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Civil Appeal No. 233 of 1991 etc.
From the Judgment and Order dated 21.6.1988 of the Central Administrative Tribunal, Bombay Bench in O.A. No. 58 of 1988.
V.C. Mahajan, S.N. Terdal, A.K. Srivastava, C.V, Subba Rao, S.K. Gambhir, Dr. B. L. Wadhera, Sudarshan Menon, P. Parameshwaran and G.D. Gupta for the appearing parties.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
To cater to the educational needs of children of persons employed in the ordnances factory at Ambazari the Central Government has sanctioned and is running a Primary School from classes I to V.
In the same premises, the employees 687 of the ordance factory, by their own arrangement are also having a Secondary School with classes VI to X.
They have appointed the respondents as teachers in the Secondary School.
They are paid honorarium and not full salary.
Their honorarium is paid out of fees from the children and other donations received by the school.
the respondents, however, approached the Central Administrative Tribunal seeking regularisation of their services and demanding equal pay for equal work.
The Tribunal has allowed their claim with certain directions to the appellants including the Union of India.
The directions issued by the Tribunal are as follows: "(i) The respondents will immediately take up an assessment of the needs of the school to carry on its activities at their present level and the number of additional teachers required for this purpose; (ii) After assessing the number of teachers needed, the respondents will proceed to create a sufficient number of posts to be filled up on a regular basis; (iii) After completing the above exercise respondents will take steps to fill up the newly created posts in accordance with recruitment rules to be framed for the purpose.
the applicants who have worked as teachers in past should be first considered for the posts and only if they are found unsuitable should candidates from sources like the Employment Exchange be considered; (iv) Once the procedure outlined above is completed all persons selected should be appointed on a regular basis and on remuneration admissible to the regular teachers of the primary school; (v) Similar procedure should also be followed in respect of posts of peon giving Shri Tadas an opportunity of competing for regular appontment; (vi) Till the exercise outlined above is completed which we hope will be done before the academic year 1989 90 commences the present procedure may continue and such of the applicants as are selected for appointment will be subject to the same conditions of service as before.
" The Union of India and the officers of the ordnance factory have challenged the validity of these directions in Civil Appeal No. 233/1991.
The respondents who have not been recruited as per the directions of the Tribunal have preferred Civil Appeal No. 480/1989.
We have considered the submissions of counsel on both sides in the light of the material on record.
At the outset we may point out that 688 there is no evidence that the respondents were appointed as teachers on honorarium by or on behalf of the Central Government.
There is also no evidence that the respondents were initially appointed in the Primary School and latter they were shifted to the Secondary School.
The fact, however, remains that when the respondents moved the Tribunal for relies they were only teaching in the Secondary School.
It is undisputed that the Central Government has not sanctioned the Secondary School nor created any posts thereto.
the Central Government has only sanctioned the Primary School and the posts connected therewith.
Those posts are being occupied by regularly recruited teachers.
The Tribunal, however, has directed the Central Government immediately to take up an assessment of the needs of the School to carry on its activities at the present level and to create a sufficient number of posts to be filled up on a regular basis.
The Tribunal has further directed the Central Government to take steps to fill up the newly created posts in accordance with the recruitment rules to be framed for the purpose.
These directions are indeed amazing.
It has compelled the Government to sanction the Secondary School, create adequate number of posts and fill up the posts after framing the recruitment rules for the purpose.
There is no law requiring the Central Government to sanction the Secondary School.
the Central Government has taken a decision that it will not involve itself in sanctioning or running classes beyond the Primary School level.
It is a policy matter involving financial burden.
No Court or the Tribunal could compel the Government to change its policy involving expenditure.
The Tribunal therefore, could not have, could not have, issued the directions as it did to compel the Central Government to assess the needs of the school and create the necessary posts without support of law.
Secondly, the respondents are not paid by the Central Government.
They are not holding any appointment under the Central Government.
There is no relationship of master and servant between the Central Government and the respondents.
The respondents are employed in the Secondary School by local arrangement made by the officers of the ordnance factory.
It is not proved that how the Central Government is accountable to such arrangement made by the local officers.
Thirdly, Section 14 of the confers no jurisdiction, power and authority on the Tribunal to deal with the service matters of the employees like the respondents.
689 In any view of the matter, the respondents cannot claim the pay scale admissible to the Government school teachers much less regularisation of their services by the Central Government.
The directions issued by the Tribunal therefore, cannot be sustained.
They are apparently injustified and without authority of law.
In the result we allow the Civil Appeal No. 233/1991, and set aside the order of the Tribunal.
the Civil Appeal No. 480/1989 is dismissed.
In the circumstances of the case, however, we make no order as to costs.
S.B. CA No. 233/91 allowed and CA No. 480/89 dismissed.
| The appellant i.e. the Central Government sanctioned primary school from classes I V to cater to the educational needs of children of persons employed in the ordance factory at Ambazari.
The employees on their own in the same premises opened a secondary school with classes VI to X.
The respondents are teachers in the Secondary School and are being paid out of fees and other donations received by the school, They approached the Central Administrative Tribunal seeking regularisation of their service and demanded equal pay for equal work.
The Tribunal allowed their claim with certain directions to the appellants including the Union of India i.e. directing the Central Government immediately to take up an assessment of the needs of the School to carry on its activities at the present level and to create a sufficient number of posts to be filled up on a regular basis.
The Tribunal further directed the Central Government to take steps to fill up the newly created posts in accordance with recruitment rules to be framed for the purpose.
Allowing Civil appeal No. 233 of 1991 of the Union of India, and setting aside the order of the Tribunal dismissing Civil Appeal No. 480 of 1989 of the respondents who have not been recruited as per direction of the Tribunal, the Court.
HELD: 1.
There is no evidence in record that respondents were appointed as teachers on honorarium by or on behalf of the Central Government.
There is no evidence that they were initially appointed in primary School and later shifted to the Secondary School.
It is undisputed 686 that the Central Government has not sanctioned the Secondary School nor created any posts thereto.
It had only sanctioned the Primary School and the posts connected therewith which are being occupied by regularly recruited teachers.
[688A B] 2.
The directions of the Tribunal are indeed amazing compelling the Central Government to sanction the Secondary School.
The Central Government has taken a decision that it will not involve itself in sanctioning or running classes beyond the Primary School level.
It is a policy matter involving financial burden.
No court or the Tribunal could compel the Government to change its policy involving expenditure.
[688D E] 3.
The respondents are not paid by the Central Government.
There is no relationship of master and servant between the Central Government and the respondents.
The respondents are employed by the local officers so how the Central Government is accountable.
[688G] 4.
Even section 14 of the Administrative Tribunal Act, 1985 confers no jurisdiction, power or authority on the Tribunal to deal with the service matters of the employees like the respondents.
the respondents cannot claim the pay scale admissible to the Government school teachers and much less regularisation of their services by the Central Government.
[688H 689A] 5.
The directions of the Tribunal are apparently unjustified and without authority of law so cannot be sustained.
[688F]
|
on (Civil) No. 860 of 1991.
(Under Article 32 of the Constitution of India).
Petitioner in person G. Ramaswamy, Altar Ahmad, Anil Katiyar, A.M. Khanwilkar and M.P. Sarawala for the Respondents.
The following Order of the Court was delivered: This application is in public interest and has been filed by a practising advocate of this Court who has consistently been taking interestin matters relating to environment and pollution.
The reliefs claimed in this application under Article 32 of the Constitution are for issuing appropriate directions to cinema exhibition halls to exhibit slides containing information and messages on environment free of cost: directions for spread of infor mation relating to environment in national and regional languages and for broadcast thereof on the All India Radio and exposure thereof on the television in regular and short term programmes with a view to educating the people of India about their social obligation in the matter of the upkeep of up the environment in proper shape and making them alive to their obligation not to act as polluting agencies or fac tors.
" There is also a prayer that environment should be made a compulsory subject in schools and colleges in a graded system so that there would be a general growth of awareness.
We had issued notice to the Union of India on the petition and the Central Government has immediately responded.
Until 1972, general awareness of mankind to the impor tance of environment for the well being of mankind had not been appropriately appreciated though over the years for more than a century there was a growing realisation that mankind had to live in tune with nature if life was to be peaceful, happy and satisfied.
In the name of scientific development, man started distancing himself from Nature and even developed an urge to conquer nature.
Our ancestors had known that nature was not subduable and, therefore.
had made it an obligation for man to surrender to nature and live in tune with it.
Our Constitution underwent an amendment in 381 1976 by incorporating an article (51A) with the heading "Fundamental Duties".
Clause (g) thereof requires every citizen to protect and improve the natural environment including forests, lakes, rivers and wild life, and to have compassion for living creatures.
Soon after the internation al conference on environment the Water Pollution Control Act of 1974 came on the statute book; the Air Pollution Control Act came in 1981 and finally came the Environment Protection Act of 1986.
Law is a regulator of human conduct as the professors of jurisprudence say, but no law can indeed effectively work unless there is an element of acceptance by the people in society.
No law works out smoothly unless the interaction is voluntary.
In order that human conduct ,nay be m accordance with the prescription of law it is necessary that there should be appropriate awareness about what the law requires and there is an element of acceptance that the requirement of law is grounded upon a philosophy which should be fol lowed.
This would be possible only when steps are taken in an adequate measure to make people aware of the indispens able necessity of their conduct being oriented in accordance with the requirements of law.
There has been an explosion of human population over the last 50 years.
Life has become competitive.
Sense of ideal ism in the living process has systematically eroded.
As a consequence of this the age old norms of good living are no longer followed.
The anxiety to do good to the needy or for the society in general has died out, today oblivious of the repercussions of one 's actions on society, everyone is prepared to do whatever is easy and convenient for his own purpose.
In this backdrop if the laws are to be enforced and the malaise of pollution has to be kept under control and the environment has to be protected in an unpolluted state it is necessary that people are aware of the vice of pollution and its evil consequences.
We are in a democratic polity where dissemination of information is the foundation of the system.
Keeping the citizens informed is an obligation of the Government.
It is equally the responsibility of society to adequately educate every component of it so that the social level is kept up.
We therefore, accept on principle the prayers made by the petitioner.
We are happy to find that the learned Attorney General who appeare for the Union of India has also appreci ated the stand of the petitioner and has even cooperated to work out the procedure by which some of the prayers could be granted.
We dispose of this writ petition with the following direc tions 382 (1) Respondents 1, 2, & 3 shall issue appropriate direc tions to the State Governments and Union Territories to invariably enforce as a condition of license of all cinema hails, touring cinemas and video parlours to exhibit free of cost atleast two slides/messages on environment in each show undertaken by them.
The Ministry of Environmental should within two months from now come out with appropriate slide material which would be brief out efficiently carry the message home on various aspects of environment and pollu tion.
This material should be circulated directly to the Collectors who are the licensing authorities for the cinema exhibition halls under the respective slate laws for compli ance without any further direction and helping the cinema halls and video parlours to comply with the requirements of our order.
Failure to comply with our order should be treat ed as a ground for cancellation of the licence by the appro priate authorities.
The material for the slides should be such that it would at once be impressive, striking and leave as impact on every one who sees the slide.
(2) The Ministry of Information and Broadcasting of the Government of India should without delay start producing information films of short duration as is being done now on various aspects of environment and pollution bringing out the benefits for society on the environment being protected and the hazards involved in the environment being polluted.
Mind catching aspects should be made the central theme of such short films.
One such film should be shown, as far as practicable.
in one show every day by the cinema hails and the Central Government and the State Government are directed to ensure compliance of this condition from February 1, 1992.
(3) Realising the importance of the matter of environ ment and the necessity of protecting it in an unpolluted for as we had suggested to learned Attorney General to have a dialogue with the Ministry of Information and Broadcasting as to the manner the All India Radio and Doordarshan can assist this process of education.
We are happy to indicate that, learned Attorney General has told us that five to seven minutes can be devoted every day and there could be, once a week, a longer programme.
We do not want to project an impression that we are authorities on the subject, but we would suggest to the programme controlling authorities of the Doordarshan and the All India Radio to take proper steps to make interesting programmes and broadcast the same on the radio and exhibit the same on the television.
The national network as also the State Doordarshan Centres should immedi ately take steps to implement this direction so that from February 1, 1992, regular compliance can be made.
383 (4) We accept on principle that through the medium of education awareness of the environment and its problems related to pollution should be taught as a compulsory sub ject.
Learned Attorney General pointed out to us that the Central Government is associated with education at the higher levels and the University Grants Commission can monitor only the under graduate and post graduate studies.
The rest of it, according to him, is a State subject.
He has agreed that the University Grants Commission will take appropriate steps immediately to give effect to what we have said, i.e., requiring the Universities to prescribe a course on environment.
They would consider the feasibility of making this a compulsory subject at every level in college education.
So for as education up to the college level is concerned, we would require every State Government and every Education Board connected with education up to the matricu lation or stage even intermediate colleges to immediately take steps to enforce compulsory education on environment in a graded way.
this should be so done that in the next aca demic year there would be compliance of this requirement.
We have not considered it necessary to hear the State Governments and the other interested groups as by now there is a general acceptance through out the world as also in our country that protection of environment and keeping it free of pollution is an indispensable necessity for life to survive on earth.
If that be the situation, every one must 'turn his immediate attention to the proper care to sustain environment in a decent way.
We dispose of the matter with the aforesaid direction but give liberty to Mr. Mehta to apply to the Court from time to time for further directions, if necessary.
S.B. Petition dis posed of.
| This application is in public interest seeking relief for issuing appropriate directions of this Court to Cinema, exhibition hails to exhibit slides containing information and messages on environment free of cost.
Further directions for spread of information relating to environment in nation al and regional languages vide broadcast thereof on the All India Radio, exposure thereof on television in regular and short term programmes with a view to educating the people of India about their social obligation in the matter of the upkeep of the environment in proper shape and making them alive to their obligation not to act as polluting agencies or factors.
It is further prayed that environment should be made a compulsory subject in schools and colleges in a graded system so that there would be a general growth of awareness.
Till 1972 general awareness of mankind to the environ ment for the well being of mankind had not been appropriate ly appreciated.
In 1975 the Constitution underwent an amend ment by incorporating an Article 51A with the heading "Fundamental Duties" Clause (g) thereof requires every citizen to protect and improve the natural environment including forests, lakes, rivers and wild life and to have compassion for every living creature.
In 1974 Water Pollu tion Central Act came on the statues book.
In 1981 Air Pollution (Central Act) and finally in 1986 the Environment Protection Act were enacted.
Law is a regulator of human conduct but no law can indeed effectively work unless there is an element of ac ceptance by the people in society.
379 There has been an explosion of human population, over the last 50 years.
Life has become competitive so the age old norms of good living are no longer followed.
It has therefore, become necessary that people be made aware of vice of pollution and its level of consequenceS. Keepingg the citizen informed is an obligation of the Government as well as the responsibility of society to adequately educate every component of it so that social level is kept up.
Disposing of the matter, the Court, HELD The principle on which the praayer is made is accepted and the following directions are issued 1.
That the Cenaral Governmeent, the State Government and Union Tcrritories should invariably enforce as a condi tion of license of all cinema halls, touring Cinemas and video parlours to exhibit.
free of cost at feast two slidcs/messages on environment in each show undertaken by them.
The Ministry of Environment should within two months from.
now come out with appropriate slide material on var ious aspect of environment and pollution.
This material should be circulated to the collectors who arc the licensing authori ties for compliance without any further directions and failure to comply with the Court order should be treated as a ground for.
cancellation of the licence by the appro priate authorities.
[382 A C] 2.
The Ministry of Information and Broadcasting of the Government of India should without delay start pronouncing information films of short duration on various aspects of environment and pollution bringing out the benefits for society on the environment protection and hazardous involved in environment pollution.
[382 D] 3.
The national network, the State Door Darshan Cen tres, All India Radio, Television should take proper steps to exhibit such films and interesting programmes on the subject.
There should be regular compliance of these direc tions be followed from February 1, 1992.
[382 G H] 4.
The principle that through the medium of educational awareness of the environment and its pollution problems should be taught as a compulsory subject at every level of education.
University Grants Commission should prescribe a course on environment in a graded manner as a compulsory subject in college education.
The compliance of this re quirement be done in the next academic year.
[383 A C] 380 Since there is a general acceptance throughout the world as also in our country that protection of environment keeping free of pollution is an indispensable necessity of life to survive on earth so everyone must turn his immediate attention to the proper care to sustain environment in a decent way.
|
No 1 IN C.A. No 4444 of 1990 etc.
From the Judgment and Order dated 25.5.90 of the Alla habad High Court in CWP No. 5267 of 90.
Yogeshwar Prasad, Gopal Subramanium, S.K. Mehta, Dhruv Mehta, Arvind Verma, Aman Vachher, Pradeep Misra and R.B. Misra for the appearing parties.
The following order of the Court was delivered: The dispute in these cases relates to admission in post graduate courses of the medical wing.
There are seven medical colleges in the State of Uttar Pradesh.
Sometime back in a fake writ petition the High Court of Allahabad made an order that admission could be effected on the basis of the MBBS results.
That can counter to the decision of this Court and on being looked into it transpired that the proceedings before the High Court were totally fraudulent and no one by the name given in the petition as petitioner could really be identified.
This Court at that stage had clearly indicated that the prescription by this Court has been that there should be a selection test for post graduate admission as admission has become very competitive and to have compliance of Article 14 of the Constitution a broad based arrangement should be made.
On that account this Court had clearly indicated that no admission should be permitted on the basis of the MBBS results.
In view of the fact that the Allahabad High Court 's order has already been reversed, nothing more need be done.
387 SLP (C) . . of 1990 This petition is directed against the order of the learned Single Judge of the Allahabad High Court dated 25.5.1990.
U.P. Junior Doctors ' Action Committee in their special leave petition which has not yet been numbered challenge the order referred to above where the petitioner could not be identified and challenge was to the decision of the High Court dated 25.5.1990 which permitted admission on the basis of MBBS results.
Since we have already clarified the position and reiterated the requirement of a selection test the order of the High Court must be taken to have already been vacated.
11 is not necessary to entertain this special leave petition.
CA in SLP 15354/91 Special leave granted.
In this appeal by special leave Principal of the Agra Medical college along with some others is the appellant.
The High Court by the impugned order required provisional admis sion in M.S. (Surgery) and in M.D. (Medicine) to be given to respondents 1 and 2 respectively in the Medical College of Agra while the writ petition was yet to be heard.
The con ten tion raised before us is that grading admission at an interlocutory stage in a pending proceeding even by styling it as provisonal create lot of adderse consequences and leads to indicipline in the system of imparting education, Admission into post graduate degrees in the medical wing through out the country has become very competitive and it has become clear thatstrict regulation is necessary.
This Court by its judgement in Dr. Pradeep, Jain & Ors.
vs Union of India & Ors [1984] 3 sec 654 indicated that admis sion for 25 percent of the seats in post graduate courses should be regulated on the basis of all India selection and in regard to the remainder 75 per cent of the States were left to decide the procedure for admission.
Appropriate knowledge and expertise are a prerequisite for a person to be allowed to register himself as a medical practitioner.
Very often, health problems require expert treatment.
If anyone is authorised in society to practise medicine or undertake medical care without the appropriate qualification, society exposes itself to health hazards.
The prescriptions by the Indian Medical Council and the attempts made by Government for regulating the medical study are for establishing basically uniform knowledge to be imparted to the students before they can be entrusted with the nation 's medicare.
Unless there is a sincere and thorough educational discipline to be gone through as a precondition to the grant of the requisite certificate the lives of citizens would be at peril.
388 The Indian Medical Council has prescribed a reasonable period of study on expert advice and upon taking into con sideration the experience over the years as to how much study is necessary for the requisite qualification to be gathered.
This Court has also indicated the dates of admis sion and commencement of the courses of study.
These are prescriptions for a purpose and are not intended to be empty formalities to be violated.
One of the prescriptions of the Medical Council is also the ratio between the teachers and the students.
That again is a factor which cannot be brushed aside.
It is a well known rule of practice and procedure that at interlocu .
tory stage a relief which is asked for and is available at the disposal of the matter is not granted.
The writ petitioners wanted admission into postgraduate course as the main relief in the writ petition.
To have it granted at the threshold creates a lot of difficulties.
In a case where the petitioner ultimately loses in a case of this type a very embarrassing situation crops up.
If he has by then read for two to three years, there is a claim of equity raised on the plea that one cannot reverse the course of time.
In a case of this type equities should not be claimed or grained. 'Faking an overall picture of the matter we are of the view that unless there is any special reason to be indicated in clear terms in an interlocutory order as a rule no provisional admission should be granted and more so into technical courses.
On the basis of what we have said the order of the High Court should be reversed but we are not doing so on account of the fact that nine similarly placed medical graduates have already been given admission pursuant to such interloc utory orders by the respondents without even raising a challenge.
The order was made as early as in February, 1991 and for all these nine months no steps have been taken by the appellants to comply with the order and they are in fact facing a contempt proceeding.
While on principle we indicate that such provisional admission should not be granted.
We dismiss this special leave petition and sustain the order not on merits but for the reason indicated.
The interlocuto ry application in the civil appeal need not be further dealt with in view of what we have said above.
We had issued notice to the Principals of the seven medical colleges.
They have appeared and have given a writ ten undertaking to the Court by way of affidavit that there was some misunderstanding in regard to the requirement of a selection test for post graduate admission.
There were two year and three year courses running simultaneously for some period and some confusion was there as to whether the two year course 389 students were covered by the direction of this Court.
Though we are of the view that there was hardly any scope for being misled, we are prepared to give the benefit of doubt to the Principals.
The contempt proceedings are withdrawn but the undertaking are kept on record.
G.N. Appeals dismissed.
| These matters relate to admission in post graduate courses in the Medical Colleges in Uttar Pradesh.
On a Writ Petition, which later turned out to be fake, the High Court had ordered that admission could be effected on the basis of the MBBS Examination.
This has been disputed in appeal before this Court.
In another Writ Petition, pending hearing, the High Court directed that provisional admission be given to two candidates, one in MS (Surgery) and another in MD (Medicine).
The Principal of the Medical college and others preferred an appeal against the High Court 's order.
It was contended that granting admission, though provi sional, at an interlocutory stage in a pending proceeding creates a lot of adverse consequences and indiscipline in the system of imparting education.
Dismissing the matters, this Court, 385 HELD: 1.1 It transpires that the proceedings before the High Court were totally fraudulent and no one by the name given in the petition as petitioner could really be identi fied.
This Court had clearly indicated that no admission should be permitted on the basis of the MBBS results.
Noth ing survives now, as the High Court 's order has already been reversed.
[386 F,G] 2.1 It is already settled that admission for 25 per cent of the seats in post graduate courses should be regulated on the basis of all India selection and in regard to the re mainder of 75 per cent the States were left to decide the procedure for admission.
[387 E] 2.2 Unless there is a sincere and thorough educational discipline to be gone through as a precondition to the grant of the requisite certificate the lives of citizens would be at peril.
The Indian Medical Council has prescribed a rea sonable period of study, on expert advice, and upon taking into consideration the experience over the years as to how much study is necessary for the requisite qualification to be gathered.
This Court has also indicated the dates of admission and commencement of the courses of study.
These are prescriptions for a purpose and are not intended to be empty formalities to be violated.
[387 G, H; 388 A] Dr. Pradeep Jain & Ors.
vs Union of India & Ors.
, [1984] 3 S.C.C. 654, relied on.
It is a well known rule of practice and procedure that at an interlocutory stage, a relief which is asked for and is available at the disposal of the matter, is not (generally) granted.
To have it granted at the threshold creates a lot of difficulties.
In a case where the petition er ultimately loses in a case of this type a very embarrass ing situation crops up.
If he has by then read for two to three years, there is a claim of equity raised on the plea that one cannot reverse the course of time.
In a case of this type, equities should not be claimed or granted.
Unless there is any special reason to be indicated in clear terms in an interlocutory order, as a rule no provisional admis sion should be granted and more so into technical courses.
[388 C, D] 4.1 The order of the High Court in the instant case should be reversed but this is not being done so, on account of the fact that nine similarly placed medical graduates have already been given admission pursuant to such interloc utory orders by the respondents 386 without even raising a challenge.
The order was made as early as in February, 1991 and for nine months no steps have been taken by the appellants to comply with the order and they are in fact facing a contempt proceeding.
[388 F] 4.2 Notice had been issued to the Principals of the seven medi cal colleges who have appeared and given written undertakings to the Court by way of affidavit that there was some misunderstanding in regard to the requirement of a selection test for post graduate admission.
Though there was hardly any scope for being misled, the benefit of doubt is being given to the Principals.
The contempt proceedings are discharged, but their undertakings are kept on record.
[388 G, H; 389 A]
|
l Appeal No. 138 of 1992 From the Judgment and Order dated 30.8.1991 of the Central Administrative Tribunal,Principal Bench, New Delhi in O.A.No.
1177 of 1987.
G.D. Gupta and Ashok K. Mahajan for the Appellant.
K.T.S. Tulsi, Hemant Sharma and Vijay K.Mehta for the Respondents.
The Judgment of the Court was delivered by AHMADI, J.
Special leave granted.
Heard counsel on both sides.
The facts giving rise to this appeal, briefly stated, are as under : One MR.Jaisani, a direct recruit, was holding the post of Assistant Director General (prevention of Food Adulteration) in the Ministry of Health and Family Welfare of the Government of India.
On his passing away sometime in july 1989, a vacancy arose which was required to be filled under the extant recruitment rules.
The recruitment rules which were then in operation provided for the said post being filled in by direct recruitment only.
A requisition was sent to the Union Public Service Commission (Commission ' hereafter) sometime in November, 1989, for selection of a candidate for filling in the vacancy in question.
However, before the Commission could advertise the post, the Union Government informed the Commission by letter dated December 29, 1989 received by the Commission on January 1, 1990 not to proceed with the process of selection it was examining the question of opening up an avenue for promotion from Assistant Secretary to the post in question Notwithstanding the said communication, the commission advertised the post in January 1990, The appellant applied for the same and was called for an interview on December 13,1990.
Thereupon the first respondent, Mrs. Debi Mukherjee,who was then serving as Assistant Secretary, and was hoping to be promoted as Assistant Director General on the amendment of 4 the recruitment rules approached the Central Administrative Tribunal.
New Delhi and obtained an interim order staying the process of selection initiated by the Commission.
It may here be mentioned that in the meantime two further layers above that of Assistant Secretary came to be created providing for higher pay scales by an amendment of the rules pursuant to the directions given by this Court in Writ petition No. 1118/89 read with the directions in the Contempt Petition No. 5/90 dated May 4, 1990.
The two layers thus created provided for higher pay scales but no separate designations.
The question regarding the appointment to the vacancy created on the demise of Jaisani, however, had still to be dealt with.
The appellant who was affected by the Tribuanl 's Order approached for impleadment/intervention but the Tribunal did not allow the same although we are told that the Tribunal gave a hearing to the counsel for the appellant.
The Tribunal ultimately disposed of the petition with a direction to the concerned Ministry to provide promotional avenues to the applicant who had functioned in the post of Assistant Secretary for several years and had held the charge of Assistant Director General as and when the occasion arose.
Three months ' time was granted to the concerned Ministry to carry out the directions.
The failure to carry out the directions had led to the filing of a Contempt Application also.
The grievance of the appellant is two fold.
Firstly, he contends that once the process for selection had started it was not open to the Government as well as the Tribunal to freeze the process and the Commission was entitled to complete the selection.
The second point urged was that the fact of the creation of tow layers by the amendment of the relevant rules had been totally over looked by the Tribunal even though its attention was drawn to the same by counsel for the appellant.
In support of the first contention, strong reliance was placed on the decision of this Court in N.T. Devin Katti & Ors.
vs Karnataka Public Service Commission & Ors.
; In that case this Court observed that a candidate who is eligible and otherwise qualified in accordance with the relevant rules and the terms of the advertisement acquires a vested right of being considered for selection in accordance with the rules as they existed at the date of advertisement.
He cannot be deprived of that limited right on the amendment of rules during the pendency of selection unless the amended rules are retrospective in nature.
While making these observations, it was made clear that a candidate on making an application for a post pursuant to an advertisement does not acquire any vested right of selection or of appointment to the post in question.
This is obvious from the ratio of this Court 's decision in Jatinder Kumar & Ors., In that case, it was clarified that an independent body like the 5 Commission is established to ensure selection of best available talent for appointment to the post in question to avoid arbitrariness and nepotism in the matter of appointment.
The selection has to be made by the Commission and on the basis thereof the Government has to fill up the post adhering to the order of merit drawn up by the Commission.
This Court emphasised that the selection by the Commission is only recommendary in nature and the final authority for appointment is the Government, and if the Government declined to accept the recommendation the Constitution enjoins the Government to place on the table of the legislature its reasons and report for so doing.
Thereby the Government is made answerable to the elected representatives under the Constitution.
This however, does not clothe the selectee with any right to appointment that is to say that he cannot force the Government to accept the recommendation of the Commission but the Government has to make the appointment strictly in accordance with the recruitment rules and merits as determined by the Commission and it cannot disturb the list at its sweet will.
Nor can the Government appoint a person whose name does not appear in the list.
It is obvious from the ratio of these two decisions to which our attention was pointedly drawn that if the Commission issued an advertisement at the behest of the Government and pursuant thereto calls a candidate for interviews, the candidate has a right to be considered for selection but not a right to be selected or to appointment to the post in question.
The right to selection crystalises only after the candidate is called for interview pursuant to the advertisement.
But in the instant case the question is whether the Government can withdraw the requisition sent to the Commission for initiating the process of selection because at the point of time no right had crystalised in anyone for being considered for selection.
If the Government is at a given point of time considering the question of amending the recruitment rules with a view to providing for promotion to the post in question, the Government can before an advertisement is issued by the Commission and the process of selection is under way request the Commission to withdraw the same till it decides on the question of amending the rules.
The decision of the Government to withdraw the requisition sent to the Commission in NOVEMBER 1989 before the issuance of the advertisement does not interfere with any vested right of selection because that stage had yet not reached.
In the instant case, that is exactly what happened.
Therefore, before the appellant acquired a right to be considered for selection the Government had already intimated that it was examining the question of amending the recruitment rules with a view to providing for appointment by promotion to the post in question.
Once this decision was communicated to the Commission before it had set the process of selection in motion by issuing an advertisement, it was not open to the Commission to insist that it will go ahead with the selection process as the extant rule provided for 6 promotion by direct recruitment and the Government could amend the recruitment rules retrospectively, if it so desired, with a view to providing for appointment by promotion.
Such an exercise by the Commission would be an exercise in futility, waste of public time and money and hardship to candidates who seek appointment.
Whether to provide for promotion as a mode of appointment to the post in question is a matter of policy left to the Government to decide and if it desired that the selection process should be held in abeyance till the question was examined and a final decision was taken thereon, it was not open to the Commission to ignore the communication of the Government in that behalf and proceed to set the selection process in motion.
We think the action of the Commission was somewhat hasty and unjustified.
The appellant, therefore, cannot claim any vested right as urged by his learned counsel.
Nor can the Tribunal 's omission to notice that two new layers were created have a bearing on the Government 's decision to place the process of selection in hibernation till a final decision is taken on the proposal to provide for promotion to the post.
For the above reasons, we are of the opinion that the decision reached by the Tribunal does not require any interference at our hands in exercise of the power under Article 136 of the Constitution.
Hence, the appeal fails and is accordingly dismissed with no order as to costs.
R.P. Appeal dismissed.
| The Union government sent a requisition to the Union Public Service Commission for selection of a candidate to post of Assistant Director General (Prevention of Food Adulteration)in the Ministry of Health and Family Welfare which, under the extant rules, was to be filled in only by direct recruitment.
However, before the Commission could advertise the post,the Government informed it not to proceed with the process of selection as it was examining to fill up the post by promotion of Assistant Secretary.
But inspite of this,the commission Advertised the post and the appellant was called for an interview where upon Respondent No.1, an Assistant Secretary who was expecting her promotion to the post on amendment of the rules,obtained an interim order from Central Administrative Tribunal, staying the process of selection initiated by the Commission.
The appellant, feeling affected by the said order, unsuccessfully moved the Tribunal for impleadment.
Meanwhile two further layers above that of Assistant Secretary, though in higher pay scales but with no separate designations, were created by an amendment of rules in pursuance of this Court 's direction, The Tribunal disposed of the application directing to provide promotional avenues to Respondent No.1 who, while functioning as Assistant Secretary, had also occasionally held the charge of Assistant Director General.
Aggrieved, the appellant preferred the appeal by special leave to this Court.
It was contended by the appellant that once the process for selection had started, it was not open to the Government as well as to the Tribunal to freeze the process and the Commission was entitled to complete the selection; and that the fact of creation of two layers by the amendment of the rules was wrongly overlooked by the Tribunal.
Dismissing the appeal, this Court, 2 HELD : 1.1 If the Government is at a given point of time considering the question of amending the recruitment rules with a view to providing for promotion to a particular post, it can, before an advertisement is issued by the Commission and the process of the selection is under way, request the Commission to withhold the same till it decides on the question of amending the the rules.
(p.5E F) 1.2 Whether to provide for promotion as a mode of appointment to the post in question is a matter of policy left to the government to decide.(p.6AB) 1.3 Once the decision of the Government to withdraw the repuisition was communicated to the Commission before it had set the process of selection in motion by issuing an advertisement, it was not open to the Commission to go ahead with the selection process as the Government could amend the recruitment rules retrospectively, if it so desired, with a view to providing for appointment by promotion .Such an exercise by the Commission would be one in futility, waste of public time and money and hardship to candidates who seek appointment.(pp.5GH;6A) The action of the Commission was somewhat hasty and unjustified.(p.6B) 2.1 If the Commission issues an advertisement at the behest of the Government and pursuant thereto calls a candidate for interview, the candidate has a right to be considered for selection but not a right to be selected or to appointment to the post in question.
The right to selection crystalises only after the candidate is called for interview pursuant to the advertisement.(p.5 C D) N.T. Devin Katti & Ors.
vs Karnataka Public Service Commission & Ors.(1990) 3 SCC 157 and Jatinder Kumar & Ors.v.
State of Punjab & Ors.
(1985)1 SCR 899, referred to.
2.2 In the instant case, the decision of the Government to withdraw the requisition sent to the Commission before the issuance of the advertisement dose not interfere with any vested right of selection because that stage had yet not reached.(p.5F) 2.3 Before the appellant acquired a right to be considered for selection the Government had already intimated that it was examining the question of amending the recruitment rules with a view to providing for appointment by promotion to the post in question.
(p.5G) 3 2.4 The appellant, therefore, cannot claim any vested right.
Nor can the tribunal 's omission to notice that two new layers were created have a bearing on the Government 's decision to place the process of selection in hibernation till a final decision is taken on the proposal to provide for promotion to the post.
(p.6BC)
|
Appeal No. 4916 of 1991 From the Judgment and Order dated 5.4.1991 of the Alla habad High Court in Second Appeal No. 3395 of 1978.
Manoj Swarup and Ms. Lalita Kohli for the Appellants.
571 B.S. Nagar for Goodwill Indeevar for the Respondent.
The Judgment of the Court was delivered by VENKATACHALIAH, J.
Special leave 'is granted and the appeal taken up for final hearing and disposed of by this judgment.
We have heard Sri Manoj Swamp, learned counsel for the Appellant and Shri Goodwill Indeevar for the Respondent.
Appellant was Defendant in a suit for specific performance.
He seeks special leave to appeal to this Court from the judgment and order dated 5.4.1991 of the High Court of Allahabad in Second Appeal No.3395 of 1978 decreeing, in reversal of the decrees of dismissal entered by the two courts below, specific performance of an agreement for sale of land. 3.
On 3.7.1973 Respondent Natthu Singh sold Plot No.195 measuring 5 bighas and 18 biswas and Plot No.196 measuring 9 bighas and 8 biswas of Gulistapur Village, Pargana Dadri to the appellant for a consideration of Rs. 15,000.
On the very day, i.e., 3.7.1973, another agreement was entered into between the parties whereunder Appellant agreed to reconvey the said properties to the Respondent against payment of Rs. 15,000/ within two years.
On 2.6.1975, well within the period of two years stipulated for the performance of the agreement to re sell, Respondent instituted the suit for specific performance alleging that despite offer of performance and tendering the price, Appel lant, with the dishonest intention of appropriating the properties to himself refused reconveyance.
The Appellant contested the suit principally on the ground that Respondent was never ready and willing to perform the contract and that Respondent himself was in breach.
The trial court framed the necessary and relevant issues stemming from the pleadings and on its own apprecia tion of the evidence on record came to find against the Respondent that he was ready and willing to perform the contract; and that the agreement, being one of reconveyance, time was of its essence.
The suit was accordingly dismissed.
Respondent 's first appeal before the learned IInd Additional District Judge, Bulandshahar was also unsuccessful.
However, in Respondent 's second appeal, the High Court reversed the findings of the two courts below and allowing the appeal held that Respondent Plaintiff was ready and willing to perform the contract; that the Appellant was the party in breach; and that, therefore, Respondent was entitled to a decree.
This decree is assailed in this ap peal.
572 6.
Sri Manoj Swarup appearing in support of the appeal urged two contentions; the first is that the High Court was in error in embarking upon a re appraisal of the evidence in a second appeal to distrub concurrent findings of fact that Respondent was not willing and ready to perform the con tract.
The second contention is that contract itself became incapable of specific performance in view of the fact that during the pendency of second appeal the State had initiated proceedings for compulsory acquisition of the suit proper ties and the subject matter of the suit itself ceased to be available.
Counsel says the power to give compensation as an alternative to specific performance did not extend to a case in which the relief of specific performance had itself become impossible.
On the first question, as to the readiness of the Respondent to perform his obligations, the High Court no ticed that on 30th January, 1974 even before institution of the suit Respondent and his brother had sold another proper ty belonging to them for a price of Rs. 30,000 and that Respondent had the necessary wherewithal to perform his part of the bargain.
The High Court held: ".
Thus, the plaintiff admittedly had re ceived Rs. 15,000/ on 30.1.
1974 and soon thereafter the first notice was issued to the defendant asking him to indicate a date for executing the saledeed and also expressing his readiness and willingness.
There is no evi dence on the record that between 30.1.1974 and the date of suit or thereafter the plaintiff had parted with this money.
" The High Court also noticed that the two notices dated 23.3. 1974 and 6.5.
1975 respectively issued by the Respond ent to the Appellant before the suit contained the averments that he was ready and willing to perform the contract.
The notices were, no doubt, not actually served on the appellant as they had come back unserved upon the alleged refusal by the appellant to accept them.
The High Court relied upon the averments in the notices which could be treated as a part to the plaint having been referred to and relied upon therein.
In our opinion, the High Court was right in its view.
The notices must be presumed to have been served as contemplated by Section 27 of the General .Clauses Act.
As to the jurisdiction of the High Court to reappreciate evi dence in a second appeal it is to be observed that where the findings by the Court of facts is vitiated by non considera tion of relevant evidence or by an essentially erroneous approach to the matter, the High Court is not precluded from recording proper findings.
We find no substance in the first contention.
573 9.
The second contention is, however, not without its interesting aspects.
During the pendency of the second appeal, the properties were acquired by the State for a public purpose.
This is not disputed.
It would appear that a compensation of Rs. 4 lakhs or thereabouts has been deter mined.
That sum, along with the generous solatium and the rates of interest provided by the statute would now be a much larger amount.
Before the High Court, Appellant sought to rely upon the decision of this Court in Piarey Lal vs Hori Lal, [1977] 2 S.C.R. 915.
That was a case where in proceedings of consolidation the subject matter of an agree ment to sell was allotted to a person other than the vendor, the relief of specific performance was held not to survive.
The High Court rightly held that pronouncement was distin guishable and inapplicable to the present controversy.
As to the relief available to a plaintiff where the subject matter was acquired during the pendency of a suit for specific performance the High Court said: ".
The learned counsel for the respondent has vehemently urged that after the land has been acquired its corpus has ceased to exist and no decree for specific performance can now be granted.
In my opinion with the acquisition of)the land plaintiffs rights do not get extinguished in totality.
The appellate court always suitably mould the relief which the circumstances of the case may require or permit.
The power in this regard is ample and wide enough.
However, in the present case the property has not been totally lost.
What happens in the case of the acquisition is that for the property compensation payable in lieu there of is substituted. " The High Court issued these consequential directions: "If the decree for specific performance of contract in question is found incapable of being executed due to acquisition of subject land, the decree shall stand suitably substi tuted by a decree for realisation of compensa tion payable in lieu thereof as may be or have been determined under the relevant Act and the plaintiff shall have a right to recover such compensation together with solatium and inter est due thereon.
The plaintiff shall have a right to recover it from the defendant if the defendant has already realised these amounts and in that event ' ;the defendant shall be further liable to pay interest at the rate 574 of twelve per cent from the date of realisa tion by him to the date of payment on the entire amount realised in respect of the disputed land.
" We are afraid the approach of the High Court is perhaps somewhat an over simplification of an otherwise difficult area of law as to the nature of relief available to a plain tiff where the contract becomes impossible of specific performance and where there is no alternative prayer for compensation in lieu or substitution of specific perform ance.
While the solution that has commended itself to the High Court might appear essentially just or equitable, there are certain problems both of procedure and of substance in the administration of the law of specific relief particular ly in the area of award of an alternative relief in lieu or substitute of specific performance that require and compel consideration, especially in view of some pronouncements of the High Courts which have not perceived with precision, the nice distinctions between this branch of the law as adminis tered in England and in India.
Section 21 of the corre sponding to Section 19 of 1877 Act enables the plaintiff in a suit for specific performance also to claim compensation for its breach either in addition to or in substitution of, such performance.
Sub sections (2), (4) and (5) of Section 21 are material and they provide: "(2).
If, in any such suit, the Court decides that specif ic performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensa tion for that breach, it shall award his such compensation accordingly.
(3) [ Omitted as unnecessary.] (4) In determining the amount of any compensation awarded under this section, the Court shall be guided by the princi ples specified in Section 73 of the , 9 of 1872.
(5) No compensation shall be awarded under this section unless the plaintiff has claimed such compensation in his plaint: Provided that where the plaintiff has not claimed any such compensation in the plaint, the Court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation.
Explanation The circumstance that the contract has become 575 incapable of specific performance does not preclude the Court from exercising the jurisdiction conferred by this section." (emphasis added) So far as the proviso to sub section (5) is concerned, two positions must be kept clearly distinguished.
If the amendment relates to the relief of compensation in lieu of or in addition to specific performance where the plaintiff has not abandoned his relief of specific performance the court will allow the amendment at any stage of the proceed ing.
That is a claim for compensation failing under Secion 21 of the and the amendment is one under the proviso to sub section (5).
But different and less liberal standards apply if what is sought by the amend ment is the Conversion of a suit for specific performance into one for damages for breach of contract in which case Section 73 of the Contract Act is invoked.
This amendment is under the discipline of Rule 17 Order 6, C.P.C. The fact that sub section (4), in turn, invokes Section 73 of the for the principles of quantification and assessment of compensation does not obliterate this distinc tion.
The provisions of Section 21 seem to resolve certain divergencies of judicial opinion in the High Courts on some aspects of the jurisdiction to award of compensation.
Sub section (5) seeks to set at rest the divergence of judicial opinion between High Courts whether a specific claim in the plaint is necessary to grant the compensation.
In England Lord Cairn 's (Chancery Amendment) Act, 1858 sought to confer jurisdiction upon the Equity Courts to award damages in substitution or in addition to specific performance.
This became necessary in view of the earlier dichotomy in the jurisdiction between common law and Equity Courts in the matter of choice of the nature of remedies for breach.
In common law the remedy for breach of a contract was damages.
The Equity Court innovated the remedy of specific perform ance because the remedy of damages was found to be an inade quate remedy.
Lord Cairn 's Act, 1858 conferred jurisdiction upon the Equity Courts to award damages also so that both the reliefs could be administered by one court.
Section 2 of the Act provided: "In all cases in which the Court of Chancery has jurisdiction to entertain an application for specific performance of any covenant, contract or agreement it shall be lawful for the same Court if it shall think fit to award damages to the party injured either in addi tion to or in substitution for such specific performance and such damages may be assessed as the Court shall direct.
" 576 This is the historical background to the provisions of Section 21 of the and its prede cessor in Section 19 of the 1877 Act.
In Mohamad Abdul Jabbar & Others vs Lalmia &Others.
A.I.R (34) 1947 Nagpur 254 specific performance of an agree ment of sale dated 16th January, 1934, was sought by the institution of a suit on 15th January, 1937.
During the pendency of the suit, on 20th April, 1937, the provincial Government started land acquisition proceedings respecting the subject matter of the suit and the same was acquired.
The High Court upheld the dismissal of the suit for specific performance and referred an amendment for award of damages.
On the obvious impermissibility of specific performance the Nagpur High Court said: "We accordingly conclude that specific per formance is now impossible and we cannot decree it for "equity like nature does nothing in vain.
" We cannot hold the plaintiffs appel lants entitled to the compensation money into which the property was converted because they had no right or interest in that property. " Refusing the amendment for the relief for payment of money the High Court held: "We would not allow amendment also because on the facts found by the trial Court (with which we see no reason, whatever, to differ) we would have refused specific performance, and the claim for damages on this account would also have been negatived because damages could have been awarded only if specific performance could rightly have been claimed.
The appeal, therefore, fails and is dismissed with costs." .llm0
Support for these conclusions was sought from the oft quoted, but perhaps a little misunderstood, case of Ardeshir H. Mama vs Flora Sassoon A.I.R. 1928 Privy Council 208.
The passage in Sassoon 's case relied upon by the Nagpur High Court is this: "In a series of decisions it was consistently held that just as its power to give damages additional was to be exercised in a suit in which the Court had granted specific perform ance, so the power to give damages as an alternative to specific performance did not extend to a case in which the plaintiff had debarred himself from claiming that form of relief, nor to a case in which that relief had become impossible.
577 The case of 52 Bombay 597 fell within the first category of cases described above under the alternative relief of damages.
This case fails within the second part where the relief of specific performance has become impossible." (emphasis supplied) The second part of the observation of the Nagpur High Court, with great respect to the learned Judges proceeds on a fallacy resulting from the non perception of the specific departure in the Indian law.
In Lord Cairn 's Act.
1858 damages could not be awarded when the contract had, for whatever reason, become incapable of specific performance.
But under the Indian law the explanation makes a specific departure and the jurisdiction to award damages remains unaffected by the fact that without any fault of the plain tiff, the contract becomes incapable of specific perform ance.
Indeed, Sassoon 's case is not susceptible of the import attributed to it by the Nagpur High Court.
Sassoon 's case itself indicated the departure made in Indian Law by the Explanation in Section 19 of the 1877 Act, which is the same as the Explanation to Section 21 of the 1963 Act.
The Judicial Committee, no doubt, said that Section 19 of the 1877 Act "embodies the same principle as Lord Cairn 's Act and does not, any more than did the English Statute enable the court in a specific performance suit to award 'compensa tion for its breach ' where at the hearing the plaintiff debarred himself by his own action from asking for a specif ic decree" ', But what was overlooked was this observation of Lord Blanesburgh, "except as the case provided for in the expla nation us 10 which there is introduced an express divergence from Lord Cairn 's Act as expanded in England" (emphasis supplied ) Indeed the following illustration of the Explanation appended to Section 19 of makes the position clear" "Of the Explanation A, a purchaser, sues B, his vendor, for specific performance of a contract for the sale of a patent.
Before the hearing of the suit the patent expires.
The Court may award A compensation for the non performance of the contract, and may, if necessary, amend the plaint for that purpose When the plaintiff by his option has made specific performance impossible, Section 21 does not entitle him to seek damages.
That position is common to both Section 2 of Lord Cairn 's Act, 1858 and Section 21 of the .
But in Indian Law where the contract, 578 for no fault of the plaintiff, becomes impossible of per formance section 21 enables award of compensation in lieu and substitution of specific performance.
We, therefore, hold that the second contention of Sri Manoj Swarup is not substantial either.
Learned counsel were not specific on the point whether the Respondent had actually asked for compensation in lieu of specific performance.
We may assume that it was not so specifically sought.
In order that formality in this behalf be completed, we permit the amendment here and now so that complete justice is done.
The measure of the compensation is by the standards of Section 73 of the Indian Contract.
Here again the English Rule in Bain vs Fothergill, (1874) L.R. 7 House of Lords 158 that the purchaser, on breach of the ,contract, cannot recover, for the loss of his bargain is not applicable.
In Pollock & Mulla on Contract (10th Edn.) the law on the matter is set out thus : "Where, therefore, a purchaser of land claims damages for the loss of his bargain, the question to be decided is whether the damages alleged to have been caused to him 'naturally arose in the Usual course of things from such breach '; and in an ordinary case it would be difficult to hold otherwise." [p. 663] Learned Authors adopt the following observation of Farran C.J. in Nagardas vs Ahmedkhan, : "The Legislature has not prescribed a differ ent measure of damages in the case of con tracts dealing with land from that laid down in the case of contracts relating to commodi ties" In the present case there is no difficulty in assessing the quantum of the compensation.
That is ascertainable with reference to the determination of the market value in the land acquisition proceedings.
The compensation awarded may safely be taken to be the measure of damages subject, of course, to the deduction therefrom of money value of the services, time and energy expended by the appellant in pursuing the claims of compensation and the expenditure incurred by him in the litigation culminating in the award.
We accordingly confirm the finding of the High Court that Respondent was willing and ready to perform the con tract and that it was the 579 Appellant who was in breach.
However, in substitution of the decree for specific performance, we make a decree for compensation, equivalent to the amount of the land acquisi tion compensation awarded for the suit lands together with solatium and accrued interest, less a sum of Rs.1,50,000 (one lakh fifty thousand only) which, by a rough and ready estimate, we quantify as the amount to be paid to the appel lant in respect of his services, time and money expended in pursuing the legal claims for compensation.
We may here notice one other submission of Sri Manoj Swarup.
He found fault with the operative part of the judg ment of the High Court, Which, according to Sri Manoj Swa rup, had not even provided for the payment to the appellant of Rs. 15,000 the stipulated consideration for reconveyance.
There is this apparent omission in the operative part of the High Court 's judgment.
But this is only a technicality.
The operative part granting relief should be read with the relevant prayers in the plaint itself.
But that is not of any practical significance here in as much as we have also taken this amount of Rs. 15,000 into account in somewhat generously quantifying the litigation expenses at Rs. 1,50,000 as payable to the appellant out of the sums awarded for the acquisition.
Therefore, there is no need for Re spondent to pay the sum of Rs. 15,000 additionally.
In the result there will be a decree awarding 10 the Respondent compensation in lieu and substitution of one for specific performance which but for the acquisition Respond ent would have been entitled to the quantum and the measure of the compensation being take entire amount of compensation determined for take acquisition of the suit.
properties to gather with all the solatium, accrued interest and all other payments under the law authorising the acquisition, less a sum of Rs. 1,50,000 (Rupees one lakh fifty thousand only) which shall go to the Appellant towards his services, time and amounts spent in pursuing the claims for compensa tion as well as the consideration stipulated for reconvey ance .
The sum of Rs.1,50,000 is allowed to be. paid to the Appellant on his assurance that he has not received any part of the compensation earlier.
If any amount has been received by the Appellant out of compensation awarded for the acqui sition, such sums shall go in reduction of the sum of Rs.1,50,000, the difference being for the benefit of and be paid to the Respondent additionally.
This order shall be sufficient authority for the land acquistion authorities or the Courts wherever the matter may be pending for the apportionment and payment of the compen sation for the acquisition of the suit 580 property between the Appellant and the Respondent in the manner indicated above.
These directions shall, of course, not affect or prejudice the claim of other claimants, if any, whose claims are to be determined in the said land acquistion proceedings, the assumption implicit in this apportionment being.
that there are no other claimants in the land acquisition proceedings.
If such apportionment and withdrawal is not possible, the decree in terms of this judgment shall be worked out in execution proceedings.
The decree under appeal is modified accordingly.
No costs.
T.N.A. Decree modified.
| By an agreement dated 3.7.1973 the respondent sold two plots to the appellant for a consideration of Rs. 15,000.
By another agreement, entered into between the parties on the same day, the appellant agreed to reconvey the said proper ties to the respondent against payment of Rs. 15,000 within two years.
Within the stipulated period the respondent (Plaintiff) instituted a suit for specific performance alleging that despite offer of performance and tendering the price, the Appellant (Defendant) refused reconveyance of the properties.
The Trial Court dismissed the suit by holding that the Respondent was not ready and willing to perform the con tract, and 568 that the time was essence of the reconveyance agreement.
The first Appellate Court dismissed the respondent 's appeal.
The respondent preferred second appeal before the High Court.
Relying upon the two notices issued by the Respondent to the appellant before filing of the suit which contained the averments that he was willing and ready to perform the contract, the High Court reversed the findings of the two courts below and allowed the appeal and held that Respond ent Plaintiff was willing to perform the contract and that the Appellant was the party in breach.
Accordingly it passed a decree of specific performance of an agreement for sale of land.
During the pendency of the Second Appeal, suit proper ties were acquired by the State for public purposes and the High Court rejected the plea that after the land has been acquired by the State corpus of the Land had ceased to exist and no decree for specific performance can be granted.
In defendant 's appeal to this Court it was contended on his behalf (1) that the High Court erred in reappreciating the evidence in second appeal and in disturbing the concur rent findings of fact that Respondent was not willing and ready to perform the contract; (2) that in view of the acquisition of the suit properties the contract itself became incapable of specific performance and to such a case the power to give compensation as an alternative to specific performance did not extend.
Modifying the decree of the High Court, this Court, HELD:1.
Where the findings by the Court of facts are vitiated by non consideration of relevant evidence or by an essentially erroneous approach to the matter, the High Court is not precluded from recording proper findings.
[572 H] 1.1 The notices issued by the respondent to the appel lant containing the averments that he was ready and willing to perform the contract which were not actually served on the appellant because of his refusal to accept them must be presumed to have been served as contemplated by Section 27 of the General Clauses Act.
Therefore the High Court was right in relying upon the averments in the notices which could be treated as part to the plaint.
Accordingly the finding of the High Court that Respondent was willing and ready to 569 perform the contract and that it was the Appellant who was in breach is accordingly confirmed.
[572 F G, 578 H, 579 A] 2.
Section 21 of the enables the Plaintiff in a suit for specific performance also to claim compensation for its breach either in addition to or in substitution of, such performance.
However, when the plaintiff by his option has made specific performance impos sible, Section 21 does not entitle him to seek damages.
That position is common under the English and Indian Law namely under Section of Lord Cairn 's Act, 1858 and Section 21 of the .
But under the Indian Law the explanation to sub section (5) of Section 21 makes a specif ic departure and the jurisdiction to award damages remains unaffected by the fact that without any fault of the plain tiff, the contract becomes incapable of specific perform ance.
[574 D, 577, H C] Piarey Lal vs Hori Lal, [1977] 2 S.C.R. 915, distin guished and held inapplicable.
Mohamad Abdul Jabbar & Ors.
vs Lalmia & Ors., A.I.R. (34) 1947 Nagpur 254, disapproved.
Ardeshir H. Mama vs Flora Sessoon, A.I.R. 1928 Privy Council 208, explained.
However, so far as the proviso to sub section (5) of Section 21 is concerned, two positions must to kept clearly distinguished.
If the amendment relates to the relief of compensation in lieu of or in addition to specific perform ance where the plaintiff has not abandoned his relief of specific performance the Court will allow the amendment at any stage of the proceeding.
That is a claim for compensa tion failing under section 21 of the and the amendment is one under the proviso to sub section (5).
But different and less liberal standards apply if what is sought by the amendment is the conversion of a suit for specific performance into one for damages for breach of contract in which case Section 73 of the Contract is invoked.
This amendment is under the discipline of Rule 17, Order 6, C.P.C. The fact that sub section (4), in turn, invokes Section 73 of the Indian Contract Act for the prin ciples of quanlification and assessment of compensation does not obliterate this distinction.
[575 B C] 570 3.1 In the instant case, assuming that the Respondent had not specifically sought for compensation in lieu of specific performance the amendment is permitted in order that complete justice is done.
[578 B] 3.2 The measure of the compensation is by the standards of Section 73 of the Indian Contract Act.
Here the English Rule in Bain vs Fothergill that the purchaser, on breach of the contract, cannot recover for the loss of his bargain is not applicable.
[578 C] Bain vs Fothergill, 1874 L.R. 7 House of Lords 158, held inapplicable.
Pollock & MuHa on Contract (10th edn.) p.663; Nagardas vs Ahmedkhan, , referred to. 3.3 In the instant case, the quantum of the compensation is ascertainable with reference to the determination of the market value in the land acquisition proceedings.
The com pensation awarded may safely be taken to be the measure of damages subject, of course, to the deduction therefrom of money value of the services, time and energy expended by the appellant in pursuing the claims of compensation and the expenditure incurred by him in the litigation culminating in the award.
[578 G] 4.
Accordingly there will be a decree awarding to the Respondent compensation in lieu and substitution of one for specific performance which but for the acquisition Respond ent would have been entitled to; the quantum and the measure of the compensation being the entire amount of compensation determined for the acquisition of the suit properties to gether with all the solatium, accrued interest and all other payments under the law authorising the acquisition less a sum of rupees one lakh fifty thousand only which shall go to the Appellant towards his services, time and amounts spent in pursuing the claims for compensation as well as the consideration stipulated for reconveyance.
[579 E F]
|
ivil Appeal No. 3552 of 1989.
From the Judgment and order dated 24.11.87 of the Allahabad High Court in Second Appeal No. 2719 of 1987.
J.P. Goyal, R.C. Verma, M.R. Bidsar and K.K. Gupta (NP) for the Appellants.
O.P. Rana and Girish Chandra for the Respondent.
The Judgment of the Court was delivered by KASLIWAL, J.
This appeal by special leave is directed against the Judgment of Allahabad High Court dated 24.11.1987.
The plaintiff respondent filed a suit on the ground that the land purchased through 4 sale deeds dated 10.6.1968, 21.6.1968, 17.1.1976 and 23.6.1977 were purchased by him alone and he was the real owner of said land.
The name of the defendants/appellants were included in the said sale deeds only as benamidar.
The defendants appellants took the plea that they had paid their part of the sale consideration and the land was jointly purchased in the name of both the parties.
It may be noted that the defendant appellant Om Prakash and plaintiff respondent Jai Prakash are brothers and defendant appellant NO.
2 Smt.
Satyawati is the wife of appellant Om Prakash.
It has come on record that the appellant NO. 1 Om Prakash was in Government service ever since 1953 and the plaintiff respondent was looking after the entire agricultural property in the village.
Consolidation proceedings also took place in the village and during the consolidation operation partition had been effected in the revenue records and chaks had been carved out in accordance with the share of the parties.
At that time no dispute was raised by the plaintiff respondent that he was owner of the entire property and the names of defendants appellants were wrongly mentioned as benami.
The learned trial court arrived at the conclusion that the names of the defendants appellants in the sale deeds were not mentioned as benamidars and further held that the claim of the plaintiff respondent could not be accepted as no objection had been taken by him even during the consolidation proceedings.
The suit as such was dismissed by the trial court by Judgment dated 24.1.1987.
The plaintiff aggrieved against the judgment of 19 the trial court, filed an appeal.
The first appellate court reversed the Judgment and decree of the trial court and decreed the suit in favour of the plaintiff.
The second appeal filed by the defendants was dismissed by the High Court.
The defendants aggrieved against the Judgment and decree of the High Court filed special leave petition before this Court on 15th March, 1988.
During the pendency of the special leave petition, the Benami Transactions (Prohibition of the right to recover property) Ordinance, 1988 was promulgated by the President of India on 19.5.1988.
The said ordinance was replaced by the Benami Transactions (Prohibition) ACt, 1988 (Hereinafter called the `Benami Act ').
The Act received the assent of the President of India on 5.9.1988.
The defendants filed an application on 1.5.1989 for allowing them to take additional grounds made available on the basis of the aforesaid `Benami Act '.
Thereafter special leave was granted by this court by order dated 21.8.1989 and it was directed that printing of record is dispensed with and appeal will be heard on the special leave petition paper books.
The parties were given liberty to file additional documents if any within four weeks and the appeal was directed to be listed on 13.12.1989 for hearing.
Pending disposal of the appeal, the parties were directed to maintain status quo as existing on that day.
In the above circumstances, the matter came up for hearing before us.
Though there is no specific order of this Court allowing the application dated 1.5.1989 filed by the appellants for raising additional grounds, the same shall be deemed to have been allowed as the special leave petition was granted subsequently on 21.8.1989 after hearing both the parties.
In any case, we further make it clear that we had permitted the defendants/appellants to argue additional grounds made available to them under the `Benami Act ', which admittedly came into force after the filing of the special leave petition in this Court.
Learned counsel appearing on behalf of the defendants appellants had contended that the suit filed by the plaintiff respondent was not maintainable and barred under Section 49 of the U.P. Consolidation of Holdings Act, 1954 as the point regarding the land in question being benami was never raised by the plaintiff respondent during consolidation proceedings and the chaks were allowed to be recorded in the name of the defendants appellants.
So far as this objection under Section 49 of the U.P. Consolidation of Holdings Act is concerned, no foundations were laid in the written statement nor any issue was raised.
The High Court was thus right in holding that in the facts of this case, no foundation had been laid for the applicability of Section 49 of U.P. Consolidation of Holdings Act.
We see no error in the order of the High Court in taking the aforesaid view and we also hold that the defendants 20 appellants cannot be allowed to take such plea for which no foundation was laid in the pleadings.
The next important and formidable question which arises for consideration is whether any suit relating to benami transactions can be decreed after the coming into force of the Benami Act.
This Court in Mithilesh Kumari and Anr.
vs Prem Behari Khare, J.T. , has already held that the expression "shall lie" in Section 4 (1) and "shall allow" in Section 4 (2) of the Benami Act are prospective and shall apply to present (future stages) and future suits, claims or actions only.
The expression "any property held benami" is not limited to any particular time, date or duration.
In a suit for recovery of benami property if any appeal is pending on the date of coming into force of Section 4, the appellate court can take into account the subsequent legislative changes.
Section 4 of the Benami Act reads as under: "(1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.
(2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property.
" In the case of Mithilesh Kumar this Court considered the 1/30th report of the Law Commission submitted to the Government on August 14, 1988.
Benami Transaction (Prohibition) Bill, 1988 was drafted after getting the report and the Bill was introduced in the Rajya Sabha on 31st August, 1988 and then the Bill was passed.
The Law Commission devoted several pages to justify retrospective legislation and its view was that the legislation replacing the Ordinance should be retrospective in operation and that no locus penitentia need be given to the persons who had entered in the benami transaction in the past.
Learned counsel appearing for the respondent was unable to convince us to take a different view from that already taken by this Court in Mithiledsh kumari 's case.
It was vehemently contended by the learned counsel for the plaintiff respondent that even if the ratio of Mithilesh Kumari 's case is applied, it can be made available only in a case where appeal was pending before the higher Court.
It was contended that in the present case, only special leave petition 21 filed on 15th March, 1988 was pending at the time when the Benami Act came into force.
It was pointed out that the Ordinance was promulgated on 19.5.1988 and the Benami Act received the assent of the President on 5.9.1988.
It was thus contended that no appeal was pending on 19.5.1988 or 5.9.1988 as the special leave was granted much after on 21.8.1989 and thus no advantage can be taken by the defendants appellants of Section 4 of the Benami Act as no appeal was pending on the date when the benami Act came into force.
We find no force in the above contention of the learned counsel for the plaintiff respondent.
Special leave petition was filed against the Judgment of the High Court on 15.3.1988 and special leave was granted on 21.8.1989 after hearing both the parties.
In the present case the defendants having lost in High Court could have approached this Court only through a special leave petition under article 136 of the Constitution and it is only after the grant of such special leave that the appeal could be heard.
Though the special leave might have been granted subsequently on 21.8.1989 but it is a fact that the Judgment and decree of the High Court had already been challenged by the defendant appellants and it cannot be said that no appeal was pending before this Court simply on the ground that only special leave petition was pending when the Benami Act came into force.
There is a clear prohibition under Section 4 of the benami Act that no suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.
It is well settled that an appeal is a continuation of suit and in the present case the appeal was pending before this Court.
There is no manner of dispute that the present suit had been filed by the plaintiff respondent claiming that he was the real owner of the property and the names of the defendants appellants were mentioned in the sale deeds as benami.
In our view, Section 4 of the Benami Act is a total prohibition against any suit based on benami transaction and the plaintiff respondent is not entitled to get any decree in such suit or in appeal.
As a result of the above discussion, we allow this appeal, set aside the Judgment and decree of the High Court and dismiss the suit.
In view of the fact that the suit is dismissed on account of legislative change brought about during the pendency of the appeal in this Court, there would be no order as to cost.
V.P.R. Appeal allowed.
| The defendant appellant No. 1 and plaintiff respondent were brothers and defendant appellant No. 2 was the wife of appellant No. 1.
The appellant No. 1 was in Government service ever since 1953.
The plaintiff respondent was looking after the entire agricultural property in the village.
Partition was effected during consolidation proceedings and entered in the revenue records and chaks were carved out in accordance with the share of the parties in the consolidation proceedings.
During the consolidation operation, the plaintiff respondent did not raise any dispute that he was owner of the entire property and the names of defendants appellants were wrongly mentioned as benami.
Later, the plaintiff respondent filed a suit on the ground that the suit land was purchased by him alone through 4 sale deeds dated 10.6.1968, 21.6.1968,17.1.1976, and 23.6.1977 wherein the names of the defendants appellants were included only as benamidar and he was the real owner of the land.
The defendants appellants contended that they had paid their part 16 of the sale consideration and the land was jointly purchased in the name of both the parties.
The trial court dismissed the suit holding that the names of the defendants appellants in the sale deeds were not mentioned as benamidars and that the plaintiff respondent did not take any objection in the consolidation proceedings.
When the plaintiff respondent filed an appeal before the first appellate court, it reversed the judgment and decree of the trial court and decreed the suit in favour of the plaintiff respondent.
The second appeal filed by the defendants appellants was dismissed by the High Court.
The defendants filed a special leave petition before this Court on 15th March 1988.
During the pendency of the special leave petition the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance,1988 was promulgated on 19.5.1988.
The ordinance was replaced by the Benami Transactions (Prohibition) Act, 1988, which received the President 's assent on 5.9.1988.
The defendants filed an application on 1.5.1989 for allowing them to take additional grounds made available on the basis of the aforesaid `Benami Act '.
Thereafter special leave was granted by order dated 21.8.1989 and the parties were given liberty to file additional documents, if any, within four weeks.
The defendants appellants contended that the suit filed by the plaintiff respondent was not maintainable and barred under Section 49 of the U.P. Consolidation of Holdings Act, 1954 as the point regarding the land in question being benami was never raised by the plaintiff respondent during consolidation proceedings and the chaks were allowed to be recorded in the name of the defendant appellants.
The plaintiff respondent contended that if the ratio of Mithilesh Kumari 's case, JT.
1989(1) SC 275, was applied, it could be made available only in a case where appeal was pending before the higher Court and that no advantage could be taken by the defendants appellants, of Section 4 of the Benami Act, as no appeal was pending on the date when the Benami Act came into force.
17 On the question, whether any suit relating to benami transactions can be decreed after the coming into force of the Benami Act, this Court, allowing the appeal of the defendants, HELD : 1.01.
In a suit for recovery of benami property if any appeal is pending on the date of coming into force of Section 4, the appellate court can take into account the subsequent legislative changes.
[20C] 1.02.
The Law Commission 's view was that the legislation replacing the ordinance should be retrospective in operation and that no locus penitentia need be given to the persons who had entered in the benami transaction in the past.
[20G] 1.03.
In the present case the defendants, having lost in High Court, could have approached this Court only through a special leave petition under article 136 of the Constitution and it is only after the grant of such special leave that the appeal could be heard.
Though the special leave might have been granted subsequently on 21.8.89 but it is a fact that the Judgment and decree of the High Court had already been challenged by the defendant appellants, and it cannot be said that no appeal was pending before this Court simply on the ground that only special leave petition was pending when the Benami Act came into force.
[21C E] 1.04.
An appeal is a continuation of suit and in the present case, the appeal was pending before this Court.
The suit had been filed by the plaintiff respondent claiming that he was the real owner of the property and the names of the defendants appellants were mentioned in the saledeeds as benami.
[21E F] 1.05.
Section 4 of the Benami Act is a total prohibition against any suit based on benami transaction and the plaintiff respondent is not entitled to get any decree in such suit or in appeal.
[21F] Mithilesh Kumari and Anr.
v Prem behari Khare, J.T. , referred to . 2.01.
The expression "shall lie" in Section 4(1) and "shall allow" in Section 4(2) of the Benami Act are prospective and shall apply to present (future stages) and future suits, claims or actions only.
[20B] 2.02.
The expression "any property held benami" is not limited to any particular time, date or duration.
[20C] 18 3.
No foundations were laid in the written statement nor any issue was raised by the defendants appellants, on the question of applicability of Section 49 or th U.P. Consolidation of Holdings Act.
The defendants appellants cannot be allowed to take such plea.
[19H 20A]
|
Criminal Appeal No. 722 of 1991.
From the Judgment and Order dated 21.12.1990 of the Kerala High Court in Criminal Appeal No. 425 of 1989.
B.R.L. lyanger, R. Mohan, V. Krishnamurthy and V. Bala chandran for the Appellants.
P.S. Poti, T.T. Kunhikannan, E.M.S. Anam, Ms. Indira Sawlmey, P. Parmeswaran, Ms. Sushma Suri, K. Ram Kumar and Y.P. Rao for the Respondents.
The Judgment of the Court was delivered by YOGESHWAR DAYAL, J.
Special leave granted.
This order will dispose of six matters namely, Crl.
Appeal Nos.
553/ 89, 283/91,284/91, Civil Appeal Nos.
3708 13/89, 1897/91 and Criminal Appeal arising out of S.L.P. (Crl.) No. 2647/91.
FACTS Crl.
A. No. 553/89 This appeal arises from the judgment of the learned Single Judge of the High Court of Kerala dated 6th June, 1988 whereby the learned Single Judge declined to quash the prosecution of the petitioner therein under Section 482 of the Code of Criminal Procedure.
The petitioner therein has been prosecuted for selling adulterated "Ashoka special supari" on the basis of a certificate issued by the Director of Central Food Laboratory showing that the article of Food purchased from the accused contained 2000 mgs/kg.
saccharin and that the sample does not conform to the Prevention of Food Adulteration Rules, 1955, (hereinafter referred to as the Rules).
The High Court took the view the report prima facie goes to show that accused has sold adulterated article of food and consequently declined to quash the prosecution under Section 482 of the Code.
A. No. 283/91 This appeal is directed against the order of the Kerala High Court dared 22nd January, 1991 accepting the appeal against the order of 394 acquittal passed by the Chief Judicial Magistrate, Palakkad, in S.T No. 36 of 1988.
The appeal was filed against the acquittal of accused Nos. 2 and 3 therein and out of whom N. Raja Mohammed, the Joint Managing Director of M/S N.V.K. Mohammed Sultan Rawther (P) Ltd., is the appellant before us.
The High Court confirmed the acquittal of second accused but sentenced the appellant before us under Section 16(1)(a)(i) of the Prevention of Food Adulteration Act to undergo simple imprisonment for six month and to pay a fine of Rs. 1,000 with a default sentence of simple imprisonment for two more months.
284/91.
This appeal is filed against the order dated 21st Decem ber, 1990 passed by the learned Single Judge of the Kerala High Court dismissing the revision petition whereby accused No. I therein was sentenced to pay Rs. 1,000 as fine and the two other accused were sentenced to simple imprisonment for six months each and Rs. 1,000 as fine and in default of payment of fine to undergo simple imprisonment for a period of one month more.
Their conviction were recorded under Section 7(i) and (v) read with Section (16) (1) (a) (ii) of the Prevention of Food Adulteration Act for having sold Roja Sungandha Suparit with admixture of saccharin.
The sample was taken on 22nd December, 1986.
Civil Appeal Nos.
3708 13/89 These appeals are filed by the Union of India against the judgment of the Division Bench of the High Court of Andhra Pradesh dated 16th June, 1986 whereby the Division Bench following the judgment of a learned Single Judge in Crl.
Petition No. 1569 of 1984 allowed the writ peti tions.
A batch of writ petitions were filed for a declara tion that the admixture of saccharin in Anjali Sugandhi Supari; Roja Scented Betelnut; Nizam Supari; A.R.R. Saugan tha Supari and Ajantha Sugandhi Supari is in accordance with Rule 44 of the Rules and restraining the respondents/ appel lant herein from interfering with the business of sale of Supari with such an admixture.
Civil Appeal No. 1897/91 This appeal is directed against the order of the Divi sion Bench of the Kerala High Court dated 22nd November, 1990 whereby the learned Division Bench was inclined to take the view that the learned Single Judge should have declined jurisdiction for the reason that the relief claimed 395 is of a general character for a declaration that the admix ture of saccharin in Roja Scented Betelnut is not a blanket ban under Rule 47 read with Appendix B of the Prevention of Food Adulteration Rules, 1955.
Appeal at, sing out of SLP (Crl.) No. 2647/91 This appeal is directed against the order of the High Court of Kerala dated 21st December, 1990 setting aside the order of acquittal passed by the trial court and remanding the matter to the trial court for fresh disposal according to law.
The trial court had inter alia taken the view that the sample of Supari in question was taken contrary to Rule 22 A of the Rules.
The High Court took the view that the sample was properly taken.
On a plea being raises that the article of Supari was not adulterated as saccharin could be added to Supari, the High Court did not agree with the submission and held that saccharin could not be added to Supari and consequently the High Court remanded the matter to the trial court for fresh disposal according to law.
The case inter alia involves interpretation of Rule 44 (g) of the Rules before its deletion with effect from 15th April, 1988 and the amendment of Rule 47 by Notification No. GSR 454 (E) dated 15.4.1988 (with effect from 15.4.1989) as covered by GSR 1157 (E) dated 9.12.1988.
Rules 44(g) and 47 as they originally stood and as they stood modified at the relevant time of taking of the sample, figured during the arguments and they are extracted hereunder with comments : "44.Sale of certain admixtures prohibited Notwithstanding the provisions of Rule 43, no person shall either himself or by any servant or agent sell (g) any article of food which contains any artificial sweetener, except Saccharin, or in the preparation of which any such artificial sweetener has been used".
" "47.
Addition of Saccharin to be mentioned on the label.
Saccharin may be added to any food if the container of such food is labelled with an adhesive declaratory label.
which shall be in the form given below : This . . (name of food) . . contains an admixture of Saccharin".
These Rules held the field from November 24, 1956 until August 24, 1968 when they were further amended.
The Preven tion of Food Adulteration (Third Amendment) Rules 1968, redrafted Rules 44 (g) and 47.
and it 396 is these Rules which were extant at the time of the alleged offence.
It is proper at this stage to reproduce these two Rules: "44.
Sale of certain admixtures prohibited Notwithstanding the provisions of Rule 43 no person shall either by himself or by any servant or agent sell (g) any article of food which contains any artificial sweetener except where such artifi cial sweetener is permitted in accordance with the standards laid down in Appendix 'B '.
"47.Addition of artificial sweetener to be mentioned on the label Saccharin or any other artificial sweetener shall not be added to any article of food, except where the addi tion of such artificial sweetener is permitted in accordance with the stand ards laid down in Appendix 'B ' and where any artificial sweetener is added to any food the container of such food shall be labelled with an adhesive declaratory label which shall be in the form given below: This . . (name of food) . . contains an admixture . . (name of the artificial sweetener)".
The Supreme Court in its decision Pyarali K. Tejani vs Mahadeo Ramchandra Dange and Others, ; took the view that at the relevant time the article like saccha rin could not be added to the Supan in view of the amended Rules 44(g) and 47 of the Rules.
It will be noticed that till date no standard has been prescribed in Appendix 'B ' to the Rules so far as the Supari is concerned.
Therefore under Rule 44(g) there was a total prohibition of use of saccha rin, which is an artificial sweetener, to any article of food including Supari and regarding saccharin it was specif ically provided in Rule 47 that it shall not be added to any article of food, except where the addition of such artifi cial sweetener is permitted in accordance with the standards laid down in Appendix 'B '.
Therefore, under Rule 47 again so far as saccharin is concerned and for which no standards have been prescribed in Appendix 'B ' there was total prohi bition of adding the same in any article of food.
This was the view taken in the aforesaid case of Pyarali K. Tejani.
For the period relevant for the Tejani 's case the Rules permitted saccharin to be added in case of carbonated water in item 5(B) A 1.01.01 only but no such permission was noticed by the Supreme Court in the case of Supari.
Thus the Supreme Court had settled the law, as far as the Rules between August 24, 1968 and 15th April, 1988 are concerned.
We may mention that w.e.f. 15.4.
1988 Rule 44(g) was omitted and Rule 47 was substituted by new Rules.
397 However, it appears that with effect from 26th May, 1971 for the first time a standard was prescribed for Saccharin Sodium as item No. A.07.10 in Appendix 'B ' to the Rules.
After the provision of standard for Saccharin Sodium in Appendix 'B ' to the Rules, the Bombay High Court in the case of State of Maharashtra vs Ranjitbhai Babubhai Suratwalla, distinguished the judgment of the Supreme Court in Tejani 's case (supra) and took the view that because standards; have been prescribed for saccharin, Rule 47 permitted its user in article of food.
This view was followed by Single Judge of the Andhra Preadesh High Court in the case reported as Thummalapudi Venkata Gopala Rao vs The State, (1986)Cr1 LJ 1699.
Asimilar view was taken by another Single Bench of the Madras High Court in the case M/s. Wahab and Co., a Proprietory concern represented by its proprietor M. A Wahab son of N. Mohamed Sheriff vs Food Inspector, Tiruchirappalli Municipal corparation Trichy; (1990)L.W.(CrI.)437 with out noticing the earlier cotract view of the same High Court reported as State by Public Prosecutor vs K. R. Balakrishnan, (1986) (I) FAC 384.
The Rajasthan High Court also took the same view in the case reported as Kailash vs The State of Rajasthan, (1985) (I) FAC 282.
The Gauhati High Court in the case reported as State of Assam vs Rant Karani and Others (1987) (3) All India Prevention of food Adulteration Journal 153 following some of the aforesaid decisions also look the view that addition of artificial sweetener like saccharin in Supari or Pan Ka Masala, if it conforms to the standard laid down in clause A.07.10 of the Appendix 'B ' of the Rules, did not violate Rule 44(g) read with Rule 47 of the Rules.
The Madhya Pradesh High Court in the case reported as Ujjain Municipal Corporation, Ujjain vs Chetan Das, (1985) (I) FAC 46. followed the view of the Bomaby High Court in the case reported as Ranjitbhai Babubhai Suratwalla (supra).
On the other banal the High court of Kerala, Allahabad and another earlier Single Bench of the Madras High Court took the view that prescription of standard of saccharin in Appendix 'B ' to the Rules could not alter the interpretation of Rule 44(g) nor help could be taken from interpretaion of Rule 47.
The Kerala High Court in the case reported as Food Inspector vs Usman, noticed the view of the Bombay High Court in Ranjitbhai Babubhai Suratwalla 's case (supra) and dissented from it and held: "Rule 47 of the Prevention of Food Adultera tion Rules provides that saccharin or any other artificial sweetener shall not be added to any article of food, except where the addi tion of 398 such artificial sweetener is permitted in accordance with the standards laid down in Appendix 'B ' and where any artificial sweeten er is added to any food, the container of such food shall be labelled with an adhesive de claratory label to that effect.
That means unless and to the extent in accordance with the standards prescribed in Appendix 'B ' saccharin or any other artificial sweetener are prohibited material in food articles.
For pan supari no standard is fixed in Appendix 'B '.
That means addition of artificial sweet ener is not permitted by the standards laid down in Appendix 'B ' and the prohibitions under Rule 47 operates as an absolute prohibi tion against addition of saccharin or other artificial sweetener so far as pan supari is concerned.
Whether addition of artificial sweetener is injurious to health or life is not a matter for consideration when its addi tion is prohibited".
Following the decision of the Supreme Court in Tejani 's case the Court set aside the acquittal of accused No. 1 and sentenced him.
A Division Bench of the Allahabad High Court in Krishna Chandra (in Jail,) vs State of Uttar Pradesh, (1990) (I) F.A.C. 35 differed with the earlier decision of the Single Bench in Ibrahim Hussain vs ,State of Uttar Pradesh and also differed with the view of the Bombay High Court in Ranjitb hai Babubhai Suratwallas case and declined to distinguish the Tejani 's case as held by this court and took the view that the prescription of the standard of saccharin is not at all relevant to the inquiry and saccharin could not be added to any article of food unless permitted by standard pre scribed in Appendix 'B ' to the Rules and purported to the decision of this Court in Tejani 's case.
Before us also Mr. B.R.L. lyengar, who appeared for the accused, made submission that on the construction of Rule 44(g) it permits sale of article of food which contains artificial sweetener with the standard as laid down in Appendix 'B ' to Rules.
We are unable to accept the submis sion.
We are also unable to accept the decisions of the High Courts supporting that view.
Rule 44 (g) indicates that sale of any article of food which contains artificial sweetener is banned.
The ban is lifted only if such artificial sweetener is permitted to be added to the article of food for which standards have been laid down in Appendix 'B ' to the Rules.
Admittedly no stand ard has been laid down for Pan Masala or Supari.
It is this article of food which was being sold.
No standard was pre scribed for this article of food.
Therefore, the exception permitted by clause (g) has no application 399 and no relevance.
The article which was being sold should contain a standard and the standard should permit artificial sweetener to be added.
Again Rule 47 in other form specifi cally bars saccharin or any other article of artificial sweetener to be added in any article of food, except where the addition of such artificial sweetener is permitted in accordance with the standards laid down in Appendix 'B '.
Therefore both Rules 44(g) and 47 constitute a total blanket ban on the addition of any artificial sweetener including saccharin to any article of food unless standards for that article of food is prescribed which authorises the use of such an artificial sweetener.
The argument that since the standards of saccharin have been provided for in the Appen dix 'B ' to the Rules and therefore, it could be added in view of the language of Rule 44(g) is fallacious.
What one has to see is the article of food in which the artificial sweetener is sought to be added.
If the standards for that article of food is provided in Appendix 'B ' to the Rules and such standards permit the addition of saccharin or any other artificial sweetener, then and then only saccharin or any other artificial sweetener could be added and not otherwise not.
It appears that the Bombay High Court and the other High Courts which have taken the opposite view seem to have fallen into errors while interpreting Rule 44(g1.
They have assumed as if once the standards of saccharin or the artifi cial sweetener have been prescribed it could be freely added to any article of food.
It is necessary to point out that the prescription of standard of saccharin or any artificial sweetener in Appendix 'B ' is really irrelevant.
What was emphasised in Tejani 's case is the standard of food and the standard should permit saccharin or any artificial sweetener to be added.
It is not the question of standard being pre scribed for saccharin which is relevant; what is relevant is the standard being prescribed in Appendix 'B ' of the article of food which is being sold and which standard permits user of saccharin.
This is the real intention of the legislature while enacting Rule 44(g) of the Rules.
For Supari and Pan Masala, it is undisputed that there is no standard pre scribed.
In this view of the matter, we agree with the decisions of the Kerala High court in Food Inspector vs Usman ; Allahabad High Court in Krishna Chandra, (in Jail) vs State of Uttar Pardesh, 1990 (I) F.A.C. 35 and Madras High Court in State by Public Prosecutor vs K.R. Balakrishnan, The decisions in: State of Maharashtra vs Ranjitbhai Suratwalla, the Bombay High Court; Thummalapudi Venkata Gopala Rao vs The State.
(1986) Crl.
L.J. 1699 of the Andhra Pradesh High Court; M/s. Wahab and Co., a Proprietory concern represented by its proprietor M.,A. Wahab son of N. Mohammed Sheriff vs Food Inspec 400 tor, Tiruchirapalli Municipal Corporation, Trichy, (1990) L.W. (Crl.) 437 of the Madras High Court; Kailash vs The State of Rajasthan, 1985 (I) F.A.C. 282 of the Rajasthan High Court; The State of Assam vs Ram Karani and Others, 1987 (3) All India Prevention of Food Adulteration Journal 153 of the Gauhati High Court and Ujjain Municipal Corpora tion, Ujjain vs Chetan Das, 1985 (I) F.A.C. 46 of the Madhya Pradesh High Court cannot be said to have been correctly decided and are hereby overruled.
The result is that civil Appeal Nos.
3708 13 of 1989 are accepted and the impugned judgment of the Andhra Pradesh High Court dated 16th June, 1986 is set aside Crl.
Appeal Nos.
553/89, 283/91,284/91, Civil Appeal No. 1897/91 and the appeal arising out of S.L.P. (Crl.) No. 2647/ 91 are dis missed.
T.N.A. Appeals dis posed of.
| The appellant (in Criminal Appeal No. 553/89) was prose cuted for selling adulterated supari with admixture of saccharin.
He filed a petition in the Kerala High Court under section 482 of the Criminal Procedure Code for quash ing the criminal proceedings which was dismissed by a single judge.
Against the decision of the single judge an appeal was filed in this Court.
The appellant (In Criminal Appeal No. 283/91) was also prosecuted for selling adulterated Supari but was acquitted by the Chief Judicial Magistrate, Palakkad.
On appeal the Kerala High Court set aside his acquittal and convicted him under section 16(1) (a) (i) of the Prevention of Food Adul teration Act and sentenced him to imprisonment for 6 months and a fine of Rs.1000.
Against the order the Kerala High Court an appeal was filed in this Court.
The appellant (In Criminal Appeal No. 284/91) was con victed ruder section 7(i) and (v) read with sections 16(i) (a) (ii) of the prevention of Food Adulteration Act for sale of adulterated supari with admixture of saccharin.
He filed a Revision Petition in the Kerala High Court and a Single Judge dismissed the same.
Against the order of the Single Judge an appeal was filed in this Court.
The facts in the connected civil appeal (Nos. 3708 13/89) are that a batch of writ petitions was filed in the Andhra Pradesh High 391 Court for a declaration that the admixture of saccharin in supari was in accordance with Rule 44 of the Prevention of Food Adulteration Rules, 1955 and for restraining the re spondents from interfering with the business of sale of supari.
A Division Bench of the High Court allowed the writ petitions.
Against the decision of the Division Bench Union of India has filed appeals in this Court.
Civil Appeal No. 1897/91 is directed against the order of the Division Bench of the Kerala High Court which held that the learned Single Judge should have declined jurisdic tion for the reason that the relief claimed was of a general character for a declaration that the admixture of saccharin in Roja Scented betelnut is not a blanket ban under Rule 47 read with Appendix 'B ' of the Prevention of Food Adultera tion Rules, 1955.
Criminal Appeal No. 722/91 is directed against the order of the High Court of Kerala setting aside the order of acquittal passed by the trial court and remanding the matter to the trial court for fresh disposal according to law.
The High Court did not agree with the submission that the arti cle of Supari was not adulterated as saccharin could be added to Supari.
Accordingly it held that saccharin could not be added to supari and consequently remanded the matter to the trial court for fresh disposal according to law.
In appeals to this court it was contended on behalf of the accused that on the construction of Rule 44(c) it per mits sale of Article of food which contains artificial sweetener with the standard as laid down in Appendix 'B ' to Prevention of Food Adulteration Rules, 1955.
Disposing the appeals, this Court, FIELD: 1.
Rule 44(g) of the Prevention of Food Adultera tion Rules, 1955 indicates that sale of any article of food which contains artificial sweetener is banned.
The ban is lifted only if such artificial sweetener is permitted to be added to the article of food for which standards have been laid down in Appendix 'B ' to the Rules.
Rule 47 in other form specifically bars saccharin or any other article of artificial sweetener to be added in any article of food, except where the addition of such artificial sweetener is permitted in accordance with the standards laid down in Appendix ' 'B '.
Thus both Rules 44(g) and 47 constitute a total blanket ban on the addition of any artificial sweeten er including saccharin to any article of food 392 unless standards for that article of food is prescribed which authorises the use of such an artificial sweetener.
[398 G, 399 A B] 2.
The prescription of standard of saccharin or any artificial sweetener in Appendix 'B ' is really irrelevant.
It is not the question of standard being prescribed for saccharin which is irrelevant what is relevant is the stand ard being prescribed in Appendix 'B ' of the article of food which is being sold and which standard permits user of saccharin.
This is the real intention of the legislature while enacting Rule 44(g) of the Rules.
[399 E F] 3.
What one has to see is the article of food in which the artificial sweetener is sought to be added.
The article which was being sold should contain a standard and the standard should permit artificial sweetener to be added.
If the standards for that article of food is provided in Appen dix 'B ' to the Rules and such standards permit the addition of saccharin or any other artificial sweetener, then and then only saccharin or any other artificial sweetener could be added and not otherwise.
[399 A C] 4.
Admittedly no standard has been laid down for Pan Masala or Supari i.e. the article of food which was being sold.
Therefore, the exception permitted by clause (g) of Rule 44 has no application and no relevance.
[398 H, 399 A] Pyarali K. Tejani vs Mahadeo Ramchandra Dange and Ors., ; , explained and applied.
State of Maharashtra vs Ranjitbhai Babubhai Suratwalla, ; Thummalapudi Venkata Gopala Rao vs The State.
, M/s Wahab and Co. a proprie tary concern represented by its ' proprietor N.A. Wahab son of N. Mohammad Sheriff vs Food lnspector.
Tiruchirappalli Municipal Corpn., Trichy.
[1990] L.W. (Crl.) 437; Kailash vs The ,State of Rajasthan, ; State of Assam vs Ram Karani anti Ors., (1987) 3 All India Prevention of Food Adulleration Journal 153; Ujjain Municipal Corpn.
, Ujjain vs Chetan Das, (1985) I F.A.C. 46, overruled.
State by public prosecutor vs
K.R. Balakrishnan, ; Food Inspector vs Usman. ; Krishna Chandra (In jail) vs State of Uttar pradesh, , approved.
|
Appeal No. 3012 of 1990.
From the Judgment and Order dated 13.3.1900 of the Calcutta High Court in Appeal No. 266 of 1987 WITH Civil Appeal Nos.
3117.3118, and 3738 of 1990 and SLP No. 8081 of 1990.
K.K. Venugopal.
Dr. Shankar Ghosh, Kapil Sibal, Ajay K. Jain, Pramod Dayal, Vivek Gambhir, Surinder Kamail and S.K. Gambhir for the Appellants.
Aruneshwar Gupta and Ms. Sushma Suri for the Respondents.
The Judgment of the Court was delivered by section MGHAN, J.
All these matters can be dealt with under a common judgment since the question which arises for con sideration is the scope of Section 633 of the .
It is enough if we refer to the facts in Civil Appeal No. 3012 of 1990.
The short facts are as follows: Eastern Manufacturing Company Ltd. ("The Company" in short) is the owner of a jute mill in West Bengal.
The appellants were appointed 343 Directors between 10.4.1981 and 15.6.1984.
There was a lock out in 'the Jute Mill on 2.6.1982.
By a notification dated 26.10.
1983, Government of West Bengal declared the said jute mill as a relief undertaking under the provisions of West Bengal Relief Undertaking (Special Provisions) Act, 1972.
However, on 24.11.
1983, the lock out was lifted.
Thereafter the mill resumed its manufacturing operation between 16.1.1984 and 8.4.1984.
There was a strike in the Jute Industry throughout West Bengal.
Between 7.3.1985 and 3.8.1985 there was a lock out due to labour unrest.
As a result of all these the company defaulted in the payment of the provident fund dues.
On 28.1.
1986, a petition was moved on behalf of the appellants under Section 633 of the Compa nies Act, 1956 (hereinafter referred to as 'the Act ') for being relieved of liability for delayed as well as non payment of the provident fund dues and other ancillary dues.
On 21.8.
1986 a consent order was passed by the learned Single Judge allowing the outstanding provident fund dues to be paid in monthly instalments of Rs. 50,000 commencing from April, 1986, until the entire liability is paid off.
Since this course was accepted by the provident fund authorities it was not considered necessary to serve summons on the Registrar of Companies because what was sought to be recovered were the dues under the Provident Fund Act.
It was further ordered concerning Prayer B that an injunction shall issue restraining the respondents from initiating any crimi nal proceedings against the appellants or any of them for non payment or delayed payment of the provident fund.
Aggrieved by this order, the first respondent before us, namely, the Regional Provident Fund Commissioner filed appeal No. 286 of 1987.
The Division Bench which heard the matter rendered its impugned judgment on 13.3.
The sole point which came up for determination was, whether the learned Single Judge was right in granting relief under Section 633 of the Act in respect of offences committed under the Employees Provident Fund and Miscellaneous Provi sions Act of 1952 (hereinafter referred to as "The Provident Fund Act").
It was argued on behalf of the appellants that the relief under Section 633 of the Act could be granted only in respect of offences committed under the and not in respect of offences under any other law.
It is also submitted that in respect of violations of the provisions of the Act, it is the Registrar of Companies or any one autho rised on his behalf who could initiate criminal cases.
On the contrary, in respect of offences committed under the Provident Fund Act the appropriate authority to initiate such action would be the Regional Provident Fund Commission er.
On an elaborate consideration with reference to decided cases, it 344 was held that any proceeding referred to in Section 633 of the Act would mean only under the provisions of the Act.
Reference was also made to Section 14A of the Provi dent Fund Act inserted by Amending Act 37 of 1953 and it was concluded: "If the contention that Section 633 applies in respect of liabilities arising also under the provisions of any Act other than the said Act, is accepted, then and in that case a peculiar situation will arise, a person who is otherwise liable in view of the provisions of Section 14 A would be entitled to relief under Section 633 if he is employed by or connected with a company which is covered both by Provident Fund Act and the but a person shall .not be so entitled to such relief if he is not an employee of a body corporate covered by the though he is an employee of a company within the meaning of explanation to Section 14A.
Besides if that contention that all proceedings would include proceedings under other Act also all the statutory provisions made for the welfare of weaker sections of the community stand modified automatically to the extent sepecified in Section 633 for all time to come, even for all future legislation.
This would frustrate the object of welfare legisla tions.
" Accordingly it was held that Section 633 of the Act has no application in respect of any liability under any other Act.
In the result, the order of the learned Single Judge was set aside and the application under Section 633 was dismissed.
We do not think worthwhile to refer to certain preliminary objections raised by the Division Bench in relation to maintainability as that is not argued before us.
It is against this judgment that the appeal by special leave has been preferred.
An application was moved before the Company Court claiming relief under Section 633 and the same was dismissed applying judgment of Civil Appeal No 286 of 1987.
Similar application was dismissed by the learned Single Judge by order dated 24.4.1988 in Civil Appeal Nos.
3117 & 3118 of 1990.
In Civil Appeal No. 3738 of 1990 Company Petition No. 312 of 1989 for relief under Section 633 too was dismissed.
In Special Leave Petition No. 8081 of 1990 also the Company Petition for similar relief has been dismissed.
Mr. Venugopal, learned Counsel for the appellants urged that Section 633 is very wide in its amplitude and there is no justification to 345 restrict its application to only proceedings arising under the Act.
He draws our attention to Sections 420 and 423 and submits that when proceedings are taken in relation to breach of trust, for instance, which is an offence under Indian Penal Code, against an officer of a company it would be open to him to go before the concerned Magistrate and plead a defence that he has acted honestly and reasonably.
In such a case should the Court come to a conclusion he ought fairly to be excused.
the Court will relieve him.
While this is the submission as far as sub section (1) is concerned, under sub section (2) it is maintained to be an anticipatory action.
The High Court also exercises a similar power as that Court is exercising power under sub section (1).
Otherwise if it is restricted only in respect of any liability under the then the protection extended under Section 633 is lost.
Under the of 1913 the corresponding provi sion was Section 281.
Though certain categories of persons were catalogued under sub section (3) of the said section, presently Section 633 has employed the words "an officer of a company ' the object is to see the Directors or a Director who rarely takes part in the affairs of the Company are not unduly harassed for offences which may arise under other acts, of which these Directors may not have any knowledge at all.
He also draws our attention to Section 32 of the Indus trial Disputes Act, which talks of offences by Companies under the said Act.
That is a sweeping provision where the burden is upon the person concerned to prove that the of fences were committed without his knowledge or consent and but for that proof, the statute deems him to be guilty.
If under Section 633 the protection is not so afforded against such a provision like Section 32 of the the entire purpose of Section 633 is rendered nugatory.
The result of the Division Bench .judgment of the Calcutta High Court referred to in the impugned judgment will be that these directors (the appellants) are exposed to prosecution; certainly that could not have been the intention of the law maker.
Mr. Kapil Sibal, learned counsel appearing for the appellants in Civil Appeal No. 3117 refers to Section 2(11) of the Act and submits that the definitions of "Court" contemplates with respect to any matter relating to a compa ny.
The Court having respective jurisdiction as provided under Section 2(11) is with respect to any offence under the Act, the Court of a Magistrate of the First class or, as the case may be, a Presidency Magistrate, having jurisdiction to try such offence.
346 This section will show that where like the appellants they are not working directors, they cannot be subject to prosecution.
That is where Section 633 steps in and affords protection, even if it is a liability arising under any other Act, for instance, like delayed payment or non payment of provident fund.
In other respects, he adopts the argu ments of Mr. Venugopal.
Learned counsel for the Regional Provident Fund Commis sioner would urge that any proceeding occurring under Sec tion 633 cannot relate to a proceeding other than one aris ing out of .
If the arguments of the appellants are accepted it would amount to treating Section 633 as a panacea for all the ills for offences committed in respect of various other enactments.
It might even include not only the existing enactments but enactments which are yet to come.
Insofar as each one of the other Acts not only defines penalty but also lays down the penalty; therefore merely because the appellants are officers of the company it cannot mean Section 633 could be availed of.
This provision is in pari materia with Section 448 of the English Companies Act, 1948, However, as on today Companies Act of 1985 has incor porated a similar provision under Section 727 In a leading case reported in 1981 (2) All Eng.
Law Reportes 697, (Cus toms and Excise Commissioners vs Hedon Alpha Ltd. & Ors), the scone of Section 448 of the 1948 Act came up for con sideration.
It was held that although Section 448 (1) of the 1948 Act was expressed in wide terms, in ' its true construction the only proceeding for which relief under Section 448 could be claimed were proceedings against a director by, on behalf of or for the benefit of his company for the breach of his duty to the company as a director or penal proceedings against a director for breach of the 1948 Act.
It was this line of reasoning which found favour with the Division Bench of the Calcutta High Court which view is commended for acceptance by this Court.
Otherwise the conse quences will be disastrous.
The penal provision of all other Acts would be rendered ineffective by the interpretation pressed for an acceptance.
The further submision of learned counsel is if one looks at Section 14 of the that lays down the penalty for offences of companies and is dealt with in Section 14 A.
The explanation to the said Section also talks of as to what a company would mean for the pur pose of this Section.
Therefore, where an elaborate proce dure is conternplated under those sections for recovery of these dues and the provident Fund Act being a social welfare legislation that cannot be rendered illusory by extending the benefit under Section 633 of the Companies Act.
Similar ly under Employees State Insurance Act, Section 86 talks of prosecution which came to be introduced by Amending Act of 1989 also deals with Companies.
The explanation under that Section specifically states as 347 to what would be a company or Director lot the purpose of that section.
Hence it is submitted that no mterference is called for.
Having regard to the above arguments, the only ' point that arises for determination is as to the scope of Section 633.
The Companies Act was enacted in the year 1956.
As the Preamble itself says it is an Act to cossolidate and amend a law relating to companies and certain other associations.
As to definition of Company, it is found under Section 3(1)which consists of the (i) Company (ii) Existing Company (iii) Private Cornpany (iv) Public Company Section 664 of this Act reads as follow 's: The enactments mentioned in Schedule XII are hereby repealed".
Schedule XII that is referred to under the Section refers to previous Companies Act of 1913 also under certain other Acts by way of ordinance or amendments.
Section 281 office old Act of 1913 which talks of power of the Court to ,,rant relief in certain cases reads as under: "281: Power of Court to grant relief in cer tain cases: (1) if in any proceedings tot negligence, defaul breach of duty or breach of trust against a person to whom this Section applies, it appears to the Court hearing the case that that person is or may be liable in respect of the negligence, defaut breach of duty or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including (hose connected with his appoint ment, he ought fairly to be excused for the negligence, default, breach of duty or breach of trust, that Court may relieve him either wholly or partly, from his liability on such terms as the Court may think fit.
(2) Where any person to whom this section applies has reason to apprehend that any claim will or might be made against him m respect of any negligence, default breach of duty or breach 348 of trust, he may apply to the Court for relief.
and the Court on any such application shall have the same power to relieve him as under this Section it would have had if it had been a Court before which proceedings against that person for negligence, default, breach of duty or breach of trust had been brought.
(3) The persons to whom this section applies are the following: (a) directors of a company; (b) managers and managing agents of a company; (c) officers of a company; (d) persons employed by a company as auditors whether they are or are not officers of the company? ' With this background of law, we will go on to Section 633 of the .
It reads thus: 633: Power of Court to grant relief in certain cases: (1) If any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company,it appears to the Court hearing the case that he is or may beliable in respect of the negli gence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the Court may relieve him, either wholly or partly, from his liability on such terms as it may think fit: Provided that in a criminal proceeding under this sub section, the Court shall have no power to grant relief from any civil liability which may attach to an officer in re spect of such negligence, default, breach of duty.
misfea sance of breach of trust.
(2) Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default.
breach of duty, misfea sance or breach of trust, he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would have had if it had been a Court before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under sub section(1).
349 (3) No Court shall grant any relief to any officer under subsection (1) or sub section (2) unless it has, by notice served in the manner specified by it, required the Registrar and such other person, if any, as it thinks necessary, to show cause why such relief should not be granted".
On a comparison of the two sections two important features emerge to be noticed.
The Court under Section 633 has no power to grant relief from any civil liability.
Under sub section (3) of Section 281 only four categories of persons were entitled to seek relief while under Section 633 it will be an officer of the Company.
Under the of 1956 (similarly under the Old Act of 1913) various duties and liabilities have been im posed; equally offences have been created for the non per formance of such duties.
These offences are offences in relation to the performance of certain duties under the Act.
the various offences are mentioned under Sections 59, 62, 63, 68, 142, 162, 207, 218,272, 374,420,423,538 to 545 & 606.
The expression 'any proceeding ' occurring under Section 633 cannot be read out of context and treated in isolation.
It must be construed in the light of the penal provisions.
Otherwise what will happen is the penal clauses under the various other Acts would be rendered ineffective by applica tion of Section 633.
Again, if parliament intended Section 633 to have a coverage wider than the Act, it would have specifically provided for it as, otherwise, it is a sound rule of Construction to confine the provisions of a statute to itself.
We are also of the view while referring to any proceed ing under sub section (2) the Parliament intended to re strict it only to the proceeding arising out of negligence, default, breach of trust, misfeasance or breach of duty in respect of the duties prescribed under the provisions of the .
Further examining the sub section with refer ence to the context and the placement of the sub section the only conclusion that is possible is the proceedings for which relief under this sub section could be claimed or the proceedings against the officer of a company for breach of the provisions of the .
Sub section (2) cannot apply to proceedings instituted against the officer of the company to enforce the liability arising out of violation of provisions of other statutes.
Reference could also be made to sub section (3) where notice is required to be given to the Registrar of Companies.
This is an indication that the powers under sub section (2) must be restricted in respect of proceedings arising out of the violation of the . 350 We will now refer to the corresponding provisions in English Law.
Section 448 of the Companies Act, 1948 is replaced by Section 727 of the Companies Act, 1985.
Section 727 reads thus: "727: Power of Court to grant relief in cer tian cases: (1) If in any proceeding for negligence, default, breach of duty or breach of trust against an officer of a company or a person employed by a company as auditor (whether he is or is not an officer of the company) it appears to the court hearing the case that that officer or person is or may be liable in respect of the negligence, default, breach of duty or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case (including those connected with his appoint ment) he ought fairly to be excused for the negligence, default, breach of duty or breach of trust, that court may relieve him either wholly or partly, form his liability on such terms as it thinks fit.
(2) If any such officer or person as above mentioned has reason to apprehend that any claim will or might be made against him in respect of any negligence, default, breach of duty or breach of trust, he may apply to the Court for relief; and the court on the appli cation has the same power to relieve him as under this section it would have had if it had been a court before which proceedings against that person for negligence, default, breach of duty or breach of trust Had been brought.
(3) Where a case to which sub section (1) applies is being tried by a Judge with a Jary, the Judge, after hearing the evidence, may, if he is satisfied that the defendant or defender ought in pursuance of that sub section to be relieved either in whole or in part from the liability sought to be enforced against him withdraw the case in whole or in part from the Jury and forthwith direct judgment to be entered for the defendant or defender on such terms as to costs or otherwise as the Judge may think proper".
Halsbury 's Laws of England (Fourth Edition) 7 (1) Companies, para 652 on this aspect states as follows: "POWER OF COURT TO GIVE RELIEF AGAINST LIABIL ITY: If in any procedings for negligence, default, breach of duty or breach of trust against an officer of a company or a person 351 employed by the company as auditor (whether or not he is an officer of the company), it appears to the Court hearing the case that that officer or person is or may be liable in respect of the negilgence, default, breach of duty or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the cases, including those connected with his appoint ment, he ought fairly to be excused for the negligence, default, breach of duty or breach of trust, that court may relieve him, either wholly or partly, from his liability on such terms as the court thinks fit.
The power to grant relief applies to personal breaches of duty; it does not extend to claims by third parties.
Where a case within the above provision is being tried by a judge with a jury, the judge, after hearing the evidence, may if he is satisfied that the defendant ought to be re lieved either in whole or in part from the liability sought to be enforced against him, withdraw the case in whole or in part from the jury and forthwith direct judgment to be entered for the defendant on such terms as to costs or otherwise as the judge may think proper.
If any such officer or person has reason to apprehend that any claim will or might be made against him in respect of any negligence, default, breach to duty or breach of trust, he may apply to the court for relief; and the court on any such application has the same power to relieve him as it would have had if it has been a court before which proceedings against that person for negligence, default, breach of duty or breach of trust had been brought.
The application to the court is made by way of petition.
The application is made to the court having jurisdiction to wind up the company.
In cases in the High Court of Justice the .pro ceedings are assigned to the Chancery Divi sion.
The petition and all affidavits, notices and other documents in the proceedings under it must be entitled in the matter of the company in the matter of the Companies Act, 1985.
Under the above provisions a director may be relieved against liability in respect of a transaction wholly ultra rites the company or against the penalties imposed by the Act where he has acted without obtaining or after ceas ing to hold his qualification shares.
352 The leading decision on Section 448 is reported in Customs and Excise Comrs.
vs Hedon Alpha Ltd. , , CA.
That related to the interpretation to be placed on Section 448 of the Companies Act of 1948.
In that case a Director of a company was carrying on business as a bookmaker.
The liability of the Director for general betting duty was not paid by the company.
The Director was acting honestly and reasonably, and, therefore, was found not guilty of misconduct.
Under these circumstances, the question arose whether the Director was entitled to relief from claim for civil liability by a stranger to the company.
Claim to recover betting duty would amount to default against Director within the meaning Of Section 448.
Stephen son, LJ stated on this aspect as follows: "Furthermore, the language of Section 448 was apt to describe the area in which a company director might be in breach of his duties to the company, and the ambit and concern, the context or matrix, of the section was company law and the relation of the officer or auditor of a company to the company and not to third persons.
The proceedings which qualified for the statutory relief were claims made by companies, or on their behalf or for their benefit by, e.g. liquidators, the Board of Trade, private prosecutors including penal proceedings for the enforcement of the Compa nies Act, but not proceedings for the recovery of debts or the enforcement of civil liability to strangers.
" Griffiths, LJ. was of the following view: "In my judgment section 448 has no application to the present claim.
Although the section is expressed in wide language it is in my view clearly intended to enable the court to give relief to a director who, although he has behaved reasonably and honestly, has neverthe less failed in some way in the discharge of his obligations to his company of their share holders or who has infringed one of the numer ous provisions in the Companies Acts that regulate the conduct of directors.
" It requires to be stated that though Stephenson, LJ referred to Palmer 's Company Law, he also made reference to Pennington 's Company Law (4th Edn., It is stated thus: "Under the statutory provision relief can be given against any of the criminal penalties imposed by the Companies Act, 1948 and 1976, but not, it would seem, against civil liabili ty to 353 anyone other than the company and so apparent ly no relief may be given in the rare cases where a member or auditor of a company has a personal right to sue its directors.
" We will now refer to Palmer 's Company Law.
23rd Edn. 1982 Vol. 1 page 881.
It is stated thus: "Statutory relief (S.448), Section 448 (which is referred to in Section 205, proviso (b) is a protective section for directors on lines similar to that accorded to trustees.
It provides that in any proceedings against.
inter alia, a director for negli gence, default, breach of duty or breach of trust, if a director who is or may be liable has in the opinion of the Court acted honestly and reasonably, and if having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the Court may wholly or partly relieve him from his liability; the court has a discretion in the matter, and may impose terms (Section 448) (1).
In spite of the wide words of the section it has been held that the section applies only to actions brought by or on behalf of the company against its directors for breach of duty and to penal proceedings for the enforcement of the Com paines Act .
" The 5th Edn. of Pennigton 's Company Law, 1985 at page 679 and 680 contains the follow ing observations: "However, if a director is sued for breach of any of his duties, he may apply to the Court for relief from liability, and if the Court is satisfied that he acted honestly and reasona bly, and that in all the circtumstances he ought fairly to be excused, it may relieve him from liability on such terms as it thinks fit.
This provision is identically worded to the provision in the Trustees Act, 1925 which enables the court to relieve defaulting trus tees, and the Courts, jurisdiction wilt proba bly be exercised in the same way as under that Act.
The Court is reluctant to relieve remu nerated trustees and will only do so if they show that they have taken all reasonable steps and to make good their breach of trust; the same criterion has been applied when a de faulting liquidator sought relief, and it would no doubt also be applied in the case of a director.
On the other hand, the court can give relief, even though the director has used the company 's money for ultra vires purposes, and even though the members oppose relief being given. 354 Under the statutory provision, relief can be given against any of the criminal penalties imposed by the Companies Act, 1985, but not against criminal liability under any other statute, or against civil liability to anyone other than the company whether the liability arises by stat ute or otherwise, and so apparently no relief may be given in the rare cases when a member or creditor of a company has a personal right to sue its directors.
Reference was made to the Court of Appeal decision." (emphasis supplied) Thus we are clearly of the view that under Section 633 of the Act relief cannot be extended in respect of any liability under any Act other than the Act.
May be the under Section 32 contains a stringent provision but that is no answer to hold that Section 633 of the companies Act could be invoked for offences under Section 32 of the .
We are dealing with a case arising under Employees Provident Fund Act.
The total arrears dues for the Company are Rs. 1,77,22,000.
Section 14 of the Employees Provident Fund Act specifically provides for penalties with reference to con travention of the provisions of the Act.
Section 14A speaks of offences by the companies.
We will now extract that section "14 A :(1) If the person committing an offence under this Act, the Scheme or the Family Pension Scheme or the Insurance Scheme is a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the con duct of the business of the company.
as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub section shall render any such person liable to any punishment, if he proves that the offence was commited without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
355 (2) Notwithstanding anything contained in sub section (1), where an offence under this Act, the Scheme or the Family Pension Scheme or the Insurance Scheme has been committed by a company and it is proved that that the oiffence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director or manag er, secretary or other officer of the company, such director, manager secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly .
" The authority to take action trader Provident Fund Act as seen from Section 14 is a Commissioner while the proce dure so far as the Companies Act is concerned under Section 621 is on a complaint in writing of the Registrar or 'of a shareholder of a company or of an officer authorised by the Central Government in this behalf action can be taken.
As already noted under sub section (3) of Section 633, the Court has to give notice to the Registrar of Companies or on such other person, if any, as it thinks necessary .There fore, giving of notice is mandatory.
That being so, if Section 633 is interpreted as to include proceedings under Acts other than the Companies Act it will be open to the Court to give such relief under Section 633 without giving notice to the authority competent to prosecute in respect of liabilites under the other laws or upon giving notice to other concerned and not the Registrar.
Thus the mandatory requirement of subsection (3) of Section 633 can easily be bye passed.
Then again under Section 14A of the Provident Fund Act.
officers who are talked of under this section would be deemed to have cormmitted the offence because subsection (1) states that every person who was responsible to the company as well as the company shall be deemed to be guilty of the offence.
If therefore, the relief under Sec tion 633 is extended.
such officers or persons who are otherwise liable for such offence would get the benefit of Section 633 and escape the rigour of Section 14A.
The expla nation arise makes it abundantly clear that all compaines covered by the Companies Act would be companies within the meaning of explanation.
On the contrary, those companies falling under the explanation to Section 14A would not be companies under the Companies Act.
To put it in other words, a company failing under the explanation to Section 14A of the Provident Fund Act which does not come within the pur view of the Companies Act, the liability of the persons would be governed only by Section 14A (1) and (2) of the Provident Fund Act.
They will not be entitled to any relief under Section 633.
The benefit available under a social welfare legislation namely the Employees Provident Fund Act cannot be defeated in this manner.
We may also add if the interpretation suggested by the appellants 356 is accepted it would cover not only ,the existing.
laws but all legislations to be enacted in future.
In the result we find no merit in this appeal and it is dismissed.
In view of the dismissal of appear No. 3012 of 1990 the other appeals and the special leave petition where the same question arose, are so dismissed.
However, looking to the 'facts and circumstances of the case, there will be no order as to costs.
Appeals dismissed.
| The appellants in Civil Appeal No.3012 of 1990 were Directors of a Company, which was owning a Jute mill.
Due to lock out and strike in the Jute industry, the Company de faulted in the payment of the provident fund dues.
The appellants applied under Section 633 of the for being relieved of liability for delayed as well as non payment of the provident fund and other ancillary dues.
A Single Judge of the High Court passed a consent order, allowing the outstanding provident fund dues to be paid in monthly instalments of Rs.50,000 each until the entire liability was paid oH. As the Provident Fund authorities accepted this course, summons were not served on the Regis trar of Companies, since what was sought to be recovered were the dues under the Provident Fund Act.
The Single Judge also granted an injunction restraining the respondents from initiating any criminal procccdings against 339 the appellants or any of them for non payment or delayed payment of the provident fund.
On appeal by the Regional Provident Fund Commissioner, the Division Bench held that any proceeding referred to in section 633 of the Act would mean only under the provisions of the Act, and that section 633 of the Act had no applica tion in respect of any liability under any other Act.
Hence the appeal.
Applications claiming relief under section 633 were dismissed in the connected cases also, resulting in the appeals, and Special Leave Petition, being filed before this Court.
On behalf of the appellants in Civil Appeal No. 3012 of 1990, it was contended that section 633 was very wide in its amplitude and there was no justification to restrict its application to only proceedings arising under the Act, that when proceedings were taken in relation to breach of trust, which was an offence under Indian Penal Code, against an officer of a company, it would be opentn him to plead before the concerned Magistrate that he had acted honestly and reasonably, and if the Court came to the conclusion that he should fairly be excused it would relieve him; that under sub section (2), it was an anticipatory action, and the High Court also exercised a similar power as it was exercising power under subsection (1), and if it was restricted only in respect of any liability under the , then the protection extended under section 633 was last, and that similarly, under section 32 of the , which dealt with offences by Companies under that Act the burden was upon the person concerned to prove that the offences were committed without his knowledge or consent and, but for that proof, the statute deemed him to be guilty; therefore, if protection was not afforded against such a sweeping provision, the entire purpose of Section 633 would be rendered nugatory.
On behalf of the appellants in one of the connected appeals it was contended that the definition of "Court" contemplated with respect to any matter relating to a compa ny, and that the Court having respective jurisdiction as provided under Section 2(11) was with respect to any offence under the Act, the Court of a first class Magistrate or, as the case may be, a Presidency Magistrate having jurisdiction to try such offence, that this section would show that where like the appellants they were not working directors, they could not be subject to prosecution and that was where Section 633 stepped in and afforded protection, even if it were a liability arising 340 under any other Act, for instance, like delayed payment or nonpayment of provident fund.
On behalf of the respondent Regional Provident Fund Commissioner it was contended that any proceeding occurring under Section 633 could not relate to a proceeding other than one arising out of , that each one of the other Acts not only defined penalty but also laid down the penalty, and therefore, merely because the appellants were officers of the company, it could not mean that section 633 could be availed of; otherwise, the consequences would be disastrous and the penal provision of all other Acts would be rendered ineffective, that Section 14 of the laid down the penalty for the offences of companies and was dealt with in Section 14 A, and the explanation to the said sec tion also talked of as to what a company would mean for the purpose of the section, and, therefore, where an elaborate procedure was contemplated under those sections for recovery of the dues and the Provident Fund Act, being a social welfare legislation, that could not be rendered illusory by extending the benefit under Section 633 of the ; similarly, Section 86 of the Employees ' State Insurance Act, providing for prosecution also dealt with Companies, and, the explanation under that Section specifically stated as to what would be a Company or Director for the purpose of that section and hence, no interference was called for.
Dismissing the cases, this Court, HELD: 1.1 Under Section 633 of the , relief cannot be extended in respect of any liability under any Act other than the .
[354 C] 1.2 The expression 'any proceeding ' occurring under Section 633 cannot be read out of context and treated in isolation.
It must be construed in the light of the penal provisions.
Otherwise, the penal clauses under the various other Acts would be rendered ineffective by application of Section 633.
Again, if Parliament intended Section 633 to have a coverage wider than the Act, it would have specifi cally provided for it.
Moreover, it is a sound rule of construction to confine the provisions of a statute to itself.
[349 D E] 1.3 While referring to any proceeding under sub section (2) of Section 633 the Parliament intended to restrict it only to the proceeding arising out of negligence, default, breach of trust, misfeasance or breach of duty in respect of dutics prescribed under the provi 341 sions of the .
Further, examining the sub section with reference to the context and the placement of the sub section, the only conclusion that is possible is the proceedings for which relief under this sub section could be claimed or the proceedings against the officer of a company for breach of the provisions of the .
Sub section (2) cannot apply to proceedings instituted against the officer of the company to enforce the liability arising out of violation of provisions of other statutes.
[349 F G] 1.4 Sub section (3) requires notice to be given to the Registrar of Companies.
This indicates that powers under sub section (2) must be restricted in respect of proceedings arising out of the violation of the Companies Act 1349 H] 1.5 Merely because section 32 of the contains a stringent provision, it cannot be held that Section 633 of the Companies Act could be invoked for of fences under Section 32 of the Industrial Disputes Act.
1354 D] Customs and Exicise Comrs.
vs Hedon Alpha LId.
, 2 ALL ER 697 CA.
referred to.
Halsbury 's Laws of England, (Fourth Edition) 7(1) Companies, para 652; Pennington 's Company law.
4th Edn., 1979, P.548, 23rd Edn. 1982, Vol.
I p. 881 and 5th Edn.
1985 p.679 680, referred to.
2.1 The authority to take action under the Provident Fund Act as seen from Section 14 of the said Act is a Com missioner while the procedure so far as the Companies Act is concerned, under Section 621 it is on a complaint in writing of the Registrar or of a shareholder of a company, or of an officer authorised by the Central Government in this behalf that action can be taken.
Since ii is mandatory for the Court to givc notice to the Registrar of Companies or such other person, if any, as it thinks necessary.
as required under sub section (3) of Section 633, if Section 633 is interpreted so as to include proceedings under Acts other than the Companies Act it will be open to the Court to give such relief under this Section without giving notice to the authority competent to prose cute in respect of liabilities under the other laws or upon giving notice to other concerned and not the Registrar.
Thus, the mandatory requirement of sub section (3) can easily be bye passed.
Further, if relief under Section 633 is extended, officers who would be deemed to have committed the offence under Section 14 A of the 342 Provident Fund Act, because sub section (1) states that every person who was responsible to the company as well as the company shall be deemed to be guilty of the offence and liable for such offence would get the benefit and escape the rigour of Scction 14 A.
The explanation also makes it abun dantly clear that all companies covered by the Companies Act would be companies within the meaning of explanation.
On the contrary, those companies failing under the explanation to Section 14 A would not be companies under the Companies Act.
[355 C F] 2.2 Thus in the case of a company falling under the explanation to Section 14 A of the Provident Fund Act which does not come within the purview of the Companies Act, the liability of the persons would be governed only by section 14A(1) and (2) of the Provi dent Fund Act.
They will not be entitled to any relief under Section 633.
The benefit avail able under a social welfare legislation, namely, the Employ ees ' Provident Fund Act cannot be defeated in this manner.
1355 G HI
|
ivil Appeal Nos.
2309 & 2310 of 1989 etc etc.
From the Judgment and Order dated 23.9.1988 of the Jammu & Kashmir High Court in Writ Petition No. 87/81 and C.M.P. No. 2519 of 1988.
K. Parasaran, D.D. Thakur, M.H. Beg, Raja Ram Agrawal, M.L. Verma, Prashant K. Goswami, Anil B. Divan, Pramod Kohli, P.H. Parekh, Hari Khanna, J.P.Pathak, Sandeep Thakral, S.M.Thakral, B.V. Desai, Ms. Vinita Ghorpade, E.C. Aggarwala, N.N. Bhatt, Dhiraj Singh and Ashok Mathur for the appearing parties.
The Judgment of the Court was delivered by V. RAMASWAMI, J.
Civil Appeal No. 2309 of 1989 arises out of an order made by the High Court of Jammu & kashmir in Writ Petition No.87 of 1981 dismissing the Writ Petition filed by M/s. Pine Chemicals Ltd., which is a public limited company manufacturing Rosin, Turpentine and Rosin Derivatives and carrying on business at Bari Brahmana, Jammu Tawi.
The appellants had prayed in the writ petition for quashing the order of assessment dated 20th January, 1981 made by the Assessing Authority, Incharge Sales Tax Circle, Jammu under the for the year ending 30.6.1980 and the penalty order made on February 2, 1981 under Section 10 of the in respect of the same period.
They had also prayed for a declaration that they are entitled to exemption from payment of tax under the and the Jammu & Kashmir General Sales Tax Act, 1962, on the finished goods produced by them for a period of five years commencing from 8th November, 1979, when the Company went into commercial production.
This main relief had been prayed for on the grounds that the appellant were exempt from payment of sales tax in terms of the Government Orders No. 159 Ind. dated 25.3.1971 as amended by Government Order No. 414 Ind.
dated 25th August, 1971 read with section 8(2A) of the .
Their further case was that the Government represented and announced a package of incentive for large and medium scale industries including grant of exemption from sales tax both on the raw materials purchased by the industries and the scale of their finished products, that acting upon such representation and assurances, appellants set up their factory at Bari Brahmana on the land allotted by the State Industrial Development Corporation and that therefore the Government is estopped from charging sales tax on the doctrine of promissory estoppel.
The High Court was of the view that 190 the two Government orders referred to above were only declarations of an intention to exempt from payment of sales tax and that they are not exemption notifications under sections 5 of the General Sales Tax Act.
The High Court was also of the view that the appellant have failed to prove the necessary factual foundation for invoking the principle of promissory estoppel and that, therefore, they are not entitled to any relief under that doctrine.
In that view the writ Petition was dismissed.
It may be mentioned that Civil Appeal No. 2310 of 1985 is against an order made in a Civil Misc.
Petition No. 2519 of 1988 which was also dismissed on 23.9.1988 along with the writ petition.
This miscellaneous petition was filed after the judgment in the writ petition was reserved for permission to file reply affidavit on the ground that the assessment files produced at the time of hearing contained certain documents needing certain explanation by the appellants.
Both on the ground that it was belated and on the ground that the judgment in the writ petition was delivered only relying on the material placed on record and therefore there was no need for giving an opportunity to the writ petitioners to file a reply statement, the learned judgment dismissed this miscellaneous petition also.
Civil appeals 3140 50 of 1989 have been filed by M/s. K.C. Vanaspati, a firm of partnership manufacturing Vanaspati Ghee at Bari Brahmana, Jammu Tawi.
They filed writ petition 52 of 1982 praying to quash a sales tax assessment order dated 16.1.1982 assessing them to sales tax for the period from 2nd September, 1981 till the end of the month under the Jammu & Kashmir General Sales Tax Act.
They also prayed for a mandamus directing the Government and the Assessing officer not to assess them to sales tax or recover any amount on account of sales tax from them for a period of five years from 2nd September, 1981 when their industry started commercial production.
This relief was prayed again on the ground that Government Order 159 Ind.
dated 26.3.1971 as amended by Government Order 414 Ind.
dated 25.8.1971 exempted the sales of their finished product of Vanaspati Ghee from sales tax and also on the ground that in any case the Government is estopped from collecting tax on the principle of promissory estoppel.
When this writ petition was pending as assessment order was made on 14.11.1984 for the assessment year ending 30th September 1982 including the period 2nd September to 30th September, 1981 which was the subject matter of the earlier assessment order and which was questioned in writ petition No. 52 of 1982.
The validity of this assessment order was the subject matter of writ petition No. 822 of 1984 filed by the appellants.
The relief prayed for and the grounds on which the relief prayed for were almost identical as that in writ petition No. 52 of 1982 except that 191 on the question of promissory estoppel, more detailed facts were mentioned in this writ petition.
The respondents filed their counter affidavits contending that the said Government orders were not exemption orders under Section 5 of the General Sales Tax Act and that there is no factual foundation for the plea of promissory estoppel.
Since we will be dealing with contentions in detail at the appropriate place we are not setting out contentions of the petitioners and the replies of the Government in the writ petitions in details.
During the pendency of the writ petitions certain other Government orders came to be passed and certain assessment orders for the subsequent periods were also sought to be made and questioning these actions M/s. K.C. Vanaspati filed Writ petition No. 711 of 1987 for a writ of prohibition restraining the Assessment Officer and Government from recovering any sales tax at any point of sale in the series of sales in respect of Vanaspati Ghee manufactured by them for a period of 10 years from 2nd September, 1981 when their factory went into commercial production and also for a declaration that SRO 448 dated 22nd October, 1982 issued by the Government of Jammu & Kashmir (which will be referred to later) was illegal and unconstitutional.
They had also prayed for a mandamus directing the respondents to refund the sales tax already recovered from them with interest and damages.
In this writ petition also they contended that Government Order No. 159 Ind. dated 26.3.1971 and Government Order 414 Ind.
dated 25.8.1971 were exemption orders referable to section 5 of the General Sales Tax Act.
They have also referred elaborately to the representations, declarations and promises of the Government in support of the plea of promissory estoppel.
The respondents had filed a counter affidavit refuting these contentions of the appellants.
The High Court dismissed all these three writ petitions by a common order dated 22nd February, 1989.
Civil Appeals 3148 50 of 1989 have been filed against this common order.
Civil Appeal No. 3151 of 1989 has been filed by M/s. Kashmir Vanaspati Ltd. against the judgement of the High Court in Writ Petition No.5 of 1989 in which they had prayed for the writ of certiorari to quash certain notices issued to the appellants, their selling agents and the owner of the premises where they have their sale depots, issued under section 17 of the General Sales Tax Act and for a declaration that the Vanaspati Ghee manufactured by the appellants is exempt from payment of tax at all stages upto January, 1992 i.e. for a period of 10 years from the date from which they have started their commercial production.
In this writ petition also the appellants had relied on Government Order 159 Ind.
dated 26.3.1971 and Government Order No. 414 Ind.
dated 25th August, 1971 as orders exempting their goods from sales tax under Section 5 of the General Sales Tax Act.
They have also relied on certain statement of Government as commitments 192 to continue the incentives and exemptions from sales tax for a period of 10 years on the principle of promissory estoppel.
The respondents had filed their counter affidavit.
This writ petition was also dismissed on 17th March, 1989 almost on the same grounds as in earlier two cases.
The first common question that arises for consideration in all these appeals therefore is whether Government Order No. 159 Ind.
dated 26.3.1971 and the amending Government Order No. 414 Ind.
dated 25.8.1971 are orders of exemption referable to section 5 of the General Sales Tax Act, 1962.
The said Government Orders are extracted below : GOVERNMENT OF JAMMU AND KASHMIR INDUSTRIES AND COMMERCE DEPARTMENT Sub: Grant of incentives to large and Medium Scale industries in the Jammu & Kashmir State Ref: Cabinet Decision No. 101 dated 26.3.1971 Government Order No. 149 Ind.
of 1971 dated 26.3.1971 Sanction is accorded to the grant of the following incentives and facilities to Large and Medium Scale Industries in the State of Jammu & Kashmir : 1.
Land: As provided in Government Order No. 206 Ind. of 1968 dated 5.7.1968.
However, such land. include a reasonable amount of land for the establishment of residential colonies required to house the workers of Large and medium scale Industries and would be granted on the terms and conditions defined in the Government Order No. 206 Ind.
of 1968 dated 5.7.1968.
Grant of exemption from the State Sales Tax both on raw materials and finished products for the period of five years from the date the unit goes into production.
Grant of exemption from levy of additional surcharge on Toll Tax for an initial period of five years from the date the unit goes into commercial production with respect to raw materials and finished goods.
The question of grant of exemption from this levy for further periods would be reviewed thereafter in every 193 individual case and further grant of this concession would only be considered in deserving individual cases.
Grant of exemption from the levy of Urban Immovable Property Tax on the lands and buildings belonging to such industries would be available as admissible under the Urban Immovable Property Taxation Rules.
By order of the Government of Jammu and Kashmir.
Sd/ G.R.Renzu, Secretary to Government" This order was partially modified in G.O. 414 Ind. dated 25.8.1971 which read as follows: " GOVERNMENT OF JAMMU AND KASHMIR INDUSTRIES AND COMMERCE DEPARTMENT Sub: Grant of incentives to the Large and Medium Scale Industries in the Jammu & Kashmir State Ref: Director Industries and Commerce 's letter No. SSI J/455/2251 52 dated 22 7 1971 Government Order No. 414 Ind.
of 1971 dated 25.8.1971 In partial modification of Government Order No. 159 Ind.
of 1971 dated 26.3.1971, item 2 may be read as under: 2.
Grant of exemption from the sales tax both on raw materials and finished products.
The State Sale Tax paid by Large and Medium Scale Industries on the raw materials procured by them for the initial 5 years of the production would be refunded to such industries.
Similarly such industries will be granted exemption from the payment of any state sales tax on their finished products for a period of five years from the date the unit goes into production.
194 By order of the Government of Jammu and Kashmir.
Sd/ Secretary to Government".
It may be noted at this stage itself that the amending Order G.O. 414 Ind.
dated 25th August, 1971 was also published in the Government Gazette.
Section 5 of the General Sales Tax Act, 1962 empowers the State Government to grant exemption from taxation and that section reads as follows: "Exemption from taxation: The Government may subject to such restrictions and conditions as may be prescribed, including conditions as to licence and licence fees, by order exempt in whole or in part from payment of tax any class of dealers or any goods or class or description of goods.
" The Government orders were made implementing the Cabinet decision No. 101 of the same date.
There is no ambiguity about the class of persons or dealers to whom the Government orders apply, no ambiguity about the class or description of goods and the transactions of sale which are exempt from tax.
It has been duly authenticated in terms of Section 45 of the Constitution of Jammu and Kashmir.
It is well settled that if power to do an act or pass an order can be traced to an enabling statutory provision, then even if that provision is not specifically referred to, the act or order shall be deemed to have been done or made under the enabling provision.
Thus the Government orders satisfy all the requirements of the provisions of Section 5 of local Act.
The section also does not talk of any notification: it only talks of a Government order exempting in whole or in part from payment of tax.
This is very insignificant, if contrasted with Section 4(1) and 4(5) of the local Act relating to the fixation of the taxable point refers to a notification by the Government.
The Act itself thus makes a distinction requiring a notification to be made for certain purposes and the making of a Government order in respect of certain other purposes.
Moreover, since there is no form prescribed in this behalf if the particular order in effect is an exemption order, whether it takes the form of an order or notification makes no difference.
But we may note from the various orders produced before us that normally in the case of grant of tax exemptions as an incentive to industry the exemption orders have generally taken the form of Government order rather than a notification.
But in the 195 case of other exemptions though they are also under section 5 of the local Act they have taken the form of notification.
Thus the pattern followed in Jammu & Kashmir seems to be that in respect of exemptions from payment of taxes following Cabinet decision on policy matters and incentive they have taken the form of Government order.
It is necessary to refer this aspect because in later modifications while superseding the earlier order or notifications, the Government have followed the specific pattern and have used the word `orders ' in cases of grant of incentive and the word `notifications ' in the other cases.
It may also be pointed out that the Government orders 159 and 414 were also understood and treated as such exemption orders as seen from the publicity given them by the Government while inviting entrepreneurs to establish industries in Jammu & Kashmir and certain other communications to the parties.
The booklet published by the Government in December, 1975 under the heading "Incentives to Development of Industries in Jammu & Kashmir" contained incentives available for small scale industries as also large and medium scale industries.
The above said two Government Orders were reproduced in this booklet as the orders relating to incentives available to large and medium scale industries.
Another brochure issued in March, 1978 under the heading `The State Marches Towards Industrial Development ' after noting the efforts made by the Government to invite industrial enterprises from outside the State to locate the industries in Jammu & Kashmir and the response by the industrialist, listed the package of incentives under the heading `Incentives Available to help you establish your beautiful industrial ventures in the J & K State '.
Item 5 of this list related to `exemption from certain taxes '.
This was followed by the Finance Minister 's Budget Speech for the year 1978 79 in which the Finance Minister stated: "We have to continue a consistent policy of support and protection to industry and attract as many new units as we can, both in order to increase the employment opportunity and to achieve better economic growth.
It is as such proposed to continue the grant of exemption from payment of sales tax on the goods manufactured by new units for a period of ten years from the date the unit goes into production.
" Subsequent to this speech of the Finance Minister another Brochure was published by the Government on the 7th September, 1978 which referred to the sustained efforts made by the Government to involve successful and experienced entrepreneurs from all over the country in 196 setting up the industries in J & K and incentives available to the industries.
In page 14 of this Brochure "Exemption from Sales Tax and toll tax for 10 years and exemption from CST" is listed as one of the incentives available in the State.
Obviously these announcements, references and statements relating to exemption from sales tax refer to G.O. 159 Ind.
dated 26.3.1971 and G.O. 414 Ind.
dated 25.8.1971.
No other Government order of notification relating to exemption from payment of sales tax by large and medium industries were bought to our notice as relating to these references in the Brochures and speeches.
Thus on a plain reading there could be no doubt that the two Government orders are referable to the power of the Government under Section 5 of the General Sales Tax Act and are exemption orders falling within the scope of that provision.
In this connection, we may also refer to three decisions of this Court cited at the Bar wherein similar orders of Government without specifying the source of power under which they were made and also not in the form of a notification, were considered to be orders granting exemption.
In Pournami Oil Mills & Ors.
vs State of Kerala & Anr., [1986], Supp.
SCC 728, this Court had occasion to consider almost identical Government orders as those we are concerned with in these appeals.
The first was a Government Order dated 11th April, 1979 and the relevant portion of the same reads as follows: "The Government has considered the recommendations and suggestions of the Committee in detail and they are pleased to approve the following package of measures for promoting industrial development in Kerala: SMALL SCALE INDUSTRIES: Sales Tax Concessions: New industrial units under small scale industries set up after April, 1979, will be exempted from the payment of sales tax for a period of five years from the date of production.
The second was a notification dated 21st October, 1980 made under Section 10 of the Kerala General Sales Tax Act which read as follows: "In exercise of the power conferred by Section 10 of the Kerala 197 General Sales Tax (15 of 1963) the Government of Kerala have considered it necessary in the public interest so to do, hereby make an exemption in respect of the tax payable under the said Act on the turnover of the sale of goods produced and sold by the new industrial units under the small industries for a period of five years from the date of commencement of sale of such goods by any such units by way of tax on their sales shall be paid over to Government and that the sales tax, if any, already paid by such units to Government shall not be refunded.
Provided that such units shall produce proceedings of the General Manager, District Industries Centre, declaring the eligibility of the units for claiming exemption from sales tax.
Provided further that the cumulative sales tax concessions granted to a unit at any point of time within this period shall not exceed 90 per cent of the cumulative gross fixed capital investment of the unit.
Explanation For the purpose of this notification new industrial unit under the Small scale Industries shall mean undertakings set up on or after April 1, 1979 and registered with the Department of Industries and Commerce as a small scale industrial unit.
This notification shall be deemed to have come into force with effect from April 1, 1979.
" Section 10 of the Kerala General Sales Tax Act empowered the Government if they consider it necessary in the public interest, by notification in the Gazette, to make an exemption or reduction in rate either prospectively or retrospectively in respect of any tax payable under the Act.
It may be seen that the first Government Order dated 11th April, 1979 did not refer to any statutory power under which that order was made and it was generally in the nature of an order approving package of measures and incentives for promoting industrial development in Kerala and not in the form of a notification, while the second notification was made specifically in exercise of the statutory powers under section 10 of the Kerala Act.
It may also be seen that the first Government Order gave more tax exemption while the second notification did not give any exemption relating to purchase tax and also confined the exemption from sales tax to the limits specified in the proviso to the notification.
Two main questions were 198 considered by this Court.
The first was whether the first Government Order dated 11th April, 1979 was an exemption order referable to the powers of the Government under section 10 of the Kerala Act.
On this issue this Court held that it was an exemption order and that since there was an enabling provision in the statute empowering the Government to give exemption, though the Government Order did not refer to the statutory provision conferring such powers the order should be deemed to have been made under the said enabling provision and that therefore both the orders were made in exercise of the powers under section 10 of the Kerala Act.
The second important point that was decided was that the second notification was prospective in operation and that industries set up on or after Ist April, 1979 and before the 21st October, 1980 would be entitled to the benefit of the whole exemption under the first Government order for the full period of five years from the date they started production and that right could not have been curtailed by the second notification dated 21st October, 1980.
As the Govt. was bound by the rule of estoppel from taking away the right which had accrued to them under the first Government order.
Only new industries set up after the 21st October, 1980 would have the restricted benefit as provided in the second notification.
In Bakul Oil Industries & Anr.
vs State of Gujarat & Anr.
, ; , the effect of two exemption notifications made in exercise of the Government 's power under section 49(2) of the Gujarat Sales Tax Act, 1960 was considered.
Under the first notification dated 29.4.1970 certain exemption from payment of sales tax or purchase tax was given in respect of certain specified classes of sales and purchases described in the Schedule to that notification without any specification of period.
The second notification dated 11.11.1970 amended the first notification by adding a new entry in the Schedule exempting a manufacturer who established a new industry from the whole of purchase tax and sale tax for a period of five years from the date of commissioning of the industry .
This second notification stated that for the benefit of claiming the exemption the industry shall have been commissioned at any time during the period from Ist April, 1970 to 31st March, 1975.
The assessee in that case had commissioned his plant on the 17th May, 1970 and when the Industries Commissioners refused to give him the eligibility certificate for claiming exemption he filed a writ petition under Article 226 before the Gujarat High Court.
During the pendency of the writ petition the State Government issued another notification dated 17th July, 1971 amending the definition of `new industry ' and excluding among others decorticating, expelling, crushing, roasting, parching, frying of oil, seeds and colouring, decolouring and scenting of oil, from the purview of the exemption notification.
This Court 199 held that under the first notification dated 9.4.1990 the exemption granted was general and did not stipulate as to how long the exemption would remain in operation and that would mean that the exemption granted under the notification was to have operative force till such time that exemption was allowed to remain before being withdrawn by a subsequent notification.
Though the second notification dated 11.11.1970 gave exemption for a period of five years from the date of commissioning of the industry this Court was of the view that, that exemption cannot be invoked by the assessee in that case for claiming the benefit of tax exemption for five years because the second notification was prospective in operation and would apply only to those new industries which were commissioned subsequent to the issue of that notification and since the assessee in that case commissioned the Mill on 17.5.1970 before the second notification he was not eligible for the benefit of second notification.
However, the learned counsel for the respondents relied on the observation in the first paragraph at page 192 of the Bakul Oil Industries case (supra) wherein the learned Judges have held that the State Government was under no obligation in any manner known to law to grant exemption and that it was fully within its powers to revoke the exemption by means of a subsequent notification.
These observations will have to be understood in the light of the earlier statement that the second notification dated 11.11.1970 was prospective; that is to say if the industry had been commissioned subsequent to 11.11.1970 the assessee would have been entitled to the exemption for the full period of five years.
These observations are apposite only to the notification dated 9.4.1970 which was the one which the assessee was entitled to.
In correctly understanding the ratio of this judgment we have to keep in mind that the date of commissioning of the industry was the relevant factor to the entitlement of the relief.
Therefore this is an authority only for the proposition that if the exemption notification did not stipulate as to how long the exemption would remain in operation it would be open to the Government to withdraw the same at any time by a subsequent notification.
But the learned Judges did not stop with that but make a further observation that if the exemption notification gave exemption from payment of tax for a particular period and an industry was commissioned after the date of the exemption order but before the exemption was withdrawn, the said industry would be entitled to the benefit of exemption for the period specified in the exemption order though the exemption was withdrawn before the expiry of that period if the industry could rely on any estoppel.
This is also clear as the learned Judges themselves have observed that the industry commissioned subsequent to the notification could also plead estoppel and observed: "We must, however, observe that the power of revocation or 200 withdrawal would be subject to one limitation viz. the power cannot be exercised in violation of the rule of Promissory Estoppel.
In other words, the Government can withdraw an exemption granted by it earlier if such withdrawal could be done without offending the rule of Primissory Estoppel and depriving an industry entitled to claim exemption from payment of tax under the said rule.
If the Government grants exemption to a new industry and if on the basis of the representation made by the Government an industry is established in order to avail the benefit of exemption, it may then follow that the new industry can legitimately raise a grievance that the exemption could not be withdrawn except by means of legislation having regard to the fact that Primissory Estoppel cannot be claimed against a statute.
" The Government Order which was considered by this Court in Assistant Commissioner of Commercial Taxes (Asstt.).
Dharwar & Ors.
vs Dharmendra Trading Company and Ors., ; read as follows: "Consequently, the Governor of Mysore is pleased to sanction the following incentives and concessions to the entrepreneurs for starting new industries in Mysore State: (1) Sales Tax A cash refund will be allowed on all sales tax paid by a new industry on raw material purchased by it for the first (five) years from the date the industry goes into production, eligibility to the concessions being determined on the basis of a certificate to be issued by the Department of Industries and Commerce. " Though this again was in the form of a Government order giving incentives and concessions, this Court held that since there is a power to grant an exemption or concessions under the Statue the mere fact that it did not specify the power under which it was issued will make no difference and that the assessee would be entitled to the benefit of this order.
The High Court was of the view that the Government orders are, as such, not exemption orders but only a policy decision.
The learned Judges observed that Section 5 of the General Sales Tax Act "does not speak of general order of exemption as the power to grant exemption is related to 201 a class of dealers or goods and that too subject to restrictions and conditions as may be prescribed.
So there could no general order of exemption and hence the need for specific order in favour of the petitioner is quite obvious.
" On this interpretation the High Court held that the appellant has to first establish that he had set up an industry in the State which conforms to the intent of 1971 order and thereafter ask for an exemption and that on being satisfied the Government will have to make an order of exemption under section 5 of the General Sales Tax Act.
We are unable to agree with this reasoning of the learned Judges on the interpretation of section 5 of the General Sales Tax Act.
We are of the view that the High Court was in error in thinking that the exemption order should be specific in favour of the appellant.
The exemption as can be seen from the provisions of section 5 of the General Sales Tax Act could be in respect of any class of dealers of any goods or class or description of goods.
There could be an exemption in an individual also but the power of exemption is not restricted to such cases alone.
It may refer to transactions of sale of a particular type of goods or class or description of goods or in respect of any class of dealers or a combination of both.
Of course even as an order of exemption the appellant will have to show that he had set up the industry in conformity with the intent of 1971 order and entitled in terms thereof to the exemption in respect of the goods manufactured by him.
But that is not to say that after he establishes those facts the Government will have to make a separate order of exemption in relation to him.
When the appellants sought to rely on the decision of this Court in Pournami Oil Mills case (supra) the learned Judges of the High Court sought to distinguish the same on the ground that the Government order in Pournami Oil Mills case (supra) used the words `will be exempted ' whereas in the Government orders now under consideration the words used are `will be granted exemption. ' According to the learned Judges there is a vast difference between the two expressions.
Whereas the expression `will be exempted ' is in the nature of an order the expression `will be granted exemption ' clearly implies a declaration of intention which could result in an order of exemption being issued by taking further follow up action.
We have carefully considered this reasoning of the learned Judges.
The Government orders follow an earlier Cabinet decision to give incentives to large medium scale industries.
The intention was clear that they wanted to attract entrepreneurs from all over the country to come and establish industries in the State of Jammu and Kashmir.
It is not with reference to any particular industrialist or industry that the order was intended to be operative.
The subject in both the Government orders show that it is grant of incentives.
In the light of the context in which expressions came to be used we are 202 of the view that `will be granted exemption ' has the same meaning as `will be exempted ' and does not in any way show that it requires a further follow up action.
Even in Pournami Oils Mills case (supra) under the Government order dated 11th April, 1979 the industries which are to be benefited are those which are to be set up on or after 1st of April, 1979.
The exemption is thus with are to be set up on or after 1st of April, 1979.
The exemption is thus with reference to an industry which is to be established subsequent to the Government order.
Therefore in that sense both expression mean the same.
It was then pointed out by the learned Judges of the High Court that this Government Order No. 159 dated 26.3.1971 dealt with to grant four different types of facilities and incentives and three out of them are covered by different legislative enactments and, therefore, it was futile to contend that without any follow up action the said order can be treated as notification of exemption under the different statutes.
We are unable to agree with this reasoning of the learned Judges also.
As we have already pointed out there is no prescribed form for granting exemption under section 5 of the General Sales Tax Act.
There is also no prohibition against reference to any other matter or matter in exemption orders under section 5 of the General Sales Tax Act.
If the incentives related also to other benefits or rights merely because they are included in the same Government Order does not make it any the less an exemption order so far as the exemption related to payment of Sales Tax.
In fact it appears to be that factually the submission of the learned counsel for the State that follow up action was taken in pursuance of the Government order in respect of exemption from the levy of Urban immovable property tax and the exemption from levy of an additional surcharge on toll tax is not correct.
Mr. Verma, learned senior counsel appearing for the State of Jammu & Kashmir in two of the appeals referred to what he called as a follow up action in relation to the exemption from payment of tax under the Urban Immovable Property Act, a notification issued on the 3rd of June 1971 in SRO 214 of that date, in exercise of the powers conferred by section 23 of the Jammu and Kashmir Urban Immovable Property Tax Act, 1962 amending the Immovable Property Tax Rules, 1962 by inserting Rule 20A.
The relevant portion of this Rule 20A stated that under the provisions of clause (f) of sub section (1) of section 4 of the Act "all buildings and lands owned by proprietors of a factory and used by him for the purposes thereof shall be exempted from the levy of tax etc. ".
It is true that this notification was subsequent to GO 159 Ind.
dated 26.3.1971.
But it is seen from the notification itself that the same was previously published on 25.3.1971 in the Government Gazette under section 23(1) for information of all persons likely to be affected thereby informing that notice is given thereby that it 203 will be taken up for consideration on 7.4.1971 and any objection or suggestion which may be received in the Finance Department from any person with respect to the said draft before the said date will be considered by the Government.
It is by reason of the fact that this draft rule has been published calling for objection the GO 159 Ind. itself stated that the grant of immovable property tax exemption would be available "as admissible under the Urban Immovable Property Taxation Rules." Thus on the day when the Government order was made there was already the draft amendment rules, and therefore, it could not be stated that the amendment was a follow up action in pursuance of the Government order.
Rather the Government order refers to the draft and says as per the amendment they will be entitled to the exemption.
So far as the toll tax is concerned the notification dated 18.7.1977 relied on by the learned counsel for the respondents only extended the benefit of exemption to large and medium scale industries in respect of additional toll leviable `till the construction phase is completed ' that is in respect of tax on construction materials and it did not relate to the grant of exemption of additional surcharge on toll tax.
But it is significant to note that this notification itself stated that `the raw materials brought into the stage for the purpose of manufacturing and finished products marketed outside the State by the said industries shall remain exempt from payment of additional toll for a period of ten years in respect of all the units from the date of commencement of production by them." (emphasis supplied).
This definitely shows that there is already an exemption from payment of additional toll in respect of raw materials brought and finished product marketed and the Government order related only to an extension of exemption benefit in respect of the construction phase as well.
These notifications under the Immovable Property Tax Act and Toll tax act rather reinforce thus contention of the learned counsel for the appellant that the Government orders themselves are exemption orders under section 5 of the General Sales Tax Act and no follow up action was intended under those orders and the said orders operate as exemption orders.
Thus there could be no doubt the Government Order 159 Ind.
dated 26.3.1971 and the amending Government Order 414 dated 25.8.1971 are orders of exemption from payment of sales tax issued under section 5 of the General Sales Tax Act.
Though the learned counsel for M/s Kashmir Vanaspati Limited and the learned counsel appearing tr M/s K.C. Vanaspati strenuously argued that the exemption from payment of tax was extended from 5 years to 10 years and the Government was bound to give the exemption for 10 years on the ground of promissory estoppel.
We think there is absolutely no factual foundation for such a plea.
The only reference to 10 years was in 204 the Finance Minister 's speech and in the Brochure dated September, 1978.
The Brochure only lists the concessions and incentives available generally.
It does not refer to any Government decision or Cabinet decision or any order of the Government.
No decision of the Government, let alone a Cabinet decision, or any Government order extending the period of exemption was produced before us.
It is not clear on what basis the Brochure mentioned 10 years.
Further the reference in the Brochure is not for sales tax alone, but also refers to toll tax and central sales tax.
It is noticed that so far as toll tax is concerned there are Government orders exempting the industries covered by the notifications for a period of 10 years.
The Finance Minister 's statement made in March, 1978 only refers to a proposal to continue the grant of exemption from payment of sales tax for a period of 10 years.
This statement also is not unambiguous.
It may mean that the benefits under the Government Orders 159 and 414 may be continued for another 10 years without withdrawing the same.
This is merely a budget proposal which could give rise to no right to the appellants.
As no decision order or notification is produced extending the period of exemption in relation to sales tax it is not possible to consider the claim of the appellants for exemption for 10 years on the ground of promissory estoppel.
In exercise of the powers under section 4(7) of the General Sales Tax Act the Government notified that "In supersession of all the previous notifications on the subject, the Government hereby specify, in column 3 of the Schedule appended thereto, the point of tax on the turnover in the series of sales of goods specified in column 2 of the said schedule.
"This was notified and published as SRO 195 dated 31.3.1978.
The schedule in column 2 gave the description of the goods and the column 3 point of tax.
This schedule was amended by SRO 448 dated 22nd October, 1982 the relevant portion of which read as follows: "SRO 448 .
In exercise of the powers conferred by sub section (7) of section 4 of the Jammu & Kashmir General Sales Tax Act, 1962 (XX of 1962), the Government hereby direct that in notification SRO 195 dated 31.3.1978, the following amendments shall be made namely : (1) Sub item (C) in column 2 under the heading "Goods manufactured in the State" appearing against serial No. 2 shall be numbered as sub item (d) and before sub item (d) as so numbered the following shall be inserted as sub item (c) (c) Vanaspati and edible Oils.
205 (i) When sale is made by 2nd sale in the State manufacturer to another i.e. Sale is made by dealer in the State for such dealer who purchases re sale.
goods from the manufact urer.
(ii) When sale is made by Ist sale in the State i.e. manufacturer to when sale is made by the consumer direct.
manufacturer.
By order of the Government of Jammu & Kashmir.
" Before the High Court the vires of SRO 448 was questioned on various grounds.
However, the High Court rejected all those contentions and held that it is valid and that it has superseded the exemption, if any, granted under G.O. 159 and 414.
Mr. Thakur, the learned counsel for M/s Kashmir Vanaspati and Mr. Beg, learned senior counsel for M/s. K.C. Vanaspati, apart from contending that SRO 448 was ultra vires also contended on merits that this had no effect of superseding exemption granted under the said orders.
Since we are agreeing with the learned counsel that this SRO did not and could not supersede the exemption granted under the said Government orders we are not going into the question of vires of the same.
As may be seen from SRO 195 dated 31.3.1978 the notification was made by the Government in exercise of the power under section 4(7) of the State Act which related to the power to fix a point of sale for purposes of taxation in the series of sales of goods.
In fact the notification specifically stated that it is made in supersession of all previous notifications on the subject and specified the point of tax on the turnover in the series of sales of goods specified in column 2 of the Schedule (emphasis supplied).
The said notification therefore could not have and did not supersede the exemption notification SRO 448 dated 22nd October, 1982 that vanaspati and edible oils are taxable at the point specified therein it only means that those vanaspati and edible oils which are not exempted are taxable at the points specified in the Schedule.
It may be noted that the Government order gave exemption only for five years from the date of commencement of the industry and those industries who had been manufacturing for more than that period and also those industries who were not entitled to the benefit of the said Government order would be liable to pay sales tax on the vanaspati manufactured by them and the said goods were 206 liable to tax at the point specified in the Schedule.
In the Scheme of levy of single point taxation, there could be no doubt, the Government could fix and point in the series of sales for the Government have fixed the sale by the dealer, that if the second sale, as the taxable point no exception can be taken.
In that sense no question of vires on the ground of lack of power would arise.
Under Section 4(1) of Jammu & Kashmir General Sales Tax Act the goods are taxable only once, that is it could be taxed only at one point of sale.
We have already held that the Government Orders 159 and 414 are exemption orders and exempt the sale by appellants of their manufactured products.
The exemption would not arise unless the goods are taxable at the point of their sale.
Thus the effect of exempting their sale is that the said goods manufactured by them could not be taxed at the second or subsequent sales also as that would offend section 4(1) which provides for single point levy.
In case where there are no exemption orders and the state fixed the second or subsequent sale as point of taxation the first or prior or subsequent sales are not exempted sales but are not taxable sales.
Therefore, SRO 448 fixing the sale of vanaspati ghee by a dealer would not be applicable to vanaspati ghee manufactured by the appellant which are exempt under the said Government orders.
No question of vires of SRO 448 thus arises in these cases.
Thus we are not called upon to decide the vires of SRO 448 on the ground of discrimination as in our view the goods manufactured by the appellants are exempt under Government Orders 159 and 414 and that exemption covers entire series of sales of that very goods.
As already noticed in the case of Pine Chemicals the assessment orders related to their liability for tax under the in respect of their interstate sales.
The High Court has not considered their claim for exemption under section 8 (2 A) of the .
They seem to have proceeded on the assumption that if Government orders 159 and 414 above referred to are exemption orders or if the dealers were entitled to exemption under the State Act on the principle of promissory estoppel they would automatically be entitled to the benefit of section 8 (2 A) of the .
However, probably since the High Court was of the view that the said Government orders are not exemption orders and that the appellant had not laid the factual foundation for claiming the benefit of promissory estoppel, the question of consideration of the applicability of section 8 (2 A) of the did not arise and was not considered.
In fact the appellants in the special leave petition after claiming that the Government orders above referred to are exemption orders 207 and that in any case on facts they have established their case of promissory estoppel and the Government is bound to give exemption, stated as a ground that in the High Court the Advocate General made a concession to the effect that "he was not disputing that if the appellants were entitled to exemption in respect of finished goods under section 5 of the Jammu & Kashmir Sales Tax Act they would automatically be exempted under section 8 (2 A) of the in respect of interstate transaction.
" On the basis of this concession it appears that the appellants have also filed a review petition against certain observations made in the judgment of the High Court.
However, in the reply filed by the State in the special leave petition in this Court of the Government have denied that any concession was made by the Advocate General of the State in the High Court and that in any case the concession referred to related to a question of Law and that the State is entitled to press that point in this Court.
In these circumstances we have permitted the State to raise the question that even if the said Government orders were exemption orders under section 5 of the General Sales Tax Act the appellants are not eligible for exemption in respect of their interstate sales under section 8 (2 A) of the .
Under section 6(1) of the every dealer who sells goods in the course of interstate trade or commerce shall be liable to pay tax under that Act.
A sale of goods shall be deemed to take place in the course of interstate trade or commerce if the sale occasions the movement of goods from one state to another or if effected by a transfer of documents of title to the goods during their movement from one State to another.
The rate of tax on sales in the course of inter state trade of commerce is fixed under section 8 of the .
The tax payable by any dealer under the Act shall be collected in the State from which the movement of the goods commenced by the assessment officers of that State on behalf of the Government of India in accordance with the provisions of section 9(2) of the .
The learned Advocate General of Jammu & Kashmir contended that even if the sale of a particular commodity is exempted from payment of tax under the local Act the dealer selling the same in interstate trade or commerce would be liable to pay central sales tax under the provisions of section 6(1A) of the .
His further submission was that if section 6(1A) of the is applicable to a particular transaction of sale section 8 (2A) of the would not be applicable to that transaction.
Section 6(1A) of the Act reads as follows: 208 "(1 A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter state trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State.
" In other words the liability of a dealer to pay Central Sales Tax on his interstate transactions of sale will not be affected merely on the ground that if the same dealer had sold the goods locally he would not have been liable to pay tax under the local Sales Tax Act.
This is part of the general provisions of Section 6 of the making a dealer liable to tax on inter state sales.
The rate of tax payable on inter state sale is fixed at 4% in the case of sales to a registered dealer of goods of the description coming under section 8 (2) of the or where the sale is to a Government and at 10% under Section 8 (2) (b) of the in the case of goods other than declared goods.
In respect of declared goods under section 8(2) (a) of the shall be payable at twice the rate applicable to sale or purchase of such goods inside the appropriate State.
In view of the provisions of Section 15 the State law can impose tax on sale of declared goods only at a rate not exceeding four per cent of the sale price and such tax also shall not be levied at more than one stage.
If the tax has been levied under the State Law on declared goods and such goods are sold in the course of inter state trade and tax has been paid under the Central Sales Tax the tax levied under the State law shall be reimbursed to the person making such sale in the course of inter state trade.
Section 8 (2A) of the is in the nature of an exception to these general provisions.
That sub section reads as follows: "8(2 A) Notwithstanding anything contained in sub section (1 A) of section 6 or in sub section (1) of this section, tax payable under this Act by a dealer on this turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale of, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four per cent (whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate.
Explanation For the purpose of this sub section a sale or 209 Purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods".
It may be seen from these provisions that Section 8 (2 A) of the does not have any overriding affect on the scheme of taxation relating to inter state sale of declared goods.
There is also scope for the applicability of Section 6 (1 A) of the when the inter state sale takes place when the goods are in transit and is effected by transfer of documents of title to the goods during their movement from one State to another.
There may be other instances also which may not affect the levy under section 6(1A) of the as in case where Section 8(2 A) of the was not applicable though the transaction was not taxable under the State law.
Suffice it to say that only certain cases which would have been covered by Section 6(1 A) of the have been carved out for the purpose of exemption subject to the applicability of section 8 (2 A) of the .
Section 6 (1 A) of the has not become otiose by reason of inclusion of that section in the non obstante clause in section 8(2 A).
Both provisions, therefore, operate and they should not be read so as to nullify the effect of one another.
On a plain reading of section 8(2 A) of the it deals with the liability of a dealer to pay tax under the Act on his inter state sales turnover relating to any goods on the turnover relating to such goods if the sale had taken place inside the State is exempt from payment of sales tax under the sales tax law of the appropriate State.
It provides that if an intra state sale or purchase of a commodity by the dealer is exempted from tax generally or subject to tax generally at a rate which is lower than 4 per cent then his liability to tax under the when such commodity is sold on inter state trade would be either nil or as the case may be shall be calculated at the lower rate.
Explanation states as to when the sale or purchase shall not be deemed to be exempt from tax generally under the sales tax law.
That is to say an intra state sale or purchase of a commodity shall not be deemed as exempt from State tax generally if the exemption is given only (1) in specified circumstances or under specified conditions or (2) the tax is leviable on the sale or purchase of such goods at specified stages or (3) otherwise than with reference to the turnover of 210 the goods.
These conditions or limitations are therefore with reference to the transaction of sale or purchase.
The main clause deals with the turnover of `a dealer ' which the term would include `any dealer ' or `any class of dealers '.
The existence or otherwise of the three limitations under the explanation above referred to on claiming exemption under section 8(2 A) of the will therefore, have to be tested with reference to the transaction of sale or purchase as the case may be of the dealer who claims the transaction of sale or purchase as the case may be of the dealer who claims the exemption in respect of his intra state sale of purchase of the same goods.
Thus the specified circumstances and the specified conditions referred to in the explanation should be with reference to the local turnover of the same dealer who claims exemption under section 8(2 A) of the .
The learned Advocate General for the state contended that the conditions that the industry should have been set up and commissioned subsequent to the Government orders 159 and 414 above referred to and the commodity sold by him in order to claim the exemption under the said Government order, shall be those manufactured by that industry are conditions or specified circumstances within the meaning of the explanation and, therefore, the dealer (Pine Chemicals) is not entitled to any exemption under section 8 (2 A) of the .
We are unable to agree with this submission of the learned counsel for the state.
The facts which the dealer has to prove to get the benefit of the Government orders are intended only to identify the dealer and the goods in respect of which the exemption is sought and they are not conditions or specifications of circumstances relating to the turnover sought to be exempted from payment of tax within the meaning of those provisions.
The specified circumstances and the specified conditions referred to in the explanation should relate to the transaction of sale of the commodity and not identification of the dealer or the commodity in respect of which the exemption is claimed.
These conditions relating to identity of the goods and the dealer are always there in every exemption and that cannot be put as a condition of sale.
We have already held that not only sale by the manufacturer to dealer that is exempt under the Government orders but since the General Sales Tax Act had adopted only a single point levy, even the subsequent sales would be covered by the exemption order.
Therefore, the question whether the tax is leviable on the sale or purchase at "specified stages" does not arise for consideration.
This is not also a case where the exemption is with reference to some thing other than the turnover of the goods.
In this connection we may refer to two decisions of this Court reported as Indian Aluminium Cables Ltd. & Anr.
vs State of Haryana (38 211 STC 108) and Industrial Cables India Ltd. vs Assessing Authority.
[1986] sup.
SCC 695.
The question for consideration in this case was whether the transaction of sale which would be covered by section 5 (2)(a) (iv) of the Punjab Sales Tax Act could be said to be exempt from tax generally within the meaning of section 8(2)(a) of the .
Section 5 (2A) in effect provided that in determining the taxable turnover of a dealer his turnover on "(iv) sales to any undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the Indian Electricity Act, 1910(IX of 1910), of goods for use by it in the generation or distribution of such energy" is to be deducted.
That is to say that the transaction covered by this clause are exempt from Punjab Sales Tax Act.
As may be seen from the provision the two conditions relate to the purchaser company being a licensed undertaking supplying electrical energy to the public and the goods sold are for use by the said undertaking in generation or distribution of such energy.
This court rejected the contention of the dealer that they are descriptive of the goods and not conditions and held that they are conditions under which exemption is granted and that therefore section 8(2A) of the was not attracted.
As may be seen, the two conditions are attached to the sale of the dealer who is liable to pay sales tax.
The description of the person who is to be the purchaser is not intended to identify the seller but relate to a condition of the sale being to a person of that description.
The condition that the goods sold are for use by the licensed undertaking in the generation or distribution of electrical energy is again a condition attached to the sale and not identification of the goods .
The goods are already identified.
If the same goods had been sold to a person who is not a licensed undertaking and/or not for purposes of use in the generation or distribution of electrical energy the transaction would be liable to levy of tax under local Sales Tax Law.
If the conditions specified are satisfied then that transaction which would have otherwise formed part of the taxable turnover is allowed to be deducted from the total taxable turnover.
Clearly, therefore, they are specified circumstances or specified conditions within the meaning of the explanation to section 8(2A) of the and therefore cannot be treated as exempted from tax generally.
There is also another judgment of this Court, namely, International Cotton Corporation (P) Ltd. vs Commercial Tax Officer & Ors., (35 STC 1) wherein they have generally considered the scope of section 8 (2A) of the .
After a consideration of the arguments the learned Judges observed: 212 "Reading section 6(1 A) and section 8(2A) together along with the explanation the conclusion deducible would be this: Where the intra state sales of certain goods are liable to tax, even though only at one point, whether of purchase or of sale, a subsequent inter state sale of the same commodity is liable to tax, but where that commodity is not liable to tax at all if it were an intra state sale the inter state sale of a particular commodity is taxable at a lower rate than 3 per cent then the tax on the inter state sale of tax commodity will be at that lower rate.
A sale or purchase of any goods shall not be exempt from tax in respect of inter state sales of those commodities if as an inter state sale the purchase or sale of those commodities is exempt only in specific circumstances or under specified conditions or is leviable on the sale or purchase at specified stages.
On this interpretation section 6(A) as well as section 8 (2A) can stand together." In view of the pronouncement of this Court in above decisions and on our interpretation we do not consider it necessary to refer to the decisions of the High Courts cited at the bar.
In the result we hold that the dealer "Pine Chemicals" is entitled to claim the benefit of exemption under G.O. 159 dated 26.3.1971 and G.O. 414 Ind. dated 25.8.1971 in respect of his turnover on inter state sales and the benefit of exemption is available for a period of five years from the commencement of commercial production.
Mr. Verma learned counsel appearing for the State Government then contended that the said Government orders were superseded by SRO 80 dated 12.3.1982 (hereinafter referred to as SRO 80/82) and Vanaspati Ghee has been made liable to tax at the rate of eight per cent.
The goods manufactured by M/s. Pine Chemicals are also made taxable as falling under the residuary item at the rate of 8 per cent.
S.R.O. 80 dated 12th March, 1982 reads as follows: "In exercise of the powers conferred by sub section (1) of section 4 of the Jammu & Kashmir General Sales Tax Act, 1962 (XX of 1962) and in supersession of all the previous notifications issued on the subject, the Government hereby direct that the tax on the taxable turnover shall be payable at the rates specified in schedule A 1 to A XI annexed hereto : Further the Government, in exercise of the powers conferred by section 5 of the said Act and in supersession of all the previous notifications issued on the subject, hereby direct that the goods, 213 persons and classes of persons as specified in Schedule "B" annexed hereto shall be exempt from payment of tax leviable under said Act.
Explanation: Nothing contained in schedule `B ' shall be deemed to exempt any goods specified in Schedule A I to A XI (both inclusive).
This notification shall come into force with effect from 1 4 1982.
By order of the Government of Jammu & Kashmir.
" It then sets out the description of the goods and the rates at which they are taxable in Schedule A, Annexures I to XI.
Items 1 to 3 schedule "A" Annexures IV, reads: SCHEDULE A IV Goods chargeable to tax at 8% 1.
Hydrogenated vegetable oil (Vanaspati) and palm oil of all sorts.
Lubricants.
All goods other than items (1) & (2) above and those specified in other Schedules.
x x x" In Schedule B goods except under section 5 of the General Sales Tax Act are set out.
Vanaspati Ghee is not one of the items of goods exempted under Schedule B.
The learned counsel for the appellants contended that the second paragraph in the SRO only superseded the `notification ' under Section 5 of the General Sales Tax Act made earlier and did not supersede and did not have the effect of superseding the Government orders made, in pursuance of policy decisions taken by the Cabinet, exempting from payment of tax as an incentive to the industries.
In any case the exemption for five years granted under the said Government orders could not be withdrawn so far as the appellants are concerned both on the ground that SRO 80/82 was prospective in operation and also on the ground of promissory estoppel.
214 There could be no doubt that SRO 80/82 was prospective in operation.
We have noticed in the earlier part of this judgment that the Government seems to have been following as a pattern that is in the case of incentives to industries the exemption orders had taken the form of a Government order.
Government order 159 and 414 were also in pursuance of a Cabinet decision.
SRO 80/82 though a Government notification under the Business Rules it is issued by the Ministry concerned.
In the circumstances we have also a serious doubt whether the said incentives could have been superseded by the said SRO 80/82.
In this connection we may also refer to Government order No. 54 Ind. of 1983 dated 26.2.1983 again an order made in pursuance of Cabinet decision which reads as follows: "CIVIL SECRETARIAT INDUSTRIES & COMMERCE DEPARTMENT GOVERNMENT OF JAMMU AND KASHMIR Incentives for development of Large/Medium/Small Scale and Tiny Sector Industries in Jammu & Kashmir.
Cabinet Decision No. 57 dated 5.2.1983 GOVERNMENT ORDER NO.
54 IND OF 1983 Dated 26 2 1983 In supersession of all previous orders it is ordered that the package of incentives as per Annexure to this order will now be applicable to the existing and new Large Medium/Small Scale and Tiny Industrial Units.
Such of the Industrial Units which have partly availed of the package of incentives, sanctioned under Government Order No. 391 Ind.
of 1972 dated 21.6.1972 and subsequent orders issued in amplification thereof, as well as such units which have become entitled to the availment of the earlier package of incentives, shall have the option to get benefit under the new package of incentives, sanctioned hereunder, for the remaining period of their entitlement.
215 3.
X X X 4.
X X X 5.
X X X 6.
X X X By order of the Government of Jammu & Kashmir.
J.A. Khan Secretary to Government Industries and Commerce Department.
" The annexures to this order contain the incentives, benefits privileges and priorities given to large, medium and small scale industries and tiny industries.
So far as sales tax payable by large and medium scale industries which is relevant for our purpose paragraph XII/XIII states as follows: "XII/XIII.
GST/CST/Additional Toll Tax on SSI Units and Medium/Large Units: (i) No GST shall be charged on any raw material purchased by any industrial units except on items brought on a negative list.
(ii) X X X (iii) X X X (iv) An equivalent amount of loan would be granted interest free to Medium and Large Units for a period of 10 years against GST/CST paid in the State, each installment of loan shall be recoverable in 7 years after a moratorium of 3 years, the total amount of tax loan at any point of time not to exceed 33% of capital investment or Rs. 25 Lakhs whichever is less.
Penal rate of interest may be prescribed for delay in repayment of loan.
(v) X X X (vi) X X X" 216 It may be seen that paragraph I of this order refers to `supersession of all previous orders ' and then speaks of package of incentives and then states as applicable to existing large and medium scale industries also.
If SRO 80/82 had superseded G.O. 159 and 414 does it mean that this Government order has superseded SRO 80/82 and if that is so what are incentives available after SRO 80/82 to the existing industries? This Government order is thus consistent with the pattern followed and deals only with incentives to industries.
In the second paragraph an option has been given to the industry which has not utilised the full benefit of the earlier exemption either to continue to enjoy the earlier exemption given by way of incentive or to opt for the scheme of incentive under the new Government order.
Thus all, these provisions are consistent with the case of the appellants that neither SRO 80/82 superseded GO 159 and 414 nor Government order 54 dated 26.2.1983 took their right to continue to enjoy the exemption benefit for the total period of five years as provided in the said Government orders.
The learned counsel for the appellants also contended that they are entitled to enjoy the benefit for the full period of five years both on law as also on the ground of estoppel.
We have already noticed that in Bakhul Oil case (supra) this Court held that in the case of a grant of exemption without specifying any period for which the exemption is available the Government could withdraw the same at any time.
Though in that case on facts no further question can arise since it was held that the dealer was not entitled to the benefit of the subsequent notification giving the exemption for a period of five years on the ground that the notification was prospective in operation and therefore not applicable to the dealer in that case, this Court made certain further observations to the effect that even in the case of exemption for a particular period it could be withdrawn at any time subject of course to the plea of estoppel.
In Pournami Oil Mills case also the learned Judges appear to have given the benefit of exemptions for the full period even after the withdrawal on the basis that the industry was set up in pursuance of some representation made by the Government amounting to estoppel.
In the present appeals also there are lot of materials to show that the Government made representations to industry that they would give tax exemptions and other incentives and invited entrepreneurs to establish their industries in J. & K. Relying on those representations each of these appellants have set up their industries.
It is not necessary to set out these factual details in the judgment.
Suffice it to say that we have carefully considered all the materials and are of the view that the appellants acting on the representations had set up their industries.
Therefore they are entitled to claim the benefit of the exemption for the entire period of five years calculated 217 as per the terms of the Government orders, even if it were to be held that SRO 80/82 superseded the earlier exemption orders.
It was then contended by Mr. Verma learned counsel appearing for the State that in the assessment order relating to Assessment Year 1981 82 for the period from 1.9.1981 to 30.8.1982 in the case of K.C. Vanaspati there is a finding that the assessee had collected sales tax in respect of their sales turnover for which the exemption is now claimed and that under section 8 B of the J&K General Sales Tax Act the said amount is refundable to the Government.
As has already been seen there was an assessment order for the period covering from 2nd September, 1981 to 30th September, 1981 which was the subject matter of Writ Petition No. 52 of 1982.
The same period merged in the assessment order 1.9.1981 to 30.8.1982 and consolidated assessment order was made and that was subject matter of Writ Petition No. 882 of 1984.
Both these assessment orders were regular assessment orders and they are not section 8 B orders of the Local Act.
They were made on the findings that Government Orders 159 and 414 above referred to are not exemption orders and the assessee could not be said to have acted upon any representation by the Government that they are exemption orders on the ground that if they had relied on those orders as exemption orders they would not have collected any tax in respect of their sales and that therefore the Government was not precluded by any principle of promissory estoppel from assessing their sales turnover.
The assessees had challenged these assessment orders mainly on the ground that the Government orders were exemption orders and that in any case the State is precluded from levying any sales tax on the ground of promissory estoppel.
The learned Judges of the High Court held, as already stated that, the said Government orders were not exemption orders but were only in the nature of declaration of intention to exempt the said industries from payment of sales tax and that the assessee had also not established any right for non payment of tax on any ground of promissory estoppel.
For holding that the assessees could not be said to have relied on any representation from the Government that they would be exempted from payment of tax the learned Judges relied on the facts that the assessees had collected sales tax or the sales tax element had gone into the fixation of price of Vanaspati Ghee showing thereby that the appellants had not relied on any representation from the Government that their sales are exempt from payment of tax.
Since the assessment orders were regular assessment orders on the ground that their sales are taxable sales the question of applicability of section 8 B of the local Act does not arise.
That question arises in view of our finding that their sales turnover are exempt but still under section 8 B of the Local Tax they are liable to refund any money collected "by way of a tax".
Since 218 neither the High Court had any occasion to decide this question of applicability of section 8 B of the Local Act on the basis that the sales turnover were exempt from payment of tax nor the assessing authorities had any opportunity to decide or made any order under section 8 B of the Local Act separately, we think that the entire question relating to the applicability of section 8 B of the Local Act and even the question whether there was any collection of sales tax will have to be left open.
The learned counsel Mr. Verma strenuously contended that there is a finding in the assessment orders that the appellants had collected tax and that finding had not been either challenged or set a side by the High Court and that therefore they should be directed to refund the amount collected.
We are not able to agree with this contention of the learned counsel.
As already stated the assessment order itself was questioned in the writ petitions filed by the assessees.
The High Court had proceeded on the basis that the Government orders are not exemption orders and that the Government also was not precluded from collecting tax on any ground of promissory estoppel and that therefore the question of applicability of section 8B of the Local Act did not arise before the High Court.
It may be mentioned it is not the case of the State that they had collected any amount in excess of the percentage of sales tax i.e. collectable in respect of taxable Vanaspati sales.
In the light of our findings that the sales were exempt the question now arises whether the assessees had collected any tax and whether the amount was collected by way of tax and whether any element of sales tax has merged in the fixation of the price and that amounts to collection of sales tax.
These questions will have to be decided if the State considers that the assessees had collected sales tax, in separate proceedings that may have to be initiated under Section 8 B of the Local Act or when the State demands payment of the money under section 8 B of the Local Act.
Suffice it so say that we are unable to agree with the observations of the learned Judges of the High Court that merely because in the balance sheet a reserve fund is made for payment of sales tax or on basis of a letter of Kashmir Vanaspati giving a break up of the sales price of Rs. 238 it can be said to be conclusively established that sales tax had been collected.
Any way we do not want to say anything because the matter will have to be considered by the authorities concerned in case they want to invoke Section 8 B of the Local Act on the basis that the said government orders gave exemption from payment of sales tax in respect of these assessees for a period of five years as we have held.
In this view we are also not going into the question as to the validity of section 8 B of the Local Act and we leave open that question which was outlined before us.
Thus interpretation of section 8 B of the Local Act and the question of fact of collection and the liability to refund all have to wait till a demand is made by the competent authority for refund of the amounts 219 in exercise of their power under section 8 B of the Local Act.
The assessees have made some deposits in pursuance of interim orders made by this Court pending the appeals.
It is also stated that during the pendency some other amounts were also paid by the assessees in addition to the amounts paid as per the directions given by the Court.
The refunds of this money and the liability of the State Government to pay any interest while refunding the deposits will all have to await the demand, if any, that may be made by the Government under section 8 B of the Local Act.
However, we make it clear that the stay of refund of money collected as aforesaid will be only for a period of six months by which time the Department should initiate proceedings, if any, under Section 8 B of the Local Act, if so advised.
To sum up : G.O. 159 Ind dated 26.3.1971 and G.O. 414 dated 25.8.1971 are exemption from payment of sales tax orders referable to the powers of the Government under Section 5 of the J & K General Sales Tax Act and that exemption covers the entire series was available only for a period of five years from the date of commissioning of the industries and not for ten years.
The benefit of the exemption under the said Government orders are also available in respect of the inter State sales of the same commodities for a period of five years from the commencement of the commercial production.
The appeals are accordingly allowed to the extent mentioned above.
However, there will be no order as to costs.
V.P.R. Appeal allowed.
| The appellant a public limited company was manufacturing Rosin, Turpentine and Rosin Derivatives and was carrying on business at Bari Brahmana and Jammu Tawi.
On 20.1.1981, the Assessing Authority assessed the appellant company under the , for the year ending 30.6.80.
On 22.2.1981 an assessment order under section 10 of the Act was made.
A penalty order was also made.
The appellants challenged the order of the Assessing Authority before the High Court filing Writ Petition No. 87 of 1987, contending that they were exempt from payment of sales tax under the and the Jammu & Kashmir General Sales Tax Act, 1962, on the finished goods produced by them for a period of five years commencing from 8th November, 1979, in terms of the Government Orders No. 159 Ind.
dated 26.3.1971 as amended by Government Order No. 414 Ind.
dated 25th August, 1971 read with Section 8(2A) of the ; that the Government represented and announced a package of incentives for large and medium scale industries grant of exemption from sales tax both on the raw materials purchased by the industries and the sale of their finished products; and that the Government was estopped from charging sales tax.
The High Court dismissed the Writ Petition holding that the two Government Orders were only declarations of an intention to exempt 181 from payment of sales tax and that they were not exemption notifications under section 5 of the General Sales Tax Act and that the appellants failed to prove the factual foundation for invoking the principle of promissory estoppel.
Against the High Court 's decision by special leave C.A. No. 2309 of 1989 was filed by the appellant company.
C.A. No. 2310 of 1989 The appellant company had filed a miscellaneous petition, after the judgement in the W.P.No. 87 of 1987 (the writ petition of the High Court against which C.A.No. 2309 of 1989 was filed) for permission to file reply affidavit on the ground of that the documents produced at the time of hearing needed explanation.
The High Court dismissed the Misc.
Petition as it was belated and the judgement in the writ petition was delivered relying on the materials placed on record.
C.C.No.
3148 50 of 1989 The appellant partnership firm was manufacturing Vanaspati Ghee.
It was assessed for the period from 2.9.1981 till 30.9.1981 under the Jammu & Kashmir General Sales Tax Act.
The appellants moved the High Court in a writ petition (W.P.No. 52 of 1982) to quash the assessment order, contending that the Government order 159 Ind.
dated 26.3.1971 as amended by Government Order 414 Ind.
dated 25.8.1971 exempted the sales of the finished product of Vanaspati Ghee from sales tax and that the Government was estopped from collecting tax.
When the Writ Petition (W.P.No. 52 of 1982) was pending an assessment order was made on 14.11.1984 for the assessment year ending 30th September, 1982, including the period 2nd September to 30th September, 1981 (which was questioned in W.P.No. 52 of 1982).
The assessment order dated 14.11.1984 was challenged by the assessees appellants in the writ Petition No. 822 of 1984.
During the pendency of the writ petitions certain other Government Orders were passed and certain assessment orders for the subse 182 quent periods were passed and those were questioned in the Writ Petition No. 711 of 1987.
The assessees contended that Government Order No. 159 Ind. dated 26.3.1971 and Government Order 414 Ind.
dated 25.8.1971 were exemption orders referable to section 5 of the Jammu & Kashmir General Sales Tax Act.
The respondents contended that the said Government orders were not exemption orders section 5 of the General Sales Tax Act and that there was not factual foundation for the plea of promissory estoppel.
The High Court dismissed all the three writ petitions by a common order, against which Civil Appeals 3148 50 of 1989 were filed.
C.A.No. 3151 of 1989 : The appellant assessee filed a writ petition praying to quash certain notices issued under section 14 of the and for a declaration that the Vanaspati Ghee manufactured by them was exempt from payment of tax upto January, 1992, i.e., for a period of 10 years from the date from which they started their commercial production as per the Government Order 159 Ind.
dated 26.3.1971 and Government Order No. 414 Ind.
dated 25th August 1971 as orders exempting their goods from sales tax under Section 5 of the Jammu & Kashmir General Sales Tax Act.
The Writ Petition was also dismissed against which C.A.No. 3151 of 1989 was filed by special leave.
The assessee contended that the exemption from payment of tax was extended from 5 years to 10 years and the Government was bound to give the exemption for 10 years on the ground of promissory estoppel; that SRO 448 which superseded the exemption granted under the Govt.
Orders was ultra vires and that the SRO 448 had no effect of superseding exemption granted under the G.O. 159 and 414; and that the exemption for 5 years granted under the Government Orders could not be withdrawn on the ground that SRO 80/82 was prospective in operation and also on the ground of promissory estoppel.
The State contended that even if the sale of a particular commod 183 ity was exempted from payment of tax under the local Act, the dealer selling the same in inter state trade or commerce would be liable to pay Central Sales Tax under the provisions of Section 6(1A) of the ; that if Section 6(1A) of the was applicable to a particular transaction of sale, Section 8(2 A) of the General Sales Tax Act would not be applicable to that transaction; that the conditions that the industry should have been set up and commissioned subsequent to the Government Orders 159 and 414 and the commodity sold in order to claim the exemption under the Government Orders, should be those manufactured by that industry were the conditions or specified circumstances within the meaning of the Explanation and, therefore, the appellants in C.A.Nos.
2309, 2310/89 were not entitled to any exemption under Section 8(2 A) of the ; that the Government Orders were superseded by SRO 80/82 and Vanaspati Ghee was made liable to tax at the rate of 8 per cent; that the goods manufactured by the appellants in C.A.Nos.
2309, 2310/89 were also made taxable as falling under the residuary item at the rate of 8 per cent; that in the assessment order relating to Assessment Year 1981 82 for the period from 1.9.1981 to 30.8.1982 in the case of appellants in C.A. Nos.
3148 3150 of 1989 there was a finding that the assesses collected sales tax in respect of their sales turnover for which the exemption was now claimed and that under Section 8 B of the J&K General Sales Tax Act the said amount was refundable to the Government.
As the questions, arose in these appeals were common, appeals were heard together and allowing the appeals of the assessees by a common judgment, this court, HELD :1.
If power to do an act or act or pass an order can be traced to an enabling statutory provision, then often if that provisions is not specifically referred to, the act or order shall be deemed to have been done or made under the enabling provision.
[194D] 2.1 Normally in the case of grant of tax exemption as an incentive to industry the exemption orders have generally taken the form of Government Order rather than a notification.
But in the case of other exemptions though they are also under section 5 of the local Act (J&K General Sales Tax Act, 1962) they have taken the form of notification.
[194G H] 2.2 The pattern followed in Jammu & Kashmir is that in respect 184 of exemptions from payment of taxes following Cabinet decision on Policy matters and incentive they have taken the form of a Government order.
[194H 195A] 2.3 The Jammu & Kashmir General Sales Tax Act, 1962 itself makes a distinction requiring a notification to be made for certain purposes and the making of a Government order in respect of certain other purposes.
Since there is no form prescribed in this behalf, if the particular order in effect is an exemption order, whether it takes the form of an order or notification makes no difference.
[194F G] 2.4 From the publicity given to the Government Orders 159 and 414 by the Government, while inviting entrepreneurs to establish industries in Jammu & Kashmir and certain other communications to the parties, it is be understood that the Government orders 159 and 414 were treated as exemption orders satisfy all the requirements of the provisions of section 5 of the local Act.
[195B C, 194E] 2.5 Even as an order of exemption the appellant will have to show that he had set up the industry in conformity with the intent of 1971 order and entitled in terms thereof to the exemption in respect of the goods manufactured by him.
But that is not to say that after he establishes those facts the Government will have to make a separate order of exemption in relation to him.
[201C D] 2.6 There is no prescribed form for granting exemption under section 5 of the Jammu & Kashmir General Sales Tax Act.
There is also no prohibition against reference to any other matter or matters in exemption orders under section 5 of the General Sales Tax Act.
If the incentives related also to other benefits or rights merely because they are included in the same Government Order does not make it any the less an exemption order so far as the exemption related to payment of sales tax.
[202C D] 2.7 The High Court was in error in thinking that the exemption order should be specific in favour of the appellant.
The exemption as can be seen from the provisions of section 5 of the Jammu & Kashmir General Sales Tax Act could be in respect of any class of dealers or any goods or class or description of goods.
There could be an exemption to an individual also but the power of exemption is not restricted to such cases alone.
It may refer to transactions of sale of a particular type of goods or class or description of goods or in respect of any class of 185 dealers or a combination of both.
[201B] 3.1 `Will be granted exemption ' has the same meaning as `will be exempted ' and does not in any way show that it requires a further follow up action.
[201G H] 3.2 The exemption is with reference to an industry which is to be established subsequent to the Government order.
Therefore in that sense both expressions mean the same.
[202A] 4.
The notification issued on the 3rd of June 1971 in SRO 214 under section 23 of the Jammu & Kashmir Urban Immovable Property Tax Act, 1962, amending the Immovable Property Tax Rules, 1962 by inserting Rules 20 A was subsequent to GO 159 Ind. dated 26.3.1971.
It was published on 25.3.1971 in the Government Gazette under section 23(1) for information of all persons likely to be affected thereby and any objection or suggestion which may be received in the Finance Department from any person with respect to the said draft before the said date will be considered by the Government.
It is by reason of the fact that this draft rule has been published calling for objection the GO 159 Ind. itself stated that the grant of immovable property tax exemption would be available "as admissible under the Urban Immovable Property Taxation Rules".
Thus on the day when the Government Order was made there was already the draft amendment rules, and, therefore, it could not be stated that the amendment was a follow up action in pursuance of the Government order.
The Government order refers to the draft and says as per the amendment they will be entitled to the exemption.
[202E 203B] 5.1 The only reference to 10 years was in the Finance Minister 's speech and in the Brochure dated September 1978.
The Brochure only lists the concession and incentives available generally.
It does not refer to any Government decision or Cabinet decision or any order of the Government.
[203G H] 5.2 The Finance Minister 's statement made in March 1978 only refers to a proposal to continue the grant of exemption from payment of sales tax for a period of 10 years.
This statement also is not unambiguous.
It may mean that the benefits under the Government Orders 159 and 414 may be continued for another 10 years without withdrawing the same.
This is merely a budget proposal which could 186 give rise to no right to the appellants.
As no decision order or notifications is produced extending the period of exemption in relation to sales tax it is not possible to consider the claim of the appellants for exemption for 10 years on the ground of promissory estoppel.
[204 B C] 6.1 The SRO No. 195 dated 31.3.1978 did not and could not supersede the exemption granted under the Government orders 159, 414.
[205D] 6.2 When it stated in the amending notification SRO 448 dated 22nd October, 1982 that vanaspati and edible oils are taxable at the point specified therein it only means that those vanaspati and edible oils which are not exempted are taxable at the points specified in the Schedule.
The Government order gave exemption only for five years from the date of commencement of the industry and those industries who had been manufacturing for more than that period and also those industries who were not entitled to the benefit of the said Government order would be liable to pay sales tax on the vanaspati manufactured by them and the said goods were liable to tax at the point specified in the Schedule.
[205F G] 7.1 In the scheme of levy of single point taxation, the Government could fix any point in the series of sales for the Government have fixed the sale by the dealer, that if the second sale, as the taxable point no exception can be taken.
In that sense no question of vires on the ground of lack of power would arise.
[205H 206A] 7.2 Under section 4(1) of Jammu & Kashmir General Sales Tax Act the goods are taxable only once, that is it could be taxed only at one point of sale.
The government orders 159 and 414 are exemption orders and exempt the sale by appellants of their manufactured products.
The exemption would not arise unless the goods are taxable at the point of their sale.
Thus the effect of exempting their sale is that the said goods manufactured by them could not be taxed at the second or subsequent sales also as that would offend section 4(1) which provides for single point levy.
In cases where there are no exemption orders and the State fixed the second or subsequnt sale as point of taxation the first or prior or subsequent sales are not exempted sales but are not taxable sales.
Therefore SRO 448 fixing he sale of vanaspati ghee by a dealer would not be applicable to vanaspati ghee manufactured by the appellants which are exempt under the Government orders.
[206B D] 187 7.3 The goods manufactured by the Appellants are exempt under Government Orders 159 and 414 and that exemption covers entire series of sales of that very goods.
[206D] 8.1 Under section 6(1) of the every dealer who sells goods in the course or inter state trade or commerce shall be liable to pay tax under that Act.
A sale of goods shall be deemed to take place in the course of inter state trade or commerce if the sale occasions the movement of goods from one state to another or if effected by a transfer of documents of title to the goods during their movement from one State to another.
[207D E] 8.2 In view of the provisions of Section 15 the State Law can impose tax on sale of declared goods only at a rate not exceeding four per cent of the sale price and such tax also shall not be levied at more than one stage.
If the tax has been levied under the State Law on declared goods and such goods are sold in the course of inter state trade and tax has been paid under the Central Sales Tax the Law levied under the State law shall be reimbursed to the person making such sale in the course of inter state trade.
[208C E] 8.3 Section 8(2 A) of the does not have any over riding effect on the scheme of taxation relating to inter State sale of declared goods.
There is also scope for the applicability of section 6(1 A) of the when the inter state sale takes place when the goods are in transit and is effected by transfer of documents of title to the goods during their movement from one State to another.
[209B C] 8.4 Only certain cases which would have been covered by section 6(1 A) of the have been carved out for the purpose of exemption subject to the applicability of section 8(2 A) of the .
Section 6(1 A) of the has not become otiose by reason of inclusion of that section in the non obstante clause in section 8(2 A).
Both provisions, therefore, operate and they should not be read so as to nullify the effect of one another.
[209C E] 9.
The facts which the dealer had to prove to get the benefit of the Government orders are intended only to identify the dealer and the goods in respect of which the exemption is sought and they are not conditions or specifications of circumstances relating to the turnover sought 188 to be exempted from payment of tax within the meaning of those provisions.
The specified circumstances and the specified conditions referred to in the explanation should relate to the transaction of sale of the commodity and not identification of the dealer or the commodity in respect of which the exemption is claimed.
The conditions relating to identity of the goods and the dealer are always there in every exemption and that cannot be put as a condition of sale.
[210D F] 10.1.
SRO 80/82 was prospective in operation.
The Government seems to have been following as a pattern that is in the case of incentives to industries the exemption orders had taken the form of a Government order.
Government orders 159 and 414 were also in pursuance of a Cabinet decision.
SRO 80/82 though a Government notification under the Business Rules it is issued by the Ministry concerned.
In the circumstances there is also a serious doubt whether the said incentives could have been superseded by the SRO 80/82.
[213H 214B] 10.2.
In the case of a grant of exemption without specifying any period for which the exemption is available the Government could withdraw the same at any time.
The appellants acting on the representations of the Government had set up their industries.
Therefore they are entitled to claim the benefit of the exemption for the entire period of five years calculated as per the terms of the Government orders, even if it were to be held that SRO 80/82 superseded the earlier exemption orders.
[216D E, 216G 217A] 11.
Since the assessment orders were regular assessment orders on the ground that their sales are taxable sales the question of applicability of Section 8B of the local Act does not arise.
That question arises in view of the finding that their sales turnover are exempt but still under section 8B of the Local Act, they are liable to refund any money collected "by way of tax".
[217G H] Pournami Oil Mills & Ors.
vs State of Kerala & Anr.
, [1986] Supp.
SCC 728; Bakul Oil Industries & Anr.
vs State of Gujrat & Anr.
, ; ; Assistant Commissioner of Commercial Taxes (Asstt), Dharwar & Ors.
vs Dharmendra Trading Company and Ors., ; ; Indian Aluminium Cables Ltd. & Anr.
vs State of Haryana, 38 STC 108; Industrial Cables India Ltd. vs Assessing Authority, [1986] Supp.
SCC 695; International Cotton Corporation (P) Ltd. vs Commercial Tax Officer & Ors., 35 STC 1; referred to. 189
|
Civil Appeal No.655 of 1986.
From the Judgment and Order dated 23.4.1984 of the Delhi High Court in Letters Patent Appeal No.25 of 1984.
M.K.Ramamurthy, Ms section Pappuh, B.P.Singh, Rishi Kesh, Raj Birbal, Sanjeev Sabharwal, B.R.Sabharwal and M.M. Kashyap for the appearing parties.
S.S.Harlakha appeared in person.
S.S.Onkarmal appeared in person for the Intervener.
The Judgment of the Court was Delivered by K. Ramaswamy, J.
In this appeal by special leave, by way of additional grounds with leave, the appellant impugnes Rule 5 of the Orissa Insurance Co operative Society Ltd. Service Rules (for short "the Rules") as unconstitutional and void offending Article 14 of the Constitution of India.
The material facts relevant to the point are that while the appellant was working as Divisional Manager at Delhi, the general insurance business was nationalised and its management was taken over by the Central Government under General Insurance (Emergency Provisions) Ordinance, 1971 replaced by Act 57 of 1972 (for short "the Act") and vested in the custodian of the New India Assurance Co. Ltd., the management of Orissa Insurance Co operative Society Ltd.
By operation of s.7 of the Act, the services of the appellant and others stood transferred and vested with the custodian.
Under the Act, the Board of Directors was empowered to terminate the service of the officer/employee of the insurer.
The appellant was kept under suspension from August 9,1973 pending investigation into the embezzlement, Explanation was called for on October 16, 1973.
in response thereto the appellant submitted his reply on december 7, 1974.
While dropping the 223 proceeding, the appellant was served with termination order dated April 17,1975 issued by the respondent.
The appellant challenged it in a writ petition in Delhi High Court which was dismissed by a learned Single Judge on November 11, 1983 and was confirmed by the Division Bench in Letter Patent Appeal No.351/1984 dated April 23, 1984.
Section 7 of the Act provides that every whole time officer or other employee of an existing insurer employed in connection with his General Insurance business, immediately before the appointed day, shall become an officer/employee of the Indian Insurance Co. in which the undertaking of the insurer to which the service of the officer relates has vested and would hold his office on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him, if there had been no such vesting and shall continue to do so unless and until his appointment is terminated.
Section 16(1) in Chapter V provides that if the Central Govt.
is of the opinion that for the more efficient carrying on of General Insurance business, it is necessary to do so, it may by notification, frame one or more schemes providing for all or any of the following matter; (e) the rationalisation or revision of pay scales and other terms and conditions of service of officers and other employees wherever necessary.
Pursuant thereto, the central Govt.
framed the New India Assurance Co. Ltd Merger Scheme, 1973 with effect from December 31, 1973.
Thereunder by Rule 3, the undertaking was transferred to the respondent; under Rule 5 the existing whole time officer etc.
became the officer of the transferee company (New Indian Assurance Co. Ltd) and could hold his office on the same terms and conditions as would have been admissible to him if there had been no such transfer, as referred to in paragraph 3.
He shall continue to remain an officer unless and until his employment, in the transferee company is terminated or the terms and conditions are duly altered by any other scheme framed under the Act.
By notification dated April 29, 1976 the Central Govt.
also framed the scheme called the General Insurance (Rationalisation of pay scales and other Conditions of Service of Development Step) Scheme, 1976 which came into force on May 1, 1976, the details of which are not material for the reason that service of the appellant was terminated , in terms of the existing rule 5 of the Rules.
Suffice to state that pursuant to the nationalisation under the Act and Scheme, the appellant became the officer of the respondent.
Rule 5 read thus: Termination of Service: 224 "An employee whether permanent or temporary shall not leave or discontinue his service in the Society without first giving 30 days notice in writing of his intention to do so, to the Principal Officer, Failure to do so will entail forfeiture of the pay of the month.
In the event of the Society not having any further need of any employee 's service whether permanent or temporary, which shall be decided by the Board, the Principal Officer shall give 30 days ' notice in writing for termination of his service or in lieu thereof pay such employee a sum equivalent to his one month pay including allowance upto the termination of the period of notice by way of compensation provided that nothing in these rules shall affect the rights of the society to dismiss an employee under Rule 8 for misconduct etc.
without any notice or salary in lieu of notice, in the manner prescribed in these rules.
An employee shall ordinarily retire from the Society 's services on completion of his 55th year unless the Board reserves to continue him in office of such period as may be determined from time to time.
" It is thus manifest that an employee, whether permanent or temporary, has an option to leave or discontinue by giving 30 days ' notice in writing of his intention to do so.
His failure thereof shall entail forfeiture of the pay of the month.
The employee ordinarily would be superannuated on completion of his 55th year unless the Board continues him for an extended period as may be determined from time to time.
Equally in the event of the Society not having any further need of the employee 's service, whether permanent or temporary, which should be decided by the Board, the Principal Officer shall give 30 days ' notice in writing for termination of his service or in lieu thereof, pay one month 's salary including allowances upto the period of termination.
The respondent also has the right to dismiss an employee, under Rule 8, for misconduct in the manner prescribed in the Rules.
Admittedly, though action was initiated against the appellant for the charges of embezzlement etc.
which are misconduct, the charges were dropped.
Taking aid of Rule 5 and without conducting an enquiry or giving an opportunity, the appellant 's service was terminated by tendering one month 's salary in lieu of notice and also a direction to pay all the allowances upto that date including the period of his suspension.
It is not necessary to go into the grounds taken in the High Court assailing the invalidity of the termination order as they are not pressed before us.
Sri Ramamurthy, the learned Senior counsel for the appellant placing reliance on the ratio of the majority view in D.T.C. vs D.T.C Mazdoor Congress & Ors., 225 Judgment today contended that Rule 5 is ultra vires of Article 14 of the Constitution.
Shyamala Pappu, the learned Senior counsel for the respondent contended that unlike Rule 9 in D.T.C 's case Rule 5 provides guidelines.
The Board of Directors have to take a decision, whether the need to continue the employee 's service subsists which would be based on the relevant material.
Thereby, there would be objective consideration before taking a decision, not only regarding the need to continue the post but also the services of the officer or the employee.
Though the rule does not provide for prior notice, post decisional opportunity would be read into the rule.
If so read, the rule is not ultra vires Article 14.
In our view the ratio in D.T.C. 's case has no application.
Rule 9 of the rules of Delhi Transport Corporation Service Regulation gives naked power to terminate the services of a permanent employee by giving one month 's notice or pay in lieu thereof.
It was not the contention therein, that the rule was capable of two constructions.
It is settled law that there is a presumption of constitutionality of the rule.
The court ought not to interpret the statutory provisions, unless compelled by their language, in such a manner as would involve its unconstitutionality, Since the legislature of the rule making authority is presumed to enact a law which does not contravene or violate the constitutional provisions.
Therefore, there is a presumption in favour of constitutionality of a legislation or statutory rule unless ex facie it violates the fundamental rights guaranteed under Part III of the constitution.
If the provisions of law or the rule is construed in such a way as would make it consistent with the constitution and another interpretation would render the provision or the rule unconstitutional, the court would lean in favour of the former construction.
In view of this settled legal position, the question emerges whether the language in Rule 5 would be capable to be construed consistent with the fundamental rights in Part III.
As stated earlier, the phrase "in the event of the Society not having any further need of any employee 's service whether permanent or temporary which shall be decided by the Board" is susceptible of two interpretations.
The one interpretation put up by Sri Ramamurty is that the Board may unilaterally and arbitrarily decide that there is no need for the services of a particular employee, in given facts and circumstances, though the post which the employee is occupying may continue and would be put to an end by giving one month 's notice or pay in lieu thereof.
In that event the rule per se is arbitrary offending Article 14.
The other view capable to be construed from the language employed would be that the Board of Management may form an objective opinion, on the basis of the material, that the post which the officer or the employee is occupying no longer is in need.
Thereby, the post would be abolished.
This would be a policy decision depending on the exigencies.
In consequences the service of the employee also would become 226 redundant or surplus.
In that event his service would no longer be needed.
The officer or employee may be permanent or temporary but the absence of the need for the continuance of the post would necessitate to terminate the service of an employee or officer.
It must not be a pretext or a rouse to get rid of the service of an inconvenient officer or of an employee.
If that be so.
it would become colourable exercise of power and would be liable to be quashed as offending Article 14.
Once the Board reaches a decision to abolish the post, in consequence the service of the officer/ employee occupying couched in Rule 5 also is capable of that interpretation.
In that light we are of the opinion that Rule 5 does not become arbitrary.
unreasonable or void offending Article 14.
Accordingly, we hold that the rule is valid.
But from the facts, it is clear that the Board of Management did not abolish the post but put an end to the service of the appellant.
Obviously due to loss of confidence as his honesty and integrity became suspicious and his continuance in service was felt inexpedient and not in the interest of the business of the respondents.
But Rule 8 was available for taking action for misconduct but was not availed.
Therefore, the impugned order terminating the services of the appellant is illegal.
What would be the consequence? Normally the appellant is entitled to reinstatement but in our view the ends of justice would be met by directing the respondent to pay him Rs. 1,00,000 as compensation, instead of reinstatement and further continuance in service.
The compensation awarded would be staggered between the year 1973 till date for the purpose of income tax and given the appropriate relief.
In this view it is not necessary to deal with other contentions or decisions cited across the bar.
Before parting with the case it is necessary to mention that march of service jurisprudence necessitates the respondent to recast the rules in tune with the constitution and the law.
The appeal is allowed but without cost.
The intervention application filed by Sri S.S. Onkarmal Harlalka is dismissed.
S.B. Appeal allowed.
| While the appellant was working as Divisional Manager at Delhi, the general insurance business was nationalised and its management was taken over by the Central Government under General Insurance (Emergency Provisions) Ordinance, 1971 which was replaced by Act 57 of 1972 and vested in the Custodian of the New India Assurance Co. Ltd. the management of Orissa Insurance Co operative Society Ltd. By operation of Section 7 of the Act the services of the appellant and others stood transferred and vested with the custodian.
The appellant was kept under suspension from August 9,1973 pending investigation into charges of embezzlement.
Explanation was called for on October 16,1973 and the appellant submitted his reply on December 7, 1974, While dropping the proceeding, the appellant was served with a termination order dated april 17, 1975 issued by the respondent.
The appellant challenged the aforesaid termination order in a writ petition in Delhi High Court which was dismissed by a Single Judge on November 11,1983 and this judgment was confirmed by the division Bench in a Letter Patent Appeal.
In the appeal to this Court it was contended on behalf of the 221 appellant placing reliance on the majority view in D.T.C vs D.T.C Mazdoor Congress & Ors.
judgment Today 1990(3) SC 725 that Rule 5 of the Orissa Insurance Co operative Ltd. services Rules is ultra vires of Article 14 of the Constitution.
On behalf of the respondent it was contended that unlike Rule 9 involved in D.T.C 's case, Rule 5 in the instant case provided guidelines, and that the Board of Directors had to take a decision, whether the need to continue the employee 's service subsists which would be based on relevant material and thus there would be objective consideration before taking a decision, not only regarding the need to continue the post but also the services of the Officer or the employee, and if so construed the rule is not ultra vires of article 14.
Allowing the appeal, this Court, HELD: Rule 5 of the Orissa Insurance Co operative Society Ltd. is capable of the interpretation that the Board of management may form an objective opinion, on the basis of material, that the post which the officer or the employee is occupying is no longer in need and that the post would be abolished.
This would be a policy decision depending on the exigencies.
Once the Board reaches such a decision to abolish the post, in consequence the service of the officer/employee occupying the post could be terminated.
Viewed in that light the said rule does not become arbitrary, unreasonable or void offending Article 14 and therefore the rule is valid.
[225G 226 B] There is a presumption in favour of constitutionality of a legislation or statutory rule unless ex facie it violates the fundamental rights guaranteed under Part III of the constitution.
If the provisions of a law or the rule is construed in such a way as would make it consistent with the Constitution and another interpretation would render the provision or the rule unconstitutional, the Court would lean in favour of the former construction.
[225 E] It is clear in the instant case, that the Board of Management did not abolish the post but put an end to the service of the appellant, obviously due to loss of confidence as his honesty and integrity became suspicious and his continuance in service was felt inexpedient and not in the interest of the business of the respondents.
But rule 8 was available for taking action for misconduct but was not availed.
Therefore, the order terminating the services of the appellant is illegal.
[226 C] 222 Normally the appellant is entitled to reinstatement but the ends of justice would be met by directing the respondents to pay him Rs. 1,00,000 as compensation, instead of reinstatement and further continuance in service.
The compensation awarded would be staggered between the year 1973 till date for the purpose of income tax and given the appropriate relief.
[226D E] March of service jurisprudence necessitates that the respondent recast Rule 5 in tune with the Constitution and the law.
[226 E]
|
Civil Appeal No. 378 of 1992.
From the Judgment dated 31.7.1991 of the Karnataka High Court in Writ Appeal No. 1224 of 1990.
Santosh N. Hegde and P.Mahale for the Appellants.
A.K. Subbiah, Ranji Thomas, K.V. Mohan, M Veerappa and K.H. Nobin Singh for the Respondents.
290 The Judgment of the Court was delivered by AHMADI, J.
Special leave granted.
This appeal is directed against the judgment of the High Court of Karnataka dated 31 st July, 1991, whereby the Division Bench allowed the Writ Appeal setting aside the decision of the learned Single Judge and held, relying on the judgment in Writ Appeal No. 2564 of 1987 decided on 28th May, 1991, that Section 4 (2) of the Karnataka Zila Parishads, Taluk, Panchayat Samithis, Mandal Panchayats and Nyaya Panchayats Act, 1983 (hereinafter referred to as `the Act ') does not confer any power in the Deputy Commissioner to change the headquarter of any Mandal.
It is this view taken by the Division Bench of the High Court that is put in issue in the present appeal.
For the purpose of disposal of this appeal we may notice a few relevant facts.
The Act came into force w.e.f. 14 'th August, 1984.
Thereafter, on 16th January, 1986 a notification was issued by the Deputy Commissioner in exercise of power conferred by Section 4 (1) of the Act constituting a Mandal, named Mudiyannur Mandal, and located its headquarter at Mudiyannur.
However, the Divisional Commissioner changed the headquarter to Uthanpur while exercising power under Section 4 (3) of the Act.
Thereupon a writ petition was filed on 14th December, 1987, being Writ Petition No. 7685/86, challenging the said decision of the Divisional Commissioner.
That Writ petition was dismissed by the High Court observing: if the Mandal so desires it may pass a resolution to change the headquarter from the existing place to another place whereupon it will be open to the Deputy Commissioner to consider if he would like to exercise power under Section 4 (2) of the Act.
Pursuant thereto a fresh resolution was passed whereupon the Deputy Commissioner issued a notification under Section 4 (2) of the Act for change of headquarter which was published in the Government Gazette of 20th January, 1988.
On the issuance of the said draft notification respondents Nos. 1 to 10 filed a writ petition, being Writ Petition No. 1888/88, challenging the said draft notification.
That writ petition was also dismissed by the High Court.
The Deputy Commissioner after considering the resolution of the Mandal and the objections received in response to the draft notification from respondents Nos 1 to 10 passed an order declaring Mudiyannur as the headquarter of the Mandal.
To give effect to his decision, a notification under Section 4 (2) of the Act was issued on 23rd July, 1988 whereby the headquarter was changed from Uthanpur to Mudiyannur.
Once again the respondent Nos 1 to 10 challenged that notification by a revision application filed under Section 4 (3) 291 of the Act.
The Divisional Commissioner exercising power under the said provision dismissed the revision application whereupon a Writ Petition no 77 of 1989 was taken to the High Court.
A learned Single Judge of the High Court dismissed the writ petition.
An appeal was carried to the Division Bench of the High Court.
the Division Bench allowed the appeal by the impugned judgment dated 31 st July, 1991 following an earlier decision in Writ Appeal No. 2564 of 1987 rendered on 28th May, 1991.
It is the correctness of this decision which we are called upon to examine.
Section 4 (1) as it stood before its amendment on 4th October, 1985 empowered the Deputy Commissioner to declare any area comprising a village or group of village having the required population to be a Mandal for the purposes of the Act.
That sub section did not carry a provision empowering the Deputy Commissioner to specify the headquarter of the Mandal.
By the amendment brought about in that provision by Act 3 of 1986 w.e.f. 4th October, 1985, this power was specifically conferred on the Deputy Commissioner.
The amended Section 4 (1) reads as under : "(1) Subject to the general or special orders of the Government, the Deputy Commissioner, if in his opinion, it is expedient to declare any area comprising a village or group of village having a population of not less than eight thousand and not more than twelve thousand to be a Mandal, may, after previous publication, declare such area as a Mandal for the purposes of this Act and also specify its headquarter.
" On a plain reading of this provision, it becomes obvious that the Deputy Commissioner was empowered not only to declare a village or group of villages as a Mandal but also to specify its headquarter.
We then come to sub section (2) which empowers the Deputy Commissioner, at the request of the Mandal concerned, or otherwise, to increase or decrease the area of any Mandal, by including within or excluding from such Mandal any village or group of villages or alter the name of any Mandal or declare that any area shall cease to be a Mandal after previous publication of the proposal by a notification in the Gazette.
This sub section confers power on the Deputy Commissioner to increase or diminish the area of any Mandal and to alter the name of any such Mandal but it does not in so many words confer power to specify the headquarter of such reconstituted Mandal.
Sub section (3) of section 4 empowers the Commissioner either on an application made within thirty days from the date of the notification by an aggrieved party or in exercise of suo moto power after giving a reasonable opportunity of being heard to the applicant or the Mandals 292 concerned, revise the orders of the Deputy Commissioner passed under sub section (1) or sub section (2), as the case may be, and may also, if he considers necessary, modify it as provided in the third proviso to subsection (1) Every order so passed revising or modifying the order of the Deputy Commissioner shall be published in the Official Gazette.
We are not concerned with the third proviso to sub section 4.
Sub section (1) of Section 4, therefore, empowers the Deputy Commissioner to declare any village or group of villages as a Mandal and to specify its headquarter.
After the constitution of the Mandal and on the headquarter being specified under this sub section, if any change, is to be effected in the area of the Mandal either by increasing or reducing its size, the power has to be exercised under sub section (2) of Section 4 of the Act.
That sub section also empowers the Deputy Commissioner to alter the name of the Mandal.
It was submitted by the counsels for the respondents that while this sub section in terms empowers the Deputy Commissioner to alter the name of the Mandal, it does not empower him to alter the headquarter of the Mandal because the headquarter once specified under sub section (1) of Section 4 must remain unaltered since the Act designedly does not confer any power on any authority whatsoever to change the headquarter once specified under sub section (1) of Section 4.
This submission was countered by the learned counsel for the appellant by inviting our attention to Section 14 of the Karnataka (hereinafter called `the '.
that provision reads as under: "Where by any Mysore or Karnataka Act made after the commencement of this Act, any power is conferred then that power may be exercised from time to time as occasion requires.
" Counsel for the appellant submitted that once the power to specify the headquarter is conferred on the Deputy Commissioner by sub section (1) of Section 4 of the Act it can be exercised from time to time by virtue of the said Section 14 if the occasion so requires.
He, therefore submitted that this Court should construe the scheme of Section 4 of the Act with the aid of Section 14 in such a manner as not to leave a vacuum for the exercise of power if need arises for a change of headquarter.
He submitted that if, the view taken by the High Court is approved, a situation may arise when even after a change takes place in the size of the Mandal area there would be no power vested in any authority whatsoever for changing of specifying the headquarter of the reconstituted Mandal which vacuum may lead to avoidable complications.
He, therefore, submitted that once the legislature has invested the Deputy Commissioner with the power to 293 specify the headquarter under sub section (1) of Section 4, subject to the modification which the Commissioner may choose to make under sub section (3) of Section 4, the power to alter the headquarter of a Mandal from time to time if the occasion so requires must be read into it.
We think there is a considerable force in this submission.
As pointed out earlier, Section 4(1) empowers the Deputy Commissioner to do two things, namely, (i) to declare an area as a Mandal, and (ii) to specify its headquarter.
The word `also ' preceding the words `specify its headquarter ' cannot be understood to convey that the power once exercised would stand exhausted.
Such a construction sought to be placed by counsel for the respondent does not accord with the language of the provision.
It merely conveys that when the Deputy Commissioner constitutes a Mandal for the first time it will be necessary for him to specify its headquarter also.
This power to specify the headquarter conferred on the Deputy Commissioner can be exercised from time to time as occasion requires by virtue of Section 14 of the .
The attention of the High Court was not drawn to the provision in Section 14 when it disposed of the Writ Appeal No. 2564 of 1987 and Writ Petition No 375 of 1989 on 28 th May, 1991.
It is true that the power conferred by sub section (2) of Section 4 can be exercised where there is a change in the area of the Mandal either by addition or reduction in the area.
Under clause (c) of sub section (2) of Section 4 the Deputy Commissioner is also invested with the power to alter the name of any Mandal.
The scheme of subsection (2) would, therefore, show that when there is any increase or decrease in the area of any Mandal, the Deputy Commissioner may, after the previous publication of the proposal by notification, exercise that power and rename the Mandal, if so required.
The absence of the power in sub section (2) of section 4 to specify the headquarter afresh does not necessarily mean that once the initial constitution of the Mandal takes place and the headquarter is specified the power is exhausted, notwithstanding section 14 of the .
If such an interpretation is placed on the scheme of section 4 of the Act neither the Deputy Commissioner nor any other authority will thereafter be able to alter and specify any other place as the Mandal 's headquarter.
Such a view would create a vacuum and even when a genuine need for specifying any other headquarter arises, the authorities will not be able to exercise power for want of a specific provision in the Act and that may lead to avoidable hardship and complications.
It is, therefore, essential that we read the provision of the Act in a manner so as to ensure that such a vacuum does not arise and the power is retained in the concerned authority which can be exercised should a genuine need arise.
In J.R. Raghupathy & Ors.
vs State of A.P. others; , this Court observed that the ultimate decision as 294 to the place or location of Mandal headquarter is left to the Government to decide and conferment of discretion upon the concerned authority in that behalf must necessarily leave the choice to the discretion of the said authority and it would not be proper for the courts to interfere with the discretion so exercised.
This is not to say that the discretion can be exercised in an arbitrary or whimsical manner without proper application of mind or for ulterior or malafide purpose.
If it is shown that the discretion was so exercised it would certainly be open to the Courts to interfere with the discretion but not otherwise.
We are, therefore, of the opinion that if the situation so demands and there is justification for altering the place of headquarter, it would be open to the Deputy Commissioner to exercise power under Section 4(1) of the Act read with section 14 of the to meet the situation.
We, therefore, allow this appeal, set aside the impugned order of the Division Bench of the High court and restore the order of the learned Single Judge directing that the writ petition, which gave rise to the writ appeal, shall stand dismissed.
However, in the facts and circumstances of the case there will be no order as to costs.
V.P.R. Appeal allowed.
| On 16.1.1986, the Deputy Commissioner issued a notification constituting a Mandal under section 4 (1) of the Karnataka Zila Parishads, Taluk Panchayat Samithis, Mandal Panchayats and Nyaya Panchayats Act, 1983 and located the headquarter of the Mandal at Mudiyannur.
Later on exercising powers under section 4 (3) of the Act he changed the headquarter to Uthanpur.
On 14.12.1987 a writ petition (W.P.No. 7685/86) was filed challenging the decision of the Deputy Commissioner.
The High Court dismissed the petition holding that on passing a resolution my Mandal to change the headquarter from the existing place to another place, the Deputy Commissioner was to consider if he would like to exercise power under section 4(2) of the Act.
The Mandal passed a fresh resolution and thereupon the Deputy Commissioner issued a notification under section 4 (2) of the Act for change of headquarter and on 20.1.1988 the draft notification was published in the Gazette.
The respondents 1 to 10 filed a writ petition (W.P. No 1888/88) 287 before the High Court challenging the draft notification.
The writ petition was dismissed.
Considering the resolution and the objections to the notification, the Deputy Commissioner issued another notification under section 4 (2) of the Act and the headquarter of the Mandal was changed from Uthanpur to Mudiyannur.
The respondents challenged the notification by filing a revision application under section 4 (3) of the Act which was dismissed by the Divisional Commissioner.
The respondents moved the High Court in W.P. No. 77 of 1989 challenging the order of the Deputy Commissioner.
The Single Judge of the High Court dismissed the petition, against which an appeal was filed before the Division Bench of the High Court.
The Division Bench allowed the appeal following an earlier decision of the High Court in Writ Application No. 2564 of 1987 dated 28.5.1991.
The correctness of the decision of the Division Bench of the High Court was challenged in this appeal by special leave.
The appellant contended that once the power to specify the headquarter was conferred on the Deputy Commissioner by Section 4 (1) of the Act, it could be exercised from time to time by virtue of section 14 of the Karnataka General Clauses Act,1897; that the scheme of section 4 of the Act should be construed with the aid of section 14 of the General Clauses Act in such a manner as not to leave a vacuum for the exercise of power for a change of headquarter; that if the High Court 's view was approved, there could be no power vested in any authority whatsoever for changing or specifying the headquarter of the reconstituted Mandal which vacuum might lead to avoidable complications; and that once the legislature invested the Deputy Commissioner with the power to specify the headquarter under section 4 (1), subject to the modification by the Commissioner under section 4 (3), the power to alter the headquarter of the Mandal from time to time, if the occasion so required, must be read into it.
288 The respondents submitted that while sub section (2) of Section 4 of the Act in terms empowered the Deputy Commissioner to alter the headquarter of the Mandal because the headquarter once specified under section 4(1) should remain unaltered; that the act designedly did not confer any power on any authority whatsoever to change the headquarter once specified under section 4 (1).
Allowing the appeal, this Court, HELD : 1.01 Section 4 (1) empowers the Deputy Commissioner to do two things, namely (i) to declare an area as a Mandal, and (ii) to specify its headquarter.
[293 B] 1.02 The power conferred by sub section (2) of Section 4 of the Karnataka Zila Parishads, Taluk Panchayat Samithis, Mandal Panchayats and Nyaya Panchayats Act, 1983 can be exercised where there is a change in the areas of the Mandal either by addition or reduction in the area.
Under clause (c) of sub section (2) of Section 4, the Deputy Commissioner is also invested with the power to alter the name of any Mandal.
[293 D E] 1.0 The scheme of sub section (2) of Section 4 would show that when there is any increase or decrease in the area of any Mandal, the Deputy Commissioner may, after the previous publication of the proposal by notification, exercise that power and rename the Mandal, if so required.
[293 E] 1.04 If the situation so demands and there is justification for altering the place of headquarter, it would be open to the Deputy Commissioner to exercise power under section 4 (1) of the Act read with Section 14 of the General Clauses Act to meet the situation.
[294 C] 1.05 The word `also ' preceding the words `specify its headquarter ' cannot be understood to convey that the power once exercised would stand exhausted.
Such a construction sought to be placed by counsel for the respondent does not accord with the language of the provision.
It merely conveys that when the Deputy Commissioner constitutes a Mandal for the first time it will be necessary for him to specify its headquarter also.
[293 B C] 1.06 The power to specify the headquarter conferred on the Deputy Commissioner can be exercised from time to time as occasion 289 requires by virtue of section 14 of the General Clauses Act.
[293 C D] 1.07 The ultimate decision as to the place or location of Mandal headquarter is left to the Government to decide and conferment of discretion upon the concerned authority in that behalf must necessarily leave the choice to the discretion of the authority and it would not be proper for the courts to interfere with the discretion so exercised.
This is not to say that the discretion can be exercised in an arbitrary or whimsical manner without proper application of mind or for ulterior or malafide purpose.
If it is shown that the discretion was so exercised it would certainly be open to the courts to interfere with the discretion but not otherwise.
[293 H; 294 A B] 2.
The absence of the power in sub section (2) of Section 4 to specify the headquarter afresh does not necessarily mean that once the initial constitution of the Mandal takes place and the headquarter is specified, the power is exhausted, notwithstanding section 14 of the General Clauses Act.
If such an interpretation is placed on the scheme of section 4 of the Act neither the Deputy Commissioner nor any other authority will thereafter be able to alter and specify any other place as the Mandal 's headquarter.
Such a view would create a vacuum and even when a genuine need for specifying any other headquarter arises, the authorities will not be able to exercise power for want of a specific provision in the Act and that may lead to avoidable hardship and complications.
It is, therefore, essential that the provision of the Act be read in a manner so as to ensure that such a vacuum does not arise and the power is retained in the concerned authority which can be exercised should a genuine need arise.
[293 F H] J.R. Raghupaty & Ors.
vs State of A.P. & Ors.
, ; , referred to.
|
Civil Appeal No. 4134 of 1991.
From the Judgment and Order dated 30.8.1991 of the Bombay High Court in Writ Petition No 3580 of 1991.
J.P.Pathak and P.H. Parekh for the Appellants.
A.M. Khanwilkar and S.K. Parshankar for the Respondents.
The Judgment of the Court was delivered by 229 KASLIWAL, J.
This appeal by grant of special leave is directed against the judgment of the Bombay High Court dated 30th August, 1991 in a suit for possession under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as the Act).
The suit was dismissed by the 7th Additional Small Causes Judge.
On appeal the learned 10th Additional District Judge, Pune by Judgment dated 25.4.1991 set aside the order of the trial court and decreed the plaintiff 's suit for possession.
The tenants filed the writ petition in the High Court challenging the order of the Additional District Judge, But the same was dismissed and the decree for possession passed by the Additional District Judge was affirmed.
The trial court held that the service of notice dated 7.8.1980 on the defendant tenants was not held proved.
The plaintiffs were unable to prove that the postal acknowledgement Exhibit 51 Contained the signatures of defendant no 2 or 3.
It was held that on the point of service of notice the case of the plaintiff was rather confusing and not clear.
It was held that even assuming that the notice had been served yet the case did not fall under Section 12(3) (a) of the Act.
The trial court also held that the case did not fall under Section 12(3) (b) of the Act as the defendants had paid Rs. 55,800 on 16.1.1984 and thereafter made regular payment of Rs. 600 every month.
According to the learned trial court the issues were framed on 26.8.1985 and before that the defendants had made full payment as demanded in the notice and as such no decree can be passed under Section 12(3)(b) of the Act.
Learned Additional District Judge reversed the above finding of the trial court and held that the evidence of the plaintiff showed that the copy of the notice was sent to all the defendants by registered post.
The postal receipts have been filed as exhibits 52, 53 and 54.
Learned Additional District Judge further held that when the notices are sent by registered post it is presumed to have been served and mere denial by the tenants had no value, unless they proved some extraordinary happenings or events which prevented following of usual course of business.
Learned Additional District Judge further held that the notice was sent on the address given in the plaint and it was admitted by the defendant in his statement that it contained the correct address.
A presumption of service of notice was drawn under Section 27 of the General Clauses Act and Section 114 of the Evidence Act.
Learned additional District Judge though affirmed the finding of the trial court that the case is not covered under section 12(3)(a) of the Act, but the plaintiffs were entitled to a decree under Section 12(3) (B) of the Act.
In this regard learned Additional District Judge recorded the finding that the entire arrears of rent amounted to Rs. 71,088 but the defendant tenant only 230 deposited Rs 66.000 till the first date of hearing and thus remained in arrears of Rs. 5,088.
It was also held that the provisions of 12(3)(b) of the Act are mandatory provisions and those are required to be strictly complied with by the tenants during the pendency of the suit and also appeal when the landlord claims possession of the suit premises on the ground of Section 12(3)(b) of Act.
The defendant tenant did not deposit the entire arrears on the first date of hearing and did not deposit the further rent during the pendency of the appeal.
Thus the defendant persistently committed defaults during the pendency of the suit and also the appeal in paying the rent.
We have heard learned counsel for the parties and have thoroughly gone through the record.
It is important to note that M/s Kulkarni Patterns Pvt. Ltd/. (defendant No.1) Was the tenant, defendant No 2 Shri D G. Kulkarni was the Chairman of the company and defendant No 3 Mrs M.D. Kulkarni was the wife of defendant No 2 and Director of defendant No 1.
The plaintiffs sent a notice dated 7.8.1980 to all the defendants vide postal receipts Exhibit 52,53 and 54.
Exhibit 51 is only one acknowledgement receipt which has been produced on record.
It has been contended on behalf of the appellants that the learned Additional District Judge was wrong in drawing presumption of service of service of notice in the facts of the present case.
It was submitted that the plaintiff initially stated that the acknowledgement receipt Exhibit 51 contained the signatures of defendant NO.3, but subsequently admitted that it contained the signature of defendant No. 2.
It was further argued that defendant No.2.
had appeared in the witness box and clearly denied his signatures on Exhibit 51.
It was thus contended that the presumption of service of notice was rebutted and thereafter the burden lay on the plaintiffs to prove the service of notice by examining the postman or by other evidence and the plaintiffs having failed to do so, the service of notice having not established, the suit was liable to be dismissed.
Reliance in support of the above contention was placed on a decision of this Court to which one of us was a party in Green view Radio Service vs Laxmibai Ramji And Another.
, Reliance was placed on the following observations made in the above case.
"In this connection, we may also point out that the provisions of section 106 of the Transfer of Property Act require that notice to quit has to be sent either by post to the party or be tendered or delivered personally to such party or to one of his family members or servants at his residence or if such tender or delivery is not practicable, affixed to a conspicuous part of the 231 property.
The service is complete when the notice is sent by post.
In the present case, as pointed out earlier, the notice was sent by the plaintiff 's advocate by registered post acknowledgement due.
The acknowledgement signed by the party was received by the advocate of the plaintiff.
Thus in our view the presumption of service of a letter sent by registered post can be rebutted by the addressee by appearing as witness and stating that he never received such letter.
If the acknowledgement due receipt contains the signatures of the addressee himself and the addressee as a witness states that he never received such letter and the acknowledgement due does not bear his signature and such statement of the addressee is believed then it would be a sufficient rebuttal of the presumption drawn against him.
The burden would then shift on the plaintiff who wants to rely on such presumption to satisfy the court by leading oral or documentary evidence to prove the service of such letter on the addressee.
This rebuttal by the defendant of the presumption drawn against him would of course depend on the veracity of his statement.
The court in the facts and circumstances of a case may not consider such denial by the defendant as truthful and in that case such denial alone would not be sufficient.
But if there is nothing to disbelieve the statement of the defendant then it would be sufficient rebuttal of the presumption of service of such letter or notice sent to him by registered post.
" In the present case the plaintiffs had sent a copy of the notice to all the three defendants by registered post.
Three postal receipts Exhibits 52, 53 and 54 have been filed in the present case and Exhibit 51, one acknowledgement receipt.
As regards Exhibit 51, the defendant No.2 has appeared in the witness box and has denied his signatures.
However, it has not been shown that this acknowledgement receipt was related to which of the three notices sent vide postal receipts Exhibits 52,53 and 54.
The plaintiffs have clearly proved that three notices were sent by registered post and which is clearly born out from the three postal receipts.
Admittedly the premises were taken on rent in the name of the defendant No.1 namely Kulkarni Patterns.
Pvt. Ltd. and it is proved that one of the notices by registered post was also sent to the company.
It has been admitted by the defendant No.2 in his statement that the notice was sent on the correct address.
The defendant No.2 in his statement has nowhere stated that no notice has bee received by the company.
The only denial is in respect of the acknowledgment receipt Exhibit 51 and the only inference which could legitimately be drawn is that in respect of one notice, it was not proved as 232 to who acknowledged the receipt of the notice.
We do not approve the following statement of law made by the learned Additional District Judge "that the evidence of the defendant did not show any extraordinary happenings or the events which prevented the following of usual course of business and thus, his mere denial has no value".
However, in the present case three notices were sent by registered post and one of which was sent in the name of the defendant company who was the tenant, a presumption can legitimately be drawn that the notice dated 7.8.1980 had been served on the company.
There is no rebuttal on behalf of the defendant as regards the notice served on the company and in the facts and circumstances of the present case we hold that notice dated 7.8.1980 sent by registered post was served on the defendant company, In Green View Radio Service (supra) it was held that the acknowledgement due receipt contained the signature of the addressee himself and the addressee as a witness stated that he never received such letter and the acknowledgement due did not bear his signature and such statement of the addressee if believed then it would be a sufficient rebuttal of the presumption drawn against him.
The burden will then shift on the plaintiff who wants to rely on such presumption to satisfy the court by leading oral or documentary evidence to prove the service of such letter on the addressee.
Even applying this statement of law in the facts of the present case, the rebuttal, if any, made by defendant No.2 can be related only with regard to Exhibit to Exhibit 51 for one notice but not with regard to all the three notices sent by registered post vide exhibits 52 to 54 Thus, in the facts of the case in hand before us we are fully convinced that the service of notice shall have to be presumed so far as defendant company is concerned and there is no rebuttal to such presumption by the defendant appellants.
The requirement of sending notice under Section 12(2) of the Act is to be done in the manner prescribed under paragraph two of Section 106 of the Transfer of Property Act which reads as under.
"Every notice under this Section must be in writing signed by or on behalf of the person giving it and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants, at his residence, or (if such tender or delivery is not practicable ) affixed to a conspicuous part of the property." The reading of the above provision clearly shows that the notice can be sent by post to the party who is intended to be bound by it.
Thus, the notice sent by registered post in the name of the defendant company who 233 is the tenant is fully in accordance with the requirement of section 106 of A the Transfer of Property Act.
So far as the finding recorded by the learned Additional District Judge that the defendants were defaulter in the payment of rent and full amount of rent was not paid or deposited on the first date of hearing and no rent was paid month by month during the pendency of the appeal could not be assailed by the learned counsel for the appellants.
Thus, the learned Additional District Judge as well as High Court was right in passing a decree for possession under section 12(3)(b) of the Act.
As a result of the above discussion and findings recorded by us, we find no force in this appeal and the same is dismissed with costs.
Y.L Appeal dismissed.
| The Respondents landlords filed a suit for possession of the suit premises against the appellants on the ground of default in payment of rent, amongst other, The 7th Additional Small Causes Judge, dismissed the suit holding that the service of notice dated 7 8 1980 on the defendants terminating the tenancy was not proved, even though one out of the three acknowledgments due, had been received duly signed.
As regards the question of default in payment of rent, the learned Judge took the view that the case did not fall under Section 12(3)(b) of the Act, as the defendants had paid Rs. 55,800 on 16.1.1984 and thereafter made regular payment of Rs. 600 every month.
On appeal by the respondent landlords, the learned additional District Judge reversed the findings of the trial Court and decreed the suit.
The learned Additional District Judge held that when the notices are sent by registered post, it is presumed to have been served and mere denial by the tenants had no value, unless they proved some extraordinary happenings or events which prevented following of usual course of business.
On the question of default in payment of rent the learned Judge held that as the defendants did not deposit the entire arrears on the first date of hearing and did not deposit the further rent during the pendency of the appeal, they persistently committed defaults during the pendency of the suit and also the appeal.
The appellants thereupon filed a writ petition in the High Court challenging the validity of the aforesaid order of the learned Additional District Judge.
The High Court dismissed the writ petition and affirmed the order passed by the learned Additional District Judge.
Hence this appeal by the appellants, after obtaining special leave.
Dismissing the appeal, this Court, 228 HELD: The notice under Section 106 T.P. Act can be sent by post to the party who is intended to be bound by it.
Thus the notice sent by registered post in the name of the defendant company who is the tenant is fully in accordance with the requirement of section 106 of the Transfer of Property Act.[232H 233A] The plaintiffs had sent a copy of the notice to all the three defendants by registered post.
Three postal receipts Exhs.
52,53 and 54 have been filed in the present case Exh. 51, one acknowledgment receipt.
As regards Exh. 51, the defendants No.2 has appeared in the witness box and has denied his signatures.
However, it has not been shown that this acknowledgment receipt was related to which of the three notices sent vide postal receipts Exhs. 52,53 and 54.
[231E F] The rebuttal, if any, made by defendant No.2 can be related only with regard to Exh.
51 for one notice but not with regard to all the three notices sent by registered post vide Exhs.
52 to 54.[232D] The service of notice shall have to be presumed so far as defendant company is concerned and there is no rebuttal to presumption by the defendant appellants.
[232E] The finding recorded by the learned Additional District Judge that the defendants were defaulter in the payment of rent as full amount of rent was not paid or deposited on the first date of hearing and no rent was paid month by month during the pendency of the appeal could not be assailed.
[233B] Green View Radio Service vs Laxmibai Ramji and Anr., , referred to.
|
vil Appeal No. 1306 of 1988.
From the Judgment and Order dated 2.4.1987 of the Allahabad High Court in Writ Petition No. 1818 of 1984.
H.N. Salve, P.P.Tripathi, Manoj Swarup and K.J. Johan for the Appellants.
B.Sen, Gopal Subramaniam, Prashant Kumar and Mrs. section Dikshit for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
There was a time when, in almost every State in India, people were invited to avail of the supply of the electric energy produced in the State and offered special concessions when they agreed to 158 do so in bulk under long term contracts.
A situation, however, has since developed when the demand for the energy increased so rapidly that, despite the quantity of available electric energy also having gone up tremendously the rates of supply agreed upon became uneconomical.
The State and its instrumentalities, who were supplying the energy, found themselves without power to revise the rates to meet the altered situation until the legislature came to the rescue.
It is this situation in the case of Kanoria Chemicals and Industries Ltd. (hereinafter referred to a `the appellant ') which has given rise to these appeals.
The , (hereinafter referred to as `the 1948 Act ') entrusted the control over the generation and distribution of electric energy to Electricity Boards constituted under the Act.
In the State of Uttar Pradesh, the U.P. State Electricity Board (hereinafter referred to as `the Board,) was constituted on 1.4.1959.
At that time, the State Government (hereinafter referred to as `the State ') was in the process of establishing the Rihand Hydro Electric Generating Plant, which become operational w.e.f. 1.2.62, and attained an ultimate installed capacity of 300 M.W.
The control of this remained with the State till 31.3.1965.
Since the supply of electrical energy was then available in abundance and only the eastern area of the State was served by the plant, the State considered it expedient to enter into contracts with bulk purchasers both with a view to ensure maximum utilisation of the electricity available and with a view to the industrialisation of the eastern areas of the State.
In particular the State was keen on the industrial development of the district of Mirzapur, which was considered to be an extremely backward area.
The State was keen that power intensive units be set up in close proximity of Rihand so that electricity could be supplied to these units from the Rihand power plant.
One feature of the supply of electricity from Rihand was that the metering was done at the point of generation so that transmission and distribution losses and costs could be borne by the consumers of electricity.
The appellant set up an industry for manufacture of caustic soda at Renukoot sometime in 1964.
According to the appellant, this industry involved the use of electricity as the main raw material, the other raw material needed being salt.
It is said that there were considerable disadvantages in setting up the proposed caustic soda unit in the district of Mirzapur, principally due to its distant location from areas from which salt had to be transported.
The appellant, it is said, could easily have set up its factory in some other State with greater facilities and advantages but it was induced to set up the caustic soda plant at Pipri in the district of Mirzapur on account of the assurance given by the State that it will supply hydro electric 159 power to the assessee from the Rihand power plant on a long term basis at a cheap rate.
It is claimed that, but for this promise, the appellant would never have chosen Pipri or the district of Mirzapur for the location of this plant.
After elaborate discussions between the State Government and the promoters of the appellant company, the plant was set up at Pipri and a contract was entered into between the State Government and the appellant on 30.9.1963 ensuring the supply of electricity from the point of generation to the appellant for a period of 25 years from 1.4.64.
The supply, to the extent of 6.5 MW.
was to be from Rihand hydel station at a fixed rates of 2.5 paise per unit.
An additional supply of 1.5 MW was also promised from an inter connection at the rate of 5 N.P. per unit.
The rates could be revised after the first sixteen years but any enhancement in rates was not to exceed 10 per cent of the rates agreed upon.
The State agreed further to supply 4.5 MW to the appellant from the Obra Hydro Electric Project on such rates as would be fixed subsequently.
It may be mentioned that this clause gave rise to disputes which were referred to arbitration.
An award was made by justice D.P. Madan, a retired judge of this Court, which was made a decree of this Court by an order dated 1.4.1987.
Under the award, the rate of supply was fixed at 8.69 paise per unit.
The State 's grievance is that it incurred a loss of Rs. 10.55 crores by supplying electricity from Rihand between 1.4.64 and 19.5.83 at concessional rates instead of applying the uniform tariff applicable to other "bulk power" consumers, briefly referred to as "HV 2 rates.
" It says also that it likewise suffered a loss of 12.4 crores due to the supply at 8.69 paise instead of normal rates, from Obra between 1.4.71 and 31.3.89, when the agreement, came to an end by efflux of time.
Obviously, it was not economical to continue supplying energy at the preposterously low rates to which the State had committed itself in 1963 on account of the conditions that prevailed at the time of the agreement.
The powers of the State or the Boards to revise contractual rates unilaterally were examined by this Court in Indian Aluminium Company Ltd. vs Kerala State Electricity Board [1976] 1 SCR 70.
It is sufficient to say that, after considering the provisions of section 49 and 59 of the Supply Act, the Court held that the Electricity Board were not entitled to enhance charges in derogation of stipulations contained in agreement entered into between parties.
This decision led to the provisions of the Supply Act being amended by various States.
The State of Karnataka, Orissa and Rajasthan brought in amendments enabling the Electricity Board to supersede contracts and 160 revise the rates contained in earlier agreements.
The U.P. Government, also enacted the Electricity Laws (Uttar Pradesh Amendment), Act, 1983, to vest the State 's agreement with the Board and to enable the Board to revise the contractual rates.
The Act came into force from 20.5.1983.
Section 7 of the said Act amended Section 60 of the Supply Act, 1948 by inserting the following sub sections (3) to (5) with retrospective effect from April 1, 1965 : (3) All expenditure which the State Government may, not later than two months from the commencement of the Electricity Laws (Uttar Pradesh Amendment) Act, 1983, declare to have been incurred by it on capital account in connection with the purposes of this Act in respect of the Rihand Hydro Power System shall also be deemed to be a loan advanced to the Board under section 64 on the date of commencement of this sub section and all assets acquired by such expenditure shall vest in the Board with effect from such commencement.
(4) The provisions of the sub sections (1) and (1 A) shall, subject to the provisions of sub section (5) apply in relation to the debts and obligations incurred, contracts entered into and matters and things obliged to be done by, with or for the State Government in respect of the Rihand Hydro Power system after the first constitution of the Board and before the commencement of this sub section as they apply in relation to debts and obligations incurred, contracts entered into, matters and things engaged to be done by, with or for the State Government for any of the purposes of this Act before the first constitution of the Board.
(5) All such contracts entered into by the State Government for supply of electrical energy based on or connected with the generation of electricity from the Rihand Hydro Electric Generating Station to any consumer and any contract entered into by the Board on or after April 1, 1965 for the supply of electrical energy to such consumer shall operate subject to the modifications specified in the following clauses, which shall have effect from the date of the commencement of the Electricity Laws (Uttar Pradesh Amendment) Act, 1983 (hereinafter referred to as the said date): 161 (a) the rates to be charged by the Board for the energy supplied by it to any consumer under any contract for which the payment will be due for the first time on or after the said date shall be such as may with the previous approval of the State Government be fixed by the Board, having due regard to the geographical position of the area of supply, the nature of the supply and purpose for which supply is required and any other relevant factor.
(b) If the State Government directs the Board under Section 22 B of or under any other law for the time being in force to reduce the supply of energy to a consumer and thereupon the Board reduces the supply of energy to such consumer accordingly, the consumer concerned shall not be entitled to any compensation for such reduction, and if the consumer consumes energy in excess of the reduced limit fixed under the said section 22 B or any other law for the time being in force as the case may be, then the Board shall have the right to discountinue the supply to the consumers without notice ,and without prejudice to the said right of the Board, the consumer shall be liable to pay for such excess consumption at double the normal rate fixed under clause (a); (c) Any arbitration agreement contained in such contract shall be subjects to the provisions of this sub section.
Parliament also, at about the same time, amended section 59 of the Act by Act 18 of 1983.
The amended section 59(1), which is sufficient for our purpose reads thus : 59.
General principles for Board 's finance (1) The Board shall, after taking credit for any subvention from the State Government under Section 63, carry on its operation under this Act and adjust its tariffs so as to ensure that the total revenues in any year of account shall, after meeting all expenses properly chargeable to revenues, including operating, maintenance and management expenses, taxes (if any) on income and profits depreciation and interest payable on all debentures, bonds and loan, leave such surplus as is not less than three per cent, or such higher percentage, as the State Government may, by notification in the official Gazette, specify in this behalf, of the value of the fixed assets of the Board in service at the 162 beginning of such year.
Explanation For the purposes of this sub section.
"value of the fixed assets of the Board in service at the beginning of the year" means the original cost of such fixed assets as reduced by the aggregate of the cumulative depreciation in respect of such assets calculated in accordance with the provisions of this Act and consumer 's contributions for service lines.
It has been pointed out to us that the U.P. State amendment is somewhat different from those of the other States.
The Karnataka legislature amended section 49 of the 1948 Act and the Orissa and Rajasthan legislatures inserted section 49A in the said Act.
These provisions enabled the Boards ' to prescribe tariffs and these rates were to prevail over those specified in the agreement.
The latter two amendments actually declare the relevant clauses in the agreement void from inception.
The U.P. amendment.
however, retains the effectiveness of the earlier contracts and only reads into them the rates that may be prescribed by the Board.
This is the first difference.
The second is that while the other legislations affect all agreements entered into before a specified date, the U.P. amendment is restricted to contracts for supply of electricity from the Rihand Hydro Electric Generating Station.
We are informed that, when the above amendment was sought to be effected, the only outstanding contract of the State for the supply of electricity from the Rihand Hydro Electric Generating Station was the contract with the appellant on the 30th of September, 1963.
There had been two agreements entered into for supply of electricity from this power station but the other one with Hindustan Aluminium Company had become ineffective since that company gave up its claim to supply from the above power plant in 1975 76 having been successful in putting up a power plant for its captive use.
Thus, though the Act purports to be one of general application, it was really intended to enable the State and the Board to modify the rates of supply of electricity to appellant under the contract of 30.9.1963.
At this stage it may be useful to refer also to the terms of section 49 of the Act.
It reads thus : (1) Subject to the provisions of this Act and or regulations, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs.
163 (2) In fixing the uniform tariffs the Board shall have regard to all or any of the following factors, namely : (a) the nature of the supply and the purposes for which it is required : (b) the co ordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensee: (c) the simplification and standardisation of methods and rates of charges for such supplies : (d) the extension and cheapening of supplies of electricity to sparsely developed areas.
(3) Nothing in the foregoing provisions of this section shall derogate from the power of the Board, if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee, having regard to the geographical position of any area, the nature of the supply and purpose for which supply is required and any other relevant factors.
(4) In fixing the tariff and conditions for the supply of electricity, the Board shall not show undue preference to any person.
After the statute was thus amended, the Additional Chief Engineer of the Board wrote to the appellant on 6.2.1984 stating that, though the bills were being drawn on the basis of the agreement, the rates were subject to revision with effect from May 20, 1983 with the approval of the State Government and that a supplementary bill would be sent for the arrears as and when the rates were revised in pursuance of section 60(5) (a).
On 5th April, 1984, the appellant filed Writ Petition No. 1818 of 1984 in the High Court of Allahabad assailing the validity of section 7 of the amending Act and the right of the Board to enhance the rates.
While admitting the writ petition, the High Court passed an interim order to the effect that the State Government should provide an opportunity of hearing to the appellant before bringing about any change in the terms and conditions of the Agreement or tariff rates and that no revised rates shall be charged from the 164 appellant till it is heard, and the matter decided, by the State Government.
On June 11, 1984, the Law Officer of the Board wrote to the appellant requesting it to give in writing the points which they wanted to urge before the rates were approved by the State Government.
According to the appellant, this was not sufficient compliance with the court 's order and it moved the High Court for amending its petition and made further applications to the Court.
It may be mentioned that the stand taken up by the Board in the writ petition was that the writ petition was premature as the State 's approval had not been obtained and no injury had been caused to the appellant.
But, suddenly, on 31.1.85, the Board wrote to the appellant informing it that the State Government had approved the levy of rates as per Schedule HV 2 (as defined in the U.P. Gazette Notification dated 29th October, 1982) applicable to heavy power consumers in substitution of the rates mentioned in the agreement of 20th September, 1963.
It was stated curiously enough that the approval of the State Government had been given on 28.9.1983.
The effect of the revision was to oblige the petitioner to pay 57.71 paise per unit for 1983 84 and 61.60 paise per unit for 1984 85.
An idea of the magnitude of the revision can be had by pointing out that supplementary bills raised on the basis of the revision for the period 20.5.83 to 31.12.1984 were to the tune of Rs. 3.07 crores.
The appellant 's allegation is that no such approval had been given and it is asserted that the internal correspondence between Board and State would show that the legal Department of the Board had raised certain objections to the levy of HV 2 rates on the appellant, and that consequently Board had sent a fresh proposal in December 1983 seeking approval of the State Government for imposing a flat rate in respect of supplies to the appellant in place of earlier proposal.
It is also stated no proposal was made, or approval sought, for imposing the revised rates w.e.f. 20.5.1983.
The Board, however, proceeded to make demands against the appellant on the basis of the revised rates.
According to the Board, reference was made to a resolution dated 30.1.85 to the withdrawal on that date of the proposal for a flat rate in place of HV 2 rates.
Thus, demands on the basis of HV 2 rates were sought to be sustained.
The demands amounted to several crores of rupees and disconnection was threatened in case of nonpayment.
The appellant obtained certain interim orders from High Court (which have been subsequently considered and modified from time to time by this court during the pendency of these appeals).
It is, however, not necessary to refer to these interim orders as the final liability of the appellant will have to be decided on the basis of the orders of this Court on the appeals.
165 The writ petition was heard by a Bench of two judges.
Both judges repelled the challenge to the validity of the Amendment Act but differed on some of the points which came up for their consideration.
Srivastava, J. was of the opinion that the intention and purpose of the Amendment Act was to revise the existing contractual rate of energy charges and charge higher rates upto the extent of uniform tariff rates for the supply of electricity to the consumers whose contract stood modified by the said statute.
The rates so fixed had to be dependent upon the factors enumerated in section 60(5).
According to him, the material on record showed that the factors enumerated in section 60(5) had not been taken into account by the Board before fixing the rates or by the State Government in according its approval to the same.
The Board and the Government appeared to have acted upon a consideration of the factors mentioned in section 49(2) of the Act of 1948 while framing a uniform tariff but this was not sufficient compliance with the provisions of section 60(5).
On the other hand, Mathur.
J. was of the opinion that the move for amendment of the Act and enforcement of HV 2 tariff was initiated by the Board and that the notings contained a detailed justification for enforcing the said tariff.
It also appeared from the statement of objects and reasons of the amending bill that the supply of electricity at concessional rates despite losses and the desirability of replacing the said rate by uniform tariff came up for discussion in the State Legislature and that the Board did not act wrongly or illegally if it felt that it had no option but to apply uniform rates in view of the statement contained in the objects and reasons of the bill and the discussion in the State Legislature.
He was also of the opinion that the factors contemplated by section 60(5) (a) were similar to those envisaged by section 49(2), and since consideration had been given to the latter factors while farming the uniform tariff, no consideration of factors relevant to individual consumers was called for.
The two learned judges thus differed on the following two points : (a) Whether the language of section 60 (5) (a) of U.P. Act No. 12 of 1983 required consideration of factors prescribed in section 60 (5) (a) viz., geographical position of the area of supply, the nature of supply and purpose for which supply is required and other relevant factors with reference to petitioner company for revising the existing contractual rate of H.C. tariff? (b) Whether the factors mentioned in section 49(2) of , having already been considered at the time of farming uniform tariff no fresh consideration of any factors mentioned in section 60(5)(a) of U.P. Act No. 12 of 1983 was required when the uniform tariff itself was being fixed while 166 revising the rate ? The difference of opinion was, therefore, referred to a third Judge, Mehrotra, J.
This learned Judge answered that question referred to him as follows : (a) The language of section 60(5)(a) of U.P. Act 12 of 1983 requires consideration of factors prescribed in it with reference to the petitioner company for revising the existing contractual rate; and (b) Fresh consideration of the factors mentioned in section 60(5)(a) was required irrespective of the fact that factors mentioned in section 49(2) of the had already been considered at the time of framing of the uniform tariff which was being fixed for the petitioner company while revising the rates.
Consequent on the opinion of this learned Judge the writ petition was allowed and a writ of certiorari was issued quashing the approval dated 28.9.1983 given by the State Government to the new rates and the consequent resolutions, sanctions, bills and demands of the Board and the State Government.
A writ of mandamus was also issued commanding the respondents not to charge the uniform tariff rate for the period beginning from 20th May, 1983 till the rates were fixed in accordance with section 60(5) (a) of U.P. Act No. 12 of 1983.
The Order disposing of the Writ petition finally is dated 2.4.1987.
Immediately the judgement was pronounced the State Electricity Board and the State Government sought a certificate of fitness for preferring an appeal to this Court and the High Court granted the certificate, as prayed for.
This appeal has not been numbered on account of delay.
Though the High Court had quashed the revision of the rates, it had left it to the board and State to fix revised rates afresh.
That apart, the appellant had also a grievance that, in applying the HV 2 rates which were applicable to other consumers, the Board and the State had not taken into account the special factors relevant to the supplies made to it.
The appellant also, therefore, filed S.L.P. No. 13967 of 1987 for leave to appeal from the judgement dated 2.4.1987.
Leave has been granted by this Court on 8.4.1988 and the appeal of the company had been registered as C.A. 1306 of 1988.
In the meantime the Board and State were, apparently carrying on an 167 exercise for the revision of the rates afresh as directed by the High Court and, on 28.3.1988, the Board purported to fix the following revised rates for the supply from 20th May, 1983.
Period Rate (Paise per unit) 20.5.1983 to 31.3.1984 70.21 1.4.1984 to 31.3.1985 74.93 1.4.1985 to 31.3.1986 85.14 1.4.1986 to 31.3.1987 88.60 It will be observed that rates thus fixed, and said to have been approved by the State Government, were much higher than the HV 2 rates fixed earlier, objected to by the appellant and quashed by the High Court.
Having done this, this Board sought leave to withdraw the appeal preferred by it.
So far the appellant 's appeal was concerned, it was contended that the appellant 's remedy was to challenge the revision of 28.3.1988, if so advised, in fresh proceedings.
This was the position when these appeals came to be heard by us on April 10, 1991.
We heard the appeals at length and reserved orders.
In doing so we passed the following order : "The appeals pertain to the fixation of tariff rates for supply of electricity to the appellants caustic soda plant at Renukoot.
The appellants originally came to court challenging the levy of the electricity charges on the basis of HV II rates applicable generally to consumers drawing supply from the U.P. State Electricity Board.
However, the High Court held that the rates applicable to the appellants should be determined having regard to the individual circumstances of the appellants.
This was by a majority judgement in the High Court.
Subsequently, the Electricity Board had proposed, and the State Government has approved, certain rates for the period from 20.5.1983 to 31.3.1987 which are somewhat higher than the HV II rates originally approved.
This is the bone of controversy between the parties.
We find that the State Government and Board have filed no counter affidavits in regard to the challenge by the appellants to the revision of rates effected subsequent to the High Court 168 judgment.
In the circumstances, before we pronounce our judgment we think that, in the interests of justice, it would be proper to direct the State Board and the State Government to reconsider the fixation effected by them on the basis of the following directions : 1.
Within a period of three weeks from today, the appellants will file before the State Electricity Board (with a copy to the State Government) a representation setting out what, according to them, are the individual factors which should be taken into account in fixing the rates applicable to them within the meaning of section 60(5)(a), 1948 as amended in 1983.
The State Electricity Board will consider this representation and make appropriate recommendations to the State Government.
However, before doing so, and particularly if the Board intends to take into account any factors other than those mentioned in the appellants ' representation, they should indicate the factors which they so wish to take into account, in their recommendations to the State Government.
A copy of the recommendations should be forwarded to the appellants within seven weeks from today.
On receipt of the recommendations made by the Board, the appellants may submit to the State Government, if they so desire, any representation which they wish to make regarding the recommendations within a period of three weeks thereafter.
The State Government will consider the recommendations of the State Board as well as the representations made by the appellants to the Board as well as to themselves and approve of the rates which they consider proper in the circumstances of the case by a reasoned order, giving a board indication of the factors which they have taken into account in fixing the rates.
This decision should be arrived at within a period of four weeks from the date of the receipt of the representation of the appellants.
As indicated above, since the High Court has decided that in fixing the rates the individual circumstances of the appellants should be taken into account, the State Board as well as the State Government should take into consideration the special 169 circumstances of the appellants in fixing the rates.
The Government 's order may also, in case different rates for different periods are fixed, indicate the respective dates from which the several rates will come into operation.
The rates and dates so fixed by the Government, will naturally be subject to the decision on these appeals.
" Subsequent to our order, the appellant made a representation to the Board on 29.4.91.
The Board made its recommendations thereon to the State Government on 26.6.91.
Thereafter the appellant made its representation to the State Government on 22.7.91.
The State Government has subsequently passed an order on 31.8.91 and submitted the same to us.
It is perhaps sufficient to extract the concluding paragraphs of the order. "After analysing the contentions of Kanoria Chemicals and the State Electricity Board, the State Govt. comes to the conclusion that M/s. Kanoria Chemicals and Industries Ltd. has taken benefit of establishing this unit in a backward area for the last 19 years and there is no justification in giving this benefit in continuously future also because this area has been developed in comparison to earlier years.
The request of M/s. Kanoria Chemicals and Industries Ltd. that the factors shown by State Electricity Board should be limited to Rihand Hydel Power Station, is without justification since at present, they are getting supply from U.P. Grid and not from Rihand Power Station.
Hence, the point of view of the State Electricity Board is justifiable.
After due consideration of representation dated 24.2.91 and 22.7.91 of M/s. Kanoria Chemicals and Industries Ltd. and the recommendations of the State Electricity Board dated 26.6.91, the State Govt.
comes to the conclusion that M/s. Kanoria Chemicals and Industries Ltd. has failed to indicate any fact which comes under the provisions of Sec.
60(5)(a) of the and which has not been considered by the State Electricity Board while fixing the rates in March 88 has kept in mind the decision of Hon.
High Court of Allahabad and 170 complied with the provisions of sec.
60(5)(a) of the .
Since keeping in view the factors enumerated in sec.
60(5)(a) of the , the Rules were revised in March, 1988 in the following manner, hence there appears no necessity to change these rates : S.No.
Period Rate 1.
20.5.83 to 31.3.84 70.21 paise/unit 2. 1.4.84 to 31.3.85 74.93 paise/unit 3. 1.4.85 to 31.3.86 85.14 paise/unit 4.
1.4.86 to 31.3.87 88.60 paise/unit In other words, the State and Board adhere to the rates fixed on 28.3.88.
It may be interesting to set out a comparative table of the revisions effected by the Board originally (which was quashed by the High Court) and the rates now approved : Period HV 2 rate Revised rate Paise/unit paise/unit 20.5.83 to 31.3.84 55.71 70.21 1984 85 59.86 74.93 1985 86 63.89 85.14 1986 87 80.88 88.60 *1987 88 84.64 88.60 *1988 89 93.39 88.60 * The revised rates for 1987 88 and 1988 89 are stated to be provisional but so far till today no fresh rates have been fixed in respect of these periods.
171 The resultant position is that the appellant is now facing huge demands in respect of the period since 20.5.1983 and till 31.3.1989 when the agreement expires, at rates which will be higher than the HV 2 rates which had been sought to be applied in the first instance.
The appellant vehemently challenges the fixation of rates on 28.3.88 and 31.8.91.
A good part of the argument before us in these appeals, in the first instance, was addressed on the question whether the State Government was obliged to give a hearing to the consumer before revising the rates under section 60(5) and whether the factors relevant under s.60(5) can be said to have been taken into account on the ground that they had already been taken into account while fixing uniform rates under s.49.
In this context, reference was made to several decisions and contentions where canvassed in regard to the nature of the process of fixation of rates of charges for supply of electricity.
It is, however, unnecessary to go into all these aspects because, in pursuance of the directions of this Court dated 10.4.1991, the matter has been re considered by the Board and the State Government and fresh rates have been fixed along with the respective dates of operation after hearing the appellant 's representatives.
Broadly two principal submissions have been addressed before us at this stage on behalf of the appellants.
The first is that the fixation of rates as on 31.8.1991 is not valid as the respondents have not complied with the directions given by this Court in the order dated 10.4.1991.
It is argued that the respondents have neither disclosed the factors based on which the rates were revised in March 1988 nor have they indicated the monetary incidence or impact of the factors taken into account, though a specific request was made in this regard by the appellant to the Board and to the State Government.
The appellant, it is said, has been gravely prejudiced and handicapped, in the absence of any such disclosure, in making any effective representation.
Further in the final order dated 31.8.91, the State Government has stated that the fixation of rate by the State Government was based upon the consideration of facts and data communicated by the Board to the State Government in March 1988 but, admittedly, no facts, data or basis had been placed before this court at the time of the original writ petition on the basis of which the State Government had fixed the rates in March, 1988 compelling this Court to remand the matter for fresh consideration.
Suddenly the Board, while concluding its recommendation to the State Government on 26.9.91 reminded the State Government that prior approval of the State Government for the rates had already been obtained in March 88 and persuaded the State Government to mechanically uphold the pre determined rates.
Finally, it is contended that even in this process of re fixation of the 172 rates there was no genuine exercise to consider relevant factors in determining the rate under section 60(5)(a).
We do not think that there is any force in these contentions.
By the time the matter came up before us for hearing in the first instance the State Government had already passed its order of revision dated March 28, 1988.
The rates which had been recommended by the State Electricity Board and approved by the State Government were within the knowledge of the appellant.
It was of course necessary and equitable that, before giving effect to these rates (if not even before they were recommended), the consumer should have had no opportunity of placing before the Electricity Board and the State Government its side of the picture.
This opportunity has, however, been provided by to the appellant.
The appellant has also filed its representation.
After considering the representation, the Board made its recommendations to the State Government and a copy of these recommendations were also available to the appellant.
The appellant also had full opportunity to meet the various points set out in the recommendations of the Board.
The comments of both the Board and the appellant have been taken into account by the State Government before finally approving of the rates proposed by the Board.
The grievance of the appellant seems to be that the Board has not set out anywhere the precise manner in which the rates recommended by them were arrived at and that this has considerably handicapped any effective representation being made by it to the Board and to the State Government.
We do not think the proceedings are vitiated for this reason.
It is true that the actual computations of the rates were not set out by the Board in its recommendations made in 1983 or 1985 or 1988 but the proper approach to the issue is not the one adopted by the petitioner.
The section does not require the Board or the State Government to explain each and every step in its calculation.
All that the State Government has to do is to take into consideration the factors relevant under section 60(5) and propose rates for fixation to the State Government.
It is in order to ensure that these recommendations take into account all relevant factors that an opportunity has been provided to the consumer to satisfy the Board as well as the State Government that the fixation has not taken into account certain relevant factors.
We, therefore, think the appellant must be held to have been given a fair opportunity under section 60(5)(a) so long as it had an opportunity to explain to the Board and the State Government the factors individual to its case and also as to how and why the rates recommended by the Board need modification.
Moreover, the issue here was in a narrow compass for the following reason.
On the passing of the Amendment Act, the Board decided to substitute the contract rates by the HV 2 rates.
But this was rendered infructuous because of the terms of section 60(5)(a) which, it was said, were 173 different from those of section 49.
If the factors under section 49 were alone to be taken into account then the consumers, one and all, would have been liable to pay for the electricity at the tariff rates.
The claim of the appellant was that in applying these rates certain factors individual to it had not been taken into account.
If one compares the two provisions, one will find that most of the elements are common to the two provisions.
Both under section 49 and section 60 the authorities have to take into account the geographical position of any area, the nature of supply and purpose for which supply is required and any other relevant factor.
The only difference between the two provisions is that since section 49 deals with a general fixation while section 60(5) deals with a fixation for a particular individual case, there may be some special factors to be taken into account which may or may not be germane while fixing the general tariff under section 49.
Hence the only point which needed to be considered, when the matter was reexamined pursuant to our directions, was whether, having regard to the factors prevailing in the case of the appellant the rates to be fixed should be higher or lower than the HV 2 rates or whether they should be the same.
It was open to the petitioner to contend, as it in fact did, that there are special features in its case which make it legitimate to fix some concessional rates as compared to other consumers.
On the other hand, it is equally open to the State Electricity Board to contend that having regard to the prevalence of certain circumstances, the rates to be fixed should be higher than the tariff rates applicable generally.
This is a short aspect on which both parties have made their positions clear.
Apart from the general factors which have been taken into account in fixing the general tariff rates, the Board has, in making its recommendations, taken into account the purpose for which supply was required by the petitioner along with the factor of recurring losses incurred by the Board year after year and its statutory requirements to maintain a minimum surplus of 3 per cent as required under section 59 of the Supply Act, 1948.
We are, therefore, satisfied that the appellant had full opportunity to place all its special features before the Board and the State Government and that all aspects have been fully considered by the authorities.
The fixation of rates on 31.8.1991 is not, therefore, vitiated for the reasons urged by the appellant.
The only other aspect that requires consideration is regarding the maintainability of the rates as now fixed by the Board and the State.
Three questions arise in regard to this : (i) Can the Board fix rates higher than HV 2 rates in respect of bulk consumers like the company for whom a concessional rate had been granted on special considerations ? 174 (ii) Can the Board determine rates in 1991 and make them retrospective w.e.f. 1983? (iii)Was there material for the Board to fix rates which they have eventually fixed? We find that the answer to the first two questions posed only be in the affirmative.
On the first issue, there are no obstacles, statutory or theoretical, standing in the way of the Board fixing rates for the company which will be higher than the rates applicable to bulk consumers.
The provision in s.60(5)(a) is intended to enable the Board and State to cut off the shackles cast by an ancient contract entered into at a time when conditions were totally different.
It confers an absolute and unrestricted enabling power to revise the rates in an appropriate manner and contains no restriction of the nature suggested for the appellant.
In doing this, the only limitation which the statute requires the authorities to keep in mind are the factors mentioned in the section.
Whether the revised rates for the consumer governed earlier by the contract should be higher or lower than, or equal to, the tariff rates would depend on a large number of considerations, in particular, the basis on which, and the point of time at which, those general rates were fixed.
In principle, it is quite conceivable that, in an appropriate case, a consideration of the relevant factors may justify even a rate higher than the general tariff rates intended for the particular category of consumers.
We shall examine later whether this was justified in the present case.
At the moment, all we are concerned with is the legality of fixing such higher rates and we see no difficulty in this either on the language of the Statute or on other considerations.
A retrospective effect to the revision also seems to be clearly envisaged by the section.
One can easily conceive a weighty reason for saying so.
If the section were interpreted as conferring a power of revision only prospectively, a consumer affected can easily frustrate the effect of the provision by initiating proceedings seeking an injunction restraining the Board and State from revising the rates, on one ground or other, and thus getting the revision deferred indefinitely.
Or, again, the revision of rates, even if effected promptly by the Board and State, may prove infructuous for one reason or another.
Indeed, even in the present case, the Board and State were fairly prompt in taking steps.
Even in January 1984, they warned the appellant that they were proposing to revise the rates and they did this too as early as in 1985.
For reasons for which they cannot be blamed this proved ineffective.
They revised the rates again in March 1988 and August 1991 and, till today, the validity of their action is under challenge.
In this 175 state of affairs, it would be a very impractical interpretation of the section to say that the revision of rates can only be prospective.
The language of the section also supports this view.
Slightly rearranging the syntax of the clause to facilitate easier understanding, what it provides is that the revised rates fixed by the Board shall be the rates to be charged by the Board for the energy supplied by it to any consumer for which the payment will be due for the first time on or after the 20th May, 1983.
In other words, the rates eventually fixed will, by force of statute, apply to all supply of electricity for which the charges become payable in terms of the contract, after 20.5.1983.
There are three objections suggested against this interpretation.
The first is that it precludes the Board and State, where they choose to do so, from revising the rates prospectively or with effect from such dates, after 20.5.1983, which they may consider appropriate.
We think this consequence does not flow from the language of the provision.
The mandate is only that the rates to be charged on supplies for which payment becomes due after 20.8.83 shall be as fixed by the Board.
The powers of the Board in fixing the rates including the dates from which they will be operative are not restricted in any manner.
The Board is at complete liberty to fix different rates from different dates and that scheme of fixation will be read with the contract.
Only the Board cannot revise the rates in respect of supplies for which payment under the contract, fell due before 20.5.83.
The second objection, which is a follow up of the first, is that if the power u/s 60 is held exercisable more than once, the interpretation will permit successive revisions, each superseding the earlier one, a position that could lead to immense harassment.
We have no doubt the power u/s 60 is exercisable more than once.
All the same, the answer to the appellant 's objection is that, while this could be a basis of substantial harassment if repeated revisions are automatically dated back to 20.5.83 (as argued, on the first point, for the assessee), it loses all force on our interpretation leaving it open to the Board and State to fix the dates with effect from which revisions will be effective.
In view of this, one can take in that, while making a subsequent revision, the authorities will not normally tamper with an earlier revision (s) or alter the dates of effectiveness fixed for the earlier revision (s) without a valid reason to do so.
If this is done, it will be open to a court to examine the basis thereof and sustain it only where the earlier fixation was based on an error or misconception or the like and called for modification.
The third objection is that the Hindi version of the Amendment Act is differently worded and does not contain the words "for the first time" found in the English version.
Reliance is placed on the decision of a Bench of seven judges of the Allahabad High Court in Mata Badal Pandey vs Board of Revenue, (1974) U.P.T.C. 570 to 176 the effect that, where there appears a doubt or ambiguity on a plain reading of the English words as to the true intention of the legislature and the Hindi version is conflicting or different.
the Hindi text will be the key for finding the answer.
We do not think the Hindi version really alters the position; actually it is the presence of the words "for the first time" in the English version that create an ambiguity.
Without these words, the clause clearly provides that all supply of electricity, for which payment is to be made after 20.5.83, will be charged at the rates to be fixed by the Board.
We, therefore, reject the appellant 's contention and hold that the fixation by the Board of rates from 20.5.83 and, at different rates for different periods of time, is unexceptionable.
This takes us to the real and crucial question in the case as to whether rates to be fixed in the present case should, on proper consideration, be less than, equal to or higher than the general HV 2 rates.
The appellant contends that it should be charged at the cost of generation plus a reasonable margin of profit or at the rate at which the supply is made to the Madhya Pradesh State Electricity Board.
At any rate, it is said, the rates charged to the appellant should be less than HV 2 rates.
For this it relies on: (a) the special circumstance that the appellant, at great detriment to itself, agreed to set up a caustic soda plant in a backward area at the request of the State Government and in public interest only because of a promised concession in rates of electricity supply; (b) the fact that the supply to the appellant is metered at the point of generation with the result that the transmission and distribution losses, in so far as the appellant is concerned, are borne by the appellant and not by the Board as in the case of other consumers and (c) the important fact that electricity, in the case of the appellant, is one of the only two raw materials needed for its business.
On the other hand, for the Electricity Board, it is contended that the appellant should be called upon to pay higher than HV 2 rates for the following reasons : (i) The appellant has been having substantial supplies of electricity at nominal rates of 2.5 paise and 2.75 paise per unit between 1963 and 1983.
(ii) The supply to the assessee is being made only from the State Grid and there is no reason why it should draw the supply at lower rates than others : (iii) The Board had been incurring heavy losses over the years.
This is to a considerable extent due to the spiraling demand for electricity, the Board 's responsibilities under the statute to co 177 ordinate development of the supply of energy throughout the State and the necessity to supply energy at concessional rates to certain sectors such as the agricultural sector.
(iv) The Board is also entitled, under s.59 of the 1948 Act, to take into account the necessity of building up a surplus, statutorily fixed, in the fixation of rates of supply to all or any of its consumers.
We have given careful thought to the considerations urged before us and we are of opinion that there is no material to justify any departure from the HV 2 rates in the case of the appellant.
We find no force in the contentions put forward on behalf of the appellant to reduce the rates applicable to the appellant below HV 2 level.
The special circumstances pleaded have lost their importance with the passage of time.
It is obvious that the conditions that prevailed in 1963 are not valid and the appellant has had the benefit of concessional rates for twenty years.
No doubt the benefits would have continued for five more years but for statutory intervention.
But the statute permits a reconsideration of the situation as in May 1983 and it is unarguable, it seems to us, that the rate of 2.75 p. should continue even after 1983 or that the appellant should be entitled to any special concession.
The consideration that electricity is a "raw material" in the assessee 's business is, again, irrelevant for it can mean nothing more than that the appellant needs substantial quantities of the energy and there is no reason why it should not pay for it at the normal market rates.
The point regarding take off of supply at the generating point will no doubt have some relevance on the question of rates and we shall refer to this aspect later in the context of the pleas put forward by the Board.
We are, therefore, of the view that the appellant has no valid justification for staking a claim to less than the HV 2 rates.
Equally, it seems to us, the authorities have no case for seeking to raise the rates beyond the HV 2 rates.
They are supplying energy to the appellant from the grid since 1968 and they cannot justifiably seek to demand higher rates from the appellant than from the HV 2 consumers.
This is sought to be justified on the basis of the huge losses that the Board has been incurring and the statutory justification for escalation in the rates keeping in view the necessity to build up a surplus.
This, however, is an aspect of working which should affect all the consumers equally.
May be the Board can, in appropriate circumstances, seek to make up for a part of the losses by hiking up the rates to one particular category of consumers but that would not be justified here as the transmission and distribution losses 178 in respect of the supply to the appellant are borne by it and, in the absence of some special vital reason, it would not be equitable to fix the rates of supply to the appellant above the rates applicable to other HV 2 consumers.
Some reference was made to the difficulties in completely fitting the scheme of computations for determining the HV_2 rates into the scheme under the appellant 's contract.
It is, however, unnecessary to go into that aspect as we are only on the question of rates and holding that there is no justification for charging more than HV 2 rates from the appellant.
Moreover, the appellant has been paying for the Obra supply at HV 2 rates since 1989.
We have also been informed that in 1972 the appellant took a further additional supply of 8 MW and agreed to pay therefor at HV 2B rates as applicable to other Bulk Power Consumers in the State.
In these circumstances, we have reached to the conclusion that there is no justification to charge more than HV 2 rates from the appellant.
We, therefore, allow this appeal in part, quash the determinations of 1988 and 1991 and direct that the appellants should be charged from 20.5.83 to 31.3.89 at the HV 2 rates applicable to other consumers.
The appeal of the appellant is partly allowed to the above extent.
The Board 's appeal has not yet been numbered as it is delayed by a few days.
It was, however, stated that the Board wishes to withdraw its appeal because of the subsequent developments.
For these reasons and also in view of our above conclusion the Board 's appeal also stands dismissed.
In the circumstances, we direct each party to bear its own costs.
T.N.A. C.A. 1306/88 Partly allowed.
C.A. 128/92 dismissed.
| The appellant company set up a caustic soda industry at Renukoot involving the use of electricity as the main raw material.
On 30.9.63 it entered into a contract with the State of Uttar Pradesh for supply of electricity for the period of 25 years from 1.4.64, to the extent of 6.5 NW from the Rihand Hydel station at a fixed rate of 2.5 paise per unit and an additional supply of 1.5 NW from an inter connection at the rate of 5 NP per unit.
The terms of the contract provided that the transmission and distribution losses were to be borne by the company and that the rates could be raised after sixteen years but any enhancement in rates was not to exceed 10 per cent of the rates agreed upon.
Subsequently, the UP Government enacted the Electricity Laws (Uttar Pradesh Amendment) Act, 1983 which came into force from 152 20.5.1983.
Section 7 of the said Act amended section 60 of the Electricity Supply Act, 1948 by inserting sub section (3) to (5) with retrospective effect from April 1, 1965.
The Amended Act enabled the State and the Board to modify the rates of supply of Electricity to appellant under the contract of 30.9.63.
Simultaneously the Parliament also amended Section 59 of the Electricity Supply Act by the Act 18 of 1983 enabling the Electricity Board to fix the tariff in such a way so as to build up a statutory surplus fixed by the State Government.
On the passing of the Amendment Act, the Electricity Board informed the appellant company that the rates were proposed to be revised and later it informed the appellant company that on 28.9.83 the State Government, by its Gazette Notification dated 29th October, 1982, had approved the levy of HV 2 rates (i.e. uniform tariff applicable to `Bulk power ' consumers) in substitution of the rates mentioned in the agreement of 30th September, 1963.
The effect of the revision was to oblige the appellant company to pay 57.71 paise per unit for 1983 84 and 61.60 paise per unit for 1984 85.
Accordingly, supplementary bills were raised demanding Rs. 3.07 crores from the appellant company.
The appellant filed a writ petition in the High Court of Allahabad assailing the Validity of section 7 of the amending Act and the right of the Board to enhance the rates.
By its order dated 2.4.87 the High Court allowed the writ petition and quashed the approval dated 28.9.83 given by the State Government to the new rates and the consequential demands of the Electricity Board but left it to the Board and State to fix revised rates afresh by directing the respondents (1) not to charge the uniform tariff rate for the period beginning from 20th May, 1983 till the rates were fixed in accordance with section 60(5) (a); and (ii) that the rates applicable to the appellants should be determined having regard to the individual circumstances of the appellant.
The Electricity Board and the State Government preferred an appeal to this Court.
Aggrieved by the fact that in applying the HV 2 rates the Board and the State had not taken into account the special factors relevant to the supplies made to it, the appellant also filed an appeal in this Court.
In the meantime, pursuant to the directions of the High Court the Board fixed the revised rates on 28.3.88 for the supply from 20th May, 1983 which were much higher than the HV 2 rates fixed earlier and 153 quashed by the High Court.
The appeals came to be heard by this Court on April 10, 1991 when this Court directed that the appellant should make a representation to the State Electricity Board setting out the individual factors which should be taken into account in fixing the rates applicable to them within the meaning of section 60(5) (a) of the 1948 Act and that the State Government should reconsider the fixation after considering the recommendations made by the Board as well as the representations of the appellant.
Accordingly the State reconsidered the matter and by its order dated 31.8.92 approved the rates fixed by the State Government on 28.3.88.
The appellant challenged the validity of the rates fixed contending that (i) the fixation of rates as on 31.8.1992 was not valid because (a) the respondents have not complied with this court 's directions dated 10.4.1991 as they have neither disclosed the factors based on which the rates were revised in March 1988 nor indicated the monetary incidence or impact of the factors taken into account; (b) in the process of refixation of the rates there was no genuine exercise to consider relevant factors in determining the rate under section 60 (5) (a); (c) that the Board had not set out anywhere the precise manner in which the rates recommended by them were arrived at; (ii) Section 60 cannot be interpreted so as to give power to the Board to fix rates retrospectively because (a) such an interpretation precludes the Board and the State from revising the rates prospectively; (b) if the power is held exercisable more than once, it will permit successive revisions each superseding the earlier one, a position that could lead to harassment; (c) that the Hindi version of the Amendment Act is differently worded and does not contain the words "for the first time" found in the English version and in case of a conflicting version between Hindi and English version the Hindi text should be the key to find out the true intention of the Legislature; and (iii) in view of a facts (a) that the company established its industry in a backward area at the request of the State and in public interest; (b) the transmission and distribution losses are borne by the appellant and (c) electricity is one of the raw materials needed for its industry the appellant should be charged less than the HV 2 rates.
On behalf of the Electricity Board it was contended that the 154 demand of rates higher than HV 2 rates was justified because (a) the Company has been getting substantial supplies of electricity at nominal rates from 1963 to 1983; (b) The Board has incurred heavy losses over the years by supplying electricity at concessional rates; and (c) there was a necessity to build up a statutory surplus prescribed by section 59.
Allowing the Company 's appeal in part and dismissing the Electricity Board 's appeal, this Court, HELD: 1.The fixation of revised rates is not vitiated.
[173 E] 2.
Section 60 does not require the Board or the State Government to explain each and every step in its calculation.
All that the Electricity Board has to do is to take into consideration the factors relevant under section 60(5) and propose rates for fixation to the State Government.
It is in order to ensure that these recommendations take into account all relevant factors that an opportunity has been provided to the consumer to satisfy the Board as well as the State Government that the fixation has taken into account certain relevant factors.
Therefore, the rate revision proceedings were not vitiated for the reason that the Board has not set out the precise manner in which the rates recommended by them were arrived at.
[172 D E, 172 C] 2.1 Apart from the general factors which have been taken into account in fixing the general tariff rates, the Board has, in making its recommendations, taken into account the purpose for which supply was required by the appellant along with the factor of recurring losses incurred by the Board year after year and its statutory requirements to maintain a minimum surplus of 3 per cent as required under section 59 of the Supply Act, 1948.
[173 D] 2.2 The rates recommended by the State Electricity Board and approved by the State Government were within the knowledge of the appellant company.
The appellant company filed its representation.
After considering the representation, the Board made its recommendations to the State Government and a copy of the recommendations were also available to the appellant.
The appellant had full opportunity to meet the various points set out in the recommendations of the Board.
The comments of both the Board and the Appellant were taken into account by the State Government before finally approving of the rates proposed by the Board.
Therefore, the appellant company had full opportunity to place all its special feature before the Board and the 155 State Government.
[171H, 172A,B, 173E] 2.3 If one compares the two provisions viz. sections 49 and 60 one will find that most of the elements are common to the two provisions.
Both under section 49 and section 60 the authorities have to take into account the geographical position of any area, the nature of supply and purpose for which supply is required and any other relevant factor.
The only difference between the two provisions is that since section 49 deals with a general fixation while section 60(5) deals with a fixation for a particular individual case, there may be some special factors to be taken into account which may or may not be germane while fixing the general tariff under section 49.
[172H, 173 A] Indian Aluminium Company Ltd. vs Kerala State Electricity Board, ; ; cited.
A retrospective effect to the revision of rates is clearly envisaged by section 60.
One can easily conceive a weighty reason for saying so.
If the section were interpreted as conferring a power of revision only prospectively, a consumer affected can easily frustrate the effect of the provision by initiating proceedings seeking an injunction restraining the Board and thus getting the revision deferred indefinitely.
Or, again, the revision of rates, even if effected promptly by the Board and State, may prove infructuous for one reason or another.
Therefore, it would be a very impractical interpretation of the section to say that the revision of rates can only be prospective.
[174E G] 3.1 The mandate of section 60 is only that the rates to be charged on supplies for which payment becomes due after 20.8.83 shall be as fixed by the Board.
The powers of the Board in fixing the rates including the dates from which they will be operative are not restricted in any manner.
The Board is at complete liberty to fix different rates from different dates and that scheme of fixation will be read with the contract.
Only the Board cannot revise the rates in respect of supplies for which payment under the contract fell due before the Amendment Act came into force.
[175 B C] 3.2 The power under section 60 is exercisable more than once.
However, while making a subsequent revision, the authorities will not normally tamper with an earlier revision or alter the dates of effectiveness fixed for the earlier revision without a valid reason to do so.
If this is done, it will be open to a court to examine the basis thereof and 156 sustain it only where the earlier fixation was based on an error or misconception or the like and called for modification.
[175D E] 3.3 Although the Hindi version of the Amendment Act is differently worded and does not contain the words "for the first time" found in the English version, the Hindi version does not really alter the position; actually it is the presence of the words "for the first time" in the English version that create ambiguity.
Without these words, the clause clearly provides that all supply of electricity, for which payment is to be made after 20.5.83, i.e. coming into force of the Amendment Act, will be charged at the rates to be fixed by the Board.
Therefore, the fixation by the Board of rates from 20.5.83, and, at different rates for different period of time, is unexceptionable.
[175F H, 176 A] Mata Badal Pandey vs Board of Revenue, (1974) U.P.T.C. 570; referred to. 4.
There are no obstacles, statutory or theoretical, standing in the way of the Board fixing rates for the company which will be higher than the rates applicable to bulk consumers.
The provision in section 60(5)(a) is intended to enable the Board and State to cut off the shackles cast by an ancient contract entered into at a time when conditions were totally different.
It confers an absolute and unrestricted enabling power to revise the rates in an appropriate manner.
[174 A] While revising rates, the only limitation which the statute requires the authorities to keep in mind are the factors mentioned in the section.
Whether the revised rates for the consumer governed earlier by the contract should be higher or lower than, or equal to, the tariff rates would depend on a large number of considerations, in particular, the basis on which, and the point of time at which, those general rates were fixed.
In principle, it is quite conceivable that, in an appropriate case, a consideration of the relevant factors may justify even a rate higher than the general tariff rates intended for the particular category of consumers.
[174B D] 4.1 However, there is no material to justify any departure from the HV 2 rates in the case of the appellant.
The special circumstances pleaded by the appellant company have lost their importance with the passage of time.
The conditions that prevailed in 1963 are not valid and the appellant has had the benefit of concessional rates for twenty years.
The consideration that electricity is a "raw material" in the assesee 's 157 business is, again irrelevant for it can mean nothing more than that the appellant needs substantial quantities of the energy and there is no reason why it should not pay for it at the normal market rates.
Therefore, the appellant has no valid justification for staking a claim to less than the HV 2 rates.
[177B D] 4.2 Equally, the authorities have no case to raise the rates beyond the HV 2 rates.
The huge losses that the Board has been incurring and the statutory justification for escalation in the rates keeping in view the necessity to build up a surplus is an aspect of working which should affect all the consumers equally.
May be the Board can, in appropriate circumstances, seek to make up for a part of the losses by hiking up the rates to one particular category of consumers but that would not be justified here as the transmission and distribution losses in respect of the supply to the appellant are borne by it and, in the absence of some special vital reason, it would not be equitable to fix the rates of supply to the appellant above the rates applicable to other HV 2 consumers.
Therefore, there is no justification to charge more than HV 2 rates from the appellant.
[177EG, 178 B] 4.3 The determination of 1988 and 1991 are quashed.
The State Electricity Board is directed to charge the appellant Company from 20.5.83 to 31.3.89 at the HV 2 rates applicable to other consumers.
[178 B]
|
N: Criminal.
Appeal No. 330 of 1980.
From the judgement and Order dated 3.4.1980 of the Madras High Court in Crl.
Appeal No. 360 of 1974.
Hardev Singh and Ms. Madhu Moolchandani for the Appellants.
V.C. Mahajan, B. Parthasarthi and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
The appellant N.M. Parthasarathy is the sole proprietor of a firm called "Elector technik".
He was formerly working as Inspector of Industries.
He along with an Inspector of Industries, was prosecuted on the allegations that between February, 1967 and February, 1969 they entered into a criminal conspiracy to obtain Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and import licences on false representations made to the Director of Industries, Assistant Director of Industries, Joint Chief Controller of Imports/Exports and the Iron and Steel Controller.
The first 251 charge framed against both of them was for an offence of conspiracy punishable under section 120 B read with section 420 IPC and section 5(1) (b) read with section 5(2) of the Prevention of Corruption Act, 1947.
Charges 2, 4 and 6 framed against him were for offence of cheating punishable under section 420 IPC.
Charges 3, 5 and 7 were framed against the second accused for abetment of cheating punishable under section 420 read with section 109 IPC.
The 8th charge was also against the second accused under section 5 (1) (b) read with section 5 (2) of the Prevention of Corruption Act, 1947.
The trial court acquitted both of them on all the charges.
The State went in appeal against the judgment of acquittal and the High Court on re appreciation of evidence set side the acquittal and convicted both of them on all the counts.
The appellant was sentenced to undergo rigorous imprisonment for two years under Section 120 B IPC and rigorous imprisonment for two years for each of the three counts of cheating under section 420 IPC.
The sentences were to run concurrently.
We have heard Mr. Hardev Singh, learned counsel for the appellant and Mr. V.C. Mahajan, Senior Advocate for the respondents.
Mr. Hardev Singh has taken us through the judgment of the trial court and that of the High Court.
Mr. Hardev Singh has primarily argued that the High Court has grossly erred in reversing the judgment of acquittal rendered by the trial court.
According to him even if two views were possible the High Court was not justified in taking a different view than the trial court and reversing the acquittal.
This precise argument was raised before the High Court on behalf of the appellant.
The High Court rejected the same as under: "In the circumstances, I am of the opinion that this is not a case where, on the evidence available on record, two conclusions are possible and therefore this Court could not interfere with the acquittal of the accused by the learned Special Judge.
I am of the opinion that only one conclusion is possible on the evidence on record and that it is that the accused are guilty of all the charges framed against them and that interference with the acquittal of the accused by the learned Special Judge is called for in this case.
" We are of the view that the High Court was justified in reaching the above conclusion.
The High Court examined the evidence on the record in detail and rightly came to the conclusion that the guilt against the appellant was established beyond reasonable doubt.
The High Court on re appreciation of the evidence, independently reached the following findings: 252 "Thus it is established by Exhibit D 36 as well as the evidence of P.Ws 3 and 6 that the first accused had only a single phase domestic supply of electricity at his premises in Katpadi Extension even in August, 1969, that he could not have used that supply of electricity validly for any non domestic purposes and that it would not have been possible to produce any industrial machinery with that single phase power.
" "The evidence of P.W.s 6, 13, 15 and 19 shows that the machinery found in the premises of Electro technic during their inspections were worth only about Rs. 9,200 or Rs. 10,000 and not of the value of Rs. 94,000 as represented by the first accused in the list submitted by him along with his application, Exhibit P 18." "It has already been found that with the 230 Volts domestic supply he could not have produced any of the new end products.
The additional machinery required for producing these new end products had not been installed in the first accused 's factory.
It is hardly likely that all the alleged additional machinery could have been installed in the factory whose dimensions are only 18 feet by 12 feet." "It is made clear by the evidence that the second accused had made false statements in Exhibit P 96 about the alleged installation of the additional items of machinery in the first accused 's factory.
For the reasons stated above I find that the prosecution has proved charges 2 and 3 satisfactorily, beyond all reasonable doubt." "The first accused has succeeded in obtaining the Essentiality Certificate, Exhibit P.5, by making these false representations and the 2nd accused has induced P.W.5 to recommend in Exhibit P.24 the issue of the Essentiality Certificate and P.W.12 to issue the Essentiality Certificate and Exhibit P 14 by making the false representations Exhibit P 22 and P 23, as in Exhibit P 19, which have been found to be false in the earlier part of his judgment.
Therefore, I find that the prosecution has proved these two charges 4 and 5 against the accused satisfactorily and beyond all reasonable doubt." "In the present case both the accused have acted in concert in the first accused obtaining the S.S.I. registration certificate, Exhibit P 20 as amended by Exhibit P 21, the Essentiality Certificate, Exhibit P 5 and the import licenses, Exhibits P 6 and P 7, and the second accused enabling him to obtain the 253 same by his recommendations, Exhibits P 19, P 22 and P 23 which contain false particulars.
This would show that both the accused have acted in concert for committing these offences and that they would not have done so if there had been no conspiracy.
In these circumstances I find that the prosecution has established the charge of conspiracy framed against both the accused satisfactorily and beyond reasonable doubt.
" We agree with the above quoted reasoning and the conclusions reached by the High Court.
We, therefore, uphold the conviction and sentence awarded by the High Court.
While upholding the judgment of the High Court, we are inclined to agree with the learned counsel for the appellant that this is fit case where benefit of section 360, Criminal Procedure Code be extended to the appellant.
The occurrence in this case relates to the period between February, 1967 and February, 1969.
The Special Judge, Madras by his judgment dated July 23, 1973 acquitted the appellant.
The High Court on April 3, 1980 reversed the trial court and convicted the appellant.
This Court granted bail to the appellant on April 29, 1980.
Mr. Hardev Singh has placed before us documents showing several achievements of the appellant in the industrial field since then.
The appellant 's industry has manufactured the largest Hot Air Kiln in India for Ministry of Railways, largest Degreasing plant for Nuclear Fuel Complex, Sintering Furnace for anti tank missiles and various other items for the Ministry of Defence and other Departments of the Government of India.
The appellant claims that he has set up 100 per cent export unit with Rs. 75 crores export per annum.
For all these reasons we are of the view that it is expedient that the appellant be released on probation.
We, therefore, direct that he be released on his entering into a bond to the satisfaction of the Special Court, Madras.
The Special Court shall pass an order in terms of Section 360, Criminal Procedure Code, 1973 to its satisfaction.
A copy of this order be sent to the Special Court, Madras immediately.
The appellant is directed to appear before the Special Court, Madras within two months from today to enable the Special Court, Madras to pass an order as directed by us.
In the event of appellant 's failure to present himself before the Special Court as directed he shall undergo the original sentence awarded by the High Court.
The appeal is disposed of in the above terms.
T.N.A Appeal disposed of.
| The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations.
The Trial Court acquitted both of them on all the charges.
The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges.
Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC.
In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant.
Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt.
Accordingly, the conviction and the sentence awarded by the High Court is upheld.
[251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969.
The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them.
This Court granted bail to the appellant in 1980.
Since then the appellant has several achievements to his credit in the industrial field.
Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant.
[253 C E]
|
RISDICTION: Criminal Appeal No. 47 of 1992.
From the Judgment and Order dated 13/14.8.1991 of the Bombay High Court in Crl.
W.P.No. 597 of 1991.
WITH Writ Petition (CRL.) No. 1247 of 1991.
238 (Under Article 32 of the Constitution of India) Dr. Y.S. Chitale and V.B. Joshi for the appellants/Petitioners.
Altaf Ahmed, Addl.
Solicitor General, S.M. Jadhav and A.S. Bhasme for the Respondents.
The Judgment of the Court was delivered by Dr. A.S. ANAND, J.
Leave is granted in SLP(Crl) No. 3227 of 1991.
Writ Petition No. 1247 of 1991 filed under Article 32 of the Constitution of India is also taken up for disposal along with the aforesaid appeal, which is directed against the judgment of the Division Bench of the Bombay High Court in Criminal Writ Petition No. 597 of 1991, since it is the same order of detention which has been called in question in both the cases.
Both the appeal and the Writ Petition have been filed by the wife of on Harvinder Singh @ Kukku, who has been detained vide order of detention, dated 26th February 1991, issued under the provisions of Section 3(1)n of the Maharashtra Prevention of Dangerous Activities of Slumlords, Bootleggers and Drug Offenders Act, 1981 (hereinafter referred to as the `Act ', The appellant had questioned the detention of her husband through Criminal Writ Petition No. 597 of 1991 before the Bombay High Court on carious grounds.
The High Court, however, did not find any merit in the challenge and being of the opinion that there was no infirmity in the order of detention dismissed the Writ Petition.
Appellant has filed an appeal by Special Leave against the High Court judgment and has also questioned the order of detention through a petition under Article 32 of the Constitution.
The facts leading to the detention of the detenu as reflected in the grounds of detention are as follows: 3.
The Police personnel, attached to Matunga Police Station, where maintaining a watch on vehicles passing near the fish market with a view to check transportation of illicit liquor.
On 9th September 1991, a black Fiat Car, bearing registration No. BLD 1674, was seen coming from the direction of Chembur at about 0845 hrs.
The police party signalled the driver to a stop.
Instead of stopping the car, the detenu, who was driving the car, accelerated the car and drove it straight towards the police party that they were likely to be run over and to save themselves they jumped on the foot path.
While so driving the car towards the police party, the detenu also hurled abuses at them and shouted that he would kill them.
The detenu kept driving the car recklessly 239 and then dashed against a pedestrian causing him injury and even at that time instead of stopping the car shouted that whosoever would come in his way would be killed.
The detenu kept on driving the car recklessly and dashed the car against a stationery taxi damaging it.
As a result of the collision the car came to a stop.
As soon as the car stopped, the police party, with a view to apprehend the detenu and the other persons sitting in the car rushed towards them.
The detenu and two other persons sitting inside the car jumped out and escaped.
A police case came to be registered with the Matunga Police Station against the detenu and two unknown persons for offences under Section 307, 324 read with Section 34 of the Indian Penal Code.
The detenu made himself scarce and could not be immediately arrested.
He was eventually traced and arrested on 13th September, 1990, when he made a statement admitting that he was engaged in transporting illicit liquor on 9.9.1990 and also admitted his escape after hitting the pedestrian and the stationery taxi after driving the car towards the police party which signalled to stop him.
The detenu was produced before the Metropolitan Magistrate on 14.9.1990.
and was released on bail on the condition that he should attend the police station between 6.00 to 8.00 p.m. everyday till 24.9.1990.
However, the detenu failed to carry out the condition which led to the cancellation of his bail on 24.9.1990 and he was taken into custody.
The detenu then moved the Sessions Court against cancellation of his bail.
His application was accepted and he was admitted to bail.
The motor car of the detenu,bearing registration No. BLD 1674, was seized by the police and from the dicky of the car, 12 rubber tubes and from the rear seat of the car 13 rubber tubes, each containing about 40 litres of illicit liquor were recovered.
Samples of the seized illicit liquor were sent to the Chemical Analyst whose report, dated 10th of January 1991, indicated that the samples contained ethyl alcohol 34% v/v in water.
During the investigation of the case, the police recorded statements of four witnesses who were, however, willing to make statements only on the condition of anonymity, fearing retaliation from the detenu in case they deposed against him.
Keeping in view the activities of the detenu and the fact that he had been enlarged on bail, the detaining authority on being satisfied that unless an order of detention was made against the detenu, he was likely to indulge in activities prejudicial to the maintenance of `public order ' in future also, made an order of detention on 26th February 1991.
The grounds of detention were served on the detenu.
The order of the detention was confirmed by the State Government after considering the report of the Advisory Board constituted under 240 Section 12(1) of the Act.
The order of detention was questioned before the High Court, as already noticed through Criminal Writ Petition No. 597 of 1991, unsuccessfully.
Two basic arguments have been raised by Dr. Chitale before us to question the order of detention.
The thrust of the first argument is that the activities of the detenu could be said to be prejudicial only to the maintenance of "law and order" and not prejudicial to the maintenance of "public Order".
Learned counsel stressed that the activities, which had been attributed to the detenu, howsoever reprehensible they may be, had no impact on the general members of the community and therefore could not be said to disturb the even tempo of the society and as such his detention for acting in a manner prejudicial to `public order ' was unjustified.
The second argument of the learned counsel is based on the proviso to Section 3(2) of the Act, which according to the learned counsel, prohibited the State Government to make an order of detention, in the first instance exceeding three months and since the order of detention in the instant case was for a period exceeding three months, it was categorised as bad in law and invalid.
No other contention was pressed.
"Public Order" or "Law and Order" are two different and distinct concepts and there is abundance of authority of this Court drawing a clear distinction between the two.
With a view to determining the validity or otherwise of the order of detention, it would be necessary to notice the difference between the two concepts.
In Ram Manohar Lohia vs State of Bihar, ; speaking for the majority, Hidayatullah J. pointed out the distinction in the following words: "One has to imagine three concentric circles.
Law and order represents the largest circle within which is the next circle representing public order and the smallest circle represents security of State.
It is then easy to see that an act may affect law and order but not public order just as an act may affect public order but not security of the State.
In Arun Ghosh vs State of West Bengal, [1970] 1SCC 98 again Hidayatullah J. speaking for the Court, pointed out that what in a given 241 situation may be a matter covered by law and order, on account of its impact on the society may really turn out to be one of `public order '.
It was observed: "Take the case of assault on girls.
A guest at a hotel may kiss or make advances to half a dozen chambermaids.
He may annoy them and also the management but he does not cause disturbance of public order.
He may even have a fracas with the friends of one of the girls but even then it would be a case of breach of law and order only.
Take another case of a man who molests women in lonely places.
As a result of his activities girls going to colleges and schools are in constant danger and fear.
Women going for their ordinary business are afraid of being waylaid and assaulted.
The activity of this man in its essential quality is not different from the act of the other man but in its potentiality and in its effect upon the public tranquility there is a vast difference.
The act of the man who molests the girls in lonely places causes a disturbance in the even tempo of living which is the first requirement of public order.
He disturbs the society and the community.
His act makes all the women apprehensive of their honour and he can be said to be causing disturbance of public order and not merely committing individual actions which may be taken note of by the criminal prosecution agencies.
" [p.100] 9.
A Constitution Bench in Madhu Limaye vs Ved Murti, again dealt with the question and it was observed: "In our judgment, the expression `in the interest of public order ' in the Constitution is capable of taking within itself not only those acts which disturb the security of the State or act within order publique as described but also certain acts which disturb public transquillity or are breaches of the peace.
It is not necessary to give the expression a narrow meaning because, as has been observed, the expression `in the interest of public order ' is very wide." [p. 756] 10.
In Kanu Biswas vs State of West Bengal, [1972] 3 SCC [p.756] 831, this Court opined: "The question whether a man has only committed a breach of law and order or has acted in a manner likely to cause a disturbance of the public order,. is a question of degree and the extent of the reach of the act upon the society .
Public order is what the French 242 call "ordre publique" and is something more than ordinary maintenance of law and order.
The test to be adopted in determining whether an act affects law and order or public order, as laid down in the above case, is: Does it lead to disturbance of the current of life of the community so as to amount to a disturbance of the public order or does it affect merely an individual leaving the tranquility of society undisturbed?" [p. 834] 11.
In Ashok Kumar vs Delhi Administration, this Court re examined the question and observed: "The true distinction between the areas of `public order ' and `law and order ' lies not in the nature of quality of the act, but in the degree and extent of its reach upon society.
The distinction between the two concepts of `law and order ' and `public order ' is a fine one but this does not mean that there can be no overlapping.
Acts similar in nature but committed in different contexts and circumstances might cause different reactions.
In one case it might affect specific individuals only and therefore touch the problem of law and order, while in another it might affect public order.
The act by itself therefore is not determinant of its own gravity.
It is the potentiality of the act to disturb the even tempo of the life of the community which makes it prejudicial to the maintenance of public order." [pp. 409 10] 12.
In Subhash Bhandari vs District Magistrate, Lucknow, ; , a Division Bench of this Court has held: "A solitary act of omission or commission can be taken into consideration for being subjectively satisfied, by the detaining authority to pass an order of detention if the reach, effect and potentiality of the act is such that it disturbs public tranquility by creating terror and panic in the society or a considerable number of the people in a specified locality where the act is alleged to have been committed.
Thus it is the degree and extent of the reach of the act upon the society which is vital for considering the question whether a man has committed only a breach of law and order or has acted in a manner likely to cause disturbance to public order." [pp. 686 87] 243 13.
It is not necessary to multiply the authorities on this point.
From the law laid by this Court, as noticed above, it follows that it is the degree and extent of the each of the objectionable activity upon the society which is vital for considering the question whether a man has committed only a breach of `law and order ' or has acted in a manner likely to cause disturbance to `public order '.
It is the potentiality of the act to disturb the even tempo of life of the community which makes it prejudicial to the maintenance of `public order '.
Whenever an order of detention is questioned, the courts apply these tests to find out whether the objectionable activities upon which the order of detention is grounded fall under the classification of being prejudicial to "public order" or belong to the category of being prejudicial only to `law and order '.
An order of detention under the Act would be valid if the activities of a detenu affect `public order ' but would not be so where the same affect only the maintenance of `law and order '.
Facts of each case have, therefore, to be carefully scrutinised to test the validity of an order of detention.
Dr. Chitale did not dispute that if the activities of the detenu have the potential of disturbing the even tempo of the society or community, those activities would be prejudicial to maintenance of `public order ', he however, relied upon certain judgment to urge that "bootlegging" activity of the detenu in the instant case, could not affect public tranquillity and did not have any potential of affecting public order to justify his detention.
Reliance was placed on Om Prakash vs Commissioner of Police & Ors., [1989] Supp.
2 SCC 576; Rashidmiya vs Police Commissioner, Ahmedabad & Anr., [1989] 3 SCC 321 and Piyush Kantilal Mehta vs Commissioner of Police, Ahmedabad City and Anr., [1989] Supp. 1 SCC 322 and it was urged that in these cases an activity of "bootlegging" was not held to fall within the mischief of being prejudicial to `public order '.
Indeed, in Piyush Kantilal Mehta, Om Prakash and Rashidmiya cases (supra), the Court found that the activities of the detenu, a bootlegger in those cases, as detailed in the grounds of detention, were of a general and vague nature and those activities did not adversely affect the maintenance of `public order ' under Section 3(4) of the Gujarat Prevention of Anti Social Activities ' Act, 1985.
The Bench in Rashidmiya and Om Prakash 's cases (supra) relied upon the judgment in Piyush Kantilal Mehta 's case and on the facts of those cases quashed the order of detention.
In Piyush Kantilal Mehta 's case (supra), the allegations, in the ground of detention, were that the detenu was a bootlegger, who was indulging in the 244 sale of foreign liquor and that he and his associates were also using force and violence and beating innocent citizens creating a sense of terror.
The detenu was caught possessing English liquor with foreign markings as well as foreign liquor.
The Court found that the detenu was only a bootlegger and he could not be preventively detained under the provisions of the Gujarat Prevention of Anti Social Activities ' Act, 1985 unless as laid down in sub Section (4) of Section 3 of that Act, his activities as a bootlegger had the potential of affecting adversely or were likely to affect adversely, the maintenance of `public order ' and on the peculiar facts of the case, it was found that the alleged activities of the detenu did not affect `public order ' but created only a law and order problem.
Dr. Chitale then placed reliance on State of U.P. vs Hari Shankar Tewari; , ; Ahmedhussain Shaikhhussain vs Commissioner of Police, Ahmedabad and Anr. ; ; T. Devaki vs Government of Tamil Nadu & Ors., ; ; Ashok Kumar vs Delhi Administration and Ors.
, ; but none of these judgments lay down tests different than the ones which we have culled out from the judgments of this court referred to earlier.
Those cases were decided on their peculiar facts.
The courts were very much alive to the conceptual difference between activities prejudicial to law and order and those prejudicial to public order and since on facts it was found that the activities of the detenu were not prejudicial to `public order ', the orders of detention were quashed.
Crime is a revolt against the whole society and an attack on the civilization of the day.
Order is the basic need of any organised civilized society and any attempt to disturb that order affects the society and the community.
The distinction between breach of `law and order ' and disturbance of `public order ' is one of degree and the extent of reach of the activity in question upon the society.
In their essential quality, the activities which affects `law and order ' and those which disturb `public order ' may not be different but in their potentiality and effect upon even tempo of the society and public tranquility there is a vast difference.
In each case, therefore, the courts have to see the length, magnitude and intensity of questionable activities of a person to find out whether his activities are prejudicial to maintenance of `public order ' or only `law and order '.
There is no gain saying that in the present state of law, a criminal can be punished only when the prosecution is able to lead evidence and prove the case against an accused person beyond a reasonable doubt.
Where the prosecution is unable to lead evidence to prove its case, the case fails, though that failure does not imply that no crime had been committed.
Where the 245 prosecution case fails, because witnesses are reluctant on account of fear of retaliation to come forward to depose against an accused, obviously, the crime would go unpunished and the criminal would be encouraged.
In the ultimate analysis, it is the society which suffers.
Respect for law has to be maintained in the interest of the society and discouragement of a criminal is one of the ways to maintain it.
The objectionable activities of a detenu have, therefore, to be judged in the totality of the circumstances to find out whether those activities have any prejudicial affect on the society as a whole or not.
If the society, and not only an individual, suffers on account of the questionable activities of a person, then those activities are prejudicial to the maintenance of `public order ' and are not merely prejudicial to the maintenance of `law and order '.
The Maharashtra Prevention of Dangerous Activities of Slumlords, Bootleggers and Drug Offenders Act, 1981 was enacted to provide for preventive detention of slumlords, bootleggers and drug offenders for preventing their dangerous activities prejudicial to the maintenance of `public order '.
Section 2(a) defines the meaning of the expression "acting in any manner prejudicial to the maintenance of public order" and reads as follows: "acting in any manner prejudicial to the maintenance of public order" means (i) in the case of a slumlord, when he is engaged, or is making preparations for engaging, in any of his activities as a slumlord, which affect adversely, or are likely to affect adversely, the maintenance of public order; (ii) in the case of a bootlegger, when he is engaged, or is making preparations for engaging, in any of his activities as a bootlegger, which affect adversely, or are likely to affect adversely, the maintenance of public order; (iii) in the case of drug offender, when he is engaged or is making preparations for engaging, in any of his activities as drug offender, which affect adversely, or are likely to affect adversely, the maintenance of public order; Explanation: For the purpose of this clause (a), public order shall be deemed to have been affected adversely, or shall be deemed 246 likely to be affected adversely, inter alia, if any of the activities of any of the persons referred to in this clause, directly or indirectly, is causing or calculated to cause any harm, danger or alarm of a feeling of insecurity, among the general public or any section thereof or a grave or widespread danger to life or public health;" 20.
The explanation to Section 2(a) (supra) brings into effect a legal fiction as to the adverse affect on `public order '.
It provides that if any of the activities of a person referred to in clause [ (i) (iii) ] of Section 2(a) directly or indirectly causes or is calculated to cause any harm, danger or alarm or a feeling of insecurity among the general public or any Section thereof or a grave or a wide spread danger to life or public health, then public order shall be deemed to have been adversely affected.
Thus, it is the fall out of the activity of the "bootlegger" which determines whether `public order ' has been affected within the meaning of this deeming provision or not.
This legislative intent has to be kept in view while dealing with detentions under the Act.
Let us now consider the facts of the instant case.
The substance of the grounds on which detention has been ordered is that the detenu is bootlegger and in furtherance of his activities and to escape from the clutches of law, he even tried to run over, by his speeding vehicle, the police party, which tried to signal him to a stop, exhorting all the time that he would kill anyone who would come in his way.
He continued to drive in a reckless speed and dashed against a pedestrian causing injuries to him, where again he had exhorted that anyone who would come in his way would meet his death.
Four witnesses A,B,C,D, who agreed to give statements to the police on conditions of anonymity, clearly stated that they would not depose against the detenu for fear of retaliation as the detenu had threatened to do away with anyone who would depose against him.
The evidence of these witnesses show that the detenu was indulging in transporting of illicit liquor and distributing the same in the locality and was keeping arms with him while transporting liquor.
The activities of the detenue, therefore, were not merely "bootlegging" as was the position in Om Prakash, Rashidmiya and Piyush Kantilal Mehta 's cases (supra) but went further to adversely affect the even tempo of the society by creating a feeling of insecurity among those who were likely to depose against him as also the law enforcement agencies.
The fear psychosis created by the detenu in the witnesses was aimed at letting the crime go unpunished which has the potential of the society, and not merely some individual, to suffer.
The activities of the detenu, therefore, squarely fall within the deeming provision enacted in the explanation of Section 2(a) of the Act, and it therefore, follows as a logical consequence that the activities of 247 the detenu were not merely prejudicial to the maintenance of `law and order ' but were prejudicial to the maintenance of "public order".
The first argument raised by Dr. Chitale against the order of detention, therefore, fails.
Coming now to the second argument of Dr. Chitale to the effect that proviso to Section 3(2) of the Act, prohibited the State Government to make an order of detention in the first instance, exceeding three months, and since the order of detention in the instant case had been made for a period exceeding three months, it was vitiated.
Section 3 reads as follows: "Power to make orders detaining certain persons.
(1) The State Government may, if satisfied with respect to any person that with a view to preventing him from acting in any manner prejudicial to the maintenance of public order, it is necessary so to do, make an order directing that such person is detained.
(2) If, having regard to the circumstances prevailing or likely to prevail in any area within the local limits of the jurisdiction of a District Magistrate or a Commissioner of Police, the State Government is satisfied that it is necessary so to do, it may, by order in writing, direct, that during such period as may be specified in the order such District Magistrate or Commissioner of Police may also, if satisfied as provided in sub section (1), exercise the powers conferred by the said sub section: Provided that the period specified in the order made by the State Government under this sub section shall not, in the first instance, exceed three months but the State Government may, if satisfied as aforesaid that it is necessary so to do, amend such order to extend such period from time to time by any period not exceeding three months at any one time.
(3) When any order is made under this section by an officer mentioned in sub section (2), he shall forthwith report that fact to the State Government, together with the grounds on which the order has been made and such other particulars as, in his opinion, have a bearing on the matter, and no such order shall remain in force for more than twelve days after the making thereof, unless in the meantime, it has been approved by the State Government." 248 A plain reading of the Section shows that the State Government under Section 3(1), if satisfied, with respect to any person that with a view to preventing him from acting in a manner prejudicial to the maintenance of "public order", it is necessary so to do , make an order of detention against the person concerned.
Sub section (2) of Section 3 deals with the delegation of powers by the State Government and provides that if the State Government is satisfied, having regard to the circumstances prevailing in any area within the local limits of the jurisdiction of a District Magistrate or a Commissioner of Police, it is necessary to empower District Magistrate or the Commissioner of Police, as the case may be to exercise the powers of the State Government to order detention of a person as provided by sub Section (1), then the State Government may, by an order in writing direct that during such period as may be specified in the order, the District Magistrate or the Commissioner of Police may also if satisfied as provided in sub section (1), exercise the powers of the State Government as conferred by sub Section (1).
The proviso to sub Section (2), only lays down that the period of delegation of powers, specified in the order to be made by the State Government under sub section (2), delegating to the District Magistrate or the Commissioner of Police the powers under sub section (1) shall not in the first instance exceed three months.
The proviso, therefore, has nothing to do with the period of detention of a detenu.
The maximum period of detention is prescribed under Section 13 of the Act which lays down that a person may be detained in pursuance of any detention order made under the Act, which has been confirmed under Section 12 of the Act.
It is, therefore, futile to contend that the order of detention in the instant case was vitiated because it was for a period of more than three months.
The second argument, therefore, also fails.
We are, in the facts and circumstances of the case, satisfied that the Division Bench of the Bombay High Court rightly dismissed the Criminal Writ Petition No. 597 of 1991 and that order does not call for any interference.
The Appeal fails and is dismissed.
Writ Petition No. 1247 of 1991 also fails and is hereby dismissed since the order of detention does not suffer from any infirmity.
G.N. Appeal/Petition dismissed.
| With a view to check transportation of illicit liquor, the Police were maintaining a watch and the speeding car driven by the detenu, husband of the appellant/petitioner was signalled to stop.
Instead,the detenu accelerated the car and drove straight towards the Police party.
They had to jump on to the foot path to save themselves.
The detenu hurled abuses and threatened to kill the Police officers.
He kept on driving the car recklessly, dashed against a pedestrian thereby injuring him.
Ultimately the car collided with a stationary taxi and stopped.
The Police rushed to apprehend the detenu and two others in the car, but they jumped out of the car and escaped.
Police seized the motor car and recovered illicit liquor therefrom.
A police case was registered against the detenu and two other unknown persons for offences under Sections 307,324 read with Section 34 IPC.
The detenu made himself scarce and could not be arrested immediately.
However, after a few days he was arrested and he admitted the incident including his escape.
He was produced before the Magistrate and was released on bail on the condition that he should report to the police daily.
Since the detenu failed to carry out the condition, bail was cancelled and he was taken into custody.
The detenu then moved the Sessions Court against the cancellation of his bail, which was admitted and he was granted bail.
During the investigation of the case, Police could record statements 235 from four witnesses, who deposed only on condition of anonymity as they feared retaliation from the detenu.
The detaining authority on being satisfied that the detenu was likely to indulge in activities prejudicial to the maintenance of "public order" passed an order of detention and the grounds of detention were served on the detenu.
The said order was confirmed by the State Government on the report of the Advisory Board.
The wife of the detenu challenged the detention order before the High Court.
The High Court having dismissed the Writ Petition she has filed the present appeal by special leave, as also a Writ Petition before this Court, challenging the detention order passed against her husband.
On behalf of the appellant/petitioner, it was argued that the activities of the detenu had no impact on the public and therefore could not be said to have disturbed the even tempo of the society and as such his detention for acting in a manner prejudicial to the "public order" was unjustified.
It was further contended that Section 3(2) of the Maharashtra Prevention of Dangerous Activities of Slumlords, Bootleggers and Drug Offenders Act, 1981 prohibited the State Government to make an order of detention in the first instance, exceeding three months, and since in the present case the detention order was for more than three months, it was invalid.
Dismissing the matters, this Court, HELD: 1.1.
Crime is a revolt against the whole society and an attack on the civilization of the day.
Order is the basic need of any organised civilized society and any attempt to disturb that order affects the society and the community.
The distinction between breach of `law and order ' and disturbance of 'public order ' is one of degree and the extent of reach of the activity in question upon the society.
In their essential quality, the activities which affect "law and order" and those which disturb "public order" may not be different but in their potentiality and effect upon even tempo of the society and public tranquility there is a vast difference.
In each case, therefore, the courts have to see the length, magnitude and intensity of the questionable activities of a person to find out whether his activities are prejudicial to maintenance of "public order" or only "law and order".
[244E G] 1.2 Respect for law has to be maintained in the interest of the society and discouragement of a criminal is one of the ways to maintain it.
The 236 objectionable activities of a detenu have, therefore, to be judged in the totality of the circumstance to find out whether those activities have any prejudicial affect on the society as a whole or not.
If the society.
and not only and individual, suffers on account of the questionable activities of a person, then those activities are prejudicial to the maintenance of "public order" and are not merely prejudicial to the maintenance of "law and order".
An order of detention would be valid if the activities of a detenu affect "public order" but would not be so where the same affect only the maintenance of "law and order".[245B C] Ram Manohar Lohia vs State of Bihar.
; ; Arun Ghosh vs
State of West Bengal, ; Madhu Limaye vs Ved Murti, [1970]3 SCC 738; Kanu Biswas v State of West Bengal, ; ; Ashok Kumar vs Delhi Administration, ; Subhash Bhandari vs District Magistrate, Lucknow; , , relied on.
State of U.P vs Hari Shankar Tewari, [1987] 2SCC 490; Ahmedhussain Shaikhhussain vs Commissioner of Police, Ahmedabad & Anr, [1989]4 SCC 751; T.Devaki vs Government of Tamil Nadu & Ors.
[1990] 2SCC 456; Referred to 2.1 The explanation to Section 2(a) of the Maharashtra Prevention of Dangerous Activities of Slumords, Bootleggers and Drug offenders Act, 1981 brings into effect a legal fiction as to the adverse affect on `public order '.
It provides that if any of the activities of a person referred to in clauses ( (i) (iii) of Section 2(a) directly or indirectly causes or is calculated to cause any harm, danger or alarm or a feeling of insecurity among the general public or any section thereof or a grave or a wide spread danger to life or public health, then public order shall be deemed to have been adversely affected.
Thus, it is the fall out of the activity of the `bootlegger ' which determine whether `public order ' has been affected within the meaning of deeming provision or not.
This legislative intent has to be kept in view while dealing with detentions under the act.
[246 B, C] 2.2 In the instant case, the substance of the grounds on which detention has been ordered is that the detenu is a bootlegger and in furtherance of his activities and to escape from the clutches of law, he even tried to run over, by his speeding vehicle, the police party, which tried to signal him to a stop, exhorting all the time that he would kill anyone who would come in his way.
He continued to drive in a reckless speed and dashed against a pedestrian causing injuries to him, where 237 again he had exhorted that anyone who would come in his way would meet his death.
Four witnesses A, B, C, D, who agreed to give statements to the police on conditions of anonymity, clearly stated that they would not depose against the detenu for fear of retaliation as the detenu had threatened to do away with anyone who would depose against him.
The evidence of witnesses shows that the detenu was indulging in transporting of illicit liquor and distributing the same in the locality and was keeping arms with him while transporting liquor.
The activities of the detenu, therefore, were not merely `bootlegging ' but went further to adversely affect the even tempo of the society by creating a feeling of insecurity among those who were likely to depose against him as also the law enforcement agencies.
The fear psychosis created by the detenu in the witnesses was aimed at letting the crime go unpunished which has the potential of the society, and not merely some individual, to suffer.
The activities of the detenu, therefore, squarely fall within the deeming provision enacted in the explanation to Section 2(a) of the Act.
It, therefore, follows that the activities of the detenu were not merely prejudicial to the maintenance of `law and order ' but were prejudicial to the maintenance of `public order '.
[246D H, 247 A] Om Prakash vs Commissioner of Police & Ors., [1989] Supp.
(2) SCC 576; Rashidmiya vs Police Commissioner, Ahmedabad & Anr., [1989] 3 SCC 321; Piyush Kantilal Mehta vs Commissioner of Police, Ahmedabad City and Anr., [1989] Supp.
(1) SCC 322, referred to.
The maximum period of detention is prescribed under Section 13 of the Act which lays down that a person may be detained in pursuance of any detention order made under the Act, which has been confirmed under Section 12 of the Act.
Therefore, the order of detention in the instant case, though it was for a period of more than three months, is not vitiated since the order is in conformity with the said provisions.
[248D, E]
|
DICTION: Writ Petition NO.
844 OF 1991.
(Under Article 32 of the Constitution of India) WITH S.L.P.NOS. 16475 & 17635 of 1991.
N.S. Hegde, Amrendra Bal and J.R. Das for the Petitioners.
Soresh Roy, Ms. Kirti Mishra and P.N. Mishra for the Respondents.
The Judgment of the Court was delivered by KANIA, CJ.
We have already dismissed the writ petition and special leave petitions by our order dated 5.12.1991.
We would, however, like to make a suggestion to the authorities for their consideration that some preference might be given to in service candidates who have done five years of rural service.
In the first place, it is possible that the facilities for keeping up with the latest medical literature might not be available to such in service candidates and the nature of their work makes it difficult for them to acquire knowledge about very recent medical research which the candidates who have come after freshly passing their graduation examination might have.
Moreover, it might act as an incentive to doctors who had done their graduation to do rural service for some time.
Keeping in mind the fact that the rural areas had suffered grievously for non availability of qualified doctors giving such incentive would be quite in order.
Learned counsel for the respondents has, however, drawn out attention to the decision of a Division Bench of two learned judges of this Court in Dr. Dinesh Kumar & Ors.
vs Motilal Nehru Medical College, Allahabad & Ors., [1986] 3 SCC page 727 at 740.
It has been observed there that merely by offering a weightage of 15 per cent to a doctor for three years rural service would not bring about a migration of doctors from the urban to rural areas.
They observed that it you want to produce doctors who are MD or MS, particularly surgeons, who are going to operate upon human beings, it is of utmost importance that the selection should be based on merit.
Learned Judges have gone on to observe that no weightage should be given to a candidate for rural service rendered by him so far as admissions to post graduate courses are concerned (see para 12 at pate 741).
In our opinion, this observation certainly does not constitute the ratio of the decision.
The decision is in no way dependent upon these 337 observations.
Moreover, those observations are in connection with All India Selection and do not have equal force when applied to selection from a single State.
These observations, however, suggest that the weightage to be given must be the bare minimum required to meet the situation.
In these circumstances, we are of the view that the authorities might well consider giving weightage upto a maximum of 5 per cent of marks in favour of in service candidates who have done rural service for five years or more.
The actual percentage would certainly have to be left to the authorities.
We also clarify that these suggestions do not in any way confer any legal right on in service students who have done rural service nor do the suggestions have any application to the selection of the students upto the end of this year.
| The writ petition and the SLPs were dismissed by this Court 's order dated 5.12.1991.
Taking judicial notice of the fact that the rural areas had suffered for non availability of qualified doctors, this Court suggested that some preference might have to be given to in service candidates who have done five years of rural service.
HELD: 1.01.
The authorities might well consider giving weightage upto a maximum of 5 per cent of marks in favour of in service candidates who have done rural service for five years or more.
The actual percentage would certainly have to be left to the authorities.
[327 B] 1.02.
This might act as an incentive to doctors who had done their graduation to do rural service for some time.
[326 E] 1.03.
The observation in Dr. Dinesh Kumar and Others vs Motilal Nehru Medical College, Allahabad and others, [1986] 3 SCC page 727 at 740 to the effect that no weightage should be given to the candidate for rural service rendered by him so far as admissions to post graduate courses are concerned is not the ratio of the judgment but a mere observation.
[336 H 337 A] 1.04.
The suggestions do not in any way confer any legal right on in service students who have done rural service nor do they have any application to the selection of the students upto the end of the year.
[337 B] Dr Dinesh Kumar & Ors.
vs Motilal Nehru Medical College, Allahabad & Ors., ; at page 740, distinguished.
|
ivil Appeal No. 3087 of 1991.
From the Judgment and Order dated 23.11.
1990 of the Delhi High Court in F.A.O. (O.S.) 123 of 1989.
Kapil Sibal, D.D. Thakur, Ms. Lira Goswamy, A.K. Mahajan, A.S. Chandhoik, Ms. Meera Chibar and Dinesh Agnani for the appearing parties.
414 The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
We grant special leave and proceed to dispose of the appeal.
The General Electric Technical Services Company (`GET SCO ') had entered into a contract with Indian Airlines which included, inter alia, the construction and fabrication of air craft testing centre/engine repair centre in Delhi.
The GETSCO in turn entered into a contract with M/s Punj Sons (P) Ltd. respondent 1 for getting that work done for Indian Airlines.
As per the contract respondent I was required to provide performance bond equal to 30 per cent of the total value of contract price which was to be split up into two performance bonds partly to be released on completion of the project, and the balance upon the expiration of the warran ty.
The respondent I was also required to furnish a bank guarantee to secure the mobilisation advance of 25 per cent of the contract value.
On 28 October, 1986 respondent 1 furnished the bank guarantee to secure the mobilisation advance of Rs. 1,86,00,000.
The guarantee was furnished by Hongkong & Shanghai Bank ( 'the Bank ') respondent 2.
Respondent I instead of furnishing the two performance bonds, as agreed upon, wrote a letter dated 3 September, 1987, as follows: ". .
Sub: Jet Engine Test & Repair Centre at Palam Finance September 3, 1987 Dear Sir, In terms of above contract we have to submit two separate Bonds for Mobilisation advance & performance guarantee & 25% and 30% of the Contract value.
Bank Guarantee for mobilisation advance has already been submit ted and we have not to submit the Performance Bonds for 30% of the Contract value.
Since the amount of Performance Bond shall be progres sively utilised over the contract period, in order to reduce Bank charges and marginal money, we would like to suggest alternative proposals to meet with your requirements: 415 AA.
We propose to submit performance guaran tees for 30% of the contract value duly signed by two directors in their personal capacity and countersigned by Punj Sons (Pvt) Ltd. This Performance bond shall include identical terms & conditions, as desired in your format.
Similar Bond has already been accepted by M/s Hindustan Petroleum Corporation Ltd. Bombay for their Bombay Pune Pipeline Project valued at Rs.7.05 crores.
Alternatively, we would suggest submission of a Composite Bank gurantee where amount vacated by Mobilisation advance shall be utilised by Performance Bank Guarantee amount.
This Guarantee shall at any time be valid for equivalent to 30% of the contract value, to cover unrecovered mobilisation advance and Performance Guarantee amount of the work certified.
We have submitted similar Bonds to a number of our customers to their entire satis faction.
May we request you to look into the above arrangement and allow us to submit the above Bond or Composite Bank Guarantee under this Contract.
Thanking you and assuring you of our best services at all times. " GETSCO has accepted the revised proposal contained in the aforesaid letter.
Consequently, on 25 January 1988, the Bank furnished a composite bank guarantee for Rs.2, 12,25,000.
Out of this composite bank guarantee 15 per cent being Rs. 1,06,12,500 would remain in force until 30 June, 1988 and the balance 15 per cent would remain valid till final acceptance certificate i.e. till 30 June 1989.
It seems respondent 1 failed to complete the project within the stipulated time as per contractual specifications despite repeated opportunities to rectify defects and defi ciencies prior to August 1988 and thereafter.
GETSCO termi nated respondent 1 's right to continue the project and wrote a letter dated 17 April 1989 to the Bank seeking encashment of the bank guarantee dated 25 January 1988 for Rs. 1,06, 12,500.
On the same day the bank issued a cashier 's order No. 2605 for Rs. 1,06, 12,500 in favour of GETSCO.
On 18 April 1989 the respondent 1 filed a suit for injunction against GETSCO and the Bank in the High Court and obtained an ex parte injunction at the residence 416 of learned Single Judge restraining the Bank and GETSCO from encashing the bank guarantee.
On 11 July 1989 the ex parte injunction was vacated.
On the same day respondent 1 preferred an appeal to the Division Bench of the High Court and obtained stay of encashment of he bank guarantee.
On 23 November 1990, the Division Bench allowed the appeal, set aside the order of learned Single Judge and stayed the encashment of the bank guarantee till the disposal of the respondent 's suit.
It seems to us that the Division Bench of the High Court has misconstrued the terms of the bank guarantee and the rights and liabilities of the parties thereunder.
The first bank guarantee dated 28 October, 1986 is in these terms: "1.
In consideration of General Electric Technical Services co. Inc. Cincinnati, Ohio, U.S.A. C/o M/s P.L. Jaitly & co. IE/12, Jhandewalan Extension, New Delhi (hereinafter called the owner) having agreed to grant mobilisation advance of Rs.18,600,000 [Rs. Eighteen million six hundred thousand only] to M/s Punj Sons Pvt. Ltd., Industrial Area, Kalkaji, New Delhi 110019 (hereinafter called Contractor) under the terms and conditions of Tender No. HB 040 I made by and between, owner and Contractor for Indian Airlines Jet Engine Repair and Test Facilities Phase II Construc tion being undertaken at the Indira Gandhi International Airport, New Delhi (here in called the Agreement) on the production of Bank Guarantee for Rs.18,600,000 [Rupees eighteen million six hundred thousand only] we, Hongkong & Shanghai Banking Corporation, 28 Kasturba Gandhi Marg, New Delhi 110001 (hereinafter called Bank) do hereby undertake to pay to the Owner an amount not exceeding Rs. 18,600,000 [Rs. eighteen million six hundred thousand only], against any loss or damage caused to or suffered or would be caused to or suffered by the owner by reason of any breach by the Contractor of the terms and conditions contained in the Agreement.
We, the Bank do hereby undertake to pay the amount due and payable under this Guarantee with demur, merely on demand from the owner stating that the amount claimed is due by way of loss or damage caused to or would be caused to or suffered by the owner by reason of any breach 417 by the Contractor of any of the terms or conditions contained in the Agreement or by reason of the Contractor 's failure to perform the Agreement.
Any such demand made on the Bank shall be conclusive, as regards the amount due and payable by the Bank under this Guarantee.
However, our liability under this Guarantee shall be restricted to an amount not exceeding Rs.18,600,000 [Rupees eighteen million six hundred thousand only].
We, the Bank further agree that the Guaran tee herein contained shall remain in force and effect during the period that would be taken for the performance of the Agreement and that it shall continue to be enforceable till all the due of the owner under or by virtue of the Agreement have been fully paid and its claims satisfied or discharged or till the owner certifies that the terms and conditions of the Agreement have been tully and properly carried out by the Contractor and accordingly dis charges the Guarantee.
Unless a demand or claim under this Guarantee is made on us in writing on or before the date (named in the Agreement as the end of the warrant/mainte nance period) we shall be discharged from all liability under this Guarantee thereafter.
We, the Bank further agree with the Owner that the owner shall have the fullest liberty without our consent and without affecting in any manner our obligations hereunder to vary any of the terms and conditions of the Agree ment or to extend time of performance by the Contractor from time to time or to postpone for any time or from time to time any of the powers exercisable by the owner against the Contractor and to forbear or enforce any of the terms and conditions relating to the Agreement and we shall not be relieved from our liability by reason of any such variation, or extension being granted by the owner or any indulgence by the owner to the Contractor or by any such matter or thing whatsoever which under the law relating to sureties would but for this provision have effect of so relieving us.
We, the Bank lastly undertake not to revoke this Guarantee during its currency except with the previous consent of the owner in writing.
418 Notwithstanding anything stated above, our liability under this Guarantee is restricted to a sum of Rs. 18,600,000 [Rs. eighteen million six hundred thousand only].
Our Guar antee shall remain in force until the (date named in the Agreement as the end of the warrant/maintenance period).
Unless a demand is lodged with us on or before that date 13 day of February 1988, all your rights under the said guarantee shall be forfeited and we shall be relieved and discharged from all liabilities thereafter.
" The relevant terms of the second composite bank guarantee dated 25 January 1988 are as follows: "Bank Guarantee No. 86 NDH 918 dt.
28.10.1986 for Rs. 1,86,00,000 favouring M/s General Electric & Technical Services Co. Inc. Under the instructions from our clients M/s Punj Sons (Pvt) Ltd. M 13, Connaught Place, New Delhi 110001, we hereby enhance the value of the above Bank Guarantee upto Rs.21,225,000 [Rupees twenty one million two hundred twenty five thousand only] being 30% of the revised Lumpsum Contract value of Rs.70,750,000 [Rupees seventy million seven hundred fifty thousand only].
This Bank Guarantee shall act 'Composite Bank Guarantee ' for Mobilisation Advance and Performance Bond where in Bank Guarantee, to the extent of amounts of Mobilisation Advance so recovered, shall be utilised towards Two Performance Bonds of 15% of the Contract value each valid upto 30th June, 1988 and 30th June, 1989, respectively.
All the other terms and conditions of the original Guarantee will remain unchanged.
We, the Hongkong & Shanghai Banking Corpora tion, 28, Kastruba Gandhi Marg, New Delhi 110001, hereby undertakes not to revoke the Guarantee during the currency except with the previous consent of the General Electric 419 and Technical Services Company Inc. Notwithstanding, anything contained herein before our liability under this Guarantee is restricted to Rs.21,225,000 [Rupees Twenty One Million Two Hundred Twenty five thousand only] and the recovery of Mobilisation advance from Running Bills Account will be in accordance with the contract, the Guarantee against such amounts of Mobilisation Advance as so recov ered shall be treated towards performance Guarantee with the intent that after recovery of Mobilisation Advance in full, the Guarantee shall operate against the full value of Per formance Bond.
Out of the said guarantee amount, the Bank Guarantee amount of Rs.10,612,500 [Rupees ten million six hundred twelve thousand & five hundred only] being the 15% of lumpsum value of the contract shall remain in force till the completion of the Project i.e. upto 30th June 1988 and the Bank Guarantee for the balance amount i.e. Rs.10,612,500 [Rupees ten million six hundred twelve thousand five hundred only] being 15% amount shall remain in force till final ac ceptance certificate till 30th June, 1989.
NOTWITHSTANDING anything contained hereinbe fore our liability under this Guarantee will be restricted to Rs.21,225,000 [Rupees twenty one million two hundred twenty five thousands only] until 30th June 1988 and will automati cally stand reduced from Rs.21,225,000 to Rs.10,612,500 (Rupees ten million six hundred twelve thousand and five hundred only) on 30th June, 1988 without further reference to you.
Our liability will continue only to the extent of the balance amount of Rs.10,612,500 [Rupees ten million six hundred twelve thousand and five hundred only] after 30th June, 1988 and will be conditional upon a claim being filed with us in writing on or before 30th June 1989.
Thereafter our liability under this guarantee shall stand extinguished and we shall be relieved and discharged from all liabilities thereunder.
" The second bank guarantee with which we are concerned makes a reference to the first guarantee.
It states that the guarantee is a composite bank guarantee for mobilisation of advance and performance bond.
It further states that all the other terms and conditions of 420 the original Guarantee will remain unchanged.
The liability of the Bank shall automatically reduce from Rs.2,12,25,000 to Rs. 1,06, 12,500 on 30 June 1988, which will continue even after 30 June, 1988 and will be condi tional upon a claim being filed with the Bank in writing on or before 30 June 1989.
In the first guarantee, the Bank has undertaken to pay to GETSCO the amount guaranteed without any demur merely on demand stating that the amount is due by way of loss or damage caused to or would be caused to or suffered by GETSCO by reason of any breach committed by the respondent on any of the terms or conditions contained in the agreement or by reason of respondent 's failure to per form the agreement.
It is also provided that any such demand by GETSCO made on the Bank shall be conclusive as regards the amount due and payable by the Bank under the guarantee.
The GETSCO has only sought to enforce the bank guarantee for the balance amount of Rs. 1,06, 12,500 on a complaint that respondent 1, has failed to perform the contract as per the terms and conditions.
The Bank has undertaken to pay this sum of money and it is a commitment of the Bank.
The Bank must honour its commitment when demand is made.
Indeed, the Bank was prepared to pay and has in fact issued the Cash ier 's order as per demand from GETSCO, but the Court has directed the Bank not to pay under the guarantee.
The question is whether the Court was justified in restraining the Bank from paying to GETSCO under the bank guarantee at the instance of respondent 1.
The law as to the contractual obligations under the bank guarantee has been well settled in a catenae of cases.
Almost all such cases have been considered in a recent judgment of this Court in U.P. Cooperative Federation Ltd. vs Singh Consultants and Engineers (P) Ltd., wherein Sabyasachi Mukherji, J., as he then was, observed (at 189) 'that in order to restrain the operation either of irrevocable letter of credit or of confirmed letter of credit or of bank guar antee, there should be serious dispute and there should be good prima facie case of fraud and special equities in the form of preventing irretrievable injustice between the parties.
Otherwise, the very purpose of bank guarantees would be negatived and the fabric of trading operations will get jeopardised '.
It was further observed that the Bank must honour the bank guarantee free from interference by the Courts.
Otherwise, trust in commerce internal and interna tional would be irreparably damaged.
It is only in excep tional cases that is to say in case of fraud or in case of irretrievable injustice, the Court should interfere.
In the concurring opinion one of us (K. Jagannatha Shetty, J.) has observed that whether it is a 421 traditional bond or performance guarantee, the obligation of the Bank appears to be the same.
If the documentary credits are irrevocable and independent, the Bank must pay when demand is made.
Since the Bank pledges its own credit in volving its reputation, it has no defence except in the case of fraud.
The Bank 's obligations of course should not be extended to protest the unscrupulous party, that is, the party who is responsible for the fraud.
But the banker must be sure of his ground before declining to pay.
The nature of the fraud that the courts talk about is fraud of an "egre gious nature as to vitiate the entire underlying transac tion".
It is fraud of the beneficiary, not the fraud of somebody else.
The High Court has observed that failure on the part of GETSCO to make a reference to mobilisation advance in the letter seeking encashment of the bank guarantee would be tantamount to suppression of material facts, in the sense that the mobilisation advance was, under the contract to be recovered from the running bills.
It was further observed that disclosure of such facts would have put the bank to further inquiry as to what was the amount covered by those bills and what was the corresponding amount of the mobilisa tion advance and to what extent the amount covered by the bank guarantee remained payable.
In any event, the High Court said, that GETSCO could not demand full amount of the bank guarantee on 17 April 1989.
It seems to us that the High Court has misconstrued the terms of the bank guarantee and the nature of the inter se rights of the parties under the contract.
The mobilisation advance is required to be recovered by GETSCO from the running bills submitted by the respondent.
If the full mobilisation advance has not been recovered, it would be to the advantage of the respondent.
Secondly, the Bank is not concerned with the outstanding amount payable by GETSCO under the running bills.
The right to recover the amount under the running bills has no rele vance to the liability of the Bank under the guarantee.
The liability of the Bank remained intact irrespective of the recovery of mobilisation advance or the non payment under the running bills.
The failure on the part of GETSCO to specify the remaining mobilisation advance in the letter for encashment of bank guarantee is of little consequence to the liability of the Bank under the guarantee.
The demand by GETSCO is under the Bank guarantee and as per the terms thereof.
The Bank has to pay and the Bank was willing to pay as per the undertaking.
The Bank cannot be interdicted by the Court at the instance of respondent 1 in the absence of fraud or special equities in the form of preventing irre trievable injustice between the parties.
422 The High Court in the absence of prima facie case on such matters has committed an error in restraining the Bank from honouring its commitment under the bank guarantee.
In the result, we allow the appeal, set aside the im pugned judgment and order of the High Court.
The appellant is entitled to costs in this Court.
S.L.P. (Civil) No. of 1991 (In CC 13 153/91) Since we have set aside the order of the Division Bench of the High Court this Special Leave Petition does not survive and is accordingly dismissed.
No costs.
V.P.R. Appeal allowed.
| The appellant 's contract with Indian Airlines included the construction and fabrication of air craft testing cen tre/engine repair centre in Delhi.
For getting that work done, the appellant entered into a contract with the re spondent 1.
As per the contract, respondent 1 was required to provide performance bond equal to 30 per cent of the total value of contract price, which was to be split up into two performance bonds partly to be released on completion of the project, and the balance upon the expiration of the warran ty, and to furnish a Bank guarantee to secure the mobilisa tion advance of 25 per cent of contract value.
Respondent II, instead of furnishing the two perform ance bonds, wrote a letter for a revised proposal, which was accepted by the appellant.
As the respondent 1 failed to complete the project within the stipulated time, as per contractual specifica tions, despite repeated opportunities, the appellant termi nated respondent 1 's right to continue the project and sought for encashment of the Bank guarantee for Rs. 1,06,12,500, which was issued to the appellant by the Bank.
The respondent I filed a suit for injunction against the appellant and the Bank in the High Court and obtained an ex parte injunction from the Single Judge, restraining the Bank and the appellant from encashing the Bank guarantee.
When the ex parte injunction was vacated, respondent I preferred an appeal to the Division Bench of the High Court.
The Division 413 Bench allowed the appeal, staying the encashment Of the Bank guarantee till the disposal of the respondent 's suit.
On the question, whether the Court was justified in restraining the Bank from paying the appellant under the Bank guarantee at the instance of respondent I, allowing the appeal of the appellant company, this Court, HELD: 1.
In the instant case, the High Court has miscon strued the terms of the Bank guarantee and the nature of the inter rights of the parties under the contract.
The mobili sation advance is required to be recovered by the appellant from the running bills submitted by the respondent.
If the full mobilisation advance has not been recovered, it would be to the advantage of the respondent.
Secondly, the Bank is not concerned with the outstanding amount payable by the appellant under the running bills.
The right to recover the amount under the running bills has no relevance to the liability of the Bank under the guarantee.
The liability of the Bank remained intact irrespective of the recovery of mobilisation advance or the non payment under the running bills.
The failure on the part of the appellant to specify the remaining mobilisation advance in the letter for encash ment of Bank guarantee is of little consequence to the liability of the Bank under the guarantee.
The demand by the appellant is under the Bank guarantee and as per the terms thereof.
The Bank has to pay and the Bank was willing to pay as per the undertaking.
The Bank cannot be interdicted by the Court at the instance of respondent I in the absence of fraud or special equities in the form of preventing irre trievable injustice between the parties.
The High Court in the absence of prima facie case on such matters has commit ted an error in restraining the Bank from honouring its commitment under the bank guarantee.
[421E 422A] U.P. Cooperative Federation Ltd. vs Singh Consultants and Engineers (P) Ltd., , Followed.
|
: Criminal Appeal No. 36 of 1979.
From, the judgement and Order dated 17.11.1978 of the Madhya Pradesh High Court in Criminal Appeal No. 477 of 1973.
A.N. Mulla, Dhruv Mehta, Aman Vachher and S.K. Mehta for the Appellants.
B.Y. Kulkarni and Uma Nath Singh for Respondents.
The Judgment of the Court was delivered by section RATANAVEL PANDIAN, J.
The two appellants, namely, Chandra Mohan Tiwari and Ram Pal Singh Sengar have filed this criminal appeal challenging the correctness and legality of the judgment and order dated 17th of November 1978 of the High Court of Madhya Pradesh at Jabalpur rendered in Criminal Appeal No. 477 of 1973, whereby the High Court has allowed the appeal preferred by the State by setting aside the order of acquittal passed by the Trial Court and convicted the first appellant under Section 302 IPC and the second appellant under Section 302 read with 34 IPC and sentenced each of them to imprisonment for life.
The matrix of the case which has led to the filing of this appeal briefly stated is as follow: PW 6 Ahiwaransingh was at the material time, a compounder in the Veterinary Hospital, Budhni.
He was residing in one of the quarters situated in the compound of the Veterinary Hospital.
On the opposite side of compound there are Government quarters.
One of which was occupied by appellant Ram Pal Singh (Appellant No. 2), who was serving as Gram Sevak in the Block Development office.
He is married and distantly related to PW 6.
The first appellant Chandra Mohan Tiwari was wielding high influence in that locality and was well known to the members of the family of PW 6.
It appears that he contested the election to the Legislative Assembly from Budhni constituency.
The members of the family of PW 6 included PW 5, the Deceased Saroj aged about 16 years, who are PW 6 's wife and eldest daughter respectively.
PW 6 had settled the marriage of his daughter Saroj at Dahiyapur, Etawah District (U.P.).
On 24.5.1970 he along with his deceased daughter, Saroj, left Budhni for Bhopal enroute to Dahiyapur.
At Bhopal he stayed with his relative by name Arjun Singh.
On 25.5.1970 at 318 about 11.00 A.M. PW 6 had gone to the market leaving Saroj alone in the house.
According to the prosecution, the second Appellant came to the house of PW 6 and told Saroj that her father wanted her presence for selection of clothes.
Saroj believing the words of second appellant and without entertaining any doubt on the representation of the second appellant accompanied him in a jeep which was driven by the first appellant.
Then she was taken to a house where she was wrongfully confined for about two and a half months.
During this period both the appellants are stated to have forcibly committed sexual intercourse with Saroj.
PW 6 lost his nerve on the sudden disappearance of his daughter, but he instead of lodging a report with the police, which evidently he thought would adversely affect the future life of his daughter and her impending marriage and also bring the family in disrepute, unsuccessfully made a frantic and intensive search for his daughter.
Then he lodged a report exhibit P/10 on 3.8.1970 at the Police Station of Mangalwara, alleging that he had reason to believe that Saroj might have been kidnapped by both the appellants.
The police did not take any prompt action on the report.
By that time, the appellants, on coming to know of the lodging of the report, devised a plan fore stall any action being taken against them.
The second appellant took Saroj in a taxi to Hoshangabad and left her near the police station with an instruction to lodge a false complaint at the police station that she was kidnapped from Bhopal on 25.5.1970 by one Ramnath and Indrasen and was wrongfully confined by them.
She was also threatened that the appellants would be keeping a watch over her and that in case she divulged the truth, serious consequences would follow.
As instructed by the second appellant, Saroj lodged a complaint exhibit D/15 on 9.8.1970 at Hoshangabad Police Station.
However, when she was taken to the Police Station, Mangalwara in connection with the report, lodged by her father (PW 6) she told the entire truth to the police and her parents.
Even then no progress was made in the investigation on the report of PW 6 at Mangalwara.
So PW 6 made a fervent plea to the then Chief Minister of the State and requested him to take action in the matter.
It was only thereafter, on the instructions of the higher authorities wheels of investigation started moving on.
The police after completing the investigation filed the charge sheet before the Additional District Magistrate (Judicial) Bhopal against both these two appellants for offences punishable under Section 363, 366 and 376 IPC.
The victim Saroj, when examined before the Magistrate on 12.7.1971 stated in her statement exhibit P/25 that she was kidnapped by both the appellants and wrongfully confined and also subjected to sexual inter course and that she lodged the false report exhibit D/15 at the Hoshangabad police station under duress and as instructed by the second appellant 319 herein.
The Magistrate discharged the first appellant, and committed the second appellant alone to take his trial.
On a revision preferred against the order of discharge of the first appellant both the appellants were put up for trial before the third Additional Sessions Judge, Bhopal in Sessions Case Nos. 66 and 95 of 1972 for offences punishable under sections 363, 366 and 376 IPC.
During the said trial both appellants were on bail.
The case was fixed for recording evidence from 21.8.1972 on which date the victim Saroj was to be examined as a prosecution witness.
While the matter stood thus, according to the prosecution, on 20.6.72 Saroj lodged a report exhibit P/7 at Budhni Police Station complaining that the second appellant had forcibly entered into the backyard of her house, but took to his heels when she raised a hue and cry.
In the above background, the present occurrence had occurred on the intervening night of 20/21st August 1972.
The prosecution case is that on that fateful night the first appellant armed with a pistol and the second appellant with a `farsa ' entered into the house of PW 6 through the main door which was kept ajar by PW 5 who went out of the house of answer call of nature inside the compound and that the first appellant fired a shot which hit on the chest of the victim Saroj, who was then in her bed and caused her instantaneous death.
Both PWs 5 and 6 identified the appellants as the assailants.
PW 6 tried to chase the appellants, but he stumbled near the gate of the compound and could not apprehend them.
The distress cries of PWs 5 and 6 attracted the neighbours to the scene.
PW 6 narrated the incident to PWs 1 and 2 by mentioning the name of the appellants as the assailants and requested PW 1 to lodge a report at the police station.
Accordingly, PW 1 lodged the First Information Report exhibit P/1 at 1.30 A.M. PW 18, the investigating officer took up the investigation during the course of which he inspected the scene of the occurrence, held in quest and then sent dead body to the hospital for necropsy.
On the next day i.e. on 21.8.72 both the appellants were arrested when they had come to attend the hearing of the case of kidnaping and rape.
After completing the investigation both the appellants were put up for trial.
The Sessions Judge of Indore found both appellants not guilty of the offence of murder and consequently acquitted them.
Feeling aggrieved by the judgment of the Trial Court, the State preferred the appeal before the High Court, which for the detailed discussion made in its judgment held that the prosecution has satisfactorily established the guilt of both appellants beyond all reasonable doubts, allowed the appeal by setting aside the judgment of the Trial Court acquitting the appellants and convicted the first appellant under section 302 and the second appellant under Section 302 read with Section 34 IPC and sentenced each of them to undergo imprisonment for life.
Hence the present appeal is preferred by the appellants on being aggrieved by the impugned judgment of the High Court.
320 Mr. A.N. Mulla, the learned Sr. Counsel appearing on behalf of the appellants after taking us in detail through the judgment of the courts below, evidence of the prosecution as well as the defence witnesses and in particular exhibit D/15, the First Information Report dated 9.8.70 relating to the offence of kidnaping and rape registered on the basis of the complaint given by the deceased Saroj at Hoshangabad Police Station, vehemently submitted that the prosecution has miserably failed to prove the motive for the occurrence.
The learned counsel perfervidly advanced his argument inter alia contending that the High Court has erred in reversing the judgment of the Trial Court based on well reasoned and considered findings of fact, ignoring the settled principles of law as laid down by this Court as regards the scope of interference of the High Court in an appeal preferred against an order of acquittal, that the evidence of PWs 5 and 6 who had developed rancur and were inimically disposed towards the appellants ought not to have been accepted and implicitly relied upon as their testimony is highly tainted with interestedness, that the contents of exhibit D 15 whereby the deceased had implicated Ram Nath Singh and one Indra Sen as assailants of kidnaping belie the version of PWs 5 and 6 and negative the prosecution story as far as the motive is concerned, that the evidence of PWs 5 and 6 suffers from the vice of discrepancies and incongruities, that the non recovery of any `lota ' (a small vessel) from the place where PW 5 was easing as well as the non marking of the place where the said vessel was kept in the site plan falsify the evidence of PW 5 that she opened the door and went near the compound wall to answer call of nature , that the recovery of two bullets from the scene is an indication of the fact that there should have been two shots, that there was delay in laying the complaint, that the unchallenged claim of the appellants that they were in Bhopal clearly shows that the appellants would not have come to Budhni from Bhopal that too at the odd hours with an anticipation that the door of the scene house would be kept open.
The learned counsel further submits that had the appellants come to the scene house to assassinate the victim Saroj, they would not have exposed themselves without covering their faces so that their identity could not be established and that the life of the girl might have been put to an end by inmates of the said house, particularly her father on account of some conspiracy since the victim girl wanted to have the case of kidnaping and rape not to be proceeded with.
Before adverting to the contentions, urged by the learned counsel, we would like to briefly state the legal position regarding the right of appeal of an accused person sentenced to imprisonment for life by the High Court after reversing the order of acquittal and the scope of interference in such appeal by this court.
The present appeal is under Section 379 321 of the Code of Criminal Procedure of 1973 (hereinafter referred to as the `code ') and Section 2(a) of the of 1970 (hereinafter referred to as `the Act of 1970 ') Section 379 of the Code contemplates that where the High Court has, on appeal, reversed an order or acquittal of an accused person and convicted him and sentenced him to death or to imprisonment for life or to imprisonment for the term of ten years of more, that person may appeal to the Supreme Court.
This section in newly introduced in the Code of 1973 (Act 2 of 1974) on the recommendation of the Law Commission of India in its 41st Report.
Article 134 (1) (a) of the Constitution envisages that an appeal shall lie to the Supreme Court from any judgment, final order or sentence in a criminal proceeding of the High Court in the territory of India if the High Court has on appeal reversed an order of acquittal of an accused person and sentenced him to death.
To say in other words under Article 134 (1) (a) the absolute right of appeal to the Supreme Court is restricted only to cases where the High Court reverses an order of acquittal passed by the Trial Court and awards the sentence of death.
The right of appeal is also extended under Article 134 (1) (b) to cases where the High Court has withdrawn for trial before itself any case from any court subordinate to its authority and has in such trial convicted the accused person and sentenced him to death, which type of cases are rare and infrequent occurrence.
Under clause (c) of the above said Article an appeal lies to the Supreme Court on a certificate under Article 134 A by the High Court certifying that the case is a fit one for appeal to the Supreme Court but, of course, subject to the proviso to Article 134 (1).
In this connection, it is pertinent to note that the Government of Madras (as then called) expressed its view that the limited right of appeal now conferred in case of the persons sentenced to death by clauses (a) and (b) of Article 134 (1) should be enlarged and that in all cases in which the accused persons are sentenced to death, there should be a right of appeal to the Supreme Court without the need of a certificate from the High Court.
This view was rejected by the Law Commission of India in its 14th Report stating that even in cases not covered by clauses (a) and (b) of Article 134 (1) the High Court has the power to certify the case as a fit one for appeal to the Supreme Court under Clause (c) and further there is also the safeguard provided by the wide powers of the Supreme Court under Article 136 which confers a discretionary power on the Court to interfere by granting special leave to appeal in suitable cases including cases where the High court has refused to grant Certificate for appeal under Article 134 (A).
See the decision of the constitution Bench in Tarachand vs State of Maharashtra ; = ; and the later decision in Krishan and others vs State of Maharashtra.
322 To avoid proliferation we are not citing all the decisions on this aspect.
The reason, given by the Law Commission in its 14th Reports (Volume I at page 52) for rejecting the view of the Government of Madras is as follows: "We are not inclined to accept this view.
For over a century such cases have been dealt with by the High Courts subject to the superintendence of the Privy Council under its special leave jurisdiction and there is no reason why the High Courts should not continue to deal with such cases in the same manner.
" In 1968 a Private Member 's Bill was introduced in Parliament which proposed that the limited jurisdiction of the Supreme Court contemplated under Article 134 (1) (a) and (b) should be enlarged to cover cases where the High Court has, after reversing an order of acquittal, sentenced a person to imprisonment for life or for 10 years or more.
Be that as it may in its 41 st Report, the Law Commission expressed its view that the limitation of the right of appeal under Article 134 (1) (a) and (b) applies only to cases of death but not to cases of imprisonment for life awarded by the High Court or appeal against acquittal and that limitation "is too stringent and not easily justifiable and that the convicted persons ought to have a right of appeal in such cases".
The Law Commission, at the same time, was not in favour of extending this right of appeal in which the High Court has on appeal against acquittal sentenced a person to imprisonment for a term of 10 years or more, and proposed a new Section 417 B restricting such appeal to the Supreme Court only in cases of sentence of imprisonment for life.
While so, the Joint Select Committee by its report dated 4th December, 1972 drafted clause 379 (original clause 389) of the Code of Criminal Procedure Bill 1970 (page xxvi) which reads thus: "The amendment has been made to bring the provision of the clause in line with the provisions of the .
Vide the 14th Report of the Law Commission (at page 52) and the 41st Report of the Law Commission (paragraphs 31.65 to 31.69 at pages 281 283).
Section 2 of the Act of 1970 reads thus : 2.
Enlarged appellate jurisdiction of Supreme Court in regard to criminal matters.
Without prejudice to the powers conferred on the Supreme Court by clause (1) of article 134 of the Constitution, an appeal shall lie to the Supreme Court from any judgment, final order of sentence in a criminal proceeding 323 of a High Court in the territory of India if the High Court (a) has an appeal reversed an order of acquittal of an accused person and sentenced him to imprisonment for life or to imprisonment for a period of not less than ten years ; (b) has withdrawn for trial before itself any case from any court subordinate to its authority and has in such trial convicted the accused person and sentenced him to imprisonment for life or to imprisonment for a period of not less than ten years.
" The right of appeal under the above Section to the Supreme Court is an addition to those provided under Article 134 (1) of the Constitution.
In cases which do not come under clauses (a) and (b) of Article 134(1) or under the Act of 1970 or Section 379 of the Code an appeal does not lie as of right to the Supreme Court against any order of conviction by the High Court.
In such cases, appeal will lie only if a certificate is granted by the High Court under sub clause (c) of Article 134 (1) certifying that the case is a fit one for appeal to the Supreme Court or by way of special leave under Article 136 when the certificate is refused by the High Court.
See Mahebub Beg and others vs State of Maharashtra, (S.C.) CR.
A 120/64 dated 19.3.1965 reported in and Babu vs State of U.P. ; = ; The resultant position of law from the conjoined reading of the above provisions of the Constitution, the Act of 1970 and the Code of Criminal Procedure is as follows: (1) Under sub clause (a) of Article 134(1) an appeal lies as of right to the Supreme Court in a case where the High Court has reversed an order of acquittal of an accused person and sentenced him to death.
(2) Under sub clause (b) of Article 134 (1) an appeal lies as of right to the Supreme Court in a case where the High Court has withdrawn the case for trial before itself from any court subordinate to its authority and sentenced him to death.
(3) Under Section 2 (a) of the Act of 1970 an appeal lies as of right to the Supreme Court in a case where the High Court has reversed an order of acquittal of an accused person and sentenced him to imprisonment for life or imprisonment for a period of not less then 10 years 324 (4) Under Section 2 (b) of the Act of 1970 an appeal lies as of right to the Supreme Court in a case where the High Court has withdrawn for trial before itself any case from any court subordinate to its authority and has in such trial convicted the accused person and sentenced him to imprisonment for life or imprisonment for a period of not less than 10 years.
(5) Under Section 379 of the Code, which is now newly introduced in line with the Constitutional provisions of Article 134 (1) (a) and (b) and with Section 2 of the Act of 1970, an appeal lies as of right to the Supreme Court in a case where the High Court has on appeal reversed an order of acquittal of an accused person and convicted and sentenced him either to death or to imprisonment for life or imprisonment for a term of 10 years or more.
(6) In cases not covered by Article 134 (1) (a) and (b) or Section 2 (a) and (b) of the Act of 1970 or by Section 379 of the Code of Criminal Procedure an appeal will lie only either on a certificate granted by the High Court under Article 134 (1) (c) or by grant of special leave to appeal by the Supreme Court under Article 136.
The right of appeal given under Section 379 of the Code is in line with Article 134 (1) (a) and (b) and Section 2 (a) and (b) of the Act of 1970.
This Court in Podda Narayana and others vs State of Andhra Pradesh ; = [1975] (Supp) SCR 8 had an occasion to examine the scope of Section 2 of the Act of 1970 and held thus : "As the High Court had awarded the sentence of life imprisonment after reversing the order of acquittal passed by the Additional Sessions Judge the appeal to the Supreme Court lies even on facts and as a matter of right under Section 2 of the ".
M.H. Beg, J. as he then was, speaking for the Bench in Ram Kumar Pande vs The State of Madhya Pradesh, ; = ; observed as follow. "Strictly speaking, no certificate of the High Court is required for such an appeal where an acquittal has been converted into a conviction under section 302/34 I.P.C. and a sentence of life imprisonment imposed upon an accused person.
The appeal in, such a case, lies as a matter of right to this Court under the Act of 1970.
" 325 This Court in Rajendra Prasad vs State of Bihar, ; = ; while disposing of an appeal preferred under Section 2(a) of the Act of 1970 laid down the following dictum: "Thus when two courts, have come to a different conclusion on the same evidence, we had ourselves to go through the entire evidence carefully in order to see whether the appreciation of the evidence by the Sessions Judge was so unreasonable and unrealistic as to entitle the High Court to interfere with the same.
" In Kishore Singh and another vs The State of Madhya Pradesh, AIR 1977 S.C. 2267 = ; the following view similar to the one taken in Ram Kumar Pande 's case was reaffirmed and it read thus : "The High Court is not right in holding that a certificate is necessary under Article 134 (1) (c) of the Constitution if the appellants have a right of appeal under Section 2 of the Act." In Ram Kumar Pande 's case, the jurisdiction of the Supreme Court to interfere in a judgment of the High Court reversing the acquittal of the Trial Court and convicting the accused person and sentencing him to life imprisonment, in respect of which an appeal to the Supreme Court lies as of right was examined and the following maxim has been laid down.
"The well settled rule of practice in a case of an appeal against an acquittal is that the appellate Court should not interfere with the acquittal merely because it can take one of the two reasonably possible views which favours conviction.
But, if the view of the Trial Court is not reasonable sustainable, on the evidence on record, the Appellate Court will interfere with an acquittal.
If the Appellate Court sets aside an acquittal and convicts, we have to be satisfied, after examining the prosecution and defence case and the crucial points emerging for decisions from the facts of the case, that the view taken by the Trial Court, on evidence on record, is at least as acceptable as the one taken by the High Court, before we could interfere with the High Court 's judgment.
" Kailasam, J. speaking for the Bench in Bhajan Singh and others vs State of Punjab, ; dealing with the scope of the appeal before the Supreme Court filed under Section 2 (a) of the Act of 1970 observed thus : "as a court of appeal this Court has got to go into all the 326 questions of fact and law and decide the case on its merit.
After a right of appeal has been provided under the said section, the question, whether the High Court interfered on sufficient ground or not, will not be material, as this Court has to decide the case on its own merits.
The decisions, regarding the scope of appeal against an acquittal, the powers of the High Court to interfere in an appeal against acquittal by the State, which may be relevant when the Supreme Court is acting under Article 136, are not material in deciding an appeal by a person, whose acquittal has been set aside by the High Court, and who is entitled to prefer an appeal to this Court.
" In Dinanath Singh & others vs State of Bihar, AIR 1980 S.C. 1199 = , an appeal under Section 2 (a) of the Act of 1970 was directed against the judgement of the Patna High Court convicting the appellants therein under Section 302 read with 34 IPC and sentencing them to imprisonment for life by reversing the order of acquittal of the Trial Court.
While disposing the appeal Fazal Ali.
J. speaking for the Bench pointed out thus: "It is now well settled by the long course of decisions of this Court that where the view taken by the trial court in acquitting the accused is reasonably possible, even if the High Court were to take a different view on the evidence, that is no ground for reversing the order of acquittal." This court while disposing an appeal filed under Section 379 of the Code in Pattipati Venkaiah vs State of Andhra Pradesh, affirmed the order of conviction passed by the High Court on the ground that the judgment of the Trial court acquitting the accused was extremely perverse and no other reasonable view was possible than the guilt of the accused.
Reference also may be had to Sita Ram and Others vs State of U.P. [1979] 2 SCC 656 and Rajput Ruda Meha and Others vs State of Gujarat, This Court in a catena of decisions have dealt with the power of the High Court to review evidence and reverse order of acquittal and laid down the guidelines in exercising that power.
Though it is not necessary for us in the present case to deal with all those decisions, the following may be referred to : 327 Roop Singh and others vs State of Punjab. ; = ; ; Dargahi and others vs State of U.P., AIR 1973 S.C. 2695 = ; Barati vs State of U.P., AIR 1974 S.C.839 = ; ; G.B. Patel vs State of Maharashtra; , = ; ; and Kanwali vs State of U.P.
Having regard to the above principle of law, we shall now carefully scrutinize the entire evidence adduced by the prosecution and examine the contentions advanced by Mr. Mulla and decide the case on its merit, independent of the views expressed by the High Court in its impugned judgment : Motive for the murder: There is overwhelming evidence both oral and documentary in clearly establishing a strong motive for the appellants/accused to put an end to the life of the deceased Saroj, who when examined before the Magistrate on 12.7.1991 had deposed under exhibit P/25 that she was kidnapped by both the appellants, wrongfully confined and subjected to sexual intercourse, though she initially lodged a report under exhibit D 15 on 9.8.70 at the Hoshangabad police station against some other persons exculpating these two appellants.
Earlier to her examination before the Magistrate the deceased lodged a report exhibit P 7 on 20.6.1972 at Budhni police station complaining that the second appellant had forcibly entered into the backyard of her house and on her raising a cry he took to his heels.
The trial of the case against both the appellants before the Additional Sessions Judge, Bhopal in Sessions Case Nos. 66 and 95 of 1972 under Sections 363, 366 and 376 IPC was fixed for recording the evidence of the victim in that case, namely, the deceased herein from 21.8.1972.
Both the appellants were on bail in the case of kidnaping and rape during the period of the occurrence in question which occurred on the intervening night of 20/21st August 1972.
The learned counsel for the appellants has submitted that PWs 5 and 6 had sufficient motive to implicate both the appellants in this heinous crime of murder as these two appellants according to both PWs had spoiled the future career of their daughter, deceased Saroj by kidnaping and committing rape on her even if the identity of the real assailant/assailants was or were not known and further there was every possibility of PW 6 falsely implicating these two appellants on strong suspicion.
As stated by Fazal Ali, J. in State of Punjab vs Pritam Singh, "when the motive was equally balanced, the Court had to look to surrounding circumstances in order to find out the truth.
" 328 This is not a case solely based on circumstantial evidence, but on the other hand there are two eye witnesses to the occurrence, namely, PWs 5 and 6.
The several impelling circumstances attending the case namely, the prior incident of kidnaping and rape, the conduct of the deceased Saroj in giving her statement under exhibit P. 25 supporting the case of the prosecution registered on the complaint given by PW 1 at the instance of PW 6, the lodging of the complaint under exhibit P 7 by Saroj on 20.6.72 against the second appellant and lastly the posting of the case for recording the evidence of Saroj on 21.8.72 when taken in conjuction with the evidence of PWs 5 and 6, unevasively and unerringly show that these two appellants had strong motive to snap the life thread of the victim so that she could not give evidence on the next day in the case of kidnapping and rape.
The contents of exhibit D 15 cannot be said to have whittled down the veracity of the prosecution case as regards the motive for the occurrence.
On the other hand, the subsequent statement made by the deceased under, the exhibit P/25 explaining under what circumstances she was forced to give exhibit D 15 would also serve as a corroborating piece of evidence in establishing the motive for the occurrence.
Ocular Testimony : As per the prosecution, due to the above motive the appellants have resorted in perpetrating this dastardly and heinous crime, PWs 5 and 6 though the parents of the victim, are the natural and probable eye witnesses as the incident had occurred in the odd hours inside their house wherein these two witnesses and their 4 daughters including the deceased Saroj were the inmates.
According to these two witnesses by about 12 or 12.30 mid night PW 5 went out of the house by opening the main door to answer call of nature within the compound.
Besides moon light, there was electric light within the compound.
Added to that there was also electric light burning in the residential quarter of Doctor Sahib shedding light inside the compound of the scene house.
PW 5 sighting the two appellants yelled out.
She found the appellant Chandra Mohan Tiwari having a small gun and the second appellant Rampal Singh being armed with a farsa.
On hearing the cry of PW 5, Saroj woke up.
PW 6 who had earlier been awakened by his wife (PW 5) saw both the appellants entering into his house with their respective weapons.
The deceased Saroj on seeing the two appellants hardly uttered `Babaji '.
Suddenly the first appellants fired a shot which hit Saroj.
On receipt of the injury Saroj fell down on her cot.
Thereafter both the appellants fled away.
PW 5 witnessed both the appellants entering into the room and heard the sound of a gun shot and the 329 appellants thereafter running out of the house.
While PW 5 yelled out, PW 6 ran after the appellants up to the compound shouting that the appellants had fired a gun shot at Saroj.
On coming out of the compound, PW 6 fell down.
PWs 1, 2 and others who rushed to the scene on hearing the shrieks and shouts of PWs 5 and 6 lifted PW 6 and brought him inside the house.
PWs 1, 2 and others asked PW 6 as to what had happened.
PW 6 told them that the first appellant had fired a shot at his daughter Saroj and thereafter both the appellants had fled away from the scene.
The victim Saroj by that time was struggling for breathing and gasping.
PW 1 has testified to the fact that he arrived at the scene on hearing the shouting of PW 6 "killed, killed ' and found PW 6 lying down outside the main gate of his compound, that PW 1 and others lifted PW 6 and brought him inside the house, that on being asked PW 6 informed PW 1 and others that Sengar and "Tiwari (referring to both appellants) had shot at his daughter and that PW 6 requested him to lay a complaint at Budhni Police Station.
The Trial Court for the reasons given in its judgment observed that the evidence of PW 5 as regards to the identity of the appellants is "totally unreliable" and that of PW 6 appears to be "absurd and fantastic" and finally concluded thus: ". .
I find the two accused persons had no motive to perpetrate the crime in question, that one Gungasingh and possibly the father of the girl Ahivaransingh might have had stronger motive for perpetrating the murder, that it was impossible for the accused persons to have been present at Budhni at 12.30 that night and that it is most likely that they have been falsely implicated in the murder by the political rivals of the accused Chandra Mohan Tiwari and with the motive of preventing the accused Ram Pal Singh over getting married to Saroj." The entire prosecution as indicated ibid mainly rests on the evidence of PWs 5 and 6 who are the unfortunate parents of the victim and who speak about the motive of the occurrence and give a full detailed account of the entire incident.
In addition to the ocular testimony of PWs 5 and 6 the prosecution also relies upon the evidence of PWs 1 and 2, who came to the scene spot immediately after the occurrence and learnt from PWs 5 and 6 that the appellants were the perpetrators of the crime.
No doubt, it is true that the evidence of PWs 5 and 6 is that of the interested party in that both of them are the parents of the victim and that they had animus towards the appellants.
As dexterously emphasised by the 330 Supreme Court on many occasions that interested witnesses are not necessarily false witnesses though the fact that those witnesses have personal interest of stake in the matter must put the Court on its guard, that the evidence of such witnesses must be subjected to close scrutiny and the Court must assess the testimony of each important witness and indicate the reasons for accepting or rejecting it and that no evidence should be at once disregarded simply because it came from interested parties.
Vide Siya Ram Rai vs State of Bihar, ; Sarwan Singh vs State of Punjab, ; Birbal vs Kedar, AIR 1977 S.C.1 = ; ; Gopal Singh vs State of U.P. AIR 1979 S.C.1822 = ; Hari Obulla Reddy & Others vs State of Andhra Pradesh, [1981]3 SCC 675; and Anvaruddin & Ors.
vs Shakoor & Ors.
[1990]2 Judgements Today S.C. 83.
After carefully scanning the evidence of PWs 5 and 6, we unreservedly come to the conclusion that their evidence cannot be thrown overboard simply on the ground that their evidence is of the interested party because when the occurrence had taken place inside the house, that too at dead of night, it would be futile to expect of the prosecution to produce independent outsiders as witnesses.
It was contended by Mr. Mulla that PWs 5 and 6 could not have identified the assailants since according to PW 6 both assailants had covered their faces so that faces behind the mask could never be known to others and remain mystery for ever.
But a careful reading of the evidence of PW 6 in our opinion does not support the conclusion sought to be arrived at by the learned defence counsel.
What PW 6 had admitted in the cross examination is that both the appellants had tied a towel on their heads, but their identity was visible.
It transpired from the evidence of PWs 1, 2 and 6 that PWs 1 and 2 who immediately came to the scene of the occurrence were informed by PW 6 that the assailants were the two appellants.
The spontaneous declaration to Pws 1 and 2 by PW 6 without premeditation or any deliberation or artifice by naming the appellants as assailants can be admitted as resgestae and acted upon.
It is significant to note in this connection that PW 1 who laid the First Information Report Ex P 1 within an hour from the time of the occurrence has mentioned the names of these two appellants as having been given by PW 6 at the scene immediately after the occurrence.
The FIR has been lodged without any loss of time though it has been hesitatingly stated that there was a delay.
The chronology of events narrated and the factual conspectus recounted by PWs 5 and 6 are unshakable and the intrinsic quality of the evidence of these two witnesses compel 331 this Court to implicitly rely on their testimony and to accept the same.
In spite of the fact that these two PWs have been subjected to intensive and incisive cross examination, nothing tangible has been brought for discarding their testimony.
No doubt, the earlier conduct of the appellants in kidnaping and forcibly raping their daughter, the victim should have inflicted deeper wounds in the minds of these two witnesses, but that cannot in any way destroy the value of their evidence which is cogent and trustworthy.
PWs 3 and 4 who were examined by the prosecution to speak about the movements of the appellants near the scene at or about the time of the occurrence have resiled from their earlier statements and have not supported the prosecution case.
The evidence of Pws 5 and 6 which is corroborated by various other circumstances would in our opinion suffice of record a conviction against the appellants.
The Trial Court appears to have gone wrong in jettisoning the entire evidence in a very scanty and unsatisfactory manner with unsound reasoning.
The non recovery of `lota ' (a small vessel for taking water) and the non marking of the place where the said vessel was kept in the site plan are too tenuous and they do not in any way belittle the veracity of the prosecution case.
The recovery of the pellets below the dead body and the cork, usually fixed on cartridges from the chest of the girl under the Memo exhibit P 4 as spoken by PWs 1 and 18 amply corroborate the evidence of PW 6 and support the prosecution case that the girl was shot dead in close range while she was on her bed.
Being the parents of the victim, they would be the least disposed to falsely implicate the appellants or substitute them in place of the real culprits.
In our considered opinion, whilst the conclusion arrived at by the Trial Court abjuring the unimpeachable and reliable evidence of PWs 5 and 6 on speculative reasons and unreasonable grounds, the contrary conclusion of the High Court based on the evolution of the evidence does not suffer from any illegality or manifest error on perversity nor is it erroneous.
Further, on our independent analysis of the evidence we see absolutely no substantial and compelling reasons to brush aside the testimony of these two eye witnesses and to take a contrary finding to that of the High Court.
Based on the evidence of DW 1, an advocate at Bhopal, who defended the appellants herein in the kidnaping case and who had deposed that on the night of 20.8.72 the first appellant was with him from 9/9.30 P.M. to 12 mid night and who had filed exhibit P30, and application before the court stating that the first appellant was with him, an argument was advanced that the appellants could not have gone to the scene village 332 Budhni from Bhopal, when the distance between the two places is about 40 miles and committed the offence of murder.
In support of the evidence of DW 1 reliance has been placed on the testimony of DWs 2 to 4 of whom DW 3 was the Proprietor of Chetna Lodge, who had testified to the effect that the first appellant was in his lodge from 18th to 21st August as borne out from the entry in exhibit
A similar contention of alibi was also raised before the High Court on the basis of the evidence of the defence witnesses and the High Court after discussing and deeply examining the testimony of the defence witnesses made the following observations: 1.
"It is with regret that we have to say that the testimony of this witness (PW 1) does not inspire any confidence.
"It is surprising that the learned trial Judge should have placed reliance on the testimony of DW 2 Ramakant and D.W.7 Durgaprasad and come to the conclusion that accused Rampalsingh could not have been at the scene of occurrence as he was at Bhopal, forty miles away from the scene of occurrence, at the relevant time.
" Further the High Court was correctly rejected the finding of the Trial Court as an unreasonable one holding: ". .it is most likely that they have been falsely implicated in this murder by the political rivals of the accused Chandramohan Tiwari and with the motive of preventing the accused Rampalsingh ever getting married to Saroj.
" We also after going through the evidence of the defence witnesses are unable to accept the plea of alibi and are in total agreement with the reasons given by the High Court for rejecting not the plea of alibi but also the defence that these appellants were implicated on account of political rivalry.
Medical Evidence: PW 17 who conducted autopsy on the dead body of the deceased found a lacerated wound on the chest just left the mid line at the level of nipple over the third, fourth and fifth inter costal space.
The wound was slightly oval shaped measuring 1 1/2" x 2" deep and opening into thoraic cavity.
The surrounding skin was ecchymost, but no tattooing of gun powder was noticed.
The wound as described by the Doctor is a slit like small lacerated wound on the medial end of clavicle.
On internal examination PW 17 he found comminuted fracture of sternum and second, 333 third ribs of left side chest.
There was a punctured wound on the medial border of left lung near its appex.
He found one rounded pellet (which has been recorded as bullet, but has been clarified in the further chief examination as pellet which receives support from the evidence of PW 19, the ballistic expert) in the left cavity of the chest, embedded in the posterior wall of chest at scapular region at the level of second and third ribs.
The Medical Officer is of the opinion that the death was due to severe fatal injuries to vital organs like left lung and heart resulting in profuse bleeding and shock.
PW 19 after examining the two pellets and two wads marked as Ex.
P1 and P 2 and W1 and W2 respectively gave his opinion that the holes, found on the saree, chader (bed sheet) and the blouse were gun shot holes and there was presence of blackening surrounding the holes on the chader and that the distance of firing should have been within one yard.
The evidence of the Medical Officer (PW 17) and of the Ballistic expert (PW 19) amply corroborates the testimony of PWs 5 and 6 that the assailants whomsoever they had been should have entered into the room and shot at the victim standing within a close range.
Mr. Mulla advanced an argument that the recovery of the two pellets and two wads from the scene place is an indicative of the fact that there would have been two shots, and that the presence of only one injury on the body of the deceased as per the evidence of PW 17 falsifies the present prosecution case that the victim was shot at only once.
The presence of the pellets and two wads, of course, indicate that there ought to have been two shots, but it does not necessarily follow that both the shots, should have hit the victim, probably one of the shots must have missed target.
From the mere absence of two injuries on the body of the deceased, no conclusion would be arrived at that the entire prosecution case is liable to be rejected.
The further submission of the learned counsel that the appellants should not have come at the odd hours anticipating that the main door of the house would have been kept open does not appeal to us.
Probably, the appellants who came there with the intention of putting an end to the life of the victim by any other design should have taken this opportunity to enter into the house and shot at the deceased.
Lastly a feeble argument was put forth by the defence stating that the father of the deceased and other inmates of the house on being aggrieved at the conduct of the victim should have put an end to the life of the girl by conspiring together.
This submission has to be mentioned for 334 simply rejecting the same because had the father and other inmates of the house had already conspired to murder the girl, they would not have waited for such a long time and ultimately killed her by shooting at her chest.
No father, however grave be the provocation at the hands of his daughter would resort, in the normal course to kill his daughter or participate in any conspiracy to murder her.
Moreover, there is no circumstance in the present case even feebly or remotely indicating that the inmates of the house were responsible for the cause of the death of the deceased.
In spite of our best efforts and great deal of pondering over the matter, we find absolutely no reason, much less compelling reason to disagree with the conclusion of the High Court since the organic synthesis of the events, circumstances and facts of the case lead only to one conclusion, namely, that the prosecution has established that this preplanned and cold blooded murder, executed in very cowardly and dastardly manner at a helpless and defenceless young girl was perpetrated by the appellants.
We, quite apart from the reason of the High Court, even on our independent assessment and evaluations of the evidence hold that the finding of the Trial Court is not reasonably sustainable and that the prosecution has satisfactorily proved the guilt of the accused beyond any shadow of doubt and consequently the judgment of the High does not call for any interference.
In the result, the impugned judgment of the High Court is affirmed and the appeal is dismissed.
T.N.A Appeal dismissed.
| The appellants were alleged to have kidnapped, wrongfully confined and raped S, the daughter of PWs 5 and 6.
They were prosecuted for offences punishable under section 363, 366 and 376 of the Indian Penal Code.
S was examined before the Magistrate where she stated that because of the threat given by the appellants and as instructed by them she lodged a false report at the police station implicating some other persons, whereas infact she was kidnapped, wrongfully confined and raped by the appellants.
The Magistrate, discharged the first appellant, and committed the second appellant alone to take his trial.
On a revision preferred against the order of discharge of the first appellant both the appellants were 314 put up for trial before the third Additional Sessions Judge, Bhopal.
During the said trial both appellants were on bail.
The case was fixed for 21.8.1972 on which date the victim S was to be examined as a prosecution witness.
While the matter stood thus S lodged a report at the Police Station complaining that the second appellant had forcibly entered into the backyard of her house, but took to his heels when she raised a hue and cry.
However, it was alleged that on the night of 20.8.72, i.e. immediately before the day when the case was fixed and victim S was to be examined as a prosecution witness, the first appellant armed with a pistol and the second appellant with a `farsa ' entered into the house of S and the first appellant fired a shot causing instantaneous death of section The appellants were prosecuted for murder.
The Sessions Judge acquitted both the appellants.
The State preferred an appeal before the High Court.
The High Court allowed the appeal, set aside the acquittal order and convicted the first appellant under Section 302 and the second appellant under section 302, read with Section 34 IPC and sentenced each of them to undergo imprisonment for life.
The appellants preferred an appeal to this Court under section 379 of the Code of Criminal Procedure and Section 2 (a) of the and it was contended on their behalf (i) that the High Court erred in reviewing the evidence and reversing the order of acquittal; (ii) that the prosecution has failed to prove the motive of the crime; (iii) the victim 's parents were inimical towards the appellants and their evidence cannot be relied upon because they were interested witness.
Dismissing the appeal, this Court, HELD : 1.
The Trial Court was wrong in jettisoning the entire evidence in a very scanty and unsatisfactory manner with unsound reasoning.
Whilst the Trial Court 's conclusion was arrived at by abjuring the unimpeachable and reliable evidence of parents of the deceased on speculative reasons and unreasonable grounds, the contrary conclusion of the High Court based on the evolution of the evidence does not suffer from any illegality or manifest error or perversity nor is it erroneous.
Further, independent analysis of the evidence by this Court shows that there are absolutely no substan 315 tial and compelling reasons to brush aside the testimony of these two eye witnesses and to take a contrary finding to that of the High Court.
[331 C D; F G] 1.1 The organic synthesis of the events, circumstances and facts of the case lead only to one conclusion, namely, that the prosecution has satisfactorily proved the guilt of the accused beyond any shadow of doubt and consequently the judgment of the High Court does not call for any interference.
[334 C D E} Tarachand vs State of Maharashtra, ; = ; ; Kishan and Ors.
vs State of Maharashtra.
; ; Mahebub Beg and Ors.
vs State of Maharashtra, (S.C.) ; Babu vs State of UP.
, ; 2 S.C.R. 771; Podda Narayana and Ors.
vs State of Andhra Pradesh, ; [1975] Supp.
S.C.R. 84; Ram Kumar Pande vs The State of Madhya Pradesh, ; 3 S.C.C. 815; Rajendra Prasad State of Bihar A I R SC 10 59 = = [1977]3 SCR 68; Kishore Singh and Anr.
vs The State of Madhya Pradesh, A.I.R. 1977 S.C. 2267 = [1978] 1.S.C.R. 635; Bhajan Singh and Ors.
vs State of Punjab, [1978] 4 S.C.C. 77; Dinanath Singh & Ors.
vs State of Bihar, A.I.R. 1980 S.C. 1199 = ; Pattipati Venkaiah vs State of Andhra Pradesh ; Sita Ram and Ors.
vs State of U.P., [1979] 2 S.C.C. 656; Rajput Ruda Meha and Ors.
vs State of Gujarat, ; referred to.
Roop Singh and ors.
vs State of Punjab; , = ; ; Dargahi and ors.
vs State of U.P., A.I.R. 1973 S.C. 2695 = ; Barati vs State of U.P., ; = [1974] 3 S.C.R. 570; G.B. Patel vs State of Maharashtra, A.I.R. 1979 S.C. 135 = ; ; Kanwali vs State of U.P. ; referred to. 2.
There is overwhelming evidence both oral and documentary in clearly establishing a strong motive for the appellants to put an end to the life of the deceased.
The several impelling circumstances attending the case namely, the prior incident of kidnapping and rape, the conduct of the deceased in giving her statement supporting the case of the prosecution, the lodging of the complaint by S against the second appellant and lastly the posting of the case for recording the evidence of S when taken in conjunction with the evidence of parents of the victim unevasively and unerringly show that these two appellants had strong motive to snap the life thread 316 of the victim so that she could not give evidence on the next date in the case of kidnaping and rape.
[327 C D E; 328 A D C] State of Punjab vs Pritam Singh. ; relied on.
Interested witnesses are not necessarily false witnesses though the fact that those witnesses have personal interest or stake in the matter must put the court on its guard, that the evidence of such witnesses must be subjected to close scrutiny and the Court must access the testimony of each important witness and indicate the reasons for accepting or rejecting it and that no evidence should be at once disregarded simply because it came from interested parties.
[330 A B] Siya Ram Rai vs State of Bihar, ; Sarwan Singh vs State of Punjab, ; Birbal vs Kedar, ; = ; ; Gopal Singh v State of U.P. A I R 1979 S.C.1822=[1978] 3 S.C.C. 327; Hari Obulla Reddy & Ors.
vs State of Andhra Pradesh, ; Anvaruddin & Ors.
vs Shakoor & Ors., [1990] 2 Judgments today S.C. 83; relied on.
3.1 The evidence of parents of the deceased cannot be thrown over board simply on the ground that their evidence is of the interested party because when the occurrence had taken place inside the house, that too at dead of night, it would be futile to expect of the prosecution to produce independent outsiders as witnesses.
The parents of the victim are the natural and probable eye witnesses as the incident had occurred in the odd hours inside their house.
Being the parents of the victim, they would be the least disposed to falsely implicate the appellants or substitute them in place of the real culprit.
[330 D; 328 E; 331 E] 3.2 The chronology of events narrated and the factual conspectus recounted by the parents of the deceased are unshakable and the intrinsic quality of the evidence of these two witnesses compel this Court to implicitly rely on their testimony and to accept the same.
In spite of the fact that these two witnesses have been subjected to intensive and incisive cross examination, nothing tangible has been brought for discarding their testimony.
No doubt, the earlier conduct of the appellants in kidnapping and forcibly raping their daughter, the victim should have inflicted deeper wounds in minds of these two witnesses, but that cannot in any way destroy the value of their evidence which is cogent and trustworthy.
[330 H; 331 A B] 317
|
Civil Appeal No. 752 of 1984 etc.etc.
From the Judgment and Order dated 1.8.983 of Andhra Pradesh Administrative Tribunal, Hyderabad in Representation Petition No. 799 of 1977.
K. Madhava Reddy, T.V.S.N. Chari, Ms. Manjula Gupta, B. Kanta Rao, D. Prakash Reddy, B. Rageshwar Rao, Vimal Dave, K. Ram Kumar, Y. Prabhakara Rao, K.R. Nagaraja, Krishan Kumar and G. Prabhakara for the appearing parties.
The Judgment of the Court was delivered by K. JAYACHANDRA REDDY, J.
The questions involved in these matters being common they are being disposed of by a common judgment.
All these matters arise out of a common order of the A.P. Administrative Tribunal passed in Representation Petitions Nos.
799/77, 548/79 and 140/81.
S.L.P. (Civil) No. 5218/85 is filed against a separate order of the Tribunal in R.P. No. 1473/80.
The dispute is regarding the inter se seniority between the Supervisors who are upgraded as Junior Engineers and the degree holders who are directly appointed as Junior Engineers.
All of them belong to the different branches in the A.P. Engineering Subordinate Service.
First we shall state the relevant facts in each of the appeals and then formulate the points that arise for consideration.
For convenience sake we shall refer to the parties as arrayed before the Tribunal.
CIVIL APPEAL NOS.
752 AND 754/84 : These two appeals are filed against the order in R.P. No. 799/77.
The first one is filed by the State of A.P. and the other one by upgraded Supervisors Junior Engineers.
The petitioners before the Tribunal are all Junior Engineers in 300 Irrigation and Power Department.
They were initially appointed as temporary Junior Engineers in the year 1969/70.
Later they appeared in a special qualifying test (`SQT ' for short) held by the Public Service Commission and on the basis of the result of the test their services were regularised in the post of Junior Engineers with retrospective effect from the date of the temporary appointment subject to the maintenance of the order of ranking given by the Public Service Commission in the test.
The respondent Nos. 3 onwards in these R.Ps. are also Junior Engineers in the same department but they were appointed as Supervisors and on acquiring the degree they have been redesignated as Junior Engineers.
Several G.O.Ms were issued by the Government and the important one is G.O.Ms.
No. 559 (I & P) Department dated 18.7.77.
The post of Junior Engineers was made Gazetted post.
The case of the petitioners is that the respondents acquired degree qualification after 28.2.72 therefor they were not entitled to be appointed as regular Gazetted Junior Engineers and at any rate they cannot be treated as seniors on the basis of reckoning their seniority from the date of acquiring degree qualification and that the seniority of these graduate Supervisors should be reckoned from the date of their actual appointment as Junior Engineers and not from the date of acquiring degree qualification.
The respondent Supervisors, on the other hand contended that they are entitled to upgradation and weightage of service from the date of their appointment as Supervisors.
CIVIL APPEAL NO.
753/84 : This appeal is filed against the order in R.P. No. 548/79.
The petitioners in this R.P. are all Supervisors who graduated after 28.2.72.
Their contention was that they were appointed much before the respondents namely the directly recruited Junior Engineers and the services of the respondents Junior Engineers should not be regularised in such a way so as to effect the seniority of the petitioners and that the seniority of the petitioners should be reckoned from the notional date of appointment.
CIVIL APPEAL NO.
755/84 : This appeal is filed against the order in R.P. No. 140/81.
The sole petitioners before the Tribunal, who is a respondent here, questioned G.O.Ms.
No. 466 Transport, Roads and Building and sought a declaration that he should be declared as senior to respondent Nos. 3 and 5 and promote him to the post of Assistant Engineer.
The petitioner before the Tribunal was directly recruited Junior Engineer.
He also passed the SQT held in the year 1975.
The respondents before the Tribunal were upgraded Supervisors who acquired the graduate qualification.
G.O. Ms. No. 466 was issued 301 directing that the respondent before the Tribunal namely the upgraded Supervisors should be treated seniors to all the directly recruited Junior Engineers whose services were regularised on the basis of the SQT.
The Tribunal held that the findings in the other R.Ps.
799/77 and 548/79 apply to the facts of this case also and accordingly directed to prepare an inter se seniority list in the Transport, Roads and Buildings Department on the lines indicated therein.
R.P. was disposed of with those observations.
The upgraded Supervisors Junior Engineers who were the respondents before the Tribunal have filed this appeal.
These matters were heard together by the Tribunal.
After considering the various G.O.Ms.
and the arguments the Tribunal held that there was no bar to the retrospective regularisation of the services of the directly recruited Junior Engineers from the dates of their initial appointments.
It also held that the action of the Government in giving the benefit of the notional date of appointment to the upgraded Junior Engineers and the benefit of the date of regularisation of their services from the dates of their notional appointments subject to maintenance of order of ranking given by the Public Service Commission is justified.
The Tribunal further held that the order of ranking given by the Public Service Commission in respect of directly recruited Junior Engineers has to be maintained and each of them will have to be treated as being entitled to count his seniority from the date on which his service has been regularised or from the date of the regularisation of the service of the person immediately below him in the order of ranking given by the Public Service Commission, whichever is earlier.
In paragraph 23 of the Order the Tribunal specifically held thus: "23.
We are of the opinion that once the dates from which the directly recruited Junior Engineers can claim seniority are thus fixed on the basis of this formula, it should not be difficult to fix their inter se seniority vis a vis the upgraded Junior Engineers on the basis of the notional dates of appointment given to the latter.
In this connection we would like to point out that, whereas in the case of an upgraded Junior Engineer who acquired degree qualification before 28.2.1972, seniority will have to be fixed by putting him below all the regular Junior Engineers including directly recruited Junior Engineers who are entitled to claim seniority from any date during the year in which such upgraded Junior Engineer has been given the notional date of appointment, this practice cannot be followed in case of an upgraded junior Engineer who has acquired degree qualification after 28.2.1972, in view of the fact that the provision for fixing his seniority below other Junior Engineers 302 of the particular year (as was made in G.O. Ms. No. 893 dated 15.6.72) was not made in the amended Rule as issued under G.O.Ms.
No. 54 dt.
15.2.1983 His seniority will, therefore have to be fixed on the basis of the specific notional date of appointment given to him by interspersing his name among the regular Junior Engineers as arranged in chronological order of dates from which such regular Junior Engineers (including directly recruited Junior Engineers) are entitled to count their seniority.
" It is this part of the Order that has given rise to all these appeals before us.
The State of A.P. being aggrieved by this Order filed C.A. No. 752/84 and both petitioners and respondents namely the Junior Engineers directly recruited and upgraded Supervisors as Junior Engineers are the main respondents before us.
Civil Appeal Nos. 753 54 are filed by the upgraded Supervisors Junior Engineers.
In these two matters the Junior Engineers directly recruited are the respondents.
Thus in all these matters the Junior Engineers directly recruited are the respondents.
It is contended on behalf of State of A.P. that the direction given by the Tribunal particularly interspersing is not workable.
Learned counsel for the State, however, pointed out that the upgraded Supervisors have put in long years of service and they have been discharging the same duties as directly recruited Junior Engineers and that this fact also has to be borne in mind in fixing the notional date of appointment of the two categories officers and in fixing their inter se seniority.
Shri B.Kanta Rao, learned counsel appearing for all the upgraded Supervisors Junior Engineers contended that in G.O. Ms. No. 559 it is specifically laid down that Supervisor who have acquired graduate qualification may be appointed as Junior Engineers after 28.2.72 and the weightage of four years should be reckoned from the date of acquiring the degree qualification i.e. 28.2.72 or thereafter.
He also contended that the seniority of the upgraded Supervisor Junior Engineers should not be fixed from the date of the Order of appointment dated 8.8.77.
On behalf of the directly recruited Junior Engineers Shri K.Madhava Reddy, learned counsel submitted that the upgraded Supervisors can under no circumstances be treated as seniors to the directly recruited Junior Engineers.
According to him appointment of Junior Engineers was suspended for some time and in view of the exigencies the degree holders were appointed on temporary basis and they have served for a number of years.
Later the Government decided to make regular appointments and accordingly a Special 303 Qualification Test was held and such of those temporary Junior Engineers who were degree holders got qualified and were given the appointments and a seniority list strictly on the basis of performance in the test and on merit was prepared by the Public Service Commission and a retrospective effect was given.
His further submission was that so far as the upgraded Supervisors are concerned all the relevant G.O.Ms.
make it clear that the crucial date has to be reckoned on the basis of the actual date of appointment and not on the date of acquiring the degrees.
For appreciating these rival contentions it becomes necessary to refer to some of the G.O.Ms.
particularly with a view to arrive at the ("crucial date") in respect of each of these categories for the purpose of fixation of the seniority.
In respect of upgraded Supervisors who acquired a degree, certain G.O.Ms. were issued from time to time.
In the year 1972 G.O.Ms.
No. 893 dated 15.6.72 was issued amending the special rules for the A.P. Engineering Subordinate Service.
The same provided that Supervisors who while in service acquire B.E./A.M.I.E. degree qualification, shall be entitled to count 50% of the service rendered as Supervisors prior to the acquisition of such qualification subject to a maximum limit of four years.
This was subject to certain conditions.
One of the conditions was that they should be considered to have been placed below the last of the Junior Engineer of the year after giving such weightage.
In the year 1976 another G.O.Ms No. 451 (I & P) dated 10.6.76 ordered that the Supervisors who acquire the graduate qualification while in service should be appointed as Junior Engineers with immediate effect.
On 8.11.76 G.O.Ms. No.815 (I & P) was issued.
Clause 4 of the Conditions stipulated in G.O.Ms.
No.893 was amended and the benefit of the weightage was directed to be given effect only to those who acquired the aforesaid degree qualification prior to 28.2.72.
Then came the important G.O.Ms.
No. 559 (I & P) dated 18.7.77.
Relying on the contents of the above G.O.Ms.
the upgraded Supervisors claimed that the weightage of four years should be reckoned from the date of acquiring the qualification and not from the date of actual appointment.
The directly recruited Junior Engineers also based their claim on G.O. Ms. Ms. Nos. 451 and 559 and they further contended that the upgraded Supervisors should be treated as regularly appointed only with effect from the date of their appointment.
It may not be necessary for the purpose of this case to extract the entire contents of the G.O. Ms. that preceded G.O. Ms. Nos. 451 and 559.
It would suffice if we just give the gist of those respective G.O.Ms.
Under G.O.Ms.
No. 787 dated 9.6.71 the Government declared that posts of 304 Junior Engineers would be filled in by graduate Engineers which will be made a separate category and they will be made gazetted.
Therefore G.O.Ms. No.240 dated 28.2.72 was issued.
Under the said G.O.Ms. 1870 posts of Supervisors in Public Works Department were declared to constitute a category of Junior Engineers and similarly in the Roads and Buildings Department 620 posts were declared to constitute as a category of Junior Engineer as distinct from Supervisors and both these categories were made gazetted with effect from that date.
The G.O.Ms. also provided for temporary appointments in the case of qualified Junior Engineers being not available for filling up all such gazetted posts, and all these posts of Junior Engineers in both the Departments were declared to be within the purview of the A.P. Public Service Commission and the method of recruitment to the post of Junior Engineer should be by direct recruitment.
Then came the G.O. Ms. No. 893 dated 15.6.72 amending the special rules for the A.P. Engineering Subordinate Service under which the Supervisors who acquired the qualification were declared to be entitled to count 50% of their service subject to a maximum limit of four years for the purpose of promotion to the post of Assistant Engineer from Junior Engineer.
G.O. Ms. No. 782 dated 3.5.74 was issued permitting the Junior Engineers recruited during emergency on temporary basis to apply for SQT held by the Public Service Commission.
Accordingly the Rules were amended as per G.O. Ms. No. 786 dated 7.8.74 and the adhoc rules were framed enabling the computation of period of two years with or without break in the service rendered by such degree holders Junior Engineers who appeared in the SQT held by the Public Service Commission and were declared to be selected and thus their services were regularised retrospectively giving them the benefit of the service of two years rendered prior to the actual selection.
In conformity with the same Rule 33A was also relaxed for the purpose of fixing their inter se seniority.
The next important G.O.Ms.
with which we are concerned is G.O.Ms.
No. 451 dated 10.6.76.
It reads as under: "GOVERNMENT OF ANDHRA PRADESH ABSTRACT Establishment Irrigation and Power Department Appointment of Supervisors who have acquired Graduate Qualification as Junior Engineers Orders Issued.
Irrigation and Power (Ser.II) Department G.O. MS.
No. Dated: 10 6 1976 ORDER: Consequent on the declaration of the posts of Junior 305 Engineers as Gazetted with effect from 28.2.1972, the upgradation of Supervisors who acquired Graduate Qualification while in service, as Junior Engineers, ceased.
Since then representations have been made to Government by several Associations that the benefit of upgradation should be extended also to Supervisors who acquired the Graduate qualification on or after 28.2.1972.
On a reconsideration of the matter, the Governement are of the view that some consideration should be shown to the Supervisors who have acquired the Graduate qualification while in service.
Accordingly the Government have decided that the Supervisors in P.W. (Irrigation) Department who have acquired Graduate qualification while in service should be appointed temporarily as Junior Engineers (Prospectively) with immediate effect.
The Chief Engineer (General) is requested to take action accordingly, Orders regarding other consequential matters will issue separately.
(BY ORDER AND IN THE NAME OF THE GOVERNOR OF A.P.) M. GOPALAKRISHNAN, SECRETARY TO GOVERNMENT " Under this G.O. Ms. it is proposed to extend the benefit of upgradation to Supervisors who acquired the graduate qualification on or after 28.2.72 but the second para makes it clear that they should be appointed temporarily as Junior Engineers and that too prospectively only.
The next and the important G.O.Ms.
is No.559 dated 18.7.77 which reads as under: "GOVERNMENT OF ANDHRA PRADESH ABSTRACT ESTABLISHMENT Irrigation & Power Department Appointment by transfer of Supervisors who have acquired Graduate qualification from 28.2.1972 onwards as Junior Engineers Further orders Issued.
306 IRRIGATION & POWER (SERVICE III) DEPARTMENT G.O. Ms. No.559 Dated 18th July, 1977 Read the following: G.O. Ms. No.451, Irrigation & Power (Ser.
III) Department, dated 10.6.76.
ORDER: It was ordered in the G.O., cited that the Supervisors in the Public Works (Irrigation) Department, should be appointed temporarily as Junior Engineers (Prospectively) with immediate effect.
It was also indicated therein that orders regarding other consequential matters would issue separately.
Accordingly, matters relating to weightage, seniority, etc., have been examined by the Government and the following orders are issued: (i) Supervisors who acquire Graduate qualification may be appointed as Junior Engineers on or after 28.2.1972, subject to the availability of vacancies in the cadre of Junior Engineers.
They will not be entitled for appointment as Junior Engineers automatically from the date of acquisition of degree qualification; (ii) A Supervisor, who is appointed as Junior Engineer, shall be entitled to count 1/3rd of the service rendered by him as Supervisor, before his appointment as Junior Engineer, subject to a maximum of four years, for the purpose of computing the service as Junior Engineer, which will render him eligible for consideration for promotion as Assistant Engineer.
(iii) The seniority of the Supervisors, who are appointed as Junior Engineers, shall be fixed with reference to the notional date arrived at after giving weightage of service; (iv) A Supervisor, who is appointed as Junior Engineer, shall put in a minimum service of one year as Junior Engineer to become eligible for promotion as Assistant Engineer; (v) No Supervisor shall ordinarily be eligible for appointment as Junior Engineer unless he has put in a minimum service of three years as Supervisors.
A Supervisor with less than three years of service, who is appointed as Junior Engineer for any special reason, shall not be entitled to any weightage for his past service.
307 3.
Necessary amendment to the Special Rules for the Andhra Pradesh Engineering Service will be issued separately.
The Transport, Roads & Building/Panchayati Raj/Housing, Municipal Administration & Urban Development Department will issue amendments to the Special Rules with which they are concerned in accordance with the above decisions in consultation with the Andhra Pradesh Public Service Commission.
The cadre strength of Junior Engineers was last fixed in G.O.Ms.
No. 240, Public Works (VI) Department, dated 28.2.1972.
Since then a large number of posts of Junior Engineers/Supervisors have been sanctioned by Government.
The Chief Engineer (General) is requested to submit proposals for suitably enhancing the strength of the two orders.
(BY ORDER AND IN THE NAME OF THE GOVERNOR OF A.P.) M. GOPALAKRISHNAN, SECRETARY TO GOVERNMENT.
" G.O. Ms. No. 451 is referred to in this G.O.Ms.
and in the Preamble it is clearly noted that the appointments of the upgraded Supervisors as Junior Engineers should be temporary and prospectively only.
In Paragraph 2 (i) it is also made abundantly clear that they will not be entitled for appointment as Junior Engineers automatically from the date of acquisition of degree qualification.
Coming to the weightage it is clarified in paragraph 2 (ii) to the effect that a Supervisor who is appointed as Junior Engineer shall be entitled to count 1/3rd of the service rendered by him as Supervisor, before his appointment as Junior Engineer, subject to a maximum of four years and the same would be taken into account to render the appointee eligible for consideration for promotion as Assistant Engineer.
Paragraph 2 (iii) is very important regarding the seniority and the same has to be fixed with reference to the notional date arrived at after giving weightage of service, Paragraph 2 (v) gives a clue that the weightage could be from the date of appointment.
The Government, however, issued proceedings dated 8.8.77 and fixed the seniority of these upgraded Supervisors who acquired the degree qualification from the date of acquiring the degree.
We have already noted that vide G.O. Ms. No. 893 the special rules were amended.
After the G.O. Ms. No. 559 was issued, representations were made by the Association of Andhra Junior Engineers as well as from the Diploma holders Engineers Association.
Having considered these representations, the Government came out with another G.O. Ms. No. 593 dated 29.7.77 and clarified that the rules only refer to the date of appointment and does not refer to selection and that the seniority of an individual or a class or category has to be fixed according to the date of his first 308 appointment and not with reference to the date of selection and the Chief Engineer (General) was requested to fix the seniority accordingly.
The Chief Engineer (General) Vide proceedings No. Rc.
MI/58062/74 75 dated 8.8.77 fixed the seniority.
But in doing so he has taken the date of passing the examination by the upgraded Junior Engineers as the date of appointment.
As already noted this fixation of seniority was questioned before the Tribunal.
From the above resume of all the G.O.Ms.
it is clear that an interpretation of G.O. Ms. No. 559 would be decisive in the these matters.
In our view the G.O. Ms. No. 559 makes it abundantly clear that the appointments of these upgraded Supervisors who acquired the graduate qualification while in service, would be prospective only and that they would be entitled to the weightage of four years of service rendered before the appointment.
The G.O. Ms. does not anywhere indicate that the weightage should be from the date of acquiring the degree qualification.
It must be borne in mind that it is only after acquiring such degree qualification that a Supervisor is appointed as Junior Engineer and having regard to the service rendered by him the Government as a policy decided to give weightage of four years for the purpose of considering the eligibility for promotion as Assistant Engineer.
In this context it is pertinent to note that the degree holders were appointed temporarily because of a ban and later the Government again as a policy decision decided to make regular appointments by direct recruitment but enabled the degree holders who are in temporary service to appear in a SQT.
Again as a matter of policy the Government decided to give some weightage to the service rendered by them before the appointment by selection.
It can thus be seen that the Government in fixing the seniority for the purpose of future promotion of the appointees both the upgraded as well as those selected by the Public Service Commission in SQT has taken into account the past service rendered by them.
In the case of upgraded Junior Engineers weightage of four years ' service is given and in the other case two years ' weightage is given.
In this context it is contended on behalf of the upgraded Junior Engineers that the regularisation of the direct Junior Engineers retrospectively that is with effect from two years prior to the date of their appointments is unwarranted.
In this context the Tribunal has rightly pointed out that under Rule 23 A of the A.P. State and Subordinate Service Rules, 1962 if a person having been appointed temporarily under Rule 10 to a post borne on the cadre is subsequently appointed in the service in accordance with the rules he shall commence his probation from such subsequent date or the earlier date as the appointing authority may determine.
We agree with the Tribunal that there is no bar to the retrospective regularisa 309 tion of the service of the direct Junior Engineers.
However, in the instant case, it was a special selection by SQT restricted to the directly recruited Junior Engineers who had put in two years of service and the objective was to regularise their services.
As stated supra as a matter of policy the Government gave weightage to both the categories.
In Devi Prasad and others vs Government of Andhra Pradesh and others.
AIR 1980 SC 1185, G.O. Ms. No.893 referred to above was questioned on the ground of unreasonableness in the matter of giving weightage to the upgraded supervisors.
This Court held that in the light of their experience there is nothing unreasonable in giving them limited benefit or weightage.
It was further observed as under: "Ultimately; it is a matter of Government policy to decide what weightage should be given as between two categories of Government servants rendering somewhat similar kind of service.
In the present case, there may be truth in the case of the appellants that they are hit hard because of the new rule.
Dr. Chitale tried to convince us of the hardship that his clients sustain consequent on this rule and weightage conferred thereby.
But mere hardship without anything arbitrary in the rule does not call for judicial intervention, especially when it flows out of a policy which is not basically illegal.
However, Government must be interested in keeping its servants specially in strategic areas like engineering contended and efficient.
In so producing contentment, it may have to evolve a flexible policy which will not strike a group as inflicting hardship on them.
A sense of justice must permeate both the groups." However, the upgraded Junior Engineers who having got the benefit of four years ' service cannot be heard to say that similar weightage cannot be given to the direct recruits who prior to the selection were working on temporary basis.
Shri Kanta Rao, learned counsel relied on the decisions of this Court in Smt.
M.Nirmala and other vs State of Andhra Pradesh and others etc., [1986]3 SCC 647; Ashok Gulati and others vs B.S. Jain and others.
, [1986] Supp. SCC597; Direct Recruit Class II Engineering Officers ' Association vs State of Maharashtra and others, [1990] 2SCC 715 and Masood Akhtar Khan and others vs State of Madhya Pradesh and others, and contended that both the categories were discharging the same duties and there should not be any discrimination.
Learned counsel also relied on some unreported judgments of the Andhra Pradesh High Court in writ Petitions Nos.
1929, 1006 and 2387/ 310 73 and also Writ Petitions Nos.
3897/72.
We have perused all these judgments and we are of the view that such a question did not arise in these cases.
The question to be considered is from which date the weightage of four years ' service should be given to the upgraded Junior Engineers namely the Supervisors.
Is it the date of acquiring the degree qualification or the date of their appointment? Having given our earnest consideration and for the reasons stated above we hold that the weightage can be given only from the date of their appointment.
The Tribunal in the course of its order, however, observed that in accordance with the existing rules the appointments of these Junior Engineers from the notional date have to be cleared by the Public Service Commission and the appointments cannot be held to be regular appointments as long as they are not approved by the Public Service Commission.
Having referred to the Rules, the Tribunal in paragraph 18 observed thus: "We thus find that the appointment of the upgraded JEs as well as the direct JEs to the Gazetted posts have not been made strictly in accordance with the Rules and, hence, it is necessary for the Government to issue specific orders after following the procedure laid down in the Rules, in regard to their appointment to the Gazetted post of `Junior Engineers.
" Having so observed the Tribunal suggested some working formula in the meanwhile.
In evolving this formula the Tribunal further held thus.
"Thus, after having examined the points raised for and against the action taken by the Government in giving the upgraded Junior Engineers the benefit of the notional dates of appointment given to them and in giving the direct Junior Engineers benefit of the dates of the regularisation of their services from the dates of their initial appointment subject to the maintenance of the order ranking given by the P.S.C., we feel that the Government action in this respect was quite justified.
" Towards the end the Tribunal, however, observed that the seniority of the upgraded Junior Engineers who acquired the degree qualification before 28.2.72 will have to be fixed by putting them below all the regular Junior Engineers.
Likewise those who have acquired the degree qualification after 28.2.72 their seniority have to be fixed on the basis of notional date of appointment by "interspersing" among the regular Junior Engineers.
The learned counsel for the State of A.P. submitted that this exercise of "interspersing" becomes impossible at this stage.
311 Having given our careful consideration particularly to the fact that this litigation has been pending for the last so many years, about two decades.
We feel that it is high time a finality has to be reached by resolving the controversies and in this context we are of the view that the approval of the Public Service Commission in respect of these appointments need not be sought, if the Government has not already obtained the approval of the Public Service Commission.
To sum up, our conclusions are as under: (i) The weightage of four years in respect of upgraded Junior Engineers as provided in G.O. Ms. No. 559 has to be reckoned from the date of appointment and not the date of their acquiring the degree qualification; (ii) On the basis of that notional date, their inter se seniority has to be fixed; (iii) The regularisation of the degree holder Junior Engineers who passed the SQT by giving retrospective effect cannot be held to be illegal, and their seniority among themselves shall be subject to the order of ranking given by the Public Service Commission on the basis of the SQT; (iv) The Government shall prepare a common seniority list of the degree holders Junior Engineers and the upgraded Junior Engineers on the above lines and that list shall be the basis for all the subsequent promotions.
Promotions, if any, already given shall be reviewed and readjusted in accordance with the said seniority list; and (v) The approval of the Public Service Commission in respect of these appointments and their seniority thus fixed need not be sought at this distance of time.
Accordingly Civil Appeal Nos. 752 55/84 are disposed of as per the directions given above.
There will be no order as to costs.
S.L.P.(C) No. 5218/85: This Special Leave Petition arises out of a separate order passed by the A.P. Administrative Tribunal in R.P. No. 1473/80.
The petitioners before the Tribunal belong to A.P. Panchayati Raj Engineering Department in Zone No. 1.
They are all graduates in Civil Engineering and were temporarily appointed as Junior Engineers originally in the Public Works Department in 1969.
Their services were terminated for want of vacancies.
However, during the year 1973 they were again appointed in the A.P. Panchayati Raj Engineering Department.
They also appeared in the Spe 312 cial Qualifying Test and they were selected by the Public Service Commission and they were appointed as regular Junior Engineers.
They commenced their probation.
The respondents before the Tribunal were appointed as Supervisors and after they acquired the degree qualification they were designated as Junior Engineers.
The grievance of the petitioners was that the respondents could not have been put above the petitioners in the matter of seniority and their seniority should have been reckoned from the date of their acquiring the graduate qualification.
G.O. Ms. No. 422 issued by the Department declaring them as seniors to the petitioners, was specifically questioned before the Tribunal.
The Tribunal held that the impugned G.O.Ms. is vitiated firstly on the ground that the principles of natural justice have not been observed and secondly that the petitioners before the Tribunal who were the direct recruits and who were selected by the Public Service Commission after holding the SQT, are entitled to count their service in the ranking of Junior Engineers from the date of their appointment subject to the order regarding the maintenance of ranking given by the Public Service Commission.
The said order of Tribunal is questioned in this Special Leave Petition by the upgraded Junior Engineers who were the respondents before the Tribunal.
In this petition also the grounds raised are the same as in Civil Appeal Nos. 752 55/84.
The conclusion reached by us in the above matters also govern the points in this petition.
Accordingly this Special Leave Petition is disposed of in terms of the directions given in Civil Appeal Nos. 752 55/84.
There will be no order as to costs.
W.P. (C) No. 3566/85: This Writ Petition is filed under Article 32 of the Constitution of India.
The petitioners are all upgraded Junir Engineers of A.P. Panchayati Raj Engineering Service.
They have questioned G.O.Ms.
No. 376/84 under which some promotions were made on the basis of the inter se seniority list of the direct recruits and upgraded Junior Engineers.
The conclusions reached by us in Civil Appeals Nos.
752 55/84 also govern the points raised in this Writ Petition.
Accordingly the Writ Petition is disposed of in terms of the directions given in Civil Appeals Nos. 752 55/84.
There will be no order as to costs.
G.N. Matters disposed of.
| The A.P. Engineering Subordinate Service Rules were amended in 1972 by way of Government order.
It provided that supervisors who acquired B.E./A.M.I.E. degree while in service would be entitled to count 50 % of the services rendered as Supervisors prior to acquiring the said qualification subject to a maximum of four years.
However, this was subject to certain conditions, the Chief among them was that they should be considered to have been placed below the last of the Junior Engineer of the year, after giving such weightage.
Order dated 10.6.76 required that the Supervisors who acquire the degree qualification while in service would be appointed, as Junior Engineers with immediate effect.
The abovesaid order was amended on 8.11.76 giving benefit of the weightage to only those who acquired the degree qualification prior to 28.2.72.
In 1977, by another order of the State Government, the post of Junior Engineer was made Gazetted post.
In separate petition before the Andhra Pradesh Administrative Tribunal, the Supervisors upgraded as Junior Engineers including those who acquired the degree qualification after 28.2.72, as well as the State of A.P. agitated the issue regarding inter se seniority between the upgraded Junior Engineers and the direct recruit Junior Engineers.
The Tribunal heard all the matters together and gave a finding that there was no bar to the retrospective regularisation 296 of the directly recruited Engineers from the dates of their initial appointments.
The Tribunal also upheld the action of the Government in giving the benefit of the notional date of appointment to the upgraded Junior Engineers and the benefit of the date of regularisation of their services from the dates of their notional appointments subject to maintenance of order or ranking given by the Public Service Commission.
The Tribunal also ordered that the ranking given by the Public Service Commission in respect of directly recruited Junior Engineers his to be maintained and each of them would be entitled to count has seniority from the date on which his service has been regularised or from the date of regularisation of the service of the person immediately below in the order of ranking given by the Public Service Commission, whichever was earlier.
In respect of upgraded Junior Engineers who acquired degree qualification after 28.2.1972, the Tribunal gave a specific direction that their seniority has to be fixed on the basis of specific notional date of appointment given to them by interspersing their names among regular Junior Engineers as arranged in chronological order of dates from which such regular Junior Engineers are entitled to count their seniority.
Aggrieved against the Tribunal 's order, the State Government and the supervisors upgraded as Junior Engineers, preferred the present appeals.
On behalf of the State, it was contended that the direction of the tribunal particularly interspersing was not workable, since the upgraded Junior Engineers have put in long years of service and were discharging the same duties as the directly recruited Junior Engineers and this factor should be taken into account in fixing the notional date of appointment and inter se seniority.
On behalf of the upgraded Junior Engineers, it was contended that in G.O. Ms No.559 it is specifically laid down that Supervisors who have acquired graduate qualification may be appointed as Junior Engineers after 28.2.75 and the weightage of four years should be reckoned from the date of acquiring the degree qualification i.e.28.2.72 or thereafter; and their seniority should not be fixed from the date of the order of appointment.
On the order hand, the direct recruit Junior Engineers contended that the upgraded Junior Engineers can under no 297 circumstances be treated as seniors to the directly recruited Junior Engineers for the appointment of Junior Engineers was suspended for some time and in view of the exigencies the degree holders were appointed on temporary basis and they have served for a number of years; the Government decided to make regular appointments and accordingly a Special Qualifying Test was held in which they qualified and they were given the appointments; and a seniority list strictly on the basis of performance in the test and on merit was prepared by the Public Service Commission and a retrospective effect was given.
It was further contended that so far as the upgraded Junior Engineers are concerned all the relevant G.O.Ms.
make it clear that the crucial date has to be reckoned on the basis of the actual date of appointment and not on the date of acquiring the degree.
Disposing of the matters, this court, HELD: 1.1.
The weightage of four years in respect of upgraded Junior Engineers as provided in G.O.Ms.
No.559 has to be reckoned from the date of appointment and not the date of their acquiring the degree qualification.
On the basis of that notional date, their inter se seniority has to be fixed.
[311 B C] 1.2.G.O.
Ms. No. 559 makes it abundantly clear that the appointments of the upgraded Junior Engineers who acquired the graduate qualification while in service, would be prospective only and that they would be entitled to the weightage of four years of service rendered before the appointment.
It does not anywhere indicate that the weightage should be from the date of acquiring the degree qualification.
It is only after acquiring such degree qualification that a Supervisor is appointed as Junior Engineer and having regard to the service rendered by him, the Government, as a policy, decided to give weightage of four years for the purpose of considering the eligibility for promotion as Assistant Engineer.
[308 C D] 2.1.The regularisation of the degree holders Junior Engineers who passed the Special Qualifying Test by giving restrospective effect cannot be held to be illegal, and their seniority among themselves shall be subject to the order of ranking given by the Public Service Commission on the basis of the Special Qualifying Test.
[311 D] 2.2.
The degree holders were appointed temporarily because of a ban and later the Government again, as a policy decision, decided 298 to make regular appointments by direct recruitment but enabled the degree holders who were in temporary service to appear in a Special Qualifying Test.
Here again, as a matter of policy, the Government decided to give some weightage to the service rendered by them before the appointment by selection.
Thus, the Governement, in fixing the seniority for the purpose of future promotion of the appointees both the upgraded Junior Engineers as well as those selected by the Public Service Commission in the Special Qualifying Test has taken into account the past service rendered by them.
[308 E F] 3.
In the case of upgraded Junior Engineers weightage of four years service was given and in the other case two years, weightage was given.
As a matter of policy, the Government gave weightage to both the categories discharging the same duties.
The upgraded Junior Engineers who having got the benefit of four years` service, therefore, cannot say that similar weightage should not be given to the direct recruits who, prior to the selection, were working on temporary basis.
B, F] Devi Prasad and Ors.
vs Government of Andhra Pradesh and Ors.
, AIR 1980 SC 1185, relied on.
M. Nirmala and Ors.
vs State of Andhra Pradesh and Ors.
; , ; Ashok Gulati and Ors.
vs B.S.Jain and Ors., [1986] Sup.
SCC 597; Direct Recruit Class II Engineering Officers Association vs State of Maharashtra and Ors.
, ; ; Masood Akhtar Khan and Ors.
vs State of Madhya Pradesh and Ors., , referred to.
The Tribunal has rightly pointed out that under Rule 23 A of the A.P State and Subordinate Service Rules, 1962 if a person having been appointed temporarily under Rule 10 to a post borne on the cadre is subsequently appointed in the service in accordance with the rules, he shall commence his probation from such subsequent date or the earlier date as the appointing authority may determine.
The Tribunal was also right in holding that there was no bar to the retrospective regularisation of the service of the direct recruit Junior Engineers.
[308 G H; 309 A] 5.
In the light of this Judgment, the State Government shall prepare a common seniority list of the degree holder Junior Engineers and the upgraded Junior Engineers and that list shall be the 299 basis for all the subsequent promotions.
Any promotion already given shall be reviewed and readjusted in accordance with the said seniority list.
[311 D E] 6.
Since this litigation has been pending for about two decades, it is high time a finality has to be reached by resolving the controversies and in this context the approval of the Public Service Commission in respect of these appointments need not be sought, if the Government has not already obtained the approval of the Public Service Commission.
[311 A B]
|
ivil Appeal No. 1351 of 1976.
From the Judgment and Order dated 24.11.
1975 of the Andhra Pradesh High Court in A.S. No. 691 of 1972.
T.V.S.N. Chari for the Appellant.
A. Subba Rao and A.D.N. Rao for the Respondents.
The Judgment of the Court was delivered by K. RAMASWAMY, J.
This appeal by special leave arises against the Division Bench judgment dated November 24, 1975 in A.S. No. 691 of 1972 of the A.P. High Court fixing the market value @ Rs. I0 per square yard.
The facts lie in a short compass are stated thereunder.
By notification under section 4(1) of the Land Acquisition Act 1894 (in short 'the Act ') was published in the State Gazette on November 21, 1963 to acquire 5 acres 589 1/3 sq. yards in T.S. No. 981, Block No. 34 of Waitair Ward, Vishakapatnam for a housing scheme.
The Collector 475 awarded at Rs. 1.58 per sq. yard and on reference, the Civil Court enhanced the compensation to Rs. 10 per sq. yard with solatium at 15 per cent and interest at 4 per cent.
The respondent claimed @ Rs. 12 per sq. yard.
On appeal and cross appeals the High Court confirmed the award and dis missed the appeal as well as cross objections for enhance ment to Rs. 12 per sq. yard.
Two contentions have been raised by Shri Narsimahachari, the learned counsel for the appellant.
Under exhibit B. 6 dated August 3, 1961; under exhibit B 7 dated Sept. 5, 1961 and exhibit B 8, dated Sept. 8, 1961 the respondent purchased one acre 1936 sq.
yards in each docu ments in the same T.S. No. 981 @ 0.42 p. per sq. yard.
He sold on January 24, 1963 in an extent of one acre under exhibit B. 10 @ Rs.5 per sq. yard.
Therefore, ' the aforesaid sale deeds, exhibit B. 6, B. 7, B. 8 and B. 10 will reflect the prevailing market value of the land in question.
The Trial Court and the High Court committed grievous error in placing reliance on a decision of the High Court in A.S. No. 191 of 1967 dated November 11, 1970 awarding @ Rs. 10 per sq. yard in respect of 6,209 sq. yards in T.S. No. 1008, Block No. 39, Waitair Beach Road which was acquired under a notifica tion dated March 19, 1961 for the purpose of Caltex Oil Refinery.
The price fixed therein does not reflect the correct market value while the bona fide sale deed of pur chase and sale by the respondents relating to the acquired land are available on records and form correct basis.
The courts below committed grave error of law in completely excluding those sale transactions and relying upon that judgment.
We find force in the contention, though Shri Subba Rao, learned counsel for the respondent vehemently resisted, it.
It is settled law by catena of decisions that the market value postulated in section 23(1) of the Act designed to award just and fair compensation for the lands acquired.
The word "market value" would postulate price of the land prevailing on the date of the publication of the notification under section 4(1).
This Court repeatedly laid the acid test that in determining the market value of the land, the price which a willing vendor might reasonably expect to obtain from a willing purchaser would form the basis to fix the market value.
For ascertaining the market rate, the Court can rely upon such transactions which would offer a reasonable basis to fix the price.
The price paid in sale or purchase of the land acquired within a reasonable time from the date of the acquisition of the land in question would be the best piece of evidence.
In its absence the price paid for a land pos sessing similar advantages to the land in the neighbourhood of the land acquired in or about the time of the notifica tion would supply the data to assess the market value.
It is not necessary to cite all the decisions suffice to state that in a recent judgment in Periya & Pareekanni Rubbers Ltd. vs State of Kerala, [1990] Supp. 1 SCR 476 362 a bench of this Court, to which one of us K.R.S., J., was a member surveyed all the relevant precedents touching the points.
In the light of the settled legal position let us consider whether the High Court and the Civil Court are justified in excluding the sale deeds completely and to place reliance on another judgment of the Division Bench of the High Court of A.P.
Admittedly, the claimant is a vendee in exhibit B. 6 to B. 8 @ 0.42 paise.
In a span of one year and four months, they sold @ Rs.5 per sq. yard; It is common knowledge that proposal for acquisition would be known to everyone in the neighbourhood, in particular, to the owners of the property and it is not uncommon that sale transac tions would be brought into existence before the publication of section 4(1) notification so as to form the basis to lay higher claim for compensation.
We do assume that exhibit B. 10 is a genuine and bona fide sale transaction.
In respect of one acre of the land in the self same land when sold at Rs.5 per sq. yard, would it fetch in a short period of nine months, double the market value, namely. @ Rs. 10 per sq. yard.
We have no doubt that it would not get that price for 5 acres and odd area.
It is undoubted that in respect of a notification of 1961 in which another T.S. number in the locality, namely, T.S. No. 1008, ultimately, the High Court awarded @ Rs. 10 per sq. yard.
Perhaps had there been no bona fide or genuine sale transaction relating to the self same land, the reliance placed on that judgment may be justified but exclusion of bona fide and genuine sale trans actions in respect of the same land under acquisition and to place reliance on the award of some other land is obviously illegal.
When the claimants themselves sold as a willing seller of an acre of land @ Rs.5 per sq.
yard large extent of five acres and odd under acquisition, if it is offered to be sold as a block, it would not fetch higher rate but surely be negotiated for a lesser rate if not the same market value @ Rs.5 due to time lag of nine months.
No attempt was made by the respondent to explain under what circumstances they came to sell their lands @ Rs.5 per sq. yard when they expect higher value @ Rs. 10 per sq. yard.
May be the payment of Rs. 10 per sq. yard, be wind fall to the owner of the land in T.S. No. 1008 Taking the totality of the facts and circumstance, we hold that the High Court committed grave error to completely ignore the sale transac tions of the lands under acquisition.
In view of the time lag we have no hesitation to conclude that the prevailing market value of the land as on the date of the notification would be Rs.6 per sq. yard.
It is next contended by Shri Narsimahachari that when a large extent of land was acquired for a housing scheme, at least 1/3 of the land should be deducted towards laying the roads, setting up parks, 477 drainage and other amenities.
The High Court committed manifest error in omitting to deduct 1/3 of the land.
Shri Subba Rao, the learned counsel for the respondent contended that the High Court had noted this contention of the appellant and considered that the market value of the land would be Rs. 12 per sq. yard and after giving the deduction of 1/3 it would come to Rs. 10.
The reasoning of the High Court is proper and warrants no interference.
In support thereof he placed reliance in Spl.
Tehsildar, Visha kapatnam vs Rednam Dharma Rao & Ors., C.A. No 4187 of 1982, dated July 17, 1990 wherein this Court had upheld the deduc tion of 1/5 from the market value towards developmental charges.
It is settled law that the High Court and the Reference court when made wrong application of a principle or important points effecting valuation has been over looked or misapplied, this Court would under article 136 correct the same, vide The Spl.
Land Acquisition Officer, Bangalore vs
T. Adinarayan Setty, [1959] Suppl.
1 S.C.R. 404; Dattatrayaya Shankarbhat Ambalgi and Ors.
vs The Collector of Sholapur and Anr., AiR 3 S.C.C. 431; The Dollar Co., Madras vs Collector of Madras, [1975] Supp.
SCC 403 and Padma Uppal Etc.
vs State of Punjab & Ors.
, ; In Tribeni Devi & Ors.
vs Collector of Ranchi, ; at 2 13, this Court held that "in order to devel op that area at least the value of 1/3 of the land will have to be deducted for roads, drainage and other amenities".
On this basis the value of the land at Rs.2,08,135.70 per acre would, after the deduction of 1/3 come to Rs. 1,38,757 per acre.
In Smt.
Kaushalya Devi Bogre & Ors.
vs The Land Acquisition Officer, Aurangabad; , this Court held that deduction of 1/3 was held to be reasonable.
In Vijay Kumar Motilal vs State of Maharashtra, 19 i/3rd was deducted towards developmental charges in undeveloped area.
In Vijaysingh Liladhar vs Special Land Acquisition Officer, the deduction of i/4th by the High Court which was not challenged in this court was upehld.
In Spl.
Land Acquisition Officer, Bangalore vs T. Adinarayan Setty, supra, deduction of 25 per cent was held to be reasonable.
It is to be noted that in building Regula tions, setting apart the lands for development of roads, drainage and other amenties like electricity etc.
are condi tion precedent to approve lay out for building colonies.
Therefore, based upon the situation of the land and the need for development the deduction shall be made.
Where acquired land is in the midst of already developed land with ameni ties of roads, drainage, electricity etc.
then deduction of 1/3 would not be justified.
In the 478 rural areas housing schemes relating to weaker sections deduction 1/4 may be justified.
On that basis, this court in R. Dharma Rao 's case upheld deduction of 1/5 because the owner while obtaining the lay out had already set apart lands for road and drainage.
Therefore, deduction of 1/3 would be reasonable.
In fact in The Tehsildar, Land Acquisi tion, Vishakapatnam vs
P. Narasing Rao & Ors., , a Division Bench of the High Court surveyed judgments of the High Court relating to housing schemes of Vishakapatnam upholding deduction of 1/3 to be reasonable.
Accordingly we hold that 1/3 of the market value should be deducted for development of the lands.
The High Court com mitted greivous error in giving a curious reasoning of valuing at Rs. 12 and upholding Rs. I0 to be the market value after deduction, though *.he market value was deter mined at Rs. 10.
Accordingly the appeal is allowed.
The market value is determined at Rs.6 per sq. yard and after deducting 1/3 the market value is Rs.4 per sq. yard.
The respondents are entitled to 15 per cent Solatium on market value and 4 per cent interest thereon from the date of dispossession.
But in the circumstances parties are directed to pay and receive their own costs.
N.P.V. Appeal al lowed.
| The respondent 's land admeasuring 5 acres 589 1/3 Sq. yards was acquired by the State Government in 1963 for a housing scheme and compensation at Rs.1.58 per Sq. yard was awarded.
On reference, the Civil Court enhanced the compen sation to Rs. 10 per Sq. yard with solatium at 15 per cent and interest at 4 per cent.
On appeal and cross appeals, the High Court confirmed the award.
In the appeal before this Court, on behalf of the De partment, it was contended that the respondent had purchased the land in question in 1961 in three documents at Rs.0.42 p. per sq. yard and sold in 1963 one acre of the land at Rs.5 per sq. yard and, therefore, the deeds under which the transactions took place reflected the prevailing market value of the land in question, and courts below committed grave error in relying on a decision of the High Court awarding Rs. 10 per sq. yard in respect of another land acquired under a Notification of 1961, and that when a large extent of land was acquired for a housing scheme, at least 1/3 of the land should be deducted towards laying the roads, setting up parks, drainage and other amenities.
Allowing the appeal, this Court, HELD: 1.1 The market value postulated in Section 23(1) of the Land Acquisition Act, 1894 is designed to award just and fair compensation for the lands acquired.
The word "market value" would postulate price of the land prevailing on the date of the publication of the notifica 473 tion under Section 4(1).
In determining the market value of the land, the price which a willing vendor might reasonably expect to obtain from a willing purchaser would form the basis.
For ascertaining the market rate, the Court can rely upon such transactions which would offer a reasonable basis to fix the price.
The price paid in sale or purchase of the land acquired within a reasonable time from the date of the acquisition of the land in question would be the best piece of evidence.
In its absence the price paid for a land pos sessing similar advantages to the land in neighbourhood of the land acquired in or about the time of the notification would supply the data to assess the market value.
[475E G] Periya & Pareekanni Rubbers Lief.
vs State of Kerala, [1990] Supp. 1 SCR 362, referred to. 1.2 In the instant case, admittedly, the claimant pur chased land at Rs.0.42 p. and in a span of one year and four months, sold at Rs.5 per sq yard.
When the claimants them selves sold as a willing seller of an acre of land @ Rs.5 per sq.
yard, if a large extent of five acres and odd under acquisition is offered to be sold as a block, it would not fetch higher rate but surely be negotiated for a lesser rate, if not the same market value of Rs.5 due to time lag of nine months.
May be the payment of Rs. 10 per sq yard to the owner of another land acquired in 1961 was a windfall.
Taking the totality of the facts and circumstances, the High Court committed grave error in completely ignoring the sale transactions of the lands under acquisition.
In view of the time lag, the prevailing market value of the land as on the date of the notification would be Rs.6 per sq. yard.
[476B, E G] 1.3 In Building Regulations, setting apart the lands for development of roads, drainage and other amenities like electricity etc.
are condition precedent to approve lay out for building colonies.
Therefore, based upon the situation of the land and the need for development, the deduction shall be made.
Where acquired land is in the midst of al ready developed land with amenities of roads, drainage, electricity etc.
then deduction of 1/3 would not be justi fied.
In the rural areas housing schemes relating to weaker sections, deduction of 1/4 may be justified.
[477G H, 478A] Spl.
Tehsildar, Vishakapatnam vs Rednam Dharma Rao & Ors., CA No. 4187 of 1982 decided on July 17, 1990; Tribeni Devi & Ors.
vs Collector of Ranchi, ; at 213; Smt.
Kaushalya Devi Bogre & Ors.
vs The Land Acquisi tion Officer, Aurangabad; , ; Vijay Kumar Motilal vs State of Maharashtra, ; Vijay singh Liladhar vs Special Land Acquisition Officer, 760; Spl.
Land Acquisition Officer, Bangalore vs
T. Adinaray an Setty, [1959] Sppl.
1 SCR 404 and The Tehsildar, Land Acquisition, Vishakapatnarn
P. Narasing Rao & Ors., , relied on. 1.4 In the instant case, 1/3 of the market value should be deducted for development of the lands.
[478B] 1.5 The market value is determined at Rs.6 per sq. yard and after deducting 1/3 for development of lands, it would be Rs.4 per sq. yard.
[478C] 2.
It is settled law that when wrong application of a principle has been made or important points affecting valua tion have been overlooked or misapplied by the High Court or Reference Court, this Court would, under Article 136 of the Constitution, correct the same.
The Spl.
Land Acquisition Officer, Bangalore vs
T. Adina rayan Setty, [1959] Suppl.
1 SCR 404; Dattatrayaya Shankarb hat Ambalgi and Ors.
vs The Collector of Sholapur and Anr., ; The Dollar Co. Madras vs Collector of Madras, and Padma Uppal etc.
vs State of Punjab & Ors.
, ; , relied on.
|
ition (Civil) No. 873 of 1990.
(Under Article 32 of the Constitiution of India) WITH Contempt Petition No. 6 of 1991.
AND Civil Appeal Nos.
309 to 373 of 1992.
R.K. Garg, Kapil Sibal, V. Lakshmi Narayanan, D.K. Garg and P. Mahale for the Petitioners.
R.N. Narasimhamurthy, Kh.
Nobin Singh and M. Veerappa for the Respondents.
The Judgment of the Court was delivered by R.M. SAHAI, J.
Teachers appointed temporarily for three months or less, by privately managed degree colleges receiving cent per cent grant in aid, controlled administratively and financially by the Educational Department of the State of Karnataka, seek regularisation of their services by invoking principle of equitable estoppel arising from implied assurance due to their continuance, as such, for years with a break of a day or two every three months.
Another basis for direction to regularise is founded on denial of similar treatment by the State as has been extended to contract teachers and local teachers appointed in government or vocational colleges.
Payment of fixed salary instead of regular emoluments for eight months in a year and that too for number of years is yet another grievance.
Ad hoc appointments, a convenient way of entry usually from back door, at times even in disregard of rules and regulations, are comparatively recent innovation to the service jurisprudence.
They are individual problem to begin with, become a family problem with passage of time and end with human problem in court of law.
It is unjust and unfair to those who are lesser fortunate in society with little or no approach even though better qualified, more meritorious and well deserving.
The infection is 401 widespread in government or semi government departments of State financed institutions.
It arises either because the appointing authority resorts to it deliberately as a favour or to accommodate someone or for any extraneous reason ignoring the regular procedure provided for recruitment as a pretext under emergency measure or to avoid loss of work etc.
Or the rules or circulars issued by the department itself empower the authority to do so as a stop gap arrangement.
The former is an abuse of power.
It is unpardonable.
Even if it is found to have been resorted to as a genuine emergency measure the courts should be reluctant to grant indulgence.
Latter gives rise to equities which have bothered courts every now and then.
Malady appears to be widespread in educational institutions as provisions for temporary or ad hoc appointments have been exploited by the managements of private aided colleges to their advantage by filling it, on one hand, with persons of own choice, at times without following the procedure, and keeping the teachers exposed to threat of termination, on the other, with all evil consequences flowing out of it.
Any institution run by State fund but managed privately is bound to suffer from such inherent drawbacks.
In State of Karnataka it is basically State created problem due to defective rule and absence of any provsions to effectively deal with such a situation.
What is surprising is that till today the State has not been able to bring out a comprehensive legislation on such an important aspect as education and the appointment, selection, promotion, transfer, payment of salary etc.
of teachers is regulated by government orders issued from time to time.
Since 1980 it is governed by an order issued by Educational and Youth Services Department of the State of Karnataka on 3rd October, 1981.
Clause 5 of the Order reads as under: "Any appoinment for a period of three months or less in a College shall be made, subject to approval of the Director within one month from the date of appointment by the Management or such authority as the Management by Order, may specify in that behalf.
Such temporary appointments may, however, be continued for a further period of not more than three months, with one day 's break when selection through the Selection Committee is likely to take time.
The Director may, for reasons to be recorded in writing refuse approval for the said appointment and the services of the person so appointed shall be terminated forthwith.
" Appointments for more than three months is to be by a regularly constituted selection committee under clause 4 of the order.
But if is for three months or less than the appointment could be made by the 402 Management under clause 5 subject to approval by the Director.
It could be continued for further period of three months if there was delay in regular appointment.
But the direction to re appoint with one day 's break is not understandable.
If the intention was to differentiate between appointments for more than three months and others it was a futile exercise.
That had already been achieved by providing two different methods of selection one by Selection Committee and ohter by Management.
Distinction between appointment against temporary and permanent vacancies are well known in service law.
It was unnecessary to make it appear crude.
If the purpose was to avoid any possible claim for regularisation by the temporary teachers then it was acting more like a private business house of narrow outlook than government of a welfare State.
Such provisions cannot withstand the test of arbitrariness.
That is why the High Court, while disposing of CMW 6232 of 1990 B.R. Parineeth & Ors.
vs The State of Karnataka & Others, along with many other petitions by its order dated 3rd July, 1990, criticised such practice as pernicious.
The rule making authority lost sight of fact that such policy was likely to give dominance to vested interests who leave no opportunity to exploit the educated youth who have to survive even at cost of one meal a day.
That is apparent from continuance of these teachers for 8 to 10 years with sword of termination hanging on their head ready to strike every three months at the instance of either the management or the Director.
Provision of stop gap appointments might have been well intended and may be necessary as well but their improper use results in abuse.
And that is what has happened on a large scale.
The helplessness expressed by the State in the counter affidavit that the managements went on continuing such teachers without holding regular selections despite orders of educational authorities may be true but not convincing.
It sounds like surrender in favour of private managements.
Another obnoxious part is the emoluments that have been paid to the temporary teachers.
The order provides that the teacher shall be paid a fixed salary which is ten rupees less than the minimum payable to regular employee.
This method of payment is again beyond comprehension.
An appointment may be temporary or permanent but the nature of work being same and the temporary appointment may be due to exigency of service, non availability of permanent vacancy or as stop gap arrangement till the regular selection is completed, yet there can be no justification for paying a teacher, so appointed a fixed salary by adopting a different method of payment than a regular teacher.
Fixation of such emoluments is arbitrary and violative of Article 14 of the Constitution.
The evil inherent in it is that apart from the teachers being at the beck and call of the management are in danger of being exploited as has been done by the management 403 committees of State of Karnataka who have utilized the services of these teachers for 8 to 10 years by paying a meagre salary when probably during this period if they would have been paid according to the salary payable to a regular teacher they would have been getting much more.
Payment of nearly eight months ' salary, by resorting to clause 5, and, that too fixed amount, for the same job which is performed by regular teachers is unfair and unjust.
A temporary or ad hoc employee may not have a claim to become permanent without facing selection or being absorded in accordance with rules but no discrimination can be made for same job on basis of method of recruitment.
Such injustice is abhorring to the constitutional scheme.
While deprecating direction by the government to break service for a day or two and paying fixed salary to temporary employees we must condemn the practice of management of not making regular selection utmost within six months of occurrence of vacancy.
Nor the helplessness of government can be appreciated as expressed in the counter affidavit that despite orders the management continued with it.
If the government could not take effective measure either by superseding the management or stopping grant in aid then either it was working under pressure from Management of the private aided institutions or it was itself interested in continuing such unfortunate state of affairs.
In either case the equities have been created because of doing of state itself, therefore, it should resolve it.
One such method was adopted by the High Court in invididual petitions filed by the teachers by directing the Director of Education to hold selection.
In pursuance of it some of the teachers have been regularised.
But substantial number still remain due to State 's going back on its agreement before the court by creating obstacles in implementation of the order.
Many of them who have have faced selection and have secured higher marks and are in zone of selection are being denied the benefit because it is claimed that such regularisation would be contrary to reservation policy of the State.
The policy is under challenge in another proceedings in the Court.
Without entering into validity of the policy which according to petitioner results in cent per cent reservation we are of opinion that such practice should be put an end to, therefore, following directions are necessary to be issued: (1) Provision in clause 5 of one day 's break in service is struck down as ultra vires.
(2) Orders for payment of fixed salary to temporary teachers is declared invalid.
But it shall operate prospectively.
A teacher appointed temporarily shall be paid the salary that is admissible to any teacher appointed regularly.
404 (3) Any teacher appointed temporarily shall be continued till the purpose for which he has been appointed exhausts or if it is in waiting of regular selection then till such selection is made.
(4) Management shall take steps, whenever necessary, to fill up permanent vacancies in accordance with rules.
Delay in filling up the vacancies shall not entitle the management or Director to terminate the services of temporary teachers except for adequate reasons.
But it shall entitle the government to take such steps including supersession of management or stopping grants in aid if permitted under law to compel the institutions to comply with the rules.
So far these petitioners and teachers similarly situated are concerned, it could not be disputed that many of those teachers who appeared for selection in pursuance of the High Court order secured sufficiently high marks but they could not be regularised because the vacancies are said to be reserved.
But what has been lost sight of is that petitioners are seeking regularisation on posts on which they have been working and not fresh appointments, therefore, they could not be denied benefit of the High Court 's order specially when no such difficulty was pointed out and it was on agreement by the respondents that the order was passed.
No material has been brought on record to show that any action was taken prior to decision by the High Court against any institution for not following the reservation policy.
To deny therefore the benefit of selection held on agreement by the respondents is being unjust to such selectees.
Further the State of Karnataka appears to have been regularising services of adhoc teachers.
Till now it has regularised services of contract lecturers, local candidates, University lecturers,Engineering colleges, lecturers etc.
It may not furnish, any basis for petitioners to claim that the State may be directed to issue similar order regularsing services of teachers of privately managed colleges.
All the same such policy decisions of government in favour of one or the other set of employees of sister department are bound to raise hopes and expectations in employees of other departments.
That is why it is incumbent on governments to be more circumspect in taking such decisions.
The petitioners may not be able to build up any challenge on discrimination as employees of government colleges and private colleges may not belong to the same class yet their claim cannot be negatived on the respondents ' stand in the counter affidavit that the regularisation of temporary teachers who have not faced selection shall impair educational standard without explaining the effect of regularisation of temporary teachers of University and even technical colleges.
Such being the unfortunate state of affairs this Court is left with no option but to issue following directions to respondents for not honoring its com 405 mitments before the High court and acting contrary to the spirit of the order, and also due to failure of governemt in remaining vigilant against private management of the college by issuing timely directions and taking effective steps for enforcing the rules: (1) Services of such temporary teachers who have worked as such for three years, including the break till today shall not be terminated.
They shall be absorbed as and when regular vacancies arise.
(2) If regular selections have been made the governemt shall create additional posts to accommodate such selected candidates.
(3) The teachers who have undergone the process of selection under the directions of the High Court and have been appointed because of the reservation policy of the Government be regularly appointed by creating additional posts.
(4) From the date of judgment every temporary teacher shall be paid salary as is admissible to teachers appointed against permanent post.
(5) Such teachers shall be continued in service even during vacations.
For these reasons this petition succeeds and is allowed.
The direction is issued to respondents in the terms indicated above.
Civil Appeal Nos.
309 373 of 1992 arising out of SLP (Civil) Nos.
13131 95 of 1990 challenging the order of High Court in CMW 6232 of 1990 decided on 3rd July, 1990 is disposed of accordingly.
Contempt Petition No. 6 of 1991 alleging violation of status quo order granted in W.P. (Civil) No. 873 of 1990 need not be decided.
It is directed to be filed.
The petitioners shall be entitled to their cost from the State of Karnataka.
T.N.A. Petition allowed.
| The Education and Youth Services Department of the State of Karnataka issued an order dated 3rd October 1981 which provided two different methods of selection of teachers in private aided degree colleges one by Selection Committee and another by Management.
Under the order appointments for more than three months could be made by a selection committee whereas temporary appointments for less than 3 months could be made by the Management and such temporary appointments could be continued for a futher period of not more than 3 months, with one day 's break in service.
The Government order also provided that such temporary teachers shall be paid fixed salary being ten rupees less than the minimum payable to regular teachers.
The teachers temporarily appointed under the said order accordingly continued in service for a long period but with a break of a day or two every three months in their service.
Subsequently, they filed a writ petition in this Court seeking regularisation of their services by invoking the principle of equitable estoppel arising from implied assurance due to their long continuance.
It was contended on behalf of the petitioners that; (i) since the State has regularised the services of contract teachers and local teachers appointed in Government or vocational colleges they should also he extended similar treatment; and (ii) payment of fixed salary instead of regular emoluments for eight months in a year was discriminatory and arbitrary.
398 Allowing the petition, this Court, HELD: 1.
Provision of one day 's break in service in the Government order is deprecated and is struck down as ultra vires.
If the intention was to differentiate between appointments for more than three months and others it was a futile exercise.
That was already achieved by providing two different methods of selection one by Selection Committee and other by Management.
Distinction between appointment against temporary and permanent vacancies are well known in service law.
It was unnecessary to make it appear crude.
If the purpose was to avoid any possible claim for regularisation by the temporary teachers then it was acting more like a private business house of narrow outlook than government of a welfare State.
Such provisions cannot withstand the test of arbitrariness.
[403 G; 402 A B] B.R. Parineeth & Ors.
vs The State of Karnataka & Ors.
CMW 6232 of 1990 decided on 3.7.1990, referred to.
Order for payment of fixed salary to temporary teachers is declared invalid.
An appointment may be temporary or permanent but the nature of work being same and the temporary appointment may be due to exigency of service, non availability of permanent vacancy or as stop gap arrangement till the regular selection is completed, yet there can be no justification for paying a teacher, so appointed, a fixed salary by adopting a different method of payment than a regular teacher.
Fixation of such emoluments is arbitrary and violative of Article 14 of the Constitution.
[403 G; 402 F G] 2.1 Payment of nearly eight months ' salary by resorting to government order and, that too fixed amount, for the same job which is performed by regular teachers is unfair and unjust.
Such injustice is abhorring to the constitutional scheme.
[403 A B;] 3.
The practice of management of not making regular selection utmost within six months of occurrence of vacancy is condemned.
The helplessness expressed by the State that the managements went on continuing such teachers without holding regular selections despite orders of educational authorities may be true but not convincing and sounds like surrender in favour of private managements.
[403 C, 402 E] 3.1 Managements shall take steps, whenever necessary, to fill up permanent vacancies in accordance with rules.
Delay in filling 399 up the vacancies shall not entitle the management or director to terminate the services of temporary teachers except for adequate reasons.
But it shall entitle the government to take such steps including supersession of management or stopping grants in aid if premitted under law to compel the institutions to comply with the rules.
[404 B] 4.
Regularisation of services of teachers of Government colleges by the State may not furnish, any basis for petitioners to claim that the state may be directed to issue similar order regularizing services of teachers of privately managed colleges.
All the same such policy decisions of government in favour of one or the other set of employees of sister department are bound to raise hope and expectations in employees of other departments.
Therefore, it is incumbent on governments to be more circumspect in taking such decisions.
[404 E G] 5.
Ad hoc appointments, a convenient way of entry usually from backdoor, at times even in disregard of rules and regulations, are comparatively recent innovation to the service jurisprudence.
The infection is widespread in government or semi government departments or State financed institutions.
Malady appears to be widespread in educational institutions as provisions for temporary or ad hoc appointments have been exploited by the managements of private aided colleges to their advantage by filling it, on one hand, with persons of own choice, at time without following the procedure and keeping the teachers exposed to threat of termination, on the other, with all evil consequences flowing out of it.
Any institution run by State fund but managed privately is bound to suffer from such inherent drawbacks.
[400 G H; 401 C D] 6.
In the circumstances of the case following directions are issued: a) Any teacher appointed temporarily shall be continued till the purpose for which he has been appointed exhausts or if it is in waiting of regular selection then till such selection is made; [404 A] b) Services of such temporary teachers who have worked as such for three years, including the break till today shall not be terminated.
They shall be absorbed as and when regular vacancies arise; [405 B] 400 c) If regular selections have been made the government shall creat additional posts to accommodate such selected candidates; [405 B] d) From the date of judgment every temporary teacher shall be paid salary as is admissible to teachers appointed against permanent post.
[405 D]
|
ivil Appeal No. 1993 of 1982.
From the Judgment and Order dated 9.2.1982 of the Delhi High Court in S.A.O No. 59 of 1979.
M.K.Ramamurthi, Mrs. Chandan Ramamurthi and M.A.Krishnamoorthi for the Appellants.
Harish N. Salve and A.K.Sanghi for the Respondents.
The Judgment of the Court was delivered by T.K.THOMMEN, J.
This appeal arises from the judgment of the 476 Delhi High Court in S.A.O.No.
59 of 1979 whereby the High Court, reversing the concurrent findings of the Additional Rent Controller and the Rent Control Tribunal, allowed the respondent landlord 's application for eviction of the appellant tenant under section 14(1)(e) of the Delhi Rent Control Act, 1958 (the `Act ').
The respondent is the daughter of the original landlord who had let out the premises to the appellant on 1.10.1961.
The present respondent purchased the property from her father on 27th June, 1964 and thus stepped into his shoes as the `landlord ' as defined under section 2(e) of the Act.
Relying upon the Rent Note and the appellant 's letters dated 7.10.1961 and 18.8.1962 addressed to the respondent 's father and the earlier proceedings between them for eviction of the appellant on the ground of sub letting the premises for commercial purposes, both the statutory authorities found that the premises which had been let out for residential purposes to the appellant had also been used incidentally for commercial purposes so as to exclude the application of section 14 (1) (e) read with the Explanation thereto.
This finding was reversed by the High Court by the impugned judgment.
This High Court found that there was no evidence for the statutory authorities to come to the conclusion, which they did, as regards the premises having been used for commercial purpose.
This is what the High Court says: ". .
No documentary evidence has been brought on record to hold that the premises were ever used for boarding and lodging foreign students. .Thus there is no evidence on record to hold that the premises were used for boarding and lodging of the foreign students or that the premises were let to the respondent for commercial purposes.
Thus, I am of the view that the premises were let to the respondent for use as residence and the findings to contrary by the controller and the Tribunal are without any evidence on record and are perverse".
This finding of the High Court is, in our view, unsustainable.
The High Court was not justified in saying that there was no evidence to hold that the premises were used for boarding and lodging foreign students.
The specific plea of the landlord in the earlier proceedings was that the tenant had sub let the premises for commercial purposes.
The tenant contended that she had never parted with her exclusive possession of any part of the premises and the foreign students who were lodging were her paying guests and were not her tenants.
The plea of sub tenancy raised by the landlord was thus rejected on the ground that those who logged with her were not sub tenants but only paying guests.
Letters dated 7.10.1961 477 and 18.8.1962 addressed by the appellant tenant to the respondent landlord were considered by the authorities in coming to the conclusion, which they did.
These letters clearly disclosed the fact that foreign students were lodged in the evidence let in by the appellant and not contradicted by the respondent clearly showed that apart from the appellant, all the other inmates of the premises were foreign students staying with her as her paying guests.
The appellant testified to the effect that she earned her livelihood from the income she received as lodging fee from students who lodged with her.
It was out of that income that all her personal expenses including the rent payable by her for the premises had been met.
These are the findings of the two fact finding authorities and those findings are based on oral and documentary evidence.
To have reversed those findings by the High Court in Second Appeal on the ground that they were perverse was totally uncalled for.
Mr Harish Salve appearing for the respondent landlord submits that even if the High Court was wrong in coming to the conclusion that there was no evidence about foreign students stayed as paying guests in the premises did not imply either that they lodged with the consent of the landlord or that such lodging amounted to a commercial use of the building.
Counsel submits that the High Court was right on the facts of this case in saying that the ground contained in clause (e) of section (1) of section 14 was attracted.
There is no substance in the contention that the landlord was unaware that the premises had been used for lodging foreign students.
The two letters relied on by the statutory authorities leave no doubt that this fact was well known to the landlord at all material times.
To the knowledge of the landlord the premises have been regularly used by the tenant ever since 1961 for the residence of not only herself but also of the foreign students who were lodged by her for gain as paying guests.
The evidence is that she had no income other than what she received as lodging fee from foreign students.
The question then is whether the facts found excluded the application of the ground contained in clause (e) of the section 14 (1).
Section 14, insofar as it is material, reads: "S.14.
Protection of tenant against eviction: (1) Notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant: 478 Provided that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on one or more of the following grounds only, namely (e) that the premises let for residential purpose are required bona fide by the landlord for occupation as a residence for himself or for any member of his family dependent on him, if he is the owner thereof, or for any person for whose benefit the premises are held and that the landlord or such person has no other reasonably suitable residential accommodation; Explanation For the purposes of this clause, "premises let for residential purposes" include any premises which having been let for use as a residence are, without the consent of the landlord, used incidentally for commercial or other purposes".
The only ground which is relied on by the landlord is that which is contained in clause(e) read with the Explanation.
Clause (e) on the facts alleged is applicable only if the landlord is in a position to establish that the premises let for residential purposes are required bona fide by him for occupation as a residence.
Assuming that the bona fide requirement of the landlord is established, the landlord must still prove that the premises had been let for residential purposes.
The Explanation to clause (e) makes it clear that the words `premises let for residential purposes ' include any premises let for residential purposes, but used incidentally, without the consent of the landlord, for commercial or other purposes.
The Explanation is attracted when (i) the premises have been let for residential purposes, (ii) the premises have been used incidentally for commercial or other purposes, and (iii) the landlord had not given his consent for such incidental use for commercial or other purposes.
If the three ingredients contained in the Explanation are attracted, the premises do not cease to be "Premises let for residential purposes" falling under clause (e).
In respect of such premises, the bona fide requirement of the landlord referred to in clause (e) is a ground for eviction.
If the premises have never been used for any non residential purpose, the aid of the Explanation is unnecessary to attract clause (e).
The Explanation is called in aid only where premises let for residential purposes have been used incidentally for commercial or other non residential purposes, but without the consent of the landlord.
The fundamental question in respect of residential premises is whether the landlord had consented to the user of the premises for any other purpose, albeit incidentally.
479 If the landlord is in a position to establish that the premises have been let for residential purposes and that he has never consented to the user of the premises for any other purpose, the mere fact that such premises have been incidentally used for commercial or other purposes would not change or affect the residential character of the premises.
In respect of such premises, it is open to the landlord to prove his bona fide requirements and thus establish the ground mentioned under clause (e).
On the other hand, if the premises have been regularly and openly used for non residential purposes, the knowledge and constant of the landlord, unless proved to the contrary, are ordinarily presumed and in that event the Explanation would be of no avail to save the ground under clause (e).
In the present case, it is not disputed that the premises had been let for residential purposes, but it is also beyond doubt that to the knowledge of the landlord the premises have been regularly used by the tenant not only for her own residence but also for her foreign guests.
The landlord has at all material times known or is presumed to have known that foreign students have been staying with the appellant as her paying guests and that she has been ever since 1961 running a boarding house in the premises.
At no time did the landlord object to the user of the premises by the appellant for such purpose.
The continued user of the building ever since 1961 for the purpose of lodging paying guests shows that the respondent landlord and her father have not only been aware of such user of the building, but have also impliedly consented to such user.
This presumption is irresistible from the evidence on record.
Such user takes the premises in question out of the ambit of `premises let for residential purposes ' so as to exclude the ground contained in clause (e).
We are fortified in our conclusion by the views expressed by this Court in Dr. Gopal Dass Verma vs Dr. S.K. Bhardwaj & Anr., ; and Kartar Singh vs Chaman Lal & Ors., SC (1969) IV All India Rent Control Journal 349.
The position would have been probably different, and the Explanation would have been still available, had foreign guests been lodged only occasionally and for short periods, even if it be on the basis of payment to cover expenses.
All this is a question of intention.
Was it an occasional accommodation of paying guests consistently with the character of the premises as a private residence? The evidence on record leaves no doubt that the premises have been regularly used by the appellant as a boarding house and not as a private 480 residence in the ordinary acceptation of the term.
She has in fact been carrying on, in the words of Romer, J., "a species of business".
See Hobson vs Tulloch [1898] 1 Chancery Division 424.
See also Thorn & Ors.
vs Madden and Tendler vs Sproule [1947] 1 All E.R. 193.
In the absence of any question of law, much less any substantial question of law, the High Court was not justified in reversing the concurrent findings of the statutory authorities.
In the circumstances, we set aside the impugned judgment of the High Court and restore the orders of the Additional Rent Controller dated 29.9.1976 and Rent Control Tribunal dated 18.11.1978.
The appeal is allowed in the above terms with the costs of the appellant throughout.
N.V.K. Appeal allowed.
| The respondent was the daughter of the original landlord who had let out the premises to the appellant on October 1, 1961.
She purchased the property from her father on June 27, 1964 and thus stepped into his shoes as the `landlord ' as defined under section 2 (e) of the Delhi Rent Control Act, 1958.
The respondent sought eviction of the appellant from the demised premises on the ground of personal bonafide requirement.
The appellant resisted the eviction petition on the grounds that the premises were not let out for residential purpose only but for commercial purpose also i.e. for keeping foreign students as paying guests, and that the respondent does not have a bonafide need or requirement as such.
Relying upon the Rent Note and the appellant 's letters dated October 7, 1961 and August 18, 1962 addressed to the respondent 's father, and the earlier proceedings between them for eviction of the appellant on the ground of sub letting the premises for commercial purpose, both the statutory authorities the Additional Rent Controller and the Rent Control Tribunal found that the premises which had also been used incidentally for commercial purposes so as to exclude the application of section 14(1) (e) read with the explanation thereto, and dismissed the respondent 's application for eviction.
473 This finding was reversed by the High Court in the respondent 's second appeal under Section 29 of the Act.
The High Court found that there was no evidence for the statutory authorities to come to the conclusion, which they did, as regards the premises having been used for commercial purpose.
The High Court accepted the appeal and set aside the judgment and order of the Rent Controller and the Rent Control Tribunal, and allowed the eviction application.
The tenant appealed to this Court by Special appeal.
On behalf of the respondent landlord it was submitted that even if the High Court was wrong in coming to the conclusion that there was no evidence about foreign students being lodged by the tenant, the mere fact that foreign students stayed as paying guests in the premises did not imply either that they lodged with the consent of the landlord or that such lodging amounted to a commercial use of the building, and that the High Court was right in saying that the ground contained in clause (e) of sub section (1) of section 14 was attracted.
Allowing the appeal, and setting aside the judgment of the High Court, and restoring the orders of the Additional Rent Controller and the Rent Control Tribunal, this Court, HELD: 1.
The finding of the High Court is unsustainable.
The High Court was not justified in saying that there was no evidence to hold that the premises were used for boarding and lodging foreign students.
The specific plea of the landlord in the earlier proceedings was that the tenant had sub let the premises for commercial purposes.
The tenant contended that she had never parted with her exclusive possession of any part of the premises and the foreign students who were lodging with her were her paying guests and were not her tenants.
The plea of sub tenancy raised by the landlord was thus rejected on the ground that those who lodged with her were not sub tenants but only paying guests.
[476 G H] 2.
The letters dated October 7, 1961 and August 18, 1962 clearly disclosed the fact that foreign students were lodged in the premises as the guests of the appellant.
The evidence let in by the appellant and not contradicted by the respondent clearly showed that apart from the appellant all the other inmates of the premises were foreign students staying with her as her paying guests.
The appellant testified that she earned her livelihood from the income she received as lodging fee from students who lodged with her, and 474 that is was out of that income that all her personal expenses including the rent payable by her for the premises had been met.
These are the findings of the two fact finding authorities, and those findings are based on oral and documentary evidence.
To have reversed those findings by the High Court in Second Appeal on the ground that they were perverse was totally uncalled for.
[477 A C] 3.
In the absence of any question of law, much less any substantial question of law, the High Court was not justified in reversing the concurrent findings of the statutory authorities.
[480 B] 4.
Clause (e) of section 14(1) of the Act is applicable only if the landlord is in a position to establish that the premises let for residential purposes are required bona fide by him for occupations as residence.
Assuming that the bona fide requirement of the landlord is established the landlord must still prove that the premises had been let for residential purposes.
The Explanation of clause (e) makes it clear that the words `premises let for residential purposes ' included any premises let for residential purposes but used incidentally, without the consent of the landlord, for commercial or other purposes.
The Explanation is attracted when : (1) the premises have been let for residential purposes, (ii) the premises have been used incidentally for commercial or other purposes,and (iii) the landlord has not given his consent for such incidental use for commercial or other purpose.
[478 D F] 5.
If the premises have never been used for any non residential purpose, the aid of the explanation is unnecessary to attract clause (e).
The Explanation is called in aid only where premises let for residential purpose have been used incidentally for commercial or other non residential purpose, but without the consent of the landlord.
[478 G] 6.
If the landlord is in a position to establish that the premises have been let for residential purposes and that he has never consented to the user of the premises for any other purpose, the mere fact that such premises have been incidentally used for commercial or other purposes would not change or affect the residential character of the premises.
[479 A] 7.
If the premises have been regularly and openly used for non residential purposes, the knowledge and consent of the landlord, unless proved to the contrary, are ordinarily presumed and in 475 that event the explanation would be of no avail to save the ground under clause (e).
[479 B] 8.
In the instant case, it is not disputed that the premises had been let for residential purposes, but it is also beyond doubt that to the knowledge of the landlord the premises have been regularly used by the tenant not only for her own residence but also for her foreign guests.
The landlord has as all material times known or is presumed to have known that foreign students have been staying with the appellant as her paying guests and that she has been ever since 1961 running a boarding house in the premises.
At no time did the landlord object to the user of the premises by the appellant for such purpose.
[479 C D] 9.
The continued user of the building ever since 1961 for the purpose of lodging paying guests shows that the respondent landlord and her father have not only been aware of such user of the building, but have also impliedly consented to such user.
This presumption is irresistible from the evidence on record.
Such user takes the premises in question out of the ambit of `premises let for residential purpose ' so as to exclude the ground contained in clause (e).
[479 E] Dr. Gopal Dass Verma vs Dr. S.K. Bhardwaj & Anr., ; ; Kartar Singh vs Chaman Lal & Ors., (SC) (1969) IV All India Rent Control Journal 349; Hobson vs Tulloch, [1898] 1 Chancery Division 424; Thorn & Ors.
vs Madden, [1925] All E.R.321 and Tandler vs Sproula , referred to.
|
Special leave Petition (Civil) No. 10330 of 1991.
From the Judgement and Order dated 3.5.1991 of the Bomaby High ourt in writ Petition No. 186 of 1991.
Kapil Sibal, Makrand D. Adkar and Ejaz Maqbool for the Petitioner.
R.D. Tulpule, D.M. Nargolkar, Ms. Kiran Bhagalia, Ms. V.D.Khanna and A.M. Khanwilkar for the respondents.
Caveator in person.
The following Order of the Court was delivered.
The petitioner, Bhushan Uttam Khare, appeared for the Third Year M.B.B.S. Examination held by University of Poona in the months of October November, 1990.
The results of the said examination were declared on 12.12.1990.
As per University of Poona Ordinance 134A, the petitioner applied for revaluation of his answer papers.
167 students including the petitioner had applied for revaluation.
When the revaluation results were declared, certain students made representation to the University authorities for their answer papers being revaluate from the same set of examiners.
388 On receipt of the representation, the Executive Council of University appointed a Committee to make an enquiry.
On the report of the Committee, the University of Poona decided to cancel the revaluation results and to conduct further revaluation.
This decision of the Executive Council cancelling the earlier revaluation and directing a second revaluation was challenged by the petitioner and others in writ petitions filed before the High Court at Bomaby.
By the impugned judgement dated May 3, 1991 the High Court dismissed the writ petitions.
Aggrieved by the decisions, the petitioners have moved this petition for special leave.
The Poona University Act, 1974 defines the powers and duties of the Executive Council.
The Executive Council may make Ordinances to provide for the conduct of the examinations.
Under Ordinance 134A, the Vice Chancellor shall use his discretionery powers to decide as to whether all the applications received from the candidates, be considered for revaluation or not.
If as a result of revaluation of answer books, the marks obtained by the candidate increase over the original marks by 10% or more of the marks carried by the paper then only the result of revaluation will be accepted by the University.
Application for vertification of answer books will be entertained within a period of two weeks from the date of declaration of the results.
Ordinance 146 reads: "146.
In any case where it is found that the result of an examination has been affected by error, malpractice, fraud, improper conduct or other course of whatsoever nature, the Executive Council shall have power to amend such result in such manner as shall be in accord with the true position and to make such declaration as the Executive Council shall consider necessary in that behalf.
Provided that, but subject to 0.147, no result shall be amended after the expiration of six months from the date of publication of the said result".
In the Third Year M.B.B.S. Examination, 402 students appeared for the examination and 167 students for revaluation of the answer books.
When the representation of students opting for revaluation was placed before the Executive Council as glaring difference was indicated, a Committee was appointed for scrutiny and to reassess theory papers of the students acquiring more than 20% marks after revaluation, from senior teachers of the Faculty.
After scrutiny, it was found out that the marks are closer to the original marks in Medicine, Surgery and Preventive and Social Medicine.
Therefore, the Committee recommended that the entire revaluation of the papers should be cancelled.
This report of the 389 Committee was placed before the Executive Council in its meeting held on March 27, 1991 and the Council by the resolution cancelled the result of the revaluation and directed fresh revaluation.
The second revaluation was done through the examiners outside the State.
The results on revaluation intimated to the Medical College thus stood cancelled and the final results were delcared in pursuance to the second revaluation.
The action of the Executive Council was attacked on the grounds that it was an arbitrary action; that the choice of the examiners was that of the Vice Chancellor as enjoined under the Ordinance and there was no glaring instance of any malpractice, fraud or other course of whatsoever nature to cancel the revaluation and in the absence of any provision in the statute or the Ordinance for a second revaluation, the decision taken by the Executive Council is unwarranted and, therefore, illegal.
In repelling these contentions, the High Court has taken the view that educational institutions set up Enquiry Committee to deal with problem posed by the adoption of unfair means and it is normally within their domestic jurisdiction to decide all questions in the light of the material adduced.
Unless there is an absolute and compelling justification, the Writ Court is slow to interfere with the autonomous activity of the Executive Councils.
The High Court said that the material on record indicated that this is not a case for exercise of jurisdiction under Article 226 of the Constitution and since the Court has found that there is material to reach the decision as regards cancellation of the impugned result of revaluation, the contentions taken up by the petitioner are untenable.
The petitioners have reiterated the submissions that there had been no improper conduct come to light and the absence of any provision for a second revaluation vitiates the whole action.
We have been taken through a comparative chart containing the marks awarded in the original examination, the first revaluation and the second revaluation.
The attempt of the learned counsel for the petitioners had been to make out that the disparity was not such as to indicate any improper practice and that the Committee constituted consisted of four members of whom two were original examiners and the report submitted by that Committee should not have been made the basis for the decision which affected the prospects and career of a large number of medical students.
The learned counsel for the University as also the standing counsel for the State drew our attention to the fact that Executive Council had only cautiously proceeded in the matter and before ordering cancellation a probe was made and the mem 390 bers of the Enquiry Committee were competent persons and that there is no illegality which warrants interference of the Court.
We have considered all the materials placed before us in the light of arguments advanced keeping in mind the well accepted principle that in deciding the matters relating to orders passed by authorities of educational institutions, the Court should normally be very slow to pass orders in its jurisdiction because matters falling within the jurisdiction of educational authorities should normally be left to their decision and the Court should interfere with them only when it thinks it must do so in the interest of justice.
We are satisfied that there had been sufficient material before the Executive Council to proceed in the manner in which it has done.
It is not correct to say that the University had acted on non existing rule for ordering revaluation.
Ordinance 146 is comprehensive enough to include revaluation also for further action.
The fact that two examiners were also the members of the Committee which recommended for revaluation cannot result in any bias even if they had been directly concerned with the original evaluation.
It is true that in the second revaluation also there had been some changes between the original valuation and the revaluation results.
However, it is not so glaring or demonstrably unconscionable as seen in the first revaluation.
We cannot, therefore, accept the contention of the petitioner that the High Court had erred in not granting the relief sought for.
We can only observe that the case of the petitioner, who alone has come before this Court and who had secured higher marks in the first revaluation and is, therefore, aggrieved by the cancellation of the same, would by duly considered in the selection for Post Graduate Course.
The special leave petition is dismissed.
Y.L. SLP dismissed.
| Consequent upon the announcement of his M.B.B.S. Examination result on 12.12.1990, the petitioner alongwith other 166 students, applied for revaluation of answer books under University of Poona Ordinance 134A.
When the revaluation results were declared, certain students made representation to the University Authorities for their answer papers being revalued from the same set of examiners.
The University on consideration of that representation appointed a Committee for scrutiny and to reasses theory papers of the students acquiring more than 20% marks after revaluation, from senior teachers of the Faculty.
After scrutiny, it was found out that the marks are closer to the original marks in Medicine, Surgery and Preventive and Social Medicine.
The Committee therefore recommended that the entire revaluation of the papers should be cancelled.
The Executive Council by a resolution cancelled the result of the revaluation and directed fresh revaluation and the second revaluation was done through the examiners outside the State and the result declared on the basis thereof.
The peritioner and others challenged the aforesaid decision of the Executive Council cancelling the earlier revaluation and directing a second revaluation by means of writ petitions.
It was contended before the High Court on behalf of the petitioners that the action of the Executive Council was arbitrary in as much as there was no malpractice, fraud or anything objectionable to the revaluation as the examiners were chosen by the Vice Chancellor as enjoined under the Ordinance.
Hence the cancellation of revaluation was not proper.
The High Court repelled the two contentions advanced before it and dismissed the writ petitions.
Hence this Petition for Special Leave to appeal.
Dismissing the Petition for special leave to appeal, this Court, HELD: In deciding the matters relating to orders passed by authorities of educational institutions, the Court should normally be 387 very slow to pass orders in its jurisdiction because matters falling within the jurisdiction of educational authorities should normally be left to their decision and the Court should interfere with them only when it thinks it must do so in the interest of justice.
[390 B] Under Ordinance 134A, the Vice Chancellor shall use his discretionary power to decide as to whether all the applications received from the candidates, considered for revaluation or not.
If as a result of revaluation of answer books, the marks obtained by the candidate increase over the original marks by 10% or more then only the result of revaluation will be accepted by the University.
[388 C D] Ordinance 146 is comprehensive enough to include revaluation also for further action.
The fact that two examiners were also the members of the Committee which recommended for revaluation cannot result in any bias even if they had been directly concerned with the original evaluation.
It is true that in the second revaluation also there had been some changes between the original valuation and the revaluation results.
However, it is not so glaring or demonstrably unconscionable as seen in the first revaluation.
[390 D]
|
Civil Appeal No. 503 of 1974.
From the Judgement and order dated 29/30.8.1973 of the Gujarat High Court in Special Civil Application No. 129 of 1973.
Joseph Vellapally and D.N. Mishra for the Appellants.
R.N. Sachthey, Anip Sachthey and Ms. Rashmi Dhariwal for the Respondents.
393 The Judgement of the Court was delivered by R.M. SAHAI, J. Validity of demand, under Section 58A of the Bombay Prohibition Act, for maintenance of excise staff for supervision of the manufacture of industrial alcohol was assailed on lack of legiislative competence of the State.
Section 58A is extracted below: "58A: The State Government may by general or special order direct that the manufacture, import, export, transport, storage, sale, purchase, use, collection or cultivation of any intoxitant, denatured spirituous preparations, hemp, Mowra flowers, or molasses shall be under the supervision of such Prohibition and Excise or Police Staff as it may deem proper to appoint, and that the cost of such staff shall be paid to the State Govt.
by person manufacturing, importing, exporting, transporting, storing, selling, purchasing, using, collecting or cultivating the intoxicant, denatured spirituous preparation, hemp, Mowra flowers or molasses: "Provided that the State Government may exempt any class of persons or institutions from paying the whole or any part of the cost of such staff".
Rule 2 of Bombay Prohibition (Manufacture of Spirit) (Gujarat) Rules, 1963, framed by the State of Gujarat empowered the director to grant a licence for working of the distillery for the manufacture of the spirit.
Condition Nos.2 and 3 of the licence issued provided for employment of excise staff for supervision of the operations of manufacture and storage of spirit as well as for payment of salary and allowances to staff so posted.
Attack was not on power to supervise or even the right to post staff for supervision but on demand of cost of maintenance of such personnel.
Levy was upheld, by the High Court, as fee under entry 8 of List II of the VIIth Schedule read with entry 66 of the same list.
In Synthetics & Chemicals Ltd. & Ors.
vs State of U.P. & Ors.
, ; a Constitution Bench after exhaustively reviewing the constitutional entries and various decisions held that industrial alcohol being unfit for human consumption as no levy on it could be made by a State either under Entry 51 or Entry 8 of List II of VIIth Schedule.
Nor such levy could be justified on doctrine of privilege or police power.
Therefore it was urged that the order of High Court was liable to be set aside and the provision was liable to be struck down as ultra vires.
Such understanding of the judgement is not warranted.
The Constitu 394 tion Bench while distinguishing between potable and non potable alcohol and holding that the State had no privilege in it upheld the power of State to regulate and ensure that non potable alcohol was not diverted and misued.
According to learned counsel since the entire judgment of the High Court proceeded on privilege theory it cannot withstand the principle laid down in Synthetic & Chemical 's case.
Levy as a fee under Entry 8 of List II of VIIth Schedule or excise duty under Entry 51 are different than cost of supervision charged under Section 58A.
The former has to stand the test of levy being in accordance with law on power derived from one of the constitutional entries.
Since Synthetic & Chemical 's case finally brought down the curtain in respect of industrial alcohol by taking it out of the purview of either Entry 8 or 51 of List II of VIIth Schedule of the competency of the State to frame any legislation to levy any tax or duty is excluded.
But by that a provision enacted by the State for supervision which is squarely covered under Entry 33 of the concurrent list which deals with production, supply and distribution which includes regulation cannot be assailed.
The Bench in Synthetic & Chemical 's case made it clear that even though the power to levy tax or duty on industrial alcohol vested in the Central Government the State was still left with power to lay down regulations to ensure that non potable alcohol,that is, industrial alcohol, was not diverted and misused as substitute for potable alcohol.
This is enough to justify a provision like 58A.
In paragraph 88 of the decision it was observed that in respect of industrial alcohol the States were not authorised to impose the impost as they have purported to do in that case but that did not effect any imposition of fee where there were circumstances to establish that there was quid pro quo for the fee nor it will affect any regulatory measure.
This completely demolishes the argument on behalf of appellant.
Principle of occupied field precluded State from trenching on any power which was already covered by central legislation.
But in absence of any provision in Industries (Development & Regulation) Act touching upon regulation or ensuring that industrial alcohol was not diverted the state was competent to legislate on it under Entry 3 List III of VIIth Schedule which is extracted below, "33.
Trade and Commerce in, and the production, supply and distribution of (a) The products of any industry where the control of such industry by Union is declared by Parliament by Law to be 395 expedient in the public interest, and imported goods of the same kind as such products.
(b). . . . . (c). . . . . (d). . . . . (e). . . . .
Trade and commerce and supply and distribution of goods are exclusive state subjects under entry 26 and 27 of List II of VIIth Schedule.
But both are subject to entry 33 of List III.
That is what is covered in entry 33 is excluded from list II.
And the power to legislate in respect of what is covered by list III is enjoyed both by Central and State subject to Article 246 of the Constitution.
Since 58A can be traced to regulatory power of the State exercisable under entry 33 the challenge to its validity is liable to fail.
It could not therefore be successfully claimed that it was violative of any constitutional provision or the section was invalid in view of the ratio in Synthetic & Chemicals ' case.
Failing on the principal submission the learned counsel urged that no cost for supervision could be demanded unless the power to issue licence for production was found to exist in State.
Reliance was placed on observations in Synthetic & Chemical 's case.
Since it stands answered by the constitution Bench itself it is unnecessary to dilate on it.
Suffice it is to extract the following observation, "The position with regard to the control of alcohol industry has undergone material and significant change after the amendement of 1956 to the IDR Act.
After the amendment, the State is left with only the following powers to legislate in respect of alcohol: (a). . . . . . (b) It may lay down regulations to ensure that non potable alcohol is not diverted and misued as a substitute for potable alcohol.
(c). . . . . . (d) However, in case State is rendering any service, as distinct from its claim of so called grant of privilege, it may charge fees based on quid pro quo".
Feeble attempt was made to challenge absence of any quid pro quo.
But no serious effort was made in High Court is clear from following observation.
: 396 "If any quid pro quo is to be established between the quantum of the levy and the services rendered it must be established between the actual cost of supervision paid by a manufacturer or a businessman and the quantum of profits made by him by lawfully carrying on his business into a prohibited commodity.
We have no doubt in our mind that the annual payment of a few thousand rupees by way of cost of supervision under Section 58A brings to each of the three petitioners profits which must be quite disproportionate in size.
We need not go into the details of this aspect because it has not been contended before us that if the levy under Section 58A is held to be a fee, there is no sufficient quid pro quo between the quantum of the impost and the services rendered to the manufacturer or businessman.
" In the result, this appeal fails and is dismissed with costs.
G.N. Appeal dismissed.
| Rule 2 of the Bombay Prohibition (Manufacture of Spirit) (Gujarat) Rules, 1963, framed by the State Government in exercise of powers conferred under Section 58A of the Bombay Prohibition Act, dealt with grant of licence for working of distillery for the manufacture of spirit.
One of the conditions for grant of licence was that the cost of maintenance of staff, viz. payment of salary and allowances, was to be paid to the Government by the licensees.
This was challenged by the appellant and the High Court upheld the levy as being within the legislative competence of the State.
Aggrieved against the High Court 's order, the appellant has preferred the present appeal.
The appellants contended that since the judgement appealed against proceeded on privilege theory, it cannot withstand the principle laid down in Synthetic & Chemicals, case; and that levy as a fee under Entry 8 of list II of Seventh Schedule or excise duty under Entry 51 is different than the cost of supervision charged under Section 58A of the Bombay Prohibition Act.
Dismissing the appeal, this Court, 392 HELD: 1.1 Even though the power to levy tax or duty on industrial alcohol is vested in the Central Government, the State was till left with power to lay down regulations to ensure that non potable alcohol, that is, industrial alcohol, was not diverted and misused as substitute for potable alcohol.
This is enough to justify a provision like 58A of the Bombay Prohibition Act.
[394 D] 1.2 Principle of occupied field precluded State from trenching on any power which was already covered by Central legislation.
But in absence of any provision in Industries (Development & Regulation) Act touching upon regulation or ensuring that industrial alcohol was not divered, the State was competent to legislate on it under Entry 33 list III of VII Schedule.
[394 F G] 1.3 Trade and commerce and supply and distribution of goods are exclusive state subject under entries 26 and 27 of List II of VII Schedule.
But both are subject to entry 33 of List III.
What is covered in entry 33 is excluded from List II.
And the power to legislate in respect of what is covered by List III is enjoyed both by Central and State legislatures subject to Article 246 of the Constitution.
Since section 58A can be traced to regulatory power of the State exercisable under entry 33 of List III the challenge to its validity is liable to fail.
Thus, Section 58A of the Bomaby Prohibition Act is valid and is not violative of any constitutional provision.
[395 B C].
1.4 It cannot be said that no cost for supervision could be demanded unless the power to issue licence for production was found to exist in State.
[395 d] Synthetics & Chemicals Ltd. & Ors., vs State of U.P & Ors. ; , followed.
|
N: Criminal Appeal Nos.273 74 of 1980.
From the Judgment and Order dated 19.1.1980 of the Madhya Pradesh High Court in Crl.
A. Nos.
107 of 1970 and 1 of 1971.
468 R.L. Kohli and K.C. Kohli for the Appellants.
Uma Nath Singh for the Respondent.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Bhagwan Swaroop was charged under Section 302 IPC for the murder of Man Singh and under Section 307 IPC for an attempt to murder Shahid.
He was further charged under section 451 IPC for committing trespass and also under section 25 A of Arms Act.
Ramswaroop, father of Bhagwan Swaroop, was charged under sections 109/302, 451 IPC and 29 of the Arms Act.
Ramswaroop was acquitted of all the charges by the trial court.
Bhagwan Swaroop was, however, convicted under section 302 IPC and was sentenced to imprisonment for life.
He was acquitted of the other two charges.
The appeal filed by Bhagwan Swaroop was dismissed by the High Court.
The High Court allowed the State appeal and further convicted Bhagwan Swaroop under section 307 IPC and section 25 A Arms Act.
He was sentenced to five years and one year rigorous imprisonment respectively for the said offences.
This appeal before us by way of special leave is by Bhagwan Swaroop against his conviction and sentence on the three counts.
Deceased Man Singh was the son of Shahjor Singh and brother of Babusingh.
They were living in the house owned by Ramswaroop and his sons.
There was dispute between the parties regarding a piece of land which according to the accused, the complainant party was forcibly occupying.
A notice had been served upon Shahjor Singh by the accused, to vacate the said encroachment.
According to the prosecution on May 11, 1969 at about 2.45 p.m. accused Ramswaroop had an altercation with Babusingh, at a place called Gauri and thereafter he rushed the complainant party and started dismantling the tin shed in the disputed land.
Shahjor Singh sent his son Babusingh to the police station to lodge a report.
Meanwhile Man Singh deceased came at the spot and gave a push to Ramswaroop who as a result fell down.
He got up immediately and shouted for his son Bhagwan Swaroop and asked him to bring the rifle and kill the complainant party.
Bhagwan Swaroop rushed to his house, brought a gun and fired a shot hitting Man Singh.
Bhagwan Swaroop fired the second shot which hit Shahid.
Man Singh fell down and thereafter complainant Shahjor Singh took out a lathi and gave breathing to Ramswaroop.
Man Singh succumbed to the gun shot injury.
Both the accused denied the commission of the crime.
Accused Ramswaroop stated in his examination as under: 469 "I found Babusingh gambling in my garden.
I asked him as to why he is doing so in the garden, he started abusing me.
I slapped him.
His father came there both of them abused me and then left the place.
I told him that I will make the report of the incident to the police station.
When I reached near the house of Shahjor Singh on my way to the Police Station he along with his sons caught me and started beating me with lathies.
Shahjor Singh brought an axe, when he was about to use his axe on me there was gun fire.
" Accused Bhagwan Swaroop took the plea of alibi which has been rejected by both the courts below.
We are of the view that the said plea was rightly rejected.
The trial court did not believe the prosecution version in toto.
The trial court found that the "prosecution tried to indulge in exaggeration, misrepresentation and at times suppression of facts without any meaning".
The trial court further concluded as under: "The defence version that Babusingh was gambling alongwith others in the garden of the accused Ramswaroop appears correct.
Ramswaroop went there and questioned Babusingh.
There was altercation and use of hot words.
Admittedly Shahjorsingh P.W. I came there and Babusingh accompanied him back to his house.
Ramswaroop further stated in his examination that he gave one slap to Babusingh.
Babusingh as P.W.9 stated that he was given three or four slaps by Ramswaroop.
Thus the fact that Babusingh was slapped, stand established in the case".
The part of the prosecution story, that the accused Ramswaroop rushed towards the house of Shahjor Singh and reached there before the arrival of Shahjor Singh, was also dis believed by the trial court.
Regarding the actual occurrence, it is not disputed that Ramswaroop was given four simple injuries by the complainant.
The prosecution case is that the injuries were given after the gun shot had been fired whereas the defence version is that the gun shot was fired while lathi injuries were being given to Ramswaroop.
Trial court considered the statements of Banne Khan, P.W.6, Shahid P.W.8, Sarfuddin P.W.11, Safaat Ahmad D.W.1 and Hamid Ahmed D.W.3 and came to the following conclusion: "Any way this one fact is clear from the evidence of these eye witnesses that Ramswaroop was put to beating, then there was gun fire and Bhagwanswaroop was seen on the spot" 470 The trial court on appreciation of the evidence produced by the prosecution and the complainants came to the conclusion that the following facts stood established from the evidence: "Ramswaroop, came near the house of Shahjorsingh.
There was exchange of abuses between Shahjorsingh and Ramswaroop.
Ramswaroop tried to remove the tin shed of Gonda.
He was pushed aside by Mansingh and then put to beating by lathies.
" It was under these circumstances that Ramswaroop asked his son to fire the gun shot.
The question for our consideration is whether on the facts of this case the appellant can claim right of private defence.
The learned trial court came to the conclusion that since minor injuries were caused by the lathi there was no basis for entertaining a reasonable apprehension that Ramswaroop would be killed or hurt grievously and as such the plea of self defence was rejected.
The High Court upheld the finding of the trial court in the following words: "No doubt the respondent Ramswaroop had injuries on his person.
There were two simple injuries caused by hard and blunt object and the other two could be caused by fall for which there is definite prosecution evidence that the respondent Ramswaroop was pushed and he fell down.
These injuries on him could not give rise to any apprehension of either grievous hurt or death.
" We do not agree with the courts below.
It is established on the record that Ramswaroop was being given lathi blows by the complainant party and it was at that time that gun shot was fired by Bhagwan Swaroop to save his father from further blows.
A lathi is capable of causing a simple as well as a fatal injury.
Whether in fact the injuries actually caused were simple or grievous is of no consequence.
It is the scenario of a father being given lathi blows which has to be kept in mind and we are of the view that in such a situation a son could reasonably apprehend danger to the life of his father and his firing a gun shot at that point of time in defence of his father is justified.
We, therefore, set aside the finding of the courts below on this point and hold that Bhagwan Swaroop fired the gun shot to defend the person of his father.
The trial court on the basis of the evidence on the record, including that of Dr. Mukherjee P.W.5, came to the conclusion that only one shot was fired by Bhagwan Swaroop.
According to the trial court Shahid was accidentally hit by the pellets spread by the gun shot.
It was on these findings that trial court acquitted Bhagwan Swaroop of the charge 471 under 307 IPC.
We agree with the trial court and hold that the High Court was not justified in reversing the same.
The High Court further grossly erred in setting aside the acquittal of Bhagwan Swaroop under section 25 A of the Arms Act.
Using the licensed gun of his father under the circumstances of this case cannot be considered possessing an arm without a licence.
We agree with the reasoning and findings of the trial court and hold that High Court was not justified in setting aside the acquittal of Bhagwan Swaroop under Arms Act.
For the reasons given above we allow the appeal, set aside the conviction of appellant Bhagwan Swaroop under section 302 IPC, 307 IPC and 25 Arms Act and acquit him on all these counts.
He is already in bail.
His bail bonds are discharged.
V.P.R. Appeal allowed.
| The deceased along with his father and brother was living in the house owned by the accused appellant 's father.
There was dispute between the accused and the complainant party regarding a piece of land which according to the accused, the complainant party was forcibly occupying.
On May 11, 1969 at about 2.45 p.m. appellant 's father had an altercation with deceased 's brother.
Thereafter he went to deceased 's house and abused the complainant party and started dismantling the tin shed on the disputed land.
The prosecution 's case was that the deceased 's brother was sent to police station to lodge a report.
The deceased came at the spot and gave a push to appellant 's father.
He fell down.
Getting up, immediately, shouted for appellant and asked him to bring the rifle and kill the complainant party.
The appellant brought a gun and fired a shot hitting the deceased.
The appellant fired the second shot which hit another.
The deceased fell down and thereafter the deceased 's father took out a lathi and gave beating to appellant 's father.
The deceased succumbed to the gunshot injury.
Appellant was charged under Section 302, 307, 451 IPC and also under section 25 A of Arms Act.
The father of appellant was charged under sections 109/302, 451 IPC and 29 of the Arms Act.
The appellant and its father denied the commission of the 467 crime.
Appellant 's plea of alibi was rejected by the trial court.
It also did not believe the prosecution case in toto.
The appellant 's father was acquitted of all the charges by the trial court.
It convicted the appellant under section 302 IPC and he was sentenced to imprisonment for life, but he was acquitted of the other charges.
The High Court allowed the State 's appeal convicting the appellant under section 307 IPC and section 25 A Arms Act also.
He was sentenced to five years and one year rigorous imprisonment respectively for the offences.
The appellant filed this appeal before this Court by way of special leave.
On the question, whether on the facts of the case, the appellant accused can claim right of private defence, allowing the appeal, this Court, HELD:1.
It is established on the record that the appellant 's father was being given lathi blows by the complainant party and it was at that time that gun shot was fired by the appellant to save his father from further blows.
A lathi is capable of causing a simple as well as a fatal injury.
Whether in fact the injuries actually caused were simple or grievous is of no consequence.
It is the scenario of a father being given lathi blows which has to be kept in mind.
In such a situation a son could reasonably apprehend danger to the life of his father and his firing a gun shot at that point of time in defence of his father is justified.
The appellant fired the gun shot to defend the person of his father.
[470 E G] 2.
Using the licensed gun of his father under the circumstances of the case cannot be considered possessing an arm without a licence.
The High Court grossly erred in setting aside the acquittal of the appellant under section 25 A of the Arms Act.
[471 A B]
|
Civil Appeal No. 3498 of 1991.
From the Judgment dated 17/18.7.1991 of the Bombay High Court in writ petition No. 2038 of 1991.
G. Ramaswamy, Attorney General, V.R. Reddy, Addl.
Solicitor General, Anil B. Divan, K.S. Cooper and T.R. Andyaranjina, R.F. Nariman, S.A. Divan, B.R. Agrawala, Vinod B. Agarwala, P.N. Kapadia, Pramod B. Agarwala, section Krishnachandani, Dr. Sumat Bhardwaj, Ms. Sandhaya Mehta for M/s Gagret & Co., Ms. Sushma Suri, A.M. Khanwilkar, M.P. Bharucha, R. Karanjawala, Mrs. M. Karanjawala, Mrs. V.S. Rekha, A.R. Amin, K.J. John, Dr. A.M. Singhvi and Ajit Pudussery for the appearing parities.
493 The Judgment of the court was delivered by THOMMEN, J.
The question which aries in this appeal from the judgment of the Bombay High Court in writ petition No. 2038 of 1991 is, when does a company become liable to pay interest under section 73 (2A) of the (the "Act").
The answer to it depends on the answer to the more fundamental and far more difficult question, i.e. when does a company become liable to repay the money received from applicants for shares or debentures in excess of the aggregate of the application money relating to the allotted shares or debentures.
If such excess application money is not repaid within eight days from the days on which the company and every director `who is an officer in default ' is liable to pay insterest at the specified rates.
The period of eight days has to be reckoned in accordance with section 74.
But it is not clear when exactly does the liability to repay the excess money arise.
Does it arise on the date of the allotment, as found by the High Court, or on the expiry of 10 weeks from the date of closing of the subscription lists, referred to in sub section (1A) of section 73, or, as contended by the company, on the expiry of the period mentioned in the prospectus? Whichever is the correct date, interest becomes payable by the company and its directors `in default ', if the excess money is not repaid within the period of grace of eight days from the date on which the company becomes liable to pay it.
When does that liability arise is the crucial question.
We shall presently examine the relevant provisions of the section, but before we do so, it may be of interest to refer briefly to the circumstances in which the alleged liability of the appellant company has arisen.
The appellant is a company registered under the provisions of the .
The company obtained the consent of the Government of India vide its Order dated May 31, 1990 to issue 7,20,00,000 equity shares of Rs. 10 each at par and 33, 90,000 fourteen per cent secured redeemable non convertible debentures of Rs. 100 each at par.
This Order was, made by the Government in exercise of its power under the .
One of the conditions attached to the order reads: "The company shall scrupulously adhere to the time limit of 10 weeks from the date of closure of the subscription list for allotment of all securities and despatch of allotment letters/certificates and refund orders.
" A prospectus was issued by the company on 12th July, 1990 for the issue of the aforesaid shares and debentures.
The prospectus stated, amongst 494 other things, that the company had sought the permission of the stock exchanges at Indore, Ahmedabad, Bombay, Calcutta and Delhi for dealing in equity shares and debentures in terms of the prospectus; that interest at the rate of 15 % per annum on the excess application money will be paid to the applicants as per the guidelines issued by the Ministry of Finance on July 21, 1983 and September 27, 1985; that the public issue will open on August 20, 1990 and close on August 23, 1990; and that it would not be extended beyond August 31, 1990.
When the issue thus opened on August 20, 1990, it received overwhelming response as a result of which it was about 40 times over subscribed.
The company received 26,32,894 applications for equity shares together with an aggregate sum of Rs. 225,25,51,247 in respect of a public issue of Rs. 25 crores.
In view of this public response, the share issue was close on 23rd August, 1990.
On October 15, 1990 the board of directors of the company approved the allotment of shares.
Shortly thereafter, it secured the requisite permissions of the stock exchanges at Indore, Ahmedabad, Bombay, Calcutta and Delhi to deal in the shares offered in the prospectus.
These permissions were obtained prior to November 1, 1990.
The company had to despatch 25,50,604 refund orders of an aggregate value of well over Rs. 200 crores.
These orders which were printed in Bombay were meant to be despatched from Delhi.
The company despatched 8,55,226 refund orders from the Sarojini Nagar Post Office , New Delhi at the rate of approx.
1,00,000 refund orders per day.
On 26th October, 1990 a consignment of 6,69,999 refund orders had been despatched from Bombay to Delhi in a brake van of the Paschim Express.
A fire broke out on the way in the brake van as a result of which many refund orders were destroyed.
Almost 50 % of the consignment was missing after the accident.
In consultation with the Madhya Pradesh Stock Exchange and the Company 's Bank,instructions were issued by the Company to stop payment of all refund orders with a view to avoiding any possible fraud or misuse.
As a result of the countermanding of all the multi colored refund orders and the printing of new refund orders with distinctive colours etc., delay occurred in the despatch of newly printed orders.
At the request of the company, the Madhya Pradesh Stock Exchange granted it extension of time till November 30,1990 for issuing the refund orders.
Time for this purpose was further extended by that stock exchange till 19th December, 1990.
The Bombay Stock Exchange, however, refused to grant extension of time.
It further informed the company that it was bound to pay interest by reason of the delay in the despatch of refund orders.
The Securities and Exchange Board of India, the second respondent, called upon the company by its letter dated March 13,1991 to pay interest to the investors at varying rates for the period from 1st November (which is when the period of 10 weeks from the date of the closure of the subscription lists expired) till the date of posting of 495 the refund orders.
The refund orders were not despatched until 12th November, 1990.
The Government of India and the Securities and Exchange Board of India insisted that the company should pay interest to the investors for the period of the delay in making the refund in accordance with the provisions of section 73.
Apprehending that the Government might direct the stock exchanges to delist the shares of the company by reason of its failure to pay interest, and also initiate actions against it, the company filed a petition in the High Court under Article 226 of the Constitution, but it was dismissed by the impugned judgment.
The Bombay Stock Exchange seems to have understood that the liability of the company arose on the expiry of 10 weeks after the date of closure of the subscription lists.
Paragraph 23.2 of its publication of March 1991 quotes the condition mentioned in the Order of the Government of India dated 31.5.1990(which we have extracted above)to the effect that the liability of the company for despatch for refund orders arose only at the end of 10 weeks from the date of closure of the subscription lists.
In the High Court, the Union of India and the Securities and Exchange Board of India appeared to have taken a divergent stand on the question.
While the Government of India submitted (as disclosed in its affidavit, and as referred to by the High Court in the impugned judgment) that the liability to pay the excess amounts arose on the expiry of 10 weeks from the date of closure of the subscription lists, the Securities and Exchange Board of India contended that the liability arose on the date of allotment.
In the present appeal, however, the Union of India support the stand of the Securities and Exchange Board of India.
On the other hand, the company contended that, on the facts of this case, the liability arose only at the end of the period as extended by the Stock Exchange at Indore in terms of the prospects.
The High Court held: ".
In our judgment, there is no difficulty in fixing the date from which the liability of the company to make repayment arises.
In a case where the allotment is completed before expiry of the 10 weeks, then from the date of allotment and in case where the allotment is not completed till the expiry of ten weeks from the date of closure of the subscription list, then from the date of expiry of ten weeks. " The reason stated by the High Court for coming to this conclusion is that the company knew that the excess amount was on the date of allotment and there was no reason why the company should delay payment till the end of 10 weeks in case the allotment was made earlier.
The High Court says 496 ".
In cases where the allotment is completed before expiry of ten weeks, then the Company very well knows the excess amount, which is to be repaid and consequently the liability accrues forthwith to repay the said amount.
In case the Company fails to repay the amount within the grace period of eight days, then the Company would be liable to pay interest to the investor inspite of the fact that period of ten weeks from the date of closure of the subscription list is not over. " The High Court thus held that the company was liable to pay interest at the prescribed rates for the period of delay and the liability for the same arose on the expiry of 8 days from the date of allotment of the shares, and not from the date of expiry of 10 weeks, where allotment was made earlier to that date.
The High Court did not accept the contention of the company that the time having been extended by the Madhya Pradesh Stock Exchange till 19th December, 1990 in accordance with the relevant provisions of the prospectus, the company had no liability to pay interest.
The question for consideration, therefore, is whether the High Court was right in discarding, for computation of interest, the time limit of 10 weeks running from the date of closure of the subscription lists, notwithstanding that the allotment had been made, as in the present case, prior to the date of expiry of 10 weeks.
`Listing means the admission of the securities of a company to trading privileges on a Stock Exchange.
The principal objectives of listing are to provide ready marketability and impart liquidity and free negotiability to stocks and shares; ensure proper supervision and control of dealings therein; and protect the interests of shareholders and of the general investing public.
(See para 1.1.
of the `Stock Exchange Listing ', publication of Bombay Stock Exchange of March, 1991).
A public limited company has no obligation to have its shares listed on a recognised stock exchange.
But if the company intends to offer its shares or debentures to the public for subscription by the issue of a prospectus, it must, before issuing such prospectus, apply to one or more recognised stock exchanges for permission to have the shares or debentures intended to be so offered to the public to be dealt with in each such stock exchange in terms of section 73.
We shall now read the provisions of section 73 insofar as they are material: Sub section (1) of section 73 read: 497 "section 73 (1).
Every company intending to offer shares or debentures to the public for subscription by the issue of a prospectus shall, before such issue, make an application to one or more recognised stock exchanges for permission for the shares or debentures intending to be so offered to be dealt with in the stock exchange or each such stock exchange.
" This sub section was inserted by the Companies (Amendment) Act, 1988 with effect from 15.6.1988.
It has application only to a company intending to offer shares or debentures to the public for subscription by the issue of a prospectus.
Until this sub section was inserted, listing of public issues was not compulsory.
This original sub section (1) was substituted by the Companies (Amendment) Act, 1974 with effect from 1.2.1975, and substituted again and renumbered as the present sub section (1A) with effect from 15.6.1988 by the Companies (Amendment) Act, 1988.
Sub section (1A) reads: "73(1A).
Where a prospectus, whether issued generally or not, states that an application under sub section (1) has been made for permission for the shares or debentures offered thereby to be dealt in one or more recognised stock exchanges, such prospectus shall state the name of the stock exchange or, as the case may be, each such stock exchange, and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of ten weeks from the date of the closing of the subscription lists: Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the shares or debentures to be dealt in on that stock exchange has been preferred under section 22 of the (42 of 1956), such allotment shall not be void until the dismissal of the appeal.
" This provision makes it necessary for the company to state in its prospectus the name of each of the recognised stock exchanges whose permission for listing has been sought by the company.
Any allotment of shares will become void if permission is not granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of 10 weeks from the date of the closing of the subscription lists.
The validity of the allotment is thus made dependent on securing the requisite 498 permission of each stock exchange whose permission has been sought.
The liability to repay the application money arises only upon refusal of the stock exchange to grant the permission sought by the company before the expiry of 10 weeks from the date of closing of the subscription lists.
This is clear from sub section (1A) read with sub section (5).
There is a deemed refusal if permission is not granted by the stock exchange before the expiry of 10 weeks from the date of closing of the subscription lists, and upon the expiry of that date, any allotment of shares made by the company becomes void.
However , from the decision of the stock exchange refusing permission, an appeal will lie under section 22 of the .
Pending the decision in appeal, the allotment made would not be void, and the decision of the concerned stock exchange is made dependent on the result of the appeal.
What is significant is that it is the legislative intent to delay the result postulated under sub section (IA), i.e., rendering the allotment void, until the said period of 10 weeks has expired or until the dismissal of the appeal.
Sub section (2), as amended in 1988, reads: "section 73(2).
Where the permission has not been applied under sub section (I) or, such permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money." This sub section requires the company to repay `forthwith ' all money received from applicants in response to the company 's prospectus either where the company has not applied for permission of the recognised stock exchange for listing or where permission has been applied for but not granted.
If the company has issued a prospectus without seeking permission for listing, it has clearly acted in violation of the mandatory provisions of the Act, and the company has no right to receive or retain any amount by way of subscription in pursuance of its prospectus.
On the 499 other hand, where permission has been sought, but has not been obtained within 10 weeks from the date of closing of the subscription lists, thereby rendering void any allotment made, the company is bound to repay all such money forthwith, but without interest.
In the event of such money not being repaid within 8 days after the liability to repay arose, the company and every director of the company who is `an officer in default ' are made jointly and severally liable to pay the principal amount as well as interest thereon from the date of expiry of the said 8 days.
The interest is payable at the prescribed rates varying from 4% to 15%, dependent on the length of the period of delay in making such repayment.
This sub section thus postulates two circumstances in which interest becomes payable, namely, where the permission has not been applied for before issuing the prospectus and the company had thus acted in violation of the law or where permission, though applied for, has not been granted.
In the former case, apart from the other consequences which may flow from the company 's disobedience of the law, the liability to pay interest arises as from the date of receipt of the amounts, for the company ought not to have received any such amount in response to the prospectus issued by the company in disobedience of the requirements of sub section (I).
In the latter case, the liability to pay interest does not arise until the expiry of 8 days after the company became liable to repay the amounts received by reason of its failure to obtain the necessary permission as referred to in sub section (IA).
It may be mentioned in this connection that, prior to the amendment of 1988, sub section (2) did not make the company liable to pay interest on the amounts repayable by it in terms thereof, but only the directors were liable for payment of such interest, apart from the principal amounts.
The proviso to the sub section as it stood prior to 1988 exempted a director from such liability if the default was not caused by his misconduct or negligence.
As a result of substitution of a proviso of the sub section by the Amendment Act of 1988, the company and every director of the company `who is an officer in default ' are made jointly and severally liable for payment of the principal amount as well as interest.
We shall now read the crucial provision which is sub section (2A): "S.73 (2A).
Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the application moneys relating to the shares or debentures in respect of which 500 allotments have been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if such money is not repaid within eight days, from the date the company becomes liable to pay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed having regard to the length of the period of delay in making the repayment of such money".
Sub section (2A) was inserted by the Companies (Amendment) Act, 1974 which came into force w.e.f. 1.2.1975.
Section 73, as it stood prior to 1975, contained no specific provision compelling the company or its directors to repay the amounts received in excess of the aggregate of the application money relating to the shares or debentures in respect of which allotments have been made.
Sub section(2A) was inserted to cover cases where permission of the stock exchange has been obtained, but the shares or debentures have been over subscribed and the company is consequently in possession of excess amounts.
The sub section, as inserted in 1975, made the company liable to repay the excess amounts forthwith, but did not make the company liable to pay interest on such excess amounts.
But a liability was cast on the directors.
If the excess amount was not repaid within 8 days from the day the company became liable to repay it, the directors were made jointly and severally liable to repay such amount with interest.
The proviso to sub section (2A), which like the proviso to sub section (2), as they stood prior to 1988, provided that a director was not liable to repay the money with interest if he proved that the default in payment of the money was not on account of any misconduct or negligence on his part.
Owing to the absence of a specific provision imposing liability on the company to pay interest on the over subscribed amounts, and also owing to the absence of any provision to exempt directors who were not directly in charge of the administration of the company and the need to make listing of public issues compulsory, further amendments to the section became necessary.
Accordingly the Amendment Act of 1988 introduced several amendments to section 73, one of them being the substitution of a part of sub section (2A) making the company and every director of the company who is `an officer in default ' jointly and severally liable to repay the excess money with interest.
A `director of a company who is an officer in default ' appearing in sub section (2A) must be understood with reference to 501 the definition of `an officer who is in default ' contained in section 2(31) read with section 5.
This definition includes the managing director or the wholetime director of a company.
So understood, the liability imposed under sub section (2A) on a director of the company falls only upon a director who is `an officer in default ', as defined under section 2(31) read with section 5(a) (b), and not upon any other director.
The nominees of the Government or financial institutions on the board of directors of the company, but not directly in charge of its administration as full time directors, are exempted from personal liability.
The rate of interest payable under sub section (2A) is, an seen above, not less than 4 per cent and not more than 15 per cent.
The sub section requires the company to repay the over subscribed amounts.
These amounts are paid by persons who have responded to the prospectus which was issued by the company after making an application for permission in accordance with sub section (1).
But when the subscription lists are closed, the excess money is ascertained with reference to the actual allotments made and so it becomes repayable as the company has no right to retain it.
The question is, for the purpose of computing interest, did it become repayable upon the date of allotment, as found by the High Court and as contended by the respondents, or on some other day.
The Additional Solicitor General, appearing for the Union of India, Mr. K.S. Cooper, for the Securities & Exchange Board of India, Mr. T.R. Andhyarujina, for the Bombay Stock Exchange and Dr. A.M. Singhvi, for one of the interveners, submit that the liability to repay the excess amount arises on the date of allotment of the shares, for the statute says that the liability arises forthwith and any delay beyond the period of 8 days from the day on which the liability arose attracts interest.
The expression `forthwith ' has to be understood as an immediate liability ascertainable with reference to the date of allotment, but subject to a period of grace of 8 days.
Mr. Anil B. Dewan, appearing for the company, on the other hand, contends that the company is entitled to retain the excess amount for the period mentioned in the prospectus and consequently no liability to pay interest can arise until the expiry of that period.
Prospectus is an instrument registered under section 60 of the Act and all statements contained in it are matters permitted to be inserted by the statue.
The terms of the prospectus are binding not only upon the company but also upon persons who deal with the company in pursuance of the prospectus.
One of those terms concerns the repayment of excess money.
It reads: ".
In case an application is rejected in full, the whole of the 502 application money received will be refunded and where an application is rejected in part, the balance, if any, after adjusting money due in the manner provided earlier in this Prospectus on Equity Shares/Debentures allotted will be refunded to the applicants within ten weeks of the date of closing of the Subscription List or in the event of unforeseen circumstances within such further time as may be allowed by the Stock Exchange at Indore" (emphasis supplied) In the present case, counsel points out, time for refund had been extended by the Madhya Pradesh Stock Exchange till 19th December, 1990.
Accordingly the liability of the company to repay the excess amount did not arise until then.
In the circumstances, interest became payable only after 8 days from the expiry of the period as extended by the Madhya Pradesh Stock Exchange.
If Mr. Dewan 's argument were to be accepted, the company would have incurred no liability to pay interest, for time had been extended by the Madhya Pradesh Stock Exchange.
But this argument is clearly contrary to the provisions contained in sub section (4) of section 73 of the Act which reads:_ "section 73(4).
Any condition purporting to require or bind any applicant for shares or debentures to waive compliance with any of the requirements of this section shall be void".
In the teeth of that sub section, Mr. Dewan 's argument on the point is totally without merit.
Even if sub section (4) had not been inserted in section 73, Mr. Dewan 's argument in this respect would have been equally unsustainable, for no agreement can defeat or circumvent a mandatory requirement of the statute.
This is all the more so in view of section 9 which specifically provides that the provisions of the Act override the memorandum or articles of association of the company or any agreement executed or resolution passed by it.
The statute requires the company to pay interest in terms of sub section (2A).
That provision says that the company should pay excess money forthwith, failing which interest becomes payable at the end of 8 days therefrom.
Any inconsistent provision in the prospectus is unenforceable and it can be of no avail to the company.
It is true that the expression `forthwith ' does not necessarily and always mean instantaneous.
The expression has to be understood in the context of the statute.
Where, however, the statute prescribes the payment 503 of money and the accrual of interest thereon at certain points of time, the expression `forthwith ' must necessarily be understood to be immediate or instantaneous, so as to avoid any ambiguity or uncertainty.
The right accrues or liability arises exactly as prescribed by the statute.
Decisions such as Keshave Nilkanth Joglekar vs The Commissioner of Police, Greater Bombay, , and Salim vs State of West Bengal, ; , deal with the expression `forthwith ' in the context of preventive detention demanding a liberal or reasonable construction.
But that is not the construction which has to be adopted when `forthwith ' is used for determining the time and mode of payment of the principal and interest.
The legislature intended the expression `forthwith ' to refer to a particular day on which the liability to repay the principal amount arose, and that is the day from which the period of 8 days has to be computed, and on the expiry of that period, interest begins to accrue.
It is further contended on behalf of the company that in any view interest is payable as a penalty and, therefore, a reasonable and rational construction has to be placed upon the statute in regard to the commencement of the liability of the company to repay the excess amount.
Relevant circumstances which caused the delay must be taken into account in this regard.
There is no substance in this contention.
As stated earlier, sub section (2A) provides for the accrual of interest and the rates thereof.
Unlike sub section (2B) provides for punishment by imposition of fine or imprisonment, sub section (2A) speaks only of interest which is in contradiction to punishment and is not penal in character.
It merely provides a mode of calculation of the amounts payable.
Any consideration with reference to a penal provision is of no relevance to the liability of the company or its directors to pay interest in terms of sub section (2A).
Sub section (2B) on the other hand provides for punishment.
It reads: "S.73(2B).
If default is made in complying with the provisions of sub section (2A), the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees, and where repayment is not made within six months from the expiry of the eighth day, also with imprisonment for a term which may extend to one year".
This sub section concerns solely with default of compliance with the requirement of sub section (2A) namely, repayment of excess money.
Failure to repay the excess money as required by sub section (2A) visits the company and every officer of the company who is in default (as 504 defined under section 5) with the stipulated punishment.
This is, of course, in addition to the payment of interest prescribed under sub section (2A).
Sub section (5), as it stood prior to 1.2.1975, read: "section 73(5).
For the purpose of this section permission shall not be deemed to be refused if it is intimated that the application for permission though not at present granted, will be given further consideration".
This sub section was substituted by the Companies (Amendment) Act, 1974 with effect from 1.2.1975 reading as follows: "S.73(5).
For the purposes of this section, it shall be deemed that permission has not been granted if the application for permission, where made, has not been disposed of within the time specified in sub section (1).
" Sub section (1) referred to in sub section (5), as substituted on 1.2.1975, is in fact the present sub section (1A), for, as stated earlier, the original sub section (1) was amended and renumbered as sub section (1A) when the present sub section (1) was inserted by the Companies (Amendment) Act, 1988 w.e.f. 15.6.1988.
Consequently, the words `the time specified in sub section (1) ' appearing in sub section (5), as inserted w.e.f. 1.2.1975, denote the period of 10 weeks mentioned in the present sub section (1A).
This means that the permission for listing is deemed not to have been granted, i.e., impliedly refused, if the application for permission filed by the company has not been disposed of before the expiry of 10 weeks from the date of the closing of the subscription lists, as mentioned under sub section (1A).
Sub section (1A) postulates that any allotment made becomes void at the end of 10 weeks from the date of the closing of the subscription lists if by that time the requisite permission of the stock exchange has not been obtained.
But this consequence is postponed till the dismissal of any appeal preferred under section 22 of the (see the proviso to sub section (1A) of section 73 of the Act).
Nevertheless, the permission, if not obtained within 10 weeks, is deemed not to have been granted.
If the permission for listing sought under sub section (1) is not granted, the interest payable under sub section (2) is attracted.
Sub section (2) says that the liability to repay the money received from applicants arises forthwith either where the permission has not been sought or, having been 505 sought, it has not been granted.
The fact that an appeal is pending does not postpone the result contemplated in sub section (2) in regard to the liability to repay the amounts and the interest accruing thereon if the amounts are not repaid within 8 days after the liability arose.
The accrual of interest under sub section (2) is not dependent or consequent on the nullity postulated in sub section (1A).
In this connection, reference may be made to sub section (3) which reads: "S.73(3).
All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled bank until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2), and if default is made in complying with this sub section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees." (emphasis supplied) This sub section refers to the obligation of the company to keep all amounts received from the subscribers in a separate bank account maintained with a Scheduled bank.
Such money must so remain in the bank until the permission has been granted by the stock exchange or until the disposal of an appeal preferred against refusal to grant permission.
Where the permission has not been sought, the company has, as seen above, acted in disobedience of the law, and the amounts received from the investors must be credited to the separate bank account and immediately returned to them together with the interest which accrued for the period.
But where permission has been sought, but not granted, the amounts so kept in the bank have to be repaid within the time specified in sub section (2).
Default of compliance with this requirement will make the company and every officer in default (as defined under section 5) liable to be punished with fine.
This will, of course, be in addition to the liability for payment of interest in terms of sub section (2).
The right or obligation of the company to keep the money in the bank is only for the period preceding the decision of the stock exchange on the company 's request for permission to list.
Once the permission is 506 expressly or impliedly refused, the money has to be returned to the applicants, notwithstanding the pendency of the company 's appeal.
The earlier part of the sub section about depositing the money in the bank is controlled by the latter provision in the sub section for returns of the money as required by sub section (2).
This is particularly so by reason of the penalty specially provided in sub section (3) in the event of default of compliance with the requirement of that sub section.
Sub section (3) may at the first blush appear to be contradictory, but it is really not so, considering the legislative intent to protect the legitimate claim of the applicants for interest on the money paid by them.
The interest provided under sub section (2) is payable to the applicants in terms of that sub section, unless the money is returned to them within the specified time, not withstanding the pendency of an appeal mentioned in the proviso to sub section (1A).
Sub section (3) has to be so understood to be in harmony with the other provisions of section 73.
This is all the more explicit from sub section (3A).
Sub section (3A) says that the company shall not utilise the amounts held in the separate bank account for any purpose other than what is permitted by sub section (3A).
Sub section (3A) provides: "S.73(3A).
Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely: (a) adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus; or (b) repayment of moneys received from applicants in pursuance of the prospectus, where shares have not been permitted to the dealt in on the stock exchange or each stock exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share".
The money credited to the separate bank account can be utilised for only two purposes: (1) for adjustment against allotment of shares where listing is permitted; or (2) for repayment where listing is not permitted or the company is otherwise unable to allot shares.
The company has no right to deal with the money in any other manner or keep it longer than permitted by the section.
507 The money so kept in the separate bank account is held by the company for and on behalf of the subscribers in a fiduciary capacity.
Such amount do not form part of the general assets of the company.
The relationship between the applicants and the company in respect of the application money so held in accordance with sub section (3) is that of `bailers and bailee and not of creditors and debtor '.
See Palmer 's Company Law, 24th ed.
para 24.31; ,1085.
Interest does not begin to run under sub section (2) until 8 days have elapsed from the date of expiry of the period of 10 weeks commencing on the date of closure of the subscription lists.
The fact that the legislature has so provided in cases where permission has been refused expressly or by reason of the deeming provision is sufficient indication of the legislative intent to give the company reasonable time to repay the money.
Companies generally make allotments as soon as practicable after the necessary application has been made to the recognised stock exchange for permission for listing.
Upon the issue of the prospectus after making such application, amounts are received from the public in consideration of which allotments are made in anticipation of the requisite permission.
Greater the reputation of the company, larger are the amounts likely to be received.
If permission is not granted, the entire amounts received from the public have to be forthwith repaid.
On the other hand, if permission is obtained, but the amounts received from the public are in excess of the aggregate of the application money relating to the allotted shares or debentures, such excess amounts are forthwith repayable.
Whether or not permission will be obtained cannot be ascertained until the period prescribed for the purpose has expired namely, 10 weeks from the date of closing of the subscription lists.
Until the expiry of those 10 weeks, neither the subscribing public nor the company will be in a position to decide whether or not the allotments made are valid.
This is a period of uncertainty and it is for that reason that the legislature has, in a case of refusal to grant permission, provided that the liability to repay the application money arises upon the expiry of 10 weeks.
The possibility of an appeal being allowed is, as stated above, not a ground to delay repayment.
It should make no difference whether it is as a result of the permission having been refused, or permission having been granted and excess amounts are received by reason of over subscription, that repayment of money has to be made by the company.
In either event, the liability to repay the amounts arises forthwith on the expiry of 10 weeks from the date of closure of the subscription lists, and the interest will begin to accrue thereon on the expiry of 8 days therefrom.
This construction is, in our view, just and reasonable from the point of view of both the investor and 508 the company, and has the advantage of certainty, uniformity and easy application.
The condition attached to the Order of the Government of India dated 31st May, 1990, which we have extracted above, indicates that the time limit of 10 weeks from the date of closure of the subscription lists applied to refund orders as well as to allotment of all securities and despatch of allotment letters/certificates.
The Government of India thus understood that the liability of the company to repay the amounts in terms of section 73 arose only at the end of 10 weeks from the date of closure of the subscription lists.
This condition presumably applies to repayment under sub section (2) as well as under sub section (2A) of section 73.
This is fully borne out by the averments contained in the affidavit filed in the High Court on behalf of the Union of India as well as by the oral submissions on its behalf before the High Court on the point.
Similar appears to be the stand of the Bombay Stock Exchange, as seen from its publication of March 1991 (para 23.2).
The letter dated March 13, 1991 sent by the Securities and Exchange Board of India, the 2nd respondent, to the appellant company stating that interest was payable from 1st November, 1990, which is the date of expiry of the period of 10 weeks from the date of closure of the subscription lists, roughly indicates how the 2nd respondent construed the provision shortly before the proceedings commenced in the High Court.
The section is not free from ambiguities and doubts.
Having been amended in several respect, it has not finally emerged with the clarity that admits of easy construction.
But the contemporaneous construction placed upon an ambiguous section by the administrators entrusted with the task of executing the statute is extremely significant.
This construction is, in our view, perfectly consistent with the language and the object of the statute.
It is a practical and reasonable construction, particularly because it affords the company reasonably sufficient time to complete the formalities for despatch of the refund orders.
And the investor who has responded to the invitation contained in the prospectus is not unduly kept waiting for the return of the excess amounts due to him.
See Desh Bandhu Gupta & Co. & Ors.
vs Delhi Stock Exchange Association Ltd., ; and K.P. Varghese vs Income Tax Officer, Ernakulam & Anr., ; See also Crawford 's Interpretation of Laws, 1989 Ed.
Neither the date of allotment, as found by the High Court, nor the date specified in the prospectus, as contended by the company, is relevant to the commencement of liability for payment of interest on the excess money.
509 The liability of a company to repay the excess money under section 73(2A) of the Act arises on the expiry of 10 weeks from the date of the closing of the subscription lists, and the interest begins to accrue thereon at the end of 8 days therefrom.
Accordingly the liability to repay the excess money in the present case arose on 1.11.1990 which was admittedly the date of expiry of 10 weeks from the date of the closing of the subscription lists, and consequently the liability to pay interest at the rate specified in sub section (2A) arose on the expiry of 8 days from 1.11.1990.
MOHAN, J. I had the advantage of perusing the draft judgment of my learned brother.
I concur with him.
However, some important points require to be amplified.
The points that arises for determination are: (i) the scope of liability under Section 73 (2A) of the .
(ii) Meaning of the word "forthwith" (iii) Whether the payment of interest is penal in nature? (iv) Whether administrative inconvenience could be pleaded to avoid the statutory liability? Section 73 occurs under Para III of the (Central Act of 1/1956 hereinafter referred to as the Act).
This section deals with the allotment of shares and debenturs.
It has undergone important amendments in 1975 and 1988.
Prior to amendment in 1975, Section 73 read as under :_ "Allotment of shares and debentures to be dealt in on stock exchanges.
(1) Where a prospectus, whether issued generally or not states that application has been or will be made for permission for the shares or debentures offered thereby to be dealt in on a recognised stock exchange, any allotment made on an application in pursuance of the prospectus shall, whenever made, be void, if the permission has not been applied for before the tenth day after the first issue of the prospectus or, if the permission has not been granted before the expiry of (four weeks) be notified to the applicant for permission by or on behalf of the stock exchange.
(2) Where the permission has not been applied for as aforesaid, or has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from ap 510 plicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of five per cent per annum from the expiry of the eighth day: Provided that a director shall not be liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part.
(3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank so long as the company may become liable to repay it under sub section (2) ; and if default is made in complying with this sub section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
(4) Any condition purporting to require or bind any applicant for shares or debentures to waive compliance with any of the requirements of this section shall be void.
(5) For the purpose of this section (it shall not be deemed that permission has not been granted) if it is intimated that the application for permission though not at present granted, will be given further consideration.
(6) This section shall have effect : (a) in relation to any shares or debentures agreed to be taken by a person underwriting an offer thereof by a prospectus, as if he had applied, therefor in pursuance of the prospectus; and (b) in relation to a prospectus offering shares for sale, with the following modifications namely (i) reference to sale shall be substituted reference to allotment; (ii) the persons by whom the offer is made, and not the company, shall be liable under sub section (2) to repay money received from applicants, and reference to the company 's liability under that sub section shall be construed accordingly; and (iii) for the reference in sub section (3) to the company and every officer of the company who is in default, there 511 shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the default.
(7) No prospectus shall state that application has been made for permission that the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange".
After amendment in 1975, Section 73 read as follows: "Allotment of shares and debentures to be dealt in on stock exchanges.
(1) Where a prospectus whether issued generally or not states that an application has been, or will be, made for permission for the shares or debentures offered thereby to be dealt in on one or more recognised stock exchanges, such prospectus shall state the name or the stock exchange or, as the case may be, each such stock exchange, and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been applied for before the 10th day after the first issue of the prospectus, or, whether such permission has been applied for before that day, if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of 10 weeks from the date of the closing of the subscription lists : Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the share or debentures to be dealt in on that stock exchange has been preferred under section 22 of the (42 of 1956), such allotment shall not be void until the dismissal of the appeal.
(2) Where the permission has not been applied for as aforesaid, substituted for "or has not been granted as aforesaid" by the Companies (Amendment) Act, 1974, w.e.f. 1.2.1975 substituted for "five per cent" ibid.
(2A) Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the applicant moneys relating to the shares or debentures 512 in respect of which allotment has been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if such money is not repaid within eight days, from the day the company becomes liable to pay it, the Directors of the Company shall be jointly and severally liable to repay the money with interest at the rate of twelve per cent per annum from the expiry of the said eighth day : Provided that a Director shall not be liable if he proves the the default in the payment of the money was not due to any misconduct or negligence on his part.
(2B) If default is made in complying with the provisions of sub section (2A), the company and every officer of the company who is in default he shall be punishable with fine which may extend to five thousand rupees, and where repayment is not made within six months from th expiry of the eighth day, also with imprisonment for a term which may extend to one year.
(3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank (until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2); and default is made in complying with this sub section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
(3A) Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely: (a) Adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus; or (b) Repayment of moneys received from applicants in pursuance of the prospectus, where shares have not been permitted to be dealt in on the stock exchange or each stock 513 exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share.
(4) Any condition purporting to require or bind applicant for shares or debentures, to waive compliance with any of the requirement of the section shall be void.
(5) For the purpose of this section it shall be deemed that permission has not been granted if the application for permission, where made, has not been imposed of within the time specified in sub section (1).
(6) This section shall have effect (a) In relation to any shares or debentures agreed to be taken by a person underwriting an offer thereof by a prospectus, as if he had applied therefor in pursuance of the prospectus; and (b) In relation to a prospectus offering shares for sale, with the following modifications namely (i) References to sale shall be substituted for references to allotment; (ii) The persons by whom the offer is made, and not the company, shall be liable under sub section (2) to repay money received from applicants, and references to the company 's liability under that sub section shall be construed accordingly; and (iii) For the reference in sub section (3) to the company and every officer of the company who is in default, there shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of or wilfully authorises or permits, the default.
(7) No prospectus shall state that application has been made for permission for the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange.
" After amendment in 1988, Section 73 reads as under: "Allotment of shares and debenture to be dealt in on stock exchange.
Every company, intending to offer shares or debentures to the public for subscription by the issue of a 514 prospectus shall before such issue, make an application to one or more recognised stock exchanges for permission for the shares or debentures intending to the so offered to be dealt with in the stock exchange or each such stock exchange.
(1A) Where a prospectus, whether is issued generally or not, states that an application under sub section (1) has been made for permission for the shares or debentures offered thereby to be dealt in one or more recognised stock exchange, such prospectus shall state the name of the stock exchange and any allotment made on an application in pursuance of such prospectus shall, whenever made, be void if the permission has not been granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of ten weeks from the date of the closing of the subscription lists : Provided that where an appeal against the decision of any recognised stock exchange refusing permission for the shares or debentures to be dealt in on that stock exchange has been preferred under section 22 of the Securities Contracts (Regulations) Act, 1956 (42 of 1956), such allotment shall not be void until the dismissal of the appeal.
(2) Where the permission has not been applied for under sub section (1) or, such permission having been applied for, has not been granted as aforesaid, the company shall forthwith repay without interest all moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company become liable to repay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen pr cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money.
(2A) Where permission has been granted by the recognised stock exchange or stock exchanges for dealing in any shares or debentures in such stock exchange or each such stock exchange and the moneys received from applicants for shares or debentures are in excess of the aggregate of the application moneys relating to the shares or debentures in respect of which allotments have been made, the company shall repay the moneys to the extent of such excess forthwith without interest, and if 515 such money is not repaid within eight days, from the day the company becomes liable to pay it, the company and every director of the company who is an officer in default shall, on and from the expiry of the eighth day, be jointly and severally liable to repay that money with interest at such rate, not less than four per cent and not more than fifteen per cent, as may be prescribed, having regard to the length of the period of delay in making the repayment of such money.
(2B) If default is made in complying with the provisions of sub section 2(A), the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees, and where repayments is not made within six months from the expiry of the eighth day, also with imprisonment for a term which may extend to one year.
(3) All moneys received as aforesaid shall be kept in a separate bank account maintained with a Scheduled Bank until the permission has been granted, or where an appeal has been preferred against the refusal to grant such permission, until the disposal of the appeal, and the money standing in such separate account shall, where the permission has not been applied for as aforesaid or has not been granted, be repaid within the time and in the manner specified in sub section (2) and if default is made in complying with this sub section, the company and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees.
(3A) Moneys standing to the credit of the separate bank account referred to in sub section (3) shall not be utilised for any purpose other than the following purposes, namely : (a) adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus ; or (b) repayment of moneys received from applicants in pursuance of the prospectus where shares have not been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus, as the case may be, or, where the company is for any other reason unable to make the allotment of share.
(4) Any condition purporting to require or bind any applicant 516 for shares or debentures to waive compliance with any of the requirement of this section shall be void.
(5) For the purposes of this section, it shall be deemed that permission has not been granted if the application for permission, where made, has not been disposed of within the time specified in sub section (1).
(6) This section shall have effect (a) in relation to any shares or debentures agreed to be taken by a person under writing an offer thereof by a prospectus, as if he had applied therefore in pursuance of the prospectus; and (b) in relation to a prospectus offering shares for sale, with the following modifications, namely (i) reference to sale shall be substituted for references to allotment; (ii) the persons by whom the offer is made, and not the company, shall be liable under sub section (2) to repay money received from applicants, and references to the company 's liability under that sub section shall be construed accordingly; and (iii) for the reference in sub section (3) to the company and every officer of the company who is in default, there shall be substituted a reference to any person by or through whom the offer is made and who is knowingly guilty of, or wilfully authorises or permits, the default.
(7) No prospectus shall state that application has been made for permission for the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange".
As the section reads now, every company is required while it offers for public subscription issues of shares or debentures by means of a prospectus, to make an application for listing the security in one or more recognised stock exchanges.
Should the stock exchange not grant the permission for listing, before the expiry of 10 weeks from the date of closing the subscription lists, no allotment could be made.
In other words, the stock exchange has a say in the matter of listing.
It also requires to be stated that the company, besides the Director, is made liable for failure to repay the application money or the excess application money along with interest.
517 Notes on clauses read as under : "Clause 10 provides for compulsory listing of all public issues with recognised stock exchanges.
Presently, listing of public issues is not compulsory.
Further , as per the existing provisions only the directors are liable for failure to repay the application money or the excess application money within the specified time, if the company fails to pay".
"It is proposed to make the company in addition to the directors who commit the default liable to repay the application money or excess application money alongwith interest at a rate between 4% to 15% depending upon the period of delay with a view to ensuring that ordinary directors like nominee of govt.
financial institutions do not attract penal provisions, it is further proposed that only the directors who is an officer in default should be liable for prosecution".
As per provision to sub section (1), an appeal may be preferred under section 22 of the Stock Securities Contracts (Regulations) Act, 1956.
Such an appeal may be (i) against the decision of stock exchange refusing permission ; and (ii) if the stock exchange fails to dispose of the application for permission within 10 weeks from the date of closing of the subscription lists.
This 10 weeks become important because of the deemed rejection under sub section (5).
Sub section (1A) mentions the date of closing of the subscription lists.
Thus, it is a crucial date for determining the expiry of 10 weeks for the grant of permission by stock exchange.
Equally that becomes the crucial date for calculating the time for preferring an appeal under section 22 of the , as aforesaid against the refusal of permission.
No doubt, neither in this section nor elsewhere it is stated as to when the company is required to close subscription lists.
Of course, that will depend upon the facts of each case.
Section 69 of the Act states that unless minimum subscription is received, no allotment shall be made of any share capital of the company offered to the public for subscription.
In fact, sub section 5 of the said section states categorically as follows : "If the conditions aforesaid have not been complied with on the expiry of one hundred and twenty days after the first issue of the prospectus, all moneys received from applicants for shares shall be forthwith repaid to them without interest; and if 518 any such money is not so repaid within one hundred and thirty days after the issue of the prospectus, the directors of the company shall be jointly and severally liable to repay that money with interest at the rate of six per cent per annum from the expiry of the one hundred and thirtieth day : Provided that a director shall not be so liable if he proves that the default in the repayment of the money was not due to any misconduct or negligence on his part".
One thing that is striking as far as the sub section is concerned is, the repayment without interest before the expiry of 150 days after the first issue of the prospectus and the repayment with interest within 130 days after the issue of the prospectus or specific in their terms unlike Section 73.
It cannot be gain said that the prospectus of the company is an important document provided for under the statute.
Section 2(36) defines "prospectus" as follows : "prospectus" means any document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchases of any shares in, or debentures of, a body corporate".
SEction 60 deals with registration of prospectus.
Under sub section (3) it is provided that the Registrar shall not register a prospectus unless the requirements of sections 55, 56, 57 and 58 and sub sections (1) and (2) have been complied with.
Section 62 deals with civil liability for misstatements in prospectus, while section 63 deals with criminal liability for misstatement in prospectus.
In the background of the legal provisions section 73 will have to be analysed with regard to the liability to pay interest.
The date of allotment, according to Mr. Andhyarujina and Mr. Cooper is the relevant date.
Therefore, according to the learned counsel, the crucial issue is the allotment.
It is also submitted that when permission is granted, it is only a categorisation.
It has already been seen that under section 69(5), specific dates have been mentioned as 120 and 130 respectively.
Sub section 2(A) of Section 73 does not mention any specific day.
It also requires to be noticed under sub section 1(A) of this very section "10 weeks from the date of closing of the subscription lists" is mentioned.
Both under sub section (2) and 2(A), no such time has been prescribed.
Prior to 1988, sub section (1) contemplated two situations (i) application to stock exchange being made after issue within 10 days of issue or (ii) 519 application made before the issue and 10 weeks for stock exchange to grant the application.
Of course, if the application is not granted within 10 weeks, there will be deemed rejection under sub section (5).
But, unfortunately, after the amendment of sub section (1) and 1(A), sub section (2) has not been amended with reference to these amended provisions.
As the law stands at present, the question of issue of prospectus without an application to stock exchange cannot arise at all.
As careful reading of sub section 2(A) will clearly disclose that the said section comes into operation only where permission has been granted by the recognised stock exchange or exchanges.
These words "where permission has been granted" are of great significance.
Therefore, the contention that on the date of allotment the liability to pay interest arises may not be correct.
Nor again, it would be correct to contend that the mechanics of refund liability to pay arises on the date of allotment since there is a failure of consideration in respect of shares not allotted.
On allotment, the money may become due.
Thereafter the money is held in a fiduciary capacity.
But the more important question is does it become payable? We will, now, refer to Black 's Legal Dictionary as to the meaning of the word "due" and "payable" (5th Ed. 448) are as under : "Due" Just; proper; regular; lawful; sufficient; reasonable, as in the phrases "due care", "due process of owing; payable; justly owed.
That which one contracts to pay or perform to another; that which law or justice requires to be paid or done.
Owed, or owing, as distinguished from payable.
A debt is often said to be due from a person where he is the party owing it, or primarily bound to pay, whether the time for payment has or has not primarily bound to pay, whether the time for payment has or has not arrived.
The same thing is true of the phrase "due and owing".
Payable.
A bill or note is commonly said to be due when the time for payment of it has arrived.
The word "due" always imports a fixed and settled obligation or liability, but with reference to the time for its payment there is considerable ambiguity in the use of the term, the precise signification being determined in each case from the context.
It may mean that the debt or claim in question is now (presently or immediately) matured and enforceable, or that it matured at some time in the past and yet remains unsatisfied, or that it is fixed and certain but the day appointed for its payment has not yet arrived.
But commonly, and in the absence of any qualifying expressions, the word "due" is re 520 stricted to the first of these meanings, the second being expressed by the term "overdue" and the third by the word "payable".
"Payable" Capable of being paid; suitable to be paid; admitting or demanding payment; justly due legally enforceable.
A sum of money is said to be payable when a person is under an obligation to pay it.
Payable may therefore signify an obligation to pay at a future time, but, when used without qualification, term normally means that the debt is payable at once, as opposed to "owing".
As a matter of fact, these words assumed great significance under section 60 of Transfer of Property Act.
The section was amended by Act 20 of 1929.
The word "due" in the section has been substituted for the word "payable" in order to make it clear that a mortgagor cannot redeem within the term of the mortgage".
"When the right of redemption arises the right of redemption arises when the principal money secured by the mortgage that has become due and may be exercised at any time thereafter, subject of course to the law of limitation.
In English law, the mortgagor cannot redeem before the time fixed for payment.
Nevertheless there were a considerable number of Indian cases in which it was held that the time fixed in the deed was fixed for the convenience of the mortgagor and that he could redeem before that time unless there was an express stipulation to the contrary.
These cases are bad law, for th view taken in other case that the mortgagor cannot redeem before the time fixed for payment is confirmed by the decision of Judicial Committee in Bhaktawar Begam vs Husaini Khanam, [1914] 36 All. 195.
41 I.A. 84, followed in Bir Mohammad vs Nagoor, , 25 I.C. 576 which treats Rose Ammal vs Rajarathnam, [1900] 23 Mad. 23 as overruled".
In in Baroda Board & Paper Mills Ltd. vs Income Tax Officer.
Circle I, Warde E, Ahmedabad and others, it is held as under : "Mr. A.L. Shah who appears for the liquidator in O.J. Appeal No. 2 of 1975 has urged before us that the legislature has used in the context of the priority of debts two distinct sets of words "debt due" and "due and payable" and proper meaning should be given to these sets of words, namely, "debt due" and "due and payable" and distinction must be made when the legislature has used two different terminologies, namely, "due" in the beginning of the clause and "due and payable" at the end of the clause.
He also wants us to dissect the phrase "due and 521 payable" and he wants to emphasize that the debt must have become due in the narrower sense of the word of having come into existence and having been payable with reference to enforceability of payment and, in this sense, relying upon the decision of D.A. Desai J., he has urged before us that the debt must be existing at the relevant date and the event which brought the debt into existence must have occurred within the twelve months preceding the relevant date and it must also have become payable, meaning thereby that its payment could have been enforced against the company, within the twelve months before the relevant date.
In view of the decisions that we have already referred to, particularly the passage from People vs Arguello as approved by the Supreme Court in Kesoram Industries ' case and in Raman Iron Foundry 's case, it is not possible for us to accept this contention of Mr. Shah.
In our opinion, the only meaning that could be attached to the word "due" occurring in section 530 is that it must be presently due and the words "due and payable" mean the same thing, namely , that it must be presently payable.
Therefore, so far as section 530(1) (a) is concerned, the revenue, taxess or rate, due from the company to the Central or State Government or to a local authority must be presently payable, that is, that the liability could be enforced as at the relevant date and, secondly, it must have so become presently payable within the twelve months immediately preceding the relevant date".
In this connection we may refer to the case in Union of India vs Air Foam Industries (P) Ltd., ; & 1271 (para 7), which reads as follows : "The first thing that strikes one on looking at Clause 18 is its heading which reads; "Recovery of Sums Due".
It is true that a heading cannot control the interpretation of a clause if its meaning is otherwise plain and unambiguous, but it can certainly be referred to as indicating the general drift of the clause and affording a key to a better understanding of its meaning.
The heading of Clause 18 clearly suggests that this clause is intended to deal with the subject of recovery of sums due.
Now a sum would be due to the purchaser when there is an existing obligation to pay it in present.
It would be profitable in this connection to refer to the concept of a `debt ' for a sum due is to be found in Webb vs Stenton, where Lindley. L. J., ". a debt is a sum of money which is now payable or will become payable in the future by reason of a 522 present obligation".
There must be debitum in presenti; solvendum may be in presenti or in future that is immaterial.
There must be an existing obligation to pay a sum of money now or in future.
The following passage from the judgment of the Supreme Court of California in People vs Arguello, [1869] 37 Calif 524, which was apporoved by this Court in Kesoram Industies vs Commr.
of Wealth Tax, ; 1966 SC 1370), clearly brings out the essential characteristics of a debt.
"Standing alone, the word `debt ' is as applicable to a sum of money which has been promised at a future day as to a sum now due and payable.
If we wish to distinguish between the two, we say of the former that it is a debt owing, and of the latter that it is a debt due".
This passage indicates that when there is an obligation to pay a sum of money at a future date, it is a debt owing but when the obligation is to pay a sum of money in praesenti it is a debt due.
A sum due would, therefore, mean a sum for which there is an existing obligation to pay in presenti, or in other words, which is presently payable.
Recovery of such sums is the subject matter of Clause 18 according to the heading, That is the dominant idea running through the entire Clause 18".
We will now refer to Venkataramiya 's Law Lexicon and Legal Maxims Vol, I, 713, 714.
"Due" means payable immediately or a debt contracted but payable at a future time.
In Wharton 's Law Lexicon, 14th Edn., it s meaning is stated to be "anything owing.
That which one contracts to pay or perform to another; that which law or justice requires to be paid or done.
It should be observed that a debt is said to be `due ' the instant that it has existence as a debt; it may be payable at a future time".
Therefore, it cannot be contended on the strength of Section 530 `due ' and `payable ' is one and the same even under S.732 (A).
However, as contended, if the liability to pay interest arises from the date of allotment and the grace period after eight days, what is to happen in cases where permission is refused by the stock exchange? For the grant of such permission 10 weeks are available.
Therefore, a company making allotment prior to the grant of permission cannot be mulcted with the liability when the section itself comes into play upon the grant of permission.
Therefore, some definite date is required.
It cannot be lost sight of that where permission is refused in the first instance there is also the right of appeal under Section 22 of the Securities Contracts (Regulations) Act, 1956.
This too, has got an important bearing.
It cannot be held that after allotment the mechanics 523 of refund would come into play and again after rejection of permission, the money on all applications should be refunded once over again.
Equally, the contention of Mr. Anil Divan that the stock exchange will have power to extend the time cannot be accepted.
It may be a practice to do so.
But it does not mean the stock exchange can act contrary to clear wording to this section.
More so, when Sub section (4) is clear in its terms.
Merely because the intending applicants agree to abide by the prospectus that cannot be binding in the teeth of this Sub section.
For the sake of competition, reference may be made to the corresponding provision of English Law.
Buckley on the Companies Acts, 14th Ed.
I, while dealing with Section 51 which is the corresponding provision state as follows : "The Act does not require the prospectus to fix any time for closing the subscription lists and, unless and until an issue is fully subscribed, there is nothing in law to require the company to close the lists.
It is the common practice, however, at any rate in the case of prospectuses issued generally, to state in the prospectus that the lists will be closed on or before a particular date.
In any case to which this section applies the company will, by reason of sub s(3), be unable to employ any money received from shareholders until either permission to be listed has been obtained, or the lists have been closed and the period indicated in sub section (1) has expired without the permission having been refused.
Note that the sub section does not say, 'if the permission has not been granted before the expiration of three weeks etc. ' Presumable in practice the stock exchange, when it has an application for permission to be listed under consideration and has not either granted or refused permission within the three weeks period indicated above, will notify the applicant under sub section (1) of an extension of the period.
An allotment within this section is void, not voidable as in an allotment in breach of Section 47" sub section (3) in Re Nanwa Gold Mines, Ballantyne vs Nanwa Gold Mines Ltd. applications to subscribe for shares were invited on the footing that, if a resolution for reduction of capital was not passed or not confirmed by the court, the application moneys would be refunded and meanwhile would be retained in a separate account.
The moneys were in fact put in a separate account in the names of the company and its registrars.
The conditions 524 were not fulfilled and shortly afterwards a receiver was appointed in a debenture holders ' action.
Harman J. held that the moneys in the separate account were repayable to the subscribers in full, basing his decision on the terms of the invitation and not on the provisions of this sub section; but he expressed the view that the payment into a separate account in compliance with the sub section would probably have the same effect".
Palmer 's Company Law, 1982, Vol I, 264 states as follows: "Refusal of Application to Deal Where a prospectus states that application has been or will be made for the shares or debentures to be dealt with on the stock exchange, any allotment made on an application under the prospectus shall be void.
(1) if permission has not been applied for before the third day after the first issue of the prospectus; or (2) if permission is refused before the expiration of three weeks (subject to the extension by the stock exchange to six weeks from the date of the closing of the subscription lists (Sec.
51 (1).
It should be noted that under case (2) above, the allotment is not void if the stock exchange merely defers the decision on permission to deal, or does not arrive at a decision within the stated time.
During the periods stated in cases (1) and (2) above, the application money received by the company from shareholders who applied for shares has to be kept on separate account (Sec.
51 (3) ; "that appears", as Harman J. observed in Re Nanwa Gold Mines Ltd, "to be an attempt to erect, so to speak, by statute a kind of trust for applicant", consequently, the application money thus kept on separate account does not form part of the general assets of the company which are charged by a debenture secured by a floating charge.
The relationship between the applicants and the company which holds the application moneys on separate account is that if bailers and bailee, and not of creditors and debtor".
Now, we will refer to the case in Nanwa Gold Mines Ltd. Ballantyne vs Nanwa Gold Mines Ltd., [1955] I W.L.R. 1080 @ 1085.
"Sub section (3) provides that where money is sent in on a provisional application: "All money received as "aforesaid shall 525 be kept in a separate bank account so long as the company may become liable to repay it under the last foregoing sub section; and, if default is made in complying with this sub section, the company and every officer of the company who is in default shall be liable to a fine not exceeding five hundred pounds".
That appears to be an attempt to erect so to speak, by statute a kind of trust for applicants in a case of this sort.
It is irrelevant here, because in this case the directors promised to do this very thing; No doubt that was only a compliance with the statute; but they did promise to do so and I think that their promise is of contractual effect, so I need not consider whether, if there was no promise but only the statutory obligation, the position would be the same.
I incline to think it would be so, and that the object of section 51(3) was to provide protection for persons who pay money on the faith of promises of this kind".
As to the present position with regard to the liability to refund under Sec.
73 2(A) it is important to bear in mind that two notifications have come to be issued in exercise of powers conferred under Section 642.
Notification No. GSR 614 (E) dated 3rd October, 1991, called the Companies (Central Government 's) General Rules and Forms (Second Amendment), 1991, which came into force on 1st November, 1991.
In the above notification it is stated as under: "If the company does not receive application money for at least 90% of the issued amount, the entire subscription will be refunded to the applicants within ninety days from the date of closure of the issue.
If there is delay in the refund of application money by more than 8 days after the company becomes liable to pay the excess amount, the company will pay interest for the delayed period, at prescribed rates in sub section (2) and (2A) of Section 73.
No statement made in this Form shall contravene any of the provisions of the , and the rules made thereunder".
"Signature of Directors" Again, notification No. S.O. 666(E) dated October 3, 1991 issued under sub section (1) of Section 641 with amendments in Schedule II to the said Act, under Part I General Information, stated as under: "(f) Declaration about the issue of allotment letters/refunds within a period of 10 weeks and interest in case of any delay 526 in refund at the prescribed rate under Section 73(2)/2A" Thus, the liability of the company to repay the excess amount under section 73(2A) will arise only on the expiry of 10 weeks from the date of the closure of subscription lists.
The interest begins to accrue thereupon at the end of 8 days.
As the meaning of the word "forthwith", we will now refer to Bouvier 's Law Dictionary for the meaning of the word "forthwith".
"FORTHWITH.
As soon as by reasonable exertion, confined to the object, it may be accomplished.
(Approved in Dickerman vs Trust Co., ; 176 U.S. 193, , This is the import of the term; it varies, of course, with every particular cases; 4 Tyrwh. 837; Edwards vs Ins Co., See Seammon vs Ins.
Co., 101, III 621; ; Bannect vs Ins 67 N.Y. 274; Pennsylvanis R. Co. vs Reichert, ; Meriden Silver Plate Co. vs Flory , It is not as promptly as immediately; in some cases it might mean within a reasonable time; We will also refer to 193 Soutern Reporter, 339 and 16 Soutern Reporter 33 @ 35 Col I. "As regards compliance with statute requiring petition for judicial review of an executive committee 's denial of primary election contest to be filled "forthwith" the term "forthwith" is a relative one and means within such time as to permit that which is to be done, to be done lawfully and according to the practical and ordinary course of things to be performed or accomplished, and it is not to be used by way of a penalty when accidental interventions of which party is not to be charged with foresight have upset what otherwise would have been reasonable calculations regarding available time.
Laws 1035, exhibit Secs c. 10".
"Forthwith" is not susceptible of a fixed time definition, and the surrounding facts and circumstances must be taken into consideration in determining the question, and forthwith may be minutes, hours, days or even weeks".
Therefore it cannot be said that "forthwith" means E.O. instanti.
It cannot but be held that the payment of interest is only compensatory and not penal.
Merely because clause 10 to which a reference has already been made uses the word "penal" it cannot be amount to penalty.
As useful reference can be made in Mahalaxmi Sugar Mills Co. Ltd. vs Commissioner of Income Tax, Delhi, New Delhi; , "4.
Penalties if any person defaults in payment of excess imposed under sub section (1) of Sec. 3, or , contravenes any provision of any rule made under this Act, he shall without prejudice to his liability therefore under sub section (5) of Sec.
3 be liable to imprisonment upto six months or to a fine not exceeding rupees five thousand or both and in the case of continuing contravention in to a further fine not exceeding rupees five thousand or both and in the case of continuing contraventio in to a further fine not exceeding rupees one thousand 527 for each day during which the contravention continues".
It is apparent that section 3(2) requires the payment of cess on the date prescribed under the rules.
Rule 4 of the U.P. Sugarcane Cess Rules, 1956 provides that the cess due on the sugarcane entering into the premises during the first fortnight to each calendar year must be deposited in the government treasury by the twenty second day of that month and the cess due for the remainder of the month must be deposited before the seventh day of the next following month.
If the cess is not paid by the specified date, then by virtue of section 3(3) the arrear of cess will carry interest at the rate of six per cent per annum from the specified date to the date of payment.
Section 3(5) is a very different provision.
It does not deal with the interest paid on the arrears of cess but provides for an additional sum recoverable by way of penalty from a person who default in making payment of cess.
It is a thing apart from an arrear of cess and the interest due thereon.
Now, the interest payable on an arrear of cess under section 3(3) is in reality part and parcel of the liability to pay cess.
It is an accretion to the cess.
The arrear of cess "carries" interest; if the cess is not paid within the prescribed period a larger sum will become payable as cess.
The enlargement of the cess liability is automatic under section 3(3).
No specific order is necessary in order that the obligation to pay interest is as certain as the liability to pay cess.
As soon as the prescribed date is crossed without payment of the cess, interest begins to accrue.
It is not a penalty for which provisions has been separately made by section 3(5).
Nor is it a penalty within the meaning of section 4, which provides for a criminal liability and a criminal prosecution.
The penalty payable under section 3(5) lies in the discretion of the collecting officer or authority.
In the case of the penalty under section 4, no prosecution can be instituted unless, under section 5(1), a complaint is made by or under the authority of the Cane Commissioner of the District Magistrate.
There is another consideration distinguishing the interest payable under section 3(3) from the penalty imposed under section 3(5).
Section 3(6) provides that the officer or authority empowered to collect the cess may forward to the Collector a certificate under his signature specifying the amount of arrears including interest due from any person, and on receipt of such certificate the Collector is required to proceed to recover the amount specified from such person as if it were an arrear of land revenue.
The words used in section 3(6) are "specifying the amount of arrears including interest", that is to say that the interest is part of the arrear of cess.
In the case of a penalty imposed under section 3(5), a separate provision for recovery has been made under section 3(7).
Although the manner of recovery of a penalty provided by section 3(7) is the same as the manner of recovery provided by section 3(6) of the arrears of cess, the Legislature dealt with it as something distinct from the recovery of the arrears of cess including 528 interest.
In truth, the interest provided for under s.3(3) is in the nature of compensation paid to the Government for delay in the payment of cess.
It is not by way of penalty.
The provision for penalty as a civil liability has been made under section 3(5) and for penalty as a criminal offence under s.4.
The Delhi High Court proceeded entirely on the basis that the interest bore the character of a penalty.
It was according to the learned Judges "penal interest".
The learned Judge failed to notice section 3(5) and s.4 and the other provisions of the Cess Act".
The last question will be that in view of the clear terms of the statute whether the administrative inconvenience could be pleaded.
This could be decided with reference to the case in Sanjeev Coke Manufacturing Co. vs Bharat Coking Coal Ltd. & Another, ; @ 1029, as follows: ".
But in the ultimate analysis, we are not really to concern ourselves with the hollowness or the self condemnatory nature of the statements made in the affidavits filed by the respondents to justify and sustain the legislation.
The deponents of the affidavits filed into Court may speak for the parties on whose behalf they swear to the statement.
They do not speak for the Parliament.
No one may speak for the Parliament and Parliament has said what it intends to say, only the Court may say what it the Parliament meant to say.
None else.
Once a statute leaves Parliament House, the Court 's is the only authentic voice which may echo (interpret) the Parliament.
This the court will do with reference to the language of the statute and other permissible aids.
The executive Government may place before the court their understanding or misunderstanding of what Parliament has said or intended to say or what they think was Parliament 's object and all the facts and circumstances which in their view led to the legislation.
When they do so, they do not speak for Parliament.
No Act of Parliament may be struck down because of the understanding of Parliamentary intention by the executive government or because their (the Government 's) spokesmen do not bring out relevant circumstances but indulge in empty and self defeating affidavits.
They do not and they cannot bind Parliament.
Validity of legislation is not to be judged merely by affidavits filed on behalf of the State, but by all the relevant circumstances which the court may ultimately find and more especially by what may be gathered from what the legislature has itself said. " 529 Therefore, it has to be held that administrative inconvenience can hardly be any ground.
Viewing the statutory provisions form the above perspective, I agree with my learned brother that the liability to repay the excess amount arose on November 1, 1990 and the liability to pay interest arose on the expiry of eight days from November 1, 1990.
ORDER For the reasons stated by us in our separate but concurring judgments dated 4.2.1992, we allow the appeal to the limited extent indicated by us and the judgment of the High Court shall stand altered accordingly.
In the circumstances of this case, we make no order as to costs.
V.P.R. Appeal allowed.
| The appellant company was registered under the .
It obtained the consent of the Government of India to 482 issue 7,20,00,000 equity shares of Rs. 10 each at par and 33, 90, 000 fourteen per cent secured redeemable non convertible debentures of Rs. 100 each at per.
One of the conditions attached to the consent order was "The company shall scrupulously adhere to the time limit of 10 weeks from the date of closure of the subscription list for allotment of all securities and despatch of allotment letters/certificates and refund orders." On 12.7.1990 the company issued prospectus for the issue of the shares and debentures, stating therein that the company had sought the permission of the stock exchanges at Indore, Ahmedabad, Bombay, Calcutta and Delhi for dealing in equity shares and debentures in terms of the prospects; that interest at the rate of 15 % per annum on the excess application money would be paid to the applicants as per the guidelines issued by the Ministry of Finance on July 21, 1983 and September 27, 1985; that the public issue would open on August 20, 1990 and close on August 23, 1990; and that it would not be extended beyond August 31, 1990.
The issue opened on August 20, 1990.
The company received 26,32,894 applications for equity shares together with an aggregate sum of Rs. 225,25,51,247 in respect of a public issue of Rs. 25 crores.
The shares issue was close on 23rd August 1990.
On October 15,1990 the Board of Directors of the company approved the allotment of shares.
Prior to 1.11.1990, it secured the requisite permissions of the stock exchanges at Indore, Ahmedabad, Bombay Calcutta and Delhi to deal in the shares offered in the prospects.
The company had to despatch 25,50,604 refund order, which were printed in Bombay and they were meant to be despatched from Delhi.
The company despatched 8,55,226 refund orders from New Delhi at the rate of approx.
1,00,000 refund orders per day.
On 26th October, 1990 a consignment of 6,69,999 refund orders were despatched from Bombay to Delhi.
As a result of a fire that broke out on the way, many refund orders were destroyed and about 50 % of the consignment was missing after the accident.
In consultation with the Madhya Pradesh Stock Exchange and the Company 's Bank, instructions were issued by the Company to 483 stop payment of all refund orders with a view to avoiding any possible fraud or misuse.
As a result of the countermanding of all the refund orders and the printing of new refund orders, delay occurred in the despatch of newly printed orders.
For issuing the refund orders, at the request of the company, the Madhya Pradesh Stock Exchange granted extension of time till November 30,1990 and further extended till 19th December, 1990.
The Bombay Stock Exchange refusing the grant extension of time informed the company that it was bound to pay interest by reason of the delay in the despatch of refund orders.
The refund orders were not despatched until 12th November, 1990.
The Government of India and the Securities and Exchanges Board of India Respondents Nos. 1 and 2 respectively, insisted that the company should pay interest to the investors for the period of the delay in making the refund in accordance with the provisions of section 73 of the from 1st November (the expiry date of the period of 10 weeks from the date of the closure of the subscription lists) till the date of posting of the refund orders.
The company filed a writ petition in the High Court apprehending that the Government might direct the stock exchanges to delist the shares of the company by reason of its failure to pay interest and also initiate actions against it.
In the High Court, the respondent No. 1 submitted that the liability to pay the excess amount arose on the expiry of 10 weeks from the date of closure of the subscription lists.
The respondent No. 2 contended that the liability arose on the date of allotment.
The company the appellant contended that on the facts of the case, the liability arose on at the end of the period as extended by the Stock Exchanges at Indore in terms of the prospectus.
The High Court dismissed the writ petition, holding that the company was liable to pay interest at the prescribed rates for the period of delay and the liability for same arose on the expiry of 8 days from the date of allotment of the shares, and not from the date of expiry of 10 weeks, where allotment was made earlier to that date.
484 This appeal was filed by the Company against the High Court 's judgment by special leave, on the question, whether the High Court was right in discarding, for computation of interest, the time limit of 10 weeks running from the date of closure of the subscription lists, notwithstanding that the allotment had been made prior to the date of expiry of 10 weeks.
The appellant contended that the company was entitled to retain the excess amount for the period mentioned in the prospectus and consequently no liability to pay interest could arise until the expiry of that period; that as the Madhya Pradesh Stock Exchange had extended time for refund till 19th December, 1990, the liability of the company to repay the excess amount did not arise until then; that the interest became payable only after 8 days from the expiry of the period as extended by the Madhya Pradesh Stock Exchange; and that the interest was payable as a penalty and therefore a reasonable and rational construction of the statute to be made in regard to the commencement of the liability of the company to repay the excess amount by taking into account of the relevant circumstances which caused the delay.
The respondents submitted that the liability to repay the excess amount arose on the date of allotment of the shares, that the liability arose forthwith and any delay beyond the period of 8 days from the day on which the liability arose attracted interest that the expression `forwith ' had to be understood as an immediate liability ascertainable with reference to the date of allotment, but subject to a period of grace of 8 days.
Allowing the appeal, this Court, HELD : 1.01 As per Dr. Justice T.K. Thommen : A public limited company has no obligation to have its shares listed on a recognised stock exchange.
But if the company intend to offer its shares or debentures to the public for subscription by the issue of a prospectus, it must, before issuing such prospectus, apply to one or more recognised stock exchanges for permission to have the shares or debentures intended to be so offered to the public to be dealt with in each such stock exchange in terms of section 73.
[496 G] 1.02 Sub section (1) of section 73, as amended by the 485 Companies (Amendment) Act, 1988 has application only to a company intending to offer shares or debentures to the public for subscription by the issue of a prospectus.
Until this sub section was inserted, listing of public issues was not compulsory.
[497 B C] 1.03.
Sub section (1A) of Section 73 as amended by the Companies (Amendment) Act, 1988 makes it necessary for the company to state in its prospectus the name of each of the recognised stock exchanges whose permission for listing has been sought by the company.
[497 G] 1.04.
Any allotment of shares will become void if permission is not granted by the stock exchange or each such stock exchange, as the case may be, before the expiry of 10 weeks from the date of the closing of the subscription lists.
The validity of the allotment is made dependent on securing the requisite permission of each stock exchanges whose permission has been sought.
[497 G 498 A] 1.05.
The liability to repay the application money arises only upon refusal of the stock exchange to grant the permission sought by the company before the expiry of 10 weeks from the date of closing of the subscription lists.
[498 A] 1.06 There is a deemed refusal if permission is not granted by the stock exchange before the expiry of 10 weeks from the date of closing of the subscription lists, and upon the expiry of that date, any allotment of shares made by the company becomes void.
[498B] 1.07.
Sub section (1A) postulates that any allotment made becomes void at the end of 10 weeks from the date of the closing of the subscription lists if by that time the requisite permission of the stock exchange has not been obtained.
But this consequence is postponed till the dismissal of any appeal preferred under section 22 of the .
Nevertheless, the permission, if not obtained with 10 weeks, is deemed not to have been granted.
[504 F G] 1.08.
It is the legislative intent to delay the result postulated under sub section (1A) i.e., rendering the allotment void, until the period of 10 weeks has expired or until the dismissal of the appeal.
The liability to repay the excess money in the present case arose on 1.11.1990 which was admittedly the date of expiry of 10 weeks from the date of the closing of the subscription lists, and consequently the liability to pay interest at the rate specified in sub 486 section (2A) arose on the expiry of 8 days from 1.11.1990.
[498 C D] 2.01.
From the decision of the stock exchange refusing permission, an appeal will lie under section 22 of the Securities Contracts (Regulation)Act, 1956.
[498 C] 2.02.
Pending the decision in appeal, the allotment made would not be void, and the decision of the concerned stock exchange is made dependent on the result of the appeal.
[498 C] 2.03.
The fact that an appeal is pending does not postpone the result contemplated in sub section (2) in regard to the liability to repay the amounts and the interest accruing thereon if the amounts are not repaid within 8 days after the liability arose.
[505 A] 3.01 Sub section (1A) of Section 73 postulates two circumstances in which interest becomes payable, namely, where the permission has not been applied for before issuing the prospects and the company has thus acted in violation of the law or where permission, though applied for, has not been granted.
In the former case, apart from the other consequences which may flow from the company 's disobedience of the law, the liability to pay interest arises as from the date of receipt of the amounts, for the company ought not to have received any such amount in response to the prospectus issued by the company in disobedience of the requirements of subsection (1).
In the latter case, the liability to pay interest does not arise until the expiry of 8 days after the company became liable to repay the amounts received by reason of its failure to obtain the necessary permission as referred to in sub section (1A).
[499 C D] 3.02.
Section 73, as it stood prior to 1975, contained no specific provision compelling the company or its directors to repay the amounts received in excess of the aggregate of the application money relating to the shares or debentures in respect of which allotments have been made.
Sub section (2A) was inserted by the Companies (Amendment)Act, 1974 inserted to cover cases where permission of the stock exchange has been obtained, but the shares or debentures have been over subscribed and the company is consequently in possession of excess amounts.
The amended sub section made the company liable to repay the excess amounts forthwith, but did not made the company liable to pay interest on such excess amounts.
But a liability was cast on the directors.
If the excess amount was not repaid within 8 days from the day the company became liable to 487 repay it, the directors were made jointly and severally liable to repay such amount with interest.
The proviso to sub section (2A), which like the proviso to sub section (2), as they stood prior to 1988, provided that a director was not liable to repay the money with interest if he proved that the default in payment of the money was not on account of any misconduct or negligence on his part.
[500 C E] 3.03.
Owing to the absence of a specific provision imposing liability on the company to pay interest on the over subscribed amounts, and also owing to the absence of any provision to exempt directors who were not directly in charge of the administration of the company and the need to make listing of public issues compulsory, further amendments to the section became necessary.
Accordingly the Amendment Act of 1988 introduced several amendments to section 73, one of them being the substitution of a part of sub section (2A) making the company and every director of the company who is `an officer in default ' jointly and severally liable to repay the excess money with interest.
[500 F H] 3.04.
A `director of a company who is an officer in default ' appearing in sub section (2A) must be understood with reference to the definition of `an officer who is in default ' contained in section 2 (31) read with section 5.
This definition includes the managing director or the whole time director of a company.
[500 H 501 A] 3.05.
The liability imposed under sub section (2A) on a director of the company falls only upon a director who is `an officer in default ', as defined under section 2 (31) read with section 5(a) (b), and not upon any other director.
The nominees of the Government of financial institutions on the board of directors of the company, but not directly in charge of its administration as full time directors, are exempted from personal liability.
[501 A B] 3.06.
Sub section (2A) provides for the accrual of interest and the rates thereof.
Unlike sub section (2B) providing for punishment by imposition of fine or imprisonment, sub section (2A) speaks only of interest which is in contra distinction to punishment and is not penal in character.
It merely provides a mode of calculation of the amounts payable.
Any consideration with reference to a penal provision is of no relevance to the liability of the company of its directors to pay interest in terms of sub section (2A).
[503 E] 488 3.07.
Sub section (2B) concerns solely with default of compliance with the requirement of sub section (2A) namely, repayment of excess money.
Failure to repay the excess money as required by sub section (2A) visits the company and every officer of the company who is in default (as defined under section 5) with the stipulated punishment.
This is, of course, in addition to the payment of interest prescribed under sub section (2A).
[503 H 504 A] 3.08.
The interest provided under sub section (2) is payable to the applicants in terms of that sub section unless the money is returned to them within the specified time, notwithstanding the pendency of an appeal mentioned in the proviso to sub section (1A).
Subsection (3) has to be so understood to be in harmony with the other provisions of section 73.
[506 C] 3.09.
If the permission for listing sought under sub section (1) is not granted, the interest payable under sub section (2) is attracted.
Sub section (2) says that the liability to repay the money received from applicants arises forthwith either where the permission has not been sought or, having been sought, it has not been granted.
[504 H 505 A] 3.10.
The accrual of interest under sub section (2) is not dependent or consequent on the nullity postulated insub section (1A).
[505B] 4.01.
The expression `forthwith ' does not necessarily and always mean instantaneous.
The expression has to be understood in the context of the statue.
Where, however, the statute prescribes the payment of money and the accrual of interest thereon at certain points of time, the expression `forthwith ' must necessarily be understood to be immediate or instantaneous, so as to avoid any ambiguity or uncertainty.
The right accrues or liability arises exactly as prescribed by the statute.
[502 H 503 A] 4.02.
When `forthwith ' is used for determining the time and mode of payment of the principal and interest, a liberal or reasonable construction not to be adopted.
The legislature intended the expression `forthwith ' to refer to a particular day on which the liability to repay the principal amount arose and that is the day from which the period of 8 days has to be computed, and on the expiry of that period, interest begins to accrue.
[503 B C] 489 Keshav Nilkanth Joglekar vs The Commissioner of Police, Greater Bombay, ; and Salim vs State of West Bengal, ; , distinguished.
The right or obligation of the company to keep the money in the bank is only for the period preceding the decision of the stock exchange on the company 's request for permission to list.
Once the permission is expressly or impliedly refused, the money has to be returned to the applicants, notwithstanding the pendency of the company 's appeal.
The earlier part of the sub section about depositing the money in the bank is controlled by the latter provision in the sub section for return of the money as required by sub section (2).
This is particularly so by reason of the penalty specially provided in sub section (3) in the event of default of compliance with the requirement of that sub section.
[505 H 506 B] 5.02.
The money credited to the separate bank account can be utilised for only two purposes: (1) for adjustment against allotment of shares where listing is permitted; or (2) for repayment where listing is not permitted or the company is otherwise unable to allot shares.
The company has no right to deal with the money in any other manner or keep it longer than permitted by the section.
[506 G H] Palmer 's Company Law, 24th ed.
para 24.31; 1955(1) WLR 1080, referred to.
Interest does not begin to run under sub section (2) until 8 days have elapsed from the date of expiry of the period of 10 weeks commencing on the date of closure of the subscription lists.
The fact that the legislature has so provided in cases where permission has been refused expressly or by reason of the deeming provision is sufficient indication of the legislative intent to give the company reasonable time to repay the money.
[507 B C] 6.02.
Companies generally make allotments as soon as practicable after the necessary application has been made to the recognised stock exchange for permission for listing.
Upon the issue of the prospectus after making such application, amounts are received from the public in consideration of which allotments are made in anticipation of the requisite permission.
Greater the reputation of the company, larger are the amounts likely to be received.
If permission is not granted, the entire amounts received from the public 490 have to be forthwith repaid.
On the other hand, if permission is obtained, but the amounts received from the public are in excess of the aggregate of the application money relating to the allotted shares or debentures.
Such excess amounts are forthwith repayable.
Whether or not permission will be obtained cannot be ascertained until the period prescribed for the purpose has expired, namely, 10 weeks from the date of closing of the subscription lists.
Until the expiry of those 10 weeks, neither the subscribing public nor the company will be in a position to decide whether or not the allotments made are valid.
This is a period of uncertainty and it is for that reason that the legislature has, been is a case of refusal to grant permission, provided that the liability to repay the application money arises upon the expiry of 10 weeks.
[507 D G] 6.03.
The possibility of an appeal being allowed is, not a ground to delay repayment.
It should make no difference whether it is as a result of the permission having been refused, or permission having been granted and excess amounts are received by reason of over subscription, that repayment of money has to be made by the company.
It either event, the liability to repay the amounts arises forth with on the expiry of 10 weeks from the date of closure of the subscription lists, and the interest will begin to accrue thereon on the expiry of 8 days therefrom.
This construction is, just and reasonable from the point of view of both the investor and the company, and has the advantage of certainty, uniformity and easy application.
[507 G 508 A] 7.
The section 73 is not free from ambiguities and doubts.
Having been amended in several respects, it has not finally emerged with the clarity that admits of easy construction.
But the contemporaneous construction placed upon an ambiguous section by the administrators entrusted with the task of executing the statute is extremely significant.
This construction is, perfectly consistent with the language and the object of the statute.
It is a practical and reasonable construction, particularly because it affords the company reasonably sufficient time to complete the formalities for despatch of the refund orders.
And the investor who has responded to the invitation contained in the prospectus is not unduly kept waiting for the return of the excess amounts due to him.
[508 E G] Desh Bandu Gupta & Co. & ors.
vs Delhi Stock Exchange Association Ltd.; , and K.P. Varghese vs Income Tax Officer, Ernakulam & Anr., ; , referred to.
491 Crawford 's Interpretation of Laws, 1989 Ed.
referred to.
As per Mr. Justics section Mohan (Concurring) 1.01.
Sub section (2A) of Section 73 of the comes into operation only where permission has been granted by the recognised stock exchange or exchanges.
The words, "where permission has been granted" are of great significance.
Therefore, the contention that on the date of allotment the liability to pay interest arises may not be correct.
Nor again, it would be correct to contend that the mechanics of refund liability to pay arises on the date of allotment since there is a failure of consideration in respect of shares not allotted.
[519 B C] 1.02.
The liability of the company to repay the excess amount under Section 73 (2A) will arise only on the expiry of 10 weeks from the date of the closure of subscription lists.
The interest begins to accrue thereupon at the end of 8 days.
[526 A] 2.01.
The word "due" in the section 73 has been substituted for the word "payable" in order to make it clear that a mortgagor cannot redeem within the term of the mortgage.
The right of redemption arises when the principal money secured by the mortgage has become due and may be exercised at any time thereafter, subject of course to the law of limitation.
[520 C D] 2.02. "Due", means payable immediately or a debt contracted but payable at a future time.
"A debt is said to be `due 'the instant that it has existence as a debt; it may be payable at a future time" it cannot be contended on the strength of Section 530 `due ' and `payable ' is one and the same even under section 732 (a).
[522 E F] Black 's Legal Dictionary, (5th Edition 488), Venkataramiah 's Law Lexicon and Legal Maxims Vol.
I, 713 714; Wharton 's Law Lexicon, 14th Edition; Buckley on the Companies Acts, 14th Edition, Volume I, referred to.
Bhaktawar Begum vs Husaini Khanam, (1914)36 All. 195; 41 I.A. 84; ; Bir Mohammad V. Nagoor, ; (which over ruled Rose Ammal vs Rajarathnam, ; Baroda Board & Paper Mills Ltd. vs Income Tax Officer, Circle I, Ward E, Ahmedabad and others, 1976 (46) company cases 492 25; Union of India vs Air Foam Industries (P) Ltd., ; & 1271 (Para 7) referred to.
"Forthwith ' is not susceptible of a fixed time definition, and the surrounding facts and circumstances must be taken into consideration in determining the question, and forthwith may be minutes, hours, days or even weeks.
It cannot be said that "forthwith" means E.O. instanti.
[526 E F] Dickerman vs Trust Co., ; 176 U.S. 193, , , 4 Tyrwh.
837; Edwards vs Ins.
Co., ; Seammon vs Ins.
Co., 101, III 621; ; ; Bennect vs Ins ; Pennsylvanis R.Co.
vs Reichert, 58 Md. 261; Meriden Silver Plate Co. vs Flory , 193, Soutern Reporter, 339 and 16 Soutern Reporter 33 @ 35 Col. I., Laws 1035, Ex Secs C. 10, referred to.
Bouvier 's Law Dictionary Referred to. 4.
It cannot but be held that the payment of interest is only compensatory and not penal.
Merely because clause 10 uses the word "penal" it cannot be amount to penalty.
[526 F] Mahalaxmi Sugar Mills Co. Ltd vs Commissioner of Income Tax, Delhi, New Delhi, ; , referred to.
In view of the clear terms of the statute the administrative inconvenience cannot be pleaded.
[528 B C] Sanjeev Coke Manufacturing Co vs Bharat Cooking Coal Ltd. & Another, ; 1029, referred to.
|
ivil Appeal No. 1360 of 1974.
From the judgment and Order dated 14.12.1973 of the Delhi High Court in suit No. 64 of 1969.
Ms. Suruchi Agarwal and T.V.S.N. Chari for the Appellants.
H.K. Puri and Mrs. Urmila Sirur for the Respondents.
The Judgment of the Court was delivered by DR. A.S.ANAND,J.
This appeal, by special leave, is directed against the judgment of the Full Bench of the Delhi High Court, dated 14.12.1973 in Suit No. 64/69, delivered in a reference made by a learned Single Judge for opinion of the Full Bench.
The questions referred by the learned Single Judge to the Full Bench revolved around the scope and effect of the provisions of Sections 54 and 59B of the Indian Income Tax Act 1922 (hereinafter referred to as the '1922 Act ') and Sections 137 and 138 of the Income Tax Act 1961 (hereinafter referred to as the '1961 Act ') as amended from time to time in 1964 and 1967 in the context of the claim of privilege by the Income Tax Department for the production of the 551 documents relating to assessment of an assessee summoned by the Civil Court.
The following three questions were referred to and considered by the Full Bench: "1.
What is the position of law relating to privilege prior to 1964? 2.
What is the position of law relating to privilege after 1964 ?; and 3.
What is the effect of the production of certified copies relating to income tax assessment records, and how far certified copies can be admitted in evidence ?" The circumstances under which these questions arose, briefly put, are as follows: 2.
The plaintiff, Trilok Chand Jain, instituted a suit for recovery of Rs. 1,39,722.86 against the defendants, M/s. Dagi Ram Pindi Lal and Smt.
Budh Wanti Gulati, w/o Shri Pindi Lal Gulati, the appellants herein.
During the course of proceedings in the suit, when evidence was being recorded, the plaintiff obtained summons from the court requiring the Income Tax Department to produce in the court records relating to the Income Tax Assessment of the defendants, M/s. Dagi Ram Pindi Lal, for the assessment years 1964 65 to 1971 72.
The Income tax officer to whom the summons were issued, sent the record in a sealed cover through an Inspector along with a letter, dated November 1,1972, claiming that the said record was privileged under Section 137 of the 1961 Act.
The plaintiff also applied for and obtained summons requiring the Income tax Officer to produce the Income tax record relating to M/s Borizeon Industrial Products (P) Ltd. and Bishamber Nath Kaul.
That record was also sent by the Income Tax Officer in a sealed cover alongwith a letter in which it was submitted that no disclosure of information regarding income tax pertaining to an income tax assessee could be made.
The plaintiffs, it appears, in the meanwhile filed in the court a number of certified copies of the accounts of the defendants, which he had been able to obtain from the income tax authorities and sought permission of the Court to tender the certified copies in evidence.
Arguments were addressed by the parties before the learned Single Judge on the question of privilege as claimed by the Income Tax officer.
Being of the opinion that the question of privilege, as claimed by the Income Tax officer, was important and likely to arise in 552 the course of trial of suits in future also, a reference was made by the learned Single Judge to the Full Bench.
In dealing with the three questions (supra) referred to it, the Full Bench considered different situations.
It considered the first question in the following four situations: "(a) Where the documents, records, etc.
in respect of which privilege is claimed were filed by an assessee or a third party before April 1,1962, with effect from which date the Indian Income Tax Act, 1922 was repealed, in respect of assessment years up to and including assessment year 1961 62 in proceedings for the said assessment years taking place under the Indian Income tax Act,1922; (b) Where the documents, records, etc. were filed by an assessee or a third party after April 1,1962, but before April 1,1964 in respect of assessment years up to and including assessment year 1961 62 in proceedings for the said assessment years taking place under the Indian Income_tax Act,1922; (c) Where the document, records, etc. were filed by an assessee or a third party after April 1,1962, but before April 1,1964, in respect of assessment years up to and including assessment year 1961 62 in proceedings for the said assessment years taking place under the Income tax Act, 1961;and (d) Where the documents, records, etc. were filed by an assessee or a third party after April 1,1962, but before April 1,1964, in respect of assessment years 1962 63 and 1963 64 in proceedings for the said assessment years taking place under the Income tax Act, 1961." and sustained the claim of privilege by the Income Tax Department in each one of the situations.
The Full Bench while considering the second question, dealt with the following situations: (a) Where the documents, records, etc.
in respect of which privilege is claimed were filed by an assessee or a third party after April 1, 1964, in respect of assessment years up to and including assessment year 1961 62 in proceedings for the said 553 assessment years taking place under the Indian Income tax Act, 1922; (b) Where the documents, records etc.
were filed by an assessee or a third party after April 1, 1964, in respect of assessment years up to and including year 1961 62 in proceedings for the said assessment years taking place under the Indian Income tax Act, 1961; (c) Where the documents, records, etc. were filed by an assessee or a third party after April 1, 1964, in respect of assessment years 1962 63 and 1963 64 in proceedings for the said assessments years taking place under the Income tax Act, 1961; and (d) Where the documents, records, etc. were filed by an assessee or a third party after April 1, 1964, in respect of assessment years 1964 65 onwards.
" The claim of privilege was sustained in all above situations also.
Dealing with the effect of omission of Section 137 and substitution of section 138 (1) (a) and (b), the High Court opined; ". .that when a party to a proceeding in a Court applies for summoning any documents, records etc.
from the income tax authorities, the Court may summon the said documents, records, etc.
But on receipt of summons, it is open to the Commissioner of Income tax to consider the matter as provided under section 138 (1) (b), and decide whether it would be (sic) in the public interest to produce or furnish the documents, records, etc.
summoned for, and submit his view to the Court in answer to the summons.
In case, he is satisfied that the production etc.
would not be in the public interest, his decision is final and the Court to which the said decision is communicated cannot question the same." [EMPHASIS SUPPLIED] The Full Bench, however, did not express any opinion on the third question.
Learned counsel for the appellant has not questioned the findings of the Full Bench in so far as they relate to the claim of privilege in respect 554 of documents filed prior to the repeal of the 1922 Act or before the omission of Section 137 from the 1961 Act.
She has questioned the findings of the Full Bench only as regards the power and jurisdiction of the Court to summon the documents, after the repeal of the 1922 Act and after the deletion of Section 137 from the 1961 Act by the Finance Act, 1964 as also the interpretation placed by the Bench on Section 138 (1) (b) of the Act.
The controversy before us has been confined to the finding of the High Court relating to the claim of privilege for the production of documents which were filed after the repeal of Section 137, with effect from 1.4.1964 in respect of assessment years 1964 65 onwards.
Thus, it is the finding on situation (d) of the second question as rendered by the Full Bench Which alone has been questioned and debated before us.
The precise argument of the learned counsel for the appellant is that after the repeal of Section 137 of the 1961 Act by Act V of 1964, there is no longer any impediment left in the way of a civil court to summon the production of documents filed by an assessee during the assessment proceedings before an Income tax Officer after 1.4.1964 in respect of assessment years 1964 65 onwards, and that the finality attached to an order of the Commissioner with regard to claim of privilege under Section 138 (1) (b) has no relationship to the power of the court to summon that record.
For a proper appreciation of the question debated before us, it would be desirable to refer to the relevant provisions of the 1922 Act and 1961 Act, as amended from time to time, and notice the changes brought about in the matter of claim of privilege by the Income Tax Department.
Section 54 (1) and (2) of the 1922 Act provided as follows: "54.
Disclosure of information by a public servant (1) All particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of this Act or in any evidence given, or affidavit or deposition made, in the course of any proceedings under this Act other than proceedings under this Chapter, or in any record of any assessment proceeding, or any proceeding relating to the recovery of a demand, prepared for the purpose of this Act, shall be treated as confidential, and notwithstanding 555 anything contained in the Indian Evidence Act, 1872(1 of 1872) no Court shall save as provided in this Act, be entitled to require any public servant to produce before it any such return, accounts, documents or record or any part of any such record, or to give evidence before it in respect thereof.
(2) If a public servant discloses any particulars contained in any such statement, return, accounts,documents, evidence, affidavit deposition or record, he shall be punishable with imprisonment which may extend to six months, and shall also be liable to fine.
By Section 9 of the Taxation Laws (Amendment) Act of 1960, Section 59 B was inserted in the 1922 Act with effect from April 1, 1960.
It provided as under: "59 B Disclosure of information regarding tax payable Where a person makes an application to the Commissioner in the prescribed form and after payment of the prescribed fee for information as to the amount of tax determined as payable by any assessee in respect of any assessment made on or after the 1st day of April, 1960, the Commissioner may, notwithstanding anything contained in section 54, if he is satisfied that there are no circumstances justifying its refusal, furnish or cause to be furnished the information asked for.
" Both the aforesaid provisions dealt with the confidential nature of the documents filed, before the Income Tax authorities and the claim of privilege to disclose the same to anyone, including a court of law.
Section 54 (1) declared that the various documents referred to therein shall be treated as confidential and prohibited a court from requiring any public servant to produce before it any such document or to give evidence before it in respect thereof, notwithstanding anything contained in the .
Sub Section (2) of Section 54 made punishable, the disclosure by a public servant, of any information contained in those documents.
the effect of introduction of Section 59 B by Taxation Laws (Amendment) Act 1960 was that it entitled a person to make an application to the Commissioner to obtain information thereafter as to the amount of tax determined, as payable by an assessee in respect of any assessment made 556 on or before April 1, 1960, and authorised the Commissioner to furnish or cause to be furnished the sought for information, if he was satisfied that there were no circumstances justifying its refusal.
This legal position continued to prevail till April 1, 1960, when the 1922 Act was repealed by the 1961 Act.
In the 1961 Act , provisions were made corresponding to sections 54 and 59 B of the 1922 Act in Sections 137 and 138.
The relevant portions of Sections 137 and 138 of the Act provided as follows: "137.
Disclosure of information prohibited (1) All particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of this Act, or in any evidence given or affidavit or deposition made in the course of any proceedings under this Act, other than proceedings under Chapter XXII, or in any record of any assessment proceedings, or any proceedings relating to recovery of a demand, prepared for the purposes of this Act, shall be treated as confidential, and notwithstanding anything contained in the , no Court shall, save as provided in this Act, be entitled to require any public servant to produce before it any such return, accounts, documents or record or any part of any such record, or to give evidence before it in respect thereof.
(2) No public servant shall disclose any particulars contained in any such statement, return, accounts, documents, evidence, affidavit, deposition or record.
(3) . . (4) . . (5) . . "138.
Disclosure of information respecting tax payable WHERE A person makes an application to the Commissioner in the prescribed form and pays the prescribed fee for information as to the amount of tax determined as payable by an assessee in respect of any assessment made either under this Act or the Indian income tax Act, 1922.
On or after the 1st day 557 of April, 1960, the Commissioner may, notwithstanding anything contained in Section 137, if he is satisfied that there are no circumstances justifying its refusal, furnish or cause to be furnished the information asked for.
The provisions of Section 137(1) of the 1961 Act were, as is seen, almost identical to the provisions of sub section (1) of Section 54 of the 1922 Act and Section 137 (2) prohibited a public servant from disclosing the particulars contained in any of the documents mentioned in Section 137 (1).
The provisions of Section 138 of the 1961 Act were almost identical to the provisions of Section 59 B of the 1922 Act.
With effect from April 1, 1964, Section 137 of the 1961 Act was omitted from the Statute vide Section 32 of the Finance Act No. V of 1964, and Section 138 was substituted by a new Section vide Section 33 of the Finance Act No. V of 1964.
The substituted Section 138 reads as under: "138.
Disclosure of information respecting assessees: (1) Where a person makes an application to the Commissioner in the prescribed form for any information relating to any assessee in respect of any assessment made either under this Act or the Indian Income tax Act, 1922, on or after the 1st day of April, 1960, the Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for in respect of that assessment only and his decision in this behalf shall be final and shall not be called in question in any Court of law.
(2) Notwithstanding anything contained in sub section (1) or any other law for the time being in force, the Central Government may, having regard to the practices and usages customary or any other relevant factors, by order notified in the Official Gazette, direct that no information or document shall be furnished or produced by a public servant in respect of such matters relating to such class of assessees or except to such authorities as may be specified in the order.
The scope of Section 138, of the 1961 Act was, as can be seen, enlarged by the substituted provisions of Section 138.
Under the original 558 Section 138 a person could make an application for information only as to the amount of tax determined, as payable by an assessee, under sub section (1) of the substituted Section 138, a person could make an application for any information relating to an assessment.
Again, under the original Section 138, before the necessary information could be furnished or cause to be furnished to an applicant, the Commissioner was to be satisfied that there were no circumstances justifying refusal to furnish the information asked for; under sub Section (1) of the substituted Section 138, the Commissioner was required to be satisfied that it was in the public interest to furnish the information asked for and "his decision in this behalf shall be final and shall not be called in question in any court of law." Vide sub Section (2) of the substituted Section 138, the Central Government was also empowered to direct, by an order notified in the Official Gazette, that no information or document shall be furnished or produced by a public servant in respect of such matters relating to such class of assessees or except to such authorities as may be specified in the order.
10, The substituted Section 138 was once again amended and substituted vide Section 28 of the Finance Act, 1967 with effect from April 1, 1967.
The new sub section (1) of section 138 reads as follows: "(1)(a) The Board or any other income tax authority specified by it by a general or special order in this behalf may furnish or cause to be furnished to (i) any officer, authority or body performing any functions under any law relating to the imposition of any tax, duty of cess, or to dealings in foreign exchange as defined in section 2(d) of the Foreign Exchange Regulation Act, 1947; or (ii)such officer, authority or body performing functions under any other law as the Central Government may, if in its opinion it is necessary so to do in the public interest, specify by notification in the Official Gazette in this behalf, any such information relating to any assessee in respect of any assessment made under this Act or the Indian income tax Act, 1922 as may, in the opinion of the Board or other Income tax authority, be necessary for the purpose of enabling the officer, authority or body to perform his or its functions under that law.
559 (b) Where a person makes an application to the Commissioner in the prescribed form for any information relating to any assessee in respect of any assessment made under this Act or the Indian Income tax Act 1922, on or after the 1st day of April, 1960 the Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for in respect of that assessment only and his decision in this behalf shall be final and shall not be called in question in any court of law.
" The provisions of sub Section (1) of Section 138 as they originally stood were incorporated in clause (b) of the substituted sub Section (1) and a new provision was incorporated in clause (a) of sub Section (1) which empowered the Board or any other income tax authority specified by it by a general or special order in that behalf to furnish or cause to be furnished, information relating to any assessee to such officer, authority or body as is mentioned in the provision to enable him or it to perform its functions under the Act.
Vide clause (b)of the substituted sub Section (1) of Section 138, finality has also been attached to an order of the Commissioner, made on an application filed by any person seeking information relating to an assessee in respect of any assessment.
The Commissioner, has to make an order, after being satisfied that it is in the public interest so to do, to furnish or cause to be furnished such information and that decision of the Commissioner is immune from challenge in any court of law.
The controversy as already noticed, before us is limited to the jurisdiction or lack of it of a civil court to seek production of documents relating to assessments filed after April 1, 1964 in assessment proceedings 1964 65 onwards, after the omission of Section 137 of the Act.
The Full Bench, in the impugned judgment, came to the conclusion that the omission of Section 137 did not make any difference and that the ban on the courts as contained in the repealed Section 137 continued to remain in force by virtue of the provisions of Section 138 (1) and after 1967 by Section 138 (1)(b) of the Act even in respect of the documents filed in the assessment proceeding after April 1, 1964 for assessments relating to the period 1964 65 onwards.
The Full Bench also pressed into aid the provisions of Section 6 of the General Clauses Act to 560 hold that the repeal of Section 137 did not remove the ban on the courts to summon any documents from the income tax authorities, even in respect of documents which had been filed before the Income tax authorities after the repeal of Section 137 after April 1, 1964.
In our opinion the High Court fell in error in coming to that conclusion.
It not only ignored the legislative intent manifest in the omission of Section 137 of the 1961 Act, after the repeal of the 1922 Act, but also ignored the powers of a court under the general law, to summon such documents, record etc.
as is found relevant to a case pending before the court, in the absence of any specific prohibition, under any law for the time being in force.
The High Court assumed that by Section 54 of the 1922 ACt and Section 137 of the 1961 Act, the jurisdiction of the courts to call for documents from the income tax authorities had been taken away for all times to come, notwithstanding the repeal of the 1922 Act or the omission of Section 137 specifically from the 1961 Act.
The High Court appears to have lost sight of the position that under the Code of Civil Procedure, the courts of law have always possessed the jurisdiction to call for the production of documents relevant to the case before the court from anybody having custody of those documents.
Section 54 of the 1922 Act and after its repeal Section 137 of the 1961 Act had only placed fetters on the exercise of that jurisdiction, in respect of the specified documents, by the courts, notwithstanding anything contained in any other law for the time being in force.
The exercise of the jurisdiction to seek production of documents had, thus only been put under a cloud in so far as the record of assessment is concerned.
With the repeal of the 1922 Act and omission of Section 137 of the 1961 Act, the fetters on the exercise of that jurisdiction were removed with the result that the exercise of the jurisdiction to call for the production of documents relevant to the case pending before the court, even from the income tax authorities, revived.
Neither Section 54 of the 1922 Act nor Section 137 of the 1961 Act had taken away for all times the jurisdiction of the courts to call for the record from the income tax authorities.
Those provisions, as already noticed had, only put the exercise of that jurisdiction under a cloud and those fetters were coterminous with the life of Section 54 of the 1922 Act or Section 137 of the 1961 Act.
The finality which has been attached to the order if the Commissioner under Section 138 (1) (b) of the Act is applicable only in cases where application is made to the Commissioner by a party or any other person 561 for receiving documents or information.
It has nothing to do with the powers of the courts to summon the production of assessment record of an assessee, filed after 1.4.1964.
The Privilege as to secrecy, which the assessee had acquired under Section 54 of the 1922 Act remained unimpaired by the repeal of that Act or even by the omission of Section 137 of the 1951 Act in respect of record filed prior to 1.4.1964 and relating to the assessments prior to that date.
That privilege did not extend, after April 1, 1964, to record filed before the income tax authorities, for the assessment years 1964 65 onwards.
Section 6 of the General Clauses Act as well as Section 138 (1) (b) of the 1961 Act cannot extend the ban on the exercise of the jurisdiction by the courts to summon the production of documents from the income tax authorities after April 1, 1964 relating to assessment year 1964 65 in respect of the record filed after April 1, 1964.
Section 6 (C) of the on which reliance was placed by the HIgh Court reads as under: "6.
Where this ACt, or any Central Act or regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not . . . (c) affect any right, privilege, obligation or liability acquired or incurred under any enactment so repealed.
" A plain reading of the Section shows that the repeal of any enactment unless a different intention appears, shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed enactment.
In respect of the documents filed after the repeal of Section 137 of the 1961 Act, with effect from April 1, 1964, relating to assessments for the period 1964 65 onwards, no right, privilege, obligation or liability can be said to have been acquired, accrued or incurred prior to the omission of section 137 of the Act.
Therefore, the ban contained in Section 137 of the 1961 Act on the exercise of the powers of a civil court to call for production of documents etc.
could not be said to have continued to exist, in matters arising subsequent to the omission of that Section with effect from April 1, 1964 and that ban came to an end in respect of the period after April 1, 1964.
The general principle is that an enactment which is repealed, is to be treated, except as to transactions past and closed, as if it had never existed.
The assessee had acquired no right or 562 privilege under the repealed Act, since the provision is only a procedural restriction and did not create any substantive right on the assessee, in respect of assessments for the period after the omission of Section 137 of the 1961 Act.
Thus, reliance placed on the provisions of Section 6 of the to hold the continuation of the ban on the exercise of jurisdiction by the courts was misplaced.
Dealing with the scope of Section 138 (1) (b) of the Act, the High Court held that the said provisions attached a finality to an order of the Income Tax Commissioner and applied to the cases where the record was summoned even by a court of law.
The High Court opined: "The complete omission of the declaration of the confidential nature of the documents, records, etc.
and the removal of the ban on courts and public servants no doubt, suggests that the power of a court under the general law to summon such documents, records,etc.
relevant to the case before it has been restored.
But at the same time, the legislature which empowered the Commissioner of Income tax to furnish the information if he is satisfied that it is in the public interest so to do made the decision of the Commissioner final and un questionable in a Court of law.
When two powers are thus vested in two legal authorities, neither of them can be ignored, and both of them have to be reconciled and given effect to .
In the case of the two powers under consideration, it has to be noted that the power to summon which vests in a court is under the general law, while the power of the Commissioner has been conferred upon him by a special law and has, therefore, to prevail over the former.
In view of the same, it has to be held that while it is open to a court to summon the documents, records etc.
from the Income tax Commissioner, it is equally open to the Commissioner on receiving the summons to consider whether the production/furnishing of the documents, records etc.
would be in the public interest, and submit the same to the court in answer to the summons.
" We are unable to subscribe to the above view.
Clause (b) of sub Section (1) of Section 138 is limited in its scope and application.
Under it, any person can make an application to the 563 Commissioner for any information relating to an assessee in respect of any assessment made either under the 1922 Act or under the 1961 Act on or after the 1st April 1960 and the Commissioner of Income Tax has the authority to furnish or cause to be furnished the information asked for on being satisfied that it is in the public interest so to do and such an order of the Commissioner is final and cannot be called in question in any court of law.
The Commissioner of Income Tax under this clause performs only an administrative function, on his subjective satisfaction as to whether it is in the public interest to furnish the information or not to any person seeking such information and his decision in that behalf is final and the aggrieved person cannot question it in a court of law.
By enacting this provision, the legislature could not be said to have intended that the Commissioner of Income Tax would have the authority to sit in judgment over the requisition made by a court of law requiring the production of record of assessment relating to an assessee in a case pending before the court.
When a court of law, in any matter pending before it desires the production of record relating to any assessment after applying its judicial mind and hearing the parties and on being prima facie satisfied that the record required to be summoned is relevant for the decision of the controversy before it it passes a judicial order summoning the production of that record from the party having possession of the record.
The Commissioner of Income Tax cannot, therefore, refuse to send the record, as he certainly is not authorised to set at naught a judicial order of a court of law.
He must obey the order of the court by sending the record to the court concerned indeed it is open to the Commissioner of Income Tax to claim privilege, in respect of any document or record so summoned by a court of law, under Sections 123 and 124 of the and even then it is for the court to decide whether or not to grant that privilege.
Had the legislature intended that no document from the assessment record of an assessee should be produced in a court on being summoned by it, without the approval of the Commissioner of Income Tax, it would have said so in Section 138 of the Act itself.
The repeal of Section 137 of the Act clearly discloses the legislative intent that it was felt by the legislature that it was no more necessary to keep the records of assessment by the Income Tax Department relating to an assessee as confidential from the courts and the bar with regard to the production of any part of the record was removed in so far as the courts are concerned.
The finality which has 564 been attached to the order of the Commissioner under Section 138(1)(b) of the Act is, thus, restricted to the cases where the information etc.
as contemplated by the Section is called for by any person, other than a court of law by a judicial order.
The High Court, therefore, fell in error in holding that the assessment records of an assessee filed before the income tax authorities, even after April 1, 1964, are immune from production in a court of law on summons for their production being issued by the court and that the disclosure of any information from the record even to the courts is subject to the veto powers of the Commissioner of Income Tax.
Section 138(1)(b) does not affect the powers of the courts to require the production of assessment records or the disclosure of any information therefrom to it, in a case pending before the court when the court, by a judicial order, requires the production of the record, considered relevant by it for decision of a case pending before it.
As a result of the above discussion, we, therefore, find that the answer given by the Full Bench of the High Court in the impugned judgment, to situation (d) of the second question (supra) as formulated by it, is erroneous and we set it aside.
Consequently, we hold that after the repeal of Section 137 of the Act, there is no longer any impediment left in the way of a court to summon the production of documents filed by an assessee before the income tax authorities after April 1, 1964 relating to assessment proceedings for 1964 65 onwards and that the finality attached to an order of the Commissioner under Section 138(1)(b) has no relevance to the exercise of powers by a court to summon the production of documents in a case pending before the Court.
Since, the challenge before us had been confined to the answer given by the High Court to situation (d) of the second question as formulated by it and no other finding of the High Court was called in question, we have refrained from expressing any opinion on the other findings recorded by the Full Bench of the High Court.
The appeal consequently succeeds to the extent indicated above and is allowed.
We, however, make no order as to costs.
V.P.R. Appeal allowed.
| The Plaintiff respondent instituted a suit for recovery of Rs.1,39,722.86 against the defendants appellants.
When evidence was being recorded in the suit proceedings, the plaintiff obtained summons from the court requiring the Income Tax Department to produce in the court records relating to the income tax assessment of the defendants for the assessment years 1964 65 to 1971 72.
The Income Tax Officer produced the record in a sealed cover.
The plaintiff also obtained summons requiring the Income Tax Officer to produce the income tax record relating to two other assessees, which was produced in the Court by the Department in a sealed cover with a submission that no disclosure of information regarding income tax 546 pertaining to an income tax assessee could be made.
The plaintiffs in the meanwhile filed in the court a number of certified copies of the accounts of the defendants, which he had obtained from the Income Tax authorities and sought permission of the Court to tender the certified copies in evidence.
Before a Single Judge of the High Court on the question of privilege as claimed by the Income Tax Department, arguments were addressed by the parties.
The following three questions were referred to the Full Bench (i) What is the position of law relating to privilege prior to 1964? (ii) What is the position of law relating to privilege after 1964? and (iii) What is the effect of the production of certified copies relating to income tax assessment records, and how far certified copies can be admitted in evidence? The Full Bench answered the first and second questions sustaining the claim of the privilege by the Income Tax Department and the Full Bench did not express any opinion on the third question.
Against the judgment of the Full Bench of the High Court, appeal was filed by special leave.
The controversy before this Court was confined to the finding of the High Court relating to the claim of privilege for the production of documents which were filed after the repeal of Section 137, with effect from 1.4.1964 in respect of assessment years 1964 65 onwards.
The appellants (defendants) contended that after the repeal of Section 137 of the Income Tax Act, 1961 by the Finance Act, 1964 there was no longer any impediment left in the way of a civil court to summon the production of documents filed by an assessee during the assessment proceedings before an Income Tax Officer after 1.4.1964 in respect of assessment years 1964 65 onwards, and that the finality attached to an order of the Commissioner with regard to claim of privilege under Section 138(1)(b) had no relationship to the power of the court to summon that record.
Allowing the appeal of the defendants appellants, this Court, 547 HELD:1.01.
Section 54 of the Income Tax Act, 1922 and after its repeal, Section 137 of the Income Tax Act, 1961 had only placed fetters on the exercise of the jurisdiction, in respect of the specified documents, by the courts, notwithstanding anything contained in any other law for the time being in force.
The exercise of the jurisdiction to seek production of documents had, only been put under a cloud in so far as the record of assessment is concerned.
[560E] 1.02.
With the repeal of the 1922 Act and omission of Section 137 of the 1961 Act, the fetters on the exercise of the jurisdiction were removed with the result that the exercise of jurisdiction to call for the production of documents relevant to the case pending before the court, even from the income tax authorities, revived.
[560E F] 1.03.
Neither Section 54 of the 1922 Act nor Section 137 of the 1961 Act had taken away for all times the jurisdiction of the courts to call for the record from the Income Tax authorities.
Those provisions had only put the exercise of that jurisdiction under a cloud and those fetters were coterminous with the life of Section 54 of the 1922 Act or Section 137 of the 1961 Act.
[560F G] 2.01.
Clause (b) of Sub Section (1) of Section 138 is limited in its scope and application.
Under it, any person can make an application to the Commissioner for any information relating to an assessee in respect of any assessment made either under the 1922 Act or under the 1961 Act on or after the 1st April 1960 and the Commissioner of Income Tax has the authority to furnish or cause to be furnished the information asked for on being satisfied that it is in the public interest so to do and such an order of the Commissioner is final and cannot be called in question in any court of law.
The Commissioner of Income Tax under this clause performs only an administrative function, on his subjective satisfaction as to whether it is in the public interest to furnish the information or not to any person seeking such information and his decision in that behalf is final and the aggrieved person cannot question it in a court of law.
By enacting this provision, the legislature could not be said to have intended that the Commissioner of Income Tax would have the authority to sit in judgment over the requisition (Judicial order) made by a court of law requiring the production of record of assessment relating to an assessee in a case pending before the court.
[562H 563D] 548 2.02.
When a court of law, in any matter pending before it, desires the production of record relating to any assessment after applying its judicial mind and hearing the parties and on being prima facie satisfied that the record required to be summoned is relevant for the decision of the controversy before it it passes a judicial order summoning the production of that record from the Party having possession of the record.
The Commissioner of Income Tax cannot, therefore, refuse to send the record, as he certainly is not authorised to set at naught a judicial order of a court law.
He must obey the order of the court by sending the record to the court concerned.
[563D F] 2.03.
It is open to the Commissioner of Income Tax to claim privilege, in respect of any document or record so summoned by a court of law, under Sections 123 and 124 of the and even then it is for the court to decide whether or not to grant that privilege.
Had the legislature intended that no document from the assessment record of an assessee should be produced in a court on being summoned by it, without the approval of the Commissioner of Income Tax, it would have said so in Section 138 of the Act itself.
[563F G] 2.04.
The repeal of Section 137 of the Act clearly discloses the legislative intent that it was felt by the legislature that it was no more necessary to keep the records of assessment by the Income Tax Department relating to an assessee as confidential from the courts and the bar with regard to the production of any part of the record was removed in so far as the courts are concerned.
The finality which has been attached to the order of the Commissioner under Section 138(1)(b) of the Act is restricted to the cases where the information etc.
as contemplated by the section is called for by any person, other than a court of law by a judicial order.
[563G 564A] 2.05 The finality which has been attached to the order of the Commissioner under Section 138(1)(b) of the Act is applicable only in cases where application is made to the Commissioner by a party or any other person for receiving documents or information.
It has nothing to do with the powers of the courts to summon the production of assessment record of an assessee, filed after 1.4.1964.
The privilege as to secrecy, which the assessee had acquired under Section 54 of the 1922 Act remained unimpaired by the repeal of that Act or even by the omission of Section 549 137 of the 1961 Act in respect of record filed prior to 1.4.1964 and relating to the assessments prior to that date.
That privilege did not extend, after April 1,1964.
to record filed before the income tax authorities, for the assessment years 1964 65 onwards.
[560H 561B] 2.06.
Section 138(1)(b) does not effect the powers of the courts to require the production of assessment records or the disclosure of any information therefrom to it, in a case pending before the court when the court, by a judicial order, requires the production of the record, considered relevant by it for decision of a case pending before it.
[564B C] 2.07.
The High Court, therefore, fell in error in holding that the assessment records of an assessee filed before the income tax authorities, even after April 1,1964, are immune from production in a court of law on summons for their production being issued by the court and that the disclosure of any information from the record even to the courts is subject to the veto powers of the Commissioner of Income Tax.
[564B] 3.01.
Section 6 of the General Clauses Act as well as Section 138 (1)(b) of the 1961 Act cannot extend the ban on the exercise of the jurisdiction by the courts to summon the production of documents from the income tax authorities after April 1,1964 relating to assessment year 1964 65 in respect of the record filed after April 1,1964.
[561B C] 3.02.
Section 6 of the General Clauses Act provides that the repeal of any enactment, unless a different intention appears, shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed enactment.
[561F] 3.03 The general principle is that an enactment which is repealed, is to be treated, except as to transactions past and closed, as if it had never existed.
The assessee had acquired no right or privilege under the repealed Act, since the provision is only a procedural restriction and did not create any substantive right in the assessee, in respect of assessments for the period after the omission of Section 137 of the 1961 Act.
Thus, reliance placed on the provisions of Section 6 of the General Clauses Act to hold the continuation of the ban on the exercise of jurisdiction by the courts was misplaced.
[561H 562B] 3.04.
In respect of the documents filed after the omission of Section 550 137 of the 1961 Act , with effect from April 1,1964, relating to assessments for the period 1964 65 onwards, no right, privilege, obligation or liability can be said to have been acquired accrued or incurred prior to the omission of Section 137 of the Act.
[561F G] 3.05 The ban contained in Section 137 of the 1961 Act on the exercise of the powers of a civil court to call for production of documents etc.
could not be said to have continued to exist, in matters arising subsequent to the omission of that Section with effect from April 1, 1964 and that ban came to an end in respect of the period after April 1, 1964.
[561G] 4.
After the repeal of Section 137 of the act, there is no longer any impediment left in the way of a court to summon the production of documents filed by an assessee before the income tax authorities after April 1,1964 relating to assessment proceedings for 1964 65 onwards and that the finality attached to an order of the Commissioner under Section 138 (1)(b) has no relevance to the exercise of powers by a court to summon the production of documents in a case pending before the Court.
[564D E]
|
Civil Appeal No. 350 of 1974.
Appeal by Certificate from the Judgment and Order dated 29/30 8 1973 of the Gujarat High Court in Special Civil Application No. 163 of 1973.
M.H.Baig, Rajiv Shakdhar, R.Sasi Prabhu (for M/s S.A. Shroff & Co.) for the Appellants.
P.S. Poti, Bimal Roy Jad.
Anip Sachthey and Ms. Rashmi Dhariwal for the Respondents.
The Judgment of the Court was delivered by MOHAN, J.
This is an appeal by certificate granted by the High Court of Gujarat at Ahmedabad under articles 132(1) and 133 (1)(a) of the Constitution of India.
It is directed against the judgment dated 29/30th August, 1973 in special Civil Application No. 163 of 1973.
The facts leading to this appeal are briefly as under: The Appellant is a company registered under Indian .
It is engaged in the business of manufacturing resins, chemicals, sodium carboxy methyl, cellulose and certain other chemicals.
Industrial alcohol is one of the raw materials used by the appellant company.
Though, till the year 1969, the appellant was purchasing industrial alcohol from the market, it installed its own distillery from may 1970 at Bilimora, within the State of gujarat.
This was for the purpose of manufacturing industrial alcohol from molasses.
On July 3rd, 1969 the second respondent, the Director of Prohibition and excise, Gujarat State, Ahmedabad issued a licence to the appellant for manufacturing spirit.
In accordance with the conditions No. 2 and 3 of the licence, the 2nd respondent appointed a staff of 9 persons.
The said staff consisted of one Inspector, one Sub Inspector, one Nayak, one jamadar and five constables to supervise the manufacture of spirit in the 678 appellant 's distillery plant.
The appellant was also required to provide residential accommodation to the supervisory staff within the factory premises.
On July 3rd, 1969 the 2nd respondent asked the appellant to deposit the supervisory charges.
From time to time, these supervisory charges were also deposited in accordance with the directions of 2nd respondent.
It requires to be stated at this stage that the levy of supervisory charges, is traceable to section 58(A) of Bombay Prohibition Act of 1949.
The Section says: "Sec.58(A) : The State government may be general or special order direct that the manufacture, import, export, transport, storage, sale, purchase, use collection or cultivation of any intoxicant, denatured spirituous preparation, hemp, mhowra flowers, or molasses shall be under the supervision of such Prohibition and Excise or Police Staff as it may deem proper to appoint, and that the cost of such staff shall be paid to the State Government by person manufacturing, importing,exporting,transporting, storing,selling, purchasing, using, collecting or cultivating the intoxicant, denatured spirituous preparation hemp, mhowra flowers or molasses: Provided that the State Government may exempt any class of persons or institution from paying the whole or any part of the cost of such staff." Section 143 of the said Act confers power for making rules.
Rules have been framed called Bombay Prohibition (Manufacture of Spirit) (Gujarat)Rules, 1963.
These rules inter alia regulate the working of distilleries, manufacturing spirit.
Rule 2 provides for the licence.
Condition Nos.2 and 3 of the licence require payment of the supervisory staff and for provision of quarters for the residential accommodation of the staff respectively.
The appellant filled Civil Application No. 163 of 1973 in the High court of Gujarat challenging the constitutional validity of Section 58(A) of the Act.
By the impugned judgment,, the said petition was dismissed.
Hence, the present civil appeal.
679 The arguments of the appellant briefly stated will boil down to this.
It has been categorically laid down in Synthetics & Chemicals Ltd. vs State of U.P. & Ors., [1989] Supp. 1 SCR 623 that in respect of industrial alcohol, the states have no power to impose the impost as is sought to be done in the instant case.
The theory of privilege as adumbrated by the High court can no longer be sustained in view of the judgement.
Even otherwise, there is no quid pro quo.
In countering the submissions, it is argued on behalf of the State that Synthetics and Chemicals Ltd. etc.
(supra) dealt merely with the vend fees.
That is not the case here.
The maintenance of the Staff contemplated under Section 58(A) of the Act is primarily for the purpose of ensuring that while dealing with industrial alcohol, no attempt shall be made to divert nonpotable alcohol.
Therefore, by regulatory measures, the States sees to it that industrial alcohol is not diverted for the use as potable alcohol.
Such a regulatory measure is perfectly valid as seen from Southern Pharmaceuticals & Chemicals vs State of Kerala, ; This decision was noted with approval in Synthetics & Chemicals Ltd. Etc.
(Supra).
However, such a power was sustained though not on police power but as a regulatory measure.
As regards the services rendered, the appellants are precluded from contending that the services did not make the impost, since the High Court has noted that it was not contended before it that there was not sufficient quid pro quo between the quantum of impost and the services rendered to the manufacturer or businessman.
We are relieved of the necessity of deciding the correctness of these submissions by a detailed judgment, since identical points were raised in Civil Appeal No. 503 of 1974 (Sh.
Bileshwar Khand Udyog Khedut Sahakari Mandali Ltd. vs The State of Gujarat & Anr.) to which one of us (Mohan, J.) was a party.
The said Civil Appeal has been dismissed considering these aspects and upholding the validity of Section 58(A).
The said judgment will squarely cover this case as well.
We fully concur with the reasons contained therein.
In Synthetics & Chemicals Ltd. etc.
(supra) concerning the power to make regulations in order that non potable alcohol may not be diverted for use as potable alcohol, the following observations are found at page 681: 680 "The position with regard to the control of alcohol industry has undergone material and significant change after the amendment of 1956 to the IDR Act.
After the amendment, the state is left with only the following powers to legislate in respect of alcohol: (a) it may pass any legislation in the nature of prohibition of potable liquor referable to entry 6 of list II and regulating powers.
(b) it may lay down regulations to ensure that non potable alcohol is not diverted and misused as a substitute for potable alcohol.
(c) the State may charge excise duty on potable alcohol and sales tax under entry 52 of list II, However, sales tax cannot be charged on industrial alcohol in the present case, because under the Ethyl Alcohol (price Control) Orders, sales tax cannot be charged by the State on industrial alcohol.
(d) however, in case State is rendering any service, as distinct from its claim of so called grant of privilege, it may charge fees based on quid pro quo.
" In this connection, we may also usefully refer to southern Pharmaceuticals & Chemicals (supra).
This case related to the constitutional validity of Sections 12 A, 12 B,14(e) & (f), 68 A of Kerala Abkari Act (1 of 1077) and Rules 13 and 16 of the Kerala Rectified Spirit Rules, 1972.
One of the contentions raised was that the provision contained under Section 14 (e) of the Act for the collection of supervisory charges was clearly invalid inasmuch as: (a) They are in conflict of Rule 45 of Central Excise Rules and, (b) They could not be sustained as fee as there was no quid pro quo.
In the said judgment at page 1875, para.27 Southern Pharmaceuticals & Chemicals (supra) reads as under: " A fee may be charged for the privilege or benefit conferred, 681 or service rendered or to meet the expenses connected there with.
A fee my be, levied to meet the cost of supervision and may be, something more.
It is in consideration for the privilege, licence or service".
Again in para 29, it was stated thus: "There is a broad co relationship between the fee collected and the cost of the establishment under Section 14(e) of the Act it is provided that the commissioner, with the previous approval of the Government may prescribe the size and nature of the establishment necessary for supervision of a manufactory and the cost of the establishment and other incidental charges in connection with such supervision be realised from the licensee.
There can be no doubt that the supervisory staff is deployed in a bonded manufactory by the Government for its own protection to prevent the leakage of revenue, but there is no denying the fact that a licensee undoubtedly receives a service in return.
The cost of the establishment levied under Section 14(e) of the Act is to be collected from the licensee in the manner provided by Rule 16(4) of the Kerala Rectified Spirit Rules, 1972,relevant part of which reads: "(4) All the transactions in the spirit store shall be conducted only in the presence of an Excise Officer not below the rank of an Excise Inspector.
Such officer shall be assisted by at least two Excise Guards.
The cost of establishment of such officer and the guards shall be payable by the licensee in advance in the first week of every month as per counter signed challan to be obtained from such officer.
The rate at which the cost of establishment is to be paid by the licensee shall be fixed by the Commissioner from time to time and intimated to the licensee in writing. ." There is admittedly no provision made in the Central Rules for the recovery of supervisory charges, perhaps because as the Court observed in the Hyderabad Chemicals and Pharmaceutical 's case ; (supra) it was felt that the duty on medicinal and toilet preparations containing alcohol 682 would be sufficient to defray the cost of such supervision.
But the absence of such a provision in the Central Rules, as we have already indicated, does not deprive the State from making a provision in that behalf.
It is true that the supervisory charges are in the nature of a compulsory exaction from a licensee and the collections are not credited to a separate fund, but are taken to the consolidated fund of the State and are not separately appropriated towards the expenditure incurred in redering the service.
However, as observed in Government of Madras vs Zenith Lamp & Electricals Ltd., ; 1973 SC 724) followed in State of Rajasthan vs Sajjanlal Panjawat,[1974] 2 SCR 741; (AIR that by itself is not decisive, by reason of ART.
266 of the Constitution.
It is equally true that normally a fee is uniform and no account is taken of the paying capacity of the recipient of the service, but absence of uniformity will not make it a tax if co relationship is established [see Commissioner H.R.E., Madras vs Lakshmindra Thirtha Swamiar of Shirur Mutt and Government of Madras vs
Zenith Lamp and Electricals Ltd., ; and ; (supra)].
The cost of supervision would necessarily vary with the nature and extent of the business carried on by a licensee.
Therefore, the supervisory charges can be sustained even if they are regarded as a fee for services rendered by the State or its instrumentalities.
" In dealing with Synthetics Chemical case (supra) the following observations were made: "Learned Advocates General for the States of Gujarat and Kerala have also made their submissions, and referred to several decision and the concept of police power, and contented that imposition of a fee would be the most effective method of regulating intoxicating liquor other than alcohol.
According to the Advocate General of Kerala, that would be justified as the reasonable measure in regard to intoxicating liquor.
According to him, it has been accepted by courts all along that the 'police power ' of the State enables regulations to be made regarding manufacture, transport, possession 683 and sale of intoxicating liquor.
Such police power could be exercised as to impose reasonable restriction as to effectuate the power.
He referred to the observations of this Court in Cooverjee B.Bharucha vs The Excise Commissioner and the Chief Commissioner, Ajmer & Ors., ; which quoted the passage from Crowley vs Christensen,(1890) 24 Lawyers ' Edn. 620.
Reference was also made to Hari Shanker 's case (supra).
Where this Court quoted Vol.
38 of the American Jurisprudence where it was stated that the higher the fee is imposed for a licence, better is the regulation.
Reliance was also placed on P. N. Kaushal 's case (supra).
It was contended that it has been accepted by this Court that the police power is excercisable for regulation of an activity of a legislature within the permissible field or impost as regulatory measure.
It may be valid though it may neither be fee nor a tax in the limited sense of the term.
See the observations of this court in Southern Pharmaceuticals & Chemicals.
Trichur & Ors., etc.
vs State of Kerala & Ors.
,etc.[1982] 1 SCR 519 at 537 .
Regarding regulatory measures in connection with medicinal preparations containing alcohol it was observed by this Court that the impugned provisions had to be enacted to ensure that the Rectified spirit is not misused under the pretext of being used for toilet and medicinal preparations containing alcohol.
Such a regulation is a necessary concomitant of the police power of the State to regulate such trade or business which is inherently dangerous to public health.
The American doctrine of police power is not perhaps applicable as such in India, but power of sovereignty to regulate as part of the power of the competent legislature to effectuate its aim are there.
It is true that that in the State of West Bengal vs Subodh Gopal Bose & Ors., [1954]V SCR 587 at 601 604 and Kameshwar Prasad & Ors., vs The State of Bihar & Anr., ; the concept of police power was accepted as such, but this doctrine was not accepted in India as an independent power but was recognised as part of the power of the State to legislate with respect to the matters enumerated in the State and Concurrent Lists, subject to constitutional limitations.
It 684 was that the American jurisprudence of police power as distinguished from specific legislative power is not recognised in our Constitution and is, therefore, contrary to the scheme of the Constitution.
In interpreting the provisions of our Constitution, we should go by the plain words used by the Constitution makers and the importing of expression like 'police power ', which is a term of variable and indefinite connotation can only make the task of interpretation more difficult.
It was contended that in enacting a law with respect to intoxicating liquor as part of the legislative power measures of social control and regulation of private rights are permissible and as such may even amount to prohibition.
We are of the opinion that we need not detain ourselves on the question whether the States have the police power or not.
We must accept the position that the States have the power to regulate the use of alcohol and that power must include power to make provisions to prevent and or check industrial alcohol being used as intoxicating or drinkable alcohol.
The question is whether in the grab of regulations a legislation which is in pith and substance, as we look upon the instant legislation, fee or levy which has no connection with the cost or expenses administering the regulation, can be imposed purely as regulatory measure.
Judges by the pith and substance of the impugned legislation, we are definitely of the opinion that these levies cannot be treated as part of regulatory measures.
in this view of the matter we do not detain ourselves with examining the numerous American decisions to which our attention was drawn by learned counsel very elaborately and thoroughly.
" This is an added reasoning to uphold the validity of Section 58(A).
Turning to the second argument about the absence of quid pro quo, we need only extract the following from the judgment of the High Court: "Section 58(A) of the Bombay Prohibition Act creates a statutory duty of supervision and incidentally provides for recovering from a manufacturer or a businessman the cost of supervision which is primarily necessitated by the manufacturer 685 or businessman having been permitted under a licence to carry on lawfully a business or industrial activity which would otherwise have been unlawful.
We need not go into the details of this aspect because it has not been contended before us that if the levy under Section 58A is held to be a fee, there is no sufficient quid pro quo between the quantum of the impost and the services rendered to the manufacturer or businessman.
" In the result, the appeal fails and is dismissed with cost.
V.P.R. Appeal dismissed.
| The appellant, a company registered under the Indian , was using industrial alcohol as one of the raw materials for manufacturing resins, chemicals, sodium carboxy methyl, cellulose and certain other chemicals.
In May, 1970, the company installed its own distillery for the purpose of manufacturing industrial alcohol from mollasses.
The respondent No.2 on 3.7.1969 issued a licence to the company for manufacturing spirit.
In accordance with the conditions No. 2 and No. 3, the respondent No. 2 appointed a 9 member supervisory staff consisting of one Inspector, one Sub Inspector, one Nayak, one Jamadar and five constables, to supervise the manufacture of the spirit in the company 's distillery plant.
The appellant company was required to provide residential accommodation to the supervisory staff within its factory premises and to deposit supervisory charges from time to time.
The company complied the requirements.
In 1973 the appellant company filed a Civil Application in the High Court challenging the constitutional validity of the Section 58(A) of the Bombay Prohibition Act, 1949.
The High Court dismissed the petition, hence this appeal by certificate granted by the High Court under Articles 132(1)133(1)(a) of the Constitution.
The appellant company contended that this Court in Synthetics and Chemicals Ltd. case, [1989] Supp.1 SCR 623 held that in respect of 676 industrial alcohol, the States had no power to impose the impost;that in view of the judgment of this Court, the theory of privilege as adumbrated by the High Court could not be sustained, and that there was no quid pro quo.
The respondent State submitted that the Synthetics and Chemicals Ltd. case dealt merely with the vend fees, and not about supervisory charges.
Dismissing the appeal, this Court HELD: 1.01.
The States have the power to regulate the use of alcohol and that power must include power to make provisions to prevent and/or check industrial alcohol being used as intoxicating or drinkable alcohol.
This is an added reasoning to uphold the validity of Section 58(A).
[684D, F G] Synthetics & Chemicals Ltd.v.
State of U.P. and Ors., [1989] Supp.1 SCR 623 Followed.
1.02.Section 58(A) of the Bombay Prohibition Act creates a statutory duty of supervision and incidentally provides for recovering from a manufacturer or a businessman having been permitted under a licence to carry on lawfully a business or industrial activity which would otherwise have been unlawful.
[684G 685A] 1.03.The maintenance of the staff contemplated under Section 58(A) of the Act is primarily for the purpose of ensuring that while dealing with industrial alcohol, no attempt shall be made to divert non potable alcohol.
Therefore, by regulatory measures, the State sees to it that industrial alcohol is not diverted for the use as potable alcohol.
Such a regulatory measure is perfectly valid.
However, such a power was sustained though not on police power but as a regulatory measure.
[679C D] Southern Pharmaceuticals & Chemicals vs State of Kerala, ; ; Sh.
Bileshwar Khand Udyog Khedut Sahakari Mandali Ltd. vs The State of Gujarat & Anr., C.A. No. 503 of 1974 Followed.
The appellants are precluded from contending that the services did not make the impost, since the High Court has noted that it was not contended before it that there was not sufficient quid pro quo between the 677 quantum of impost and the services rendered to the manufacturer or businessman.
[679E F]
|
ivil Appeal No. 1031 of 1979 etc.etc.
From the Judgment and Order dated 23/24.11.1977 of the Bombay High Court in Sales Tax Reference No. 92 of 1976.
S.K. Dholakia, S.M. Jadhav and A.S. Bhasme for the Appellants.
Vinod A. Bobde, Ms. A.K. Verma, U.A. Rana, P.G. Gokhale, Ms. Sangeeta Aggarwal and D.N. Mishra for the Respondents.
The Judgement of the Court was delivered by RANGANATHAN,J. These are appeals by the Revenue arising out of proceedings under the Bombay Sales Tax Act, 1959 (hereinafter called `the Act ').
The respondents, Bharat Petroleum Corporation Ltd. (in CA 1031 of 1979) and Phulgaon Cotton Mills Ltd. (in the four other appeals) are assessees to sales tax.
They claimed a set off, against the sales tax payable by them for the years in question, of certain sums, invoking the provisions of rules 41 and 41 A framed under the Act, as they stood at the relevant time.
As the wording of these rules, in so far as it is material for our present purposes, is identical and the basis of the claim was also common, it will be convenient to dispose of both sets of appeals by a common judgment and we proceed to do so.
The set off claimed by the assessees was in terms of section 42 and rules 41 and 41A, which may now be referred to : (1) Section 42 reads thus : ``42.Draw back, set off, refund etc.
The State Government may provide by rules that (a)in such circumstances and subject to such conditions as may be specified in the rules a draw back, set off or refund of the whole or any part of the tax (i) xx xx xx (ii) paid or levied or leviable in respect of any earlier sale or 812 purchase of goods under this Act or any earlier law, be granted to the purchasing dealer ; (b) xx xx xx The State Government has notified various rules from time to time in exercise of this power which are collected in Chapter VII of the Rules.
Of these we are concerned with rules 41 and 41A. (2) Rule 41 (omitted w.e.f. 24.6.81) was a very long rule containing several clauses.
In so far as is relevant for our present purposes, it was in the following terms: ``41.
Drawback, set off etc.
of tax paid by a manufacturer In assessing the amount of tax payable in respect of any period by a Registered dealer, who manufactures taxable goods for sale (hereinafter in this rule referred to as the ``Manufacturing dealer ' '), the Commissioner shall grant to him a draw back, set off or as the case may be a refund of the aggregate of the following sums, that is to say : (a) xx xx xx (aa) xx xx xx (b) xx xx xx (bb) xx xx xx (c) xx xx xx (cc) xx xx xx (d) xx xx xx (e) a sum recovered from the Manufacturing dealer by another registered dealer by way of sales tax or, general sales tax or both, as the case may be, on the purchase by him, of goods from such registered dealer, being goods specified in schedule C to the Act other than in entries 1 to 11(both inclusive) and 15 therein and in Schedule D other than in entries 1 to 4 (both inclusive) 813 therein and in Schedule E other than in entries 1 and 2 therein, when the purchasing dealer did not hold a recognition or when the dealer held a recognition but effected the purchase otherwise than against a certificate under section 12 of the Act provided that such goods are used by him in the manufacture of taxable goods for sale or in the packing of taxable goods manufactured by him for sale.
Explanation : xx xx xx (Material portions Underlined) (3) The relevant portion of rule 41A, which has been invoked in the case of Phulgaon Cotton Mills Ltd., reads thus : "41A.(1) Drawback, set off etc.
of tax paid by a manufacturer in respect of purchases made on or after the 15th July 1962 : In assessing the amount of tax payable in respect of any period by a Registered dealer who manufactures taxable goods for sale or export* (hereinafter in this rule referred to as the ``manufacturing dealer ' '), the Commissioner shall, in respect of the purchases made by such dealer on or after the 15th July, 1962 of any goods specified in Schedule B, C, D, or E and used by him within the State in the manufacture of taxable goods (**) which have in fact been sold by him (and not given away as samples or otherwise) or which have been exported by him or used by him in the packing of goods so manufactured grant him a draw back, set off or, as the case may be, a refund of the aggregate of the following sums, that is to say: (a) a sum recovered from the manufacturing dealer by other Registered Dealers by way of sales tax, or general sales tax, as the case may be, both, on the purchase by him from such registered dealers, when the manufacturing dealer did not hold a Recognition or when he held a recognition but effected the * The words ``or export ' 'were inserted by a notification dated 31.8.70.
** The words ``which have in fact. .so manufactured ' 'were substituted by a notification dated 15.1.1976 for the words ``for sale or export or in the packing of goods so manufactured for sale or export ' '.
814 purchase otherwise than against a certificate under section 11 of the Act; (b) xx xx xx (c) xx xx xx (d) xx xx xx (Material portions underlined) (4)There was also a claim under rule 43AB but we are not concerned with that in the present appeals.
Now to turn to the facts which give rise to these appeals.
A.Burmah Shell The Bharat Petroleum Corporation Ltd.is before us as the successor in interest of the Burmah Shell Refineries Ltd. which is the assessee with which we are concerned.
We shall refer to it as the `refinery 'to distinguish it from the Burmah Shell Oil Storage and Distributing Company of India Ltd. which will be briefly referred to hereinafter as the `Marketing company '.
We are concerned with the period from 1.1.1961 to 31.12.1961.
The refinery registered itself as a `dealer ' under the Act and possessed a recognition certificate under section 25,after having failed in a plea, raised in earlier assessment years, that it was not a `dealer ' and was not required to be registered as such.
It had entered into a contract with the marketing company under which it agreed to process and refine crude oil belonging to the marketing company and manufacture kerosene for it.
This contract was in the nature of a bailment by the marketing company to the refinery, the refinery taking the crude oil and returning it after purification, as refined kerosene.
For the performance of this task it received payments from the manufacturing company by way refining charges on the basis of the job work done from time to time.
The refined kerosene was eventually sold by the marketing company and the refinery had nothing to do with the sales.
It may be mentioned here that there was no sales tax payable on sales of kerosene till 31.3.1961 but it became liable to sales tax thereafter.
For the above purification process, the refinery needed to use 815 sulphuric acid.
During the calendar year 1961, it purchased 3048.760 MT of acid for Rs. 3,52,742 from Dharmsi Morarji Chemical Co. Ltd.(hereinafter referred to as ``Dharmsis ' ') under an agreement dated 9.6.1955 which was to remain in force for a period of ten years from 1.1.1966 (Sic).
On the sulphuric acid it so purchased, a sales tax of Rs.13,421.15 (Rs.15,107.72, according to the High Court) was recovered from it by Dharmsis, as the refinery did not purchase it on the strength of the recognition certificate held by it as the certificate could have been utilised only if the goods purchased had been intended to be used by it in the manufacture of goods for sale by itself, whereas the manufactured kerosene was sold by the marketing company.
When the sulphuric acid was used in the refining process, the crude oil got refined and purified but the impurities therein precipitated into the acid and yielded ``acid sludge ' '.
The refinery 's contract with Dharmsis provided that the acid sludge should be sold by the refinery to the Dharmsis which, apparently, had its own uses for the sludge.
Accordingly, the refinery sold 3541.985 MT of acid sludge, during the relevant period, for Rs.68,108 the correctness of this figure was unsuccessfully contested before the High Court and on this amount it paid sales tax.
The record does not show the amount of sales tax paid by the refinery on this account, but, having regard to the nature of the commodity and turnover involved, it must, admittedly, have been a very small amount.
Having done this, the refinery claimed that, as against the sales tax paid by it for the period in question (including the tax paid on the acid sludge), it was entitled to a set off(and a refund, if need be) of the amount of Rs. 13,421.15 paid by it as sales tax on its purchases of sulphuric acid.
Its argument is that it is entitled to this refund as all the conditions set out in clause (e) rule 41 were fulfilled this wise : (a) It is a `manufacturer ', as the process of refining carried out by it falls within the wide definition of `manufacture ' contained in s.2(17) of the Act viz. : ``2(17) `manufacture ', with all its grammatical variations and cognate expressions, means producing, making, extracting, altering, ornamenting, finishing or otherwise treating, or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed ' '.
816 It is also a Registered dealer.
(b) It manufactured taxable goods for sale.
The acid sludge manufactured by it was taxable throughout the year and the pure kerosene manufactured by it was taxable .w.e.f.
1 4 1961 onwards.
(c) Tax had been recovered from it on its purchases of sulphuric acid from Dharmsis who are Registered dealers as the purchases had not been effected on the basis of a recognition certificate.
The Sales Tax Officer allowed the set off only to the extent of Rs. 1,101.40 without giving any details as to the manner in which this figure had been arrived at.
On appeal, the Appellate Assistant Commissioner held that the assessee was entitled to no set off at all under rule 41 as what was manufactured by the assessee was kerosene and not acid sludge and the kerosene was sold not by the assessee manufacturer but by some other company.
The Appellate Tribunal, however, allowed the assessee 's claim in full and its view was upheld, on reference, by the High Court.
Hence the present appeal.
B.Phulgaon Cotton In the case of Phulgaon Cotton Mills, we are concerned with four accounting periods : 1 7 73 to 30 6 74, 1 7 74 to 30 6 75, 1 7 75 to 30 6 76 and 1 7 76 to 30 6 77.
The issue as to the application of rule 41A arises in the following circumstances.
The assessee purchased raw unginned cotton from agriculturists and unregistered dealers.
The cotton was ginned, yielding ginned cotton and seeds.
One of the issues raised in the assessments was as to whether purchase tax should be paid on the total value of the raw cotton purchased or on the said purchase price less the value of the cotton seeds obtained therefrom.
This question was answered against the assessee and is no more in issue before us.
The assessee manufactured yarn and cloth from the ginned cotton.
Besides cotton and yarn, cotton waste and yarn waste were also obtained in the course of the manufacture and these were also sold by the assessee.
Some quantity of the fabrics produced by the assessee were also exported.
817 During the periods 1 7 73 to 30 6 74 and 1 7 74 to 30 6 75, the assessee had paid sales tax on the purchase value of the entire raw cotton purchased by it.
It, therefore, claimed a set off, under rule 41A, of the purchase tax so paid as it had to pay sales tax on the yarn and cotton waste sold by it.
It also claimed set off under rule 43AB in respect of the three periods other than between 1 7 74 and 30 6 75 but we are not concerned with this claim.
The Sales Tax Officer allowed only partial relief to the assessee under rule 41A.
He permitted a set off not of the entire purchase tax paid by the assessee on the raw cotton purchased by it but only of a part thereof proportionate to the extent of yarn sales.
The Appellate Tribunal however upheld the contention of the assessee.
It allowed a set off of the entire purchase tax paid by the assessee on the raw cotton, machinery and other purchases which had been used in the process of manufacture of cotton waste.
In doing so it followed the principle of the decision of the High Court in the case of Burmah Shell Refineries, (1978) 41 S.T.C. 337.
It observed : ``21. .When the raw cotton is ginned or ginned cotton is used in the process of manufacturing yarn, there is bound to be cotton waste.
In view of these facts, the appellant will also be entitled to full set off so far as the purchases of cotton are concerned, which have resulted in the production of taxable commodity i.e. cotton waste.
Each and every ounce of cotton is used in the manufacture of cotton waste which is a taxable commodity.
The question of, therefore, allowing proportionate set off so far as the purchases of cotton or machinery which are used in manufacturing of cotton waste does not arise.
The appellant is entitled to full set off so far as purchases of cotton machinery and other purchases, which are used in the manufacture of cotton waste, a taxable commodity.
There is no conflict in the decisions given by the Tribunal in earlier rulings given in the appellant 's own cases.
No such argument of production of cotton waste by product simultaneously was canvassed.
All that was canvassed was that yarn waste was a taxable by product.
Hence, full set off on purchase of cotton be allowed.
Tribunal negatived this contention by pointing out that there is no simultaneous production of yarn and cloth.
First yarn is manufactured and then cloth.
Thus question of referring this issue to larger Bench does not arise.
The cases will have, 818 therefore, to go back to the Assistant Commissioner for deciding the quantum of set off admissible under Rule 41 A on these basis for all the periods." The Tribunal, however, directed that the deductions should be so allowed as not to result in a double deduction of the same amount of purchase tax.
Aggrieved by the order of the Tribunal, the Commissioner of Sales Tax filed petitions for special leave to appeal to this Court therefrom as no useful purpose would be served by approaching the High Court on reference in view of the decision of that Court in the Burmah Shell Refineries case on the point at issue having gone against the Revenue.
Leave was granted by this Court on 3 9 90 and hence the four civil appeals by the Revenue in the case of Phulgaon Cotton Mills Limited.
Before dealing with issue on the interpretation of rules 41 and 41A which has been debated before us, we wish to point out the difficulties encountered by us as the facts in the case of Phulgaon Cotton Mills are not quite clear from the record.
From the Tribunal 's order, it is seen that, during the periods 1 7 75 to 30 6 76 and 1 7 76 to 30 6 77, the assessee purchased no raw cotton from unregistered dealers and no purchase tax was levied thereon.
Nevertheless, some relief under rule 41A was allowed by the Officer in the assessments for these periods as well.
The basis on which a claim was made, and partially allowed, under rule 41A in respect of these periods is not known.
Also, the Tribunal has allowed full relief on the basis that since cotton was used in the manufacture of cotton waste, the assessee was entitled to relief in respect of purchase tax paid on raw cotton though for these years there was no such tax.
But the order of the Tribunal refers also to "set off so far as purchases of machinery and other purchases ' ' indicating that perhaps some purchase tax had been paid in respect of those purchases and set off had been sought in respect thereof.
But, even assuming this, the discussion regarding cotton waste appears to be pointless since, admittedly, the yarn manufactured was liable to sales tax and, on the Tribunal 's reasoning, this was sufficient to enable the assessee to claim set off of the purchase tax paid on cotton, machinery and other materials used in the manufacture.
But these aspects have not been touched upon before us.
The arguments before us, as we shall refer presently, revolved round a very simple issue.
We shall discuss this issue 819 and leave the other aspects touched upon above to be clarified, if need be, when the assessment is finally redone in the light of our judgment.
Shri Dholakia, learned counsel for the State of Maharashtra, submits that the issue in these appeals is a very simple one.
Rules 41 and 41A are intended to give relief to a dealer in respect of purchase of goods which are used in the manufacture of taxable goods for sale, the clear idea being that where the manufactured goods will also be liable to sales tax in the hands of the manufacturer there should be a relief of the taxes paid by him on the goods purchased by him for use in such manufacture, so as to avoid double taxation.
In the Bharat Petroleum case, the manufactured goods viz. pure kerosene were neither sold by the respondent so as to attract sales tax in his hands nor, indeed, liable to sales tax at all for the first three months.
So also, in the case of Phulgaon Cotton Mills, the cotton purchased on payment of tax was used for the manufacture of cloth which was not liable to sales tax.
A set off cannot be allowed merely because a bye product or waste product (viz. the acid sludge in the one case and the cotton waste in the other) was sold for a nominal turnover which was subject to tax.
Even assuming that the sulphuric acid or cotton purchased can be said to have been used for the manufacture of two commodities (viz. kerosene and acid sludge in the one case and cloth and cotton waste in the other), the set off under the rules relied upon should be split up proportionately and allowed only to a proportionate extent, the proportion being decided on the basis of the respective turnovers of the taxable and non taxable goods.
He submits that though the rules do not specifically provide for such a bifurcation, an apportionment of such nature is almost invariably implicit in a tax law and is also consonant with the object and purpose of the rules.
He, therefore, submits that the High Court and Tribunal ought to have restricted the relief only to a proportionate extent as done by the sales tax officer.
He points out that the basis on which the apportionment was made by the officer had not been specifically challenged before the appellate authorities and is not in issue before us.
On the other hand, Sri Bobde, learned counsel appearing for Bharat Petroleum laid stress on two aspects of the rule.
First, he points out that, under the rule, it is not a requirement that the manufactured goods have to be sold by the manufacturing dealer himself.
The fact is that the kerosene constituted taxable goods after 1.4.61 and was sold by the marketing company.
The second aspect of the rule is that, admittedly, the 820 sulphuric acid purchased was wholly used in the manufacture of two items kerosene and acid sludge one of which viz. the sludge was taxable and also subjected to tax.
Once this condition is fulfilled, the amount of set off is specified in the rule itself as the amount of purchase tax paid on the goods so used and cannot be scaled down proportionately merely because, according to the department, the turnover of the taxable goods is insignificant.
Sri Rana, learned counsel appearing for the Phulgaon Cotton Mills, adopts this argument mutatis mutandis.
We have given deep thought to these contentions and we have come to the conclusion that, plausible and attractive as the argument urged on behalf of the State is, the conclusion arrived at by the High Court and the Apellate Tribunal has to be upheld.
But before dealing with this aspect, we may dispose of two minor questions.
The first which arises in the Bharat Petroleum case is whether rule 41 contemplates that the goods purchased by the dealer should be used for manufacture of taxable goods for sale by him.
The High Court has given good reasons, with which we are inclined to agree, for holding that no such restrictions can be read into this rule but this contention is of no significance in view of our conclusion that the assessee would be entitled to the set off claimed even on the basis of the taxable sales of acid sludge effected by it.
The other point is whether the assesees can be said to manufacture ``acid sludge ' ' and ``cotton waste ' ' respectively.
It is suggested for the State that the assessees are purchasing acid and cotton for the manufacture of kerosene and yarn/cloth respectively and it is ludicrous to suggest that the assessees are purchasing sulphuric acid and cotton for manufacturing acid sludge and cotton waste.
Put like that the assessee 's contention seems a little artificial.
But the contention is not really absurd.
For, the assessees do purchase sulphuric acid and cotton for use in a manufacturing process which yields not only kerosene and yarn/cloth but also acid sludge and cotton waste.
As pointed out in State of Gujarat vs Raipur Manufacturing Co. Ltd.
,(1967) 19 S.T.C.1, where a subsidiary product is turned out regularly and continuously in the course of a manufacturing business and is also sold regularly from time to time, an intention can be attributed to the manufacturer to manufacture and sell not merely the main item manufactured but also the subsidiary products.
There is also no evidence on record to suggest, at least so far as acid sludge is concerned, that it is not a commercial commodity with a market but an item of waste.
The contract with Dharmsis speaks to the contrary and moreover, as pointed out by the High Court, the assessee had been 821 practically compelled by the Department to apply for and obtain a recognition certificate for the manufacture of sludge and it had also paid tax as dealers in acid sludge.
These two contentions have, therefore, to be rejected.
Turning now to the main question, we are inclined to agree with respondents ' counsel that they are entitled to a set off of the entire tax paid by them on the purchases of sulphuric acid and cotton respectively.
The only condition under the rule is that the goods purchased on payment of tax should have been used in the manufacture of taxable goods for sale.
Their concurrent user for the manufacture of another item of goods which may or may not be taxable is immaterial though we may point out that in the Bharat Petroleum case, the kerosene was also taxable for nine months in the year and in the case of Phulgaon Cotton Mills, yarn was also manufactured and it was subject to tax.
Sri Dholakia contends for an implicit principle of apportionment on the basis of turnovers of various items of goods manufactured and restriction of the quantum of set off to a proportion based on the turnover of taxable goods to the total turnover.
He cited certain decisions under the Income tax and Sales Tax Acts in support of this contention : Anglo French Textiles vs C.I.T., , S.C.; Tata Iron & Steel Co. vs State, ; and Best & Co. vs C.I.T.,(1966) , S.C. We do not think these cases are of assistance.
The first two cases dealt with the question as to when profits and gains can be said to accrue or arise in a manufacturing business and the third held that when a receipt is a composite one of capital and revenue nature, it is open to the Revenue to apportion the same and bring the latter to tax.
These are situation in which the taxable element is severable.
Under the rules presently under consideration also, situations are conceivable where such severance is implicit.
For instance, suppose the cotton purchased is utilised partly for manufacture of cloth that is taxable and part for manufacture of cloth that is not taxable or partly for the manufacture of yarn which is taxable and is sold and partly for manufacture of cloth which is not taxable.
In these instances, it is clear that only some of the cotton is utilised for the first purpose and some for the second purpose and so only the purchase tax paid in respect of the quantity utilised for the first purpose will be eligible for set off.
But the type of user with which we are concerned is a composite one in which it is not possible to correlate any part of the purchased goods as having gone in for the purpose of manufacture of taxable goods.
The position is picturesquely brought out in 822 the case of Bharat Petroleum.
The entire sulphuric acid purchased has no doubt been used in the manufacture of kerosene though perhaps not a drop of acid clings to the kerosene manufactured.
Equally, the entire sulphuric acid has gone into the composition of the acid sludge.
The 3048.760 M.T. of acid have dissolved the impurities in the crude oil and conglomerated with them to constitute 3541.485 M.T. of acid sludge.
Having regard to the nature of the interactions here, it is incontrovertible that the entire sulphuric acid purchased has gone into the manufacture of the sludge.
The rules do not require that the purchased goods must have been used only for the manufacture of taxable goods for sale.
In this situation, it is not possible to cut down the quantum of relief clearly outlined in the rule on the basis of some general principle claimed to underlie the provision.
As Sri Bobde rightly pointed out, the basis for the relief provided is not very clear cut.
Various reliefs have been provided in a group of rules which come in for application in various situations.
The relief may be based on the principle that the manufactured product is taxed either in the hands of the same assessee or in someone else 's hands, or that the manufactured goods are exported which may yield no tax but earn foreign exchange, or even that the purchases are utilised for manufacture of goods in the State thus contributing to the industrial development of the State.
It is, therefore, difficult to read into the provision a quantitative correlation of the goods resulting in a taxable turnover and the purchases of raw materials on which tax has been paid.
In this background, the straight forward answer to the question raised lies in the literal interpretation of the language of the rules without straining to discover some doubtful principle for denying relief.
For the above reasons, we agree with the view taken by the High Court and followed by the Tribunal and dismiss these appeals.
We, however, make no order regarding costs.
| The assessee Oil refinery, predecessor in interest to the respondent Corporation in one of the appeals had registered itself as a dealer under the Bombay Sales Tax Act, 1959.
During the Calendar year 1961, it had purchased sulphuric acid from a chemical company for processing and refining crude oil and manufacturing kerosene for a marketing company.
On the sulphuric acid so purchased sales tax was recovered from it by the chemical company.
While the refined kerosene which was not taxable upto 31.3.1961 was sold by the marketing company, the acid sludge yielded in the purification process was sold by the refinery.
The refinery paid sales tax on the acid sludge sold by it, and claimed a set off (and a refund, if need be) of the sales tax paid by it on its purchase of sulphuric acid, on the ground that all the conditions set out in clause (e) of Rule 41 of the Bombay Sales Tax Rules, 1959 were fulfilled, viz., it was manufacturer within the meaning of Section 2 (17) of the Act, that it was also a registered dealer, that it manufactured taxable goods for sale, that while acid sludge was taxable throughout the year, kerosene was taxable with effect from 1.4.1961 onwards and that tax was recovered on the raw material purchased by it by the chemical company.
808 The Sales Tax Officer allowed the set off only partly.
On appeal, the Appellate Assistant Commissioner held that the assessee was entitled to no set off at all under Rule 41 since what was manufactured by the assessee was kerosene and not acid sludge, and the kerosene was sold not by the assessee manufacturer, but by some other company.
The Appellate Tribunal, however, allowed the assessee 's claim in full and on reference this was upheld by the High Court.
The respondent Cotton Mill in the other appeals purchased raw unginned cotton from agriculturists and unregistered dealers during periods 1.7.73 to 30.6.74 and 1.7.74 to 30.6.75 and paid sales tax on the raw cotton so purchased.
The cotton was ginned yielding place to ginned cotton and cotton seed.
The respondent manufactured yarn and cloth from the ginned cotton.
The cotton waste and yarn waste obtained in the course of manufacture were also sold by the assessee.
It paid sales tax on the yarn and cotton waste sold by it and claimed a set off, under 41 A of the Rules, of the sales tax paid on the purchase value of the entire raw cotton purchased by it.
The Sales Tax Officer allowed a set off of only part of the purchase tax paid on the raw cotton purchased by the assessee proportionate to the extent of yarn sales.
On appeal, the Appellate Tribunal allowed a set off of the entire purchase tax paid on the raw cotton, machinery and other purchases, which had been used in the process of manufacture of cotton waste.
It, however, directed that the deductions should be so allowed as not to result in a double deduction of the same amount of purchase tax.
In the appeals, by Special leave, before this Court, on behalf of the State Government, it was contended that Rules 41 and 41 A were intended to give relief to a dealer in respect of purchase of goods which were used in the manufacture of taxable goods for sale, that the manufactured goods, viz., pure kerosene was neither sold by the respondent so as to attract sales tax in his hands nor, was it liable to sales tax at all for the first three months, and the cotton purchased on payment of tax was used for the manufacture of cloth which was not liable to sales tax, and that a set off could not be allowed merely because a by product or waste product, viz., acid sludge and cotton waste was sold for a nominal turn over, which was subject to tax, and that the set off should be split up proportionately and allowed only to a proportionate extent, on the basis of the respective 809 turnover of the taxable and non taxable goods, and an apportionment of such nature was implicit in a tax law and was also in consonance with the object and purpose of the rules.
On behalf of one of the respondents it was contended that under Rule 41 it was not a requirement that the manufactured goods had to be sold by the manufacturing dealer himself and that the sulphuric acid purchased was wholly used in the manufacture of two items kerosene and acid sludge one of which, viz., the sludge, was taxable and also subjected to tax, and the amount of set off was specified in the rule itself as the amount of purchase tax paid on the goods so used, and could not be scaled down proportionately merely because the turnover of the taxable goods was insignificant.
The other respondent adopted these contentions.
Dismissing the appeals, this Court, HELD: 1.1 The assessees are entitled to a set off of the entire tax paid by them on the purchases of sulphuric acid and cotton respectively.
The only condition under the rule is that the goods purchased on payment of tax should have been used in the manufacture of taxable goods for sale.
Their concurrent user for the manufacture of another item of goods which may or may not be taxable is immaterial though kerosene was also taxable for nine months in the year and yarn was also manufactured and it was subject to tax.
Commissioner of Sales Tax vs Burmah Shell Refineries Limited, (1978) 41 S.T.C. 337, referred to. 1.2.
The principle of apportionment on the basis of turnovers of various items of goods manufactured and restriction of the quantum of set off to a proportion based on the turnover of taxable goods to the total turnover cannot be accepted.
No doubt under the rules, situations are conceivable where severance of taxable element is implicit, but the type of user in the instant case is a composite one, in which it is not possible to correlate any part of the purchased goods as having gone in for the purpose of manufacture of taxable goods.
Anglo French Textiles vs C.I.T., , S.C.; Tata Iron & Steel Co. vs State ; and Best & Co. vs C.I.T. , S.C., distinguished.
810 1.3 In the instant case the entire sulphuric acid purchased has no doubt been used in the manufacture of kerosene though perhaps not a drop of acid clings to the kerosene manufactured.
Equally, the entire sulphuric acid has gone into the composition of the acid sludge.
Having regard to the nature of the interactions in the instant case,it is incontrovertible that the entire sulphuric acid purchased has gone into the manufacture of the sludge.
The rules do not require that the purchased goods must have been used only for the manufacture of taxable goods for sale.
Therefore, it is not possible to cut down the quantum of relief clearly outlined in the rule on the basis of some general principle claimed to underline the provision.
1.4 The basis for the relief provided is not very clear cut.
Various reliefs have been provided in a group of rules which come in for application in various situations.
The relief may be based on the principle that the manufactured product is taxed either in the hands of the same assessee or in someone else 's hands, or that the manufactured goods are exported which may yield no tax but earn foreign exchange, or even that the purchases are utilised for manufacture of goods in the State thus contributing to the industrial development of the State.
It is, therefore, difficult to read into the provision a quantitative correlation of the goods resulting in a taxable turnover and the purchases of raw materials on which tax has been paid.
1.5 Rule 41 does not contemplate that the goods purchased by the dealer should be used for manufacture of taxable goods for sale by him.
No such restriction can be read into this rule.
2.1 Where a subsidiary product is turned out regularly and continuously in the course of a manufacturing business and is also sold regularly from time to time, an intention can be attributed to the manufacturer to manufacture and sell the subsidiary product.
State of Gujarat vs Raipur Manufacturing Co. Ltd., (1967) 19 S.T.C. 1, relied on.
2.2 The assessees in the instant case do purchase sulphuric acid and unginned cotton for use in a manufacturing process, which yield not only kerosene and yarn/cloth, but also acid sludge and cotton waste.
There is also no evidence to suggest that acid sludge is not a commercial 811 commodity with a market but an item of waste.
|
Appeal No. 869 of 1987.
From the Judgment and Order dated 22.12.1981 of the Orissa High Court in Original Judicature Case No. 412 of 1976.
WITH CA No. 870 of 1987 R.K. Garg and A.K. Panda for the Appellants.
C.S. Srinivasa Rao for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY,J.
1.
These appeals raise the question whether it is permissible to the government to order compulsory retirement of a government servant on the basis of material which includes uncommunicated adverse remarks.
While the appellants (government servants, compulsory retired) rely upon the decisions of this court in Brij Mohan Singh Chopra, and Baidyanath Mahapatra; , , in support of their contention that it is not permissible, the respondent government relies upon the decision in M.E. Reddy. ; to contend that it is permissible to the government to take into consideration uncommunicated adverse remarks also while taking a decision to retire a government servant compulsorily.
The appellants in both the appeals have been compulsorily retired by the government of Orissa in exercise of the power conferred upon it by the first proviso to Rule 71 (a) of the Orissa Service Code.
Since the relevant facts in both the appeals are similar, it would be sufficient if we set out the facts in Civil Appeal No. 869 of 1987.
841 3.
The appellant, Sri Baikuntha Nath Das was appointed as a Pharmacist (then designated as Compounder) by the Civil Surgeon, Mayurbhanj on 15.3.1951.
By an order dated 13.2.1976 the government of Orissa retired him compulsorily under the first proviso to sub rule of Rule 71 of the Orissa Service Code.
The order reads as follows: ``In exercise of the powers conferred under the first proviso to sub rule (a) of rule 71 of Orissa Service Code, the Government of Orissa is pleased to order the retirement of Sri Baikunthanath Das, Pharmacist now working under the Chief District Medical Officer, Mayurbhanj on the expiry of three months from the date of service of this order on him.
By order of the Governor. ' ' 4.
The petitioner challenged the same in the High Court of Orissa by way of a writ petition, being O.J.C.No.
412 of 1976.
His case was that the order was based on no material and that it was the result of ill will and malice the Chief District Medical Officer bore towards him.
The petitioner was transferred by the said officer from place to place and was also placed under suspension at one stage.
He submitted that his entire service has been spot less and that at no time were any adverse entries in his confidential character rolls communicated to him.
In the counter affidavit filed on behalf of the government, it was submitted that the decision to retire the petitioner compulsorily was taken by the Review Committee and not by the Chief Medical Officer.
It was submitted that besides the remarks made in the confidential character rolls, other material was also taken into consideration by the Review Committee and that it arrived at its decision bonafide and in public interest which decision was accepted and approved by the government.
The allegation of malafides was denied.
The High Court looked into the proceedings of the Review Committee and the confidential character rolls of the petitioner and dismissed the writ petition on the following reasoning: An order of compulsory retirement after putting in the prescribed qualifying period of service does not amount to punishment as has been repeatedly held by this court.
The order in question was passed by the State Government and not by the Chief Medical Officer.
It is true that the confidential character roll of the petitioner contained several remarks adverse to him which were, no doubt, not communicated to him, but the decision of this court in Union of India 842 vs M.E.Reddy; , , holds that uncommunicated adverse remarks can also be relied upon while passing an order of compulsory retirement.
The said adverse remarks have been made by successive Civil Surgeons and not by the particular Chief District Medical Officer against whom the petitioner has alleged malafides.
It is unlikely that all the Chief District Medical Officers were prejudiced against the petitioner.
In particular, the court observed, "the materials placed before us do not justify a conclusion that the remarks in the confidential character rolls had not duly and properly been recorded." The decision to retire has been taken by the Review Committee on proper material and there are no grounds to interfere with its decision, it opined. 6.
The adverse remarks made against the petitioner in the words of the High Court are to the following effect: ". most insincere, irregular in habits and negligent and besides being a person of doubtful integrity, he had been quarrelsome with his colleagues and superior officers and had been creating problems for the administration.
Rule 71 (a) alongwith the first proviso appended thereto which alone is relevant for our purpose reads thus: "71.
(a) Except as otherwise provided in the other clauses of this rule the date of compulsory retirement of a Government servant, except a ministerial servant who was in Government service on the 31st March, 1939 and Class IV Government servant, is the date on which he or she attains the age of 58 years subject to the condition that a review shall be conducted in respect of the Government servant in the 55th year of age in order to determine whether he/she should be allowed to remain in service upto the date of the completion of the age of 58 years or retired on completing the age of 55 years in the public interest: Provided that a Government servant may retire from service any time after completing thirty years qualifying service or on attaining the age of fifty years, by giving a notice in writing to the appropriate authority at least three months before the date on which he wishes to retire or by giving the said notice to the 843 said authority before such shorter period as Government may allow in any case.
It shall be open to the appropriate authority to withhold permission to a Government servant who seeks to retire under this rule, if he is under suspension or if inquires against him are in progress.
The appropriate authority may also require any officer to retire in public interest any time after he has completed thirty years qualifying service or attained the age of fifty years, by giving a notice in writing to the Government servant at least three months before the date on which he is required to retire or by giving three months pay and allowances in lieu of such notice.
xx xx xx" 8.
It is evident that the latter half of the proviso which empowers the government to retire a government servant in public interest after he completes 30 years of qualifying service or after attaining the age of 50 years is in pari materia with the Fundamental Rule 56(j).
The Government of Orissa had issued certain instructions in this behalf.
According to these instructions, the Review Committee, if it is of the opinion that a particular government servant should be retired compulsorily, must make a proposal recording its full reasons therefor.
The administrative department controlling the services to which the particular government servant belongs, will then process the proposal and put it up to the government for final orders.
In Shyam Lal vs State of Uttar Pradesh, ; , a Constitution Bench of this court held that an order of compulsory retirement is not a punishment nor is there any stigma attached to it.
It said: "There is no such element of charge or imputation in the case of compulsory retirement.
The two requirements for compulsory retirement are that the officer has completed twenty five years ' service and that it is in the public interest to dispense with his further services.
It is true that this power of compulsory retirement may be used when the authority exercising this power cannot substantiate the misconduct which may be the real cause for taking the action but what is important to note is that the directions in the last sentence of Note 1 to Article 465 A make it abundantly clear that an imputation or charge is not in terms made a condition for the exercise of the power.
844 In other words, a compulsory retirement has no stigma or implication of misbehaviour or incapacity.
In Shivacharana vs State of Mysore, A.I.R. 1965 S.C. 280, another Constitution Bench reaffirmed the said principle and held that "Whether or not the petitioner 's retirement was in the public interest, is a matter for the State Government to consider and as to the plea that the order is arbitrary and illegal, it is impossible to hold on the material placed by the petitioner before us that the said order suffers from the vice of malafides.
As far back as 1970, a Division Bench of this court comprising J.C. Shah and K.S. Hegde, JJ. held in Union of India vs J.N Sinha, [1971] 1 S.C.R. 791, that an order of compulsory retirement made under F.R. 56 (j) does not involve any civil consequences, that the employee retired thereunder does not lose any of the rights acquired by him before retirement and that the said rule is not intended for taking any penal action against the government servant.
It was pointed out that the said rule embodies one of the facets of the pleasure doctrine embodied in Article 310 of the Constitution and that the rule holds the balance between the rights of the individual Government servant and the interest of the public.
The rule is intended it was explained, to enable the Government to energise its machinery and to make it efficient by compulsory retiring those who in its opinion should not be there in public interest.
It was also held that rules of natural justice are not attracted in such a case.
If the appropriate authority forms the requisite opinion bonafide, it was held, its opinion cannot be challenged before the courts though it is open to an aggrieved party to contend that the requisite opinion has not been formed or that it is based on collateral grounds or that it is an arbitrary decision.
It is significant to notice that this decision was rendered after the decisions of this court in State of Orissa vs Dr.
Binapani Devi; , and A.K.Kraipak vs Union of India, A.I.R. 1970 S.C. 150.Indeed, the said decisions were relied upon to contend that even in such a case the principles of natural justice required an opportunity to be given to the government servant to show cause against the proposed action.
The contention, was not accepted as stated above.
The principles enunciated in the decision have been accepted and followed in many a later decision.
There has never been a dissent not until 1987.
In R.L. Butial vs Union of India, relied upon by the appellant 's 845 counsel, the Constitution Bench considered a case where the government servant was denied the promotion and later retired compulsorily under F.R. 56(j) on the basis of adverse entries in his confidential records.
The appellant, an electrical engineer, entered the service of Simla Electricity Board in 1934.
In 1940, he was transferred to Central Electricity Commission later designated as Central Water and Power Commission (Power Wing).
In 1955 he was promoted to the post of Director wherein he was confirmed in the year 1960.
In his confidential reports relating to the years 1964 and 1965, certain adverse remarks were made.
They were communicated to him.
He made a representation asking for specific instances on the basis of which the said adverse remarks were made.
These representations were rejected.
Meanwhile, a vacancy arose in the higher post.
The appellant was overlooked both in the year 1964 as well as in 1965 by the Departmental Promotion Committee and the U.P.S.C.
On August 15, 1967, on his completing 55 years of age, he was compulsorily retired under F.R. 56(j).
Thereupon he filed three writ petitions in the High Court challenging the said adverse entries as also the order of compulsory retirement.
The writ petitions were dismissed whereupon the matters were brought to this court on the basis of a certificate.
The Constitution Bench enunciated the following propositions: 1.
The rules framed by the Central Water and Power Commission on the subject of maintenance of confidential reports show that a confidential report is intended to be a general assessment of work performed by the government servant and that the said reports are maintained to serve as a data of operative merit when question of promotion, confirmation etc.
arose.
Ordinarily, they are not to contain specific instances except where a specific instance has led to a censure or a warning.
In such situation alone, a reasonable opportunity has to be afforded to the government servant to present his case.
No opportunity need be given before the entries are made.
Making of an adverse entry does not amount to inflicting a penalty.
When the petitioner was overlooked for promotion his representations against the adverse remarks were still pending.
But inasmuch as the said representations were rejected later there was no occasion for reviewing the decision not to promote the appellant.
Withholding a promotion is not a penalty under the Central Service Rules.
Hence, no enquiry was required to be held before deciding not to promote the 846 appellant more so, when the promotion was on the basis of selection and not on the basis of seniority alone.
So far as the order of compulsory retirement was concerned, it was based upon a consideration of his entire service record including his confidential reports.
The adverse remarks in such reports, were communicated from time to time and the representations made by the appellant were rejected.
It is only thereafter that the decision to retire him compulsorily was taken and, therefore, there was no ground to interfere with the said order.
It is evident that in this case, the question arising for our consideration viz, whether uncommunicated adverse remarks can be taken into consideration alongwith other material for compulsorily retiring a government servant did not arise for consideration.
That question arose directly in Union of India vs M.E.Reddy. 15.
The respondent, M.E. Reddy belonged to Indian Police Services.
He was retired compulsorily under Rule 16 (3) of All India Service (Death cum Retirement Rules) 1958 corresponding to F.R. 56 (j).
The contention of the respondent was that the order was passed on non existing material inasmuch as at no time were any adverse remarks communicated to him.
His contention was that had there been any adverse entries they ought to have been communicated to him under the rules.
The said contention was dealt with in the following words: ".
This argument, in our opinion, appears to be based on a serious misconception.
In the first place, under the various rules on the subject it is not every adverse entry or remarks that has to be communicated to the officer concerned.
The superior officer may make certain remarks while assessing the work and conduct of subordinate officer based on his personal supervision or contract.
Some of these remarks may be purely innocuous, or may be connected with general reputation of honesty or integrity that a particular officer enjoys.
It will indeed be difficult if not impossible to prove by positive evidence that a particular officer is dishonest but those who have had the opportunity to watch the performance of the said officer from close quarters are in a position to know the nature and character not only of his performance but also of the 847 reputation that he enjoys".
The Learned Judges referred to the decisions in R.L.Butail,J.N.Sinha and several other decisions of this court and held that the confidential reports, even though not communicated to the officer concerned, can certainly be considered by the appointing authority while passing the order of compulsory retirement.
in this connection, they relied upon the principle in J.N. Sinha that principles of natural justices are not attracted in the case of compulsory retirement since it is neither a punishment nor does it involve any civil consequences.
the principle of the above decision was followed in Dr. N.V.Puttabhatta vs
State of Mysore; , , a decision rendered by A.N.Grover and G.K.Mitter , J.J. Indeed, the contention of the appellant in this case was that since an order of compulsory retirement has adverse effects upon the career and prospects of the government servant, the order must be passed in accordance with principles of natural justice.
It was contended that before passing the order, a notice to show cause against the order proposed must be given to the government servant .
Reliance was placed upon the decisions in Binapani Devi and Kraipak.
This contention was negatived following the decision in J.N.Sinha.
It was also pointed out, applying the principles of Shivacharana that an order of compulsory retirement is not a punishment nor does it involve any stigma or implication or misbehaviour.
Another contention urged in this case was that the order of compulsory retirement was based upon uncommunicated adverse remarks and that the appellant was also not afforded an opportunity to make a representation against the same.
At the relevant time, no appeal lay against the orders passed upon the representation.
Dealing with the said contention, the court observed: "as the confidential reports rules stood at the relevant time, the appellant could not have appealed against the adverse remarks and if the opinion of the government to retire him compulsorily was based primarily on the said report, he could only challange the order if he was in a position to show that the remarks were arbitrary and malafide." 18.
Yet another contention which is relevant to the present case is this : the retirement of the appellant therein was ordered under Rule 235 of Mysore Civil Services Rules.
The language of the said rule corresponded to 848 F.R.56(j) but it did not contain the word "absolute" as is found in F.R.56(j).
An argument was sought to be built up on the said difference in language but the same was rejected holding that even in the absence of the word "absolute" the position remains the same.
We are refering to the said aspect in as much as the proviso to Rule 71 (a) of the Orissa Service Code, concerned in the appeals before us, also does not contain the word "absolute".
In (A.I.R.1980 S.C.1894) Gian Singh Mann vs Punjab and Haryana High Court, a Bench consisting of Krishna Iyer and Pathak, JJ. reiterated the principle that an order of compulsory retirement does not amount to punishment and that no stigma or implication of misbehaviour is intended or attached to such an order.
In O.N.G.C vs Iskandar Ali, a probationer was terminated on the basis of adverse remarks made in his assessment roll.
A Bench comprising three learned Judges (Fazal Ali, A.C. Gupta and Kailasam, JJ.) held that the order of termination in that case was an order of termination simpliciter without involving any stigma or any civil consequences.
Since the respondent was a probationer, he had no right to the post.
The remarks in his assessment roll disclosed that the respondent was not found suitable for being retained in service and even though some sort of enquiry was commenced, it was not proceeded with.
The appointing authority considered it expedient to terminate the service of the respondent in the circumstances and such an order was beyond challenge on the ground of violation of Article 311.
This court has taken the view in certain cases that while taking a decision to retire a government servant under Rule 56(j), more importance should be attached to the confidential records of the later years and that much importance should not be attached to the record relating to earlier years or to the early years of service.
In Brij Bihari Lal Agarwal vs High Court of Madhya Pradesh, , upon which strong reliance is placed by the appellant 's counsel a Bench comprising Pathak and Chinappa Reddy,JJ.
observed thus: ". .What we would like to add is that when considering the question of compulsory retirement, while it is not doubt desirable to make an overall assessment of the Government servant 's record, more than ordinary value should be attached to the confidential reports pertaining to the years immediately 849 preceding such consideration.
It is possible that a Government servant may possess a somewhat erratic record in the early years of service, but with the passage of time he may have so greatly improved that it would be of advantage to continue him in service up to the statutory age of superannuation.
Whatever value the confidential reports of earlier years may possess, those pertaining to the later years are not only of direct relevance but also of utmost importance.
We may mention that the order of compulsory retirement in the above case is dated 28th September, 1979.
The High Court took into account the confidential reports relating to the period prior to 1966 which were also not communicated to the concerned officer.
However, the decision is based not upon the non communication of adverse remarks but on the ground that they were too far in the past.
It was observed that reliance on such record has the effect of denying an opportunity of improvement to the officer concerned.
The decision in Baldev Raj Chaddha vs Union of India, ; , is to the same effect.
In J.D. Srivastava vs State of Madhya Pradesh, ; , it was held by a Bench of three learned Judges that adverse reports prior to the promotion of the officer cannot reasonably form a basis for forming an opinion to retire him.
The reports relied upon for retiring the appellant were more than 20 years old and there was no other material upon which the said decision could be based.
It was held that reliance on such stale entries cannot be placed for retiring a person compulsorily, particularly when the officer concerned was promoted subsequent to such entries.
We now come to the decision in Brij Mohan Singh Chopra vs State of Punjab, relied upon by the learned counsel for the petitioner.
In this case, there were no adverse entries in the confidential records of the appellant for a period of five years prior to the impugned order.
Within five years, there were two adverse entries.
In neither of them, however, was his integrity doubted.
These adverse remarks were not communicated to him.
The Bench consisting of E.S. Venkataramiah and K.N. Singh JJ.
quashed it on two grounds viz., 1.
It would not be reasonable and just to consider adverse entries of remote past and to ignore good entries of recent past.
If entries for a period of more than 10 years past are taken into account it would be an act of 850 digging out past to get some material to make an order against the employee.
In Gurdyal Singh Fiji vs State of Punjab, and Amarkant Chaudhary vs State of Bihar, ; , it was held that unless an adverse report is communicated and representation, if any, made by the employee is considered, it may not be acted upon to deny the promotion.
The same consideration applies where the adverse entries are taken into account in retiring an employee pre maturely from service.
K.N. Singh, J. speaking for the Bench observed: "it would be unjust and unfair and contrary to principles of natural justice to retire pre maturely a government employee on the basis of adverse entries which are either not communicated to him or if communicated, representations made against those entries are not considered and disposed of".
This is the first case in which the principles of natural justice were imported in the case of compulsory retirement even though it was held expressly in J.N. Sinha that the said principles are not attracted.
This view was reiterated by K.N. Singh, J. again in ; Baidyanath Mahapatra vs State of Orissa, (Bench comprising of K.N. Singh and M.H. Kania, JJ.).
In this case, the Review Committee took into account the entire service record of the employee including the adverse remarks relating to the year 1969 to 1982 (barring certain intervening years for which no adverse remarks were made).
The employee had joined the Orissa Government service as an Assistant Engineer in 1955.
In 1961 he was promoted to the post of Executive Engineer and in 1976 to the post of Superintending Engineer.
In 1979 he was allowed to cross the efficiency bar with effect from 1.1.1979.
He was compulsorily retired by an order dated 10.11.1983.
The Bench held in the first instance that the adverse entries for the period prior to his promotion as Superintending Engineer cannot be taken into account.
It was held that if the officer was promoted to a higher post, and that too a selection post, notwithstanding such adverse entries, it must be presumed that the said entries lost their significance and cannot be revived to retire the officer compulsorily.
Regarding the adverse entries for the subsequent years and in particular relating to the years 1981 82 and 1982 83 it was found that though the said adverse remarks were communicated, the period prescribed for making a representation had not expired.
The Bench observed: ". .These facts make it amply clear that the appellant 's 851 representation against the aforesaid adverse remarks for the years 1981 82 and 1982 83 was pending and the same had not been considered or disposed of on the date of impugned order was issued.
It is settled view that it is not permissible to prematurely retire a government servant on the basis of adverse entries, representations against which are not considered and disposed of.
See Brij Mohan Singh Chopra vs State of Punjab.
On the above basis, it was held that the Review Committee ought to have waited till the expiry of the period prescribed for making representation against the said remarks and if any representation was made it should have been considered and disposed of before they could be taken into consideration for forming the requisite opinion.
In other words, it was held that it was not open to the Review Committee and the government to rely upon the said adverse entries relating to the years 1981 82 and 1982 83, in the circumstances.
Unfortunately, the decision in J.N. Sinha was not brought to the notice of the learned Judges when deciding the above two cases.
The basis of the decisions in Brij Mohan Singh Chopra and Baidyanath Mahapatra, it appears, is that while passing an order of compulsory retirement, the authority must act consistent with the principles of natural justice.
It is said to expressly in Brij Mohan Singh Chopra.
This premise, if carried to its logical end, would also mean affording an opportunity to the concerned government servant to show cause against the action proposed and all that it involves.
It is true that these decisions do not go to that extent but limit their holding to only one facet of the rule viz., `acting upon undisclosed material to the prejudice of a man is a violation of the principle of natural justice. ' This holding is in direct conflict with the decision in J.N.Sinha which excludes application of principles of natural justice.
As pointed out above, J.N. Sinha was decided after, and expressly refers to the decisions in, Binapani Devi and Kraipak and yet holds that principles of natural justice are not attracted in a case of compulsory retirement.
The question is which of the two views is the correct one.
While answering this question, it is necessary to keep the following factors in mind: (a) Compulsory retirement provided by F.R. 56 (j) or other corresponding rules, is not a punishment.
It does not involve any stigma nor any implication of misbehaviour or incapacity.
Three Constitution Benches have said so vide Shyam Lal Shivacharana and R.L. 852 Butail.
(b) F.R. 56 (j) as also the first proviso to Rule 71(a) of the Orissa Service Code, empower the government to order compulsory retirement of a government servant if in their "opinion", it is in the public interest so to do.
This means that the action has to be taken on the subjective satisfaction of the government.
In R.L. Butail, the Constitution Bench observed: ".
In Union of India vs Col J.N. Sinha this Court stated that F.R. 56(j) in express terms confers on the appropriate authority an absolute right to retire a Government servant on his attaining the age of 55 years if such authority is of the opinion that it is in public interest so to do.
The decision further states: "If that authority, bona fide forms that opinion, the correctness of that opinion cannot be challenged before courts.
It is open to an aggrieved party to contend that the requisite opinion has not been formed or the decision is based on collateral grounds or that it is an arbitrary decision.
The law on the subjective satisfaction has been dealt with elaborately in Barium Chemicals vs Company Law Board, ; At page 323, Shelat, J., after referring to several decisions dealing with action taken on subjective satisfaction, observed thus: "Bearing in mind these principles the provisions of section 237 (b) may now be examined.
The clause empowers the Central Government and by reason of delegation of its powers the Board to appoint inspectors to investigate the affairs of the company, if "in the opinion of the Central Government" (now the Board) there are circumstances "suggesting" what is stated in the three sub clauses.
The power is executive and the opinion requisite before an order can be made is of the Central Government or the Board as the case may be and not of a Court.
Therefore, the Court cannot substitute its own opinion for the opinion of the authority.
But the question is, whether the entire action under the section is subjective?" 27.
The learned Judges then referred to certain other decisions including the decision in Vallukunnel vs Reserve Bank of India, ; and concluded as follows: 853 "Therefore, the words, "reason to believe" or "in the opinion of"do not always lead to the construction that the process of entertaining "reason to believe" or "the opinion" is an altogether subjective process not lending itself even to a limited scrutiny by the court that such "reason to believe" or "opinion" was not formed on relevant facts or within the limits or as Lord Radcliffe and Lord Reid called the restraints of the statute as an alternative safeguard to rule of natural justice where the function is administrative.
The blurring of the dividing line between a quasi judicial order and an administrative order, pointed out in Kraipak has no effect upon the above position, more so when compulsory retirement is not a punishment nor does it imply any stigma.
Kraipak or for that matter, Maneka Gandhi cannot be understood as doing away with the concept of subjective satisfaction.
On the above premises, it follows, in our respectful opinion that the view taken in J.N. Sinha is the correct one viz., principles of natural justice are not attracted in a case of compulsory retirement under F.R. 56(j) or a rule corresponding to it.
In this context, we may point out a practical difficulty arising from the simultaneous operation of two rules enunciated in Brij Mohan Singh Chopra.
On one hand, it is stated that only the entries of last ten years should be seen and on the other hand, it is stated that if there are any adverse remarks therein, they must not only be communicated but the representations made against them should be considered and disposed of before they can be taken into consideration.
Where do we draw the line in the matter of disposal of representation.
Does it mean, disposal by the appropriate authority alone or does it include appeal as well.
Even if the appeal is dismissed, the government servant may file a revision or make a representation to a still higher authority.
He may also approach a court or Tribunal for expunging those remarks.
Should the government wait until all these stages are over.
All that would naturally take a long time by which time, these reports would also have become stale.
A government servant so minded can adopt one or the other proceeding to keep the matter alive.
This is an additional reason for holding that the principle of M.E. Reddy should be preferred over Brij Mohan Singh Chopra and Baidyanath Mahapatra, on the question of taking into consideration uncommunicated adverse remarks.
854 30.
Another factor to be borne in mind is this: most often, the authority which made the adverse remarks and the authority competent to retire him compulsorily are not the same.
There is no reason to presume that the authority competent to retire him will not act bonafide or will not consider the entire record dispassionately.
As the decided cases show, very often, a Review Committee consisting of more than one responsible official is constituted to examine the cases and make their recommendation to the government.
The Review Committee, or the government, would not naturally be swayed by one or two remarks, favourable or adverse.
They would form an opinion on a totality of consideration of the entire record including representations, if any, made by the government servant against the above remarks of course attaching more importance to later period of his service.
Another circumstance to be borne in mind is the unlikelihood of succession of officers making unfounded remarks against a government servant.
We may not be understood as saying either that adverse remarks need not be communicated or that the representations, if any, submitted by the government servant (against such remarks) need not be considered or disposed of.
The adverse remarks ought to be communicated in the normal course, as required by the Rules/orders in that behalf.
Any representations made against them would and should also be dealt with in the normal course, with reasonable promptitude.
All that we are saying is that the action under F.R.56(j) (or the Rule corresponding to it) need not await the disposal or final disposal of such representation or representations, as the case may be.
In some cases, it may happen that some adverse remarks of the recent years are not communicated or if communicated, the representation received in that behalf are pending consideration.
On this account alone, the action under F.R.56(j) need not be held back.
There is reason to presume that the Review Committee or the government, if it chooses to take into consideration such uncommunicated remarks, would not be conscious or cognizant of the fact that they are not communicated to the government servant and that he was not given an opportunity to explain or rebut the same.
Similarly, if any representation made by the government servant is there, it shall also be taken into consideration.
We may reiterate that not only the Review Committee is generally composed of high and responsible officers, the power is vested in government alone and not in a minor official.
It is unlikely that adverse remarks over a number of years remain uncommunicated and yet they are made the primary basis of action.
Such an unlikely situation if indeed present, may be indicative of malice in law.
We may 855 mention in this connection that the remedy provided by Article 226 of the Constitution is no less an important safeguard.
Even with its well known constraints, the remedy is an effective check against mala fide, perverse or arbitrary action.
At this stage, we think it appropriate to append a note of clarification.
What is normally required to be communicated is adverse remarks not every remark, comment or observation made in the confidential rolls.
There may be any number of remarks, observations and comments, which do not constitute adverse remarks, but are yet relevant for the purpose of F.R. 56(j) or a Rule corresponding to it.
The object and purposes for which this power is to be exercised are well stated in J.N. Sinha and other decisions referred supra.
The following principles emerge from the above discussion: (i) An order of compulsory retirement is not a punishment.
It implies no stigma nor any suggestion of misbehaviour.
(ii) The order has to be passed by the government on forming the opinion that it is in the public interest to retire a government servant compulsorily.
The order is passed on the subjective satisfaction of the government.
(iii) Principles of natural justice have no place in the context of an order of compulsory retirement.
This does not mean that judicial scrutiny is excluded altogether.
While the High Court or this Court would not examine the matter as an appellate court, they may interfere if they are satisfied that the order is passed (a) mala fide or (b) that it is based on no evidence or (c) that it is arbitrary in the sense that no reasonable person would form the requisite opinion on the given material; in short, if it is found to be perverse order.
(iv) The government (or the Review Committee, as the case may be) shall have to consider the entire record of service before taking a decision in the matter of course attaching more importance to record of and performance during the later years.
The record to be so considered would naturally include the entries in the confidential records/character rolls, both favourable and adverse.
If a government servant is promoted to a higher post notwithstanding the adverse remarks, such remarks lose their 856 sting, more so, if the promotion is based upon merit (selection) and not upon seniority.
(v) An order of compulsory retirement is not liable to be quashed by a Court merely on the showing that while passing it uncommunicated adverse remarks were also taken into consideration.
That circumstance by itself cannot be a basis for interfere.
Interference is permissible only on the grounds mentioned in (iii) above.
This aspect has been discussed in paras 29 to 31 above.
Before parting with the case, we must refer to an argument urged by Sri R.K. Garg.
He stressed what is called, the new concept of Article 14 as adumberated in Maneka Gandhi (A.I.R. 1978 S.C. 579) and submitted on that basis that any and every arbitrary action is open to judicial scrutiny.
The general principle evolved in the said decision is not in issue here.
We are concerned mainly with the question whether a facet of principle of natural justice audi alteram partem is attracted in the case of compulsory retirement.
In other words, the question is whether acting upon undisclosed material is a ground for quashing the order of compulsory retirement.
Since we have held that the nature of the function is not quasi judicial in nature and because the action has to be taken on the subjective satisfaction of the Government, there is no room for importing the said facet of natural justice in such a case, more particularly when an order of compulsory retirement is not a punishment nor does it involve any stigma.
So far as the appeals before us are concerned, the High Court which has looked into the relevant record and confidential records has opined that the order of compulsory retirement was based not merely upon the said adverse remarks but other material as well.
Secondly, it has also found that the material placed before them does not justify the conclusion that the said remarks were not recorded duly or properly.
In the circumstances, it cannot be said that the order of compulsory retirement suffers from mala fides or that it is based on no evidence or that it is arbitrary.
For the above reason, both the appeals are dismissed but in circumstances of the case, we make no order as to costs.
V.P.R. Appeals dismissed.
| C.A.No.869 of 1987 On 15.3.1951, the appellant was appointed as a Pharmacist, which was then designated as compounder.
On 13.2.1976 he was retired compulsorily by the Government under the first proviso to Sub rule of Rule 71 of the Orissa Service Code.
The appellant challenged the order by way of a writ petition in the High Court contending that the order was the result of ill will and malice the Chief District Medical Officer bore towards him; that his entire service was spot less and that at no time were any adverse entries in his confidential character rolls communicated to him.
The respondent Government submitted that the decision to retire 837 the petitioner compulsorily was taken by the Review Committee and not by the Chief Medical Officer; that besides the remarks made in the confidential character rolls, other material was also taken into consideration by the Review Committee that it arrived at its decision bonafide and in public interest which decision was accepted and approved by the Government.
The allegation of malafides was denied.
The High Court looked into the proceedings of the Review Committee and the confidential character rolls of the appellant and dismissed the writ petition on the reasoning, that an order of compulsory retirement after putting in the prescribed qualifying period of service did not amount to punishment; that the order was passed by the state Government and not by the Chief Medical Officer and that the petitioner has failed to establish that remarks in the confidential character rolls were not duly and properly recorded.
It held that the adverse remarks though not communicated, can yet be relied upon.
Accordingly it held that the decision to retire was taken by the Review Committee on proper material and there were no grounds to interfere with its decision.
The present appeal by special leave was filed by the government servant against the decision of the High Court on the question, whether acting upon undisclosed material was a ground for quashing the order of compulsory retirement C.A. No. 870 of 1987 was also filed on similar facts.
It was contended by the appellant that since an order of compulsory retirement had adverse effects upon the career and prospects of the government servant, the order should be passed in accordance with principles of natural justice; that before passing the order, a notice to show cause against the order proposed should be given to the government servant; that the order of compulsory retirement was based upon uncommunicated adverse remarks and that the appellant was also not afforded an opportunity to make a representation against the same; and that as per the new concept of Article 14 adumbrated Maneka Gandhi case, AIR 1978 SC 579, any and every arbitrary action was open to judicial scrutiny.
Dismissing the appeals, this Court, HELD: 1.01.
What is normally required to be communicated is adverse remarks not every remark, comment or observation made in the confidential rolls.
There may be any number of remarks, observations and 838 comments, which do not constitute adverse remarks, but are yet relevant for the purpose of F.R. 56(j) or a Rule corresponding to it.
[855B C] 1.02.
The adverse remarks ought to be communicated in the normal course, as required by the Rules/ orders in that behalf.
Any representations made against them would and should also be dealt with in the normal course, with reasonable promptitude.
[854D E] 1.03.
The action under F.R.56(j) (or the Rule corresponding to it) need not await the disposal or final disposal of such representation or representations, as the case may be.
In some cases, it may happen that some adverse remarks of the recent years are not communicated or if communicated, the representation received in that behalf are pending consideration.
On this account alone, the action under F.R.56(j) need not be held back.
[854E F] 1.04.
There is no reason to presume that the Review Committee or the government, if it chooses to take into consideration such uncommunicated remarks, would not be conscious or cognizant of the fact that they are not communicated to the government servant and that he was not given an opportunity to explain or rebut the same.
Similarly, if any representation made by the government servant is there, it shall also be taken into consideration.
[854F G] 1.05.
Not only the Review Committee is generally composed of high and responsible officers, the power is vested in government alone and not in a minor official.
It is unlikely that adverse remarks over a number of years remain uncommunicated and yet they are made the primary basis of action.
Such an unlikely situation, if indeed present, may be indicative of malice in law.
[854G H] 2.01.
An order of compulsory retirement is not a punishment.
It implies no stigma nor any suggestion of misbehaviour.
[855D] 2.02.
The order has to be passed by the government on forming the opinion that it is in the public interest to retire a government servant compulsorily.
The order is passed on the subjective satisfaction of the government.
[855D E] 2.03.
Principles of natural justice have no place in the context of an order of compulsory retirement.
This does not mean that judicial scrutiny 839 is excluded altogether.
While the High Court or this Court would not examine the matter as an appellate court, they may interfere if they are satisfied that the order is passed (a) mala fide or (b) that it is based on no evidence or (c) that it is arbitrary in the sense that no reasonable person would form the requisite opinion on the given material; in short, if it is found to be a perverse order.
[855E F] 2.04.
The remedy provided by Article 226 of the Constitution is no less an important safeguard.
Even with its well known constraints, the remedy is an effective check against mala fide, perverse or arbitrary action.
[855A] 2.05.
An order of compulsory retirement is not liable to be quashed by a court merely on the showing that while passing it, uncommunicated adverse remarks were also taken into consideration.
That circumstance by itself cannot be a basis for interference.
[856B] 2.06.
The government (or the Review Committee, as the case may be) shall have to consider the entire record of service before taking a decision in the matter, of course, attaching more importance to the record of and performance during the later years.
The record to be so considered would naturally include the entries in the confidential records/character rolls, both favourable and adverse.
If a government servant is promoted to a higher post notwithstanding the adverse remarks, such remarks lose their sting, more so, if the promotion is based upon merit (selection) and not upon seniority.
[855G 856A] 2.07.
The nature of the function is not quasi judicial in nature and because the action has to be taken on the subjective satisfaction of the Government, there is no room for importing any facet of natural justice particularly because an order of compulsory retirement is not a punishment nor does it involve any stigma.
[856E] Union Of India vs M.E.Reddy, ; ; Union of India vs J.N.Sinha, [1971] 1 SCR 791, Applied.
Shyam Lal vs State of Uttar Pradesh, ; ; Shivacharana vs State of Mysore, AIR (1965) SC 280; State of Orissa vs Dr. Binapani Devi, ; ; A.K. kraipak vs Union of India, AIR 1970 SC 150; R.L. Butail vs Union of India, ; Dr. N.V. Puttabhatta vs State of Mysore; , ; Gian Singh Mann vs Punjab and Haryana 840 High Court; , ; O.N.G.C. vs Iskandar Ali, Brij Bihari Lal Agarwal vs High Court Of Madhya Pradesh, ; Baldev Raj Chaddha vs Union Of India, ; ; J.D. Srivastava vs State of Madhya Pradesh, ; ; Brij Mohan Singh Chopra vs State of Punjab, ; Gurdyal Singh Fiji vs State of Punjab, ;m Amarkant Chaudhary vs State of Bihar, ; ; Baidyanath Mahapatra vs State of Orissa, ; ; Barium Chemicals vs Company Law Board, ; ; Vallukunnel vs Reserve Bank of India, ; ; Maneka Gandhi 's case, AIR 1978 SC 579, Referred to.
|
ivil Appeal No. 3362 of 1979.
From the Judgment and Order dated 3.10.1977 of the Andhra Pradesh High Court in Writ Petition No. 3348 of 1975.
A.S. Nambiar and B. Parthasarthy for the Appellants.
T.V. S.N. Chari and G. Narasimhulu for the Respondents.
The Judgment of the Court was delivered by K. RAMASWAMY,J.
This appeal by special leave arises against the judgment of the Division Bench of the Andhra Pradesh High Court dated October 3, 1977 in Writ Petition No. 3343/75.
The Govt.
in exercise of power under section 68 D in Chapter IVA of the approved a draft scheme framed under section 68 C through G.O.M.S. No. 753, Home (Transport) Dept.
dated June, 1975, Published in the gazette on June 4, 1975, relating to the route Anantapur to Dharmavaram via Mamillappalli.
The Scheme No. 82 of 1974 was questioned in Writ Petition No. 3827/75 and the same was upheld by a single Judge on September 30.
1975 and on appeal in Writ Appeal No. 80 of 1975 dated November 14, 1975, the Division Bench upheld the same.
While approving the scheme the routes, namely : (1) Kodikonda to Anantapur via Dharmavaram, (2) Bukkapatnam to Anantapur via Dharmavaram, (3) Interstate route Virechal to Dharmavaram via Anantapur, (4) Anantapur to Puttaparti via Dharmavaram to the extent indicated in the note thereunder were exempted from the scheme.
Thereby the partial exemption of these routes from the approved scheme stood upheld.
Thereafter the two respondents filed the writ petition challenging the self same scheme contending that the non exemption of the routes i.e. Kalyandrug to Pernapalli via Dharamavaram and Anantapur to Perur via Dharmavaram offend Act, 14 of the Constitution.
The High Court upheld the contention and held that their exclusion is discriminatory.
Accordingly the High Court directed that the case "worth 833 consideration in the case of exempted routes".
The Govt.
was directed to consider their case and to pass appropriate orders to accord exemption from the scheme.
Questioning the correctness of the judgment, this appeal has been filed.
Under section 68 C, where the State Transport Undertaking is of the opinion that for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service, it is necessary in the public interest that the road "transport services" in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State Transport Undertaking, "Whether to the exclusion, complete or partial", of other persons or otherwise, the State Transport Undertaking may prepare a scheme giving particulars of the nature of the service proposed to be rendered, the area or route proposed to be covered and such other particulars respecting thereto as may be prescribed, and shall cause every such scheme to be published in the Official Gazette and also in such other manner as the State Government may direct.
The draft scheme accordingly was prepared on the above routes and was published.
Objections had been filed.
In exercise of the power under sub section 2 of section 68 D the State Govt.
after considering the objections and giving opportunity to the objectors and the representatives and also of the State Transport Undertaking approved the scheme and excluded the aforesaid four routes.
AS stated earlier, the scheme was upheld by the High Court and became final.
The question emerges whether the non exclusion of two transport operators, the respondents herein, offends Act, 14.
The contention of Sri Narsamhulu, the learned counsel for the operators, is that the State Govt.
having exempted four routes from the scheme, the respondents too are entitled to parity of treatment and the denial offends their right to equality guaranteed under Art.14 of the Constitution.
We find difficult to give our acceptance to this contention.
It is true, as disclosed in the counter affidavit filed by the State Govt.
in the writ petition, before the High Court that inadequate transport facilities prevailing on those four routes and density of the population that need transport service by the private operators induced the Govt.
to give exemption and that the respondents also may be situated in the similar circumstances.
But by the very language of s.68 C whose constitutional validity can no longer be questioned, and was not in fact questioned, gives 834 power to the S.T.U. to exclude the private operators completely or partially from an area or route or part thereof in the draft scheme and given exclusive power to offer transport service in that area or route or part thereof.
On approval the scheme has the effect of excluding the private operators from the field.
The statute itself gives power to the State to exercise discretion for formulating a scheme for an area or route or part thereof and necessarily has the effect of excluding the existing or potential private operators from the field to render transport service in that partially prohibited area etc.
while retaining similar private operators in other area, route or part thereof.
The exclusion completely or partially is allowable under the statute itself and is writ large.
The discretion need not necessarily be discriminatory.
68 C left the choice to the S.T.U. and so discrimination in that sense is discernible from section 68C which itself authorises the S.T.U., based on factual matrix, eliminate in its choice of a partial exclusion of private operators in an area or route or part thereof.
Opportunity has been given to an affected party to file his or their objections and of a right of hearing before the State Govt.
approved of the draft scheme and publication thereof in the gazette.
The exercise of discretion by the S.T.U. in its selective application of partial prohibition is controlled and regulated by the statute in Ss.
68D and 68E of the Act.
In Ram Nath Verma vs State of Rajasthan, ; at 160 one of the contentions raised was that out of five routes which were partially overlapping, three routes have been taken over.
Permits of the existing objectors has been cancelled with respect to the overlapping part of the routes while in other two routes, the objectors were allowed to ply even on the overlapping part but they had been forbidden to pick up passengers on the overlapping part for a destination within the overlapping part.
This latter method was adopted to make the permits ineffective for the overlapping part.
The contention of the aggrieved persons was that they were discriminated.
This Court held thus: "We are of the opinion that there is no force in it.
Under s.68C, it is open to frame a scheme in which there is a partial exclusion of private operators.
Making the permits ineffective for the overlapping part only amounts to partial exclusion of the private operators from that route.
In the circumstances an order making the permit ineffective for the overlapping part would be justified under section 68C".
Giving primacy to the contention of violation of article 14 would be fraught with insidious effects of upsetting the very scheme itself, since anyone of the existing or potential 835 operators would always contend that he too is similarly situated with that of the exempted operators of other area, route or part thereof and unequal treatment has been meted out in the grant of permit to offer transport service offending his right under article 14.
It is true that sub s.2 of s68E, as stated by Shri Narsamhulu, that despite the approval of the scheme under sub s.2 of section 68 D, the State Govt.
may, at any time, if it considers necessary in the public interest so to do, modify any scheme published under section 3 of section 68 D of the Act after following the procedure prescribed therein.
The exercise of that power would be de hors the approval granted under sub.s.2 of section 68 D of the Act and published under sub s.3 of section 68 D.
The conditions precedent therein are the Govt.
must objectively come to a finding that there exists necessity in public interest and that the approved scheme needs modification and that the Govt.
considers that such necessity to be imperative to modify the scheme.
The Govt.
thereafter should follow the procedure prescribed under sub section 2 of section 68 E as if it is a new scheme and pass appropriate orders in that regard.
That too it would be only either on the initiative of the S.T.U. or on an application or representations by the general public of the necessity, in public interest, to modify the scheme approved under sub section 2 of section 68 D of that Act.
It is not at the behest of the erstwhile holders of the permit, who have been completely or partially frozen to obtain permit afresh or intending fresh applications in this behalf.
It is now settled law that even on a partial overlapping approved scheme private operators have been totally prohibited to have corridor, shelters and could no longer enter into the frozen area, route or part thereof and obtain permit to render transport service to the travelling public.
When that be so, the partial exclusion does not offend article 14 of the Constitution.
In fact the respondents did not question the validity of the scheme.
Thus considered the approach and the reasoning of the High Court are clearly illegal.
Accordingly the appeal is allowed and the judgment of the High Court is set aside.
The writ petition stands dismissed.
Rule nisi discharged.
But in the circumstances the parties are left to bear their own costs.
T.N.A. Appeal allowed.
| In exercise of its power under section 68 D of the the Government of Andhra Pradesh approved a draft scheme framed under section 68 C relating to the route Anantapur to Dharamavaram via Mamillapalli.
However, exemption was granted to persons holding permit for the routes namely (a) Kodikonda to Anantapur via Dharmavaram; (b) Bukkapatnam to Anantapur via Dharmavaram; (c) Interstate route Virechal to Dharmavaram via Anantapur; (d) Anantapur to Puttaparti via Dharmavaram and the partial exemption of these routes from the scheme was upheld by the Andhra Pradesh High Court.
Thereafter, the respondents filed a writ petition in High Court for a direction for exemption from the operation of the scheme, and the High Court held that exclusion of the respondents was discriminatory, Accordingly it directed the State Govt.
to consider the respondent 's case and pass appropriate orders to accord exemption from the operation of the scheme.
Against the decision of the High Court the Andhra Pradesh State Road Transport Corporation filed an appeal in this Court.
It was contended on behalf of the respondents that since the State Government exempted four routes from the operation of the scheme they are entitled to parity and denial offends their right to equality under Article 14 of the Constitution.
831 Allowing the appeal and setting aside the order of the High Court, this Court.
HELD: 1.
Section 68 C of the , whose constitutional validity can no longer be questioned, gives power to the State Transport Undertaking to exclude the private operators completely or partially from an area or route or part thereof in the draft scheme.
It gives exclusive power to offer transport service in that area or route or part thereof.
[833H, 834A] 2.
The statute itself gives power to the State to exercise discretion for formulating a scheme for an area or route or part thereof and necessarily has the effect of excluding the existing or potential private operators from the fields to render transport service in that partially prohibited area etc.
while retaining similar private operators in other area, route or part thereof.
The exclusion completely or partially is allowable under the statute itself and is writ large.
The discretion need not necessarily be discriminatory.
Section 68 C left the choice to the State Transport Undertaking and so discrimination in that sense is discernible from the section which itself authorises the State Transport Undertaking, based on factual matrix, eliminate in its choice of a partial exclusion of private operators in an area or route or part thereof.
Opportunity has been given to an affected party to file his or their objections and of a right of hearing before the State Govt.
approved of the draft scheme and publication thereof in the gazette.
The exercise of discretion by the State Transport Undertaking in its selective application of partial prohibition is controlled and regulated by the statute in Ss.
68 D and 68 E of the Act.
[834B D] Ram Nath Verma vs State of Rajasthan, [1963] 2 S.C.R. 152.
referred to.
Giving primacy to the contention of violation of Article 14 would be fraught with insidious effect of upsetting the very scheme itself since anyone of the existing or potential operators would always contend that he too is similarly situated with that of the exempted operators of other area, route or part thereof and unequal treatment has been meted out in the grant of permit to offer transport service offending his right under Article 14.
[834H, 835A] 4.
It is now settled law that even on a partial overlapping approved 832 scheme private operators have been totally prohibited to have corridor shelters and could no longer enter into the frozen area, route or part thereof and obtain permit to render transport service to the travelling public.
When that be so, the partial exclusion does not offend Article 14 of the Constitution.
[835 E]
|
It is the Vice President of India who is ex officio Chairman of the Rajya Sabha and his position being akin to that of the President of India, is different from that of the Speaker.
The observations relating to the office of the speaker do not apply to the chairman of the Rajya Sabha, that is the Vice President of India.
[805F G] 8.7.
Since the conferment of authority is on the Speaker and the provision being unworkable for the Lok sabha and the State Legislatures, cannot be sustained, even without para 7, the entire Tenth Schedule is rendered invalid in the absence of any valid authority for decision of the dispute notwithstanding the fact that this defect would not apply to the Rajya sabha alone whose Chairman is the Vice President of India.
The statutory exception of doctrine of necessity has no application since designation of authority in the Tenth Schedule is made by choice while enacting the legislation instead of adopting the other available options.
[805H, 806A B] & ORIGINAL JURISDICTION: Transfer Petition (Civil) No.40 of 1991.
(Under Article 139 A(1) of the Constitution of India).
WITH Writ Petition (Civil) No. 17 of 1991.
Soli J. Sorabjee, Vijay Hansaria and Sunil Kr.
Jain for the Petitioner Ejaz Maqbool and Markand D. Adkar for the Respondents.
The Judgment of the Court was delivered by 711 (OPERATIVE CONCLUSIONS IN THE MAJORITY OPINION) [Per VENKATACHALIAH, K, JAYACHANDRA REDDY AND AGRAWAL, JJ.
].
The Writ Petitions, Transfer Petitions, Civil Appeals, Special Leave Petitions and other connected matters raising common questions as to the constitutional validity of the constitution (52nd Amendment) Act, 1985, in so far as it seeks to introduce the Tenth Schedule in the Constitution of India, were heard together.
Some of these matters involve investigation and determination of factual controversies and of the extent of applicability to them of the conclusions reached on the various constitutional issues.
That exercise shall have to be undertaken in the individual cases separately.
The present judgment is pronounced in the Transfer Petition No. 40 of 1991 seeking the transfer of the Writ Petition, Rule No. 2421/90 on the file of the High Court of Guwahati to this Court.
The Transfer Petition is allowed and the aforesaid Writ Petition is withdrawn to this Court for the purpose of deciding the constitutional issues and of declaring the law on the matter.
For the reasons to be set out in the detailed judgment to follow, the following are the operative conclusions in the majority opinion on the various constitutional issues: (A) That having regard to the background and evolution of the principles underlying the Constitution (52nd Amendment) Act, 1985, in so far as it seeks to introduce the Tenth Schedule in the Constitution of India, the provisions of Paragraph 7 of the Tenth Schedule of the Constitution in terms and in effect bring about a change in the operation and effect of Articles 136, 226 and 227 of the Constitution of India and, therefore, the amendment would require to be ratified in accordance with the proviso to sub Article (2) of Article 368 of the Constitution of India.
(B) That there is nothing in the said proviso to Article 368 (2) which detracts from the severability of a provision on account of the inclusion of which the Bill containing the Amendment requires ratification from the rest of the provisions of such Bill 712 Which do not attract and require such ratification.
Having regard to the mandatory language of Article 368 (2) that "thereupon the constitution shall stand amended" the operation of the proviso should not be extended to constitutional amendments in a Bill which can stand by themselves without such ratification.
(C) That accordingly, the Constitution (52nd Amendment) Act, 1985, in so far as it seeks to introduce the Tenth Schedule in the constitution of India, to the extent of its provisions which are amenable to the legal sovereign of the amending process of the union Parliament cannot be overborne by the proviso which cannot operate in that area.
There is no justification for the view that even the rest of the provisions of the constitution (52nd Amendment) Act, 1985, excluding Paragraph 7 of the Tenth Schedule become constitutionally infirm by reason alone of the fact that one of its severable provisions which attracted and required ratification under the proviso to Article 368 (2) was not so ratified.
(D) That Paragraph 7 of the Tenth Schedule contains a provision which is independent of, and stands apart from, the main provisions of the Tenth Schedule which are intended to provide a remedy for the evil of unprincipled and unethical political defections and, therefore, is a severable part.
The remaining provisions of the Tenth Schedule can and do stand independently of Paragraph 7 and are complete in themselves workable and are not truncated by the excision of Paragraph 7.
(E) That the Paragraph 2 of the Tenth Schedule to the Constitution is valid.
Its provisions do not suffer from the vice of subverting democratic rights of elected Members of Parliament and the Legislatures of the States.
It does not violate their freedom of speech, freedom of vote and conscience as contended.
The provisions of Paragraph 2 do not violet any rights or freedom under Article 105 and 194 of the Constitution.
The provisions are salutory and are intended to strengthen the 713 fabric of Indian parliamentary democracy by curbing unprincipled and unethical political defections.
(F) The contention that the provisions of the Tenth Schedule, even with the exclusion of Paragraph 7, violate the basic structure of the Constitution in that they affect the democratic rights of elected members and, therefore, of the principles of Parliamentary democracy is unsound and is rejected.
(G) The Speakers, Chairmen while exercising powers and discharging functions under the Tenth Schedule act as Tribunal adjucating rights and obligations under the Tenth Schedule and their decisions in that capacity are amenable to judicial review.
However, having regard to the Constitutional Scheme in the Tenth Schedule, judicial review should not cover any stage prior to the making of a decision by the speakers/Chairmen.
Having regard to the Constitutional intendment and the status of the repository of the adjudicatory power, no quia timet actions are permissible, the only exception for any interlocutory interference being cases of interlocutory disqualifications or suspensions which may have grave, immediate and irreversible repercussions and consequence.
(H) That Paragraph 6(1) of the Tenth Schedule, to the extent it seeks to impart finality to the decision of the Speakers/Chairmen is valid.
But the concept of statutory finality embodied in Paragraph 6 (1) does not detract from or abrogate judicial review under Articles 136,226 and 227 of the Constitution in so far as infirmities based on violations of constitutional mandates, mala fides, non compliance with Rules of Natural Justice and perversity, are concerned.
(I) That the deeming provision in Paragraph 6 (2) of the Tenth Schedule attracts an immunity analogous to that in Articles 122 (1) and 212 (1) of the Constitution as understood and explained in Keshav singh 's Case (Spl.
Ref., No. 1; , to protect the validity of proceedings from mere irregularities of procedure.
The deeming provision, having regard to the words "be deemed to be proceedings in Parliament" or "proceedings 714 in the Legislature of a State" confines the scope of the fiction accordingly.
(J) That contention that the investiture of adjudicatory functions in the Speakers/Chairmen would by itself vitiate the provision on the ground of likelihood of political bias is unsound and is rejected.
The Speakers/Chairmen hold a pivotal position in the scheme of Parliamentary democracy and are guardians of the rights and privileges of the House.
They are expected to and do take far reaching decisions in the functioning of Parliamentary democracy.
Vestiture of power to adjudicate questions under the Tenth Schedule in such a constitutional functionaries should not be considered exceptionable.
(K) In the view we take of the validity of Paragraph 7 it is unnecessary to pronounce on the contention that judicial review is a basic structure of the Constitution and Paragraph 7 of the Tenth Schedule violates such basic structure .
The factual controversies raised in the Writ Petition will, however, have to be decided by the High Court applying the principles declared and laid down by this judgment.
The Writ Petition is, accordingly,, remitted to the High Court for such disposal in accordance with law.
(Operative conclusions in the minority opinion) [Per SHARMA AND VERMA, JJ.] For the reasons to be given in our detailed judgment to follow, our operative conclusions in the minority opinion on the various constitutional issues are as follows: 1.
Para 7 of the Tenth Schedule,in clear terms and in effect excludes the jurisdiction of all courts, including the Supreme Court under Article 136 and the High Courts under Articles 226 and 227 to entertain any challenge to the decision under para 6 on any ground even of illegality or perveristy, not only at an interim stage but also after the final decision on the question of disqualification on the ground of defection.
Para 7 of the Tenth Schedule, therefore, in terms and in effect, 715 makes a change in Article 136 in Chapter IV of Part V; and Articles 226 and 227 in Chapter V of Part VI of the Constitution, attracting the proviso to clause (2) of Article 368.
In view of para 7 in the Bill resulting in the Constitution (Fifty Second Amendment) Act, 1985 it was required to be ratified by the Legislature of not less than one half of the States as a condition precedent before the Bill could be presented to the President for assent, in accordance with the mandatory special procedure prescribed in the Proviso to clause (2) of Article 368 for exercise of the constituent power.
Without ratification by the specified number of State Legislatures, the stage for presenting the Bill for assent of the President did not reach and, therefore, the so called assent of the President was non est and did not result in the Constitution standing amended in accordance with the terms of the Bill.
In the absence of ratification by the specified number of State Legislatures before presentation of the Bill to the President for his assent, as required by the Proviso to clause (2) of Article 368, it is not merely para 7 but, the entire Constitution (Fifty Second Amendment) Act, 1985 which is rendered unconstitutional, since the constituent power was not exercised as prescribed in Article 368, and therefore, the Constitution did not stand amended in accordance with the terms of the Bill providing for the amendment.
Doctrine of Severability cannot be applied to a Bill making a constitutional amendment where any part thereof attracts the Proviso to clause (2) of Article 368.
Doctrine of Severability is not applicable to permit striking down para 7 alone saving the remaining provisions of the Bill making the Constitutional Amendment on the ground that para 7 alone attracts the proviso to clause (2) of Article 368.
Even otherwise, having regard to the provisions of the Tenth Schedule of the Constitution inserted by the Constitution (Fifty_Second Amendment) Act, 1985, the Doctrine of Severability does not apply to it.
8.Democracy is a part of the basic structure of the Constitution and free and fair elections with provision for resolution of disputes relating to 716 the same as also for adjudication of those relating to subsequent disqualification by an independent body outside the House are essential features of the democratic system in our Constitution.
Accordingly, an independent adjudicatory machinery for resolving disputes relating to the competence of Member of the House is envisaged as an attribute of this basic feature.
The tenure of the Speaker who is the authority in the Tenth Schedule to decide this dispute is dependent on the continuous support of the majority in the House and, therefore,, he (the Speaker) does not satisfy the requirement of such an independent adjudicatory authority; and his choice as the sole arbiter in the matter violates an essential attribute of the basic feature.
Consequently, the entire constitution (Fifty Second Amendment) Act, 1985 which inserted the Tenth Schedule together with clause (2) in Articles 102 and 191, must be declared unconstitutional or an abortive attempt to so amend the constitution.
It follows that all decisions rendered by the several Speakers under the Tenth Schedule must also be declared nullity and liable to be ignored.
On the above conclusions, it does not appear necessary or appropriate to decide the remaining question urged.
ORDER The Transfer Petition is allowed and the Writ Petition, Rule No. 2421 of 1990 on the file of the High Court of Guwahati is withdrawn to this Court for the purpose of deciding the constitutional issues and of declaring the law on the matter.
In accordance with the majority opinion, the factual controversies raised in the Writ Petition will, however, have to be decided by the High Court Applying the principles declared and laid down by the majority.
The Writ Petition is, accordingly remitted to the High Court for such disposal in accordance with law.
VENKATACHALIAH, J.
In these petitions the constitutional validity of the Tenth Schedule of the Constitution introduced by the Constitution (Fifty Second Amendment) Act.
1985, is assailed.
These two cases were 717 amongst a batch of Writ Petitions, Transfer Petitions, civil Appeals, Special Leave Petitions and other similar and connected matters raising common questions which were all heard together.
On 12.11.1991 we made an order pronouncing our findings and conclusions upholding the constitutional validity of the amendment and of the provisions of the Tenth Schedule, except for Paragraph 7 which was declared invalid for want of ratification in terms of and as required by the proviso to Article 368 (2) of the Constitution.
In the order dated 12.11.1991 our conclusions were set out and we indicated that the reasons for the conclusions would follow later.
The reasons for the conclusions are now set out.
This order is made in Transfer Petition No. 40 of 1991 and in Writ Petition No. 17 of 1991.
We have not gone into the factual controversies raised in the Writ Petition before the Writ Petition before the Guwahati High Court in Rule No.2421 of 1990 from which Transfer Petition No. 40 of 1991 arises.
Indeed, in the order of 12th November, 1991 itself the said Writ Petition was remitted to the High Court for its disposal in accordance with law.
Shri F.S. Nariman, Shri Shanti Bhushan, Shri M.C. Bhandare, Shri Kapil Sibal, Shri Sharma and shri Bhim Singh, learned counsel addressed arguments in support of the petitions.
Learned Attorney General, Shri Soli J. Sorabjee,Shri R.K. Garg,Shri Santhosh Hegde sought to support the constitutional validity of the amendment.
Shri Ram Jethmalani has attacked the validity of the amendment for the same reasons as put forward by Shri Sharma.
Before we proceed to record our reasons for the conclusions reached in our order dated 12th November, 1991, on the contentions raised and argued, it is necessary to have a brief look at the provisions of the Tenth Schedule.
The Statement of Objects and Reasons appended to the Bill which was adopted as the Constitution (Fifty Second Amendment) Act, 1985 says: "The evil of political defections has been a matter of national concern.
If it is not combated, it is likely to undermine the very foundation of our democracy and the principles which sustain it.
With this object, an assurance was given in the Address by the President to Parliament that the Government intended to introduce in the current session of Parliament an anti defection 718 Bill.
This Bill is meant for outlawing defection and fulfilling the above assurance.
" On December 8, 1967, the Lok sabha had passed an unanimous Resolution in terms following: "a high level Committee consisting of representatives of political parties and constitutional experts be set up immediately by Government to consider the problem of legislators changing their allegiance from one party to another and their frequent crossing of the floor in all its aspects and make recommendations in this regard.
" The said Committee known as the "Committee on Defections" in its report dated January 7, 1969, inter alia, observed: "Following the Fourth General Election, in the short period between March 1967 and February, 1968, the Indian political scene was characterised by numerous instances of change of party allegiance by legislators in several States.
Compared to roughly 542 cases in the entire period between the First and Fourth General Election, at least 438 defections occurred in these 12 months alone.
Among Independents, 157 out of a total of 376 elected joined various parties in this period.
That the lure of office played a dominant part in decisions of legislators to defect was obvious from the fact that out of 210 defecting legislators of the States of Bihar, Haryana, Madhya Pradesh, Punjab, Rajasthan Uttar Pradesh and West Bengal, 116 were included in the Council of Ministers which they helped to bring into being by defections.
The other disturbing features of this phenomenon were: multiple acts of defections by the same persons or set of persons (Haryana affording a conspicuous example); few resignations of the membership of the legislature of explanations by individual defectors, indifference on the part of defectors to political proprieties, constituency preference or public opinion; and the belief held by the people and expressed in the press that corruption and bribery were behind some of these defections".
(emphasis supplied) 719 The Committee on Defections recommended that a defector should be debarred for a period of one year or till such time as he resigned his seat and got himself re elected from appointment to the office of a Minister including Deputy Minister or Speaker or Deputy Speaker, or any post carrying salaries or allowances to be paid from the Consolidated Fund of India or of the State or from the funds of Government Undertakings in public sector in addition to those to which the defector might be entitled as legislator.
The Committee on Defections could not however, reach an agreed conclusion in the matter of disqualifying a defector from continuing to be a Member of Parliament/State Legislator.
Keeping in view the recommendations of the committee on Defections, the Constitution (Thirty Second Amendment) Bill,, 1973 was introduced in the Lok Sabha on May 16, 1973.
It provided for disqualifying a Member from continuing as a Member of either House of Parliament or the State Legislature on his voluntarily giving up his membership of the political party by which he was set up as a candidate at such election or of which he became a Member after such election, or on his voting or abstaining from voting in such House contrary to any direction issued by such political party or by any person or authority authorised by it in this behalf without obtaining prior permission of such party, person or authority.
The said Bill, however, lapsed on account of dissolution of the House.
Thereafter, the Constitution (Forty eight Amendment) Bill, 1979 was introduced in the Lok Sabha which also contained similar provisions for disqualification on the ground of defection.
This Bill also lapsed and it was followed by the Bill which was enacted into the Constitution (Fifty Second Amendment) Act, 1985.
This brings to the fore the object underlying the provisions in the Tenth Schedule.
The object is to curb the evil of political defections motivated by lure of office or other similar considerations which endanger the foundations of our democracy.
The remedy proposed is to disqualify the Member of either House of Parliament or of the State Legislature who is found to have defected from continuing as a Member of the House.
The grounds of disqualification are specified in Paragraph 2 of the Tenth Schedule.
Paragraph 2(1) relates to a Member of the House belonging to a political party by which he was set up as a candidate at the election.
Under 720 Paragraph 2(1) (a) such a Member would incur disqualification if he voluntarily gives up his membership of such political party.
Under clause (b) he would incur the disqualification if he votes or abstains from voting in the House contrary to "any direction" issued by the political party to which he belongs or by any person or authority authorised by it in this behalf without obtaining, in either case, prior permission of such political party, person or authourity and such voting or abstention has not been condoned by such political party, person or authority within fifteen days from the date of such voting or abstention.
This sub para would also apply to a nominated member who is a Member of a political party on the date of his nomination as such Member or who joins a political party within six months of his taking oath.
Paragraph 2(2) deals with a Member who has been elected otherwise than as a candidate set up by any political party and would incur the disqualification if he joins any political party after such election.
A nominated Member of the House would incur his disqualification under sub para (3) if he joins any political party after the expiry of six months from the date on which he takes his seat.
Paragraphs 3 and 4 of the Tenth Schedule, however, exclude the applicability of the provisions for disqualification under para 2 in cases of "split" in the original political party or merger of the original political party with another political party.
These provisions in the Tenth Schedule give recognition to the role of political parties in the political process.
A political party goes before the electorate with a particular programme and it sets up candidates at the election on the basis of such programme.
A person who gets elected as a candidate set up by a political party is so elected on the basis of the programme of that political party.
The provisions of Paragraph 2(1) (a) proceed on the premise that political propriety and morality demand that if such a person, after the election, changes his affiliation and leaves and political party which had set him up as a candidate at the election, then he should give up his Membership of the legislature and go back before the electorate.
The same yard stick is applied to a person who is elected as an Independent candidate and wishes to join a political party after the election.
Paragraph 2 (1) (b) deals with a slightly different situation i.e. a variant where dissent becomes defection.
If a Member while remaining a 721 Member of the political party which had set him up as a candidate at the election, votes or abstains from voting contrary to "any direction" issued by the political party to which he belongs or by any person or authority authorised by it in this behalf he incurs the disqualification.
In other words, it deals with a Member who expresses his dissent from the stand of the political party to which he belongs by voting or abstaining from voting in the House contrary to the direction issued by the political party.
Paragraph 6 of the Tenth Schedule reads: "6 (1) If any question arises as to whether a Member of a House has become subject to disqualification under this Schedule the question shall be referred for the decision of the Chairman or, as the case may be, the Speaker of such House and his decision shall be final: Provided that where the question which has arisen is as to whether the Chairman or the Speaker of a House has become subject to such disqualification, the question shall be referred for the decision of such Member of the House as the House may elect in this behalf and his decision shall be final.
(2) All proceedings under sub Paragraph (1) of this Paragraph in relation to any question as to disqualification of a Member of a House under this Schedule shall be deemed to be proceedings in Parliament within the meaning of Article 122 or, as the case may be, proceedings in the Legislature of a State within the meaning of Article 212.
" Paragraph 7 says: "7.
Bar of jurisdiction of courts: Notwithstanding anything in this Constitution, no court shall have any jurisdiction in respect of any matter connected with the disqualification of a Member of a House under this Schedule.
The challenge to the constitutional validity of the Amendment which introduces the Tenth Schedule is sought to be sustained of many grounds.
It is urged that the constitutional Amendment introducing Paragraph 7 of the Tenth Schedule, in terms and in effect, seeks to make a change in Chapter IV of Part V of the Constitution in that it denudes the jurisdiction of the 722 Supreme Court under Article 136 of the Constitution of India and in Chapter V of part VI in that it takes away the jurisdiction of the High Courts under Article 226 and that, therefore, the legislative Bill, before presentation to the President for assent, would require to be ratified by the Legislature of not less than one half of the States by resolution to that effect.
In view of the admitted position that no such ratification was obtained for the Bill, it is contended, the whole Amending Bill not merely Paragraph 7 fails and the amendment merely remains an abortive attempt to bring about an amendment.
It is further contended that the very concept of disqualification for defection is violative of the fundamental values and principles underlying Parliamentary democracy and violates an elected representative 's freedom of speech, right to dissent and freedom of conscience and is, therefore, unconstitutional as destructive of a basic feature of the Indian Constitution.
It is also urged that the investiture in the Speaker or the Chairman of the power to adjudicate disputed defections would violate an important incident of another basic feature of the Constitution, viz., Parliamentary democracy.
It is contended that an independent, fair and impartial machinery for resolution of electoral disputes is an essential and important incident of democracy and that the vesting of the power of adjudication in the Speaker or the Chairman who, in the India Parliamentary system are nominees of political parties and are not obliged to resign their party affiliations after election is violative of this requirement.
It is alternatively contended that if it is to be held that the amendment does not attract the proviso to Article 368(2), then Paragraph 7 in so far as it takes away the power of judicial review, which, in itself, is one of the basic features of the Constitution is liable to be struck down.
There are certain other contentions which, upon a closer examination, raise issues more of construction than constitutionality.
For instance, some arguments were expanded on the exact connotations of a "split" as distinct from a "defection" within the meaning of Paragraph 3.
Then again, it was urged that under Paragraph 2(b) the expression "any direction" is so wide that even a direction,, which if given effect to and implemented might bring about a result which may itself be obnoxious to and violative of constitutional ideals and values would be a source of disqualification .
These are,, indeed, matters of construction as to how,, in the context in which the occasion for the introduction of the Tenth Schedule arose and the high purpose it is intended to serve, the expression "any direction" occurring in Paragraph 723 2(b) is to be understood.
Indeed, in one of the decisions cited before us (Prakash Singh Badal & Ors.
vs Union of India & Ors.
, AIR 1987 Punjab and Haryana 263) this aspect has been considered by the High Court.
The decision was relied upon before us.
We shall examine it presently.
Supporting the constitutionality of the Amendment, respondents urge that the Tenth Schedule creates a non justiciable constitutional area dealing with certain complex political issues which have no strict adjudicatory disposition.
New rights and obligations are created for the first time uno flatu by the Constitution and the Constitution itself has envisaged a distinct constitutional machinery for the resolution of those disputes.
These rights, obligations and remedies, it is urged, which are in their very nature and innate complexities are in political thickets and are not amenable to judicial processes and the Tenth Schedule has merely recognised this complex character of the issues and that the exclusion of this area is constitutionally preserved by imparting a finality to the decisions of the Speaker or the Chairman and by deeming the whole proceedings as proceedings within Parliament or within the House of Legislature of the States envisaged in Articles 122 and 212, respectively, and further by expressly excluding the Courts ' jurisdiction under Paragraph 7.
Indeed, in constitutional and legal theory, it is urged,, there is really no ouster of jurisdiction of Courts or of Judicial Review as the subject matter itself by its inherent character and complexities is not amenable to but outside judicial power and that the ouster of jurisdiction under Paragraph 7 is merely a consequential constitutional recognition of the non amenability of the subject matter to the judicial power of the State, the corollary of which is that the Speaker or the Chairman,, as the case may be, exercising powers under Paragraph 6(1) of the Tenth Schedule function not as a statutory Tribunal but as a part of the State 's Legislative Department.
It is, therefore, urged that no question of the ouster of jurisdiction of Courts would at all arise inasmuch as in the first place, having regard to the political nature of the issues, the subject matter is itself not amenable to judicial power.
It is urged that the question in the last analyses pertains to the constitution of the House and the Legislature is entitled to deal with it exclusively.
It is further urged that Judicial Review apart from Judicial Review of the legislation as inherent under a written constitution is 724 merely a branch of administrative law remedies and is by no means a basic feature of the Constitution and that, therefore, Paragraph 7, being a constitutional provision cannot be invalidated on some general doctrine not found in the Constitution itself.
On the contentions raised and urged at the hearing the questions that fall for consideration are the following: (A) The Constitution (Fifty Second Amendment) Act, 1985, in so far as it seeks to introduce the Tenth Schedule is destructive of the basic structure of the constitution as it is violative of the fundamental principles of Parliamentary democracy, a basic feature of the Indian constitutionalism and is destructive of the freedom of speech, right to dissent and freedom of conscience as the provisions of the Tenth Schedule seek to penalise and disqualify elected representatives for the exercise of these rights and freedoms which are essential to the sustenance of the system of Parliamentary democracy.
(B) Having regard to the legislative history and evolution of the principles underlying the Tenth Schedule, Paragraph 7 thereof in terms and in effect, brings about a change in the operation and effect of Article 136,, 226 and 227 of the Constitution of India and, therefore, the Bill introducing the amendment attracts the proviso to Article 368(2) of the constitution and would require to be ratified by the legislative of the States before the Bill is presented for Presidential assent.
(C) In view of the admitted non compliance with proviso to Article 368(2) not only Paragraph 7 of the Tenth Schedule, but also the entire Bill resulting in the Constitution (Fifty Second Amendment) Act, 1985, stands vitiated and the purported amendment is abortive and does not in law bring about a valid amendment.
Or whether, the effect of such non compliance invalidates Paragraph 7 alone and the other provisions which, by themselves, do not attract the proviso do not become invalid.
(D) That even if the effect of non ratification by the legislature 725 of the States is to invalidate Paragraph 7 alone, the whole of the Tenth Schedule fails for non severability.
Doctrine of severability, as applied to ordinary statutes to promote their constitutionality, is inapplicable to constitutional Amendments.
Even otherwise, having regard to legislative intent and scheme of the Tenth Schedule, the other provisions of the Tenth Schedule, after the severance and excision of Paragraph 7, become truncated, and unworkable and cannot stand and operate independently.
The Legislature would not have enacted the Tenth Schedule without Paragraph 7 which forms its heart and core.
(E) That the deeming provision in Paragraph 6(2) of the Tenth Schedule attracts the immunity under Articles 122 and 212.
The Speaker and the Chairman in relation to the exercise of the powers under the Tenth Schedule shall not be subjected to the jurisdiction of any Court.
The Tenth Schedule seeks to and does create a new and non justiciable area of rights, obligations and remedies to be resolved in the exclusive manner envisaged by the Constitution and is not amenable to , but constitutionally immune from curial adjudicative processes.
(F) That even if Paragraph 7 erecting a bar on the jurisdiction of Courts is held inoperative, the Courts ' jurisdiction is, in any event, barred as Paragraph 6(1) which imparts a constitutional `finality 'to the decision of the Speaker or the Chairman, as the case may be, and that such concept of `finality ' bars examination of the matter by the Courts.
(G) The concept of free and fair elections as a necessary concomitant and attribute of democracy which is a basic feature includes an independent impartial machinery for the adjudication of the electoral disputes.
The Speaker and the Chairman do not satisfy these incidents of an independent adjudicatory machinery.
The investiture of the determinative and adjudicative jurisdiction 726 in the Speaker or the Chairman, as the case may be, would, by itself, vitiate the provision on the ground of reasonable likelihood of bias and lack of impartiality and therefore denies the imperative of an independent adjudicatory machinery.
The Speaker and Chairman are elected and hold office on the support of the majority party and are not required to resign their Membership of the political party after their election to the office of the Speaker or Chairman.
(H) That even if Paragraph 7 of the Tenth Schedule is held not to bring about a change or affect Articles 136, 226 and 227 of the Constitution, the amendment is unconstitutional as it erodes and destroys judicial review which is one of the basic features of the constitution.
Re: Contention(A): (The Tenth Schedule is part of the constitution and attracts the same cannons of construction as are applicable to the expounding of the fundamental law.
One constitutional power is necessarily conditioned by the others as the Constitution is one "coherent document".
Learned counsel for the petitioners accordingly say that Tenth Schedule should be read subject to the basic features of the Constitution.
The Tenth Schedule and certain essential incidents of democracy, it is urged, cannot co exist.
In expounding the processes of the fundamental law, the Constitution must be treated as a logical whole.
Westel Woodbury Willoughby in the "Constitutional Law of the United States" states: "The Constitution is a logical whole, each provision of which is an integral part thereof, and it is, therefore,, logically proper, and indeed imperative, to construe one part in the light of the provisions of the other parts." [2nd Edn.
Vol.1 page 65] A constitutional document outlines only broad and general principles meant to endure and be capable of flexible application to changing circumstances a distinction which differentiates a statue from a Charter under which all statutes are made.
Cooley on "Constitutional Limitations" says: 727 "Upon the adoption of an amendment to a constitution, the amendment becomes a part thereof; as much so as if it had been originally incorporated in the Constitution; and it is to be construed accordingly." [8th Edn.
1 page 129] 13.
In considering the validity of a constitutional amendment the changing and the changed circumstances that compelled the amendment are important criteria.
The observations of the U.S. Supreme Court in Maxwell vs Dow (44 lawyer 's Edition 597 at page 605) are worthy of note: ". to read its language in connection with the known condition of affairs out of which the occasion for its adoption may have arisen and then to construe it,, if there be therein any doubtful expressions, in a way so far as is reasonably possible, to forward the known purpose or object for which the amendment was adopted. ." The report of the Committee on Defections took note of the unprincipled and unethical defections induced by considerations of personal gains said: ".
What was most heartening was the feeling of deep concern over these unhealthy developments in national life on the part of the leaders of political parties themselves.
Parliament mirrored this widespread concern. " [page 1] 14.
It was strenuously contended by Shri Ram Jethmalani and Shri Sharma that the provisions of the Tenth Schedule constitute a flagrant violation of those fundamental principles and values which are basic to the sustenance of the very system of Parliamentary democracy.
The Tenth Schedule, it is urged, negates those very foundational assumptions of Parliamentary democracy; of freedom of speech; of the right to dissent and of the freedom of conscience.
It is urged that unprincipled political defections may be an evil, but it will be the beginning of much greater evils if the remedies, graver than the disease itself, are adopted.
The Tenth Schedule, they say, seeks to throw away the baby with the bath water.
Learned counsel argue that "crossing the floor", as it has come to be called, mirrors the meanderings of a troubled conscience on issues of political 728 morality and to punish an elected representative for what really amounts to an expression of conscience negates the very democratic principles which the Tenth Schedule is supposed to preserve and sustain.
Learned counsel referred to the famous speech to the Electors of Bristol, 1774, where Edmund Burke reportedly said: "It ought to be the happiness and glory of a representative to live in the strictest union, the closest correspondence, and the most unreserved communication with his constituents.
Their wishes ought to have great weight with him; their opinion, high respect; their business, unremitted attention.
It is his duty to sacrifice his repose, his pleasures, his satisfactions to theirs and above all, ever, and in all cases, to prefer their interest to his own.
But his unbiased opinion, his mature judgment, his enlightened conscience, he ought not to sacrifice to you, to any man, or to any set of men living.
Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.
" [see: Parliament Functions, Practice & Procedures by JAG Griffith and Michael Ryle 1989 Edn. page 70] 15.
Shri Jethmalani and Shri sharma also relied upon certain observations of Lord Shaw in Amalgamated Society or Railway Servants vs Osborne, to contend that a provision which seeks to attach a liability of disqualification of an elected Member for freely expressing his views on matters of conscience, faith and political belief are indeed restraints on the freedom of speech restraints opposed to public policy.
In that case a registered trade union framed a rule enabling it to levy contributions on the Members to support its efforts to obtain Parliamentary representation by setting up candidates at elections.
It also framed a rule requiring all such candidates to sign and accept the conditions of the Labour Party and be subject to its whip.
The observations in the case relied upon by learned counsel are those of Lord Shaw of Dunfermline who observed: "Take the testing instance: should his view as to right and wrong on a public issue as to the true line of service to the realm, as to the real interests of the constituency which has elected him, or even of the society which pays him, differ from the decision of the parliamentary party and the maintenance by it of its 729 policy, he has come under a contract to place his vote and action into subjection not to his own convictions, but to their decisions.
My Lords, I do not think that such a subjection is compatible either with the spirit of our parliamentary constitution or with that independence and freedom which have hither to been held to lie at the basis of representative government in the United Kingdom." [page 111] "For the people having reserved to themselves the choice of their representatives, as the fence to their properties, could do it for no other end but that they might always be freely chosen, and so chosen freely act and advise, as the necessity of the commonwealth and the public good should upon examination and mature debate be judged to require. ." [page 113] "Still further, in regard to the Members of Parliament himself, he too is to be free; he is not to be the paid mandatory of any man, or organization of men, nor is he entitled to bind himself to subordinate his opinions on public questions to others, for wages, or at the peril of pecuniary loss; and any contract of this character would not be recognized by a Court of law, either for its enforcement or in respect of its breach. " [page 115] It is relevant to observe here that the rule impugned in that case was struck down by the Court of Appeal whose decision was upheld by the House of Lords on grounds of the Society 's competence to make the rule.
It was held that the rule was beyond its powers.
Lord Shaw, however, was of the view that the impugned rule was opposed to those principles of public policy essential to the working of a representative government.
The view expressed by Lord Shaw was not the decision of the House of Lords in the case.
But, the real question is whether under the Indian constitutional scheme is there any immunity from constitutional correctives against a 730 legislatively perceived political evil of unprincipled defections induced by the lure of office and monetary inducements? 16.
The points raised in the petitions are, indeed, far reaching and of no small importance invoking the `sense of relevance of constitutionally stated principles to unfamiliar settings '.
On the one hand there is the real and imminent threat to the very fabric of Indian democracy posed by certain levels of political behavior conspicuous by their utter and total disregard of well recognised political proprieties and morality.
These trends tend to degrade the tone of political life and, in their wider propensities, are dangerous to and undermine the very survival of the cherished values of democracy.
there is the legislative determination through experimental constitutional processes to combat that evil.
On the other hand, there are, as in all political and economic experimentations, certain side effects and fall out which might affect and hurt even honest dissenters and conscientious objectors.
These are the usual plus and minus of all areas of experimental legislation.
In these areas the distinction between what is constitutionally permissible and what is outside it is marked by a `hazy gray line ' and it is the Court 's duty to identify, " darken and deepen" the demarcating line of constitutionality a task in which some element of Judges ' own perceptions of the constitutional ideals inevitably participate.
There is no single litmus test of constitutionality.
Any suggested sure decisive test, might after all furnish a "transitory delusion of certitude" where the "complexities of the strands in the web of constitutionality which the Judge must alone disentangle" do not lend themselves to easy and sure formulations one way or the other.
It is here that it becomes difficult to refute the inevitable legislative element in all constitutional adjudications.
All distinctions of law even Constitutional law are, in the ultimate analyses, "matters of degree".
At what line the `white ' fades into the `black ' is essentially a legislatively perceived demarcation.
In his work "Oliver Wendell Holmes Free Speech and the Living Constitution" (1991 Edition: New York University Publication) Pohlman says: "All distinctions of law, as Holmes never tired of saying, were 731 therefore "matters of degree." Even in the case of constitutional adjudication, in which the issue was whether a particular exercise of power was within or without the legislature 's authority, the judge 's decision "will depend on a judgment or intuition more subtle than any articulate major premise." As the particular exertion of legislative power approached the hazy gray line separating individual rights from legislative powers, the judge 's assessment of constitutionality became a subtle value judgment.
The judge 's decision was therefore not deductive, formal, or conceptual in any sense.
[page 217] [emphasis supplied] Justice Holmes himself had said: "Two widely different cases suggest a general distinction, which is a clear one when stated broadly.
But as new cases cluster around the opposite poles, and begin to approach each other, the distinction becomes more difficult to trace; the determinations are made one way or the other on a very slight preponderance of feeling, rather than articulate reason; and at last a mathematical line is arrived at by the contact of contrary decisions, which is so far arbitrary that it might equally well have been drawn a little further to the one side or to the other." [Emphasis supplied] [See: "Theory of Torts" American Law Review 7 (1873) The argument that the constitutional remedies against the immorality and unprincipled chameleon like changes of political hues in pursuit of power and pelf suffer from something violative of some basic feature of the Constitution, perhaps, ignores the essential organic and evolutionary character of a Constitution and its flexibility as a living entity to provide for the demands and compulsions of the changing times and needs.
The people of this country were not beguiled into believing that the menace of unethical and unprincipled changes of political affiliations is something which the law is helpless against and is to be endured as a necessary concomitant of freedom of conscience.
The onslaughts on their sensibilities 732 by the incessant unethical political defections did not dull their perception of this phenomenon as a canker eating into the vitals of those values that make democracy a living and worth while faith.
This is prominently an area where Judges should defer to legislative perception of and reaction to the pervasive dangers of unprincipled defections to protect the community.
"Legislation may begin where an evil begins".
Referring to the judicial philosophy of Justice Holmes in such areas, Pohlman again says: "A number of Holmes 's famous aphorisms point in the direction that judges should defer when the legislature reflected the pervasive and predominant values and interests of the community.
He had, for example, no "practical" criterion to go on except "what the crowd wanted." He suggested, in a humorous vein that his epitaph. . . .No judge ought to interpret a provision of the Constitution in a way that would prevent the American people from doing what it really wanted to do.
If the general consensus was that a certain condition was an "evil" that ought to be corrected by certain means, then the government had the power to do it: "Legislation may begin where an evil begins"; "Constitutional law like other mortal contrivances has to take some chances." "Some play must be allowed to the joints if the machine is to work.
" All of these rhetorical flourishes suggest that Holmes deferred to the legislature if and when he thought it accurately mirrored the abiding beliefs, interests, and values of the american public." (emphasis supplied) [See: Justice Oliver Wendell Holmes Free Speech and the Living Constitution by H.L. Pohlman 1991 Edn. page 233] 18.
Shri Sharma contends that the rights and immunities under Article 105(2) of the Constitution which according to him are placed by judicial decisions even higher than the fundamental right in Article 19(1)(a), have violated the Tenth Schedule.
There are at least two objections to the acceptability of this contention.
The first is that the Tenth Schedule does not impinge upon the rights or immunities under Article 105(2).
Article 105(2) of the Constitution provides: "105.
Powers, privileges, etc., of the Houses of Parliament and 733 of the Members and committees thereof. (1). . (2) No Member of Parliament shall be liable to any proceedings in any court in respect of anything said or any vote given by him in Parliament or any committee thereof, and no person shall be so liable in respect of the publication by or under the authority of either House of Parliament of any report, paper, votes or proceedings.
The freedom of speech of a Member is not an absolute freedom.
That apart, the provisions of the Tenth Schedule do not purport to make a Member of a House liable in any `Court ' for anything said or any vote given by him in Parliament.
It is difficult to conceive how Article 105(2) is a source of immunity from the consequences of unprincipled floor crossing.
Secondly, on the nature and character of electoral rights this Court in Jyoti Basu & Ors.
vs Debi Ghosal & 3 S.C.R. 318 observed: "A right to elect, fundamental though it is to a democracy, is, anomalously enough, neither a fundamental right nor a Common Law Right.
It is pure and simple, a statutory right.
So is the right to be elected.
So is the right to dispute an election.
Outside of statute, there is no right to elect, no right to be elected and no right to dispute an election.
Statutory creations they are, and therefore, subject to statutory limitation. ' [Page 326] Democracy is a basic feature of the constitution.
Whether any particular brand or system of Government by itself, has this attribute of a basic feature, as lone as the essential characteristics that entitle a system of government to be called democratic are otherwise satisfied is not necessary to be gone into.
Election conducted at regular, prescribed intervals is essential to the democratic system envisaged in the constitution.
So is the need to protect and sustain the purity of the electoral process.
That may take within it the quality, efficacy and adequacy of the machinery for resolution of electoral disputes.
From that it does not necessarily follow that the rights and immunities under sub article (2) of Article 105 of the Constitution, are elevated into fundamental rights and that the Tenth Schedule would have to be struck down for its inconsistency with Article 734 105 (2) as urged by Shri Sharma.
19.Parliamentary democracy envisages that matters involving implementation of policies of the Government should be discussed by the elected representatives of the people.
Debate, discussion and persuasion are, therefor, the means and essence of the democratic process.
During the debates the Members put forward different points of view.
Members belonging to the same political party may also have, and may give expression to, differences of opinion on a matter.
Not unoften the view expressed by the Members in the House have resulted in substantial modification, and even the withdrawal, of the proposals under consideration.
Debate and expression of different points of view, thus, serve an essential and healthy purpose in the functioning of Parliamentary democracy.
At times such an expression of views during the debate in the House may lead to voting or abstenance from voting in the House otherwise than on party lines.
But a political party functions on the strength of shared beliefs.
Its own political stability and social utility depends on such shared beliefs and concerted action of its Members in furtherance of those commonly held principles.
Any freedom of its members to vote as they please independently of the political party 's declared policies will not only embarrass its public image and popularity but also undermine public confidence in it which, in the ultimate analysis, is its source of sustenance nay, indeed, its very survival.
Intra party debates are of course a different thing.
But a public image of disparate stands by Members of the same political party is not looked upon,in political tradition, as a desirable state of things.
Griffith and Ryle on "Parliament, Functions, Practice & Procedure" (1989 Edn. page 119) say: "Loyalty to party is the norm, being based on shared beliefs.
A divided party is looked on with suspicion by the electorate.
It is natural for Members to accept the opinion of their Leaders and Spokesmen on the wide variety of matters on which those Members have no specialist knowledge.
Generally Members will accept majority decisions in the party even when they disagree.
It is understandable therefore that a Member who rejects the party whip even on a single occasion will attract attention and more criticism than sympathy.
To abstain from voting when required by party to vote is to suggest a degree of unreliability.
To vote against party is disloyalty.
To join with others in abstention 735 or voting with the other side smacks of conspiracy." (emphasis supplied) Clause (b) of sub para (1) of Paragraph 2 of the Tenth Schedule gives effect to this principle and sentiment by imposing a disqualification on a Member who votes or abstains from voting contrary to "any directions" Issued by the political party.
The provision, however, recognises two exceptions: one when the Member obtains from the political party prior permission to vote or abstain from voting and the other when the Member has voted without obtaining such permission but his action has been condoned by the political party.
This provision itself accommodates the possibility that there may be occasions when a Member may vote or abstain from voting contrary to the direction of the party to which he belongs.
This, in itself again, may provide a clue to the proper understanding and construction of the expression "Any Direction" in clause (b) of Paragraph 2(1) whether really all directions or whips from the party entail the statutory consequences or whether having regard to the extra ordinary nature and sweep of the power and the very serious consequences that flow including the extreme penalty of disqualification the expression should be given a meaning confining its operation to the contexts indicated by the objects and purposes of the Tenth Schedule.
We shall deal with this aspect separately.
The working of the modern Parliamentary democracy is complex.
The area of the inter se relationship between the electoral constituencies and their elected representatives has many complex features and overtones.
The citizen as the electorate is said to be the political sovereign.
As long as regular general elections occur, the electorate remains the arbiter of the ultimate composition of the representative legislative body to which the Government of the day is responsible.
There are, of course,, larger issues of theoretical and philosophical objections to the legitimacy of a representative Government which might achieve a majority of the seats but obtains only minority of the electoral votes.
It is said that even in England this has been the phenomenon in every general elections in this century except the four in the years 1900, 1918, 1931 and 1935.
But in the area of the inter relationship between the constituency and its elected representative, it is the avowed endeavour of the latter to requite the expectations of his voters.
Occasionally, this might conflict with his political obligations to the political party sponsoring him which expects 736 and exacts in its own way loyalty to it.
This duality of capacity and functions are referred to by a learned author thus: "The functions of Members are of two kinds and flow from the working of representative government.
When a voter at a general election, in that hiatus between parliaments, puts his cross against the name of the candidate he is [most often] consciously performing two functions: seeking to return a particular person to the house of commons as Member for that constituency; and seeking to return to power as the government of the country a group of individuals of the same party as that particular person.
The voter votes for a representative and for a government.
He may know that the candidate he votes has little chance of being elected. . ." "When a candidate is elected as a Member of the House of Commons, he reflects those two functions of the voter.
Whatever other part he may play, he will be a constituency M.P.
As such, his job will be to help his constituents as individuals in their dealings with the departments of State.
He must listen to their grievances and often seek to persuade those in authority to provide remedies.
He must have no regard to the political leanings of his constituents for the represents those who voted against him or who did not vote at all as much as those who voted for him.
Even if he strongly disagrees with their complaint he may still seek to represent it, though the degree of enthusiasm with which he does so is likely to be less great." [See: Parliament Function.
Practice and Procedures by JAG Griffith and Ryle 1989 Edn. page 69] So far as his own personal views on freedom of conscience are concerned,, there may be exceptional occasions when the elected representative finds himself compelled to consider more closely how he should act.
Referring to these dilemmas the authors say: ".
The first is that he may feel that the policy of his party whether it is in office or in opposition, on a particular matter is not one of which he approves.
He may think this because of his personal opinions or because of its special consequences 737 for his constituents or outside interests or because it reflects a general position within the party with which he cannot agree.
On many occasions, he may support the party despite his disapproval.
But occasionally the strength of his feeling will be such that he is obliged to express his opposition either by speaking or by abstaining on a vote or even by voting with the other side.
Such opposition will not pass unnoticed and, unless the matter is clearly one of conscience, he will not be popular with the party whips.
The second complication is caused by a special aspect of parliamentary conduct which not frequently transcends party lines.
Members, who are neither Ministers nor front bench Opposition spokesmen, do regard as an important part of their function the general scrutiny of Governmental activity.
This is particularly the role of select committees which have, as we shall see, gained new prominence since 1979.
No doubt, it is superficially paradoxical to see Members on the Government side of the House joining in detailed criticism of the administration and yet voting to maintain that Government in office.
But as one prominent critic of government has said, there is nothing inherently contradictory in a Member sustaining the Executive in its power or helping it to overcome opposition at the same time as scrutinising the work of the executive in order both to improve it and to see that power is being exercised in a proper and legitimate fashion." [page 69 and 70] Speaking of the claims of the political party on its elected Member Rodney Brazier says: "Once returned to the House of Commons the Member 's party expects him to be loyal.
This is not entirely unfair or improper, for it is the price of the party 's label which secured his election.
But the question is whether the balance of a Member 's obligations has tilted too far in favour of the requirements of party.
The nonsense that a Whip even a three line whip is no more than a summons to attend the House, and that, once there, the Member is completely free to speak and vote as he thinks fit, was 738 still being put about, by the Parliamentary Private Secretary to the Prime Minister, as recently as 1986.
No one can honestly believe that.
Failure to vote with his party on a three line whip without permission invites a party reaction.
This will range (depending on the circumstances and whether the offence is repeated) from a quiet word from a Whip and appeals to future loyalty, to a ticking off or a formal reprimand (perhaps from the Chief Whip himself), to any one of a number of threats.
The armoury of intimidation includes the menaces that the Member will never get ministerial office, or go on overseas trips sponsored by the party, or be nominated by his party for Commons Committee Memberships, or that he might be deprived of his party 's whip in the House, or that he might be reported to his constituency which might wish to consider his behaviour when reselection comes round again. .Does the Member not enjoy the Parliamentary privilege of freedom of speech? How can his speech be free in the face of such party threats? The answer to the inquiring citizen is that the whip system is part of the conventionally established machinery of political organisation in the house, and has been ruled not to infringe a Member 's parliamentary privilege in any way.
The political parties are only too aware of utility of such a system,, and would fight in the last ditch to keep it." [See; Constitutional Reform Reshaping the British Political System by Rodney Brazier, 1991 Edn.
pages 48 and 49] The learned author, referring to cases in which an elected Member is seriously unrepresentative of the general constituency opinion, or whose personal behaviour falls below standards acceptable to his constituents commends that what is needed is some additional device to ensure that a Member pays heed to constituents ' views.
Brazier speaks of the efficacy of device where the constituency can recall its representative.
Brazier says: "What sort of conduct might attract the operation of the recall power? First, a Member might have misused his Membership of the House, for example to further his personal financial interests in a manner offensive to his constituents.
They might consider that the action taken against him by the house (or, indeed, lack 739 of action) was inadequate. .Thirdly, the use of a recall power might be particularly apt when a member changed his party but declined to resign his seats and fight an immediate by election.
It is not unreasonable to expect a Member who crosses the floor of the House, or who joins a new party, to resubmit himself quickly to the electors who had returned him in different colours.
Of course, in all those three areas of controversial conduct the ordinary process of reselection might well result in the Member being dropped as his party 's candidate (and obviously would definitely have that result in the third case).
But that could only occur when the time for reselection came; and in any event the constituency would still have the Member representing them until the next general election.
A cleaner and more timely parting of the ways would be preferable.
Sometimes a suspended sentence does not meet the case." [page 52 and 53] Indeed, in a sense an anti defection law is a statutory variant of its moral principle and justification underlying the power of recall.
What might justify a provision for recall would justify a provision for disqualification for defection.
Unprincipled defection is a political and social evil.
It is perceived as such by the legislature.
People, apparently, have grown distrustful of the emotive political exultations that such floor crossings belong to the sacred area of freedom of conscience, or of the right to dissent or of intellectual freedom.
The anti defection law seeks to recognise the practical need to place the proprieties of political and personal conduct whose awkward erosion and grotesque manifestations have been the base of the times above certain theoretical assumptions which in reality have fallen into a morass of personal and political degradation.
We should, we think, defer to this legislative wisdom and perception.
The choices in constitutional adjudications quite clearly indicate the need for such deference.
"Let the end be legitimate, let it be within the scope of the Constitution and all means which are appropriate, which are adopted to that end. " are constitutional.
[See Kazurbach vs Morgan: ; 21.
It was then urged by Shri Jethmalani that the distinction between the conception of "defection" and "split" in the Tenth Schedule is so thin and artificial that the differences on which the distinction rests are indeed 740 an outrageous defiance of logic.
Shri Jethmalani urged that if floor crossing by one Member is an evil, then a collective perpetration of it by 1/3rd of the elected Members of a party is no better and should be regarded as an aggravated evil both logically and from the part of its aggravated consequences.
But the Tenth Schedule, says Shri Jethmalani, employs its own inverse ratiocination and perverse logic to declare that where such evil is perpetrated collectively by an artificially classified group of not less than 1/3rd Members of that political party that would not be a "defection" but a permissible "split" or "merger".
This exercise to so hold up the provision as such crass imperfection is performed by Shri Jethmalani with his wonted forensic skill.
But we are afraid what was so attractively articulated, on closer examination, is, perhaps, more attractive than sound.
The underlying premise in declaring an individual act of defection as forbidden is that lure of office or money could be presumed to have prevailed.
Legislature has made this presumption on its own perception and assessment of the extant standards of political proprieties and morality.
At the same time legislature evisaged the need to provide for such "floor crossing" on the basis of honest dissent.
That a particular course of conduct commended itself to a number of elected representatives might, in itself, lend credence and reassurance to a presumption of bonafide.
The presumptive impropriety of motives progressively weakens according as the numbers sharing the action and there is nothing capricious and arbitrary in this legislative perception of the distinction between `defection ' and `split '.
Where is the line to be drawn? What number can be said to generate a presumption of bonafides ? Here again the Courts have nothing else to go by except the legislative wisdom and, again, as Justice Holmes said, the Court has no practical criterion to go by except "what the crowd wanted".
We find no substance in the attack on the statutory distinction between "defection" and "split".
Accordingly we hold: "that the Paragraph 2 of the Tenth Schedule to the Constitution is valid.
Its provisions do not suffer from the vice of subverting democratic rights of elected Members of Parliament and the Legislatures of the States.
It does not violate their freedom of 741 speech, freedom of vote and conscience as contended.
The Provisions of Paragraph 2 do not violate any rights or freedom under Articles 105 and 194 of the Constitution.
The provisions are salutory and are intended to strengthen the fabric of Indian Parliamentary democracy by curbing unprincipled and unethical political defections.
The contention that the provisions of the Tenth Schedule, even with the exclusion of Paragraph 7, violate the basic structure of the Constitution in they affect the democratic rights of elected Members and, therefore, of the principles of Parliamentary democracy is unsound and is rejected.
Re: Contention (B): The thrust of the point is that Paragraph 7 brings about a change in the provisions of chapter IV of Part V and chapter V of Part VI of the Constitution and that, therefore, the amending Bill falls within proviso to Article 368 (2).
We might, at the outset, notice Shri Sibal 's submission on a point of construction of Paragraph 7.
Shri Sibal urged that Paragraph 7, properly construed, does not seek to oust the jurisdiction of courts under Articles, 136, 226 and 227 but merely prevents an interlocutory intervention or a quia timet action.
He urged that the words "in respect of any matters connected with the disqualification of a Member" seek to bar jurisdiction only till the matter is finally decided by the speaker or Chairman, as the case may be, and does not extend beyond that stage and that in dealing with the dimensions of exclusion of the exercise of judicial power the broad considerations are that provisions which seek to exclude Courts ' jurisdiction shall be strictly construed.
Any construction which results in denying the Courts ' it, it is urged, not favoured.
Shri Sibhal relied upon the following observations of this Court in H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors: vs Union of India, ; ".
The proper forum under our Constitution for determining a legal dispute is the Court which is by training and experience, assisted by properly qualified advocates, fitted to perform that task.
A provision which purports to exclude the jurisdiction of the Courts in certain matters and to deprive the aggrieved party 742 of the normal remedy will be strictly construed, for it is a principle not to be whittled down that an aggrieved party will not, unless the jurisdiction of the Courts is by clear enactment or necessary implication barred, be denied his right to seek recourse to the Courts for determination of his rights. . ".
"The Court will avoid imputing to the Legislature an intention to enact a provision which flouts notions of justice and norms of fairplay, unless a contrary intention is manifest from words plain and unambiguous.
A provision in a statute will not be construed to defeat its manifest purpose and general values which animate its structure.
In an avowedly democratic polity, statutory provisions ensuring the security of fundamental human rights including the right to property will, unless the contrary mandate be precise and unqualified, be construed liberally so as to uphold the right.
These rules apply to the interpretation of constitutional and statutory provisions alike." [page 94 95] It is true that the provision which seeks to exclude the jurisdiction of Courts is strictly construed.
See also, Mask & Co., vs Secretary of State, AIR 1940 P.C. 105.
But the rules of construction are attracted where two or more reasonably possible constructions are open on the language of the statute.
But, here both on the language of paragraph 7 and having regard to the legislative evolution of the provision, the legislative intent is plain and manifest.
The words "no Court shall have any jurisdiction in respect of any matter connected with the disqualification of a member" are of wide import and leave no constructional options.
This is reinforced by the legislative history of the anti defection law.
The deliberate and purposed presence of Paragraph 7 is clear from the history of the previous proposed legislations on the subject.
A comparison of the provisions of the Constitution (Thirty second Amendment) Bill, 1973 and the Constitution (Forty eight Amendment) Bill, 1978, (both of which had lapsed) on the one hand and the Constitution (52nd Amendment) Bill, 1985, would bring out the avowed and deliberate intent of Paragraph 7 in the Tenth Schedule.
The previous constitution (32th and 48th Amendment) Bills contained similar provisions for 743 disqualification on grounds of defections, but these Bills did not contain any clause ousting the jurisdiction of the court.
Determination of disputed disqualifications was left to the Election Commission as in the case of other disqualifications under Article 102 and 103 in the case of members of Parliament and Articles 191 and 192 in the case of Members of Legislature of the States.
The Constitution (Fifty second Amendment) Bill for the first time envisaged the investiture of the power to decide disputes on the speaker or the Chairman.
The purpose of the enactment of Paragraph 7, as the debates in the House indicate, was to bar the jurisdiction of the Courts under Articles 136, 226 and 227 of the Constitution of India, Shri Sibal 's suggested contention would go against all these over whelming interpretative criteria apart from its unacceptability on the express language of paragraph 7.
But it was urged that no question of change in Articles 136, 226 and 227 of the Constitution within the meaning of clause (b) of the proviso to Article 368(2) arises at all in view of the fact that the area of these rights and obligations being constitutionally rendered non justiciable, there is no judicial review under Articles 136,226 and 227 at all in the first instance so as to admit of any idea of its exclusion.
Reliance was placed on the decisions of this Court in Sri Sankari Prasad Singh Deo vs Union of India and State of Bihar, ; and Sajjan Singh vs State of Rajasthan, ; 24.
In Sankari Prasad 's case, the question was whether the Amendment introducing Articles 31A and 31B in the Constitution required ratification under the said proviso.
Repelling this contention it was observed: "It will be seen that these articles do not either in terms or in effect seek to make any change in article 226 or in articles 132 and 136.
Article 31A aims at saving laws providing for the compulsory acquisition by the State of certain kind of property from the operation of articles 13 read with other relevant articles in Part III, while article 31B purports to validate certain specified Acts and Regulations already passed, which, but for such a provision, would be liable to be impugned under Article 13.
It is not correct to say that the powers of the High Court under Article 226 to issue writs "for the enforcement of any of the rights conferred by Part III" or of this Court under Articles 132 and 136 to entertain appeals from orders issuing or refusing such writs are in any way affected.
They remain just the same 744 as they were before: only a certain class of case has been excluded from the purview of Part III and the courts could no longer interfere, no because their powers were curtailed in any manner or to any extent, but because there would be no occasion hereafter for the exercise of their power in such cases." at 108] In Sajjan Singh 's case, a similar contention was raised against the validity of the Constitution (17th Amendment) Act, 1964 by which Article 31 A was again amended and 44 statutes was whether the amendment required ratification under the proviso the Article 368.
This Court noticed the question thus : "The question which calls for our decision is: what would be the requirement about making an amendment in a constitutional provision contained in Part III, if as a result of the said amendment, the powers conferred on the High Courts under Article 226 are likely to be affected?" [P. 940] Negativing the challenge to the amendment on the ground of nonratification, it was held: ".
Thus, if the pith and substance test is applied to the amendment made by the impugned Act, it would be clear that Parliament is seeking to amend fundamental rights solely with the object of removing any possible obstacle in the fulfillment of the socio economic policy in which the party in power believes.
If that be so, the effect of the amendment on the area over which the High Courts 'powers prescribed by Article 226 operate, is incidental and in the present case can be described as of an insignificant order.
The impugned Act does not purport to change the provisions of Article 226 and it cannot be said even to have that effect directly or in any appreciable measure.
That is why we think that the argument that the impugned Act falls under the proviso, cannot be sustained. " [P.944] 745 The propositions that fell for consideration is Sankari Prasad Singh 's and Sajjan Singh 's cases are indeed different.
There the jurisdiction and power of the Courts under Articles 136 and 226 were not sought to be taken away nor was there any change brought about in those provisions either "in terms or in effect", since the very rights which could be adjudicated under and enforced by the Courts were themselves taken away by the Constitution.
The result was that there was no area for the jurisdiction of the Courts to operate upon.
Matters are entirely different in the context of paragraph 7.
Indeed the aforesaid cases, by necessary implication support the point urged for the petitioners.
The changes in Chapter IV of Part V and Chapter V of Part VI envisaged by the proviso need not be direct.
The change could be either "in terms of or in effect".
It is not necessary to change the language of Articles 136 and 226 of the Constitution to attract the proviso.
If in effect these Articles are rendered ineffective and made inapplicable where these articles could otherwise have been invoked or would, but for Paragraph 7, have operated there is `in effect ' a change in those provisions attracting the proviso.
Indeed this position was recognised in Sajjan Singh 's case where it was observed: "If the effect of the amendment made in the fundamental rights on Article 226 is direct and not incidental and is of a very significant order, different considerations may perhaps arise." [P.944] In the present cases, though the amendment does not bring in any change directly in the language of Article 136, 226 and 227 of the Constitution, however, in effect paragraph 7 curtails the operation of those Articles respecting matters falling under the Tenth Schedule.
There is a change in the effect in Article 136, 226 and 227 within the meaning of clause (b) of the proviso to Article 368(2).
Paragraph 7, therefore, attracts the proviso and ratification was necessary.
Accordingly, on Point B, we hold: "That having regard to the background and evolution of the principles underlying the Constitution (52nd Amendment) Act, 1985, in so far as it seeks to introduce the Tenth Schedule in the Constitution of India, the provisions of Paragraph 7 of the Tenth Schedule of the constitution in terms and in effect bring 746 about a change in the operation and effect to Articles 136, 226 and 227 of the Constitution of India and, therefore, the amendment would require to be ratified in accordance with the proviso to sub Article (2) of Article 368 of the Constitution of India.
Re: Contentions `C ' and `D ' : The criterion for determining the validity of a law is the competence of law making authority.
The competence of the law making authority would depend on the ambit of the legislative power, and the limitations imposed thereon as also the limitations on mode of exercise of the power.
Though the amending power in a constitution is in the nature of a constituent power and differs in content from the Legislative power, the limitations imposed on the constituent power my be substantive as well as procedural.
Substantive limitations are those which restrict the field of exercise of the amending power and exclude some areas fro its ambit.
Procedural limitations are those which impose restrictions with regard to the mode of the exercise of the amending power.
Both these limitations, however, touch and affect the constituent power itself, disregard of which invalidates its exercise.
The Constitution provides for amendment in Articles 4, 169, 368, paragraph 7 of Fifth Schedule and paragraph 21 of Sixth Schedule.
Article 4 makes provisions for amendment of the First and the Fourth Schedules, Article 169 provides for amendment in the provision of the Constitution which may be necessary for abolition or creation of Legislative Councils in States, paragraph 7 of the Fifth Schedule provides for amendment of the Fifth Schedule and paragraph 21 of Sixth Schedule provides for amendment of the Sixth Schedule.
All these provisions prescribe that the said amendments can be made by a law made by Parliament which can be passed like any other law by a simple majority in the House of Parliament.
Article 368 confers the power to amend the rest of the provisions of the Constitution.
In sub Article (2) of Article 368, a special majority two thirds of the members of each House of Parliament present and voting and majority of total membership of such House is required to effectuate the amendments.
The proviso to sub article (2) of Article 368 imposes a further requirement that if any change in the provisions set out in clauses (a) to (e) of the proviso, is intended it would then be necessary that the amendment 747 be ratified by the legislature of not less than one half of the States.
Although there is no specific enumerated substantive limitation on the power in Article 368, but as arising from very limitation in the word `amend ', a substantive limitation is inherent on the amending power so that the amendment does not alter the basic structure or destroy the basic features of the Constitution.
The amending power under Article 368 is subject to the substantive limitation in that the basic structure cannot be altered or the basic features of the Constitution destroyed.
The limitation requiring a special majority is a procedural one.
Both these limitations impose a fetter on the competence of Parliament to amend the Constitution and any amendment made in disregard of these limitations would go beyond the amending power.
While examining the constitutional validity of laws the principle that is applied is that if it is possible to construe a statute so that its validity can be sustained against a constitutional attack it should be so construed and that when part of a statute is valid and part is void, the valid part must be separated from the invalid part.
This is done by applying the doctrine of severability.
The rationale of this doctrine has been explained by Cooley in the following words; "It will sometimes be found that an act of the legislature is opposed in some of its provisions to the constitution, while others, standing by themselves, would be unobjectionable.
So the forms observed in passing it may be sufficient for some of the purposes sought to be accomplished by it, but insufficient for others.
In any such case the portion which conflicts with the constitution, or inregard to which the necessary conditions have not been observed, must be treated as a nullity.
Whether the other parts of the statute must also be adjudged void because of the association must depend upon a consideration of the object of the law, and in what manner and to what extent the unconstitutional portion affects the remainder.
A statute, it has been said, is judicially held to be unconstitutional, because it is not within the scope of legislative authority; it may either propose to accomplish something prohibited by the constitution, or to accomplish some lawful, and even laudable object, by means repugnant to the Constitution of the United States 748 or of the State.
A statute may contain some such provisions, and yet the same act, having received the sanction of all branches of the legislature, and being in the form of law, may contain other useful and salutary provisions, not obnoxious to any just constitutional exception.
It would be inconsistent with all just principles of constitutional law to adjudge these enactments void because they are associated in the same act, but not connected with or dependent on others which are unconstitutional." [Cooley 's Constitutional Limitations; 8th Edn.
Vol. 1, p. 359 360] In R.M.D. Chamarbaugwalla vs Union of India, ; , this Court has observed: "The question whether a statute, which is void in part is to be treated as void in toto, or whether it is capable of enforcement as to that part which is valid is one which can arise only with reference to laws enacted by bodies which do not possess unlimited powers of legislation as, for example, the legislatures in a Federal Union.
The limitation on their powers may be of two kinds: It may be with reference to the subject matter on which they could legislate, as, for example, the topics enumerated in the Lists in the Seventh Schedule in the Indian Constitution, sections 91 and 92 of the Canadian Constitution, and section 51 of the Australian Constitution; or it may be with reference to the character of the legislation which they could enact in respect of subjects assigned to them as for example, in relation to the fundamental rights guaranteed in Part III of the Constitution and similar constitutionally protected rights in the American and other Constitutions.
When a legislature whose authority is subject to limitations aforesaid enacts a law which is wholly in excess of its powers, it is entirely void and must be completely ignored.
But where the legislation falls in part within the area allotted to it and in part outside it, it is undoubtedly void as to the latter; but does it on that account become necessarily void in its entirety? The answer to this question must depend on whether what is valid could be separated from what 749 is invalid, and that is a question which has to be decided by the court on a consideration of the provisions of the Act.
" [P.940] The doctrine of severability has been applied by this Court in cases of challenge to the validity of an amendment on the ground of disregard of the substantive limitations on the amending power, namely, alteration of the basic structure.
But only the offending part of the amendment which had the effect of altering the basic structure was struck down while the rest of the amendment was unheld, See : Shri Kesavananda Bharti Sripadagalavaru vs State of Kerala, [1973] Supp.
SCR 1; Minerva Mills Ltd.& Ors.
vs Union of India & Ors.
, ; ; P. Sambhamurthy & Ors, etc.
vs State of Andhra Pradesh & Anr.
, ; 28.Is there anything in the procedural limitations imposed by sub Article (2) of Article 368 which excludes the doctrine of severability in respect of a law which violates the said limitations? Such a violation may arise when there is a composite Bill or what is in statutory context or jargon called a `Rag Bag ' measure seeking amendments to several statutes under one amending measure which seeks to amend various provisions of the Constitution some of which may attract clauses (a) to (e) of the proviso to Article 368(2) and the Bill, though passed by the requisite majority in both the Houses of Parliament has received the assent of the President without it being sent to States for ratification or having been so sent fails to receive such ratification from not less than half the States before the Bill is presented for assent.
Such an Amendment Act is within the competence of Parliament insofar as it relates to provisions other than those mentioned in clauses (a) to (e) of proviso to Article 368(2) but in respect of the amendments introduced in provisions referred to in clauses (a) to (e) of proviso to Article 368(2), Parliament alone is not competent to make such amendments on account of some constitutionally recognised federal principle being invoked.
If the doctrine of severability can be applied it can be upheld as valid in respect of the amendments within the competence of Parliament and only the amendments which Parliament alone was not competent to make could be declared invalid.
Is there anything compelling in the proviso to Article 368(2) requiring it to be construed as excluding the doctrine of severability to such an amendment? It is settled rule of statutory construction that "the proper function of a proviso is to except and deal with a case which could 750 otherwise fall within the general language of the main enactment, and its effect is confined to that case" and that where "the language of the main enactment is clear and unambiguous, a proviso can have no repercussion on the interpretation of the main enactment, so as to exclude from it by implication what clearly falls within its express terms".
[See : Madras & Southern Mahratta railway company vs Bezwada Municipality, (1944) 71 I.A. 133 at P. 122; Commissioner of Income Tax, Mysore vs Indo Mercantile Bank Ltd., [1959] Supp. 2 SCR 256 at p. 266.
The proviso to Article 368(2) appears to have been introduced with a view to giving effect to the federal principle.
In the matter of amendment of provisions specified in clauses (a) to (e) relating to legislative and executive powers of the States vis a vis the Union, the Judiciary, the election of the President and the amending power itself, which have a bearing on the States, the proviso imposes an additional requirement of ratification of the amendment which seeks to effect a change in those provisions before the Bill is presented for the assent of the President.
It is salutary that the scope of the proviso is confined to the limits prescribed therein and is not construed so as to take away the power in the main part of Article 368 (2).
An amendment which otherwise fulfills the requirements of Article 368(2) and is outside the specified cases which require ratification cannot be denied legitimacy on the ground alone of the company it keeps.
The main part of Article 368(2) directs that when a Bill which has been passed by the requisite special majority by both the Houses has received the assent of the President "the Constitution shall stand amended in accordance with the terms of the Bill".
The proviso cannot have the effect of interdicting this constitutional declaration and mandate to mean that in a case where the proviso has not been complied even the amendments which do not fall within the ambit of the proviso also become abortive.
The words "the amendment shall also require to be ratified by the legislature" indicate that what is required to be ratified by the legislatures of the States is the amendment seeking to make the change in the provisions referred to in clauses (a) to (e) of the proviso.
The need for and the requirement of the ratification is confined to that particular amendment alone and not in respect of amendments outside the ambit of the proviso.
The proviso can have, therefore, no bearing on the validity of the amendments which do not fall within its ambit.
Indeed the following observations of this Court in Sajjan Singh case (supra) are apposite: 751 "In our opinion, the two parts of Art.368 must on a reasonable construction be harmonised with each other in the sense that the scope and effect of either of them should not be allowed to be unduly reduced or enlarged." [P.940] 30.
During the arguments reliance was placed on the words "before the Bill making provision for such amendment is presented to the President for assent" to sustain the argument that these words imply that the ratification of the Bill by not less than one half of the States is a condition precedent for the presentation of the Bill for the assent of the President.
It is further argued that a Bill which seeks to make a change in the provisions referred to in clauses (a) to (e) of the proviso cannot be presented before the President for his assent without such ratification and if assent is given by the President in the absence of such ratification, the amending Act would be void and ineffective in its entirety.
A similar situation can arise in the context of the main part of Article 368(2) which provides: "when the bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two thirds of the Members of that House present and voting, it shall be presented to the president".
Here also a condition is imposed that the Bill shall be presented to the President for his assent only after it has been passed in each House by the prescribed special majority.
An amendment in the First and Fourth Schedule referable to Article 4 can be introduced by Parliament by an ordinary law passed by simple majority.
There may be a Bill which may contain amendments made in the First and Fourth Schedules as well as amendments in other provisions of the constitution excluding those referred to in the proviso which can be amended only by a special majority under Article 368(2) and the Bill after having been passed only by an ordinary majority instead of a special majority has received the assent of the President.
The amendments which are made in the First and Fourth Schedules by the said amendment Act were validly made in view of Article 4 but the amendments in other provisions were in disregard to Article 368(2) which requires a special majority.
Is not the doctrine of severability applicable to such an amendment so that amendments made in the First and Fourth Schedules may be upheld while declaring the amendments in the other provisions as ineffective? A contrary 752 view excluding the doctrine of severability would result in elevating a procedural limitation on the amending power to a level higher than the substantive limitations.
In Bribery Commissioner vs Pedrick Ranasinghe, ; , the Judicial Committee has had to deal with a somewhat similar situation.
This was a case from Ceylon under the Ceylon (Constitution) Order of 1946.
Clause (4) of section 29 of the said Order in council contained the amending power in the following terms; "(4)In the exercise of its powers under this section, Parliament may amend or repeal any of the provisions of this Order, or of any other Order of Her Majesty in council in its application to the Island: Provided that no Bill for the amendment or repeal of any of the provisions of this Order shall be presented for the Royal Assent unless it has endorsed on it a certificate under the hand of the speaker that the number of votes cast in favour thereof in the House of Representatives amounted to not less than two thirds of the whole number of members of the House (including those not present).
Every certificate of the Speaker under this sub section shall be conclusive for all purposes and shall not be questioned in any court of law.
" In that case, it was found that section 41 of the Bribery Amendment Act, 1958 made a provision for appointment of a panel by the Governor General on the advice of the Minister of Justice for selecting members of the Bribery Tribunal while section 55 of the constitution vested the appointment, transfer, dismissal and disciplinary control of judicial officers in the Judicial Service Commission.
It was held that the legislature had purported to pass a law which, being in conflict with section 55 of the Order in Council, must be treated, if it is to be valid, as an implied alteration of the Constitutional provisions about the appointment of judicial officers and could only be made by laws which comply with the special legislative procedure laid down in section 29(4).
Since there was nothing to show that the Bribery Amendment Act, 1951 was passed by the necessary two thirds majority, it was held that "any Bill which does not comply 753 with the condition precedent of the proviso, is and remains, even though it receives the Royal Assent, invalid and ultra vires".
Applying the doctrine of severability the Judicial Committee, however, struck down the offending provision, i.e. section 41 alone.
In other words passing of the Bill by special majority was the condition precedent for presentation of the Bill for the assent.
Disregard of such a condition precedent for presenting a Bill for assent did not result in the entire enactment being vitiated and the law being declared invalid in its entirety but it only had the effect of invalidation of a particular provision which offended against the limitation on the amending power.
A comparison of the language used in clause (4) of section 29 with that of Article 368(2) would show that both the provisions bear a general similarity of purpose and both the provisions require the passing of the Bill by special majority before it was presented for assent.
The same principle would, therefore, apply while considering the validity of a composite amendment which makes alterations in the First and Fourth Schedules as well as in other provisions of the Constitution requiring special majority under Article 368(2) and such a law, even though passed by the simple majority and not by special majority, may be upheld in respect of the amendments made in the First and Fourth Schedules.
There is really no difference in principle between the condition requiring passing of the Bill by a special majority before its presentation to the President for assent contained in Article 368(2) and the condition for ratification of the amendment by the legislatures of not less than one half of the States before the Bill is presented to the President for assent contained in the proviso.
The principle of severability can be equally applied to a composite amendment which contains amendments in provisions which do not require ratification by States as well as amendment in provisions which require such ratification and by application of the doctrine of severability, the amendment can be upheld in respect of the amendments which do not require ratification and which are within the competence of Parliament alone.
Only these amendments in provisions which require ratification under the proviso need to be struck down or declared invalid.
The test of severability requires the Court to ascertain whether the legislature would at all have enacted the law if the severed part was not the part of the law and whether after severance what survives can stand independently and is workable.
If the provisions of the Tenth Schedule are considered in the background of the legislative history, namely, the report of the `Committee on Defections ' as well as the earlier Bills which were 754 moved to curb the evil of defection it would be evident that the main purpose underlying the constitutional amendment and introduction of the Tenth Schedule is to curb the evil of defection which was causing immense mischief in our body politic.
The ouster of jurisdiction of Courts under Paragraph 7 was incidental to and to lend strength to the main purpose which was to curb the evil of defection.
It cannot be said that the constituent body would not have enacted the other provisions in the Tenth Schedule if it has known that Paragraph 7 was not valid.
Nor can it be said that the rest of the provisions of the Tenth Schedule cannot stand on their own even if Paragraph 7 is found to be unconstitutional.
The provisions of Paragraph 7 can, therefore, be held to be severable from the rest of the provisions.
We accordingly hold on contentions `C ' and `D ': "That there is nothing in the said proviso to Article 368 (2) which detracts from the severability of a provision on account of the inclusion of which the Bill containing the Amendment requires ratification from the rest of the provisions of such Bill which do not attract and require such ratification.
Having regard to the mandatory language of Article 368(2) that " thereupon the Constitution shall stand amended" the operation of the proviso should not be extended to constitutional amendments in Bill which can stand by themselves without such ratification.
That, accordingly, the Constitution (52nd Amendment) Act, 1985, in so far as it seeks to introduce the Tenth Schedule in the Constitution of India, to the extent of its provisions which are amenable to the legal sovereign of the amending process of the Union Parliament cannot be overborne by the proviso which cannot operate in that area.
There is no justification for the view that even the rest of the provisions of the constitution (52nd Amendment) Act, 1985, excluding Paragraph 7 of the Tenth Schedule become constitutionally infirm by reason alone of the fact that one of its severable provisions which attracted and required ratification under the proviso to Article 368(2) was not so ratified.
That Paragraph 7 of the Tenth Schedule contains a provision 755 which is independent of, and stands apart from the main provisions of the Tenth Schedule which are intended to provide a remedy for the evil of unprincipled and unethical political defections and, therefore, is a severable part.
The remaining provisions of the Tenth Schedule can and do stand independently of Paragraph 7 and are complete in themselves workable and are not truncated by the excision of Paragraph 7.
Re: Contentions `E ' and `F ': These two contentions have certain over lapping areas between them and admit of being dealt with together.
Paragraph 6(1) of the Tenth Schedule seeks to impart a statutory finality to the decision of the Speaker or the Chairman.
The argument is that, this concept of `finality ' by itself, excludes Courts ' jurisdiction.
Does the word "final" render the decision of the Speaker immune from Judicial Review? It is now well accepted that a finality clause is not a legislative magical incantation which has that effect of telling of Judicial Review.
Statutory finality of a decision presupposes and is subject to its consonance with the statute.
On the meaning and effect of such finality clause, Prof. Wade in `Administrative Law ' 6th Edn, at page 720 says: "Many statues provide that some decision shall be final.
That provision is a bar to any appeal.
But the courts refuse to allow it to hamper the operation of judicial review.
As will be seen in this and the following section, there is a firm judicial policy against allowing the rule of law to be undermined by weakening the powers of the court.
Statutory restrictions on judicial remedies are given the narrowest possible construction, sometimes even against the plain meaning of the words.
This is a sound policy, since otherwise administrative authorities and tribunals would be given uncontrollable power and could violate the law at will.
`Finality ' is a good thing but justice is a better." "If a statute says that the decision `shall be final ' or `shall be final and conclusive to all intents and purposes ' this is held to mean merely that there is no appeal: judicial control of legality is unimpaired.
"Parliament only gives the impress of finality to 756 the decisions of the tribunal on condition that they are reached in accordance with the law.
This has been the consistent doctrine for three hundred years.
" Learned Professor further says: "The normal effect of a finality clause is therefore to prevent any appeal.
There is no right of appeal in any case unless it is given by statute.
But where there is general provision for appeals, for example, from quarter session to the High Court by case stated, a subsequent Act making the decision of quarter session final on some specific matter will prevent an appeal.
But in one case the Court of Appeal has deprived a finality clause of part even of this modest content, holding that a question which can be resolved by certiorari or declaration can equally well be the subject of a case stated, since this is only a matter of machinery.
This does not open the door to appeals generally, but only to appeals by case stated on matters which could equally well be dealt with by certiorari or declaration, i.e., matter subject to judicial review.
"A provision for finality may be important in other contexts, for example when the question is whether the finding of one tribunal may be reopened before another, or whether an interlocutory order is open to appeal. ".
[Page 721] Lord Devlin had said "Judicial interference with the executive cannot for long greatly exceed what Whitehall will accept" and said that a decision may be made un reviewable "And that puts the lid on".
Commenting on this Prof. Wade says: "But the Anisminic case showed just the opposite, when the House of Lord removed the lid and threw it away." [See: Constitutional Fundamentals, the Hamlyn Lectures, 1989 Edn.
p.88] In Durga Shankar Mehta vs Raghuraj Singh, ; the order of the Election Tribunal was made final and conclusive by section 105 of the Representation of the People Act, 1951.
The contention was that the finality and conclusiveness clauses barred the jurisdiction of the Supreme Court under Article 136.
This contention was repelled.
It was observed: ". .but once it is held that it is a judicial tribunal empowered 757 and obliged to deal judicially with disputes arising out of or in connection with election, the overriding power of this Court to grant special leave, in proper cases, would certainly be attracted and this power cannot be excluded by any parliamentary legislation.
But once that Tribunal has made any determination or adjudication on the matter, the powers of this Court to interfere by way of special leave can always be exercised.
The powers given by Article 136 of the Constitution, however, are in the nature of special or residuary powers which are exercisable outside the purview of ordinary law, in cases where the needs of justice demand interference by the Supreme Court of the land .
Section 105 of the Representation of the People Act certainly give finality to the decision of the Election Tribunal so far as that Act is concerned and does not provide for any further appeal but that cannot in any way cut down or effect the overriding powers which this court can exercise in the matter of granting special leave under article 136 of the Constitution.
" [p.522] 34.
Again, in Union of India vs Jyoti Prakash Mitter, ; a similar finality clause in Articles 217(3) of the Constitution camp up for consideration.
This Court said: ".
The President acting under Article 217(3) performs a judicial function of grave importance under the scheme of our Constitution.
He cannot act on the advice of his Ministers.
Notwithstanding the declared finality of the order of the president the Court has jurisdiction in appropriate cases to set aside the order, if it appears that it was passed on collateral considerations or the rules of natural justice were not observed, or that the President 's judgment was coloured by the advice or representation made by the executive or it was founded on no evidence. " (p 505).
758 Referring to the expression "final"occurring in Article 311(3) of the Constitution this Court in Union of India & Anr.
vs Tulsiram Patel & Ors.
[1985] Supp.
2 SCR 131 at page 274 held: ".
The finality given by clause (3) of Article 311 to the disciplinary authority 's decision that it was not reasonably practicable to hold the inquiry is not binding upon the court.
The court will also examine the charge of mala fides, if any, made in the writ petition.
In examining the relevance of the reasons, the court will consider the situation which according to the disciplinary authority made it come to the conclusion that it was not reasonably practicable to hold the inquiry.
If the court finds that the reasons are irrelevant, then the recording of its satisfaction by the disciplinary authority would be an abuse of power conferred upon it by clause (b). ." 35.
If the intendment is to exclude the jurisdiction of the superior Courts, the language would quite obviously have been different.
Even so, where such exclusion is sought to be effected by an amendment the further question whether such an amendment would be destructive of a basic feature of the Constitution would arise.
But comparison of the language in Article 363(1) would bring out in contrast the kind of language that may be necessary to achieve any such purpose.
In Brundaban Nayak vs Election Commission of India & Anr., ; , in spite of finality attached by Article 192 to the decision of the Governor in respect of disqualification incurred by a member of a State Legislature subsequent to the election, the matter was examined by this Court on an appeal by special leave under Article 136 of the Constitution against the decision of the High Court dismissing the writ petition filed under Article 226 of the Constitution.
Similarly in Union of India vs Jyoti Prakash Mitter, [1971]3 SCR 483, in spite of finality attached to the order of the President with regard to the determination of age of a Judge of the High Court under Article 217 (3) of the Constitution, this Court examined the legality of the order passed by the President during the pendency of an appeal filed under Article 136 of the Constitution.
There is authority against the acceptability of the argument that the word "final" occurring in Paragraph 6(1) has the effect of excluding the 759 jurisdiction of the Courts in Articles 136, 226 and 227. 36.
The cognate questions are whether a dispute of the kind envisaged by Paragraph 6 of the Tenth Schedule is in a non justiciable area and that, at all events, the fiction in Paragraph 6(2) that all proceedings under Paragraph 6(1) of the Tenth Schedule be deemed to be "proceedings in Parliament" of "Proceedings in the Legislature of a State" attracts immunity from the scrutiny by Courts as under Article 122 or 212, as the case may be.
Implicit in the first of these postulates is the premise that questions of disqualification of members of the House are essentially matters pertaining to the Constitution of the House and, therefore, the Legislature is entitled to exert its exclusive power to the exclusion of the judicial power.
This assumption is based on certain British legislature practices of the past in an area which is an impalpable congeries of legal rules and conventions peculiar to and characteristic of British Parliamentary traditions.
Indeed, the idea appears to have started with the proposition that the Constitution of the House was itself a matter of privilege of the House.
Halsbury contains this statement: "1493, Privilege of the House of Commons in relation to its constitution: In addition to possessing a complete control over the regulation of its own proceedings and the conduct of its members, the House of Commons claims the exclusive right of providing, as it may deem fit, for its own proper constitution." (emphasis supplied) (See: Halsbury 's Laws of England, 4th Edn.
34 Pages 603 & 604) But in the Indian constitutional dispensation the power to decide a disputed disqualification of an elected member of the House is not treated as a matter of privilege and the power to resolve such electoral disputes is clearly judicial and not legislative in nature.
The fact that election disputes were at some stage decided by the House of Commons itself was not conclusive that even their power was legislative.
The controversy, if any, in this area is put at rest by the authoritative earlier pronouncements of this Court.
760 37.In Indira Nehru Gandhi vs Raj Narain, Beg J., referring to the historical background relating to the resolution of electoral disputes by the House of Common said: "I do not think that it is possible to contend, by resorting to some concept of a succession to the powers of the medieval "High Court of Parliament" in England, that a judicial power also devolved upon our Parliament through the constituent Assembly, mentioned in Sec. 8 of the Indian Independence Act of 1947.
As already indicated by me, the Constituent assembly was invested with law making and not judicial powers.
Whatever judicial power may have been possessed once by English kings sitting in Parliament, constituting the highest Court of the realm in medieval England, have devolved solely on the House of Lords as the final court of appeal in England.
"King in Parliament" had ceased to exercise judicial powers in any other way long before 1950.
And, the House of Commons had certainly not exercised a judicial power as a successor to the one time jurisdiction of the "King in Parliament" with the possible exception of the power to punish for its contempts. " [p.627 & 628] In the same case, Justice Mathew made these observations as to the imperative judicial nature of the power to resolve disputes.
"The concept of democracy as visualised by the Constitution presupposes the representation of the people in Parliament and State Legislatures by the method of election.
And, before an election machinery can be brought into operation, there are three requisites which require to be attended to , namely, (1) there should be a set of laws and rules making provisions with respect to all matters relating to, or in connection with, elections, and it should be decided as to how these laws and rules are to be made; (2) there should be an executive charged with the duty of securing the due conduct of elections; and (3) there should be a judicial tribunal to deal with disputes arising out of or in connection with elections. " [p.504] "In whichever body or authority, the jurisdiction is vested, the 761 exercise of the jurisdiction must be judicial in character.
This court has held that in adjudicating an election dispute an authority is performing a judicial function and a petition for leave to appeal under Article 136 of the Constitution would lie to this Court against the decision nothwithstanding the provisions of Article 329(b)." (emphasis supplied) [p.506] It is also useful to recall the following observations of Gajendragadkar J., on the scope of Article 194(3) of the Constitution, which is analogous to Article 105(3) in Special Reference No.1 of 1964 ; "This clause requires that the powers, privileges and immunities which are claimed by the House must be shown to have subsisted at the commencement of the Constitution, i.e., on January 26, 1950.
it is well known that out of a large number of privileges and powers which the House of commons claimed during the days of its bitter struggle for recognition, some were given up in course of time, and some virtually faded out by desuetude; and so, in every case where a power is claimed, it is necessary to enquire whether it was an existing power at the relevant time.
It must also appear that the said power was not only claimed by the House of Commons, but was recognised by the English Courts.
It would obviously be idle to contend that if a particular power which is claimed by the House was claimed by the House of Commons but was not recognised by the English Courts, it would still be upheld under the latter part of clause (3) only on the ground that it was in fact claimed by the House of Commons.
In other words, the inquiry which is prescribed by this clause is: is the power in question shown or proved to have subsisted in the House of Commons at the relevant time?" (See page 442) This question is answered by Beg, J. in Indira Nehru Gandhi 's case: "I think, at the time our Constitution was framed, the decision 762 of an election dispute had ceased to be a privilege of the House of Commons in England and therefore, under Article 105(3), it could not be a privilege of Parliament in this country." [p.505] 38.Indeed, in dealing with the disqualifications and the resolution of disputes relating to them under Articles 191 and 192 or Article 102 and 103, as the case may be, the Constitution has evinced a clear intention to resolve electoral disputes by resort to the judicial power of the State.
Indeed, Justice Khanna in Indira Nehru Gandhi 's case said: "Not much argument is needed to show that unless there be a machinery for resolving an election dispute and for going into the allegations that elections were not free and fair being vitiated by malpractices, the provision that a candidate should not resort to malpractices would be in the nature of a mere pious wish without any legal sanction.
It is further plain that if the validity of the election declared to be valid only if we provide a forum for going into those grounds and prescribe a law for adjudicating upon those grounds. ." (See page 468) It is, therefore, inappropriate to claim that the determinative jurisdiction of the Speaker or the Chairman in the Tenth Schedule is not a judicial power and is within the non justiciable legislative area.
The classic exposition of Justice Issacs J., in Australian Boot Trade Employees Federation vs Whybrow & Co., at page 317, as to what distinguishes a judicial power from a legislative power was referred to with the approval of this Court in Express Newspaper Ltd. vs Union of India, at 611.
Issacs J., stated: "If the dispute is as to the relative rights of parties as they rest on past or present circumstances, the award is in the nature of a judgment, which might have been the decree of an ordinary judicial tribunal acting under the ordinary judicial power.
There the law applicable to the case must be observed.
If, however, the dispute is as to what shall in the future be the mutual rights and responsibilities of the parties in other words, if no present rights are asserted or denied, but a future rule of conduct is to be prescribed, thus creating new rights and obligations, with 763 sanctions for non conformity then the determination that so prescribes, call it an award, or arbitration, determination, or decision or what you will, is essentially of a legislative character, and limited only by the law which authorises it.
If, again, there are neither present rights asserted, nor a future rule of conduct prescribed, but merely a fact ascertained necessary for the practical effectuation of admitted rights, the proceeding, though called an arbitration, is rather in the nature of an appraisement or ministerial act.
" In the present case, the power to decide disputed disqualification under Paragraph 6(1) is preeminently of a judicial complexion.
The fiction in Paragraph 6(2), indeed, places it in the first clause of Article 122 or 212, as the case may be.
The words "proceedings in Parliament" or "proceedings in the legislature of a State" in Paragraph 6(2) have their corresponding expression in Articles 122(1) and 212(1) respectively.
This attracts an immunity from mere irregularities of procedures.
That apart, even after 1986 when the Tenth Schedule was introduced, the Constitution did not evince any intention to invoke Article 122 or 212 in the conduct of resolution of disputes as to the disqualification of members under Articles 191(1) and 102(1).
The very deeming provision implies that the proceedings of disqualification are, in fact, not before the House; but only before the Speaker as a specially designated authority.
The decision under paragraph 6(1) is not the decision of the House, nor is it subject to the approval by the House.
The decision operates independently of the House.
A deeming provision cannot by its creation transcend its own judicial scrutiny of the decision of the Speaker or Chairman exercising power under Paragraph 6(1) of the Tenth Schedule.
But then is the Speaker or the Chairman acting under Paragraph 6(1) is a Tribunal? "All tribunals are not courts, though all Courts are Tribunals".
The word "Courts" is used to designate those Tribunals which are set up in an organised State for the Administration of Justice.
By Administration of justice is meant the exercise of judicial power of the State to maintain and uphold rights and to punish "wrongs".
Whenever there is an infringement of a right or an injury, the Courts are there to restore the vinculum juris, which is disturbed.
See: Harinagar Sugar Mills 764 Ltd. vs Shyam Sunder Jhunjhunwala & Ors., ; In that case Hidayatullah, J. said: ".
By "courts" is meant courts of civil judicature and by "tribunals", those bodies of men who are appointed to decide controversies arising under certain special laws.
Among the powers of the State is included the power to decide such controversies.
This is undoubtedly one of the attributes of the State and is aptly called the judicial power of the State.
In the exercise of this power, a clear division is thus noticeable.
Broadly speaking, certain special matters go before tribunals, and the residue goes before the ordinary courts of civil judicature.
Their procedures may differ, but the functions are not essentially different.
What distinguishes them has never been successfully established.
Lord Stamp said that the real distinction is that the courts have "an air of detachment".
But this is more a matter of age and tradition and is not of the essence.
Many tribunals, in recent years, have acquitted themselves so well and with such detachment as to make this test insufficient.
" [p.362] Where there is a lis an affirmation by one party and denial by another and the dispute necessarily involves a decision on the rights and obligations of the parties to it and the authority is called upon to decide it, there is a exercise of judicial power.
That authority is called a Tribunal, if it does not have all the trappings of a Court.
In Associated Cement Companies Ltd. vs P.N. Sharma and Anr., [1965]2 SCR 366, this Court said: ". .
The main and the basic test, however, is whether the adjudicating power which a particular authority is empowered to exercise, has been conferred on it by a statute and can be described as a part of the State 's inherent power exercised in discharging its judicial function.
Applying this test, there can be no doubt that the power which the State Government exercises under R.6(5) and R.6(6) is a part of the State 's judicial power. .There is, in that sense, a lis; there is affirmation by one party and denial by another, and the dispute necessarily involves the rights and obligations of the parties to it.
The order which the State Government ultimately passes is 765 described as its decision and it is made final and binding. ." [p.386 and 387] By these well known and accepted tests of what constitute a Tribunal, the Speaker or the Chairman, acting under paragraph 6(1) of the Tenth Schedule is a Tribunal.
In the operative conclusions we pronounced on 12th November, 1991 we indicated in clauses G and H therein that Judicial review in the area is limited in the manner indicated.
If the adjudicatory authority is a tribunal, as indeed we have held it to be, why, then, should its scope be so limited? The finality clause in paragraph 6 does not completely exclude the jurisdiction of the courts under Articles 136, 226 and 227 of the Constitution.
But it does have the effect of limiting the scope of the jurisdiction.
The principle that is applied by the courts is that in spite of a finality clause it is open to the court to examine whether the action of the authority under challenge is ultra vires the powers conferred on the said authority.
Such an action can be ultra vires for the reason that it is in contravention of a mandatory provision of the law conferring on the authority the power to take such an action.
It will also be ultra vires the powers conferred on the authority if it is vitiated by mala fides or is colourable exercise of power based on extraneous and irrelevant considerations.
While exercising their certiorari jurisdiction, the courts have applied the test whether the impugned action falls within the jurisdiction of the authority taking the action or it falls outside such jurisdiction.
An ouster clause confines judicial review in respect of actions falling outside the jurisdiction of the authority taking such action but precludes challenge to such action on the ground of an error committed in the exercise of jurisdiction vested in the authority because such an action cannot be said to be an action without jurisdiction.
An ouster clause attaching finality to a determination, therefore, does oust certiorari to some extent and it will be effective in ousting the power of the court to review the decision of an inferior tribunal by certiorari if the inferior tribunal has not acted without jurisdiction and has merely made an error of law which does not affect its jurisdiction and if its decision is not a nullity for some reason such as breach of rule of natural justice.
See : Administrative Law by H.W.R. Wade, 6th Edn., pp. 724 726; Anisminic Ltd. vs Foreign Compensation commission; , ; S.E. Asia Fire Bricks vs Non Metallic Products, 766 In Makhan Singh vs State of Punjab, [1964] 4 SCR 797, while considering the scope of judicial review during the operation of an order passed by the President under Article 359(1) suspending the fundamental right guaranteed under Article 21 of the Constitution, it has been held that the said order did not preclude the High Court entertaining a petition under Article 226 of the Constitution where a detenu had been detained in violation of the mandatory provisions of the detention law or where the detention has been ordered mala fide.
It was emphasised that the exercise of a power mala fide was wholly outside the scope of the Act conferring the power and can always be successfully challenged.
(p. 825) Similarly in State of Rajasthan vs Union of India, ; , decided by a seven judge Bench, high Court was considering the challenge to the validity of a proclamation issued by the President of India under Article 356 of the constitution.
At the relevant time under clause (5) of Article 356, the satisfaction of the President mentioned in clause (1) was final and conclusive and it could not be questioned in any court on any ground.
All the learned judges have expressed the view that the proclamation could be open to challenge if it is vitiated by mala fides.
While taking this view, some of the learned judges have made express reference to the provisions of clause(5).
In this context, Bhagwati, J (as the learned Chief Justice then was) speaking for himself and A.C. Gupta, J. has stated: "Of course by reason of cl.
(5) of article 356, the satisfaction of the President is final and conclusive and cannot be assailed on any ground but this immunity from attack cannot apply where the challenge is not that the satisfaction is improper or unjustified, but that there is no satisfaction at all.
In such a case it is not the satisfaction arrived at by the President which is challenged, but the existence of the satisfaction itself.
Take, for example, a case where the President gives the reason for taking action under article 356, cl.
(1) and says that he is doing so, because the Chief Minister of the State is below five feet in height and, therefore, in his opinion a situation has arisen where the Government of the State cannot be carried on in accordance with the provisions of the Constitution.
Can the so called satisfaction of the President in such a case not be challenged 767 on the ground that it is absurd or perverse or mala fide or based on a wholly extraneous and irrelevant ground and is, therefore, no satisfaction at all.
82 83) Untwalia, J. has held as follows: "I, however, must hasten to add that I cannot persuade myself to subscribe to the view that under no circumstances an order of proclamation made by the President under Article 356 can be challenged in a Court of Law.
And, I am saying so notwithstanding the provision contained in clause (5) of the said Article introduced by the Constitution(38th Amendment) Act, 1975."(p.
94) "But then, what did I mean by saying that situation may arise in a given case where the jurisdiction of the Court is not completely ousted? I mean this.
If, without entering into the prohibited area, remaining on the fence, almost on the face of the impugned order or the threatened action of the President it is reasonably possible to say that in the eye of law it is no order or action as it is in flagrant violation of the very words of a particular Article, justifying the conclusion that the order is ultra vires, wholly illegal or passed mala fide, in such a situation it will be tantamount in law to be no order at all.
Then this Court is not powerless to interfere with such an order and may, rather, must strike it down.
"(p. 95) Similarly, Fazal Ali, J. has held : "Even if an issue is not justiciable, if the circumstances relied upon by the executive authority are absolutely extraneous and irrelevant, the Courts have the undoubted power to scrutinise such an e exercise of the executive power.
Such a judicial scrutiny is one which comes into operation when the exercise of the executive power is colourable or mala fide and based on extraneous or irrelevant considerations." (p. 116) "It is true that while an order passed by the President under Article 356 is put beyond judicial scrutiny by cl.
(5) of Art.356, but this does not mean that the Court possesses no jurisdiction 768 in the matter at all.
Even in respect of cl.
(5) of article 356, the Courts have a limited sphere of operation in that on the reasons given by the President in his order if the Courts find that they are absolutely extraneous and irrelevant and based on personal and illegal consideration the Courts are not powerless to strike down the order on the ground of mala fide if proved." (p.120) In Union of India vs Jyoti Prakash Mitter (supra), dealing with the decision of the President under Article 217 (3) on the question as to the age of a judge of the High Court, requiring a judicial approach it was held that the field of judicial review was enlarged to cover violation of rules of natural justice as well as an order based on no evidence because such errors are errors of jurisdiction.
c In Union of India & Anr.
vs Tulsiram Patel & Ors.
(supra) this Court was dealing with Article 311 (3) of the constitution which attaches finality to the order of the disciplinary authority on the question whether it was reasonably practicable to hold an inquiry.
It was observed that though the `finality ' clause did not bar jurisdiction it did indicate that the jurisdiction is limited to certain grades.
In the light of the decisions referred to above and the nature of function that is exercised by the Speaker/Chairman under paragraph 6, the scope of judicial review under Articles 136, 226 and 227 of the Constitution in respect of an order passed by the Speaker/Chairman under paragraph 6 would be confined to jurisdictional errors only viz., infirmities based on violation of constitutional mandate, mala fides, non compliance with rules of natural justice and perversity.
In view of the limited scope of judicial review that is available on account of the finality clause in paragraph 6 and also having regard to the constitutional intendment and the status of the repository of the adjudicatory power i.e. Speaker/Chairman, judicial review cannot be available at a stage prior to the making of a decision by the Speaker/Chairman and a quia timet action would not be permissible.
Nor would interference be permissible at an interlocutory stage of the proceedings.
Exception will, however, have to be made in respect of cases where disqualification or suspension is imposed during the pendency of the proceedings and such disqualification or suspension is likely to have grave, immediate and irreversible repercussions and consequence.
769 42.
In the result, we hold on contentions E and F : That the Tenth Schedule does not, in providing for an additional grant for disqualification and for adjudication of disputed disqualifications, seek to create a nonjusticiable constitutional area.
The power to resolve such disputes vested in the Speaker or chairman is a judicial power.
That Paragraph 6(1) of the Tenth Schedule, to the extent it seeks to impart finality to the decision of the Speakers/Chairmen is valid.
But the concept of statutory finality embodied in Paragraph 6(1) does not detract from or abrogate judicial review under Articles 136, 226 and 227 of the Constitution in so far as infirmities based on violations of constitutional mandates, mala fides, non compliance with Rules of Natural Justice and perversity, are concerned.
That the deeming provision in Paragraph 6(2) of the Tenth Schedule attracts an immunity analogous to that in Articles 122(1) and 212(1) of the Constitution as understood and explained in Keshav Singh 's Case Spl.
No. 1; , , to protect the validity of proceedings from mere irregularities of procedure.
The deeming provision, having regard to the words "be deemed to be proceedings in Parliament" or "proceedings in the Legislature of a State" confines the scope of the fiction accordingly.
The Speaker/Chairmen while exercising powers and discharging functions under the Tenth Schedule act as Tribunal adjudicating rights and obligations under the Tenth Schedule and their decisions in that capacity are amenable to judicial review.
However, having regard to the Constitutional Schedule in the Tenth Schedule, judicial review should not cover any stage prior to the making of a decision by the Speakers/Chairman.
Having regard to the constitutional intendment and the status of the repository of the adjudicatory power, no quia timet actions are permissible, the only exception for any interlocutory interference being cases of interlocutory disqualifications or suspensions which may have grave, immediate and irreversible 770 repurcussions and consequence.
Re : Contention(G): The argument is that an independant adjudicatory machinery for resolution of electrol disputes is an essential incident of democracy, which is a basic feature of Indian consitutionalism.
It is urged that investiture of the power of resolving such disputes in the Speaker or the Chairman does not answer this test of an independent, impartial quality of the adjudicatory machinery.
It is, therefore, urged that Paragraph 6(1) of the Tenth Schedule is violative of a basic feature.
It is also urged that a Speaker, under the Indian Parliamentary tradition is not required to resign his membership of the political party on whose strength he gets elected and that inevitably the decision of the Speaker is not free tugs and pulls of political polarisations.
It is urged that the Speaker who has not resigned his membership of the political party cannot be impartial and, at all events, his functioning will not be free from reasonable likelihood of bias.
The Tenth Schedule breaks away from the constitutional pattern for resolution of disqualifications envisaged in Articles 103 and 192 of the Constitution which vest jurisdiction in this behalf in the President or the Governor acting according to the opinion of Election Commission.
The disqualifications for defection could very well have been included in Article 102(1) or 191(1) as a ground, additional to the already existing grounds under clauses (a) to (e) in which event, the same dispute resolution machinery would have dealt with the disqualifications for defections also.
But the Tenth Schedule, apparently.
attempted a different experiment in respect of this particular ground of disqualification.
45.The question is, whether the investiture of the determinative jurisdiction in the Speaker would by itself stand vitiated as denying the idea of an independent adjudicatory authority.
We are afraid the criticism that the provision incurs the vice of unconstitutionality ignores the high status and importance of the office of the Speaker in a Parliamentary democracy.
The office of the speaker is held in the highest respect and esteem in Parliamentary traditions.
The evolution of the institution of Parliamentary democracy has as its pivot the institution of the Speaker.
`The Speaker holds a high, important and ceremonial office.
All questions of the well being of the House 771 are matters of Speaker 's concern '.
The Speaker is said to be the very embodiment of propriety and impartiality.
He performs wide ranging functions including the performance of important functions of a judicial character.
Mavalankar, who was himself a distinguished occupant of that high office, says : "In parliamentary democracy, the office of the Speaker is held in very high esteem and respect.
There are many reasons for this.
Some of them are purely historical and some are inherent in the concept of parliamentary democracy and the powers and duties of the Speaker.
Once a person is elected Speaker, he is expected to be above parties, above politics.
In other words, he belongs to all the members or belongs to none.
He holds the scales of justice evenly irrespective of party or person, though no one expects that he will do absolute justice in all matters; because, as a human being he has his human drawbacks and shortcomings.
However, everybody knows that he will intentionally do no injustice or show partiality.
"Such a person is naturally held in respect by all." [See : G. V. Mavalankar : The Office of Speaker, Journal of Parliamentary Information, April 1956, Vol.
2, No. 1, p.33] Pundit Nehru referring to the office of the Speaker said : ".
The speaker represents the House.
He represents the dignity of the House, the freedom of the House and because the House represents the nation, in a particular way, the Speaker becomes the symbol of the nation 's freedom and liberty.
Therefore, it is right that that should be an honoured position, a free position and should be occupied always by men of outstanding ability and impartiality.
[See : HOP.
IX (1954), CC 3447 48] Referring to the Speaker, Erskine may says : "The Chief characteristics attaching to the office of Speaker in the House of Commons are authority and impartiality.
As a symbol of his authority he is accompanied by the Royal Mace 772 which is borne before him when entering and leaving the chamber and upon state occasions by the Sergeant at Arms attending the House of commons, and is placed upon the table when he is in the chair.
In debate all speeches are addressed to him and he calls upon Members to speak a choice which is not open to dispute.
When he rises to preserve order or to give a ruling on a doubtful point he must always be heard in silence and no Member may stand when the Speaker is on his feet.
Reflections upon the character or actions of the Speaker may be punished as breaches of privilege.
His action cannot be criticized incidentally in debate or upon any form of proceeding except a substantive motion.
His authority in the chair is fortified by many special powers which are referred to below.
Confidence in the impartiality of the Speaker is an indispensable condition of the successful working of procedure, and many conventions exist which have as their object not only to ensure the impartiality of the Speaker but also to ensure that his impartiality is generally recognised. ." [See : Erskine May Parliamentary Practice 20th edition p. 234 and 235] M.N. Kaul and S.L. Shakdher in `Practice and procedure of Parliament ' 4th Edition, say : "The all important conventional and ceremonial head of Lok Sabha is the Speaker.
Within the walls of the House his authority is supreme.
This authority is based on the Speaker 's absolute and unvarying impartiality the main feature of the office, the law of its life.
The obligation of impartiality appears in the constitutional provision which ordains that the Speaker is entitled to vote only in the case of equality of votes.
Moreover, his impartiality within the House is secured by the fact that he remains above all considerations of party or political career, and to that effect he may also resign from the party to which he belonged." [p. 104] 46.
It would, indeed, be unfair to the high traditions of that great 773 office to say that the investiture, in it of this Jurisdiction would be vitiated for violation of a basic feature of democracy.
It is inappropriate to express distrust in the High office of the Speaker, merely because some of the Speakers are alleged, or even found, to have discharged their functions not in keeping with the great traditions of that high office.
The Robes of the Speaker to change and elevate the man inside.
Accordingly, the contention that the vesting of adjudicatory functions in the Speakers/Chairmen would by itself vitiate the provision on the ground of likelihood of political bias is unsound and is rejected.
The Speakers/Chairmen hold a pivotal position in the scheme of Parliamentary democracy and are guardians of the rights and privileges of the House.
They are expected to and to take far reaching decisions in the functioning of Parliamentary democracy.
Vestiture of power of adjudicate questions under the Tenth Schedule in such a constitutional functionaries should not be considered exceptionable.
48.Re : Contention H : In the view we take of the validity of paragraph 7 it is unnecessary to pronounce on the contention whether judicial review is a basic feature of the Constitution and paragraph 7 of the Tenth Schedule violates such basic structure.
We may now notice one other contention as to the construction of the expression `any direction ' occurring in paragraph 2(1)(b).
It is argued that if the expression really attracts within its sweep every direction or whip of any kind whatsoever it might be unduly restrictive of the freedom of speech and the right of dissent and that, therefore, should be given a meaning limited to the objects and purposes of the Tenth Schedule.
Learned counsel relied upon and commended to us the view taken by the minority in the Full Bench decision of Punjab and Haryana High Court in Parkash Singh Badal & Ors.
vs Union of India & Ors.
, [AIR 1987 Punjab and Haryana 263] where such a restricted sense was approved.
Tewatia J. said : "If the expression : "any direction" is to be literally construed then it would make the people 's representative a wholly political party 's representative, which decidedly he is not.
The Member would virtually lose his identity and would become a rubber 774 stamp in the hands of his political party.
Such interpretation of this provision would cost it, its constitutionality, for in that sense it would become destructive of democracy/parliamentary democracy, which is the basic feature of the Constitution.
Where giving of narrow meaning and reading down of the provision can save it from the vice of unconstitutionality the Court should read it down particularly when it brings the provision in line with the avowed legislative intent. ." ". . the purpose of enacting paragraph 2 could be no other than to insure stability of the democratic system, which in the context of Cabinet/Parliamentary form of Government on the one hand means that a political party or a coalition of political parties which has been voted to power, is entitled to govern till the next election, and on the other, that opposition has a right to censure the functioning of the Government and even overthrow it by voting it out of power if it had lost the confidence of the people, then voting or abstaining from voting by a Member contrary to any direction issued by his party would by necessary implication envisage voting or abstaining from voting in regard to a motion or proposal, which if failed, as a result of lack or requisite support in the House, would result in voting the Government out of power, which consequence necessarily follows due to well established constitutional convention only when either a motion of no confidence is passed by the House or it approves a cut motion in budgetary grants.
Former because of the implications of Article 75(3) of the Constitution and latter because no Government can function without money and when Parliament declines to sanction money, then it amounts to an expression of lack of confidence in the Government.
When so interpreted the clause (b) of sub paragraph (1) of paragraph 2 would leave the Members free to vote according to their views in the House in regard to any other matter that comes up before it." [p.313 & 314] The reasoning of the learned judge that a wider meaning of the words "any direction" would `cost it its constitutionality ' does not commend to us.
775 But we approve the conclusion that these words require to be construed harmoniously with the other provisions and appropriately confined to the objects and purposes of the Tenth Schedule.
Those objects and purposes define and limit the contours of its meaning.
The assignment of a limited meaning is not to read it down to promote its constitutionality but because such a construction is a harmonious construction in the context.
There is no justification to give the words the wider meaning.
While construing Paragraph 2(1)(b) it cannot be ignored that under the Constitution members of Parliament as well as of the State legislature enjoy freedom of speech in the House though this freedom is subject to the provisions of the constitution and the rules and standing orders regulating the Procedure of the House [Art, 105(1) and art.194(1)].
The disqualification imposed by Paragraph 2(1) (b) must be so construed as not to unduly impinge on the said freedom of speech of a member.
This would be possible if Paragraph 2(1)(b) is confined in its scope by keeping in view the object underlying the amendments contained in the Tenth Schedule, namely, to curb the evil or mischief of political defections motivated by the lure of office or other similar considerations.
The said object would be achieved if the disqualification incurred on the ground of voting or abstaining from voting by a member is confined to cases where a change of Government is likely to be brought about or is prevented, as the case may be, as a result of such voting or abstinence or when such voting or abstinence is on a matter which was a major policy and programme on which the political party to which the member belongs went to the polls.
For this purpose the direction given by the political party to a member belonging to it, the violation of which may entail disqualification under paragraph 2(1)(b), would have to be limited to a vote on motion of confidence or no confidence in the Government or where the motion under consideration relates to a matter which was an integral policy and programme of the political party on the basis of which it approached the elaborate.
The voting or abstinence from voting by a member against the direction by the political party on such a motion would amount to disapproval of the programme of the basis of which he went before the electorate and got himself elected and such voting or abstinence would amount to a breach of the trust reposed in him by the electorate.
Keeping in view the consequences of the disqualification i.e., termination of the membership of a House; it would be appropriate that the 776 direction or whip which results in such disqualification under Paragraph 2(1)(b) is so worded as to clearly indicate that voting or abstaining from voting contrary to the said direction would result in incurring the disqualification under Paragraph 2(1)(b) of the Tenth Schedule so that the member concerned has fore knowledge of the consequences flowing from his conduct in voting or abstaining from voting contrary to such a direction.
There are some submissions as to the exact import of a "split whether it is to be understood an instantaneous, one time event or whether a "split" can be said to occur over a period of time.
The hypothetical poser was that if one third of the members of a political party in the legislature broke away from it on a particular day and a few more members joined the spliter group a couple of days later, would the latter also be a part of the "split" group.
This question of construction cannot be in vaccuo.
In the present cases, we have dealt principally with constitutional issues.
The meaning to be given to "split" must necessarily be examined in a case in which the question arises in the context of its particular facts.
No hypothetical predications can or need be made.
We, accordingly,, leave this question open to be decided in an appropriate case.
Before parting with the case, we should advert to one other circumstance.
During the interlocutory stage, the constitution bench was persuaded to make certain interlocutory orders which, addressed as they were to the Speaker of the House, (though, in a different capacity as an adjudicatory forum under the Tenth Schedule) engendered complaints of disobedience culminating in the filing of petitions for initiation of proceedings of contempt against the Speaker.
It was submitted that when the very question of jurisdiction of the Court to deal with the matter was raised and even before the constitutionality of Paragraph 7 had been pronounced upon, self restraint required that no interlocutory orders in a sensitive area of the relationship between the legislature and the Courts should been made.
The purpose of interlocutory orders is to preserve in status quo the rights of the parties, so that, the proceedings do not become infructuous by any unilateral overt acts by one side or the other during its pendency.
One of the contentions urged was as to the invalidity of the amendment for non compliance with the proviso to Article 368(2) of the Constitution.
It has now been unanimously held that Paragraph 7 attracted the proviso to article 368(2).
The interlocutory orders in this case were necessarily 777 justified so that, no land slide changes were allowed to occur rendering proceedings ineffective and infructuous.
With the finding and observations as aforesaid W.P.No. 17 of 1991 is dismissed.
Writ petition in Rule No. 2421 of 1990 in the High Court of Gauhati is remitted back to the High Court for disposal in accordance with law and not inconsistent with the findings and observations contained in this order.
VERMA, J. : This matter relating to disqualification on the ground of defection of some members of the Negaland legislative Assembly under the Tenth Schedule inserted by the Constitution (Fifty Second Amendment) Act, 1985, was heard along with some other similar matters relating to several Legislative Assemblies including those of Manipur, Meghalaya, Madhya Pradesh, Gujarat and Goa, since all of them involved the decision of certain constitutional questions relating to the constitutional validity of para 7 of the Tenth Schedule and consequently the validity of the Constitution (Fifty Second Amendment) Act, 1985 itself.
At the hearing, several learned counsel addressed us on account of which the hearing obviously took some time.
Even during the course of the hearing, the actions of some Speakers tended to alter the status quo, in some cases resulting in irreversible consequences which could not be corrected in the event of para 7 of the Tenth Schedule being held invalid or the impugned orders of the Speakers being found justiciable and, on merits illegal and, therefore, the urgency increased of deciding the questions debated before us at the earliest.
For this reason, we indicated during the course of the hearing that we would pronounce our operative conclusions soon after conclusion of the hearing with reasons therefor to follow.
Accordingly, on conclusion of the hearing on November 1, 1991, we indicated that the operative conclusions would be pronounced by us at the next sitting of the Bench when it assembled on November 12, 1991 after the Diwali Vacation.
The operative conclusions of the majority (Venkatachaliah, Reddy and Agrawal, JJ.) as well as of the miority (Lalit Mohan Sharma and J.S.Verma,JJ.)were thus pronounced on November 12, 1991.
We are now indicating herein our reasons for the operative conclusions of the minority view.
The unanimous opinion according to the majority as well as the minority is that para 7 of the tenth Schedule enacts a provision for complete exclusion of judicial review including the jurisdiction of the 778 Supreme Court under Article 136 and of the High Courts under Articles 226 and 227 of the Constitution and, therefore, it makes in terms and in effect a change in Articles 136, 226 and 227 of the Constitution which attracts the proviso to clause (2) of Article 368 of the Constitution; and therefore, ratification by the specified number of State Legislatures before the Bill was presented to the President for his assent was necessary, in accordance therewith.
The majority view is that in the absence of such ratification by the State legislatures, it is para 7 alone of the Tenth Schedule which is unconstitutional; and it being severable from the remaining part of the Tenth Schedule, para 7 alone is liable to be struck down rendering the speakers 'decision under para 6 that of a judicial tribunal amenable to judicial review by the Supreme court and the High courts under Article 136, 226 and 227.
The minority opinion is that the effect of invalidity of para 7 of the Tenth Schedule is to invalidate the entire Constitution (Fifty Second Amendment) Act, 1985 which inserted the Tenth Schedule since the President 's assent to the bill without prior ratification by the State Legislatures is non est.
The minority view also is that para 7 is not severable from the remaining part of the Tenth Schedule and the Speaker not being an independent adjudicatory authority for this purpose as contemplated by a basic feature of democracy, the remaining part of the Tenth Schedule is in excess of the amending powers being violative of a basic feature of the Constitution.
In the minority opinion, we have held that the entire constitution (Fifty Second Amendment) Act, 1985 is unconstitutional and an abortive attempt to make the constitutional Amendment indicated therein.
Before proceeding to give our detailed reasons, we reproduce the operative conclusions pronounced by us on November 12, 1991 in the minority opinion (Lalit Mohan Sharma and J.S. Verma, JJ.) as under : "For the reasons to be given in our detailed judgment to follow, our operative conclusions in the minority opinion on the various constitutional issues are as follows : 1.Pare 7 of the Tenth Schedule, in clear terms and in effect, excludes the jurisdiction of all courts, including the Supreme Court under Article 136 and the High Courts under Articles 226 and 227 to entertain any challenge to the decision under para 6 on any ground even of illegality or perversity, not only 779 at an interim stage but also after the final decision on the question of disqualification on the ground of defection.
Para 7 of the Tenth Schedule, therefore, in terms and in effect, makes a change in Article 136 in Chapter IV of Part V; and Articles 226 and 227 in Chapter V of Part VI of the Constitution attracting the proviso to clause (2) of Article 368.
In view of para 7 in the Bill resulting in the constitution (Fifty Second Amendment) Act, 1985, it was required to be ratified by the Legislature of not less than one half of the States as a condition precedent before the Bill could be presented to the President for assent, in accordance with the mandatory special procedure prescribed in the proviso to clause (2) of Article 368 for exercise of the constituent power.
Without ratification by the specified number of State Legislatures, the stage for presenting the Bill for assent of the President did not reach and, therefore, the so called assent of the President was non est and did not result in the constitution standing amended in accordance with the terms of the Bill.
In the absence of ratification by the specified number of State Legislatures before presentation of the Bill to the President for his assent, as required by the proviso to clause (2) of Article 368, it is not merely para 7 but, the entire Constitution (Fifty Second Amendment) Act, 1985 which is rendered unconstitutional, since the constituent power was not exercised as prescribed in Article 368, and therefore, the Constitution did not stand amended in accordance with the terms of the Bill providing for the amendment.
5.Doctrine of Severability cannot be applied to a Bill making a constitutional amendment where any part thereof attracts the proviso to clause (2) of Article 368.
Doctrine of Severability is not applicable to permit striking down para 7 alone saving the remaining provisions of the Bill making the Constitutional Amendment on the ground that para 7 alone attracts the proviso to clause (2) of Article 368.
780 7.
Even otherwise, having regard to the provisions of the Tenth Schedule of the Constitution inserted by the Constitution (Fifty Second Amendment) Act, 1985, the Doctrine of Severability does not apply to it.
Democracy is a part of the basic structure of the Constitution and free and fair elections with provision for resolution of disputes relating to the same as also for adjudication of those relating to subsequent disqualification by an independent body outside the House are essential features of the democratic system in our Constitution.
Accordingly, an independent adjudicatory machinery for resolving disputes relating to the competence of Members of the House is envisaged as a attribute of this basic feature.
The tenure of the Speaker who is the authority in the Tenth Schedule to decide this dispute is dependent on the continuous support of the majority in the House and, therefore, he (the Speaker) does not satisfy the requirement of such an independent adjudicatory authority; and his choice as the sole arbiter in the matter violates an essential attribute of the basic feature.
9.Consequently, the entire Constitution (Fifty Second Amendment) Act, 1985 which inserted the Tenth Schedule together with clause (2) in Articles 102 and 191, must be declared unconstitutional or an abortive attempt to so amend the Constitution.
10.It follows that all decisions rendered by the several Speakers under the Tenth Schedule must also be declared nullity and liable to be ignored.
On the above conclusions, it does not appear necessary or appropriate to decide the remaining questions urged.
" it is unnecessary in this judgment to detail the facts giving rise to the debate on the constitutional issues relating to the validity of the Tenth Schedule, more particularly para 7 therein, introduced by the Constitution (Fifty second Amendment) Act, 1985.
Suffice it to say that these matters arise out of certain actions of the Speakers of several Legislative Assemblies under the Tenth Schedule.
Arguments on these questions were 781 addressed to us by several learned counsel, namely, the learned Attorney General, S/Shri A.K. Sen, Shanti Bhushan, M.C. Bhandare, F.S. Nariman, Soli J. Sorabjee, R.K. Garg, Kapil Sibal, M.R. Sharma, Ram Jethmalani, N.S. Hegde, O.P. Sharma, Bhim Singh and R.F. Nariman.
It may be mentioned that some learned counsel modified their initial stand to some extent as the hearing progressed by advancing alternative arguments as well.
Accordingly, the several facets of each constitutional issue debated before us were fully focused during the hearing.
The main debate, however, was on the construction of paras 6 and 7 of the Tenth Schedule and the validity of the Constitutional Amendment.
Arguments were also addressed on the question of violation, if any,of any basic feature of the Constitution by the provisions of the Tenth Schedule.
The points involved in the decision of the constitutional issues for the purpose of our opinion may be summarised broadly as under : (A) Construction of para 6 of the Tenth Schedule.
Its effect and the extent of exclusion of judicial review thereby.
(B) Construction of para 7 of the Tenth Schedule.
Its effect and the extent of exclusion of judicial review thereby.
(C) In case of total exclusion of judicial review including the jurisdiction of Supreme Court under Article 136 and the High Courts under Articles 226 and 227 of the Constitution by the Tenth Schedule, does para 7 make a change in these Articles attracting the proviso to clause (2) of Article 368 of the Constitution ? (D) The effect of absence of prior ratification by the State Legislatures before the Bill making provisions for such amendment was presented to the President for assent, on the constitutional validity of the Tenth Schedule.
(E) Severability of para 7 from the remaining part of the Tenth Schedule and its effect on the question of constitutional validity of the Tenth Schedule.
(F) Violation of basic feature of the Constitution, if any, by the Tenth Schedule as a whole or any part thereof and its effect on the constitutionality for this reason.
782 (G) Validity of the Tenth Schedule with reference to the right of dissent of members with particular reference to Article 105.
As indicated by us in our operative conclusions pronounced earlier, we need not express our concluded opinion on the points argued before us which are not necessary for supporting the conclusion reached by us that the entire Tenth Schedule and consequently the Constitution (Fifty Second Amendment) Act, 1985 is unconstitutional on the view we have taken on the other points.
We are, therefore, giving our reasons only in respect of the points decided by us leading to the conclusion we have reached.
At this stage, it would be appropriate to mention the specific stand of the Speakers taken at the hearing.
The learned counsel who appeared for the several Speakers clearly stated that they were instructed to apprise us that the Speakers did not accept the jurisdiction of this Court to entertain these matters in view of the complete bar on jurisdiction of the courts enacted in para 7 read with para 6 of the Tenth Schedule.
Accordingly, they abstained from addressing us on the merits of the impugned orders which led to these matters being brought in this Court in spite of our repeated invitation to them to also address us on merits in each case, which all the other learned counsel did.
No doubt, this Court 's jurisdiction to decide the constitutional validity of the Tenth Schedule was conceded, but no more.
It is in these extra ordinary circumstances that we had to hear these matters.
We need not refer herein to the details of any particular case since the merits of each case are dealt separately in the order of that case.
Suffice it to say that the unanimous view of the Bench is that the Speakers ' decision disqualifying a member under the Tenth Schedule is not immune from judicial scrutiny.
According to the majority it is subject to judicial scrutiny on the ground of illegality or perversity which in the minority view, it is a nullity liable to be so declared and ignored.
We consider it apposite in this context to recall the duty of the Court in such delicate situations.
This is best done by quoting Chief Justice Marshall in Cohens vs Virginia; , , 404, 5 L.Ed.257, 291 [1821], wherein he said : 783 "It is most true, that this Court will not take Jurisdiction if it should not : but it is equally true that it must take jurisdiction if it should.
The judiciary cannot, as the legislature may, avoid a measure because it approaches the confines of the constitution.
We cannot pass it by because it is doubtful.
With whatever doubts, with whatever difficulties, a case may be attended, we must decide it if it be brought before us.
We have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given.
The one or the other would be treason to the constitution.
Questions may occur which we would gladly avoid, but we cannot avoid them.
All we can do, is to exercise our best judgment, and conscientiously to perform our duty.
In doing this, on the present occasion, we find this tribunal invested with appellate jurisdiction in all cases arising under the constitution and laws of the United States.
We find no exception to this grant, and we cannot insert one.
XXX XXX XXX .
If the question cannot be brought in a court, then there is no case in law or equity, and no jurisdiction is given by the words of the article.
But if, in any controversy depending in a court, the cause should depend on the validity of such a law, that would be a case arising under the constitution, to which the judicial power of the United States would extend. ." (emphasis supplied) More recently, Patanjali Sastri, CJ., while comparing the role of this Court in the constitutional scheme with that of the U.S. Supreme Court, pointed out in the State of Madras vs V.G. Row ; that the duty of this Court flows from express provisions in our Constitution while such power in the U.S. Supreme Court has been assumed by the interpretative process giving a wide meaning to the "due process" clause.
Sastri, CJ., at p.605, spoke thus: "Before proceeding to consider this question, we think it right to point out, what is sometimes overlooked, that our constitution contains express provisions for judicial review of legislation as to its conformity with the Constitution, unlike as in America where the Supreme Court has assumed extensive powers of 784 reviewing legislative acts under cover of the widely interpreted `due process ' clause in the Fifth and Fourteenth Amendments.
If,then, the, courts in this country face up to such important and none too easy task, it is not out of any desire to tilt at legislative authority in a crusader 's spirit, but in discharge of a duty plainly laid upon them by the Constitution.
This is especially true as regards the `fundamental rights ', as to which this court has been assigned the role of a sentinel on the qui vive.
While the Court naturally attaches great weight to the legislative judgment, it cannot desert its own duty to determine finally the constitutionality of an impugned statute.
We have ventured on these obvious remarks because it appears to have been suggested in some quarters that the courts in the new set up are out to seek clashes with legislatures in the country." (emphasis supplied) We are in respectful agreement with the above statement of Sastri, CJ, and wish to add that even though such an obvious statement may have been necessary soon after the Constitution came into force and may not be a necessary reminder four decades later at this juncture, yet it appears apposite in the present context to clear the lingering doubts in some minds.
We have no hesitation in adding further that while we have no desire to clutch at jurisdiction, at the same time we would not be deterred in the performance of this constitutional duty whenever the need arises.
We would also like to observe the unlike England, where there is no written Constitution and Parliament is supreme, in our country there is a written Constitution delineating the spheres of jurisdiction of the legislature and the judiciary whereunder the power to construe the meaning of the provisions in the Constitution and the laws is entrusted to the judiciary with finality attached to the decision of this Court inter alia by Article 141 about the true meaning of any enacted provision and Article 144 obliges all authorities in the country to act in aid of this Court.
It is, therefore, not permissible in our constitutional scheme for any other authority to claim that power in exclusivity, or in supersession of this Court 's verdict.
Whatever be the controversy prior to this Court entertaining such a matter, it must end when the court is seized of the matter for pronouncing its verdict and it is the constitutional obligation of every person and authority to accept its binding effect when the decision is rendered by this Court.
It is also to be remembered that in our constitutional scheme based on 785 democratic principles which include governance by rule of law, every one has to act and perform his obligations according to the law of the land and it is the constitutional obligation of this Court to finally say what the law is.
We have no doubt that the Speakers and all others sharing their views are alive to this constitutional scheme, which is as much the source of their jurisdiction as it is of this Court and also conscious that the power given to each wing is for the performance of a public duty as a constitutional obligation and not for self aggrandisement.
Once this perception is clear to all, there can be no room for any conflict.
The Tenth Schedule was inserted in the Constitution of India by the Constitution (Fifty Second Amendment) Act, 1985 which came into force with effect from 1.3.1985 and is popularly known as the Anti Defection Law.
The Statement of Objects and Reasons says that this amendment in the Constitution was made to combat the evil of political defections which has become a matter of national concern and unless combated, is likely to undermine the very foundations of our democratic system and the principles which sustained it.
This amendment is, therefore, for outlawing defection to sustain our democratic principles.
The Tenth Schedule contains eight paras.
Para 1 is the interpretation clause defining `House ' to mean either House of Parliament or the legislative Assembly or, as the case may be, either House of the Legislature of a State.
The expressions `legislature party ' and `original political party ' which are used in the remaining paras are also defined.
Para 2 provides for disqualification on ground of defection.
Para 3 provides that disqualification on ground of defection is not to apply in case of split indicating therein the meaning of `split.
Para 4 provides that disqualification on ground of defection is not to apply in case of merger.
Para 5 provides exemption for the Speaker or the Deputy speaker of the House of the People or of the Legislative Assembly of the State, the Deputy Chairman of the Council of States or the Chairman or the Deputy Chairman of the Legislative Council of a State from the applicability of the provisions of the Tenth Schedule.
Para 8 contains the rule making power of the Chairman or the Speaker.
For the purpose of deciding the jurisdiction of this Court and the justiciability of the cause, it is paras 6 and 7 which are material and they read as under: "6.
Decision on questions as to disqualification of ground of defection.
786 1.
If any question arises as to whether a member of a House has become subject to disqualification under this Schedule, the question shall be referred for the decision of the Chairman or, as the case may be, the Speaker of such House and his decision shall be final : Provided that where the question which has arisen is as to whether the Chairman or the Speaker of a House has become subject to such disqualification, the question shall be referred for the decision of such member of the House as the House may elect in this behalf and his decision shall be final.
All proceedings under sub paragraph (1) of this paragraph in relation to any question as to disqualification of a member of a House under this Schedule shall be deemed to be proceedings in Parliament within the meaning of Article 122 or, as the case may be, proceedings in the Legislature, of a State within the meaning of Article 212.
Bar of Jurisdiction on courts.
Notwithstanding anything in this Constitution, no court shall have any jurisdiction in respect of any matter connected with the disqualification of a member of a House under this Schedule.
" We shall now deal with the points involved enumerated earlier.
Points `A ' & `B ' Paras 6 & 7 of Tenth Schedule In support of the objection raised to the jurisdiction of this Court and the justiciability of the Speaker 's decision relating to disqualification of a member, it has been urged that sub paragraph (1) of para 6 clearly lays down that the decision of the Chairman or, as the case may be, the Speaker of such House shall be final and sub paragraph (2) proceeds to say that all proceedings under sub paragraph (1) 'shall be deemed to the proceedings in Parliament . or, . . proceedings in the Legislature of a State ' within the meaning of Article 122 or Article 212, as the case may be.
It was urged that the clear provision in para 6 that the decision of the 787 Chairman/Speaker on the subject of disqualification under this Schedule shall be final and the further provision that all such proceedings `shall be deemed to be proceedings in Parliament . or, . proceedings in the Legislature of as State ', within the meaning of Article 122 or Article 212, as the case may be, clearly manifests the intention that the jurisdiction of all courts including the Supreme Court is ousted in such matters and the decision on this question is not justiciable.
Further argument is that para 7 in clear words thereafter reiterates that position by saying that `notwithstanding anything in this Constitution, no court shall have any jurisdiction in respect of any matter connected with the disqualification of a member of a House under this Schedule.
In other words, the argument is that para 6 by itself provides for ouster of the jurisdiction of all courts including the Supreme Court and para 7 is a remanifestation of that clear intent in case of any doubt arising from para 6 alone.
On this basis it was urged that the issue raised before us is not justiciable and the Speaker or the Chairman, as the case may be, not being `Tribunal ' within the meaning of that expression used in Article 136 of the Constitution, their decision is not open to judicial review.
In reply, it was urged that finality Clause in sub paragraph (1) of para 6 does not exclude the jurisdiction of the high Courts under Articles 226 and 227 and of this Court under Article 136.
Deeming provision in sub paragraph (2) of Para 6, it was urged, has the only effect of making it a `proceedings in Parliament ' or `proceedings in the Legislature of a State ' to bring it within the ambit of clause (1) of Articles 122 or 212 but not within clause (2) of these Articles.
The expression `proceedings in Parliament ' and `proceedings in the Legislature of a State ' are used only in clause (1) of Articles 122 and 212 but not in clause (2) of either of these Articles, on account of which the scope of the fiction cannot be extended beyond the limitation implicit in the specific words used in the legal fiction.
This being so, it was argued that immunity extended only to `irregularity of procedure ' but not to illegality as held in Keshav Singh [1965] 1 SCR 413.
In respect of para 7, the reply is that the expression `no court ' therein must be similarly construed to refer only to the courts of ordinary jurisdiction but not the extra ordinary jurisdiction of the High Courts under Article 226 & 227 and the Plenary jurisdiction of Supreme Court under Article 136.
It was also argued that the Speaker/Chairman while deciding the question of disqualification of member under para 6 exercises a judicial function of the State which otherwise would be vested in the courts and, 788 therefore, in this capacity he acts as `Tribunal amenable to the jurisdiction under Articles 136, 226 and 227 of the Constitution.
Shri Sibal also contended that the bar in para 7 operates only at the interim stage, like other election disputes, and not after the final decision under para 6.
The finality clause in sub paragraph (1) of para 6 which says that the decision of the Chairman or, as the case may be, the Speaker of such House shall be final is not decisive.
It is settled that such a finality clause in a statute by itself is not sufficient to exclude the jurisdiction of the High Courts under Articles 226 and 227 and the Supreme Court under Article 136 of the Constitution, the finality being for the statute alone.
This is apart from the decision being vulnerable on the ground of nullity.
Accordingly, sub paragraph (1) alone is insufficient to exclude the extra ordinary jurisdiction of the High Courts and the plenary jurisdiction of this Court.
The legal fiction in sub paragraph (2) of para 6 can only bring the proceedings under sub paragraph (1) thereof within the ambit of clause (1) of Article 122 or clause (1) 212, as the case may be since the expressions used in sub paragraph (2) of para 6 of the tenth Schedule are `shall be deemed to be proceedings in Parliament ' or `proceedings in the Legislature of a State ' and such expressions find place both in Articles 122 and 212 only in clause (1) and not clause (2) thereof.
The ambit of the legal function must be confined to the limitation implicit in the words used for creating the fiction and it cannot be given an extended meaning to include therein something in addition.
It is also settled that a matter falling within the ambit of clause (1) of either of these two Article is justiciable on the ground of illegality or perversity in spite of the immunity it enjoys to a challenge on the ground of `irregularity of procedures '.
To overcome this result, it was argued that such matter would fall within the ambit of Clause (2) of both Articles 122 and 212 because the consequence of the order of disqualification by the Speaker/Chairman would relate to the conduct of business of the House.
In the first place, the two separate clauses in Articles 122 and 212 clearly imply that the meaning and scope of the two cannot be identical even assuming there be some overlapping area between them.
What is to be seen is the direct impact of the action and its true nature and not the further consequences flowing therefrom.
it cannot be doubted in view of the clear language of sub paragraph (2) of para 6 that it relates to clause (1) of both Articles 122 and 212 and the legal fiction cannot, therefore, be extended beyond the limits 789 of the express words used in the fiction.
In construing the fiction it is not to be extended beyond the language of the Section by which it is created and its meaning must be restricted by the plain words used.
It cannot also be extended by importing another fiction.
The fiction in para 6(2) is a limited one which serves its purpose by confining it to clause (1) alone of Articles 122 and 212 and, therefore,, there is no occasion to enlarge its scope by reading into it words which are not there and extending it also to clause (2) of these Articles.
See Commissioner of Income tax vs Ajax Products Ltd., ; Moreover, it does appear to us that the decision relating to disqualification of a member does not relate to regulating procedure or the conduct of business of the House provided for in clause (2) of Articles 122 and 212 and taking that view would amount to extending the fiction beyond its language and importing another fiction for this purpose which is not permissible.
That being so, the matter falls within the ambit of Clause (1) only of Articles 122 and 212 as a result of which it would be vulnerable on the ground of illegality and perversity and, therefore, justiciable to that extent.
It is, therefore, not possible to uphold the objection of jurisdiction on the finality clause or the legal fiction created in para 6 of the Tenth Schedule when justiciability of the clause is based on a ground of illegality or perversity (see Keshav Singh ; This in our view is the true construction and effect of para 6 of Tenth Schedule.
We shall now deal with para 7 of the Tenth Schedule.
The words in para 7 of the Tenth Schedule are undoubtedly very wide and ordinarily mean that this provision supersedes any other provision in the Constitution.
This is clear from the use of the non obstinate clause `notwithstanding anything in this Constitution ' as the opening words of para 7.
The non obstinate clause followed by the expression `no court shall have any jurisdiction 'leave no doubt that the bar of jurisdiction of courts contained in para 7 is complete excluding also the jurisdiction of the Supreme court under Article 136 and that of the High Courts under Articles 226 and 227 of the Constitution relating to matters covered by para 7.
The question, therefore, is of the scope of para 7.
The scope of para 7 for this purpose is to be determined by the expression `in respect of any matter connected with disqualification of a member of a House under this Schedule '.
790 One of the constructions suggested at the hearing was that this expression covers only the intermediate stage of the proceedings relating to disqualification under para 6 and not the end stage when the final order is made under para 6 on the question of disqualification.
It was suggested that this construction would be in line with the construction made by this Court in its several decisions relating to exclusion of Courts ' jurisdiction in election disputes at the intermediate state under Article 329 of the Constitution.
This construction suggested of para 7 does not commend to us since it is contrary to the clear and unambiguous language of the provision.
The expression `in respect of any matter connected with the disqualification of a member of a House under this Schedule ' is wide enough to include not merely the intermediate stage of the proceedings relating to disqualification but also the final order on the question of disqualification made under para 6 which is undoubtedly such a matter.
There is thus express exclusion of all courts ' jurisdiction even in respect of the final order.
As earlier indicated by virtue of the finality clause and the deeming provision in para 6, there is exclusion of all courts ' jurisdiction to a considerable extent leaving out only the area of justiciability on the ground of illegality or perversity which obviously is relatable only to the final order under para 6.
This being so, enactment of para 7 was necessarily made to bar the jurisdiction of courts also in respect of matters falling outside the purview of the exclusion made by para 6.
para 7 by itself and more so when read along with para 6 of the Tenth Schedule, leaves no doubt that exclusion of all courts ' jurisdiction by para 7 is total leaving no area within the purview, even of the Supreme Court or the High Courts under Articles 136 , 226 and 227.
The language of para 7 being explicit, no other aid to construction is needed.
Moreover, the speech of the Law Minister who piloted the Bill in the Lok Sabha and that of the Prime Minister in the Rajya Sabha as well as the debate on this subject clearly show that these provisions were enacted to keep the entire matter relating to disqualification including the Speakers ' final decision under para 6 on the question of disqualification, wholly outside the purview of of all courts including the Supreme Court and the High Courts.
The legislative history of the absence of such a provision excluding the courts ' jurisdiction in the two earlier Bills which lapsed also re inforces the conclusion that enactment of para 7 was clearly to provide for total ouster of all courts ' jurisdiction.
791 In the face of this clear language, there is no rule of construction which permits the reading of para 7 in any different manner since there is no ambiguity in the language which is capable of only one construction, namely, total exclusion of the Jurisdiction of all courts including that of the Supreme Court and the High Courts under Articles 136, 226 and 227 of the Constitution in respect of every matter connected with the disqualification of a member of a House under the Tenth Schedule including the final decision rendered by the Speaker/Chairman, as the case may be.
Para 7 must, therefore, be read in this manner alone.
The question now is of the effect of enacting such a provision in the Tenth Schedule and the applicability of the proviso to clause (2) of Article 368 of the Constitution.
Point `C ' Applicability of Article 368(2) Proviso The above construction of para 7 of the Tenth Schedule gives rise to the question whether it thereby makes a change in Article 136 which is in Chapter IV of part V and Articles 226 and 227 which are in Chapter V of Part VI of the Constitution.
If the effect of para 7 is to make such a change in these provisions so that the proviso to clause (2) of Article 368 is attracted, then the further question which arises is of the effect on the Tenth Schedule of the absence of ratification by the specified number of State Legislatures, it being admitted that no such ratification of the Bill was made by any of the State Legislatures.
Prima facie it would appear that para 7 does seek to make a change in Articles 136 , 226 and 227 of the Constitution inasmuch as without para 7 in the Tenth Schedule a decision of the Speaker/ Chairman would be amenable to the jurisdiction of the Supreme Court under Article 136 and of the high Courts under Articles 226 and 227 as in the case of decisions as to other disqualifications provided in clauses (1) of Article 102 or 191 by the President/Governor under Article 103 or 192 in accordance with the opinion of the Election Commission which was the Scheme under the two earlier Bills which lapsed.
However, some learned counsel contended placing reliance on Sri Sankari Prasad Singh Deo vs Union of India and State of Bihar, ; and Sajjan Singh vs State of Rajasthan, ; that the effect of such total exclusion of the jurisdiction of the Supreme Court and the High Courts does not make a change in Articles 136, 226 and 227.
A close reading of these decisions indicates that instead 792 of supporting this contention, they do infact negative it.
In Sankari Prasad, the challenge was to Articles 31A and 31B inserted in the Constitution by the Constitution (First Amendment) Act, 1951.
One of the objections was based on absence of ratification under Article 368.
While rejecting this argument, the Constitution Bench held as under: "It will be seen that these Articles do not either in terms or in effect seek to make any change in article 226 or in articles 132 and 136.
Article 31A aims at saving laws providing for the compulsory acquisition by the State of a certain kind of property from the operation of article 13 read with other relevant articles in Part III, while article 31B purports to validate certain specified Acts and Regulations already passed, which, but for such a provision, would be liable to be impugned under article 13.
It is not correct to say that the powers of the High Court under article 226 to issue writs "for the enforcement of any of the rights conferred by Part III" or of this Court under articles 132 and 136 to entertain appeals from orders issuing or refusing such writs are in any way affected.
They remain just the same as they were before : only a certain class of case has been excluded from the purview of Part III and the courts could no longer interfere, not because their powers were curtailed in any manner or to any extend, but because there would be no occasion hereafter for the exercise of their powers in such cases.
" [emphasis supplied] The test applied was whether the impugned provisions inserted by the Constitutional Amendment did `either in terms or in effect seek to make any change in Article 226 or in Articles 132 and 136 '.
Thus the change may be either in terms i.e. explicit or in effect in these Articles to require ratification.
The ground for rejection of the argument therein was that the remedy in the courts remained unimpaired and unaffected by the change and the change was really by extinction of the right to seek the remedy.
In other words, the change was in the right and not the remedy of approaching the court since there was no occasion to invoke the remedy, the right itself being taken away.
To the same effect is the decision in Sajjan Singh, wherein Sankari Prasad was followed stating clearly that there was 793 no justification for reconsidering Sankari Prasad.
Distinction has to be drawn between the abridgement or extinction of a right and restriction of the remedy for enforcement of the right.
If there is an abridgement or extinction of the right which results in the disappearance of the cause of action which enables invoking the remedy and in the absence of which there is no occasion to make a grievance and invoke the subsisting remedy, then the change brought about is in the right and not the remedy.
To this situation, Sankari Prasad and Sajjan Singh apply.
On the other hand, if the right remains untouched so that a grievance based thereon can arise and, therefore, the cause of action subsists, but the remedy is curtailed or extinguished so that the cause of action cannot be enforced for want of that remedy, then the change made is in the remedy and not in the subsisting right.
To this latter category, Sankari Prasad and Sajjan Singh have no application.
This is clear from the above quoted passage in Sankari Prasad which clearly brings out this distinction between a change in the right and a change in the remedy.
The present case, in unequivocal terms, is that of destroying the remedy by enacting para 7 in the Tenth Schedule making a total exclusion of judicial review including that by the Supreme Court under Article 136 and the High Courts under Articles 226 and 227 of the Constitution.
But for para 7 which deals with the remedy and not the right, the jurisdiction of the Supreme Court under Article 136 and that of the High Courts under Articles 226 and 227 would remain unimpaired to challenge the decision under para 6, as in the case of decisions relating to other disqualifications specified in clause (1) of Articles 102 and 191, which remedy continues to subsist.
Thus, this extinction of the remedy alone without curtailing the right, since the question of disqualification of a member on the ground of defection under the Tenth Schedule does required adjudication on enacted principles, results in making a change in Article 136 in Chapter IV in Part V and Articles 226 and 227 in Chapter V in Part VI of the Constitution.
On this conclusion, it is undisputed that the proviso to clause (2) of Article 368 is attracted requiring ratification by the specified number of State Legislatures before presentation of the Bill seeking to make the constitutional amendment to the President for his assent.
Point `D ' Effect of absence of ratification 794 The material part of Article 368 is as under : "368.
Power of Parliament to amend the Constitution and Procedure therefore.
(1) Notwithstanding anything in this Constitution, Parliament may in exercise of its constituent Power amend by way of addition, variation or repeal any provision of this Constitution in accordance with the procedure laid down in this article.
(2) An amendment of this Constitution may be initiated only by the introduction of a Bill, for the purpose in either House of parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two thirds of the members of that House present and voting, it shall be presented to the President who shall give his assent to the Bill and thereupon the Constitution shall stand amended in accordance with the terms of the Bill : Provided that if such amendment seeks to make any change in (a) Article 54, Article 55, Article 73, Article 162 or Article 241, or (b) Chapter IV of Part V, Chapter V of Part VI, or Chapter I of Part XI, or (c) any of the Lists in the Seventh Schedule, or (d) the representation of States in Parliament, or (e) the provisions of this article, the amendment shall also require to be ratified by the Legislature of not less than one half of the States by resolutions to that effect passed by those legislatures before the Bill making provision for such amendment is presented to the President for assent." (emphasis supplied) it is clause (2) with its proviso which is material.
The main part of clause (2) prescribes that a constitutional amendment can be initiated only by the introduction of a Bill for the purpose and when the Bill is passed 795 by each House by a majority of the total membership of that House and by a majority of not less than tow thirds of the members of that House present and voting, it shall be presented to the President who shall give his assent to the Bill and thereupon the Constitution shall stand amended in accordance with the terms of the Bill.
In short, the Bill not being passed by the required majority is presented to the President for his assent to the Bill and on giving of the assent, the Constitution stands amended accordingly.
Then comes, the proviso which says that `if such an amendment seeks to make any change ' in the specified provisions of the Constitution, the amendment shall also require to be ratified by the Legislature of not less than one half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent.
In other words, the proviso contains a constitutional limitation on the amending power; and prescribes as a part of the special procedure, prior assent of the State legislatures before Presentation of the Bill to the President for his assent in the case of such Bills.
This is a condition interposed by the proviso in between the passing of the Bill by the requisite majority in each House and presentation of the Bill to the President for his assent, which assent results in the Constitution automatically standing amended in accordance with terms of the Bill.
Thus, the Bills governed by the proviso cannot be presented to the President for his assent without the prior ratification by the specified number of State Legislatures or in other words, such ratification is a part of the special procedure or a condition precedent to presentation of the Bill governed by the proviso to the President for his assent.
It logically follows that the consequence of the Constitution standing amended in accordance with the terms of the Bill on assent by the President, which is the substantive part of Article 368, results only when the Bill has been presented to the President for his assent in conformity with the special procedure after performance of the conditions precedent, namely, passing of the Bill by each House by the requisite majority in the case of all Bills; and in the case of Bills governed by the proviso, after the Bill has been passed by the requisite majority in each House and it has also been ratified by the legislature of not less than one half of the States.
The constituent power for amending the Constitution conferred by Article 368 also prescribes the mandatory procedure in clause (2) including its proviso, for its exercise.
The constituent power cannot, therefore, be exercised in any other manner and non compliance of the special procedure 796 so prescribed in Article 368 (2) cannot bring about the result of the Constitution standing amended in accordance with the terms of the Bill since that result ensues only at the end of the prescribed mandatory procedure and not otherwise.
The substantive part of Article 368 which provides for the resultant amendment is the consequence of strict compliance of the mandatory special procedure prescribed for exercise of the constituent power and that result does not ensue except in the manner prescribed.
The true nature and import of the amending power and procedure under Article 368 as distinguished from the ordinary legislative procedure was indicated in Kesavananda Bhartim[1973] Supp.
SCR 1 at pp.
561, 563 & 565 : ".
Under Article 368 However, a different and special procedure is provided for amending the constitution.
A Bill has to be introduced in either House of Parliament and must be passed by each House separately by a special majority.
It should be passed not only by 2/3rds majority of the members present and voting but also by a majority of the total strength of the House.
No joint sitting of the two Houses is permissible.
In the case of certain provisions of the Constitution which directly or indirectly affect interstate relations, the proposed amendment is required to be ratified by the Legislatures which is not a legislative process of not less than one half of the States before the Bill proposing the amendment is presented to the President for his assent.
The procedure is special in the sense that it is different and more exacting or restrictive than the one by which ordinary laws are made by Parliament.
Secondly in certain matters the State Legislatures are involved in the process of making the amendment.
Such partnership between the Parliament and the State Legislatures in making their own laws by the ordinary procedure is not recognised by the Constitution.
It follows from the special provision made in Article 368 for the amendment of the Constitution that our Constitution is a `rigid ' or `controlled 'constitution because the Constituent Assembly has "left a special direction as to how the constitution is to be changed.
In view of Article 368, when the special procedure is successfully followed, the proposed amendment automatically becomes a part of the 797 constitution or, in other words, it writes itself into the constitution." XXX XXX XXX ".
But when it comes to the amendment of the Constitution, a special procedure has been prescribed in Article 368, Since the result of following the special procedure under the Article is the amendment of the constitution the process which brings about the result is known as the exercise of constituent power by the bodies associated in the task of the amending the constitution.
It is, therefore, obvious, that when the Parliament and the State Legislatures function in accordance with Article 368 with a view to amend the constitution, they exercise constituent power as distinct from their ordinary legislative power under Articles 245 to 248.
Article 368 is not entirely procedural.
Undoubtedly part of it is procedural.
But there is a clear mandate that on the procedure being followed the `proposed amendment shall become part of the constitution, which is the substantive part of Article 368.
Therefore, the peculiar or special power to amend the constitution is to be sought in Article 368 only and not elsewhere." XXX XXX XXX ".
The true position is that the alchemy of the special procedure prescribed in Article 368 produces the constituent power which transport the proposed amendment into the constitution and gives it equal status with the other parts of the constitution." (emphasis supplied) Apart from the unequivocal language of clause (2) including the proviso therein indicating the above result of prior ratification being a part of the special procedure or condition precedent for valid assent of the President, the same result is reached even by another route.
The ordinary role of a proviso is to carve out an exception from the general rule in the main enacting part.
The main enacting part of clause (2) lays down that on a Bill for a constitutional amendment being passed in each House by a requisite majority, it shall be presented to the President for his assent and on the assent being given , the Constitution shall stand amended in accordance 798 with the terms of the Bill.
The proviso then carves out the exception in case of Bills seeking to make any change in the specified Articles of the Constitution prescribing that in the case of those Bills, prior ratification by the Legislatures of not less than one half of the States is also required before the Bill is presented to the President for assent.
This means that a Bill falling within the ambit of the proviso is carved out of the main enactment in clause (2) as an exception on account of which it cannot result in amendment of the Constitution on the President 's assent without prior ratification by the specified number of State Legislatures.
The proviso in clause (2) is enacted for and performs the function of a true proviso by qualifying the generality of the main enactment in clause (2) in providing an exception and taking out of the main enactment in clause (2) such Bills which but for the proviso would fall within the main part.
Not only the language of the main enactment in clause (2) and the proviso thereunder is unequivocal to give this clear indication but the true role of a proviso, the form in which the requirement of prior ratification if such a Bill by the State Legislatures is enacted in Article 368 lend further assurance that this is the only construction of clause (2) with its proviso which can be legitimately made.
If this be the correct constructions of Article 368 (2) with the proviso as we think it is, then there is no escape from the logical conclusion that a Bill to which the proviso applies does not result in amending the Constitution in accordance with its terms on assent of the President if it was presented to the President for his assent and the President gave his assent to the Bill without prior ratification by the specified number of the State Legislatures.
This is the situation in the present case.
Thus the requirement of prior ratification by the State Legislatures is not only a condition precedent forming part of the special mandatory procedure for exercise of the constituent power and a constitutional limitation thereon but also a requirement carving out an exception to the general rule of automatic amendment of the Constitution on the President 's assent to the Bill.
In other words, clause (2) with the proviso therein itself lays down that President 's assent does not result in automatic amendment of the Constitution in case of such a Bill it was not duly ratified before presentation to the President for his assent.
Nothing more is needed to show that not only para 7 of the Tenth Schedule but the entire Constitution (Fifty 799 Second Amendment) Act, 1985 is still born or an abortive attempt to amend the Constitution for want of prior ratification by the State Legislatures of the Bill before its presentation to the President for his assent.
The result achieved in each case is the same irrespective of the route taken.
If the route chosen is for construing the language of clause (2) with the proviso merely a part of it, the requirement or prior ratification is a condition precedent forming part of the special mandatory procedure providing that the constituent power in case of such a Bill can be exercised in this manner alone, the mode prescribed for other Bills being forbidden.
If the route taken is of treating the proviso as carving out an exception from the general rule which is the normal role of a proviso, then the result is that the consequence of the Constitution standing amended in terms of the provisions of the Bill on the President 's assent as laid down in the main part of clause (2) does not ensue without prior ratification in case of a Bill to which the proviso applies.
There can thus be no doubt that para 7 of the Tenth Schedule which seeks to make a change in Article 136 which is a part of Chapter IV of Part V and Articles 226 and 227 which form part of Chapter V of Part VI of the Constitution, has not been enacted by incorporation in a Bill seeking to make the constitutional Amendment in the manner prescribed by clause (2) read with the proviso therein of Article 368.
Para 7 of the Tenth Schedule is, therefore, unconstitutional and to that extent at least the Constitution does not stand amended in accordance with the Bill seeking to make the Constitutional Amendment.
The further question now is: its effect on the validity of the remaining part of the Tenth Schedule and consequently the Constitution (Fifty Second Amendment) Act, 1985 itself.
Point `E ' Severability of para 7 of Tenth Schedule The effect of absence of ratification indicated above suggests inapplicability of the Doctrine of Severability.
In our opinion, it is not para 7 alone but the entire Tenth Schedule may the Constitution (Fifty Second Amendment) Act, 1985 itself which is rendered unconstitutional being an abortive attempt to so amend the Constitution.
It is the entire Bill and not merely rely para 7 of the Tenth Schedule therein which required prior ratification by the State Legislatures before its presentation to the President for his assent, it being a joint exercise by the Parliament and State Legislatures.
The stage for presentation of Bill to the President for his assent not having 800 reached, the President 's assent was non est and it could not be result in amendment of the Constitution in accordance with the terms of the Bill for the reasons given earlier.
Severance of para 7 of the Tenth Schedule could not be made for the purpose of ratification or the President 's assent and, therefore, no such severance can be made even for the ensuing result.
If the President 's assent cannot validate para 7 in the absence of prior ratification, the same assent cannot be accepted to bring about a difference result with regard to the remaining part of the Bill.
On this view, the question of applying the Doctrine of Severability to strike down para 7 alone retaining the remaining part of Tenth Schedule does not arise since it presupposes that the Constitution stood so amended on the President 's assent.
The Doctrine does not apply to a still born legislation.
The Doctrine of Severability applies in a case where an otherwise validly enacted legislation contains a provision suffering from a defect of lack of legislative competence and the invalid provision is severable leaving the remaining valid provisions a valid provisions a viable whole.
This doctrine has no application where the legislation is not validly enacted due to non compliance of the mandatory legislative procedure such as the mandatory special procedure prescribed for exercise of the constituent power.
It is not possible to infuse life in a still born by any miracle of deft surgery even though it may be possible to continue life by removing a Congenitally defective part by surgical skill.
Even the highest degree of surgical skill can help only to continue life but it cannot infuse life in the case of still birth.
With respect, the contrary view does not give due weight to the effect of a condition precedent forming part of the special procedure and the role of a proviso and results in rewriting the proviso to mean that ratification is not a condition precedent but merely an additional requirement of such a Bill to make that part effective.
This also fouls with the expression `Constitution shall stand amended. . ' on the assent of President which is after the stage when the amendment has been made and ratified by the State Legislatures as provided.
The historical background of drafting the proviso also indicates the significance attached to prior ratification as a condition precedent for valid exercise of the constituent power.
We are unable to read the Privy Council decision in The Bribery Commissioner V. Pedrick Ranasinghe ; as an authority to 801 support applicability of the Doctrine of Severability in the Present case.
In Kesavananda Bharati, the substance of that decision was indicated by Mathew, J., at p. 778 of S.C.R., thus: ". that though Ceylon Parliament has plenary power of ordinary legislation, in the exercise of its constitution power it was subject to the special procedure laid down in s, 29 (4). ." While section 29(4) of Ceylon (Constitution) Order was entirely procedural with no substantive part therein, Article 368 of the Indian Constitution has also a substantive part as pointed out in Kesavananda Bharati.
This distinction also has to be borne in mind.
The challenge in Ranasinghe was only to the legality of a conviction made under the Bribery Act, 1954 as amended by the Bribery Amendment Act, 1958 on the ground that the Tribunal which had made the conviction was constituted under section 41 of the Amending Act which was invalid being in conflict with section 55 of the Constitution and not being enacted by exercise of constituent power in accordance with section 29(4) of the Ceylon (Constitution) Order.
Supreme Court of Ceylon quashed the conviction holding section 41 of the Amending Act to be invalid for this reason.
The Privy Council affirmed that view and in this context held that section 41 could be severed from rest of the Amending Act.
Ranasinghe was not a case of a Bill passed in exercise of the constituent power without following the special procedure of section 29(4) but of a Bill passed in exercise of the ordinary legislative power containing other provisions which could be so enacted, and including therein section 41 which could be made only in accordance with the special procedure of section 29(4) of the Constitution.
The Privy Council made a clear distinction between legislative and constituent powers and reiterated the principles thus: ".
The effect of section 5 of the Colonial Laws Validity Act, which is framed in a manner somewhat similar to section 29(4) of the Ceylon Constitution was that where a legislative power is given subject to certain manner and form, that power does not exist unless and until the manner and form is complied with Lord Sankey L.C. said : "A Bill, within the scope of sub section (6) of section 7A, which received the Royal Assent without having been approved by 802 the electors in accordance with that section, would not be a valid act of the legislature.
It would be ultra vires section 5 of the Act of 1865.
" The Bribery Amendment Act, 1958, in Ranasinghe, was enacted in exercise of the ordinary legislative power and therein was inserted section 41 which could be made only in exercise of the constituent power according to the special procedure prescribed in section 29(4) of the Ceylon (Constitutions) Order.
In this situation, only section 41 of the Amending Act was held to be invalid and severed because the special procedure for the constituent power was required only for that provision and not the rest.
In the instant case the entire Tenth Schedule is enacted in exercise of the Constituent power under Article 368, not merely para 7 therein, and this has been done without following the mandatory special procedure prescribed.
It is, therefore, not a case of severing the invalid constituent part from the remaining ordinary legislation.
Ranasinghe could have application if in an ordinary legislation outside the ambit of Article 368, a provision which could be made only in exercise of the constituent power according to Article 368 had been inserted without following the special procedure, and severance of the invalid constituent part alone was the question.
Ranasinghe is, therefore, distinguishable.
Apart from inapplicability of the Doctrine of Severability to a Bill to which the proviso to clause (2) of Article 368 applies, for the reasons given, it does not apply in the present case to strike down para 7 alone retaining the remaining part of the Tenth Schedule.
In the first place, the discipline for exercise of the constituent power was consciously and deliberately adopted instead of resorting to the mode of ordinary legislation in accordance with sub clause (e) of clause (1) of Articles 102 and 191, which would render the decision on the question of disqualification on the ground of defection also amenable to judicial review as in the case of decision on questions relating to other disqualifications.
Moreover, even the test applicable for applying the Doctrine of Severability to ordinary legislation as summarised in R.M.D. Chamarbaughwalla vs The Union of India, ; , indicates that para 7 alone is not severable to permit retention of the remaining part of the Tenth Schedule as valid legislation.
The settled test whether the enactment would have been made without para 7 indicates that the legislative intent was to make the enactment only with para 7 therein and not without it.
This intention is manifest throughout and 803 evident from the fact that but for para 7 the enactment did not require the discipline of Article 368 and exercise of the constituent power.
Para 7 follows para 6 the contents of which indicate the importance given to para 7 while enacting the Tenth Schedule.
The entire exercise, as reiterated time and again in the debates, particularly the Speech of the Law Minister while piloting the Bill in the Lok Sabha and that of the Prime Minister in the Rajya Sabha, was to emphasise that total exclusion of judicial review of the Speaker 's decision by all courts including the Supreme Court, was the prime object of enacting the Tenth Schedule.
The entire legislative history shows this.
How can the Doctrine of Severability be applied in such a situation to retain the Tenth Schedule striking down para 7 alone ? This is further reason for inapplicability of this doctrine.
Point `F ' Violation of basic features The provisions in the Tenth Schedule minus para 7, assuming para 7 to be severable as held in the majority opinion, can be sustained only if they do not violate the basic structure of the Constitution or damage any of its basic features.
This is settled by Kesavananda Bharti [1973] Supp.
S.C.R. 1.
The question, therefore, is whether there is violation of any of the basic features of the Constitution by the remaining part of the Tenth Schedule, even assuming the absence of ratification in accordance with the proviso to clause (2) of Article 368 results in invalidation of para 7 alone.
Democracy is a part of the basic structure of our Constitution; and rule of law, and free and fair elections are basic features of democracy.
One of the Postulates of free and fair elections is provision for resolution of election disputes as also adjudication of disputes relating to subsequent disqualifications by an independent authority.
It is only by a fair adjudication of such disputes relating to validity of electrons and subsequent disqualifications of members that true reflection of the electoral mandate and governance by rule of law essential for democracy can be ensured.
In the democratic pattern adopted in our Constitution, not only the resolution of election dispute is entrusted to a judicial tribunal, but even the decision on questions as to disqualification of members under Articles 103 and 192 is by the President/Governor in accordance with the opinion of the Election Commission.
The constitutional scheme, therefore, for decision on questions as to disqualification of members after being duly elected, contemplates adjudication of such disputes by an independent authority out 804 side the House, namely, President/Governor in accordance with the opinion of the Election Commission, all of whom are high constitutional functionaries with security of tenure independent of the will of the House.
Sub clause (e) of clause (1) in Articles 102 and 191 which provides for enactment of any law by the Parliament to prescribe any disqualification other than those prescribed in the earlier sub clauses of clause (1), clearly indicates that all disqualifications of members were contemplated within the scope of Articles 102 and 191.
Accordingly, all disqualifications including disqualification on the ground of defection, in our constitutional scheme, are different species of the same genus, namely, disqualification, and the constitutional scheme does not contemplate any difference in their basic traits and treatment.
It is undisputed that the disqualification on the ground of defection could as well have been prescribed by an ordinary law made by the Parliament under Articles 102 (1) (e) and 191 (1) (e) instead of by resort to the constituent power of enacting the Tenth Schedule.
This itself indicates that all disqualifications of members according to the constitutional scheme were meant to be decided by an independent authority outside the House such as the President/Governor, in accordance with the opinion of another similar independent constitutional functionary,, the Election Commission of India, who enjoys the security of tenure of tenure of a Supreme Court judge with the same terms and conditions of office.
Thus, for the purpose of entrusting the decision of the question of disqualification of a member, the constitutional scheme envisages an independent authority outside the House and not within it, which may be dependent on the pleasure of the Majority in the House for its tenure.
The Speaker 's office is undoubtedly high and has considerable aura with the attribute of impartiality.
This aura of the office was even greater when the Constitution was framed and yet the farmers of the Constitution did not choose to vest the authority of adjudicating disputes as to disqualification of members to the Speaker; and provision was made in Articles 103 and 192 for decision of such disputes by the President/Governor in accordance with the opinion of the Election Commission.
To reason is not far to seek.
The Speaker being an authority within the House and his tenure being dependent on the will of the majority therein, likelihood of suspicion of bias could not be ruled out.
The question as to disqualification of a member has adjudicatory disposition and, therefore, requires the decision 805 to be rendered in consonance with the scheme for adjudication of disputes.
Rule of law has in it firmly entrenched, natural justice, of which, rule against Bias is a necessary concomitant; and basic postulates of Rule against Bias are; Nemo judex in causa sua `A Judge is disqualified from determining any case in which he may be, or may fairly be suspected to be, biased '; and `it is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done. ' This appears to be the underlying principle adopted by the framers of the Constitution in not designating the Speaker as the authority to decide election disputes and questions as to disqualification of members under Articles 103, 192 and 329 and opting for an independent authority outside the House.
The framers of the Constitution had in this manner kept the office of the Speaker away from this controversy.
There is nothing unusual in this scheme if we bear in mind that the final authority for removal of a Judge of the Supreme Court and High Court its outside the judiciary in the Parliament under Article 124(4).
On the same principle the authority to decide the question of disqualification of a member of legislature is outside the House as envisaged by Articles 103 and 192.
In the Tenth Schedule, the Speaker is made not only the sole but the final arbiter of such dispute with no provision for any appeal or revision against the Speaker 's decision to any independent outside authority.
This departure in the Tenth Schedule is a reverse trend and violates a basic feature of the Constitution since the speaker cannot be treated as an authority contemplated for being entrusted with this function by the basic postulates of the Constitution, notwithstanding the great dignity attaching to that office with the attribute of impartiality.
It is the Vice President of India who is ex officio chairman of the Rajya Sabha and his position, being akin to that of the President of India, is different from that of the Speaker.
Nothing said herein relating to the office of the Speaker applies to the Chairman of the Rajya Sabha, that is, the Vice President of India.
However, the only authority named for the Lok Sabha and the Legislative Assemblies is the Speaker of the House and entrustment of this adjudicatory function fouls with the constitutional scheme and, therefore, violates a basic feature of the Constitution.
Remaining part of the Tenth Schedule also is rendered invalid notwithstanding the fact that this defect would not apply to the Rajya Sabha alone whose Chairman is the Vice President of India, since the Tenth Schedule becomes 806 unworkable for the Lok Sabha and the State Legislatures.
The Statutory exception of Doctrine of Necessity has no application since designation of authority in the Tenth Schedule is made by choice while enacting the legislation instead of adopting the other available options.
Since the conferment of authority is on the Speaker and that provision cannot be sustained for the reason given, even without para 7, the entire Tenth Schedule is rendered invalid in the absence of any valid authority for decision of the dispute.
Thus, even if the entire Tenth Schedule cannot be held unconstitutional merely on the ground of absence of ratification of the Bill, assuming it is permissible to strike down para 7 alone, the remaining part of the Tenth Schedule is rendered unconstitutional also on account of violation of the aforesaid basic feature.
Irrespective of the view on the question of effect of absence of ratification, the entire Tenth Schedule must be struck down as unconstitutionally.
Point `G ' Other contentions We have reached the conclusion that para 7 of the Tenth Schedule is unconstitutional; that the entire Tenth Schedule is constitutionally invalid in the absence of prior ratification in accordance with the proviso to clause (2) of Article 368; that the Doctrine of Severability does not apply in the present case of a constitutional amendment which suffers from the defect of absence of ratification as required by the proviso to clause (2) of Article 368; that the remaining part of the Tenth Schedule minus para 7 is also unconstitutional for violation of a basic feature of the Constitution; and that the entire Tenth Schedule is, therefore, constitutionally invalid rendering the Constitution (Fifty Second Amendment) Act, 1985 still born and an abortive attempt to amend the constitution.
In view of this conclusion, it is not necessary for us to express our concluded opinion on the other grounds of challenge to the constitutional validity of the entire Tenth Schedule urged at the hearing on the basis of alleged violation of certain other basic features of the Constitution including the right of members based on Article 105 of the Constitution.
These are our detailed reasons for the operative conclusions pronounced by us earlier on November 12, 1991.
| By the Constitution (Fifty Second Amendment) Act, 1985 (popularly known as the Anti defection law) the Tenth Schedule was inserted in the constitution of India providing for disqualification of a Member of either House of Parliament or of a State Legislature found to have defected from continuing as a Member of the House.
Paragraph 2 of the Tenth Schedule states that a Member of a House would incur disqualification if he voluntarily gives up his membership of the party by which he was set up as a candidate at the election, or if he without obtaining prior permission of the political party to which he belongs votes or abstains from voting in the House contrary to "any direction" issued by such political party and such voting or abstention has not been condoned by such political party within 15 days from the date of such voting or abstention; or if a Member elected otherwise than as a candidate set up by any political party joins a political party after the 688 election; or, if a nominated Member joins any political party after expiry of six months from the date he took his seat.
Paragraph 6(1) states that the question of disqualification shall be referred for decision of the chairmen/Speaker of the House and his decision shall be final.
It further provides that such question in respect of Chairman/Speaker shall be referred for decision of such Member of the House as the House may elect in this behalf.
according to Paragraph 6(2) all proceedings under para 6(1) shall be deemed to be proceedings in Parliament/Legislature of a House within the meaning of Article 122/212.
Paragraph 7 states that no court shall have jurisdiction in respect of any matter connected with the disqualification of a Member of a House.
A large number of petitions were filed before various High Courts as well as this Court challenging the constitutionality of the Amendment.
This Court transferred to itself the petitions pending before the High Courts and heard all the matters together.
The challenge was mainly on the grounds that Paragraph 7 of the Tenth Schedule, in terms and ineffect sought to make a change in chapter IV of Part V and Chapter V of Part VI of the Constitution as it takes away the jurisdiction of the Supreme court under Article 136 and that of the High Courts under Articles 226 and 227 of the constitution, and,therefore,the Bill before presentation to the President for assent would require to be ratified by the legislatures of not less than one half of the States by resolution to that effect as envisaged by the proviso to Article 368(2); that in the absence of such a ratification the whole Amendment Bill was an abortive attempt to bring about the amendment indicated therein; that even assuming that the amendment does not attract the proviso to Article 368(2), Paragraph 7 of the Schedule is liable to be struck down as it takes away the power of judicial review; that the very concept of disqualification for defection is violative of the fundamental values and principles under lying parliamentary democracy and violates an elective representative 's freedom of speech, right to dissent and freedom of conscience and is destructive of a basic feature of the Constitution; that the investiture of power to adjudicate disputed defections in the Chairmen/Speakers, who being nominees of political parties are not obliged to resign their party affiliations, does not stand the test of an independent and impartial adjudicatory machinery and is, therefore, violative of the basic feature of 689 the constitution.
It was also contended that the expression "any direction" in Paragraph 2(1)(b) of the Schedule might be unduly restrictive of the freedom of speech, and the right of dissent which may itself be obnoxious to and violative of constitutional ideals and values.
The respondents contended that the Tenth Schedule created a nonjusticiable constitutional area dealing with certain complex political issues which have no strict adjudicatory disposition and the exclusion of this area is constitutionally preserved by imparting a finality to the decision of the Speakers/Chairmen by deeming whole proceedings as those within Parliament/House of legislature envisaged in Articles 122 and 212 and further excluding the Court 's Jurisdiction under Paragraph 7; that no question of ouster of judicial review would at all arise inasmuch as the Speaker/chairman exercising power under Paragraph 6(1) of the Tenth Schedule function not as a statutory tribunal but as a part of state 's Legislative department; and that having regard to the political issues, the subject matter is itself not amenable to judicial power but pertains to the constitution of the House and the legislature is entitled to deal with it exclusively.
The Court on 12.11.1991 gave its operative conclusions, indicating reasons to follow and by its judgment dated 18.2.1992 gave the reasons.
On the questions whether: (1) the Tenth Schedule to the constitution inserted by the constitution (Fifty Second Amendment) Act, 1985, seeking to penalise and disqualify elected representatives is violative of the fundamental principles of Parliamentary democracy and is, therefor, destructive of the basic feature of the Constitution; (2) Paragraph 7 of the Tenth Schedule in terms and in effect brings about a change in operation and effect of Articles 136,226 and 227 of the Constitution and, therefore, the Bill introducing the amendment would require ratification as envisaged by the proviso to Article 368(2); (3) the non compliance with the proviso to Article 368(2) would render the entire Bill vitiated and an abortive attempt to bring about a valid amendment or would Paragraph 7 alone be invalidated with the application of the doctrine of severability; (4) the Tenth Schedule created a new and non justiciable constitutional area not amenable to curial adjudicative process; and whether Paragraph 6(1) in imparting a constitutional `finality 'to the decisions of Chairmen/Speakers, and paragraph 6(2) in the event of attracting immunity under Articles 122 690 and 212, bar judicial review; (5) the Chairmen/Speakers satisfy the requirements of an independent adjudicatory machinery or whether the investiture of the determinative and adjudicative jurisdiction in them under the Tenth Schedule would vitiate the provision on the ground of reasonable likelihood of bias.
Dismissing Writ Petition No.17 of 1991 and remitting Writ Petition Rule No.2421 of 1990 (subject matter of TP No. 40/91) to the High Court of Guwahati, this Court HELD: (By the Court) (i) Paragraph 7 of the Tenth Schedule to the Constitution in terms and in effect excludes the jurisdiction of all Courts including the Supreme Court and High courts, and brings about a change in the operation and effect of Articles 136, 226 and 227 of the constitution of India, and therefore, the amendment would require ratification in accordance with the proviso to Articles 368(2) of the constitution of India.
[pp. 711F G;714G] (ii) The finality clause in Para 6(1) of the Tenth Schedule to the Constitution is not decisive.
Such finality,being for the statute alone, does not exclude extraordinary jurisdiction of the Supreme Court under Article 136 and of the High Courts under Articles 226 and 227 of the Constitution.
[713E F; 788B C] (iii) The legal fiction in para 6(2) of the Tenth Schedule brings a proceeding under para 6(1) within the ambit of clause (1) of Article 122/212 of the Constitution, and, therefore, makes it justiciable on the ground of illegality or perversity inspite of the immunity it enjoys to a challenge on the ground of "irregularity of procedure." [713G; 788E F] Per Majority (M.N. Venkatachaliah.
K. Jayachandra Reddy (i) Paragraph 7 of the Tenth Schedule contains a provision which is independent of, and stands apart from, the main provisions of the Tenth Schedule which are intended to provide a remedy for the evil of unprincipled and unethical political defection and, therefore, is a severable part.
The remaining provisions of the Tenth Schedule can and do stand independently of Paragraph 7 and are complete in themselves workable and are not truncated by the excision of Paragraph 7.
[p.712E F] 691 (ii) There is nothing in the proviso to Article 368(2) which detracts from the severability of a provision on account of the inclusion of which the Bill containing the amendment requires ratification from the rest of the provisions of such Bill which do not attract and require such ratification.
Having regard to the mandatory language of Article 368(2) that "thereupon the Constitution shall stand amended" the operation of the proviso should not be extended to constitutional amendments in a bill which can stand by themselves without such ratification.
[711G H; 712 A B] (iii) The Constitution (Fifty Second Amendment) Act, 1985 in so far as it seeks to introduce the Tenth Schedule in the Constitution of India, to the extent of its provision which are amenable to the legal sovereign of the amending process of the Union Parliament cannot be over borne by the proviso to Article 368(2) which cannot operate in that area.
[712B C] (iv) Paragraph 2 of the Tenth schedule to the constitution is valid.
Its provisions do not suffer from the vice of subverting democratic rights of elected Members of Parliament and the legislatures of the States.
It does not violate their freedom of speech, freedom of vote and conscience; nor does it violate any rights or freedom under Article 105 and 194 of the Constitution.
[712F H] The provisions are salutory and are intended to strengthen the fabric of Indian Parliamentary democracy by curbing unprincipled and unethical political defections.
[712H, 713A] (v) The Tenth Schedule does not, in providing for an additional ground for disqualification and for adjudication of disputed disqualifications, seek to create a non justiciable constitutional area.
[p. 769A B] (vi) The Speakers/Chairmen while functioning under the Tenth Schedule exercise judicial power and act as Tribunal adjudicating rights and obligations under the Tenth schedule, and their decisions in that capacity are amenable to judicial review.
[713C] (vii) Paragraph 6(1) of the Tenth Schedule, to the extent it seeks to impart finality to the decision of the Speakers/Chairman is valid.
But the concept of statutory finality embodied therein does not detract from or abrogate judicial review under Articles 136, 226 and 227 of the Constitution in so far as infirmities based on violations of constitutional mandates, 692 male fides, non compliance with Rules of Natural Justice and perversity are concerned.
[713E F] (viii) The deeming provision in Paragraph 6(2) of the Tenth Schedule attracts an immunity analogous to that in Article 122(1) and 212(1) of the constitution to protect the validity of proceedings from mere irregularities of procedure and confines the scope of the fiction accordingly.
[713G H, 714A] Spl.
No.1 of 1964 (Keshav Singh 's case) ; ,referred to.
(ix) Having regard to the constitutional scheme in the Tenth Schedule,judicial review should not cover any stage prior to the making of a decision by the Speakers/Chairmen; and no quia timet actions are permissible, the only exception for any interlocutory interference being cases of interlocutory disqualifications or suspensions which may have grave, immediate and irreversible repercussions and consequence.
[713D E] (x) The Speakers/Chairmen hold a pivotal position in the scheme of Parliamentary democracy and are guardians of the rights and privileges of the House.
They are expected to and do take far reaching decisions in the Parliamentary democracy.
Vestiture of power to adjudicate questions under the Tenth Schedule in them should not be considered exceptionable.
[714B C] Per Lalit Mohan Sharma and J.S. Verma, JJ. contra (i) Without ratification, as required by the mandatory special provision prescribed in the proviso to Article 368(2) of the Constitution the stage of presenting the Constitution (Fifty Second) Amendment Bill for assent of the President did not reach and, therefore, the so called assent of the President was non est.[715B C] (ii) In the absence of ratification it is not merely paragraph 7 but the entire Constitution (Fifty Second Amendment) Act, 1985 which is rendered unconstitutional, since the constitutional power was not exercised as prescribed in Article 368, and, therefore, the Constitution did not stand amended in accordance with the terms of the Bill providing for amendment.
[715D E] 693 (iii) Doctrine of severability cannot be applied to a Bill making a constitutional amendment where any part thereof attracts the proviso to clause (2) of Article 368.
[715F] (iv) Doctrine of severability is not applicable to permit striking down para 7 alone saving the remaining provisions of the Bill making the Constitutional Amendment on the ground that Para 7 alone attracts the proviso the Article 368(2).
[715G] (v) The Speaker 's decision disqualifying a Member of a House under paragraph 6(1) of the Tenth Schedule is not immune from judicial scrutiny.
It is a nullity liable to be so declared and ignored.
[782G] (vi) An independent adjudicatory machinery for resolving disputes relating to the competence of Members of the House is envisaged as an attribute of the democratic system which is a basic feature of our Constitution.
The tenure of the Speaker, who is the authority in the Tenth schedule to decide this dispute, is dependent on the continuous support of the majority in the House and, therefore, he does not satisfy the requirement of such an independent adjudicatory authority; and his choice as the sole arbiter in the matter violates an essential attribute of the basic feature.
[716B C] (vii) Consequently, the entire Constitution (Fifty Second Amendment) Act, 1985 which inserted the Tenth Schedule together with clause (2) in Articles 102 and 191, must be declared unconstitutional.
[716C D] (viii) Accordingly, all decisions rendered by several Speakers under the Tenth Schedule must also be declared nullity and liable to be ignored.
[p.716D] Per Venkatachaliah : J.1.1.A constitutional document outlines only broad and general principles meant to endure and be capable of flexible application to changing circumstances a distinction which differentiates a statute from a Charter under which all statutes are made.
[726G H] Cooley on "Constitutional Limitation" 8th Edn.
I p.129, referred to. 1.2.
In considering the validity of a constitutional amendment the changing and the changed circumstances that compelled the amendment 694 are important criteria.
[727B] U.S.Supreme Court in Maxwell vs Dow 44 Lawyer 's Edition 597 at p. 605, referred to.
The Tenth Schedule is a part of the Constitution and attracts the same canons of construction as are applicable to the expounding of the fundamental law.
One constitutional power is necessarily conditioned by the other as the Constitution is one "coherent document".
In expounding the process of the fundamental law the Constitution must be treated as a logical whole.
[726D E] 1.4.
The distinction between what is constitutionally permissible and what is outside it is marked by a `hazy gray line 'and it is the Court 's duty to identify, "darken and deepen" the demarcating line of constitutionality a task in which some element of Judges ' own perceptions of the constitutional ideals inevitably participate.
There is no single litmus test of constitutionality.
Any suggested sure decisive test, might after all furnish a "transitory delusion of certitude" where the "complexities of the strands in the web of constitutionality which the Judge must alone disentangle" do not lend themselves to easy and sure formulations one way or the other.
It is here that it becomes difficult to refute the inevitable legislative element in all constitutional adjudications.
[730D F] "Theory of Torts" American Law Review 7[1873]; Justice Oliver Wendel Holmes Free Speech and the Living Constitution by H.L. Pohlman 1991 Edn. p.223, referred to.
Amalgamated Society of Railway Servants vs Osborne, , referred to.
A political party functions on the strength of shared beliefs.
Any freedom of its Members to vote as they please independently of the political party 's declared policies will not only embarrass its public image and popularity but also undermine public confidence in it which, in the ultimate analysis, is its source of sustenance nay, indeed, its very survival.
Paragraph 2(1)(b) of the Tenth Schedule gives effect to this principle and sentiment by imposing a disqualification on a Member who votes or abstains from voting contrary to "any directions" issued by the political 695 party.
The provision, however, recognising two exceptions: one when the Member obtains from the political party prior permission to vote or abstain from voting and the other when the Member has voted without obtaining such permission. his action has been condoned by the political party.
This provision itself accommodates the possibility that there may be occasions when a Member may vote or abstain from voting contrary to the direction of the party to which he belongs.[734D E; 735B C] Griffith and Ryle on "Parliament, Functions, Practice & Procedure" 1989 Edn. page 119, referred to.
In a sense anti defection law is a statutory variant of its moral principle and justification underlying the power of recall.
What might justify a provision for recall would justify a provision for disqualification for defection.
Unprincipled defection is a political and social evil.
It is perceived as such by the legislature.
The anti defection law seeks to recognise the practical need to place the proprieties of political and personal conduct whose awkward erosion and grotesque manifestations have been the bane of the times above certain theoretical assumptions which in reality have fallen into a morass of personal and political degradation.
This legislative wisdom and perception should be deferred to.
The choices in constitutional adjudications quite clearly indicate the need for such deference.[739D G] `Constitutional Reform, Reshaping the British Political System, by Rodney Brazier.
1991 Edn.pp.48 53, referred to.
1.7.The Tenth Schedule does not impinge upon the rights or immunities under Article 105(2) of the Constitution.
The freedom of speech of a Member is not an `absolute freedom.
That apart, the provisions of the Tenth Schedule do not purport to make a Member of a House liable in any "Court" for anything said or any vote given by him in Parliament.[732H; 733C] Jyoti Basu & Ors.
Debi Ghosal & Ors., ; , referred to.
A provision which seeks to exclude the jurisdiction of Courts is strictly construed.
[742E] H.H.
Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors.
vs Union of India, [1971] 1 SSC 85, referred to.
696 Mask & Co.v.
Secretary of State, AIR 1940 P.C. 105, referred to.
2.2 The rules of construction are attracted where two or more reasonably possible constructions are open on the language of the statute.
[742F] 2.3.
As regards Paragraph 7 to the Tenth Schedule, both on its language and having regard to the legislative evolution of the provision, the legislative intent is plain and manifest.
The words "no Courts shall have any jurisdiction in respect of any matter connected with the disqualification of a member" are of wide import and leave no constructional options.
This is reinforced by the legislative history of the anti defection law.
The Constitution (Fifty Second Amendment) Bill for the first time envisaged the investitute of the power to decide disputes on the Speakers or the Chairmen whereas the two similar Constitution (32nd and 48th amendment) Bills, (which had lapsed) did not contain any clause ousting the jurisdiction of the Courts.
The purpose of the enactment of Paragraph 7, as the debates in the House indicate, was to bar the jurisdiction of the Courts under Articles 136, 226 and 227 of the Constitution.
{742F G, H, 743B] 2.4.
The changes in Chapter IV of Part V and Chapter V of the Part VI of the constitution envisaged by the proviso to Article 368(2) need not be direct.
The change could be either "in terms of or in effect".
It is not necessary to change the language of Articles 136 and 226 of the Constitution to attract the proviso.
If in effect these Articles are rendered ineffective and made inapplicable where these articles could otherwise have been invoked or would, but for Paragraph 7, have operated there is `in effect 'a change in those provisions attracting the proviso.
[p. 745C D] 2.5.
Though the Amendment does not bring in any change directly in the language of Articles 136,226 and 227 of the constitution,, however, in effect Paragraph 7 curtails the operation of those Articles respecting matter falling under the Tenth Schedule.
There is a change in the effect in Articles 136, 226 and 227 within the meaning of clause (b) of the proviso to Article 368 (2).
Paragraph 7, therefore, attracts the proviso and ratification was necessary.
[745F] Sri Sankari Prasad Singh Deo vs Union of India & State of Bihar, ; Sajjan Singh vs State of Rajasthan, ; , referred to.
697 3.1 The criterion for determining the constitutional validity of a law is the competence of the law making authority (which would depend on the ambit of the Legislative power and the limitations imposed thereon as also on mode of exercise of the power).
While examining the constitutional validity of laws the doctrine of severability is applied which envisages that if it is possible to construe a statute so that its validity can be sustained against a constitutional attack it should be so construed and that when part of a statute is valid and part is void, the valid part must be separated from the invalid part.
[746C; 747D] Cooley 's constitutional Limitations; 8th Edn.
Vol. 1, p. 359 360, referred to.
R.M.D. Chamarbaughwalla vs Union of India, ; ; Shri Kesavananda Bharti Sripadagalavaru vs State of Kerala, [1973] Supp.
1 SCR; Minerva Mills Ltd. & Ors.
vs Union of India & Ors.
, ; and Sambhamurthy & Ors.
etc.v.
State of Andhra Pradesh & Anr., ; , referred to.
Though the amending power in a constitution is in the nature of a constituent power and differs in content from the Legislative power, the limitations imposed on the constituent power may be substantive as well as procedural.
Substantive limitations are those which restrict the field of exercise of the amending power and exclude some areas from its ambit.
Procedural limitations are those which impose restrictions with regard to the mode of exercise of the amending power, e.g. the limitation requiring a special majority under Article 368(2) of the constitution is a procedural one.
Both these limitations, however, touch and affect the constituent power itself, and impose a fetter on the competence of Parliament to amend the Constitution and any amendment made in disregard of these limitations would go beyond the amending power and would invalidate its exercise.
[746C E, 747C] 3.3.
Although there is no specific enumerated substantive limitation on the power in Article 368, but as arising from very limitation in the word `amend ', a substantive limitation is inherent on the amending power so that the amendment does not alter the basic structure or destroy the basic features of the Constitution.
[747A B] 3.4.
The proviso to Article 368(2) was introduced with a view to giving 698 effect to the federal principle.
Its scope is confined to the limits prescribed therein and is not construed so as to take away the power in the main part of Article 368(2).
[750C D] Madras & Southern Mahratta railway company vs Bazwada Municipality, (1944) 71 I.A. 113 and Commissioner of Income Tax, Mysore vs Indo Mercantile Bank Ltd.(1959), Supp.
2 SCR 256, referred to.
An amendment which otherwise fulfils the requirements of Article 368(2) and is outside the specified cases which require ratification cannot be denied legitimacy on the ground alone of the company it keeps.
[750E] 3.6.
The words "the amendment shall also require to be ratified by the legislature" occurring in the proviso to Article 368(2) indicate that what is required to be ratified by the legislatures of the States is the amendment seeking to make the change in the provisions referred to in clauses (a) to (e) of the proviso.
The need for and the requirement of the ratification is confined to that particular amendment alone and not in respect of amendments outside the ambit of the proviso.
The proviso can have, therefore, no bearing on the validity of the amendments which do not fall within its ambit.
[750G H] 3.7.
A composite amendment which makes alterations in the First and Fourth schedules as well as in other provisions of the Constitution requiring special majority under Article 368(2), even though passed by the simple majority and not by special majority, may be upheld in respect of the amendments made in the First and Fourth schedules.
[755D] Bribery Commissioner vs Pedrick Ranasinghe, 1965A.C.172, referred to.
There is really no difference in principle between the condition requiring passing of the Bill by a special majority before its presentation to the President for assent contained in Article 368(2) and the condition for ratification of the amendment by the legislatures of not less than one half of the States before the Bill is presented to the President for assent contained in the proviso.
[753D E] 3.9.
The principle of severability can be equally applied to a composite amendment which contains amendment in provisions which do not require ratification by States as well as amendment in provisions which require such ratification and by application of the doctrine of severability, 699 the amendment can be upheld in respect of the amendments which do not require ratification and which are within the competence of Parliament alone.
Only these amendments in provisions which require ratification under the proviso need to be struck down or declared invalid.
[753E F] 3.10.
The test of severability requires the Court to ascertain whether the legislature would at all have enacted the law if the severed part was not the part of the law and whether after severance what survives can stand independently and is workable.
[753G] 3.11.
The main purpose underlying the Constitutional (Fifty Second Amendment) Act and introduction of the Tenth Schedule is to curb the evil of defection which was causing immense mischief in our body politic.
The ouster of jurisdiction of Courts under Paragraph 7 was incidental to and to lend strength to the main purpose which was to curb the evil of defection.
It cannot be said that the constituent body would not have enacted the other provisions in the Tenth Schedule if it had known that Paragraph 7 was not valid, Nor can it be said that the rest of the provisions of the Tenth schedule cannot stand on their own even if Paragraph 7 is found to be unconstitutional.
The provisions of Paragraph 7 is therefore, severable from the rest of the provisions.
[pp.754A C] 4.1.
Democracy is a basic feature of the Constitution.
Whether any particular brand or system of Government by itself, has this attribute of a basic feature, as long as the essential characteristics that entitle a system of government to be called democratic are otherwise satisfied is not necessary to be gone into.
Election conducted at regular, prescribed intervals is essential to the democratic system envisaged in the Constitution.
So is the need to protect and sustain the purity of the electoral process.
That may take within it the quality, efficacy and adequacy of the machinery for resolution of electoral disputes.
[p.733F G] 4.2.
In the Indian constitutional dispensation the power to decide a disputed disqualification of an elected Member of the House is not treated as a matter of privilege and the power to resolve such electoral dispute is clearly judicial and not legislative in nature.
The power to decide disputed disqualification under Paragraph 6(1) is pre eminantly of a judicial complexion.
[pp.759G.763C] Indira Nehru Gandhi vs Raj Narain, ; Special Reference 700 No. 1 of 1964; , & Express Newspaper Ltd. vs Union of India, ,, referred to.
Australian Boot Trade Employees Federation vs Whybrow & Co., ; , referred to.
The word "Courts" is used to designate those Tribunals which are set up in an organised State for the administration of justice.
By Administration of Justice is meant the exercise of judicial power of the State to maintain and uphold rights and to punish "wrongs".
Whenever there is an infringement of a right or an injury, the Courts are there to restore the vinculum juris, which is disturbed.
Where there is a lis an affirmation by one party and denial by another and the dispute necessarily involves a decision on the rights and obligations of the parties to it and the authority is called upon to decide it, there is an exercise of judicial power.
That authority is called a Tribunal, if it does not have all the trappings of a court.
Thus, the Speaker or the Chairman, acting under Paragraph 6(1) of the Tenth Schedule is a Tribunal.[763G H, 764E F, 766B] Associated Cement companies Ltd. vs P.N. Sharma and Anr., ; and Harinagar Sugar Mills Ltd. vs
Shyam Sunder Jhunjhunwala & Ors., ; , referred to.
A finality clause is not a legislative magical incantation which has the effect of telling off Judicial Review.
Statutory finality of a decision presupposes and is subject to its consonance with the statute.
The principle that is applied by the courts is that in spite of a finality clause it is open to the court to examine whether the action of the authority under challenge is ultra vires the powers conferred on the said authority.
An action can be ultra vires for the reason that it is in contravention of a mandatory provision of the law conferring on the authority the power to take such an action.
It will also be ultra vires the powers conferred on the authority if it is vitiated by mala fides or is colourable exercise of power based on extraneous and irrelevant consideration.
[pp. 755D,765D E] `Administrative Law ' 6th Edn.
at p. 720 & Constitutional Fundamentals, the Harmlyn Lectures, 1989 Edn., p.88, referred to.
The finality clause with the word "final" in paragraph 6(1) of the Tenth schedule does not completely exclude the jurisdiction of the 701 Courts under Articles 136, 226 and 227 of the Constitution.
But it does have the effect of limiting the scope of the jurisdiction.
If the intendment is to exclude the jurisdiction of the superior Courts, the language would quite obviously have been different.
[758H, 759A,765C,758A] Brundaban Nayak vs Election Commission of India & Anr., ; ; Union of India vs Jyoti Prakash Mitter, ; ; Durga.
Shankar Mehra vs Reghuraj Singh, ; and Union of India & Anr.
vs Tulsiram Patel & Ors., [1985] Supp. 2 SCR 131, referred to.
An ouster clause confines judicial review in respect of actions falling outside the jurisdiction of the authority taking such action but precludes challenge to such action on the ground of an error committed in the exercise of jurisdiction vested in the authority because such an action cannot be said to be an action without jurisdiction.
[765F] Anisminic Ltd. vs
Foreign commission; , ; S.E. Asia Fire Bricks vs Non Metallic Products, 1981 A.C. 363, referred to.
The fiction in Paragraph 6(2) attracts an immunity from mere irregularities of procedures.
The very deeming provision implies that the proceedings of disqualification are, in fact,.
not before the House; but only before the Speaker a specially designated authority.
The decision under Paragraph 6(1) is not the decision of the House, nor is it subject to the approval by the House.
The decision operates independently of the House.
A deeming provision cannot by its creation transcend its own power.
There is, therefore, no immunity under Articles 122 and 212 from judicial scrutiny of the decision of the Speaker or Chairman exercising power under Paragraph 6(1) of the Tenth Schedule.
[763D F] 7.
The scope of judicial review under Articles 136, 226 and 227 of the Constitution in respect of an order passed by the Speaker/Chairman under Paragraph 6 would be confined to jurisdictional errors only, viz., infirmities based on violation of constitutional mandate, mala fides, non compliance with rules of natural justice and perversity.
But Judicial review cannot be available at a stage prior to the making of a decision by the Speaker/Chairman and a quia timet action would not be permissible.
Nor would interference be permissible at an interlocutory stage of the proceedings.
Exceptions will, however,, have to be made in respect of cases where disqualification of suspension is imposed during the pendency of the 702 proceedings and such disqualification or suspension is likely to have grave,immediate and irreversible repercussions and consequence.[768E H] Makhan Singh vs State of Punjab, [1964] 4 SCR 797;State of Rajasthan vs
Union of India; , ; Union of India vs Jyoti Prakash Mitter, (supra) and Union of India & Anr.
vs Tulsiram Patel & Ors., [1985] Supp. 2 SCR 131, referred to.
The office of the Speaker is held in the highest respect and esteem in Parliamentary traditions.
The evolution of the institution of Parliamentary democracy has as its pivot the institution of the Speaker.
He is said to be the very embodiment of propriety and impartiality.
He performs wide ranging functions including the performance of important functions of a judicial character.
It would, indeed be unfair to the high traditions of that great office to say that the investiture in it of this jurisdiction would be vitiated for violation of a basic feature .
of democracy.
It is inappropriate to express distrust in the high office of the speaker, merely because some of the speakers are alleged, or even found, to have discharged their functions not in keeping with the great traditions of that high office.
The Robes of the Speaker do change and elevate the man inside.
[770G H, 771A, 772A, 773A B] G.V. Mavalankar ; The Office of Speaker, Journal of Parliamentary Information, April 1956, Vol.
No. 1 p.33; HOP, Deb.
IX (1954), CC 3447 48 and Erskine May Parliamentary Practice 20th edition p. 234 and M.N. Kaul and S.L. Shakdher in `Practice and Procedure of Parliament ' 4th Edition, referred to.
The words "any direction" occurring in Paragraph 2(1)(b) of the Tenth Schedule require to be construed harmoniously with the other provisions and appropriately confined to the objects and purposes of the Schedule.
Those objects and purposes define and limit the contours of its meaning.
The assignment of a limited meaning is not to read it down to promote its constitutionality but because such a construction is a harmonious construction in the context.
There is no justification to give the words the wider meaning.
[774H, 775A B] Parkash Singh Badal & Ors.
vs Union of India & Ors., AIR 1987 Punjab & Haryana 263, referred to.
While construing Paragraph 2(1)(b) it cannot be ignored that 703 under the Constitution members of Parliament as well as of the State Legislature enjoy freedom of speech in the House though this freedom is subject to the provisions of the Constitution and the rules and standing orders regulating the Procedure of the House.
The disqualification imposed by Paragraph 2(1)(b) must be so construed as not to unduly impinge on the said freedom of speech of a member.
This would be possible if Paragraph 2(1)(b) is confined in its scope by keeping in view the object underlying the amendments contained in the Tenth Schedule namely, to curb the evil or mischief of political defections motivated by the lure of office or other similar considerations.
[p. 775C D] 9.3.
In view of the consequences of the disqualification, i.e., termination of the membership of a House, it would be appropriate that the direction or whip which results in such disqualification under Paragraph 2(1)(b) of the Tenth Schedule is so worded as to clearly indicate that voting or abstaining from voting contrary to the said direction would result in incurring the disqualification under Paragraph 2(1)(b), so that the member concerned has fore knowledge of the consequences flowing from his conduct in voting or abstaining from voting contrary to such a direction.
[775H, 776A B] 10.1 The purpose of interlocutory orders is to preserve in status quo the rights of the parties, so that, the proceedings do not become infructuous by any unilateral overt acts by one side or the other during its pendency.
[776G] 10.2.
The interlocutory orders in the instant case were necessarily justified so that, no land slide changes were allowed to occur rendering the proceedings ineffective and infructuous.[776H, 777A] Per VERMA, J. : 1.Under the Constitution of India which delineates the spheres of jurisdiction of the legislature and the judiciary,the power to construe the meaning of the provisions in the Constitution and the laws is entrusted to the judiciary with finality attached to the decision of this Court inter alia by Article 141 about the true meaning of any enacted provision, and Article 144 obliges all authorities in the country to act in aid of this Court.
It is, therefore, not permissible in our constitutional scheme for any other authority to claim that power in exclusivity, or in supersession of this Court 's verdict.
Whatever be the controversy prior to this Court entertaining such a matter, it must end when the Court is seized of the matter for pronouncing its verdict and it is the constitutional 704 obligation of every person and authority to accept its binding effect when the decision is rendered by this Court.
[p. 784F H] Cohens vs Virginia, ; , 404; , , 291 (1821) and State of madras vs V.G. row; , , referred to.
The finality clause in Para 6(1) of the Tenth Schedule to the Constitution which says that the decision of the Chairman or as the case may be, the speaker of the House shall be final is not decisive.
Such a finality clause in a statute by itself is not sufficient to exclude the jurisdiction of the High courts under Articles 226 and 227 and the Supreme Court under Article 136 of the Constitution, the finality being for the statute alone.
This is apart from the decision being vulnerable on the ground of nullity.
Sub paragraph (1)alone is, therefore, insufficient to exclude the extra ordinary jurisdiction of the High Courts and the plenary jurisdiction of this Court.
[788B C] 2.2.
The ambit of a legal fiction must be confined to the limitation implicit in the words used for creating the fiction and it cannot be given an extended meaning to include therein something in addition.
In construing the fiction it is not to be extended beyond the language of the Section by which it is created and its meaning must be restricted by the plain words used.
It cannot also be extended by importing another fiction.
[788E, 789A] 2.3.
The legal fiction in sub paragraph (2) of para 6 of the Tenth Schedule serves a limited purpose and brings the proceedings under sub paragraph (1) thereof within the ambit of clause (1) of Article 122 or Clause (1) of Article 212, and, therefore, there is no occasion to enlarge its scope by reading into it words which are not there and extending it also to clause (2) of these Articles.
[788C, 789B] Commissioner of Income tax vs Ajax Products Ltd., ; , referred to.
A matter falling within the ambit of clause (1) of either of the two Article 122 or 212 is justiciable on the ground of illegality or perversity in spite of the immunity it enjoys to a challenge on the ground of "irregularity of procedure".
[788E F] 2.5.
The decision relating to disqualification of a member does not relate to regulating procedure or the conduct of business of the House 705 provided for in clause (2) of Articles 122 and 212 and taking that view would amount to extending the fiction beyond its language and importing another fiction for this purpose which is not permissible.
That being so, the matter falls within the ambit of clause (1) only of Article 122 and 212 as a result of which it would be vulnerable on the ground of illegality and perversity and therefore, justiciable to that extent.
[789C D] Spl.
No. 1 of 1964 (Keshav Singh 's case) ; , 3.1.
The words in Paragraph 7 of the Tenth Schedule with its non obstante clause `notwithstanding anything in this Constitution ' followed by expression `no court shall have any jurisdiction ', are very wide and ordinarily mean that this provision supersedes any other provision in the Constitution, and leave no doubt that the bar of jurisdiction of Courts is complete excluding also the jurisdiction of the supreme court and the High courts under Articles 136, 226 and 227 of the Constitution respectively.
Further, the expression `in respect of any matter connected with the disqualification of a Member of a House under this Schedule ' is wide enough to include not merely the intermediate stage of the proceedings relating to disqualification but also the final order on the question of disqualification made under paragraph 6.
This conclusion is reinforced by the finality clause and deeming provision in para 6 of the Tenth Schedule and by the legislative history of the absence of such a provision excluding the Court 's jurisdiction in the earlier two Bills which had lapsed.
[pp. 789F G, 790C, H] 3.2.
Para 7 of the Tenth Schedule is, therefore, unconstitutional and to that extent at least the Constitution does not stand amended in accordance with the Bill seeking to make the constitutional amendment.
[799E] 4.1.
Distinction has to be drawn between the abridgment or extinction of a right and restriction of the remedy for enforcement of the right.
If there is an abridgment of extinction of the right which results in the disappearance of the cause of action which enables invoking the remedy and in the absence of which there is no occasion to make a grievance and invoke the subsisting remedy, then the change brought about is in the right and not the remedy.
On the other hand, if the right remains untouched so that a grievance based thereon can arise and, therefore, the cause of action subsists, but the remedy is curtailed or extinguished so that cause of 706 action cannot be enforced for want of that remedy, then the change made is in the remedy and not in the subsisting rights.
[793A C] Sri sankari Prasad Singh Deo vs Union of India & State of Bihar, ; and Sajjan Singh vs State of Rajasthan, ; , explained 4.2.
The instant case in unequivocal terms, is that of destroying the remedy by enacting para 7 of the Tenth Schedule making a total exclusion of judicial review including that by the Supreme Court under Article 136 and the High Courts under Articles 226 and 227 of the Constitution.
But for para 7 which deals with the remedy and not the right, the jurisdiction of the Supreme Court under Article 136 and that of the High Courts under Article 226 and 227 would remain unimpaired to challenge the decision under para 6, as in the case of decisions relating to other disqualification specified in clause (1) of Articles 102 and 191, which remedy continues to subsist.
[793D F] 4.3.
The extinction of the remedy alone without curtailing the right, since the question of disqualification of a member on the ground of defection under the Tenth Schedule does require adjudication on enacted principles, results in making a change in Article 136 in Chapter IV in Part V and Articles 226 and 227 in Chapter V in Part VI of the Constitution.
[793F] 4.4.
The Constitution (Fifty Second Amendment) Bill, therefore, attracted the proviso to Article 368(2) requiring ratification by the specified number of State legislatures before its presentation to the President for his assent.
[793G] 5.1 The proviso to Article 368(2) of the Constitution contains a constitutional limitation on the amending power; and prescribes as a part of the special procedure, prior assent of the State Legislatures before presentation of the Bill to the President for his assent in the case of the relevant Bills.
This is a condition interposed by the proviso in between the passing of the Bill by the requisite majority in each House and presentation of the Bill to the President for the assent, which assent results in the Constitution automatically standing amended in accordance with the terms of the Bill.
The Bills governed by the proviso, therefore, cannot be presented to the President for his assent without the prior ratification by the specified number of State legislatures.
[795C E] 707 5.2.
The consequence of the Constitution standing amended in accordance with the terms of the Bill on assent by the President, which is the substantive part of Article 368, results only when the Bill has been presented to the President for his assent in conformity with the special procedure after performance of the conditions precedent, namely, passing of the Bill by each House by the requisite majority in the case of all Bills; and in the case of Bills governed by the proviso, after the Bill has been passed by the requisite majority in each House and it has also been ratified by the legislature by not less than one half of the States.
Non compliance of the special procedure prescribed in Article 368(2) cannot bring about the result of the Constitution standing amended in accordance with the terms of the Bill.
[795F G, H,796A] Kesavananda Bharati vs State of Kerala, [1973] Supp.1 SCR, relied on.
The ordinary role of a proviso is to carve out an exception from the general rule in the main enacting part.
A Bill falling within the ambit of the proviso to cl.(2) of Article 368 is carved out of the main enactment in clause (2) as an exception on account of which it cannot result in amendment of the constitution on the President 's assent without prior ratification by the specified number of State legislature.
[797G H, 798A B] 5.4.
The entire Tenth Schedule is enacted in exercise of the constituent power under Article 368, not merely para 7 therein, and this has been done without following the mandatory special procedure prescribed.
It is, therefore, the entire Constitution (Fifty Second) Amendment Bill and not merely para 7 of the Tenth Schedule which required prior ratification by the State of legislatures before its presentation to the President for his assent, it being a joint exercise by the parliament and the State Legislatures.
The stage of presentation of the Bill to the President for his assent not having reached, the President 's assent was non est and it could not result in amendment of the Constitution in accordance with the terms of the Bill.
It is not a case of severing the invalid constituent part from the remaining ordinary legislation.
[799G H, 800A; 802C] 6.1.
The doctrine of severability applies in a case where an otherwise validly enacted legislation contains a provision suffering from a defect of lack of legislative competence and the invalid provision is severable leaving the remaining valid provisions a viable whole.
this doctrine has no application where the legislation is not validly enacted due to non compliance 708 of the mandatory legislative procedure such as the mandatory special procedure prescribed for exercise of the constituent power.
The doctrine does not apply to a still born legislation.
It is not possible to infuse life in a still born by any miracle and deft surgery even though it may be possible to continue life by removing a congenitally defective part by surgical skill.
[800D E] The Bribery Commissioner vs Pedrick Ranasinghe, ; , referred to.
Severance of para 7 of the Tenth Schedule could not be made for the purpose of ratification or the President 's assent and, therefore, not such severance can be made even for the ensuing result.
If the President 's assent cannot validate para 7 in the absence of prior ratification, the same assent cannot be accepted to bring about a different result with regard to the remaining part of the Bill.
[800A B] 7.
The test whether the enactment would have been made without para 7 indicates that the legislative intent was to make the enactment only with para 7 therein and not without it, otherwise the enactment did not require the discipline of Article 368and exercise of the constituent power and mode of ordinary legislation could have been resorted to in accordance with sub clause (e) of clause (1) of Article 102 and 191, which would render the decision on the question of disqualification on the ground of defection also amenable to judicial review as in the case of decision on questions relating to other disqualification.
[802F H, 803A] R.M.D. Chamarbaughwalla vs The Union of India, ; , relied on.
Democracy is a part of the basic structure of our Constitution, and rule of law; and free and fair elections are basic features of democracy, One of the postulates of free and fair elections is provision for resolution of election disputes as also adjudication of disputes relating to subsequent disqualifications by an independent authority.
It is only by a fair adjudication of such disputes relating to validity of elections and subsequent disqualifications of members that true reflection of the electoral mandate and governance by rule of law essential for democracy can be ensured.
[803E G] 709 8.2.
In the democratic pattern adopted by our Constitution, not only the resolution of election dispute is entrusted to a judicial tribunal, but even the decision on questions as to disqualification of members under Articles 103 and 192 is contemplated by an independent authority outside the house, namely, President/Governor in accordance with the opinion of the Election commission,, all of whom are high constitutional functionaries with security of tenure, independent of the will of the House.
[803G H, 804A] 8.3.
Sub clause (e) of clause (1) in Articles 102 and 191 which provide for enactment of any law by the Parliament to prescribe any disqualification other than those prescribed in the earlier sub clauses of clause (1), clearly indicates that all disqualifications of Members were contemplated within the scope of Articles 102 and 191.
All disqualification including disqualification on the ground of defection, in our constitutional scheme, are, therefore, different species of the same genus, namely, disqualification, and the constitutional scheme does not contemplate any difference in their basic traits and treatment; and were meant to be decided by an independent authority outside the House such as the President/Governor, in accordance with the opinion of another similar independent constitutional functionary, the Election commission of India, who enjoys the security of tenure of a Supreme Court Judge with the same terms and conditions of office.
[804B E] 8.4.
The Speaker 's office is undoubtedly high and has considerable aura with the attribute of impartiality.
This aura of the office was even greater when the Constitution was framed and yet the framed and yet the farmers of the Constitution did not choose to vest the authority of adjudicating disputes as to disqualification of Members to the Speaker; and provision was made in Article 103 and 192 for decision of disputes by the President/Governor in accordance with the opinion of the Election commission.
In the Tenth Schedule, the Speaker is made not only the sole but the final arbiter of such dispute with no provision for any appeal or revision against the Speaker 's decision to any independent outside authority.
This departure in the Tenth Schedule is a reverse trend and violates a basic feature of the Constitution.[804 G, 805E] 8.5.
The Speaker being an authority within the House and his tenure being dependent on the will of majority therein, likelihood of suspicion of 710 bias could not be ruled out.
The question as to disqualification of a member has adjudicatory disposition and, therefore, requires the decision to be rendered in consonance with the scheme for adjudication of disputes Rule of law has in it firmly entrenched natural justice, of which, Rule against Bias is a necessary concomitant; and basic postulates of Rule against Bias are : Nemo judex in cause sua `A Judge is disqualified from determining any case in which he may be,or may fairly be suspected to be, biased '; and `it is of fundamental importance that justice should not only be done but should manifestly and undoubtedly be seen to be done '.
|
vil Appeal No. 1314 (NT) of 1976.
From the Judgment and Order dated 15.11.1975 of the Gujarat High Court in Income Tax Reference No. 160 of 1974.
Dr. V. Gauri Shankar, Manoj Arora and Ms. A. Subhashini for the Appellant.
J. Vellapaly, Ms. A.K. Verma and J.B. Dadachanji for the Respondent.
The Judgment of the Court was delivered by OJHA, J.
This appeal has been preferred on the basis of a certificate granted by the High 'Court of Gujarat under Section 261 of the Income Tax Act, 1961 (hereinafter re ferred to as the Act).
The judgment appealed against is reported in Cellulose Products of India Ltd. vs Commissioner of Income Tax, Gujarat, [1977] 110, I.T.R. page 15 1.
The respondent is a public limited company incorporated on April 14, 1989 mainly for the purpose of carrying on business of manufacturing chemical products.
The Memorandum of Associa tion of the respondent company, as is apparent from the order of the Appellate Assistant Commissioner of Income Tax, inter alia contains the following clause: "to carry on the business of manufacture of and dealer and importers and exporters in chemical products of any nature and kind whatsoever and particulary of Carboxy Methyl Cellulose (CMC), Cellulose Pulps and other chemical products.
" The respondent was granted an industrial licence by the Central Government for the manufacture of Sodium Carboxy Methyl Cellulose (for short CMC).
In pursuance of the said licence the respondent installed a Cellulose plant, in which was manufactured Cellulose pulp which in its turn was meant to be used as a raw material for manufacture of CMC.
This fact does not appear to have been in dispute that the re spondent began production of Cellulose pulp from March 18, 1961 in the said plant while the production of CMC was started from June 15,1961. 891 In the assessment year in question namely 1966 67, the previous year of account being the financial year 1965 66 ending on March 31, 1966, the respondent claimed relief contemplated by Section 84 of the Act (as it stood prior to its being deleted with effect from April 1, 1968 by Finance (No. The Income Tax Officer took the view that since the respondent had started production of Cellu lose pulp from March 18, 1961 it had begun to manufacture or produce finished articles or goods in the year ending on March 31, 1961 and consequently the assessment year 1961 62 was the first year in which the assessee was entitled to relief under Section 84.
According to him, the relief con templated by Section.
84 being available only for five years namely the assessment year 1961 62 and the four assessment years immediately succeeding as contemplated by Sub section (7) of Section 84 of the Act, the respondent was not enti tled to the relief claimed in the assessment year 1966 67 which fell beyond the aforesaid period.
This finding of the Income Tax Officer was affirmed in appeal by the Appellate Assistant Commissioner.
The matter was taken by the respond ent in further appeal before the Income Tax Appellate Tribu nal.
The respondent 's contention that the production of Cellulose pulp during the month of March 1961 was a trial production was repelled by the Tribunal and a categorical finding was recorded by it that Cellulose pulp manufactured by the respondent during the month of March 1961 was a finished product which was a marketable commodity.
On this view the Tribunal held that the respondent having begun production or manufacture of finished product which was capable of being sold in the market in the year of account relevant to the assessment year 1961 62, the last year in which the respondent was entitled to get relief under sec tion 84 of the Act was the assessment year 1965 66 and the claim made by it for the said relief in the assessment year in question namely 1966 67 was not maintainable.
The Tribu nal, however, on an application made in this behalf by the respondent referred the following question to the High Court of Gujarat for its opinion: "Whether on the facts and in the circumstances of the case, the Tribunal was right in reject ing the assessee 's claim for relief under section 84 of the Act for the assessment year 1966 67?" The High Court by the judgment under appeal answered the question aforesaid in the negative, that is, in favour of the assessee and against the revenue.
It held that even though the word "article" used in Subsection (7) of section 84 of the Act was undoubtedly an ordinary word employed by the legislature but in the context in which it was used and 892 looking to the object with which it was enacted it was obvious that it could only refer to the end product of the industrial undertaking as a whole where there was no phased programme of installation and construction.
On this view the High Court found that the mere fact that the respondent started the production of Cellulose pulp which was an in termediate product on March 18, 1961 did not mean that the company had begun to produce or manufacture "articles" in the assessment year 1961 62.
It has been urged by learned counsel for the appellant that the finding recorded by the Tribunal referred to above was essentially a finding of fact based on appraisal of evidence and it was not open to the High Court in its advi sory jurisdiction to take a contrary view.
For the respond ent, on the other hand, in support of the judgment appealed against, it was urged by its learned counsel that inasmuch as section 84 of the Act contemplated grant of relief to a new undertaking, it should be construed liberally so as to effectuate the object thereof.
He maintained that since the undertaking established by the respondent was to manufacture CMC and the industrial licence had also been granted to it for the said purpose, exemption under section 84 of the Act could be claimed by it only in the year during which CMC was actually manufactured and since it was so done during the assessment year 1962 63 exemption could not be claimed in the assessment year 1961 62, notwithstanding the fact that Cellulose pulp for captive consumption was manufactured in that year.
According to him, therefore, the period of five years contemplated by sub section (7) of section 84 of the Act would represent the assessment year 1962 63 and the four assessment years immediately succeeding and in this view of the matter the High Court was right in allowing the relief claimed by the respondent during the assessment year in question, namely 1966 67.
In the alternative, he submitted that if ultimately the view of the Tribunal prevailed that the production had started in the assessment year 1961 62 then the disallowance of the relief in the 5th year namely in the assessment year in question should be restricted to the investment of the pulp factory and the respondent should not be denied the relief in respect of the investment exclu sively related to the CMC plant.
Having given our anxious consideration to the respective submissions made by the learned counsel for the parties, we are inclined to agree with the contention of the learned counsel for the appellant that the High Court on the facts and in the circumstances of the instant case committed an error in interfering with the conclusion of the tribunal.
It 893 is settled law that a High Court hearing a reference under the Act does not exercise any appellate or revisional or supervisory jurisdiction over the Tribunal and that it acts purely in an advisory capacity.
If the Tribunal after con sidering the evidence produced before it on a question of fact records its finding it cannot be interfered with in a reference by the High Court unless of course such finding was not supported by any evidence, was perverse or patently unreasonable.
In our opinion, the finding of the Tribunal in the instant case did not suffer from any of these infirmi ties.
The finding that the production of Cellulose pulp during the month of March 1961 was not a trial production and that Cellulose pulp as manufactured by the respondent was a finished product which was a marketable commodity was essentially a finding of fact based on appraisal of evi dence.
It is true that Cellulose pulp constitutes raw material for manufacture of CMC but it has not been disputed before us by the learned counsel for the respondent that it was even by itself a finished marketable commodity.
The circumstance that the industrial licence granted to the respondent was for the manufacture of CMC and not of Cellu lose pulp is, in our opinion, keeping in view the nature of the two articles, not of much significance.
In the same manner as a licence, for instance, for the manufacture of cloth includes the manufacture of cotton yarn, an intermedi ate product necessary for manufacturing cloth, the licence granted to the respondent for the manufacture of CMC includ ed the manufacture of Cellulose pulp which was an intermedi ate product to be used in its turn as a raw material for the manufacture of CMC.
The relevant clause of the Memorandum of Association of the respondent company, already quoted above, is obviously wide in its amplitude, It contemplates manufac ture of "chemical products of any nature and kind whatsoever and particularly of CMC, Cellulose pulp and other chemical products".
Manufacture of Cellulose pulp was thus indeed one of the objects of the company.
The question involved had to be considered in this background and the Tribunal having done so and recorded the finding of fact referred to above the High Court obviously committed an error in holding that manufacture of Cellulose pulps during March 1961 was of no consequence and that the first year of production would be the assessment year 1962 63 when CMC was actually manufac tured.
The decision of the Madras High Court relied on by the learned counsel for the respondent reported in Madras Machine Tools Manufacturers Ltd. vs Commissioner of Income Tax, Madras, , in view of what has been observed above on the facts of the instant case does not advance the case of the respondent any further than the reasons recorded in the judgment under appeal.
894 As regards the alternative submission made by the learned counsel for the respondent suffice it to say that the case on the basis of which this alternative submission is sought to be made was not set up before the Tribunal nor any such question was sought to be referred on the basis of which this alternative submission could be made.
It cannot, as such, be permitted to be made in the present appeal.
The submission that the provisions of section 84 of the Act should be construed liberally so as to effectuate the object thereof need detain us for long.
It is only when there is any genuine doubt about the interpretation of a fiscal statute or where two opinions are capable of being formed that the rule of interpretation canvassed by learned counsel for the respondent may be taken to.
In the instant case a plain reading of sub section (7) of section 84 of the Act makes it clear without any doubt that the period of five years was to start from the assessment year relevant to the previous year in which the undertaking began to manufacture or produce "articles".
Since the language of the sub section is plain and admits of no ambiguity there is no scope of applying the aforesaid rule of interpretation.
The question as to in which assessment year "the undertaking begins to manufacture or produce articles" is essentially a question to be decided on the facts of each case and on the basis of the evidence placed on record.
In view of the foregoing discussion, this appeal suc ceeds and is allowed with costs and the judgment of the High Court under appeal is set aside.
S.B. Appeal allowed.
| The respondent is a Public Limited Company incorporat ed on April 14, 1989 for carrying on business of manufac turing chemical products particularly of Carboxy Methyl Cellulose (CMC) and Cellulose Pulps.
The respondent was also granted an industrial licence by the Central Government for the manufacture of Carboxy Methyl Cellulose.
The respondent had installed a cellulose plant in which cellulose pulp, the raw material for Carboxy Methyl Cellulose was manufactured.
The plant had begun production from March 1961 while the production of Carboxy Methyl Cellulose was started from June 15, 1961.
The respondent claimed relief under section 84 of Income Tax Act as it stood prior to its being deleted with effect from April 1, 1968 by Finance Act (2) 1967, for the assessment year 1966 67, the previous year of accounting being the financial year 1965 66.
The Income Tax Officer took the view that since the respondent had started production of cellulose pulp from March, 18 1961, it had begun to manufacture or produce finished articles or goods in the year ending March 31, 1961 and consequently the assessment year 1961 62 was the first year in which the assessee was entitled to relief under section 84 Sub section (7) of the Income Tax Act under which the relief contemplated was to be available only for live assessment years.
So the respondent was not entitled to relief in the assessment year 1966 67 which fell beyond the aforesaid period.
The above view the Income Tax Officer was affirmed in appeal by the Appellate Assistant Commissioner.
Even the Income Tax Appellate Tribunal held that the respondent having begun production or manufacture of finished product which was capable of being sold in the market in the year of accounting relevant to the assessment year 1961 62 the last year in which the respondent was entitled to get relief under section 84 of the Act was the assessment year 1965 66 and the claim for 889 the relief in the assessment year 1966 67 was not maintain able.
The High Court on reference, held that the mere fact that the respondent started production of Cellulose Pulp which was an intermediate product on March 18, 1961 did not mean that the company had begun to produce or manufacture "articles" in the assessment year 1961 62 because the word "articles" used in Sub section (7) of section 84 in the context, could be only the end product of the industrial undertaking as a whole where there was no phased programme of installation and construction.
Allowing the appeal of the Revenue with costs, the Court, HELD: The High Court on the facts and circumstances of the instant case committed an error in interfering with the conclusion of the Tribunal.
It is settled law that a High Court while hearing a reference under the Act does not exercise any appellate or revisional or supervisory juris diction over the Tribunal and it acts purely in an advisory capacity.
Further in the instant case the finding of the Tribunal did not suffer from any infirmities such as not being supported by any evidence or being perverse or patent ly unreasonable.
The production of Cellulose Pulp during the month of March, 1961 was a finished product which was a marketable commodity.
It is true that Cellulose Pulp also constitutes raw material for manufacture of Carboxy Methyl Cellulose and the circumstances that the industrial licence granted to the respondent was for the manufacture of Carboxy Methyl Cellulose which also included the manufacture of Cellulose Pulp which was intermediate product to be used in its turn as a raw material for the manufacture of Carboxy Methyl Cellulose.
The relevent clause of the Memorandum of Association of the respondent company is obviously wide in its amplitude and as such comtemplates "manufacture of chemical products of any nature and kind whatsoever and particularly of Carboxy Methyl Cellulose, Cellulose Pulp and other chemical products.
" So the High Court obviously com mitted an error in holding that the manufacture of Cellulose Pulp during March 1961 was of no consequence and that the first year of production would be the assessment year 1962 63 when Carboxy Methyl Cellulose was actually manufactured.
The provisions of section 84 of the Act could be coustrued liberally only, when there is any genuine doubt about the interpretation.
[892H 893G, 894B] In the instant case, a plain reading of Sub section (7) of the section 84 of the Act makes it clear without any doubt that the period of assessment year relevant to the previous year in which the undertaking began to manufacture or produce "articles" was 1961 62.
The question as to the assessment year in which the undertaking begins to manufac ture or 890 produce articles is essentially a question to be decided on the facts of each case and on the basis of evidence placed on record.
[894C D]
|
Civil Appeal No. 916 of 1992.
From the Judgment and Order dated 18.6.1991 of the Bombay High Court in W.P.N. 1914 of 1991.
Harish N. Salve, Rajiv K. Garg and N.D. Garg for the Appellant.
K.T.S. Tulsi, Addl.
Solicitor General, A. Subba Rao, P. Parmeswaran and A.D.N. Rao for the Respondents.
The Judgment of the Court was delivered by 999 KASLIWAL, J.
Special leave granted.
This appeal has been filed against the judgment of the Bombay High Court dated 18.6.1991.
The short controversy raised in the present case is whether the cloves imported by the appellant fall within Item 169 in List 8 of appendix 6 or fall within Paragraph 167 of Chapter XIII of the Import and Export Policy April 1990 March 1993.
Brief facts of the case are that the appellant obtained by transfer an Import Lincence No. 3412179 dated 29th November, 1990 for Rs. 16,10,700 for the import of admissible Items as per Para 220 (2) (3) (4) & (6) of the Import Policy 1990 93 Vol.
After acquisition of the aforesaid additional licence, the appellant placed an order for the supply of about 200 bags of Madagascar cloves No. 1 quality to a firm of Singapore.
The appellant opened a letter of credit dated 6.5.1991 in favour of the foreign supplier.
On receipt of the letter of credit the foreign supplier shipped the above mentioned goods in favour of the appellant.
On arrival of the goods at Bombay Port, (e) appellant filed Bill of Entry for the clearance of the goods for home consumption on 30th May, 1991.
The appellant claimed clearance of the goods against the additional licence on the ground that the cloves were covered under Item 169 of Appendix 6, List 8, Part I of the Import and Export Policy being "Drugs/Drug intermediate not elsewhere specified.
" The Department relied on Para 167 which dealt with the import of spices and took the stand that the cloves could be imported only against specific licence relating to cloves.
The appellant in the above circumstances filed a Writ Petition in the High Court of Bombay seeking a mandamus against the respondent to clear the goods against the Bill of Entry filed by the appellant.
The High Court held that th cloves cannot fall within the expression "Drugs/Drug intermediate not elsewhere specified" and the import of the cloves without specific licence was not permissible.
It was thus held that the action of the Customs Authorities in not permitting clearance cannot be faulted and the licence relied upon by the appellant was not valid for the import of cloves.
It was contended by Mr. Harish Salve, Learned Counsel for the appellant that though the use of clove as a spice is not in much dispute, but at the same time it cannot be disputed that clove is a Drug/Drug intermediate.
It was submitted that in popular sense and trade parlance, clove is also used as drug intermediate and that being so the appellant was 1000 entitled to import the cloves against the additional licence under para 220 of the Policy.
It was also submitted that in the Import Policies of 1982 83 to 1985 86 cloves were specified as crude drugs.
It was thus submitted that when clove was considered as crude drugs, there was no justification now to hold that it did not fall within Item 169 which provided for Drug/Drug intermediates.
It was further argued that cloves are used for treatment of dyspepsia and flatulence.
It is also used to relieve nausea and vomiting.
Clove oil is famous for medicinal use and specially for tooth problems.
It was also argued that in the Indian Materia Medica by A.K. Nadkarni the use of the cloves has been stated as follows : "Uses Cloves(unopened flower buds) are generally used as spice in curry foods and condiments.
Medicinally they are used to correct griping caused by purgatives, relieve flatulence, various forms of gastric irritability, colic, dyspepsia, and to increase the flow of saliva.
Combined with other spices and rock salt clove is given to relieve colic, indigestion and vomiting and to many other uses.
" It was submitted that in the Indian Pharmaceutical Codex issued by the Counsel of Scientific & Industrial Research, New Delhi the Action and Uses of cloves have been stated as under : "Action and Uses Clove is one of the most stimulant of aromatics.
It is carminative and is used in treatment of flatulence and dyspepsia.
It is sometimes administered in the form of powder or an infusion to relieve nausea and vomiting, correct flatulence and excite languid digestion.
" It was thus argued that the High Court committed an error in holding that clove was not a Drug/Drug intermediate.
On the other hand, it was submitted by Mr. Tulsi, Learned Additional Solicitor General that Para 167 of the Policy clearly provided that import of cloves could be allowed only against licences and there was no question of applying Item 169 of List 8 Appendix 6 which provided for Drugs/Drug intermediate not elsewhere specified.
It was also submitted that in the common parlance as well as in trade and commerce, the cloves are always considered as spice and not as a drug or drug intermediate.
It was submitted that the cloves are sold as spice in a `Kirana ' shop and not as drug in a chemist shop.
1001 In order to appreciate the controversy raised before us it would be necessary to reproduce Para 167 contained in Chapter XIII and Item 169 appearing in Part I of List 8, Appendix 6 of the Import & Export Policy, 1991 93 Vol.
I: "Import of Spices: 167.
(1) Import of (1) Cloves (2) Cinnamon/Cassia (3) Nutmeg and (4) Mace will be allowed against licences.
Such licences may be granted to those who imported these items during any of the financial years from 1983 84 to the preceding licensing year.
Import licences will be issued on the basis of the best year 's imports of an item from 1983 84 to the proceding licensing year.
The percentage entitlement as well as minimum value of licence will be as notified by the Chief Controller of Imports & Exports.
From the licensing year 1991 92, applicants will be required to furnish evidence of exports of Indian spices, during the preceding licensing year, for a value equal to the value of the import licence granted during the preceding licensing year.
Only exports of (1) Cardamom (small), (2) all Spices/spice products in approved consumer packs of 450 gms.
or less except spice oils and oleoresins and saffron (3) Herbal spices such as rosemary, thyme, terragon, sage, etc.
(4) Vanila (5) Black cumin, (6) Star anise, (7) Kokum, (8) Garlic, (9) Cardamom (large), (10) Bishopsweed, (11) Caraway and (12) Cumin seed, will be taken into account for the above purpose.
Items may be added or deleted by the Chief Controller of Imports & Exports as and when considered necessary in public interest.
(2) Exports referred to in sub paragraph (1) above should be direct exports by the applicant in his own name with the export proceeds i.e. the foreign exchange realisation in his own name, or exports through the Consortium of Spices Exporters, membership of which is to be confined only to dealers of spices who want to avail of the facility for exports through the Consortium.
Documents required to be furnished alongwith the application for grant of licences for spices shall be as provided in sub paragraph 166(6) above.
(3) Actual users who have no past imports will also be eligible 1002 for licence on the recommendation of the sponsoring authority and approval by the Headquarters Supplementary Licensing Committee.
(4) Applications for import of spices are to be made to the licensing authority concerned.
" Item 169 in Part I of List 8, Appendix 6 : "Drugs/Drug intermediates not elsewhere specified.
" In the present case we are concerned with the Import Policy of 1990 93 and not any earlier Policy.
The appellant had obtained the licence on 29th November, 1990 and has imported the cloves in May, 1991 and as such the import of cloves in question shall be governed by the provisions contained in the Import Policy of April 1990 93, and not by any meaning given to cloves in any earlier Policy.
It cannot be disputed that the Government has power to modify or change its Import and Export Policy.
Para 167 under Chapter XIII of the present Policy clearly provides the heading Import of Spices and under this heading of spices it further makes a mention that import of cloves, Cinnamon/Cassia, Nutmeg and Mace will be allowed against licences.
Thus, it is clear beyond any doubt that cloves have been included under the heading spices and the import of cloves is only permissible against specific licences obtained in the manner provided in Para 167.
In face of the above provision dealing with the import of spices which specifically includes cloves, the general provision of Item 169 mentioning Drugs/Drug intermediates cannot be applied.
When Para 167 provides for obtaining specific licence for cloves, there is no necessity of finding its meaning from Policies or its use as medicine.
As regards import of spices, there is a clear provision under Para 167 and it would govern the import of cloves.
That part we are in agreement with the view taken by the High Court that in the common parlance as well as in trade and commerce, clove is treated as spice and not drug.
It is a matter of common knowledge that the cloves are sold in a `Kirana ' shop and not in the shop of a chemist or druggist.
Thus, we find no error in the view taken by the High Court and this appeal having no force is dismissed with no order as to costs.
N.P.V. Appeal dismissed.
| The appellant obtained, by transfer, an Import Licence for the import of admissible Items as per Para 220 (2), (3), (4) and (6) of the Import Policy 1990 93 Vol.
I and placed an order on a foreign firm for the supply of cloves No. 1 quality.
On arrival of the goods in the Indian Port, the appellant filed Bill of Entry for the clearance of the goods for home consumption, and claimed clearance of the goods against the additional licence on the ground that the cloves were covered under Item 169 of Appendix 6, List 8, Part I of the Import and Export Policy, being Drugs/Drug intermediate not elsewhere specified.
" The Department relying on Para 167, which dealt with the import of spices, took the view that the cloves could be imported only against specific licence relating to cloves.
Hence the appellant filed a writ petition in the High Court for a direction to the respondent to clear the goods against the Bill of Entry filed by the appellant.
The High Court held that cloves could not fall within the expression "Drugs/Drug intermediate not elsewhere specified" and the import of the cloves without specific licence was not permissible, and that the licence relied upon by the appellant was not valid for the import of cloves.
In the appeal before this Court, it was contended on behalf of the appellant importer that in popular sense and trade parlance, clove was also used as drug intermediate, and that in the Import Policies of 1982 83 to 1985 86 cloves were specified as crude drug and the cloves and clove oil were used for treatment of dyspepsia, flatulence, etc., and tooth problems and, therefore, the High Court committed an error in holding that clove 998 was not a Drug/Drug intermediate, and that it did not fall within Item 169.
Dismissing the appeal of the Importer, this Court, HELD : 1.1 Para 167 under Chapter XIII of the Import Policy of April 1990 93 clearly provides the heading Import of Spices and under this heading of spices it further makes a mention that import of Cloves, Cinnamon/Cassia, Nutmeg and Mace will be allowed against licences.
Thus, it is clear beyond any doubt that cloves have been included under the heading Spices and the import of cloves is only permissible against specific licences obtained in the manner provided in Para 167.
In the face of this provision, dealing with the import of spices, which specifically includes cloves, the general provision of Item 169 mentioning Drugs/Drug intermediates cannot be applied.
[1002D E] 1.2 In the instant case the appellant had obtained the licence in November, 1990 and has imported the cloves in May, 1991 and as such the import of cloves in question, shall be governed by the provisions contained in the Import Policy of April, 1990 93, and not by any meaning given to cloves in any earlier Policy.
Therefore, when para 167 provides of obtaining specific licence for cloves, there is no necessity of finding its meaning from earlier Policies or its use as medicine.
There is a clear provision under Para 167 as regards import of spices and it would govern the import of cloves.
That apart, the High Court was right in holding that in the common parlance as well as in trade and commerce, clove is treated as spice and not drug.
It is a matter of common knowledge that the cloves are sold in a `Kirana ' shop and not in the shop of a chemist or druggist.
[1002C, F G]
|
N: Criminal Appeal No. 144 of 1992.
From the Judgement and Order dated 27.9.1991 of the Karnataka High Court in W.P. No. 113 of 1991.
WITH Writ Petition (Crl.) No. 1394 of 1991.
C.S. Vaidyanathan and P.K. Manohar for the Appellant.
K.T.S. Tulsi, Addl.
Solicitor General, P. Parmeswaran, A.K. Srivastava, M. Veerappa and Kh.
Nobin Singh (For the State of Karnataka) for the Respondents.
The Judgment of the Court was delivered by section RATANAVEL PANDIAN, J.
Leave granted.
The appellant/petitioner K.P.M. Basheer by the above appeal is challenging the correctness and legality of the order dated 27th September 1991 made by the High Court of Karnataka dismissing the Writ Petition filed by the appellant challenging the legality and validity of the order of detention dated 7.1.1991 passed by the State of Karnataka.
The first respondent in the appeal, namely, the State of Karnataka in exercise of the powers conferred by the Section 3(1) of the (hereinafter 1077 referred to as `the Act ') passed the impugned detention order on 7th January 1991 with a view to preventing him from engaging in keeping and transporting smuggled goods falling within the mischief of Section 3(1)(iii) of the Act.
The appellant was directed to be detained and kept in the custody of the central prison, Banglore.
The brief facts of the case which led to the passing of the impugned order can be summarised as follows: On 12.11.1990 the Superintendent of Central Excise on information interrogated the appellant at the Balgaum bus stand on his arrival from Bombay in the presence of some panchas and recorved two gold pellets with foreign markings each weighing ten tolas, wrapped in a paper packet from his front side right watch pocket of his pant.
The appellant was not having any valid permit and also was not able to give any satisfactory explanation for possessing the gold pellets.
Therefore, the Superintendent entertaining a reasonable belief that they were smuggled gold pellets recorded the statement of the appellant.
The State Government on the information passed on by the sponsoring authority passed the impugned order on 7.1.1991 on being subjectively satisfied of the necessity of passing the impugned order on the materials placed before it.
The detention order was served on the detenu only on 28.6.1991 from which date onwards he has been detained.
Challenging the detention order, the petitioner filed a Writ Petition No. 113/91 before the High Court of Karnataka and raised several contentions; those being (1) the order of detention is based on a solitary incident; (2) there has been an undue and prolonged delay in serving the order on the detenu; and (3) the materials placed before the detaining authority were not sufficient for drawing the requisite satisfaction for passing the impugned order.
The High Court rejected all those contentions and dismissed the Writ Petition.
Hence this appeal.
Before this Court the petitioner has filed a separate Writ Petition under Article 32 of the Constitution of India raising certain additional grounds.
Those grounds are: (1) The detenu made a request to the detaining authority to forward a copy of his representation to the Central Government and that the detaining authority has not forwarded the same to the Central Government as requested by him.
Even assuming that it has been forwarded, his represe tation has not been disposed of in time and as such there is violation of Article 22(5) of the Constitution of India.
1078 (2) The normal criminal process which would be adequate to take care of the possession of the gold has not been followed; and (3) The first respondent in the Writ Petition (Union of India) has failed in its duty to inform the petitioner regarding the Government instruction issued to the sponsoring agencies not to make an order of detention in cases where the value of the smuggled goods is less than Rs.1 lakh.
In the Writ Petition both the State Government as well as the Central Government have filed their counter affidavits refuting all the additional grounds.
Before scrutinising the additional grounds raised in the Writ Petition, we shall now examine the contentions raised in the appeal and find out whether the order of the High Court warrants interference.
Mr. C.S. Vaidyanathan, the learned counsel appearing on behalf of the appellant contends that the delay of more than five months in executing the order of detention is not only an inordinate and unreasonable one but also stands un explained and on that ground the High Court ought to have set aside the order of detention.
According to him, the High Court has not gone deep into that question but summarily disposed of the same holding "The explanation offered by the 1st respondent, in para 9 of the statement of objection is quite acceptable.
" Of course, this contention has not been specifically taken in the Memorandum of Appeal, but there can be no bar to advance a legal argument in a case of this nature and especially when such a contention has been raised before the High Court.
We want through the explanation given in para 9 of the counter affidavit filed on behalf of the first respondent by the then commissioner and Secretary to Government, Home Department.
It is not denied that the detention order was executed after a period of 5 months and 11 days.
What the first respondent states is that various efforts were taken to trace the detenu at Tellicherry at the address given in the grounds of detention as well as in the Bombay address, but he could not be secured.
Further it has been stated that though the arresting officers attempted to secure him at the Court of Chief Judicial Magistrate at Belgaum on 6.3.91, 28.3.91 and 14.5.91 on which dates the criminal case aS against him stood posted before that court, the officers could not do so as the appellant did not appear before the court for hearing.
Further it is mentioned that though COFEPOSA Section in the office of the Collec 1079 torate of Customs requested the State Government on 19.4.91 to initiate action under Section 7(1)(b) of the Act it was not done so because the seizing unit was asked to make one more attempt to trace out and detain the appellant.
This explanation is not a satisfactory and reasonable one for the following reasons : (1) No sufficient cause is shown for not taking any action under Section 7 of the Act.
(2) It appears from the paragraph 9 of the counter that the officers came to know of the correct address of the appellant at Bombay, but they could not trace him.
It may be pointed out that the Bombay address at which place the appellant detenu was attempted to be secured is not given in the counter.
Had it been given, the Court would have been in a position to verify the averments made in the grounds of detention stating that the address at Bombay given by the appellant was a fictitious one.
In paragraph 17 of the Writ Petition filed before the High Court, the appellant has asserted that he appeared before the Asstt.
Collector of Customs, Marine Lines, Bombay on 6.2.91 and 20.2.91 but no attempt was made to arrest and detain him.
This specific averment is not all denied in the counter.
This indicates that the arresting officers did not take any real and genuine effort to secure and detain the appellant.
The explanation now offered stating that the appellant was fugitive, eluding the dragnet of the detention order cannot be accepted, because during the alleged period of search he has appeared before the Assistant Collector of Customs, Bombay on two occasions during Feb. 1991, that is after passing of the detention order.
All the above points show that no serious and sincere effort appears to have been taken by the arresting officers and that there was only exchange of correspondence between the Department and the arresting officers.
It is incomprehensible as to why no effort has been made to secure the appellant/detenu during the two days, namely, on 6th and 20th February when he appeared before the Assistant Collector of Customs.
No supporting affidavits or documents are filed to substantiate the averments made in the counter.
Incidentally, it may be mentioned that though the two gold pellets (the contrabans) were seized from the appellant on 1080 12.11.90 the authorities concerned passed these orders only on 7.1.1991, i.e. nearly after two months.
Under these circumstances, we are of the view that the order of detention cannot be sustained since the `live and proximate link ' between the grounds of detention and the purpose of detention is snapped on account of the undue and unreasonable delay in securing the appellant/detenu and detaining him.
As we have now come to the conclusion that the order of detention is liable to be set aside on this ground alone we are not dealing with other contentions raised in the Memorandum of Appeal as well as in the Writ Petition.
Hence for the reasons stated above we allow the appeal, set aside the order of the High Court and quash the impugned detention order and direct the detenu to be set at liberty forthwith.
In view of the order in this present appeal, no order is necessary in the Writ Petition.
R.P. Appeal allowed.
| The appellant, on 12.11.1990, was found carrying two gold pellets with foreign markings each weighing ten tolas, without any valid permit.
The order of detention under S.3(1) of the conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 was passed on 7.1.1991.
The detention order was served on him on 28.6.1991.
The Writ Petition challenging the detention order, inter alia, on the ground of undue and reasonable delay in its execution was dismissed by the High Court.
The detenu filed the appeal by special leave against the High Court 's order as also the writ petition under Article 32 of the Constitution before this Court.
Allowing the appeal and disposing of the writ petition, this Court, HELD: 1.1 The order of detention cannot be sustained since the `live and proximate link ' between the ground of detention and the purpose of detention is snapped on account of the undue and unreasonable delay in securing the appellant/detenu and detaining him.
The order of detention is liable to be set aside on this ground alone.
[p. 1080A B] 1.2 Though the two gold pellets (the contrabands) were seized from the appellant on 12.11.1990, the order of detention was passed on 7.1.1991, and the detention order was executed after a period of 5 months and 11 days.
{pp. 1078F; 1079G H; 1080A] 1076 2.1 No sufficient cause is shown for not taking any action under s.7 of the COFEPOSA Act.
The explanation that though COFEPOSA section in the office of the Collectorate of Customs requested the State Government on 19.4.1991 to initiate action under s.7(1) (b) of the Act it was not done so because the seizing unit was asked to make one more attempt to trace out the appellant is not satisfactory and reasonable one.
[pp. 1078G H; 1079A B] 2.2 No serious and sincere effort was taken by the arresting officers: There was only exchange of correspondence between the Department and the arresting officers.
It is incomprehensible as to why no effort was made to secure the appellant/detenu during the two days, namely, on 6th and 20th Feb.91, when he appeared before the Assistant Collector of Customs.
1079F G]
|
Civil Appeal Nos. 2023, 2024 & 2025 of 1990.
With I.A. Nos. 7 9 of 1991.
From the Judgment and Order dated 28.6.89 & 16.3.90 of the Calcutta High Court in Appeal No. 498 of 1988.
A.K. Mitra, P.K. Chatterjee, Jaydip Kar and Ms. Radha Rangaswamy for the Appellants.
Narayan Shetty, Gopal Subramaniam, Atin Benerjee and D.P. Mukherjee for the respondents.
The Judgment of the Court was delivered by AHMADI, J.
These three appeals by special leave arise out of the Judgments & Order dated 28the June, 1989 passed by the Division Bench of the High Court of Calcutta and from the subsequent orders dated March 16, 1990 and March 30, 1990 made in pursuance thereof.
The brief facts 902 giving rise to these three appeals may be stated as under.
The West Bengal Registration Service comprising the Sub Registrar 's post was administered by the Judicial Department of the State.
Under the West Bengal (Revision of Pay & Allowances) Rules, 1951 (hereinafter called `the ROPA Rules ') the scale of pay for the said post was fixed at Rs. 100 250.
By a resolution dated May 22, 1952 the said post of Sub Registrar was directed to be regarded as Gazetted with effect from April 1, 1952 and thereafter by notification dated July 17, 1953 the governor, in exercise of powers conferred by Rule 188 of the Civil Service (Classification, Control & Appeal) Rules read with Articles 313 and 372 of the Adoption of Laws Order, 1950 and all other related powers, declared that the West Bengal Registration Service comprising (1) Registrar of Assurances, Calcutta, (ii) Inspector of Registration Offices, (iii) Departmental District Sub Registrars, (iv) Sub Registrar of Assurances, Calcutta (v) District Sub Registrars, and (vi) Sub Registrars shall, with effect from January 30, 1953, the date of constitution of the said service, be deemed to be included in the State Service.
The respondents who belong to the said service contend that after the issuance of the said notifiction a commitment was made by the State Government that sub Registrars would be accorded all the privileges admissible to officers belonging to the State Service.
Notwithstanding the said commitment the respondents contend that their pay scale was not revised to Rs.200 400 which was the lowest pay scale admissible to State service officers.
Thereafter pursuant to the recommendation of the Pay Committee, the pay scale underwent an upward revision but the Sub Registrars were placed in the revised scale of Rs. 200 400 which corresponded to the old scale of Rs. 100 250, even though the minimum scale for State service employees was raised to Rs. 250 550 under the ROPA Rules, 1961.
The First (State) Pay Commission was then constituted in 1967.
That body examined the grievance of this service and observed that it was an extremely ill paid service.
After evaluating the job requirements, recruitment standard and responsibilities attached to the post belonging to the said service it recommended a scale of Rs. 425 825 for Sub Registrars and corresponding higher scales for the posts, the highest being Rs. 850 1600 for Registrar of Assurances, Calcutta and inspectors of Registration Officers.
It appears that this recommendation did not find favour with the State Government.
This is obvious from the fact that under the ROPA Rules, 1970, the pay scale for the post of Sub Registrar was fixed at Rs. 300 600 only.
Pursuant 903 to the recommendations of Second (State) Pay Commission the pay scale for the post was revised to Rs. 425 1050 under RUPA Rules, 1981.
This was Scale No. 11.
According to the respondents they ought to have been placed in scale No. 17 which carried a pay scale of Rs. 660 1600 but, contend the respondents, grave injustice was done to them because of the biased and negative attitude of the Finance Department of the State Government.
It was contended that since the basic minimum pay scale for State Service officers was fixed at Rs. 660 1600, there was no valid reason to deny the same to the Sub Registrars and to deny higher pay scales to officers above the level of Sub Registrars in the West Bengal Registration Service.
Feeling aggrieved by the decision of the State Government the respondents, therefore, filed a Writ Petition No. 1993 of 1987 in the High Court of Calcutta under Article 226 of the Constitution for a Mandamus to award to the Sub Registrars the pay scale No. 17 of Rs. 660 1600 with all other privileges admissible to State service officers.
In the said writ petition the learned Single Judge of the High Court passed certain interim orders against which an appeal No. 498 of 1988 was preferred before a Division Bench of the High Court.
At the hearing of the said appeal the Division Bench felt that it would be proper to dispose of the writ petition itself on merits and accordingly it heard the writ petition by consent of parties instead of disposing of the appeal against the interim order and leaving the hearing of the writ petition to the learned Single Judge.
The Division Bench of the High Court allowed the writ petition and directed that the Sub Registrars should be placed in the pay scale of Rs. 660 1600 with effect from April 1, 1981 and their pay scales should be fixed nationally on that basis without paying the difference in salary up to January 1, 1986.
The arrears of salary for the subsequent period was, however, directed to be paid within 8 weeks from the date of the judgment.
Certain other directions were also given but it is not necessary to notice them.
It may here be mentioned that during the pendency of the writ petition the Third (State) Pay Commission constituted by the State Government had submitted its report sometime in December, 1988.
Before the said body it was represented on behalf of the Sub Registrars that they should have been placed in the pay scale of Rs. 600 1600 instead of Rs. 425 1050 as that was the basic minimum scale for State service and the scale for higher posts in the West Bengal Registration Service should be correspondingly raised.
The Commission spurned this request as in its opinion the duties and responsibilities of the Sub Registrars did not justify 904 the higher pay scale.
Pursuant to the recommendations of the Pay commission the ROPA Rules, 1990 came to be issued whereunder the Sub Registrars were placed in the revised scale No. 11 of Rs. 1390 2970.
The High Court took notice of the recommendations of the Pay Commission as well as the ROPA Rules, 1990 while disposing of the writ petition by its judgment dated 28th June, 1989.
After the High Court 's Judgment awarding Scale No. 17 to the Sub Registrars, the respondents took out an application for interim relief seeking permission to exercise option for the corresponding Scale No. 17 of Rs. 2200 4000 and for granting an option to officers above the level of Sub Registrars for placement in the corresponding Scales Nos. 18 and 19 with effect from April 1, 1981.
The Division Bench of the High Court passed an ad interim order dated March 16, 1990 permitting the Sub Registrars to opt for the revised Scale No. 17.
The Civil Appeal No. 2023 of 1990 is against the main judgment of the High Court dated June 28, 1989.
Civil Appeal No. 2024 of 1990 is against the interim order dated March 16, 1990 by which the Sub Registrars were permitted to opt for the revised Scale No. 17.
On March 19, 1990 the respondents took out an application for clarification of the order dated March 16, 1990.
The High Court while disposing of this application permitted the officers belonging to the posts above the level of Sub Registrars to opt for corresponding Scales Nos. 18 and 19.
Civil Appeal No. 2025 of 1990 is against that order.
Since the subsequent two appeals Nos.
2024 and 2025 of 1990 also flow from the main judgment dated June 28, 1989, which has given rise to Civil Appeal No. 2023 of 1990 we have thought it proper to dispose of all the three appeals by this common judgment.
The history of the West Bengal Registration Service has been traced by the High Court right from 1826 but it is unnecessary to re state the same.
Suffice it to say that except the top post of the Registrar of Assurances, Calcutta, the remaining cadres in the said service belonged to the Subordinate Services of the State.
Generally speaking the West Bengal Services were divided into (i) Provincial Service and (ii) Subordinate Services leaving out certain special categories of posts.
Subordinate Services comprised certain minor administrative, executive and ministerial posts to which appointment could be made by the Local Government or by an authority subordinate thereto, specially empowered.
The other cadres and posts belonged to the Provincial Service.
By a notification dated Novem 905 ber 25, 1949 recruitment rules were framed which provided that recruitment of Sub Registrars shall be made though West Bengal Civil Service examination.
The minimum educational qualification for Sub Registrars was prescribed as `graduate of a recognised University '.
Subsequently, by a resolution dated May 22, 1952 it was provided that Sub Registrars shall be regarded as Gazetted Officers with effect from April 1, 1952.
Soon thereafter by a notifiction dated July 17, 1953 the West Bengal Registration Service was included in the State Service.
Thus according to the respondents the position that emerged after the notification of 1953 can be summed up as under : (i) The West Bengal Registration Service was expressly declared to be in the West Bengal State Service (the former Provincial Service); (ii) The recruitment rules of the State Service were identical to the recruitment rules of the other State Services.
(iii) Gazetted status and concomitant privileges of State Services were conferred on the Sub Registrars belonging to the West Bengal Registration Service; and (iv) The powers relating to the recruitment, conditions of service and disciplinary matters in regard to members belonging to the West Bengal Service including the Sub Registrars were to be exercised by the State Government.
By a notification dated July 6, 1966, the West Bengal Registration Service was declared as the West Bengal Junior Registration service and subsequently by a notification dated October 17, 1966 rules were framed under Article 309 of the Constitution which superseded all previous rules on the subject and provided that appointment to the post of Sub Registrar shall be made by the Government through the West Bengal Civil Service (Executive) and Allied Services Examination.
The educational qualification for appointment to the post of Sub Registrar was stated to be a graduate of a recognised University and the age criteria was fixed as not below 21 years and not exceeding 24 years.
The system of classification of Government employees into Gazetted and Non Gazetted and Classes I, II, III, & IV adopted hitherto was done away with by the notification dated September, 25, 1978 and Government employees were placed in Groups A, 906 B,C, and D according to pay and scale of pay.
The new grouping of services was not expected to cause any immediate disturbance in the existing framework of job charts, responsibilities and facilities.
Rule 5 (4) of the West Bengal Service Rules, 1971, Part I, was amended and read as under : "5(4) West Bengal State Services means those services and posts under the Administrative control of the Government which have been classified as Group A, Group B, Group C and Group D." A note at the foot thereof provided as under : "Note 1(a) Subject to the provisions of paragraph (b) services or posts under Group a, Group B, Group C and Group D shall consist of the services or posts specified respectively against them in the table below : section No Classification of Classification of the Post and Services Services and posts 1.
Group `A ' All Government employees drawing a pay or a scale of pay with the maximum above Rs. 1,170.
Group `B ' All Government Employees drawing a pay or a scale of pay with a maximum of Rs. 1170 or below, but above Rs. 700.
Group `C ' All Government employees drawing a pay or a scale of pay with a maximum of Rs. 700 or below, but above Rs. 415. 4.
Group `D ' All Government employees drawing a pay or a scale of pay with a maximum or Rs. 415 or below.
(a) Government may, be special order include any other class or posts carrying any pay or scale of pay in a class of service 907 consisting of posts or services carrying a higher pay or scale of pay.
(b) If a service consists of posts with more than one time scale or if there be a Selection Grade, pay attached to a service or post, post carrying the different time scales or the Selection Grade pay may be classified in different services according to the pay or the maximum scale of pay of the post.
Provided further that the aforesaid classification of posts and services shall not interfere with other existing framework of duties, functions responsibilities and facilities of Government employees on the basis of the existing classification.
" This classification had an impact on the recommendations made by the Pay Commission which were finally approved under the ROPA Rules, 1981.
This, in brief, is the history of the West Bengal Registration Service.
The grievance of the respondents was that even after the Sub Registrars were placed in the Gazetted category and their service was declared to be included in the State Service and entry into service was through a competitive examination with the minimum qualification for appointment being graduation, the pay scale for sub Registrars was fixed at Rs. 100 250 notwithstanding the Government notification of 1953 providing that the said officers belonging to the Registration Service will enjoy the benefits and privileges admissible to State Service officers.
On the representation made by the officers of the Registration Service.
the then Chief Minister granted the relief of Rs. 50 at the minimum and maximum of the pay scale thereby virtually enhancing the pay scale from Rs. 100 250 to Rs. 150 300.
Thus after the report of the Pay Committee when the scale of pay of Sub Registrar was revised to Rs. 200 400 in effect the pay at the minimum got reduced by Rs. 10 as the Sub Registrars were drawing Rs. 5 as DA and Rs. 5 as CCA besides Rs. 50 granted pursuant to the orders of the then Chief Minister.
This was totally overlooked by the Finance Department while drawing up the ROPA Rules, 1961.
Subsequent representations for upward revision of the scale were ignored by the Finance Department till the First (State) Pay Commission came to be constituted.
That body observed as under : "This is an extremely ill paid service.
The work that the 908 Registration Officers have to do is not negligible in importance.
The work involves the interpretation of documents and the assessment of stamp duties and registration fees with reference to the value of the subject matter involved.
The scale of pay should be improved.
The following scales are recommended : (a) Registrar of Assurances and Inspectors of Registration Offices Rs. 850 50 1000 60 1600.
(b) District Registrars and Sub Registrars of Assurance, Calcutta Rs. 475 35 825 EB 50 1325.
(c) District Sub Registrars Rs. 450 15 600 EB 25 825.
(d) Sub Registrars Rs. 425 10 475 15 700.
The majority members however, recommended the higher scale of Rs. 450 15 600 25 825 for Sub Registrars.
" Notwithstanding the said recommendation the pay scale for Sub Registrars was fixed at Rs. 300 600 under ROPA Rules, 1961.
The respondents contend that the injustice done to them in ignoring the above extracted recommendation of the Pay Commission resulted in their being placed in the equivalent Scale No. 11 throughout by the subsequent pay Commissions also.
A strong letter of protest written by the Head of the Department also did not yield the desired result thereby necessitating the filing of a writ petition in which the impugned order came to be passed.
It is in this background that we must examine the correctness or otherwise of the impugned judgment and the subsequent impugned interim orders made by the High Court.
The partition of Bengal in the wake of independence necessitated grant of relief to millions of persons who were uprooted and their rehabilitation.
This brought into existence new departments and organizations increasing the number and categories of employees required to handle the enormous task.
The history of pay revision in the State of West Bengal would show that under the ROPA Rules, 1950 the total number of pay scales was reduced from 500 to 78 but by the time the Pay Committee was appointed in 1959 the number had once again gone up to 143 but was reduced to 39 by the Pay Committee.
The number of pay scales again proliferated from 39 to 81 but the First (State) Pay Commission brought it 909 down to 34.
The second (State) Pay Commission appointed in 1977 found 36 standard scales, 19 new intermediate selection grade scales and 20 non standard pay scales besides a few pay scales introduced on different dates for non Governments employees.
That body reduced the number of pay scales to 29.
The Third (State) Pay Commission found the total number of pay scales to be 29 primary pay scales and brought it down to 24 pay scales.
The situation thus created on account of the increase in the stratification of administrative hierarchy and the consequential fragmentation of duties and responsibilities on the one hand and the reduction in the number of pay scales on the other necessitated higher initial pay and attaching of special pay to a increasing number of posts to avoid anomalies in the pay structure thereby throwing an increased financial burden on the State Government.
The minimum pay fixed for State employees has always been higher than that prescribed for Central Government employees.
When the pay structure was related to the index average 200 (1960 : 100) the minimum pay of Central Government employees was Rs. 196 per month while that of the State Government employees was Rs. 220; a weightage of Rs. 24 recommended by the Second (State) Pay Commission on account of dietary habits of State employees.
At the index average of 608 the minimum pay for Central Government employees has been fixed by the Fourth Central Pay Commission at Rs. 750 per month whereas the Third (State) Pay Commission has fixed the same at Rs. 800 per month.
The maximum pay for State Government employees has been fixed in the scale of Rs. 5900 200 7300.
For the old scale 11 (Rs. 425 1050) the new scale prescribed is Rs. 1360 2800.
The revised equivalent for the old scale No. 17 (Rs.660 1600) is Rs. 2200 4000.
With regard to the demand for higher pay scales for officers belonging to the Registration Service, the Pay Commission observed: "It has been represented to us that the scale of pay for the post of Sub Registrar should have been Rs. 660 1600 which is the basic scale for the State Services and that the scales of pay for the higher posts in the Registration Directorate as mentioned earlier should have been correspondingly higher.
In view of the duties and responsibilities of the posts we are of the opinion that upgradation of the scales of pay of these posts will not be justified.
The posts should carry the proposed scales of pay and special pay corresponding to their existing scales and special pay.
" 910 As pointed out earlier the High Court took notice of the revised scales fixed by this body and by subsequent orders directed that the Sub Registrars should be placed in revised scale No. 17, ie.
Rs. 2200 4000, and the officers above them should be placed in the revised scales Nos. 18 and 19.
In taking the view that the Registration Service was underpaid, the High Court was greatly impressed by the fact that the Sub Registrars were conferred gazetted status and the entire service was designated as State Service and being the head of office and the drawing and disbursing officer as well, he exercised administrative and financial power and now that the recruitment rule had been brought on par with the educational qualification as prescribed for Munsiffs, the pay scales of Sub Registrars ought to be the same and cannot be less than that of Munsiffs.
Strong reliance was also placed by the High Court on the observations of the First (State) Pay Commission, extracted earlier, in support of its conclusion that the State Government had arbitrarily brushed aside the demand to the Sub Registrars for higher wages.
Holding that the position of a Sub Registrar was equivalent to others in State Services, the High Court ruled that they were victims of hostile discrimination and the Government decision not to accept the weighty recommendations of the Pay Commission was wholly arbitrary and violative of Articles 14 and 16 of the Constitution.
In that view that it took it allowed the Writ Petition and awarded scale No. 17 (Rs. 660 1600 now revised to Rs. 2200 4000) to them and scales Nos. 18 and 19 to higher level officers in the same department.
It is against these orders that the present appeals are preferred.
From the resume of facts set out hereinabove it clearly emerges that prior to 1953 the post of Sub Registrars belonged to the Subordinate Service but by the notification dated July 17, 1953 it was placed in the State Service w.e.f. January 30, 1953.
Being the head of office, a drawing and disbursing officer with certain administrative and financial powers, and also required to perform certain quasi judicial functions, such as, interpreting recitals contained in the documents and provisions of concerned statutes and rules, counsel for the respondents contended that till 1981 when the educational qualification for entry into that post was graduation of any discipline, the Sub Registrars were entitled to be treated above members belonging to Junior Service and pay scale so determined but the State authority failed to do so.
Counsel further contended that after 1981 the additional qualification of a degree in law was added to the eligibility criterion and thus the same was brought on par with Munsiffs and hence 911 they should have been equated with Munsiffs in the matter of pay scale, since officers in all services recruited from practicing advocates were given the same scale.
Accepting this line of reasoning the Division Bench of the High Court concluded that the Government had acted arbitrarily and in violation of Articles 14 and 16 of the Constitution in not awarding scale No. 17 (Rs. 660 1600) earmarked for State Services by the Second (State) Pay Commission (which the Government had accepted and implemented) to the Sub Registrars.
It is thus manifest that the decision of the High Court was based on the facts (i) the post of the Sub Registrar was a gazetted post belonging to the State Service (ii) the First (State) Pay Commission had recommended a higher scale (which was still lower than the one demanded by the Sub Registrars) for Sub Registrars observing that it was an extremely ill paid service (a recommendation which was turned down by the Finance Department) and (iii) the eligibility criterion for entry into service was graduation up to 1981 and thereafter the requirement of a law degree was added to it, thus bringing the required educational criterion to that of a Munsiff.
The appellant contend that the High Court committed a serious error in revising the pay scale of Sub Registrars in exercise of its extraordinary jurisdiction under Article 226 of the Constitution in total ignorance of the settled legal position that pay fixation is essentially an executive function ordinarily undertaken by an expert body like a Pay Commission whose recommendations are entitled to great weight though not binding on the Government and ar not justiciable in a court of law since the court of law is not well equipped to take upon itself the task of job evaluation which is a complex exercise.
In support of this contention a catena of decisions beginning with the case of Parbat Kiran Maithani & Ors.
vs Union of India & Anr., ; and ending with the case of State of U.P. & Ors.
vs J.P. Chaurasia & Ors., ; at 29 was relied on.
The appellants also contest the contention that the Sub Registrars are a part of the constituted State Service which is awarded scale No. 17.
They contend that there is no such service as `Constituted State Service ' and therefore, the question of granting them scale No. 17 never arose.
On the contrary they point out that the employees are categorised as belonging to Group A, Group B, Group C, and Group D and are placed in one group or the other on the basis of evaluation of their work and the recruitment policy adopted by the Government.
By placing the Sub Registrars in scale No. 17 the High Court has given them a jump which is likely to give a severe 912 jolt to the pay structure and would destroy the verticle heirarchial relativities carefully built up by the Pay Commission.
The appellants, therefore, contend that the High Court had acted in haste in placing the Sub Registrars in Scale No. 17 without realising its impact on the pay structure.
For examination purposes the State Public Service Commission has placed the Sub Registrars in Group D whereas those in scale No. 17 fall in Group A. Those belonging to Group A are required to sit for six papers whereas those belonging to Group D are required to answer four papers only.
While those belonging to Group A are allowed to take one or more optional papers not exceeding three and have to appear for a compulsory personality test of 200 marks, those belonging to Group D are allowed only one optional paper and have not to appear for the personality test.
Thus the examination for Group A employees is far more stringent than for those belonging to Group D employees and, therefore, contend the appellants, they are not comparable and cannot be placed in the same pay scale invoking the equality clause in Article 14 of the Constitution.
Lastly, it is said that the financial burden which will fall on the State Government on the implementation of the impugned judgment will be in the vicinity of Rs. 1.45 crores which is not justified since the High Court has failed to appreciate the issues in their proper perspectives.
We find considerable force in the submissions made on behalf of the appellants.
We do not consider it necessary to traverse the case law on which reliance has been placed by counsel for the appellants as it is well settled that equation of posts and determination of pay scales is the primary function of the executive and not the judiciary and, therefore, ordinarily courts will not enter upon the task of job evaluation which is generally left to expert bodies like the Pay Commission, etc.
But that is not to say that the Court has no jurisdiction and the aggrieved employees have no remedy if they are unjustly treated by arbitrary state action or inaction.
Courts must, however, realise that job evaluation is both a difficult and time consuming task which even expert bodies having the assistance of staff with requistite expertise have found difficult to undertake sometimes on account of want of relevant data and scales for evaluating performances of different groups of employees.
This would call for a constant study of the external comparisons and internal relativities on account of the changing nature of job requirements.
The factors which may have to be kept in view for job evaluation may include (i) the work programme of his department (ii) the nature of contribution expected of him (iii) the extent of his 913 responsibility and accountability in the discharge of his diverse duties and functions (iv) the extent and nature of freedoms/limitations available or imposed on him in the discharges of his duties (v) the extent of powers vested in him (vi) the extent of his dependence on superiors for the exercise of his powers (vii) the need to co ordinate with other departments, etc.
We have also referred to the history of the service and the effort of various bodies to reduce the total number of pay scales to a reasonable number.
Such reduction in the number of pay scales has to be achieved by resorting to broadbanding of posts by placing different posts having comparable job charts in a common scale.
Substantial reduction in the number of pay scales must inevitably lead to clubbing of posts and grades which were earlier different and unequal.
While doing so care must be taken to ensure that such rationalisation of the pay structure does not throw up anomalies.
Ordinarily a pay structure is evolved keeping in mind several factors, e.g., (i) method of recruitment, (ii) level at which recruitment is made, (iii) the hierarchy of service in a given cadre, (iv) minimum educational/technical qualification required, (v) avenues of promotion, (vi) the nature of duties and responsibilities, (vii) the horizontal and verticle relativities with similar jobs, (viii) public dealings, (ix) satisfaction level, (x) employer 's capacity to pay, etc.
We have referred to these matters in some detail only to emphasise that several factors have to be kept in view while evolving a pay structure and the horizontal and verticle relativities have to be carefully balanced keeping in mind the hierarchial arrangements, avenues for promotion, etc.
Such a carefully evolved pay structure ought not to be ordinarily disturbed as it may upset the balance and cause avoidable ripples in other cadres as well.
It is presumably for this reason that the Judicial Secretary who had strongly recommended a substantial hike in the salary of the Sub Registrars to the Second (State) Pay Commission found it difficult to concede the demand made by the registration service before him in his capacity as the Chairman of the Third (State) Pay Commission.
There can, therefore, be no doubt that equation of posts and equation of salaries is a complex matter which is best left to an expert body unless there is cogent material on record to come to a firm conclusion that a grave error had crept in while fixing the pay scale for a given post and Court 's interference is absolutely necessary to undo the injustice.
There can be no dispute that by Government Resolution No. 226 dated 22nd May, 1952 gazetted status was conferred on Sub Registrars w.e.f. 1st April, 1952.
So also there is no dispute that by notification dated 914 17th July, 1953 the Registration Service was, with effect from the date of its constitution, i.e, 30th January, 1953, included in the West Bengal State Services.
Subsequently, by a notification dated 10th October, 1953, all the entries in column I of the Schedule under the heading `Registration Department ' of the Bengal Subordinate Service (Discipline & Appeal) Rules, 1936 were omitted along with the corresponding entries in columns 2 to 5 thereof.
Thus, contend the respondents, the West Bengal Registration Service, including the Sub Registrars was brought on par with other Constituted State Services ', with effect from 30th January, 1953.
Chapter 18 of the Third (State) Pay Commission would show that the Constituted Service may comprise of tiers, such as, Subordinate Service, Junior Service and State Service with or without corresponding higher or senior service.
Paragraph 18.5 of that chapter shows: `There are 4 tiers of constituted service in some of the Government Departments viz., Higher or Senior Service, State service, Junior Service and Subordinate Service '.
Paragraph 18.6 recites that the State Services are generally in scale No. 17 (Rs. 660 1600).
The Junior Services are generally in scales Nos. 11 to 16 and the pay scales for Subordinate Services range from scale No. 4 to scale No. 13.
It would, therefore, appear that the contention of the respondents that the State Service employees were generally placed in scale No. 17 is prima facie accurate.
Yet that body turned down the plea of the Sub Registrars to be placed in scale No. 17 on the ground that the duties and responsibilities of the post did not justify upgradation of the scale as is evident from the observation extracted earlier.
This clearly shows that the Commission determined the pay scale for Sub Registrars keeping in view their duties and responsibilities.
Therefore, merely because the Sub Registrars were conferred gazetted status and the Registration Service was included in State Service did not entitle the Sub Registrars to be placed in the higher scale if their duties and responsibilities did not justify the same.
One of the basic principles for pay fixation is that the salary must reflect the nature of duties and responsibilities attached to the post, meaning thereby that the scale must be commensurate with the task to be performed and the responsibility to be undertaken by the holder of the post.
Merely because of conferment of gazetted status or placement in State Service, no qualitative change was brought about in the job performance of the Sub Registrars and their superiors.
Before November, 1949 appointments to the posts of Sub Registrars was made by nomination of candidates who were undergraduates or even 915 of lower academic qualification.
By the notification dated 25th November, 1949, made under section 211(2)(b) of the Government of India Act, 1935, the recruitment rules framed in supersession of all previous rules, the minimum educational requirement for Sub Registrars was raised to graduation.
The revised recruitment rules for Sub Registrars framed under the proviso to Article 309 of the Constitution dated 17th October 1966 also prescribed the minimum educational requirement as graduate of a recognised university.
By the subsequent notification dated 4th November, 1981 issued under the proviso to Article 309 of the Constitution, the recruitment rules of 17th October, 1966 were amended whereby rules 3 and 4 were replaced.
The newly inserted rule provided for recruitment to the posts of Sub Registrars on the basis of West Bengal Civil Service (Executive) and Allied Service Examination conducted by the State Public Service Commission and the selection was to be made in consultation with that body.
For direct recruitment the educational qualification was raised to a degree in law from a recognised University/Institute or equivalent qualification and experience of 3 years at the Bar.
Since this revised educational requirement is the same as required for Munsiffs, the High Court has thought it proper to place them in the scale of the latter i.e. scale No. 17 (Rs. 660 1600).
But in doing so the High Court has, with respect, failed to evaluate the difference in the nature of duties and responsibilities of a Munsiff and a Sub Registrar.
The duties and responsibilities of a Munsiff and a Judicial Magistrate are far more onerous than those of a Sub Registrar.
The Sub Registrar 's duties are relatively simple namely to receive, examine and register the document whereas the duties of a Judicial Officer at the floor level are to hear cases, examine witnesses, interpret and construe different laws, hear oral arguments and deliver reasoned judgments.
He has to keep abreast with a host of laws unlike a Sub Registrar who is expected to study only a couple of laws connected with the registration of documents like the Registration Act, the Stamp Act, etc.
The responsibilities of a Judicial Officer are also far greater than those of Sub Registrars.
Therefore, to compare the Sub Registrars with Judicial Magistrates Munsiffs is to compare unequals.
It would, therefore, be wholly arbitrary to place them in the same pay scale.
In our view, therefore, the High Court, with respect, committed a serious error in law in holding that the Government 's action in not granting the same pay scale to Sub Registrars was violative of Article 14 of the Constitution.
In fact to put them on par is wholly unjustified.
916 It was then submitted that the Third (State) Pay Commission had failed to notice the upward revision of the educational requirement for direct recruitment as Sub Registrars.
It was rightly pointed out that one of the inputs for pay determination is educational requirement for the post.
The higher the educational qualification the better would be the quality of service rendered and the end result would in the ultimate be far more satisfactory.
That indeed cannot be disputed.
But educational qualification is only one of the many factors which has relevance to pay fixation.
The complexity of the job to be performed and the responsibilities attached thereto are entitled to great weight in determining the appropriate pay scale for the job.
Prima facie there appears substance in the grievance of the Sub Registrars that while the minimum educational qualification for direct entry into the post has been periodically raised, the level of pay scale for the post has not undergone any change, whatsoever.
We think the State Government ought to re examine the question of the appropriate pay scale for Sub Registrars in the light of the above and if it decides to upgrade the pay scale it may also consider if the pay scales of their superiors in the hierarchy need an upward revision.
In the result we allow these appeals and set aside the judgement and orders of the High Court impugned herein but make no order as to costs throughout.
We, however, direct the State Government to re examine the question of the appropriate pay scale for Sub Registrars within three months by a speaking order after giving a hearing to the representative of the respondent association and communicate the decision so taken to the association.
If the State Government decides on the upward revision of the salary of the Sub Registrars, it will simultaneously consider the question of upward revision of the pay scales of higher posts in the department.
I.A. Nos.
7 9 of 1991 will also stand disposed of.
T.N.A. Appeals allowed.
| The West Bengal Registration Service comprised the post of Sub Registrars and other posts above the level of sub Registrars.
By a resolution dated May 22, 1952 the post of Sub Registrar was directed to be regarded as gazetted w.e.f.
1st April, 1952.
Thereafter by a Notification dated 17th July, 1953 the Registration Service was, with effect from the date of its constitution i.e. 30th January, 1953 included in the West Bengal State Service.
The respondents alleged that notwithstanding the commitment made by the 1953 Notification that they would be accorded all the privileges admissible to officers belonging to State Service, their pay scale was not revised equivalent to the minimum pay scale admissible to State Service Officers.
Even when pursuant to the recommendations of the Pay Com 898 mittee the pay scales were revised they were placed on a scale which was lower than the minimum scale payable to State Service Employees.
Further though the First State Pay Commission recommended a Scale of Rs. 425 825 for Sub Registrars yet the recommendation did not find favour with State Government and their pay scale was fixed at Rs. 300 600.
Also pursuant to the recommendations of the Second State Pay Commission their pay scale was revised to Rs. 425 1050 i.e. scale No. 11, although the minimum scale fixed fog the State Service Officers was Rs. 660 1600 i.e. Scale No. 17.
Feeling aggrieved by the decision of the State Govt.
the respondents filed a writ petition in the High Court of Calcutta under Article 226 of the constitution for a mandamus to award scale No. 17 of Rs. 660 1600 as admissible to State Service Officers .
During the pendency of the writ petition the Third State Pay Commission submitted its report.
This Commission also rejected their claim of pay scale of Rs. 660 1600, the minimum scale for State service, on the ground that their duties and responsibilities did not justify the higher pay scale.
By its judgment dated 28th June, 1989, a Division Bench of the High Court allowed the writ petition and awarded revised scale No. 17 by holding that the Government had acted arbitrarily and in violation of Articles 14 and 16 of the Constitution in not awarding scale No. 17 to the Sub Registrars.
The High Court based its decision on the facts that (i) the post of Sub Registrar was a gazetted post belonging to the State Service; (ii) the first State Pay Commission recommended a higher pay scale which was turned down by Finance; and (iii) the revised educational qualification for Sub Registrar, a law degree, was the same as required for Munsiffs.
Subsequently the respondents filed an application for interim relief seeking permission to exercise option for the corresponding scale No. 17 of Rs. 2200 4000 equivalent to the old scale of Rs. 660 1600 which was allowed by the High Court by its order dated 16th March, 1990.
They also filed an application seeking clarification of the Court 's order dated March 16, 1990 and by its order dated 30th March, 1990 the High Court permitted the officers belonging to the posts above the level of Sub Registrars to opt for corresponding scales Nos. 18 and 19. 899 In appeals to this court against the judgment of the High Court dated 28th June, 1989 and orders dates 16th and 19th March, 1990 it was contended on behalf of the appellant that (i) the High Court committed a serious error in revising the pay scale of sub Registrars in exercise of its extraordinary jurisdiction under Article 226 of the Constitution because pay fixation was essentially an executive function ordinarily undertaken by an expert body like a Pay Commission whose recommendations are not justiciable; (ii) there being no scheme as `Constituted State Service ' the employees have been categorised as Group `A ', `B ', `C ', and `D ' on the basis of evaluation of their work and the recruitment policy.
For examination purposes the State Public Service Commission has placed the Sub Registrars in Group `D ' whereas those in scale No. 17 fall in Group `A '.
Therefore, they are not comparable and cannot be placed in same pay scale.
On behalf of the respondents it was contended that since after 1981 the qualification of a degree in law, as required in the case of Munsiffs, was also added to their eligibility criterion, they should be equated with Munsiffs in the matter of pay scale.
Allowing the appeals and setting aside the orders of the High Court, this Court, HELD : 1.
The High Court committed a serious error in law in holding that the Government 's action in not granting the scale No. 17 to Sub Registrars was violative of Article 14 of the Constitution.
[915G] 2.
Equation of posts and determination of pay scales is the primary function of the executive and not the judiciary and, therefore, ordinarily courts will not enter upon the task of job evaluation which is generally left to expert bodies like the Pay Commissions etc.
But that is not to say that the Court has no jurisdiction and the aggrieved employees have no remedy if they are unjustly treated by arbitrary state action or inaction.
[912E F] Parbat Kiran Maithani & Ors.
vs Union of India & Anr.
, ; ; State of U.P. & Ors.
vs J.P. Chaurasia & Ors., ; , cited.
Ordinarily a pay structure is evolved keeping in mind several factors, e.g. (i) method of recruitment, (ii) level at which recruitment is made, (iii) the hierarchy of service in a given cadre, (iv) minimum educa 900 tion/technical qualifications required, (v) avenues of promotion, (vi) the nature of duties and responsibilities, (vii) the horizontal and verticle relativities with similar jobs, (viii) public dealings, (ix) satisfaction level; (x) employers ' capacity to pay etc.
These factors have to be kept in view while evolving a pay structure and the horizontal and verticle relativities have to be carefully balanced keeping in mind the hierarchial arrangements, avenues for promotion etc.
Such a carefully evolved pay structure ought not to be ordinarily disturbed as it may upset the balance and cause avoidable ripples in other cadres as well.
[913C E] 4.
One of the basic principles for pay fixation is that the salary must reflect the nature of duties and responsibilities attached to the post, meaning thereby that the pay scale must be commensurate with the task to be performed and the responsibility to be undertaken by the holder of the post.
Merely because the Sub Registrars were conferred gazetted status and the Registration Service was included in State Service did not entitle the Sub Registrars to be placed in the higher scale if their duties and responsibilities did not justify the same.
By conferment of gazetted status or placement in State Service, no qualitative change was brought about in the job performance of the Sub Registrars and their superiors.
[914E G] 4.1 The High Court failed to evaluate the difference in the nature of duties and responsibilities of a Munsiff and a Sub Registrar.
The duties and responsibilities of a Munsiff and a Judicial Magistrate are far more onerous than those of a Sub Registrar.
The Sub Registrar 's duties are relatively simple namely to receive, examine and register the document whereas the duties of a Judicial Officer at the floor level are to hear cases, examine witnesses, interpret and construe different laws, hear oral arguments and deliver reasoned judgments.
He has to keep abreast with a host of laws unlike a Sub Registrar who is expected to study only a couple of laws connected with the registration of documents like the Registration Act, the Stamp Act etc.
The responsibilities of a Judicial Officer are therefore far greater than those of Sub Registrars.
Therefore, to compare the Sub Registrars with Judicial Magistrates Munsiffs is to compare unequals.
It would, therefore, be wholly arbitrary to place them in the same pay scale.
[915D g] 5.
One of the inputs for pay determination is educational requirement for the post.
The higher the educational qualification the better 901 would be the quality of service rendered and the end result would in the ultimate be far more satisfactory.
That indeed cannot be disputed.
But educational qualification is only one of the many factors which has relevance to pay fixation.
The complexity of the job to be performed and the responsibilities attached thereto are entitled to great weight in determining the appropriate pay scale for the job.
Prima facie there appears substance in the grievance of the Sub Registrars that while the minimum educational qualification for direct entry into the post has been periodically raised, the level of pay scale, for the post has not undergone any change, whatsoever.
[916A C] 6.
The State Government is directed to re examine the question of the appropriate pay scale for Sub Registrars by a speaking order after hearing the representatives of the respondent association.
If the State Government decides on the upward revision of the salary of the Sub Registrars, it will simultaneously consider the question of upward revision of the pay scales of higher posts in the department.
[916E F]
|
Criminal Appeal No. 258 of 1981.
869 From the Judgment and Order dated 12th Feb. 1981 of the Madhya Pradesh High Court in Misc.
Criminal Case No. 617 of 1980.
Appellant in person.
Uma Nath Singh for the Respondent.
The Judgment of the Court was delivered by section RATNAVEL PANDIAN,J.
The appellant, Mr. Pritam Pal Dhingra is a practising Advocate in the High Court of Madhya Pradesh at Jabalpur, having joined the Bar on 4.2.1979.
Earlier to joining the Bar, he was serving in the Army and retired on 23.12.65.
Thereafter, he was re employed in the Defence Accounts Department on 7.2.1966 as U.D.C. (Auditor).
On 29.2.76, the appellant served three months ' notice of resignation upon the departmental authorities for the reasons mentioned in the said notice and also requested to pay him the contributory provident fund benefits for his 10 years service though the date of his superannuation in the said post was 30.9.1986.
The Department not only refused to accept his resignation but also did not relieve him even after the expiry of three months.
According to the appellant, there was neither any departmental enquiry pending nor contemplated against him during those three months i.e. between 29.2.76 and 31.5.76.
However, a charge sheet dated 21.12.76 for imposing a major penalty on a complaint by Jt.
C.D.A. Vehicle Factory was served on him to which he submitted his written statement.
Then he served a final quit notice w.e.f. 8.1.77.
Though on the basis of the show cause notice, an enquiry was started, nothing came out of it.
Therefore, the appellant moved the High Court of Madhya Pradesh at Jabalpur by filing Writ Petition M.P. No. 786 of 1978 under Article 226 of the Constitution of India sworn on 27.11.78 requesting several prayers inclusive of issuance of directions to the respondent therein (the departmental authorities) to accept his resignation so as to enable him to take any other profession of his liking and to declare the retention of his service against his will after 31.5.1976 as illegal and malafide and to re imburse pay and allowances for the period of his enforced absence after the expiry of three months notice period etc.
The High Court issued show cause notice to the respondents 1 to 3 in the Writ Petition.
The respondent No. 3 thereafter accepted the resignation dated 29.2.76 of the appellant w.e.f. 15.1.79 by 870 which time the appellant claims to have completed 31 years of combined military and civil service i.e. from 29.11.47 to 15.1.79.
Meanwhile, the departmental enquiry initiated against him was dropped.
Then the appellant submitted supplemental applications praying that his resignation should be converted into one of voluntary retirement and that his military services should be counted with civil service and that he should be given all service benefits like pension, gratuity etc.
as well as consequential benefits on account of the delay in acceptance of his resignation.
Two applications being I.A.No. 908/79 and I.A. No. 4246/78 were filed by the appellant, they being one for amendment of the petition and the other for taking some additional grounds.
Both applications were allowed by a Division Bench of the High Court comprising of Mr. Justice J.S. Verma (as he then was) and Mr. Justice U.N. Bachawat, as the counsel for the respondents had no objection and granted one week time for incorporating the amendments in the petition.
At the request of the counsel for the respondent, Shri R.P. Sinha, the Court granted two weeks time to file the additional return by order dated 16.3.79.
The case was listed for further hearing on 2.4.79 on which date the writ petition was dismissed.
The appellant then on 16.4.79 moved an application to review the order dated 2.4.79.
The application was registered as M.C.C. No. 209 of 1979.
This application was too dismissed on 23.4.79 with the following observation: "The grievance of the petitioner in this review petition is that the writ petition (M.P. No. 786/78) was dismissed in motion hearing without hearing the petitioner.
The substance of the order dismissing the Writ Petition in motion hearing as stated earlier indicates that this averment made by the petitioner is not correct.
We also distinctly recollect that the petitioner was heard fully on the question of admission and it was only thereafter that the petition was dismissed by dictating that order in the Court in the presence of the petitioner.
We would, therefore, reiterate that this grievance of the petitioner that he was not heard at the time of motion hearing is wholly incorrect.
The submissions made by the petitioner in support of this review application are (1) that there is error apparent on the face of the record because the writ petition was dismissed in motion hearing without hearing the petitioner; (2) that, sum 871 marily dismissal of the writ petition was arbitrary because after notice had been issued to the respondents 1 to 3 show cause why the petition be not admitted, it was incumbent on the Court to admit the writ petition and hear both sides at length before passing any order; and (3) that, on account of above position, the petitioner was not given a fair deal before dismissing the writ petition in motion hearing.
As earlier stated, the petitioner was heard fully at the end of motion hearing and so also the counsel for respondents Nos. 1 to 3, Shri R.P. Sinha.
The main averment on the basis of which all the aforesaid submissions are based, i.e. lack of full opportunity to the petitioner is, therefore, wholly non existent.
We are constrained to observe that in making these submissions, the petitioner who is now enrolled as an Advocate, has not been fair to the Court.
The petitioner who is now enrolled as a lawyer was expected to exhibit at least the minimum decorum and sense of responsibility which is expected from a members of this noble profession.
We are pained to observe that the petitioner took a very unreasonable attitude and exhibited a behaviour which could not be appreciated even by the member of the Bar who were present when this order was being dictated in the Court room after the hearing.
However, taking into account the fact that the petitioner is a new entrant in the Bar, we have chosen not to take serious notice of the conduct of the petitioner in the hope that the petitioner having now become a member of the Bar will try to follow the high traditions of the Bar which he has chosen to join.
There is no merit in this Review application.
It is summarily dismissed.
" On being aggrieved by the above order of dismissal dated 2.4.79, the appellant filed Special Leave Petition No. 570 of 1979 before this Court but was not successful as the SLP was dismissed on 25.7.79.
The appellant on being disturbed by the dismissal of his Writ Petition moved a Contempt Petition on 16.4.80 under Section 16 of the (hereinafter referred to as `the Act ') making some 872 serious allegations against the two Hon 'ble Judges of the High Court who dismissed his Writ Petition on 2.4.79 and thereafter the Review Petition on 23.4.79 and also impleaded Shri R.P. Sinha as the third respondent in that petition.
According to the appellant, the contempt petition was registered as M.C.C. No. 136 of 1980 and placed before a Division Bench on 29.4.1980 which after hearing the appellant summarily dismissed contempt petition.
While it was so, the Registry of the High Court examined the allegations made in the affidavit filed by the appellant in M.C.C. No. 136/80 under Rule 5 of Rules regarding contempts framed by the High Court (Notification No. 8958 Nagpur dated the 24th October, 1953) and placed the matter before the learned Chief Justice of the said High Court who on that motion/reference passed an order on 2.5.1980 to place the matter before a Division for further action.
The Division Bench before which the matter was placed took cognizance of criminal contempt and directed issue of notice on 13.5.80 to the appellant directing to show cause as to why he should not be punished for contempt of Court to which the appellant filed his reply raising certain preliminary objections stating that the notice was bad for the reasons, namely, (1) The Section of the Act under which cognizance had been taken was not specifically mentioned; (2) Though the offending portions are marked the notice does not show sufficient cause as to why the words and expressions used therein have been construed as contemptuous; (3) The procedure followed by the High Court was contrary to the rules framed by it; and (4) No consent of the Advocate General has been obtained.
The appellant, on the basis of the above objections prayed to discharge the rule of contempt.
On 11.7.80 when the case came up for hearing, the learned Advocate General filed his reply to the preliminary objection and served a copy of the same to the appellant.
On the same day, the High Court passed an order reading thus: ". .
The Government Advocate further gives notice to the respondent that the contempt proceedings are under article 215 of the Constitution.
Let the respondent take inspection of the original record in case he would like to know the offending portions marked both 873 underlined and side marked and let him file his reply on merits within 15 days.
" Admittedly, the appellant inspected the Court records relating to this matter.
Even thereafter when the appellant persistently requested as under what Section of the Act he has been charged, he was informed that the proceedings were under the provisions of Article 215 of the Constitution of India.
For the proper understanding of the issue in question, we feel that it would be necessary to reproduce the offending words and passages as appearing in the contempt petition.
They are as follows: "7.
That on 2.4.79, when the case came up for hearing, the judicial process required that it was the non applicant, Shri R.P.Sinha who should have been heard in the first instance and he should have been asked by the Court whether he has filed the addition return but on account of misfortune of the petitioner and misconduct of the Presiding Judge, Justice Shri J.S. Verma that he while coming out of the chamber and occupying the seat in the temple of justice called out the petitioner and told him that after the acceptance of the resignation, the petition had become infructuous as such he was dismissing it summarily.
The petitioner was shocked to witness the most illegal and unconstitutional legal process adopted by the Hon 'ble Judge. . . . . . . . .
When the petitioner started arguing his case that his Fundamental Rights were infringed, the Hon 'ble Presiding Judge not only stopped the petitioner from arguing his case but threatened him for dire consequences in case the petitioner argued any more.
This amounts to desacrilege the sanctity of his own Court by the Judges.
. . . . . 9.
The Review Petition was heard by the same Bench in utter disregard of judicial cannon since no person against whom serious allegations have been levelled (against) can be a Judge in his own case.
The Review Petition was also 874 rejected summarily repeating the false averments more in explicit terms that they heard the petitioner as well as the counsel for the respondents thus super imposing the seal of truth over the falsehood.
GROUNDS 1.
The petitioner charges the Hon 'ble Court especially Justice J.S. Verma for adopting a most illegal and unconstitutional judicial process in utter disregard of cannons and principles of adjudication, for showing rude behaviour towards the petitioner.
The amounts to desacrilege the sanctity of his Court.
That when the attention of Justice Verma was drawn on 2.4.79, that he was violating the legal process, he misbehaved with the petitioner without any valid reason which amounts to misconduct of the Judges.
That again on 23.4.1979 when the Review Petition was being argued, he threatened the applicant/petitioner for dire consequences for no valid reasons.
That the High Court is a Temple of Justice and the Judges who occupy the seat of justice are just like Dharamraj.
Dharamraj 's are not supposed to utter falsehood atleast while occupying this sacred seat of Justice.
The Hon 'ble Judges have not only uttered falsehood in their order dated 2.4.79 ( Annexure `B ') but super imposed their false averments in their order dated 23.4.79 in which they stated that they distinctly recollect that the petitioner as well as the counsel for the respondents were heard.
The petitioner 's charge that they do not remember as to what they heard. . . 5.
. . . . . . . . . 6.
The charge against Justice U.N. Bachawat (the associate Judge) is that he silently witnessed the proceedings throughout.
He never uttered a single word or intervened when his senior faltered out and succumbed to the false averments 875 of the Presiding Judge as if was not an independent Judge but serving faithfully and obediently to his master.
. . . . . . . . . 8.
That the petitioner avers that both the contemner Judges have acted and bad faith and have fouled the seat of justice by clear malafides act of theirs and as such no protection can be extended to them under cover a bonafide act done in good faith as Judges.
That both the Judges have violated the sanctity attached to the seat of Justice and have committed a Contempt of their own Court.
Both have acted malafidely in bad faith.
PRAYER It is, therefore, prayed that Contempt Proceedings under Section 16 of the Contempt of Court Act, 1971, may be initiated against Justice J.S. Verma and Justice U.N. Bachawat of the Madhya Pradesh High Court on the aforesaid grounds.
" The High Court after examining the above scandalising remarks made by the appellant in his contempt petition rejected the objections of the appellant/contemner holding that the cognizance of the criminal contempt was taken by it on suo moto, that the contemner was informed that the Court was invoking its jurisdiction under Article 215 of Constitution of India to punish him for contempt, that the does not confer any new jurisdiction by its authority, that in a suo moto action by the High Court, consent of the Advocate General was not necessary, that non quoting of the provisions Section in the notice is immaterial and that the contemner had full notice of the charge of contempt levelled against him and concluded, "We see no defect in the notice served upon the contemner, nor do we find defect in the procedure followed." Then after referring to certain decisions of this Court in Perspective Publications vs State of Maharashtra, ; ; C.K. Daphtary vs O.P. Gupta, ; and Baradakanta Mishra vs Registrar of 876 Orissa High Court; , , the High Court made the following observation with reference to the facts of the case: "16.
The offending portions in paras 7 and 9, and repeated in grounds 1,2,3 and 4,8 and 9 attribute to Mr. Justice J.S. Verma (a) improper motive, (b) unfairness and undue basis in dealing with the case, (c) being a Judge who administers justice in a cursory manner without giving thought to the points involved, (d) of being intemperate in language, impatient and unjust, (e) who would arise false proceedings and when falsity has been brought his notice, would have the audacity to stick to the falsehood.
If the words have this import, the inevitable effect is undermining the confidence of the public in the judiciary.
The person who has indulged in scurrilous abuse of the Judge, must suffer in punishment.
" On the basis of the above observations, the High Court recorded its finding thus: "20.
In our reading of the offending portions duly marked in paras 7,9 and grounds 1,2,3 and 4,8 and 9 of the application dated 16.4.1980 in the context in which they have been written, there are imputations of malafides, bias and prejudice against Mr. Justice J.S. Verma.
The contempt involved in these passages is grossly scandalous.
Coming to the allegations in Ground No. 6 relating to Mr. Justice Bachawat, it was said that "he silently witnessed the proceedings.
He never uttered a single word or intervened when his senior faltered and succumbed to false averments of the Presiding Judge as if he was not an independent Judge but serving faithfully and obediently his master." Finally, the High Court held that the contemner, Mr. Pritam Lal is guilty of criminal contempt of not only scandalising the Court and lowering its authority but also substantially interfering with the due course of justice.
Coming to the question of sentence, the High Court taking note of the defiant attitude of the contemner who even did not think it necessary to 877 apologise but tried to justify the aspersions, sentenced the contemner to suffer simple imprisonment for two months.
Hence the present appeal.
The Contemner, Mr. Pritam Lal appeared before us in person and advanced his arguments which are similar to the submissions made before the High Court, inter alia contending that the impugned order of the High Court should be set aside with costs and suitable compensation on the ground of procedural irregularities in that (1) that the offending remarks have not been communicated to him as per Rules 5 and 9 framed by the High Court; (2) that the cognizance of the criminal cotmpt has not been taken in conformity with Section 15 of the Act; (3) that the procedure after cognizance as prescribed under Section 17 of the Act has not been followed; and (4) that Article 215 of the Constitution of India does not prescribe any procedure to be followed.
According to him he has not been given a fair and full hearing but on the other hand, the learned Judges have browbeaten and unjustly convicted him ignoring the well settled principle that every person has got an inalienable right of making fair criticism.
He has further added that the impugned order was pre conceived and pre judged one.
In addition to the oral arguments, he has filed detailed written arguments, signed on 15.11.88 citing a number of decisions which in our view, do not have any relevance to the facts of the case.
In the written submissions also, he has again made certain outrageous and contemptuous remarks about the Judges of the High Court, in attempting to justify his action which has led to the initiation of the proceedings of contempt of Court before the High Court.
As rightly pointed out by the High Court, these contentions in our opinion do not merit any consideration since every High Court which is a Court of Record is vested with `all powers ' of such Court including the power to punish for contempt of itself and has inherent jurisdiction and inalienable right to uphold its dignity and authority.
Whilst Article 129 deals with the power of the Supreme Court as Court of Record, Article 215 which is analogous to Article 129 speaks of the power of the High Court in that respect.
Prior to the , it was held that the High Court has inherent power to deal with a contempt of itself summarily and 878 to adopt its own procedure, provided that it gives a fair and reasonable opportunity to the contemner to defend himself.
But the procedure has now been prescribed by Section 15 of the Act in exercise of the powers conferred by Entry 14, List III of the Seventh Schedule of the Constitution.
Though the contempt jurisdiction of the Supreme Court and the High Court can be regulated by legislation by appropriate Legislature under Entry 77 of List I and Entry 14 of List III in exercise of which the Parliament has enacted the Act 1971, the contempt jurisdiction of the Supreme Court and the High Court is given a constitutional foundation by declaring to be `Courts of Record ' under Articles 129 and 215 of the constitution and, therefore, the inherent power of the Supreme Court and the High Court cannot be taken away by any legislation short of constitutional amendment.
In fact, Section 22 of the Act lays down that the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law relating to contempt of courts.
It necessarily follows that the constitutional jurisdiction of the Supreme Court and the High Court under Articles 129 and 215 cannot be curtailed by anything in the Act of 1971.
The above position of law has been well settled by this Court in Sukhdev Singh Sodhi vs The Chief Justice and Judges and Judges of the PEPSU High Court, ; holding thus: "In any case, so far as contempt of a High Court itself is concerned, as distinct from one of a subordinate Court, the Constitution vests these rights in every High Court, so no Act of a legislature could take away that jurisdiction and confer it afresh by virtue of its own authority.
" It has been further observed: "The High Court can deal with it summarily and adopt its own procedure.
All that is necessary is that the procedure is fair and that, the contemner is made aware of the charge against him and given a fair and reasonable opportunity to defend himself." In R.L. Kapur vs State of Madras, ; a question arose did the power of the High Court of Madras to punish contempt of itself arise under the so that under Section 25 of the , Sections 63 to 70 of the Penal Code and 879 the relevant provisions of the Code of Criminal Procedure would apply.
This question was answered by this Court in the following words: "The answer to such a question is furnished by Article 215 of the Constitution and the provisions of the themselves.
Article 215 declares that every High Court shall be a court of record and shall have all powers of such a court including the power to punish for contempt of itself.
Whether Article 215 declares the power of the High Court already existing in it by reason of its being a court of record, or whether the article confers the power as inherent in a court of record, the jurisdiction is a special one, not arising or derived from the , and therefore, not within the purview of either the Penal Code or the Code of Criminal Procedure.
" After giving the above answer to the query raised, this Court has reiterated the view held in the case of Sukhdev Singh Sodhi (referred supra).
The view expressed in Sukhdev Singh Sodhi and followed in R.L. Kapur been referred with approval in a recent decision in Delhi Judicial Service Association vs State of Gujarat, ; , holding that the view of this Court in Sukhdev Singh Sodhi is "that even after the codification of the law of contempt in India, the High Court 's jurisdiction as a Court of Record to initiate proceedings and take seisin of the matter remained unaffected by the contempts of Courts Act, 1926.
" Beg, C.J. in Re section Mulgaokar, ; has explained the special power of the Supreme Court under Article 129 stating. "This Court is armed, by Article 129 of the Constitution, with very wide and special powers, as a Court of Record, to punish its contempts.
" In Delhi Judicial Service Association case (supra), it has been pointed out as follows: "Article 129 provides that the Supreme Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself.
Article 215 contains 880 similar provisions in respect of a High Court.
Both the Supreme Court as well as High Courts are courts of record having powers to punish for contempt including the power to punish for contempt of itself.
" Yet another question whether the provisions of the Code of Criminal Procedure are applicable to such Proceedings, has been negatively answered by this Court in Sukhdev Singh Sodhi case (supra) stating thus: "We hold therefore that the Code of Criminal Procedure does not apply in matters of contempt triable by the High Court.
The High Court can deal with it summarily and adopt its own procedure.
All that is necessary is that the procedure is fair and that the contemner is made aware of the charge against him and given a fair and reasonable opportunity to defend himself.
" See also Brahma Prakash Sharma and Others vs The State of Uttar Pradesh, From the above judicial pronouncements of this Court, it is manifestly clear that the power of the Supreme Court and the High Court being the Courts of Record as embodied under Articles 129 and 215 respectively cannot be restricted and trammelled by any ordinary legislation including the provisions of the and their inherent power is elastic, unfettered and not subjected to any limit.
It would be appropriate, in this connection, to refer certain English authorities dealing with the power of the superior Courts as Courts of Record.
The 1884 edition of Belchamber 's Practice of the Civil Court says at page 241 that "Every superior court of record, whether in the United Kingdom, or in the colonial possessions or dependencies of the Crown has inherent power to punish contempts, without its precincts, as well as in facie curiae. . ." In 9 Halsbury 's Law of England (4th Edition) by Lord Hailsham at page 3 under the caption "Criminal Contempt", the following passage is found: 881 "The superior courts have an inherent jurisdiction to punish criminal contempt. ." It is further stated at page 3 itself that the power to commit by summary process is arbitrary and unlimited, but that power should be exercised with the greatest caution.
In Re Clements and the Republic of Costa Rica vs Erlanger, at page 383, Lord Jessel, M.R. said: ". this jurisdiction of committing for contempt being practically arbitrary and unlimited should be most jealously and carefully watched, and exercised. ," Reference also may be bad to a decision of the Division Bench of the Bombay High Court in State of Bombay vs P., 1958 Bom.
Law Reporter, (60) Page 873 wherein it has been held that the jurisdiction which each Judge of the High Court possesses and uses as constituting a Court of Record is a jurisdiction which is inherent in the Court itself for punishment for contempt of Court, whether it is ex facie the Court or otherwise and that for the exercise of that jurisdiction it is not necessary to refer either to the Letters Patent or the Rules framed by the Court thereunder and that it is a jurisdiction which is being exercised in the same manner as was exercised in the Court of King 's Bench Division in England.
In special feature of the procedure to be followed in a contempt proceeding is the summary procedure which is recognised not only in India but also abroad.
It is an outstanding characteristic of the law of contempt both in England and Scotland that it makes use of a particular and summary procedure which is unknown to any other branch of those countries.
In England, this summary procedure began to be adopted by the common law Courts inspite of trial by jury and that the trial by jury for contempt has steadily declined and has now fallen entirely into disuse.
In other words, consequent upon the use of the summary procedure in England, a person alleged to be in contempt does not enjoy the benefit of some of the safeguards of the ordinary criminal law such as those provided by the Judges ' Rules in England and Wales and the right to trial by jury.
882 Rule 42 of the Federal Rules of Criminal Procedure of United States reads that ``A criminal contempt may be punished summarily if the Judge certifies that he saw or heard the conduct constituting the contempt and that it was committed in the actual presence of the Court." In Ex parte Terry, ; , 307; , , 80 (1888) and in Matsusow vs United States, ; , 339 (5th Cir.
1956), it has been ruled that "If the contempt be committed in the face of the court, the offender may be instantly apprehended and imprisoned at the discretion of the judges, without any further proof or examination.
" In the Contempt of Court by Oswald, the following passage relating to the summary power of punishment is found: "The summary power of punishment for contempt has been conferred on the courts to keep a blaze of glory around them, to deter people from attempting to render them contemptible in the eyes of the public.
These powers are necessary to keep the course of justice free, as it is of great importance to society.
" In the year 1899, Lord Moriss in delivering the judgment of the Judicial Committee in Mc Leod vs St. Aubin said: "The power summarily to commit for contempt is considered for the proper administration of justice." This has long been the practice in India also.
The power under Articles 129 and 215 is a summary power as held in the cases of Sukhdev Singh Sodhi, C.K. Daphtary (referred to above) and in Hira Lal Dixit vs State of U.P., ; Peacock, C.J.laid down the rule quite broadly in the following words in Re Abdool vs Mahtab, 1867 (8 WR) Cr. 32 at page 33: "there can be no doubt that every court of record has the power of summarily punishing for contempt.
" The above view is re stated in a number of decisions of this Court.
In the case of Sukhdev Singh Sodhi it has been observed: 883 ". .the power of a High Court to institute proceedings for contempt and punish where necessary is special jurisdiction which is inherent in all courts of record and section 1 (2) of the Code expressly excludes special jurisdiction from its scope.
" The position of law that emerges from the above decisions is that the power conferred upon the Supreme Court and the High Court, being Courts of Record under Articles 129 and 215 of the Constitution respectively is an inherent power and that the jurisdiction vested is a special one not derived from any other statute but derived only from Articles 129 and 215 of the Constitution of India (See D.N. Taneja vs Bhajan Lal, ; and therefore the constitutionally vested right cannot be either abridged by any legislation or abrogated or cut down.
Nor can they be controlled or limited by any statute or by any provision of the Code of Criminal Procedure or any Rules.
The caution that has to be observed in exercising this inherent power by summary procedure is that the power should be used sparingly, that the procedure to be followed should be fair and that the contemner should be made aware of the charge against him and given a reasonable opportunity to defend himself.
If we examine the facts of the present case in the backdrop of the proposition of law, the contentions raised by the appellant challenging the procedure followed by the High Court do not merit any consideration since the appellant has been served with a notice of contempt and thereafter permitted to go through the records and finally has been afforded a fair opportunity of putting forth his explanation for the charge levelled against him.
Incidently, we may say that the submission of the contemner that the impugned order is vitiated on the ground of procedural irregularities and that Article 215 of the Constitution of India is to be read in conjunction with the provisions of Sections 15 and 17 of the Act of 1971, cannot be countenanced and it has to be summarily rejected as being devoid of any merit.
The remaining important question for consideration are whether the statements which we have extracted in the preceding part of this judgment, made by the contemner amount to a scurrilous attack on the integrity, honesty and judicial impartiality of the learned Judges of the High Court and whether the contemner by his conduct as well as by making such 884 written scandalising statements and invective remarks have interfered and seriously disturbed the system of administration of justice by bringing it down to disrespect and disrepute.
There is an abundance of empirical decisions upon particular instances of conduct which has been held to constitute contempt of Court.
We shall now refer to a few.
Lord Russel of Killowen, L.C.J. has laid down the law of Contempt in at 40 as follows: "Any act done or writing published calculated to bring a Court or a Judge of the Court into contempt, or to lower his authority, is a Contempt of Court.
" The above proposition has been approved and followed by Lord Atkin in Andre Paul vs Attorney General, AIR 1936 PC 141.
Lord Justice Donovan in Attorney General vs Butterworth, , after making reference to Reg.
vs Odham 's Press Ltd., ex parte A.G. said, "Whether or not there was an intention to interfere with the administration of justice is relevant to penalty, not to guilt." This makes it clear that an intention to interfere with the proper administration of justice is an essential ingredient of the offence of contempt of court and it is enough if the action complained of is inherently likely so to interfere.
In Morris vs The Crown Office, at page 1081, Lord Denning M.R. said: "The course of justice must not be deflected or interfered with.
Those who strike at it strike at the very foundations of our society.
" In the same case, Lord Justice Salmon spoke: "The sole purpose of proceedings for contempt is to give our courts the power effectively to protect the rights of the public by ensuring that the administration of justice shall not be obstructed or prevented." 885 Frank Further, J in Offutt vs U.S., ; expressed his view as follows: "It is a mode of vindicating the magesty of law, in its active manifestation against obstruction and outrage." In Jennison vs Baker, at page 1006, it is stated: "The law should not be seen to sit by limply, while those who defy it go free, and those who seek its protection lose hope." Chinnappa Reddy, J. Speaking for the Bench in Advocate General, Bihar vs M.P. Khair Industries, ; citing those two decisions in the ases of Offut and Jennison (supra) stated thus: ". it may be necessary to punish as a contempt, a course of conduct which abuses and makes a mockery of the judicial process and which thus extends its pernicious influence beyond the parties to the action and affects the interest of the public in the administration of Justice.
The public have an interest, an abiding and a real interest, and a vital stake in the effective and orderly administration of justice, because, unless justice is so administered, there is the peril of all rights and liberties perishing.
The Court has the duty of protecting the interest of the public in the due administration of justice and, so it is entrusted with the power to commit for Contempt of Court, not in order to protect the dignity of the Court against insult or injury as the expression "Contempt of Court" may seem to suggest, but to protect and to vindicate the right of the public that the administration of justice shall not be prevented, prejudiced, obstructed or interfered with." Krishna Iyer, J. in his separate Judgment in re section Mulgaokar (supra) while giving the broad guidelines in taking punitive action in the matter of Contempt of Court has stated: ". .if the Court considers the attack on the judge or judges scurrilous, offensive, intimidatory or malicious beyond condonable limits, the strong arm of the law must, in the name of public interest and public justice, strike a blow on him who 886 challenges the supremacy of the rule of law by fouling its source and stream." In the case of Brahma Prakash (supra), this Court after referring to various decisions of the foreign countries as well as of the Privy Council stated thus: "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 trends in any way, to interfere with the proper administration of law." In Ashram M.Jain vs A.T. Gupta, the facts were thus: The petitioner who filed a special leave petition accompanying by an affidavit affirming the statement made in the said SLP indulged in wild and vicious diatribe against the then Chief Justice of the High Court of Maharashtra.
When the SLP was heard, this Court directed notice to be issued to the petitioner as to why he should not be committed for contempt under the .
After hearing the parties and then not accepting the unconditional apology of the petitioner, this Court convicted the petitioner for contempt and sentenced him to suffer simple imprisonment for a period of two months.
In that case, Chinnappa Reddy, J. speaking for the Bench said: "The strains and mortification of litigation cannot be allowed to lead litigants to tarnish, terrorise and destroy the system of administration of justice by vilification of judges.
It is not that judges need be protected; judges may well take care of themselves.
It is the right and interest of the public in the due administration of justice that has to be protected." 887 Reference may be made to a recent decision of this Court in M.B. Sanghi vs High Court of Punjab and Haryana, ; In that case, the appellant, a practising advocate having failed to persuade the learned Subordinate Judge to grant an ad interim injunction pending filing of a counter by the opposite party, made certain derogatory remarks against the learned Judge who instead of succumbing to such unprofessional conduct made a record of the derogatory remarks and forwarded the same to the High Court through the District Judge to initiate proceedings for Contempt of Court against the appellant.
The High Court holding that the remarks made on the learned Sub Judge are disparaging in character and derogatory to the dignity of the judiciary found the appellant guilty of Section 2 (c) (i) of the .
The appellant therein though denied to have made the remarks, however, offered an unqualified apology.
But the High Court without accepting the apology punished the appellant therein with a fine of Rs. 1,000.
Ahmadi, J. of this Court in his separate judgment has observed: "The tendency of maligning the reputation of judicial officers by disgruntled elements who fail to secure the desired order is ever on the increase and it is high time it is nipped in the bud.
And, when a number of the profession resorts to such cheap gimmiks with a view to browbeating the judge into submission, it is all the more painful.
When there is a deliberate attempt to scandalise which would shake the confidence of the litigating public in the system, the damage caused is not only to the reputation of the concerned judge but also to the fair name of the judiciary.
Veiled threats, abrasive behaviour, use of disrespectful language and at times blatant condemnatory attacks like the present one are often designedly employed with a view to taming a judge into submission to secure a desired order.
Such cases raise larger issues touching the independence of not only the concerned judge but the entire institution.
The foundation of our system which is based on the independence and impartiality of those who man it will be shaken if disparaging and derogatory remarks are made against the presiding judicial officers with impunity.
It is high time that we realise that the much cherished judicial independence has to be protected not only from the executive or 888 the legislature but also from those who are an integral part of the system." After having made the above observation, the learned judge concerned with the conclusion of Agarwal, J. dismissing the appeal and while doing so, he expressed his painful thought as follows: "When a member of the bar is required to be punished for use of contemptuous language it is highly painful it pleases none but painful duties have to be performed to uphold the honour and dignity of the individual judge and his office and the prestige of the institution.
Courts are generally slow in using their contempt jurisdiction against erring members of the profession in the hope that the concerned Bar Council will chasten its member for failure to maintain proper ethical norms.
If timely action is taken by the Bar Councils, the decline in the ethical values can be easily arrested.
" We are in full agreement with the above view.
Reverting to the facts of the case, the offending criticism and the scandalising allegations made by the appellant/contemner are most fatal and dangerous obstruction of justice shaking the confidence of the public in the administration of justice and calling for a more rapid and immediate punitive action.
These calculated contemptuous remarks and the sweeping allegations which we have extracted above are derogatory in character not only to the dignity of the learned Judges casting aspersions on their conduct in the discharge of their judicial functions but also wounds the dignity of the Court.
It is highly painful to note that the appellant/contemner who is none other than an Advocate practising in the same highest Court of the state after having failed to wrench a decision in his favour in his own cause which he prosecuted as party in person has escalatingly scandalised the Court by making libellous allegations which are scurrilous, highly offensive, vicious, intimidatory, malacious and beyond condonable limit.
Even a cursory reading of the remarks made against the learned Judge of the High Court unambiguously show that the potentially prejudicial utterances and the outrageous allegations rumbustiously and invectively made by the contemner with malacious design of attempting to impair 889 the administration of justice have struck a blow on the judiciary and also seriously sullied the image, dignity and high esteem which the office of the Judge of the High Court carries with it and thus impeded the course of justice by fouling its source and steam.
In our opinion, the incident in question is a flagrant onslaught on the independence of the judiciary, destructive of the orderly administration of justice and a challenge to the supremacy of the Rule of Law.
The maxim "Salus populi suprema lex", that is "the welfare of the people is the supreme law" adequately enunciates the idea of law.
This can be achieved only when justice is administered lawfully, judicially, without fear or favour and without being hampered and thwarted, and this cannot be effective unless respect for it is fostered and maintained.
To punish an Advocate for Contempt of court, no doubt, must be regarded as an extreme measure, but to preserve the proceedings of the Courts from being deflected or interfered with, and to keep the streams of justice pure, serene and undefiled, it becomes the duty of the Court, though painful, to punish the contemner in order to preserve its dignity.
No one can claim immunity from the operation of the law of contempt, if his act or conduct in relation to Court or Court proceedings interferes with or is calculated to obstruct the due course of justice.
In view of the above heinous type of scandalising the Court, we unhesitatingly confirm the finding of the High Court that the appellant/contemner has made himself guilty of criminal contempt.
Coming to the question of sentence, it appears from order of the High Court that the appellant had adopted a defiant attitude and tried to justify the aspersions made by him even without thinking it necessary to apologise.
Before this Court also, the appellant has neither expressed any contrition nor has he any repentance for the vicious allegations made against the learned Judges of the High Court.
But on the other hand, he has exhibited a dogged determination to pursue the matter, come what may.
A reading of his memorandum of grounds and the written and signed arguments show that he was ventured into another bout of allegations against the High Court Judges and persisted in his campaign of vilification.
His present conduct has aggravated rather than mitigating his offence.
890 Therefore, having regard to the sentencing policy that punishment should be commensurate with the gravity of the offence, we hold that the sentence of 2 months, imprisonment in no way calls for interference and accordingly the sentence is confirmed.
For the reasons aforementioned, the Criminal Appeal is dismissed.
N.P.V. Appeal dismissed.
| The appellant, an Advocate practising in the High Court was earlier working in the Defence Accounts Department, on re employment, after retiring from the Army.
He had filed a Writ Petition before the High Court, claiming certain benefits like pension, gratuity, pay and allowances etc., pertaining to the service rendered by him in the Defence Accounts Department and the Army.
The High Court dismissed the Writ Petition.
It also dismissed the appellant 's review application.
This Court also dismissed his Special Leave Petition against the High Court 's order.
Thereafter, the appellant, moved a Contempt Petition under Section 16 of the making some serious allegations against the two Judges of the High Court, who dismissed his Writ Petition and also the Review Petition.
A Division Bench of the High Court summarily dismissed the contempt petition.
865 Meanwhile, the Registry of the High Court examined the allegations made in the affidavit filed by the appellant under Rule 5 of the Rules regarding contempts framed by the High Court.
A Division Bench of the High Court, before which the matter was placed on the order of the Chief Justice, took cognizance of the criminal contempt and directed issue of notice to the appellant directing him to show cause as to why he should not be punished for contempt of Court.
The appellant filed his reply raising certain preliminary objections, contending that the notice was bad for the reasons that (1) the Section of the Act under which cognizance had been taken was not specifically mentioned; (2) the notice did not show sufficient cause as to why the words and expressions used in the offending portions marked had been construed as contemptuous (3) the procedure followed by the High Court was contrary to the rules framed by it; and (4) no consent of the Advocate General had been obtained, and prayed for discharge of the rule of contempt.
Meanwhile, on the basis of the High Court 's Order, the appellant inspected the Court records relating to this matter, and thereafter, he was also informed that the proceedings were under the provisions of Article 215 of the Constitution of India.
After examining the remarks made by the appellant in his contempt petition the High Court rejected the objections of the appellant/contemner and held that the contemner was guilty of criminal contempt of not only scandalising the Court and lowering its authority but also substantially interfering with the due course of justice.
Taking note of the defiant attitude of the contemner who even did not think it necessary to apologise but tried to justify the aspersions, the High Court sentenced the contemner to suffer simple imprisonment for two months.
In the appeal before this Court, the contemner who appeared before the Court in person, contended that the order of the High Court should be set aside on the ground of procedural irregularities in that (1) that the offending remarks had not been communicated to him as per Rules 5 and 9 framed by the High Court; (2) that the cognizance of the criminal contempt had not been taken in conformity with Section 15 of the Act; (3) that the procedure, after cognizance as prescribed under Section 17 of the Act had not been followed; and (4) that Article 215 of the Constitution of India did not prescribe any procedure to be followed.
He 866 also contended that he had not been given a fair and full hearing and that the Judges had browbeaten and unjustly convicted him ignoring the well settled principle that every person had an inalienable right of making fair criticism, and that the order in question was pre conceived and pre judged one.
In his written statement also he made certain remarks about the Judges of the High Court, in attempting to justify his action which had led to the initiation of proceedings for contempt of Court before the High Court.
Dismissing the appeal, this Court, HELD: 1.1 The power conferred upon the Supreme Court and the High Court, being Courts of Record under Articles 129 and 215 of the Constitution respectively, is an inherent power and the jurisdiction vested is a special one not derived from any other statute, but derived only from Articles 129 and 215 of the Constitution of India.
Therefore, the constitutionally vested right cannot be either abridged by any legislation including or abrogated or cut down.
Nor can they be controlled or limited by any statute or by any provision of the Code of Criminal Procedure or any Rules.
The special feature of the procedure to be followed in a contempt proceeding being summary procedure, which is recognised not only in India but also abroad, the caution that has to be observed in exercising this inherent power by summary procedure is that the power should be used sparingly, that the procedure to be followed should be fair and that the contemner should be made aware of the charge against him and given a reasonable opportunity to defend himself.
[883B D] Sukhdev Singh Sodhi vs The Chief Justice and Judges of the PEPSU High Court, ; ; R.L. Kapur vs State of Madras, ; ; Delhi Judicial Service Association vs State of Gujarat, ; ; section Mulgaokar; , ; Brahma Prakash Sharma and Others vs The State of Uttar Pradesh, ; and D.N. Taneja vs Bhajan Lal, ; relied on.
Hira Lal Dixit vs State of U.P., ; ; Advocate General, Bihar vs M.P. Khair Industries, ; ; Ashram M. Jain vs A.T. Gupta, and M.B. Sanghi vs High Court of Punjab and 867 Haryana; , , referred to.
State of Bombay vs P. 1958 Bom.
Law Reporter, (60) Page 873, referred to.
Clements and the Republic Costa Rica vs Erlanger, page 383, Ex parte Terry, ; , 307; , 80 (1888); Matsusow vs United Sates, ; , 339 (5th Cir.) 1956; Sukhdev Singh Sodhi, C.K. Daphtary; Re Abdool vs Mahtab, (1867) 8 WR Cr. 32 page 33; at 40; Andre Paul vs Attorney General, AIR 1936 PC 141, Attorney General vs Butterworth, (1963) 1 Q.B. 696; Reg.
vs Odham 's Press Ltd. Ex parte A.G., (1957) 1 Q.B. 73; Morris, vs The Crown Office, , 1081, Offutt vs U.S., ; Jennison vs Baker, 1006, referred to.
Belchamber 's Practice of the Civil Court, 1884 Ed.
P. 241; Contempt of Court.
By Oswald and Halbury 's Law of England (4th Edition) by Lord Hailsham page 3, referred to. 1.2.
In the instant case, the offending criticism and the scandalising allegations made by the appellant/contemner are most fatal and dangerous obstruction of justice shaking the confidence of the public in the administration of justice and calling for a more rapid and immediate punitive action.
These calculated contemptuous remarks and the sweeping allegations are derogatory in character, not only to the dignity of the Judges and casting aspersions on their conduct in the discharge of their judicial functions but also wounds the dignity of the Court.
It is highly painful to note that the appellant/contemner who is none other than an Advocate practising in the same highest Court of the State after having failed to wrench a decision in his favour in his own cause which he prosecuted as party in person has escalatingly scandalised the Court by making libellous allegations which are scurrilous, highly offensive, vicious, intimidatory, malacious and beyond condonable limit.
Even a cursory reading of the remarks made against the Judge of the High Court unambiguously show that the potentially prejudicial utterances and the outrageous allegations rumbustiously and invectively made by the contemner with malicious design of attempting to impair the administration of justice have struck a blow on the judiciary and also seriously sullied the image, dignity and high esteem which the office of the Judge of the High Court carried with it and thus impeded the course of justice by fouling its source 868 and stream.
The incident in question is a flagrant onslaught on the independence of the judiciary, destructive of the orderly administration of justice and a challenge to the supremacy of the Rule of Law.
The maxim "Salus populi suprema lex", that is, "the welfare of the people is the supreme law" adequately enunciates the idea of law.
This can be achieved only when justice is administered lawfully, judicially, without fear or favour and without being hampered and thwarted, and this cannot be effective unless respect for it is fostered and maintained.
[888E H,889A C] 1.3.To punish an Advocate for Contempt of Court, no doubt, must be regarded as an extreme measure, but to preserve the proceedings of the Courts from the being deflected or interfered with, and to keep the streams of justice pure, serene and undefiled, it becomes the duty of the Court, though painful, to punish the contemner in order to preserve its dignity.
No one can claim immunity from the operation of the law of contempt, if his act or conduct in relation to Court or Court proceedings interferes with or is calculated to obstruct the due course of justice.
In view of the heinous type of scandalising the Court, the finding of the High Court that the appellant/contemner has made himself guilty of criminal contempt is confirmed.
[889D E] 1.4 As regards the sentence, it is clear from the order of the High Court that the appellant had adopted a defiant attitude and tried to justify the aspersions made by him even without thinking it necessary to apologise.
Before this Court also, the appellant has neither expressed any contrition nor has he any repentance for the vicious allegations made against the Judges of the High Court.
But, on the other hand, he has exhibited a dogged determination to pursue the matter, come what may.
A reading of his memorandum of grounds and the written and signed arguments show that he was ventured into another bout of allegations against the High Court Judges and persisted in his campaign of vilification.
His conduct in this Court has aggravated rather than mitigating his offence.
[889F H] 1.5.
Therefore, having regard to the sentencing policy that punishment should be commensurate with the gravity of the offence, the sentence of 2 months ' imprisonment in no way calls for interference and is accordingly confirmed.
[890A]
|
have been rendered not only anomalous but even derogatory to the sovereignty of the State.
It is hoped that the unfortunate state of affairs shall be brought to end at the earliest.
[1062E G] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 896 of 1992.
WITH T.C. No. 27 of 1987.
From the Judgment and Order dated 26.4.1985 of the Andhra Pradesh High Court in O.S. Appeal No. 2 of 1984.
Raju Ramachandran and Jagan Mohan Rao for the Appellants.
G.L. Sanghi, S.K. Mehta, Dhruv Mehta, Aman Vachher and Arvind Verma for the Respondents.
The Judgment of the Court was delivered by THOMMEN, J.
We grant leave in SLP(C) No. 10542 of 1985 which arises from the order of the Division Bench of the Andhra Pradesh High Court affirming the finding of the learned Single Judge that the respondent 's suit against the appellants was maintainable and that the High Court was competent to try the same in exercise of its admiralty jurisdiction.
The Transferred Case No. 27 of 1987 is the appeal filed by defendents 1 and 2 against the judgment of the learned Single Judge of the Andhra Pradesh High Court decreeing the suit.
The case stood transferred to this Court pursuant to this Court 's Order dated 25.11.1986.
By our order dated August 28, 1991 we allowed Civil Appeal No. 3392 of 1991 filed by the 3rd defendant against the order of the High Court dismissing its petition for condonation of delay in presenting O.S.A.S.R. No. 39789 of 1988 in the High Court.
We held that the appeal filed by the 3rd defendant had to be heard on the merits particularly on the question of law regarding the liability of the agent.
1018 We shall now deal with the appeal arising from SLP (C) No. 10542 of 1985 where the only question is whether the learned Judges of the High Court have rightly held that the respondent 's suit was maintainable in respect of a cause of action alleged to have arisen on or after 1.2.1984 when the vessel, M.V. Elisabeth, was lying in the Port of Marmagao; on 8.2.1984 when the vessel left the Port without issuing bills of lading or other documents for the goods shipped as required by the plaintiff shipper; and, subsequently when the goods were discharged and handed over to the consignee at the port of destination at Ras Al Khaimah, United Arab Emirates during the period from 13.2.84 to 19.2.84, notwithstanding the direction of the plaintiff not to deliver the goods by reason of the buyer 's failure to pay the agreed price.
The 1st defendant, M.V. Elisabeth, is a vessel of foreign nationality and it is owned by the 2nd defendant which is a foreign company carrying on business in Greece, and the 3rd defendant is stated to be the local agent of the 2nd defendant at Goa.
The Planitiff is a private limited company having its registered office in Goa.
The case of the plaintiff is that the defendants acted in "breach of duty" by leaving the port of Marmagao on 8.2.84 and delivering the goods to the consignee in breach of the plaintiff 's directions to the contrary, thereby committing conversion of the goods entrusted with them.
The suit was instituted in Andhra Pradesh High Court invoking its admiralty jurisdiction by means of an action in rem.
The vessel was arrested when it entered the Port of Vishakhapatnam on 13.4.84 after returning from foreign ports.
On the owner of the vessel entering appearance and providing security by furnishing a Bank Guarantee under protest in the sum of Rs. 14,25,000 the vessel was released from detention.
The defendants moved an application in the High Court raising a preliminary objection to the jurisdiction of that Court.
They contended that the plaintiff 's suit against a foreign ship owned by a foreign company not having a place of residence or business in India was not liable to be proceeded against on the admiralty side of the High Court by an action in rem in respect of a cause of action alleged to have arisen by reason of a tort or a breach of obligation arising from the carriage of goods from a port in India to a foreign port.
They did not, however, contend that the alleged cause of action not having arisen in Andhra Pradesh, the suit ought not to have been filed in Andhra Pradesh.
Their sole contention on the question of jurisdiction was as regards the lack of admiralty jurisdiction of any court 1019 in Andhra Pradesh or any other State in India to proceed in rem against the ship on the alleged cause of action concerning carriage of goods from an Indian port to a foreign port.
The preliminary objection was overruled by the learned the learned Single Judge and his order was confirmed by the learned Judges of the Division Bench by their order which is challenged in S.L.P.(C) No. 10542 of 1985.
The suit was finally decreed by the learned Single Judge and appeal therefrom is the subject matter of the case transferred to this Court.
The crucial question for our consideration is, therefore, the dispute about jurisdiction.
If that question were to be answered in favour of the defendants, it would be unnecessary to express any view on the merits of the Transferred Case, for the suit itself would then stand dismissed.
Mr. Raju Ramachandran, appearing for the appellants (defendants), raises a fundamental objection as to the assumption of admiralty jurisdiction over a foreign ship in respect of a claim arising in connection with the carriage of goods from an Indian port to a port outside India.
The High Court, he says, ordered the arrest of the vessel in purported exercise of its jurisdiction on the admiralty side.
The power of the High Court on the admiralty side is, however, contained in and confined to the provisions of the Admiralty Court Act, 1861 (24 & 25 Victoriae, Ch. 10) made applicable to India by the Colonial Courts of Admiralty Act, 1890 (53 & 54 Victoriae) of Admiralty (India) Act, 1891 (Act No. 16 of 1891) declaring certain Indian Courts of unlimited civil jurisdiction as colonial courts of admiralty and declaring the High Court of Judicature of Madras as one of such courts.
Mr. Ramachandran does not dispute that by reason of the Andhra State Act, 1953, and the State Re organisation Act, 1956 read with the Government of India Acts, 1915 and 1935 and the Constitution of India, the High Court of Andhra Pradesh has, like the High Courts of Madras, Bombay and Calcutta, such admiralty jurisdiction as was granted by the British Statutes referred to above.
But the jurisdiction, counsel says, was not wider than what was granted under the British Statutes.
The extent of admiralty jurisdiction and the judicial power peculiar to that jurisdiction, as conferred on the Indian High Courts, remained frozen as on the date of the Admiralty Court Act, 1861.
The wider powers assumed by the British Courts under the subsequent statutes of that country did not enlarge the admiralty jurisdiction of the Indian High Courts.
In the absence of any 1020 subsequent British or Indian statute widening the admiralty jurisdiction of the Indian Courts, the jurisdiction of the Andhra Pradesh High Court over a foreign ship by means of an action in rem does not extend to any matter falling outside the Admiralty Court Act, 1861.
The only provision of that Act respecting cargo is what is contained in Section 6 which is confined to goods `carried into any Port in England or Wales in any Ship. ' Applying that provision to India by reason of the statutes referred to above, the Indian High Court exercising admiralty jurisdiction has no power to deal with any claim concerning outward cargo because Section 6 is confined to inward cargo.
The plaintiff 's case is founded on certain facts which clearly fall outside the ambit of Section 6 of the admiralty Court Act, 1861.
Consequently, the arrest of the vessel in purported exercise of admiralty jurisdiction in rem, concerning a claim relating to outward cargo, was null and void and of no effect.
This argument, supported as it is by considerable scholarly research on the part of counsel, amounts to an invocation to admit incompetence and disability on the part of the Indian Judicial System to render justice for want of legislative grant of power.
Counsel is fortified in his submission by certain decisions of Calcutta, Bombay and other High Courts.
Mr. G.L. Sanghi, appearing for the respondent plaintiff, on the other hand, submits that the impugned judgment of the High Court is sound and correct and requires no interference by this Court because what the High Court has stated is based on a realistic appreciation of the need for liberal construction of the statutes so as to support assumption of jurisdiction to render justice where justice is required to be done rather than resorting to a technical or narrow or pedantic construction resulting in a state of helplessness.
Counsel says that every person has a right to approach the Court of the land for appropriate remedy in respect of claims against a foreign ship and its owner, and to deny him that right and to compel him to pursue remedy in a foreign country according to an unfamiliar system of law and practice in strange and uncertain conditions, and consequently incurring high expenses with all the uncertainties of such a pursuit, is unjust and uncalled for.
All major systems of law the world over recognise the competence of the coastal State to assume jurisdiction over a foreign ship entering its waters in respect of certain well recognised claims, irrespective of where the cause of action arose or where the defendant has his place of residence or business.
the reason for this wide exercise of jurisdiction is that the foreign owner being not available within jurisdiction, and the stay 1021 of the foreign ship in the waters of the coastal State being necessarily brief, jurisdiction over the ship has to be exercised by its arrest and detention by means of an action in rem.
Counsel submits that the High Court being a Court of record with unlimited jurisdiction, it was never intended by the British Parliament that the admiralty power conferred on certain High Courts should remain frozen as on the date of the passing of the Admiralty Court Act, 1861 and the subsequent changes in the law of Great Britain should not widen the jurisdiction of the Indian High Courts.
In any case, counsel submits, the colonial statutes should not be so construed as to stand in the way of the Indian High Courts exercising unlimited jurisdiction except where the jurisdiction is barred expressly of by necessary implication.
In the absence of any such bar, the powers of the High Court are unlimited and there is no merit in the preliminary objection to the jurisdiction of the High Court.
The Andhra Pradesh High Court is the successor to the Madras High Court in respect of the territories transferred from Madras and included in the State of Andhra which was formed by the Andhra State Act, 1953 (Act 30 of 1953).
Vishakhapatnam is one of the areas so included in the State of Andhra.
Section 30 of this Act provides: "30.
Jurisdiction of Andhra High Court The High Court of Andhra shall have, in respect of the territories for the time being included in the State of Andhra, all such original, appellate and other jurisdiction as, under the law in force immediately before the prescribed day, is exercisable in respect of the said territories or any part thereof by the High Court at Madras.
" The High Court of Andhra was redesignated as the High Court of Andhra Pradesh when the State was so named by the .
Section 52 of that Act provides : "52.
Jurisdiction of High Courts for new States.
The High Court for a new State shall have, in respect of any part of the territories included in that new State, all such original, appellate and other jurisdiction as, under the law in force immediately before the appointed day, is exercisable in respect of that part of the said territories by any High Court or Judicial Commissioner 's Court for an existing State." 1022 In the port of Vishakhapatnam the Andhra Pradesh High Court has thus the same jurisdiction as was vested in the Madras High Court prior to the transfer of that territory.
The question is as regards the extent and nature of that jurisdiction.
The powers of the Madras High Court are traceable to the Admiralty Court Act, 1861 (24 & 25 Victoriae c. 104) by reason person of the Letters Patent of 1865 read with the Colonial Courts of Admiralty Act, 1890 and the colonial Courts of Admiralty (India) Act, 1891.
By the last two Acts, the Madras High Court was invested with the same admiralty jurisdiction as was vested in the High Court of England.
The Letters Patent of 1865 declared that the High Court of Madras would and continue to be a court of record and that it would exercise ordinary, original and civil jurisdiction within its local limits to try and determine suits.
The Government of India Act, 1915 declared that all the High Courts established by Letters Patent were courts of record and had such original and appellate jurisdiction including admiralty jurisdiction as had been vested in them by Letters Patent.
The Government of India Act, 1935 declared that `every High Court shall be a court of record ' and that its jurisdiction, the law administered by it and the powers of the judges were the same as immediately before the commencement of Part III of that Act (sections 220 and 223).
Article 225 of the Constitution of India declares : ". the jurisdiction of, and the law administered in, any existing High Court, and the respective powers of the Judges thereof in relation to the administration of justice in the Court, including any power to make rules of Court and to regulate the sittings of the Court and of members thereof sitting alone or in Division Courts, shall be the same as immediately before the commencement of this constitution : Provided . . ." Article 215 says : "Every High Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself".
In a number of decisions of the Calcutta and Bombay High Courts, 1023 the admiralty jurisdiction of the High Courts in India has been historically traced to the Charters of 1774 and 1798, as subsequently expanded and clarified by the Letters Patent of 1823, 1862 and 1865 read with the Admiralty Court Act, 1861, the Colonial Courts of Admiralty Act, 1890, and the Colonial Court of Admiralty (India) Act, 1891 and preserved by section 106 of the Government of India Act, 1915, section 223 of the Government of India Act, 1935 and Article 225 of the Constitution of India.
The pre constitution enactments have continued to remain in force in India as existing laws : See section 18 of the Indian Independence Act, 1947, and Article 372 of the Constitution of India.
See Kamalakar Mahadev Bhagat vs Scindia Stream Navigation Co. Ltd., ; Mrs. Sahida Ismail vs Petko R. Salvejkov & Ors., AIR 1973 Bombay 18; Jayaswal Shipping Company vs `S.S. Leelavati ', AIR 1954 Calcutta 415; Rungta Sons Pvt. Ltd. & Anr.
vs S.S. `Edison Mariner ' & Anr., 1961 62 (66) Calcutta Weekly Notes 1083 and Smt.
Reena Padhi vs `Jagdhir ', AIR 1982 Orissa 57.
The view taken in these decisions is that the admiralty jurisdiction of the High Court in India does not extend beyond the ambit of the provisions of the (English) Admiralty Court Act, 1861.
Further expansion of the jurisdiction of the English High Court under various statutes did not expand the jurisdiction of the Indian High Courts.
This means, no High Court in India has jurisdiction to order the arrest and detention of a foreign ship in an action in rem in respect of a cause of action relating to outward cargo, as distinguished from inward cargo.
The rationale of these decisions is that the chartered High Courts in India are Colonial Courts of Admiralty under Act 16 of 1891 exercising the same jurisdiction as was vested in the High Court of Admiralty of England under the Admiralty Court Act, 1861, and the subsequent merger of the English High Court of Admiralty with the English High Court of Justice in 1875 and the expansion of jurisdiction of that High Court under subsequent statutes did not expand the admiralty power of the Indian High Court of merge it with its ordinary original civil jurisdiction.
P.B. Mukharji, J. of the Calcutta High Court in Jayaswal Shipping Company vs `S.S. Leelavati ', AIR 1954 Cal.
415, 421, highlights this aspect thus : ".
Courts of Admiralty are courts of specific jurisdiction and if a controversy does not come within their specific jurisdiction, they cannot entertain it, and in that respect are unlike the courts of residuary jurisdiction such as the Common Law Courts or 1024 in India the Courts of ordinary original civil jurisdiction." In National Co. Ltd. vs Asia Mariner, , 647, S.K. Mukherjea, J. of the Calcutta High Court states : "The High Court at Calcutta as a Court of Admiralty is, therefore, a Court of prescribed jurisdiction.
Its jurisdiction is prescribed by clause 26 of the Charter of 1774 and by section 2(2) of the Colonial Courts of Admiralty Act, 1890.
The jurisdiction has not been extended or modified by any statute.
None of the subsequent British statutes by which the Admiralty Jurisdiction of the High Court in England has been extended or affected have been made applicable to India." The High Court as a Court of Admiralty is thus treated as a separate entity exercising a distinct and specific or prescribed or limited jurisdiction.
This reasoning is based on the assumption that the continuance in force of the Colonial Courts of admiralty Act, 1890 as an existing law carves out a distinct jurisdiction of the High Court limited in ambit and efficacy to what has been granted by the Admiralty Court Act, 1861, and that jurisdiction has remained stultified ever since.
This restrictive construction is, in our view, not warranted by the provisions of the Constitution.
The fact that the High Court continues to enjoy the same jurisdiction as it had immediately before the commencement of the Constitution, as stated in Article 225, does not mean that a matter which is covered by the Admiralty Court Act, 1861 cannot be otherwise dealt with by he High Court, subject to its own Rules, in exercise of its manifold jurisdiction, which is, unless barred, unlimited.
To the extent not barred expressly or by necessary implication, the judicial sovereignty of this country is manifested in the jurisdiction vested in the High Courts as superior courts.
S.K. Mukherjea, J., however, continues (ibid, para 94): "The Admiralty Court Act, 1861, although repealed in part in relation to Enlgand and Wales, remains in force in India.
None of the subsequent English statutes relating to Admiralty jurisdiction over cargo claims or contract of carriage have been made applicable to the High Courts in India exercising jurisdiction in Admiralty." 1025 A similar view is echoed in other decisions on the point.
In Kamalakar Mahadev Bhagat, vs Scindia Steam Navigation co. Ltd. , a learned Judge of the Bombay High Court stated : ".
It will thus be seen that the High Court of judicature at Bombay in particular being one of the Colonial Courts of Admiralty under Act 16 of 1891 today exercises the same admiralty jurisdiction as was exercised by the High Court of Admiralty in England in 1890 when the Colonial Courts of Admiralty Act was passed by the British Parliament.
We have, therefore, to examine and ascertain as to what was the scope and nature of jurisdiction of the High Court of Admiralty in England either under any statute or otherwise in the year 1890, because, it would be just that jurisdiction which is exercisable by the High Court of Judicature at Bombay down to date." (p. 190) With respect we disagree.
All this is reminiscent of a bygone age.
The learned Judge failed to take note of the fact that in 1890 the Court of Admiralty had ceased to be a separate and distinct institution.
By the Judicature Act of 1873, the High Court of Admiralty was merged with the High Court of Justice.
It is, however, true that the substantive powers in admiralty matters were derived from the Admiralty Court Act, 1861, and those powers were not widened until 1920.
The learned Judge further observes: ".
In my opinion, therefore, the present suit falls within the exclusive Admiralty jurisdiction of the High Court and could not have been filed on the Ordinary Original Side of the High Court, much less in the City Civil Court.
In this view of the matter, I am unable to agree with the view expressed by the learned Principal Judge of the City Civil Court that actions in personam used to be entertained in the Common Law Courts in England in respect of damage done by ship on the high seas and that even at present in England it is open to a suitor to file an action in personam in the King 's Bench Division in respect thereof.
In my opinion, no such action ever lay in the Common Law Courts of England, nor can it ever lie in the Queen 's Bench Division of the High Court of England at the present time. ".
(p.200 ibid.
) 1026 All this observation, as we shall presently see, is inconsistent with the true character of the constitution of the courts in England and the powers exercised by them consequent upon the statutory changes between 1873 and 1981.
It is true that the Colonial statutes continue to remain in force by reason of Article 372 of the Constitution of India, but that does not stultify the growth of law or blinker its vision or fetter its arms.
Legislation has always marched behing time, but it is the duty of the Court to expound and fashion the law for the present and the future to meet the ends of justice.
We do not accept the reasoning of the High Court in the decisions cited above on the question of jurisdiction, whatever be the correctness of their decisions on the peculiar facts of those cases in regard to which we express no view.
But the narrow view adopted in those decisions on the source and ambit of the admiralty jurisdiction of the High Courts is, in our opinion not warranted.
Mr. Ramachandran has laid much stress on the section of the Privy Council in The Yuri Maru vs The Woron, , which was relied on by the Bombay High Court in Mrs. Sahida Ismail (supra) to come to the conclusion, which it did, as to the lack of jurisdiction of the Indian High Courts to go beyond what was permitted by the Colonial Courts of Admiralty Act, 1890.
Before we deal with the decision of the Privy Council, it is important to notice that the Colonial Courts of Admiralty were vested with the same admiralty jurisdiction which was vested in the High Court of England `whether existing by virtue of any statute or otherwise ' and they were entitled to exercise the same jurisdiction in like manner and to the same extent as the High Court in England.
We shall now read the provisions of the Colonial Courts of Admiralty Act, 1890, so far as they are material.
"2. (1).
Colonial Courts of Admiralty Every Court of law in a British possession, which is for the time being declared in pursuance of this Act to be a court of Admiralty, or which, if no such declaration is in force in the possession, has therein original unlimited civil jurisdiction, shall be a court of Admiralty, with the jurisdiction is this Act mentioned, and may for the 1027 purpose of that jurisdiction exercise all the powers which it possesses for the purpose of its other civil jurisdiction, and such court in reference to the jurisdiction conferred by this Act is in this Act referred to as a Colonial Court of Admiralty . . . . . (2) The jurisdiction of a Colonial Court of Admiralty shall, subject to the provisions of this Act, be over the like places, persons, matters, and things, as the Admiralty jurisdiction of the High Court in England, whether existing by virtue of any statute or otherwise, and the Colonial Court of Admiralty may exercise such jurisdiction in like manner and to as full an extent as the High Court in England, and shall have the same regard as that Court to international law and the comity of nations.
(3). . . . . .
Provided as follows : (a) Any enactment in an Act of the Imperial Parliament referring to the Admiralty jurisdiction of the High Court in England, when applied to a Colonial Court of Admiralty in a British possession, shall be read as if the name of that possession were therein substituted for England and Wales; and . ." (emphasis supplied) These provision show that the admiralty jurisdiction conferred on the Colonial Courts of Admiralty was identical to that of the High Court in England.
The Colonial Courts of Admiralty were, in relation to their respective territories, invested with the same jurisdiction 'over places, persons, matters and things" as in the case of the English High Court in respect of England and Wales.
This jurisdiction was derived from the statutes which then existed in England namely, the Admiralty Court Acts of 1840 and 1861, as well as from other sources such as custom and practice as recognised by the Courts exercising admiralty jurisdiction.
This is clear from the words "whether existing by virtue of any statute or otherwise".
The proviso makes the position even clearer.
What the Colonial Courts of Admiralty Act, 1890 did was not to incorporate any particular English Statute into Indian law for the purpose of conferring admiralty jurisdiction, but to assimilate the competent courts in India to 1028 the position of the English High Court in the exercise of admiralty jurisdiction.
It would, therefore, appear that any expansion of Admiralty jurisdiction of the High Court in England was intended likewise to expand the jurisdiction of the Colonial Court of Admiralty.
This should have been regarded as the position with respect to a Colonial Court of unlimited jurisdiction.
Section 3 of this Act provides : "(3) The legislature of a British possession may by any Colonial law (a) declare any court of unlimited civil jurisdiction, whether original or appellate, in that possession to be a Colonial Court of Admiralty. " (b) confer upon any inferior or subordinate court in that possession such partial or limited Admiralty jurisdiction under such regulations and with such appeal (if any) as may seem fit: Provided that any such Colonial law shall not confer any jurisdiction which is not by this Act conferred upon a Colonial Court of Admiralty." Section 3 thus draws a distinction between courts of unlimited jurisdiction falling under clause (a) and courts of limited jurisdiction falling under clause (b).
The admiralty jurisdiction of the former was wider than that which was conferred on the latter.
Section 7 confers power to make rules of court to regulate the procedure and practice of the court in the exercise of its admiralty jurisdiction.
This section provides : "S.7.
(1) Rules of court for regulating the procedure and practice (including fees and costs) in a court in a British possession in the exercise of the jurisdiction conferred by this Act, whether original or appellate, may be made by the same authority and in the same manner as rules touching the practice, procedure, fees, and costs in the said court in the exercise of its ordinary civil jurisdiction respectively are made.
. . . . . . 1029 (2) . . . . . . (3) Such rules may provide for the exercise of any jurisdiction conferred by this Act by the full court, or by any judge or judges thereof, and subject to any rules, where the ordinary civil jurisdiction of the court can in any case be exercised by a single judge, any jurisdiction conferred by this Act may in the like case be exercised by a single judge.
" By virtue of this provision, admiralty rules were made for Calcutta and Bombay High Courts.
The Madras High Court adopted admiralty rules by virtue of the powers conferred by the Letters Patent of the High Court and the Government of India Act, 1915.
By Act 16 of 1891, certain courts in British India were declared to be Colonial Courts of Admiralty.
The High Courts of Judicature at Fort William in Bengal, at Madras and at Bombay were three of the six Courts declared to be Colonial Courts of Admiralty.
* The preamble to this Act, in so declaring, stated : "WHEREAS it is provided by the Colonial Courts of Admiralty Act, 1890, that the Legislature of a British possession may by any colonial law declare any Court of unlimited civil jurisdiction in that possession to be a Colonial Court of Admiralty; . . . ." It was because of the unlimited civil jurisdiction that was already vested in these High Courts that they were declared to be Colonial Courts of Admiralty having the same jurisdiction in extent and quality as was vested in the High Court of England by virtue of any statute or custom.
The High Courts were declared to be competent to regulate their procedure and practice in exercise of admiralty jurisdiction in accordance with the Rules made in that behalf.
There is, therefore, neither reason nor logic in imposing a fetter on the jurisdiction of these High Courts by limiting it to the provisions of an imperial statute of 1861 and freezing any further growth of jurisdiction.
This is all the more true because the Admiralty Court Act, 1861 was in substance reappealed in England a long time ago.
See Halsbury 's Laws of England 4th ed.
* (1) The other Courts are : (a) The Court of the Recorder of Rangoon (b) The Court of the Resident at Aden (c) The District Court of Karachi.
1030 Vol.
I(1), para 307; Halsbury 's Statutes of England, Vol.
I, p.9 Assuming that the admiralty powers of the High Courts in India are limited to what had been derived from the Colonial Courts of Admiralty Act, 1890, that Act, having equated certain Indian High Courts to the High Court of England in regard to admiralty jurisdiction, must be considered to have conferred on the former all such powers which the latter enjoyed in 1890 and thereafter during the period preceding the Indian Independence Act, 1947.
What the Act of 1890 did was, as stated earlier, not to incorporate any English statute into Indian law, but to equate the admiralty jurisdiction of the Indian High Courts over places, persons, matters and things to that of the English High Court.
As the admiralty jurisdiction of the English High Courts expanded with the progress of legislation, and with the repeal of the earlier statutes, including in substance the Admiralty Court Acts of 1840 and 1861, it would have been reasonable and rational to attribute to the Indian High Courts a corresponding growth and expansion of admiralty jurisdiction during the pre independence era.
But a restrictive view was taken on the question in the decisions of the High Courts cited above.
There is no reason why the jurisdiction of the Indian High Courts should have been considered to have frozen and atrophied on the date of the Colonial Courts of Admiralty Act, 1890.
If this had not been considered to have happened, and a liberal construction had been adopted by courts, the admiralty jurisdiction of the High Court would in any case have been considered to have progressed up to the level of the English Administration of Justice Act, 1928, which was the last of a series of enactments in England on the subject prior to 1947, and consequently the Indian High Court would have been treated as a consolidated court on the basis of (English) Supreme Court of Judicature (Consolidation) Act, 1925, exercising identical and unlimited jurisdiction, and not a distinct or `prescribed ' admiralty jurisdiction, limited and confined to the Admiralty Court Act, 1861, as it is now treated to be by some of the High Courts in the decisions cited above.
All this is perhaps the result of the reasoning in the decision of the Privy Council in The Yuri Maru vs The Waron, The Yuri Maru which arose from Canada concerned the jurisdiction of the Exchequer Court.
The decision is summarised in the head note as follows: "The effect of section 2, sub s 2, of the Colonial Courts of Admiralty is to limit the jurisdiction of Colonial Courts of Admiralty established under the Act to the Admiralty jurisdiction of the High Court of England, as it existed at the passing of the Act; the extension of the Admiralty jurisdiction of the High Court by the Administration of Justice Act, 1920 (Imp.), s.22, repealed and re enacted by the Supreme Court of Judicature (Consolidation) Act, 1925 (imp.), s.22, does not apply to Colonial Courts of Admiralty.
Consequently, the Exchequer Court of Canada, which was established by the Admiralty Act (R.S. Can., 1906, c.141) as a Colonial Court of Admiralty, has not, under section 22, sub section
1(xii), of the above Imperial Act of 1925, jurisdiction in rem to try an action for damages for breach of a charterparty. . . ." The Privy Council thus rejected the contention that the jurisdiction of the Canadian Court of Admiralty was automatically extended with the progress of legislation in England widening the admiralty jurisdiction of the English High Court.
Nevertheless, the Privy Council significantly left it to the Canadian legislature to pass appropriate laws for widening the jurisdiction of the Canadian Courts.
Speaking for the Board, Lord Merrivale concluded : "On the whole, the true intent of the Act appears to their Lordships to have been to define as a maximum of jurisdictional authority for the Courts to set up thereunder, the Admiralty jurisdiction of the High Court in England as it existed at the time when the Act passed.
What shall from time to time be added or excluded is left for independent legislative determination".
The Exchequer Court of Canada was established by the Admiralty Act R.S. Canada, 1906, c. 141, as a Colonial Court of Admiralty.
It is not clear whether that Court was in its jurisdiction comparable to the Indian High Courts.
Assuming that it was comparable at the relevant time, and whatever be the relevance of The Yuri Maru (supra) to Courts like the Exchequer Court of canada, we see no reason why the jurisdiction of the Indian High Courts, governed as they now are by the Constitution of India, should on any way be subjected to the jurisdictional fetters imposed by the Privy Council in that 1032 decision.
Legal history is good guidance for the future, but to surrender to the former is to lose the latter.
A short account of the English statutes on admiralty jurisdiction and the power exercised by the English Courts over foreign ships will be helpful in understanding the nature and extent of the admiralty jurisdiction of the Indian Courts.
We shall, therefore, briefly discuss the salient features of the admiralty jurisdiction of the English Courts.
The customs and practices of the commercial and maritime courts and the Law Merchant administered by them and the jurisdiction assumed by the Admiral over ships and things at sea and the conflict which arose between the Court presided over by him and the common law and equity courts leading to curtailment of the powers of the Admiral and ultimately resulting in consolidation of all the courts by the Supreme Court of Judicature Act.
1873 (which came into force in 1875) are vividly described by eminent Scholars of English legal history and maritime law.
See Holdworth 's A History of English Law, Volumes I, 5 and 8; Roscoe 's Admiralty Practice, 5th ed.; Marsden: Select Pleas of the Court of Admiralty, Volumes I and II; Law and Custom of the SEa, ibid Volumes I and II; Benedict on Admiralty, 6th ed.
(1940) Vol.
I; Gilmore and Black, Law of Admiralty, 1957.
The wide jurisdiction vested in the English Courts is derived from ancient principles of Maritime Law developed by custom and practice as well as from subsequent statutes many of which have incorporated the provisions of International Conventions unifying the laws practised in several maritime countries.
It is beyond the scope of this judgment to embark on a survey of maritime history except to notice that both the Admiralty Court and the Common Law Courts claimed jurisdiction over cases governed by maritime law.
Although admiralty Judges were often compelled to abandon jurisdiction to the Courts of Common Law in various matters, maritime cases involving hypothecation, salvages, torts committed on the high seas and the like, where the Common Law Courts could not give effective redress, were left to the jurisdiction of the admiralty Judges.
The admiralty had, however, `fallen into a feeble and neglected condition and for long its proceedings excited no attention '.
But in the Eighteenth Century, the learning and ability of Lord Stowell `raised the Court to a position of the highest importance ' (Roscoe 's Admiralty Practice, 5th ed.
p. 14).
1033 In the words of Holdswoth*, "Modern legislation has restored to the court of Admiralty many of the powers, and much of the jurisdiction of which it had been deprived in the seventeenth century.
But Admiralty law has lost the international character which it once possessed.
It is essentially English Law.
"The law which is administered in the Admiralty Court of England is the English maritime law.
It is not the ordinary municipal law of the country, but it is the law which the English court Admiralty, either by Act of Parliament or by reiterated decisions and traditions and principles, has adopted as the English Maritime law**, `Neither the laws of the Rhodians, nor of Oleron, nor of Visby, nor of the Hanse towns, are of themselves any part of Admiralty law of England.
But they contain many principles and statements of marine practice, which, together with principles found in the Digest, and in the French, and other Ordinances, were used by the judges of the English court of Admiralty, when they were moulding and reducing to form the principles and practice of their court '.
*** The Admiralty Court Act, 1840 was the first of a series of statutes extending and defining the jurisdiction of the High Court of Admiralty in England.
This Act was followed by the Admiralty Court Act, 1861 confering larger powers upon the High Court of Admiralty.
Section 6 of this Act empowered the High Court of Admiralty to assume jurisdiction over foreign ships in respect of claims to cargo carried into any port in England or Wales.
**** Significantly, the Act did not apply to outward cargo.
* A History of English Law, W.S. Holdswoth, vol. 1, pp. 558 59.
** The Gaetano and Maria, (1882) 7PD at p. 143.
*** The Gas Floot Whitton, N:2 (1896) P. at pp.
47. 48.
" ***** The section reads : "6.
As to Claims for Damage to Cargo imported.
The High Court of Admiralty shall have Jurisdiction over any Claim by the Owner or Consignee or Assignee of any Bill of Lading of any Goods carried into any Port in England or Wales in any Ship.
for Damage done to the Goods or any Part thereof by the Negligence or Misconduct of or for any Breach of Duty or Breach of Contract on the Part of the Owner.
Master, or Crew of the Ship, unless it is shown to the Satisfaction of the Court that at the Time of the Institution of the Cause any Owner or Part Owner of the Ship is domiciled in England or Wales : Provided always, that if in any such Cause the Plaintiff do not recover Twenty Pounds he shall not be entitled to any Costs.
Charges, or Expenses incurred by him therein, unless the Judge shall certify that the Cause was a fit one to be tried in the said Court." (emphasis supplied) See the observation of Dr. Lushington in the "Kasan" (January 13, 1863) and in the "Bahia" (April 21, 1863 English Report, Vol. 167.
p. 268, 298.
1034 Section 7 of the Act, however, conferred jurisdiction on the High Court of Admiralty "over any claim for damage done by any ship".
This Act was followed by the Judicature Act of 1873, which came into force in 1875 and which merged the High Court of Admiralty with the High Court of Justice resulting in a fusion of admiralty law, common law and equity.
It is of interest to note that the provision contained in section 6 of the Admiralty Court Act, 1861 limiting the jurisdiction of the Admiralty Court to claims respecting inward cargo was discarded by the Administration of Justice Act, 1920 which extended the jurisdiction of the High Court to (a) any claim arising out of an agreement relating to the use or hire of a ship; (b) any claim relating to the carriage of goods in any ship, and (c) any claim in tort in respect of goods carried in any ship.
The Act thus applied to both inward and outward cargoes.
The Admiralty Court Act, 1861 and the subsequent enactments were consolidated by the Supreme Court of Judicature (consolidation) Act, 1925.
The admiralty jurisdiction of the English High Court was redefined by this Act to include various matters such as any claim "for damage done by a ship"; any claim "arising out of an agreement relating to the use or hire of a ship"; or "relating to the carriage of goods in a ship"; or "in tort in respect of goods carried in a ship".
This jurisdiction was, however, not available if "at the time of the institution of the proceedings any owner or part owner of the ship was domiciled in England" [See section 22 (1), (iv) and (vii)].
By the Administration of Justice Act, 1928, the jurisdiction vested in the High Court by the Supreme Court of Judicature (Consolidation) Act, 1925 was declared to belong to all divisions of the High Court.
The admiralty Court was thus empowered to entertain, apart from actions in rem, any claim in personam which could be brought in any other division of the High Court.
By the Administration of Justice Act, 1956, the admiralty jurisdiction of the High Court was further widened and redefined so as to include not only the claims specified under section 1(i) of Part I but also "any other jurisdiction which either was vested in the High Court of Admiralty immediately before the date of the commencement of the Supreme Court of Judicature Act, 1873 (i.e., 1.11.1875), or is conferred by or under an Act which came into operation on or after that date on the High Court as being a court with Admiralty jurisdiction and any other jurisdiction connected with ships or aircraft vested in the High Court apart from this section which is for the time being assigned by rules of court to the Probate, Divorce and Admiralty 1035 Division".
Sub Section (4) of this section removed the restriction based on the ownership of the ship.
It says that the jurisdiction applied to all ships or aircraft, "whether British or not and whether registered or not and wherever the residence or domicile of their owners may be" and "in relation to all claims, wheresoever arising".
The jurisdiction in regard to the questions or claims specified under section 1(i) includes "any claim for damage done by a ship", "any claim for loss of or damage to goods carried in a ship", "any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship" [See clauses (d), (g) & (h)].
These claims are now specifically mentioned under clauses (e), (g) and (h) respectively of section 20(2) of the Supreme Court Act, 1981, amongst other claims, as falling under the Admiralty jurisdiction of the High Court.
Part II of this Act is derived substantially from Part I of the 1956 Act which was enacted to give effect to the Brussels Convention of 1952 relating to the arrest of sea going ships and the rules concerning civil jurisdiction in matters of collision (Cmd 8954).
Section 20 of the Supreme Court Act, 1981 enumerates various questions and claims falling under the admiralty jurisdiction of the English High Court.
Apart from matters covered by the Merchant Shipping Acts 1894 to 1979 [referred to in sub section (3)] and certain other matters, various questions and claims are enumerated in sub section (2).
They include: "any claim for loss of or damage to goods carried in a ship; any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship; any claim for damage received by a ship; and any claim for damage done by a ship.
* * The specific questions and claims enumerated in sub section (2) of section 20 of the Supreme Court Act, 1981 are : "(a) any claim to the possession or ownership of a ship or to the ownership of any share therein; (b) any question arising between the co owners of a ship as to possession, employment or earnings of that ship; (c) any claim in respect of a mortgage of or charge on a ship or any share therein; (d) any claim for damage received by a ship; (e) any claim for damage done by a ship; (f) any claim for loss of life or personal injury sustained in consequence of any defect in a ship or in her apparel or equipment, or in consequence of the wrongful act, neglect or default of footnote contd.
on next page 1036 Sub section (7) of this section specifically provides that the admiralty jurisdiction of the High Court extends to "all ships or aircrafts, whether British or not and wherever the residence or domicile of their owners may be, and to all claims wherever arising".
It reads: Sub Section (7).
The preceding provisions of this section apply (a) in relation to all ships or aircraft, whether British or not and wherever the residence or domicile of their owners may be; (i) the owners, charterers or persons in possession or control of a ship; or (ii) the master or crew of a ship, or any other person for whose wrongful acts, neglects or defaults the owners, charterers or persons in possession or control of a ship are responsible, being an act, neglect or default in the navigation or management of the ship, in the loading, carriage or discharge of goods, on.
in or from the ship, or in the embarkation, carriage or disembarkation of persons on, in or from the ship.
(g) any claim for loss of or damage to goods carried in a ship; (h) any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship; (i) any claim in the nature of salvage (including any claim arising by virtue of the application, by or under section 51 of the Civil Aviation Act 1949, of the law relating to salvage to aircraft and their apparel and cargo); (j) any claim in the nature of towage in respect of a ship or an aircraft; (k) any claim in the nature of pilotage in respect of a ship or an aircraft; (l) any claim in respect of goods or materials supplied to a ship for her operation or maintenance : (m) any claim in respect of the construction, repair or equipment of a ship or in respect of dock charges or dues; (n) any claim by a master or member of the crew of a ship for wages (including any sum allotted out of wages or adjudged by a superintendent to be due by way of wages); (o) any claim by a master, shipper, chartered or agent in respect of disbursements made on account of a ship; (p) any claim arising out of an act which is or is claimed to be a general average act; (q) any claim arising out of bottomry; (r) any claim for the forfeiture or condemnation of a ship or of goods which are being or have been carried, or have been attempted to be carried, in a ship, or for the restoration of a ship or any such goods after seizure, or for droughts of Admiralty." 1037 (b) in relation to all claims, wherever arising (including, in the case of cargo or wreck salvage, claims in respect of cargo or wreck found on land); and (c) so far as they relate to mortgages and charges, to all mortgages or charges, whether registered or not and whether legal or equitable,including mortgages and charges created under foreign law: Provided that nothing in this sub section shall be construed as extending the cases in which money or property is recoverable under any of the provisions of the Merchant Shipping Acts 1894 to 1979".
This jurisdiction is wide enough to cover all claims in tort or contract arising out of any agreement for carriage of goods by sea.
* The whole jurisdiction of the English High Court is now vested in all the divisions alike.
All Divisions of the High Court and all the Judges of that Court have equal power, authority and jurisdiction, although admiralty actions are assigned to the Queen 's Bench Division and taken up by the Admiralty Court.
**The special requirements of an action in personam, namely, the habitual residence or place of business of the defendant or the cause of action having their nexus with England and Wales or the determination of a connected matter in the English High Court or the submission of the defendant to the jurisdiction of that court, are not applicable to a proceeding commenced as an admiralty action in rem.
See O. 75, rule 4(3) of the Rules of the Supreme Court, 1965.
*** The Civil Jurisdiction and Judgments Act, 1982 enacted into English Law and Scottish Law the EEC Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters.
Describing the unified court structure in England, Jackson sums up: "The Admiralty Court developed independently, having its own battle with common law courts over jurisdictional boundaries.
* See the Principle stated in The Fehmam.
** See Halsbury, op.
4th ed.
I(I) para 309.
See also Supreme Court Act, 1981.
*** See also the editor 's general note on O.75.
rule 5 on the practice of the English High Court.
1038 During the 18th and early 19th centuries it influence and power decreased, but through statutes of 1840 and 1861 the court received a firm foundation on which it has built since.
It came in from the cold into the general union of courts in 1873 5 and is now integrated into the High Court, being a branch of the Queen 's Bench Division.
. . . . . . . . . . Once under the umbrella of the unified court structure, common law and equitable principles became directly available in the Admiralty Court.
No longer need claimants have to seek these elsewhere and no longer did jurisdictional boundaries necessarily indicate the availability of substantive rights and remedies." [D.C. Jackson, Enforcement of Maritime Claims, (1985) p. 8} "The law of admiralty, or maritime law, . (is the) corpus of rules, concepts, and legal practices governing . the business of carrying goods and passengers by water." (Gilmore and Black, The Law of Admiralty, page (1).
The vital significance and the distinguishing feature of an admiralty action in rem is that this jurisdiction can be assumed by the coastal authorities in respect of any maritime claim by arrest of the ship, irrespective of the nationality of the ship or that of its owners, or the place of business or domicile or residence of its owners or the place where the cause of action arose wholly or in part. ". .
In admiralty the vessel has a juridicial personality, an almost corporate capacity, having not only rights but liabilities (sometimes distinct from those of the owner) which may be enforced by process and decree against the vessel, binding upon all interested in her and conclusive upon the world, for admiralty in appropriate cases administers remedies in rem, i.e., against the property, as well as remedies in personam, i.e., against the party personally. ".
Benedict, The Law of American Admiralty, 6th ed.
I p.3.
Admiralty Law confers upon the claimant a right in rem to proceed against the ship or cargo as distinguished from a right in personam to proceed against the owner.
The arrest of the ship is regarded as a mere procedure to obtain security to satisfy judgment.
A successful plaintiff in 1039 an action in rem has a right to recover damages against the property of the defendant.
`The liability of the shipowner is not limited to the value of the res primarily proceeded against .
An action . though originally commenced in rem, becomes a personal action against a defendant upon appearance, and he becomes liable for the full amount of a judgment unless protected by the statutory provisions for the limitation of liability '.
(Roscoe 's Admiralty Practice, 5th ed.
p.29) The foundation of an action in rem, which is a peculiarity of the Anglo American law, arises from a maritime lien or claim imposing a personal liability upon the owner of the vessel.
A defendant in an admiralty action in personam is liable for the full amount of the plaintiff 's established claim.
Likewise, a defendant acknowledging service in an action in rem is liable to be saddled with full liability even when the amount of the judgment exceeds the value of the res or of the bail provided.
An action in rem lies in the English High Court in respect of matters regulated by the Supreme Court Act, 1981, and in relation to a number of claims the jurisdiction can be invoked not only against the offending ship in question but also against a `sistership ' i.e., a ship in the same beneficial ownership as the ship in regard to which the claim arose.
"The vessel which commits the aggression is treated as the offender, as the guilty instrument or thing to which the forfeiture attaches, without any reference whatsoever to the character or conduct of the owner. " Per Justice Story, The United States vs The Big Malek Adhel, etc., [43 US (2 How.) 210, 233 (1844)] Merchant ships of different nationalities travel from port to port carrying goods or passengers.
They incur liabilities in the course of their voyage and they subject themselves to the jurisdiction of foreign States when they enter the waters of those States.
They are liable to be arrested for the enforcement of maritime claims, or seized in execution or satisfaction of judgments in legal actions arising out of collisions, salvage, loss of life or personal injury, loss of or damage to goods and the like.
They are liable to be detained or confiscated by the authorities of foreign States for violating their customs regulations, safety measures, rules of the road, health regulations, and for other causes.
The coastal State may exercise 1040 its criminal jurisdiction on board the vessel for the purpose of arrest or investigation in connection with certain serious crimes.
In the course of an international voyage, a vessel thus subjects itself to the public and private laws of various countries.
A ship travelling from port to port stays very briefly in any one port.
A plaintiff seeking to enforce his maritime claim against a foreign ship has no effective remedy once it has sailed away and if the foreign owner has neither property nor residence within jurisdiction.
The plaintiff may therefore detain the ship by obtaining an order of attachment whenever it is feared that the ship is likely to slip out of jurisdiction, thus leaving the plaintiff without any security.
A ship may be arrested (i) to acquire jurisdiction; or (ii) to obtain security for satisfaction of the claim when decreed; or (iii) in execution of a decree.
In the first two cases, the court has the discretion to insist upon security being furnished by the plaintiff to compensate the defendant in the event of it being found that the arrest was wrongful and was sought and obtained maliciously or in bad faith.
The claimant is liable in damages for wrongful arrest.
This practice of insisting upon security being furnished by the party seeking arrest of the ship is followed in the United States, Japan and other countries.
The reason for the rule is that a wrongful arrest can cause irreparable loss and damages to the shipowner; and he should in that event be compensated by the arresting party.
(See Arrest of Ships by Hill, Soehring, Hosoi and Helmer, 1985).
The attachment by arrest is only provisional and its purpose is merely to detain the ship until the matter has been finally settled by a competent court.
The attachment of the vessel brings it under the custody of the marshal or any other authorized officer.
Any interference with his custody is treated as a contempt of the court which has ordered the arrest.
But the marshal 's right under the attachment order is not one of possession, but only of custody.
Although the custody of the vessel has passed from the defendant to the marshal, all the possessory rights which previously existed continue to exist, including all the remedies which are based on possession.
The warrant usually contains a monition to all persons interested to appear before the court on a particular day and show cause why the property should not be condemned and sold to satisfy the claim of the plaintiff.
1041 The attachment being only a method of safeguarding the interest of the plaintiff by providing him with a security, it is not likely to be ordered if the defendant or his lawyer agrees to "accept service and to put in bail or to pay money into court in lieu of bail".
(See Halsbury 's Laws of England, 4th edn.
Vol. 1, p. 375 etc.).
The service of the warrant is usually effected by affixing it on the main mast or single mast of the ship.
A ship which has been arrested under an order of attachment may be released by the court if sufficient bail is put in to cover the claim of the plaintiff as well as the costs of the action.
The sureties are liable for the amount entered in the bail bond.
If the ship or cargo under arrest before judgment has not been released by the defendant by putting in sufficient bail and if the property is found deteriorating, the court has the power to order the sale of the property after notice has been duly issued to the parties interested.
If the plaintiff has finally obtained a decree of condemnation and sale of the ship, the court will issue an order to the competent officer commanding him to sell the property, in execution of the decree, and to bring the proceeds into court.
Thereupon the officer shall issue proper notice and arrange for the sale of the property by auction.
The proceeds of the sale are paid into the registry of the court and shall be disposed of by the court according to law.
A personal action may be brought against the defendant if he is either present in the country or submits to jurisdiction.
If the foreign owner of an arrested ship appears before the court and deposits security as bail for the release of his ship against which proceedings in rem have been instituted, he submits himself to jurisdiction.
An action in rem is directed against the ship itself to satisfy the claim of the plaintiff out of the res.
The ship is for this purpose treated as a person.
Such an action may constitute an inducement to the owner to submit to the jurisdiction of the court, thereby making himself liable to be proceeded against by the plaintiff in personam.
It is, however, imperative in an action in rem that the ship should be within jurisdiction at the time the proceedings are started.
A decree of the court in such an action binds not merely the parties to the writ but everybody in the world who might dispute the plaintiff 's claim.
1042 It is by means of an action in rem that the arrest of a particular ship is secured by the plaintiff.
He does not sue the owner directly and by name; but the owner or any one interested in the proceedings may appear and defend.
The writ is issued to "owners and parties interested in the property proceeded against.
" The proceedings can be started in England or in the United States in respect of a maritime lien, and in England in respect of a statutory right in rem.
A maritime lien is a privileged claim against the ship or a right to a part of the property in the ship, and it "travels" with the ship.
Because the ship has to "pay for the wrong it has done", it can be compelled to do so by a forced sale.
(See The Bold Buccleaugh, In addition to maritime liens, a ship is liable to be arrested in England in enforcement of statutory rights in rem (Supreme Court Act, 1981).
If the owner does not submit to the jurisdiction and appear before the court to put in bail and release the ship, it is liable to be condemned and sold to satisfy the claims against her.
If, however, the owner submits to jurisdiction and obtains the release of the ship by depositing security, he becomes personally liable to be proceeded against in personam in execution of the judgment if the amount decreed exceeds the amount of the bail.
The arrest of the foreign ship by means of an action in rem is thus a means of assuming jurisdiction by the competent court.
The admiralty action in rem, as practised in England or in the United States, is unknown to the civil law.
In countries following the civil law, all proceedings are initiated by actions in personam.
The President of the Court having competence in the matter has the power to order an attachment of the ship if he is convinced that the plaintiff is likely to lose his security unless the ship is detained within jurisdiction.
His hands are not fettered by the technicalities of an action in rem and the scope of the proceedings are not limited to maritime liens or claims.
* According to the French law, arrest of a ship is allowed even in respect of non maritime claims and whether or not the claimant is a secured or unsecured creditor.
A vessel may be arrested either for the purpose of mobilising the vessel as security (Saisie conservatoire) or in execution of judgment (Saisie Execution) whether or not the claim has any relation to the vessel.
Arrest of the vessel has the advantage of forcing the owner to furnish security to guarantee satisfaction of any decree that may be passed against him.
On * See D.C. Jackson, Enforcement of Maritime Claims, (1985) Appendix 5, p. 437 et seq.
1043 furnishing sufficient security with the Court, he is usually allowed to secure the release of the vessel.
Maritime law is part of the general law of France and other `civil law countries ' and is dealt with by the ordinary courts or tribunals.
The presence of any property belonging to the defendant within the territorial jurisdiction confers jurisdiction on the French Court.
(See the observation of Lord Diplock in The Jade , 923).
The real purpose of arrest in both the English and the Civil Law systems is to obtain security as a guarantee for satisfaction of the decree, although arrest in England is the basis of assumption of jurisdiction, unless the owner has submitted to jurisdiction.
In any event, once the arrest is made and the owner has entered appearance, the proceedings continue in personam.
All actions in the civil law whether maritime or not are in personam, and arrest of a vessel is permitted even in respect of non maritime claims, and the vessel is treated as any other property of the owner, and its very presence within jurisdiction is sufficient to clothe the competent tribunal with jurisdiction over the owner in respect of any claim.
(See D.C.Jackson, Enforcement of Maritime Claims, (1985) Appendix 5).
Admiralty actions in England, on the other hand, whether in rem or in personam, are confined to well defined maritime liens or claims and directed against the res(ship, cargo and freight) which is the subject matter of the dispute or any other ship in the same beneficial ownership as the res in question.
Maritime law is as much a part of the general legal system as any other branch of the law.
With the merger of the Admiralty and Common Law Courts in England in 1875 and the fusion of their legal precepts and concepts, this branch of the law, despite its peculiarities about actions in rem, is no longer treated as a separate and independent branch.
It is not the exclusive preserve of the English High Court, for certain county courts in that country are specially authorised to exercise this jurisdiction.
This is much more true of the civil law system where no distinction is drawn between maritime law and other branches of the law, and they are administered alike by the same courts or tribunals.
It may not be correct to say that the admiralty jurisdiction of the English Courts is dependent entirely on statutes.
It may be true in a very limited sense as regards the jurisdiction of the High Court after the merger of the High Court of Admiralty with the High Court of Justice by the 1044 Supreme Court of Judicature Act, 1873 which came into force in 1875: See Supreme Court of Judicature (Commencement) Act, 1874.
Even so, statutes are codifications of legal principles developed by the decisions of Courts and those principles remain the life blood of the statutes.
The observation of Lord Diplock in The Jade (1976) 1 All.
E.R. 920, on which much reliance is placed by Mr. Ramachandran in support of his arguments, has to be so understood.
(See also Halsbury 's Laws of England, Vol. 1, para 307).
Remedy for enforcement of maritime liens was available prior to the introduction of statutes.
"Admiralty law was derived from the laws of Oleron, supplemented by the civil law" Per Lord Halsbury, L.C; Currie vs M.Knight, [1897] AC 97.
For a long time the Admiralty Court developed the law independently fighting its battles with the Common Law Courts on the question of jurisdictional boundaries.
By statutory intervention the court structure came to be unified and substantive rights and remedies became available without regard to jurisdictional boundaries.
Although statutes now control the field, much of the admiralty law is rooted in judicial decisions and influenced by the impact of civil law, common law and equity.
The ancient maritime codes like the Rhodian Sea Law, the Basilika, the Assizes of Jerusalem, the Rolls of Oleron, the Laws of Visby, the Hanseatic Code, the Black Book of the British Admiralty, Consolato del Mare, and others are, apart from statute, some of the sources from which the law developed in England.
Any attempt to confine admiralty or maritime law within the bounds of statutes is not only unrealistic but incorrect.
Although this branch of the law in England is now governed generally by statutes, the law in all its aspects can be understood only by viewing it in the context of decisions of courts and the general principles which are common to common law and equity.
Unlike in the "civil law countries", there is no maritime code in England containing all aspects of maritime law.
The Merchant Shipping Acts and the Carriage of Goods by Sea Act contain the substantive rules, but the jurisdictional and other aspects of maritime claims have to be traced to numerous other statutes and sources.
English Maritime Law `is still composed of rules having their roots in statute, rules of court and judicial doctrine of Admiralty, common law and equity '.
(See D.C. Jackson, Enforcement of Maritime Claims, 1985, p.9).
See also Halsbury, op.
cit., Vol.
(1), para 307.
As Christopher Hill puts it: ". .
Britain is a 1045 common law country and that Admiralty law has been superimposed over the years by various statutory enactments from time to time.
The right to seize a vessel by legal process is therefore partly based on rights conferred by general maritime law and partly upon the right to take legal action of this nature granted by statute . ".
Maritime Law, 2nd ed.
p. 93.
In tracing the history of admiralty law in India, it is likewise misleading and incorrect to confine it to statutes.
Statutes have been codifications of rules of law as developed by usage, practice and custom.
As stated by Westropp, C.J., of the Bombay High Court in Bardot & Anr.
vs The American Ship Or Vessel `Augusta ', 1873(x) Bombay High Court Reports, 110, at p. 113: ".
If we have jurisdiction to entertain this suit, it must be sought for in the general maritime law administered by Courts of Admiralty . . . . . . . . . . we must hold it to be quite clear that the Statutes 3 & 4 Vict.
c. 65 (1840), 24 Vict. c. 10 (1861), and 26 & 27 Vict.
c. 24 (1863), do not increase or in any wise affect our jurisdiction either in Admiralty or Vice Admiralty, and that if we have jurisdiction to entertain this cause, that jurisdiction must be sought for outside those Statutes.
" Where statutes are silent and remedy has to be sought by recourse to basic principles, it is the duty of the court to devise procedural rules by analogy and expediency.
Actions in rem, as seen above, were resorted to by courts as a device to overcome the difficulty of personal service on the defendant by compelling him to enter appearance and accept service of summons with a view to furnishing security for the release of the res; or, in his absence, proceed against the res itself, by attributing to it a personality for the purpose of entering a decree and executing the same by sale of the res.
This is a practical procedural device developed by the courts with a view to rendering justice in accordance with substantive law not only in cases of collision and salvage, but also in cases of other maritime liens and claims arising by reason of breach of contract for the hire of vessels or the carriage of goods or other maritime transactions, or tortious acts, such as conversion or negligence occurring in connection with the carriage of goods.
Where substantive law demands justice for the party aggrieved, and the statute has not provided the remedy, it is the duty of the court to devise 1046 procedure by drawing analogy from other systems of law and practice.
To the courts of the "civil law countries" in Europe and other places, like problems seldom arise, for all persons and things within their territories (including their waters) fall within their competence to deal with.
They do not have to draw any distinction between an action in rem and an action in personam.
It is likewise within the competence of the appropriate Indian Courts to deal, in accordance with the general principles of maritime law and the applicable provisions of statutory law with all persons and things found within their jurisdiction.
The power of the court is plenary and unlimited unless it is expressly or by necessary implication curtailed.
Absent such curtailment of jurisdiction, all remedies which are available to the courts to administer justice are available to a claimant against a foreign ship and its owner found within the jurisdiction of the concerned High Court.
This power of the court to render justice must necessarily include the power to make interlocutory orders for arrest and attachment before judgment.
The High Court in India are superior courts of record.
They have original and appellate jurisdiction.
They have inherent and plenary powers.
Unless expressly or impliedly barred, and subject to the appellate or discretionary jurisdiction of this Court, the High Courts have unlimited jurisdiction, including the jurisdiction to determine their own powers.
(See Naresh Shridhar Mirajkar and Ors., vs State of Maharashtra and Anr.
, ; As stated in Halsbury 's Laws of England.
4th edition, Vol. 10, para 713 : "Prima facie, no matter is deemed to be beyond the jurisdiction of a superior court unless it is expressly shown to be so, while nothing is within the jurisdiction of an inferior court unless it is expressly shown on the face of the proceedings that the particular matter is within the cognizance of the particular court.
" The observation of this Court in Raja Soap Factory and Others vs S.P. Shantharaj and Others, ; , that section 151 of the Code of Civil Procedure did not confer on the High Court jurisdiction which was not specifically vested was made in the context of section 105 of the Trade and Merchandise Marks Act (43 of 1958) which conferred a specific jurisdiction in respect of a passing off action.
That observation is not 1047 relevant to the question regarding the inherent and plenary jurisdiction of the High Court as a superior court of record.
The Andhra Pradesh High Court, as a successor to the Madras High Court, is vested with all the appellate and original jurisdiction, including admiralty jurisdiction to order the arrest and detention of a ship.
In decisions such as Jayaswal Shipping Company vs `S.S. Leelavati ', AIR 1954 Calcutta 415; Kamalakar Mahadev Bhagat vs Scindia Steam Navigation Co. Ltd., Bombay, ; Rungta Sons Private Ltd. & Anr.
vs S.S. `Edison Mariner ' & Anr., 1961 62 (66) Calcutta Weekly Notes 1083; National Co. Ltd. vs Asia Mariner, 1967 68 (72) Calcutta Weekly notes 635; Mrs. Sahida Ismail vs
Petko R. Salvejkov & Ors., AIR 1973 Bombay 18 and Smt.
Reena Padhi vs `Jagdhir ', AIR 1982 Orissa 57, the High Courts took an unduly restrictive view of the courts ' admiralty jurisdiction by limiting it to what was permitted by the Admiralty Court Act, 1861 and the Colonial Courts of Admiralty Act, 1890.
This was, in our view, an unjustified abdication of jurisdiction and a self assumed fetter on competence to render justice.
In equating the admiralty jurisdiction of the Indian High Court to that of the English High Court, the Colonial Court of Admiralty Act, 1890 significantly refers to the admiralty jurisdiction of the High Court in England `whether existing by virtue of any statute or otherwise '.
This is an enabling statute, and not a statute of limitation of power.
It aids, and does not fetter, the growth of jurisdiction.
There is no reason why the words `statute or otherwise ' should be so construed as to exclude the various sources from which the admiralty jurisdiction in England developed.
Apart from statutes, the powers of that Court, as seen above, were derived from custom and practice and the principles developed by common law and equity as well as by the generally recognised principles of civil law developed and practised in Europe.
There is no reason, as rightly stated by Westropp.
C.J. of the Bombay High Court in Bardot (supra), why the expression `statute or otherwise ' should be so construed as to exclude all these vast areas of legal principles which enriched and strengthened the maritime laws of England.
Likewise, there is no reason why those principles should also not be drawn upon to enrich and strengthen the jurisprudence of this country, even if the jurisdiction of our courts were to be, by compulsions of history, considered to be curtailed and dovetailed to the colonial past a proposition which is neither correct nor consistent with our status as a sovereign republic.
It is 1048 time to take a fresh look at the old precedents.
In this connection we would refer to the recent decision of this Court in Delhi Judicial Service Association, Tis Hazari Court, Delhi vs State of Gujarat & Ors., JT This Court stated : ". .The constitution has assigned a new role to the Constitutional Courts to ensure rule of law in the country.
Time has come to have a fresh look at the old precedents and to lay down law with the changed perceptions keeping in view the provisions of the Constitution. " See also S.P. Gupta vs Union of India, [1982] 2 SCR, 365, 520 521, 597 598.
It is well recognised in international law that a merchant ship, though generally governed by the laws of the flag State, subjects itself to the jurisdiction of a foreign State as it enters its waters.
The Geneva Convention on the Territorial Sea and Contiguous Zone, 1958 and the Law of the Sea Convention, 1982 affirm that the sovereignty of a State extends over its internal and territorial waters.
* "A foreign vessel, no matter what flag she flies, owes temporary and local allegiance to the sovereign of any port to which she comes.
And the persons in such a vessel likewise must obey the law and regulations of the port.
Such jurisdiction is discretionary.
Once a foreign vessel passes out of territorial waters, she owes no further duty to the place which she has left, unless she is `hotly persued '.
But her conduct on the high seas or in foreign ports may subject her to penalties on returning on a subsequent visit".
(Benedict, The Law of American Admiralty, Sixth Edition, pages 121 & 122).
In the words of Chief Justice Marshal of the United States Supreme Court "it would be obviously inconvenient and dangerous to society and would subject the laws to continual infraction, and the government to degradation, if such (alien) individuals or merchants (trading in ships) did not owe temporary and local allegiance, and were not amenable to the jurisdiction of the country." (The Schooner Exchange vs M ' Faddon & Ors., * See Nagendra Singh, International Maritime Law Conventions, British Shipping Laws, Vols.
I to IV.
1049 [1812] 11 U.S. (7 Cranch) 114, 143.) All foreign merchant ships and persons thereon fall under the jurisdiction of a coastal State as they enter its waters.
Subject to the right of `innocent passage ', the coastal State is free to exercise jurisdiction over such ships in respect of matters the consequence of which extend beyond the ships.
Such ships are subject to the local jurisdiction in criminal, civil and administrative matters.
This jurisdiction is, however, assumed only when, in the opinion of the local authorities, the peace or tranquillity of the port is disturbed, when strangers to the vessel are involved or when the local authorities are appealed to.
Questions which affect only the internal order and economy of the ship are generally left to the authorities of the flag State.
Coastal States are entitled to assume jurisdiction in respect of maritime claims against foreign merchant ships lying in their waters.
These ships are liable to be arrested and detained for the enforcement of maritime claims.
The courts of the country in which a foreign ship has been arrested may determine the cases according to merits, provided they are empowered to do so by the domestic law of the country or in any of the cases recognised by the International Convention relating to the Arrest of Seagoing Ships, Brussels, 1952.
* The maritime claims in respect of which the power of arrest is recognised in law include claims relating to damage caused by any ship either in collision or otherwise; claims relating to carriage of goods in any ship whether by charterparty or otherwise, loss of or damage to goods etc.
These principles of international law, as generally recognised by nations, leave no doubt that, subject to the local laws regulating the competence of courts, all foreign ships lying within the waters of a State, including waters in ports, harbours, roadsteads, and the territorial waters, subject themselves to the jurisdiction of the local authorities in respect of maritime claims and they are liable to be arrested for the enforcement of such claims.
In India, carriage of goods by sea is governed by the , the Indian Carriage of Goods by Sea Act, 1925, the , and general statutes, such as the , the Contract Act, 1872, the Evidence Act, 1872, the Indian Penal Code, 1860, the , the Civil * See also the International Conventions for the Unification of Certain Rules relating to Maritime Liens and Mortgages of 10th April, 1926 and May 27, 1967.
1050 Procedure Code, 1908, the Criminal Procedure Code, 1973, the , etc.etc.
as well as the general principles of law such as the law of tort, public and private international law etc.
In this connection, reference may also be made to the and the concerning the administration of the port and the jurisdiction over ships in port, the containing various regulatory measures affecting ships, goods and persons in connection with importation or exportation of goods, as well as the provisions governing employment of labour.
The emphasises the negotiable and other characteristics of a bill of lading.
The Carriage of Goods by Sea Act, 1925, contains the Hague Rules regulating the respective rights and liabilities of the parties to a contract governed by bills of lading or similar documents of title for carriage of goods by sea "from any port in India to any other port whether in India or outside India".
The embodies rules regarding registration of Indian ships; transfers or mortgages of ships or shares; national character and flag; employment of seamen; safety, nuclear ships; collisions, accidents at sea and liability; limitation of liability; navigation; prevention of pollution; investigation and enquiries; wreck and salvage; coasting trade; sailing vessels; penalties and procedure, etc.
Many of these provisions have been adopted from rules formulated by various international conventions.
It is true that Indian statutes lag behind the development of international law in comparison to contemporaneous statutes in England and other maritime countries.
Although the Hague Rules are embodied in the Carriage of Goods by Sea Act, 1925, India never became a party to the International Convention laying down those rules (Internationl Convention for the Unification of Certain Rules of Law relating to Bills of Lading, Brussels 1924).
The Carriage of Goods by Sea Act, 1925 merely followed the (United Kingdom) Carriage of Goods by Sea Act, 1924.
The United Kingdom repealed the Carriage of Goods by Sea Act, 1924 with a view to incorporating the Visby Rules adopted by the Brussels Protocol of 1968.
The Hague Visby Rules were accordingly adopted by the Carriage of Goods by Sea Act, 1971 (United Kingdom).
Indian legislation has not, however, progressed, notwithstanding the Brussels Protocol of 1968 adopting the Visby Rules or the United Nations Convention on the Carriage of Goods by Sea, 1978 adopting the Hamburg Rules.
The Hamburg Rules prescribe the minimum liabilities of the carrier far more justly and equitably than the Hague Rules so as to correct the tilt in the latter in favour 1051 of the carriers.
The Hamburg Rules are acclaimed to be a great improvement on the Hague Rules and far more beneficial from the point of view of the cargo owners.
India has also not adopted the International Convention relating to the Arrest of Sea going Ships, Brussels, 1952.
Nor has India adopted the Brussels Conventions of 1952 on civil and penal jurisdiction in matters of collision; nor the Brussels Conventions of 1926 and 1967 relating to maritime liens and mortgages.
* India seems to be lagging behind many other countries in ratifying and adopting the beneficial provisions of various conventions intended to facilitate international trade.
Although these conventions have not been adopted by legislation, the principles incorporated in the conventions are themselves derived from the common law of nations as embodying the felt necessities of international trade and are as such part of the common law of India and applicable for the enforcement of maritime claims against foreign ships.
The contains various provisions to enforce territorial jurisdiction.
The Act being essentially regulatory in character, the various authorities, tribunals and Courts entrusted with the administration and enforcement of its provisions are specifically stated.
The High Court is defined under section 3(15) as follows : "3(15).
`High Court ', in relation to a vessel, means the High Court within the limits of whose appellate jurisdiction (a) the port of registry of the vessel is situate; (b) the vessel is for the time being; or (c) the cause of action wholly or in part arises;" (a) International Convention relating to the Arrest of Seagoing Ships, Brussels, 10 May 1952 (IMC); (b) International Convention on Certain Rules concerning Civil Jurisdiction in Matters of Collision, Brussels, 10 May 1952 (IMC); (c) International Convention for the Unification of Certain Rules relating to Penal Jurisdiction in Matters of Collision, Brussels, 10 May 1952 (IMC); and (d) International Conventions for the Unification of Certain Rules of Law relating to Maritime Liens and Mortgages Brussels, 10 April 1926, and the Revised Convention on Maritime Liens and Mortgages, Brussels, 29 May 1967 (IMC).
1052 Accordingly, a foreign ship falls within the jurisdiction of the High Court where the vessel happens to be at the relevant time i.e., at the time when the jurisdiction of the High Court is invoked, or, where the cause of action wholly or in part arises.
The detention of a foreign ship is authorised in terms of sections 443 and 444.
In view of their vital significance in the enforcement of maritime jurisdiction, we shall read these two sections in full.
Section 443 defines the character and scope of the power of detention: "section 443.
Power to detain foreign ship that has occasioned damage.
(1) Whenever any damage has in any part of the world been caused to property belonging to the Government or to any citizen of India or a company by a ship other than an Indian ship and at any time thereafter that ship is found within Indian jurisdiction, the High Court may, upon the application of any person who alleges that the damage was caused by the misconduct or want of skill of the master or any member of the crew of the ship, issue an order directed to any proper officer or other officer named in the order requiring him to detain the ship until such time as the owner, master or consignee thereof has satisfied any claim in respect of the damage or has given security to the satisfaction of the High Court to pay all costs and damages that may be awarded in any legal proceedings that may be instituted in respect of the damage, and any officer to whom the order is directed shall detain the ship accordingly.
(2) Whenever it appears that before an application can be made under this section, the ship in respect of which the application is to be made will have departed from India or the territorial waters of India, any proper officer may detain the ship for such time as to allow the application to be made and the result thereof to be communicated to the officer detaining the ship, and that officer shall not be liable for any costs or damages in respect of the detention unless the same is proved to have been made without reasonable grounds.
(3) In any legal proceedings in relation to any such damage aforesaid, the person giving security shall be made a defendant and shall for the purpose of such proceeding be deemed to be 1053 the owner of the ship that has occasioned the damage." (emphasis supplied) The power of enforcement of an order of detention of a foreign ship is dealt with by section 444.
"section 444.
Power to enforce detention of ship.
(1) Where under this Act a ship is authorised or ordered to be detained, any commissioned officer of the Indian Navy or any port officer, pilot, harbour master, conservator of port or customs collector may detain the ship.
(2) If any ship after detention, or after service on the master of any notice of, or order for, such detention proceeds to sea before she is released by competent authority, the master of the ship shall be guilty of an offence under this sub section.
(3) When a ship so proceeding to sea takes to sea, when on board thereof in the execution of his duty any person authorised under this Act to detain or survey the ship, the owner, master or agent of such ship shall each be liable to pay all expenses of, and incidental to, such person being so taken to sea and shall also be guilty of an offence under this sub section.
(4) When any owner, or master or agent is convicted of an offence under sub section (3), the convicting magistrate may inquire into and determine the amount payable on account of expenses by such owner, master or agent under that sub section and may direct that the same shall be recovered from him in the manner provided for the recovery of fines.
" These provisions relate to detention by reason of damage caused in any part of the world by a foreign ship to property belonging to the Government of India or to an Indian citizen or company.
The sections are wide in terms and the expression `damage ' is not necessarily confined to physical damage.
Ordinarily damage is caused by physical contact of the ship, such as in collision.
But damage can also be caused to property by breach of contract or acts of commission or omission on the part of the carrier or his agents or servants by reason of the negligent operation and management of the vessel, as, for example, when cargo is damaged by exposure to 1054 weather or by negligent stowage; or, by the misconduct of those in charge of the ship, like when cargo is disposed of contrary to the instructions of the owner or by reason of theft and other misdeeds.
In all these cases, damage arises by reason of loss caused by what is done by the ship or by the breach, negligence of misdeeds of those in charge of the ship.
It must however be noticed that the expression `damage done by any ship ' has been construed by the English Courts as not to apply to claims against the carrying ship for damage done to cargo.
In the Victoria , the Court so construed section 7 of the Admiralty Court Act, 1861 (24 Victoriae c. 10)*.
It has been held to apply only to physical damage done by a ship by reason of its coming into contact with something.
See The Vera Cruz, ; Currie vs M.Knight, and The Jade, In view of the specific provisions of the English statutes of 1920, 1925, 1956 and 1981, it was unnecessary for the English Courts to construe the expression broadly so as to include cargo claims and the like.
The last two enactments contain an exhaustive list of maritime claims and questions in regard to which the High Court can exercise jurisdiction over any merchant ship by arresting it as it enters the waters of Britain.
This power, as already noticed, is available, whatever be the nationality of the ship or its owner or the domicile or place of residence or business of the owner, or wherever the cause of action has arisen.
About the words `damage done by a ship ' in section 7 of the Admiralty Court Act, 1861 and the decision in The Victoria to the effect that the section had no application to claims against the carrying ship for damage to cargo, the following observation significantly appears in Halsbury 's Laws of England, 4th ed.
I (1), para 319 N. 12. ". but this question is academic in the light of the fact that jurisdiction in respect of claims for damage to cargo carried in a ship is now expressly given by the Supreme Court Act 1981 section 20(2)(g).
" In the absence of any statute in India comparable to the English statutes on admiralty jurisdiction, there is no reason why the words `damage caused by a ship ' appearing in section 443 of the should be so narrowly construed as to limit them to * Section 7 reads : "The High Court of Admiralty shall have jurisdiction over any Claim for Damage done by any ship." 1055 physical damage and exclude any other damage arising by reason of the operation of the vessel in connection with the carriage of goods.
The expression is wide enough to include all maritime questions or claims.
If goods or other property are lost or damaged, whether by physical contact or otherwise, by reason of unauthorised acts or negligent conduct on the part of the shipowner or his agents or servants, wherever the cause of action has arisen, or wherever the ship is registered, or wherever the owner has his residence or domicile or place of business, such a ship, at the request of the person aggrieved, is liable to be detained when found within Indian jurisdiction by recourse to sections 443 and 444 of the read with the appropriate rules of practice and procedure of the High Court.
These procedural provisions are but tools for enforcement of substantive rights which are rooted in general principles of law, apart from statutes, and for the enforcement of which a party aggrieved has right to invoke the inherent jurisdiction of a superior court.
The Indian Carriage of Goods by Sea Act, 1925 applies to carriage of goods by sea under bills of lading or similar documents of title from a port in India to any other port whether in or outside India.
(See section 2).
The Act imposes certain responsibilities and liabilities and confers certain rights and immunities upon the carrier (see Articles III & IV).
In respect of a claim relating to an outward cargo, the cargo owner has a right to bring a suit against a shipowner subject to the period of limitation specified under Act, namely, one year [Article III (6)].
The substantive rights recognised by the statute are of equal application to foreign merchant ships as they are to Indian merchant ships.
The Carriage of Goods by Sea Act does not, however, contain any provision for the enforcement of the right by arresting the foreign vessel found in Indian waters.
In the absence of arrest, no effective remedy against a foreign owner may be available to the cargo owner.
The same is the position with regard to claims relating to cargo carried under a charterparty.
It is, therefore, necessary that he should have recourse to the remedy available to him under the .
That Act, as stated earlier, confers a right to arrest a vessel in respect of any damage caused by a ship.
If that expression, in the absence of any other more appropriate statute, is understood sufficiently broadly as an enabling provision to effectively assume jurisdiction over a foreign ship for the enforcement of a substantive right recognised by law, there would be no difficulty in finding a remedy for the right the law has conferred on the cargo owner.
1056 The empowers the concerned High Court to arrest a ship in respect of a substantive right.
A right conferred by the Indian Carriage of Goods by Sea Act, 1925 in respect of outward cargo is one of those rights which can be enforced by arrest and detention of the foreign ship in order to found jurisdiction over the vessel and its owners, just as it can be done in respect of inward cargo by reason of the substantive rights conferred by the Admiralty Court Act, 1861 read with the Colonial Courts of Admiralty Act, 1890, and other rules of law.
The same principle must hold good for carriage under a charterparty.
These and other laws, such as the law of contract, tort, crime, mortgage, marine insurance, customs, port operations, etc., and the Civil and Criminal Procedure Codes as well as the relevant rules of court regulating procedure and practice together constitute the body of substantive and procedural laws governing claims relating to inward and outward cargo, and such claims are enforceable against foreign ships by recourse to arrest and detention when found within jurisdiction.
Viewed in this light, and by this reasoning, the Andhra Pradesh High Court, as a successor to the Madras High Court, does not lack admiralty jurisdiction in respect of claims relating to outward cargo.
The admiralty jurisdiction of the High Court is dependent on the presence of the foreign ship in Indian waters and founded on the arrest of that ship.
This jurisdiction can be assumed by the concerned High Court, whether or not the defendant resides or carries on business, or the cause of action arose wholly or in part, within the local limits of its jurisdiction.
Once a foreign ship is arrested within the local limits of the jurisdiction of the High Court, and the owner of the ship has entered appearance and furnished security to the satisfaction of the High Court for the release of the ship, the proceedings continue as a personal action.
The provides a detailed code of substantive and procedural rules regulating shipping as an industry control exercised over it by the competent authorities in confirmity with various international conventions which have, under the auspices of International Organisations such as the IMO or the ILO, unified and developed various aspects of shipping laws.
Conventions regulating sea traffic, safety of life at sea, employment of seamen, wages, hours of work, social security, etc.
are cases in point.
Likewise, the substantive rules concerning transport of goods are contained in the and the Indian Carriage of Goods by Sea Act, 1925.
But the jurisdictional questions concerning arrest 1057 of foreign ships for enforcement of claims against the shipowner as a transporter of goods, which in England are regulated by the Supreme Court Act 1981, are in many respects left unregulated by Indian legislation.
While the provisions of various international conventions concerning arrest of ships, civil and penal jurisdiction in matters of collision, maritime liens and mortgages etc. have been incorporated into the municipal laws of many maritime States, India, as stated above, lags behind them in adopting these unified rules.
* By reason of this void, doubts about jurisdiction often arise, as in the present case, when substantive rights, such as those recognised by the Carriage of Goods by Sea Act, are sought to be enforced.
The remedy lies, apart from enlightened judicial construction, in prompt legislative action to codify and clarify the admiralty laws of this country.
This requires thorough research and investigation by a team of experts in admiralty law, comparative law, and public and private international law.
Any attempt to codify without such investigation is bound to be futile.
No Indian statute defines a maritime claim.
The Supreme Court Act, 1981 of England has catalogued claims with reference to the unified rules adopted by the Brussels Convention of 1952 on the Arrest of Seagoing Ships.
** * See for example, the Brussels Conventions listed above.
See also the Administration of Justice Act, 1956 and the Supreme Court Act, 1981 incorporating the international rules into English law.
** International Convention for the Unification of Certain Rules relating to the Arrest of Seagoing Ships, Brussels, May 10, 1952.
Article 1 of this Convention reads: (1) "Maritime Claim" means a claim arising out of one or more of the following: (a) damage caused by any ship either in collision or otherwise;(b) loss of life or personal injury caused by any ship or occurring in connection with the operation of any ship;(c) salvage;(d) agreement relating to the use or hire of any ship whether by charterparty or otherwise;(e) agreement relating to the carriage of goods in any ship whether by charterparty or otherwise; (f) loss of or damage to goods including baggage carried in any ship; (g) general average; (h) bottomry; (i) towage (j) pilotage; (k) goods or materials wherever supplied to a ship for her operation or maintenance; (l) construction, repair or equipment of any ship or dock charges and dues; (m) wages of Masters, Officers, or crew; (n) Master 's disbursements, including disbursements made by shippers, charterers or agents on behalf of a ship or her owner; (o) disputes as to the title to or ownership of any ship;(p) disputes between co owners of any ship as to the ownership, possession employment or earnings of that ship; (q) the mortgage or hypothecation of any ship.
footnote contd.
on next page 1058 Although India has not adopted the various Brussels Conventions*, the provisions of these Conventions are the result of international unification and development of the maritime laws of the world, and can, therefore, be regarded as the international common law or transnational law rooted in and evolved out of the general principles of national laws, which, in the absence of specific statutory provisions, can be adopted and adapted by courts to supplement and complement national statutes on the subject.
In the absence of a general maritime code, these principles aid the courts in filling up the lacunae in the and other enactments concerning shipping.
"Procedure is but a handmaiden of justice and the cause of justice can never be allowed to be thwarted by any procedural technicalities." S.P. Gupta vs Union of India, [1982] 2 SCR, 365, 520, 521.
It is important to remember that the Brussels Convention on Arrest of Ships merely restricts or regulates the power of the coastal States and is not intended to confer power which they did not otherwise have as sovereign States.
`Arrest ' to which the convention refers is detention of a ship to secure a maritime claim, and not seizure of a ship in execution or satisfaction of judgment.
The judicial power of this country, which is an aspect of national sovereignty is vested in the people and is articulated in the provisions of the Constitution and the laws and is exercised by courts empowered to exercise.
It is absurd to confine that power to the provisions of imperial statutes of a bygone age.
Access to court which is an important right vested in every citizen implies the existence of the power of the Court to render justice according to law.
Where statute is silent and judicial intervention is required, Courts strive to redress grievances according to what is perceived to be principles of justice, equity and good conscience.
In the words of Chief Justice Marshal : (2)"Arrest" means the detention of a ship by judicial process to secure a maritime claim, but does not include the seizure of a ship in execution or satisfaction of a judgment.
(3) "Person" includes individuals, partnerships and bodies corporate, Governments, their Departments, and Public Authorities.
(4) "Claimant" means a person who alleges that a maritime claim exists in his favour.
See the Conventions listed above.
1059 "The jurisdiction of courts is a branch of that which is possessed by the nation as an independent sovereign power.
The jurisdiction of the nation within its own territory is necessarily exclusive and absolute.
It is susceptible of no limitation not imposed by itself. ".
The Schooner Exchange vs M 'Faddon & Ors.
U.S. Supreme Court Reports, Cranch 5 9, p. 114, 133 ; Admiralty jurisdiction is an essential aspect of judicial sovereignty which under the Constitution and the laws is exercised by the High Court as a superior court of record administering justice in relation to persons and things within its jurisdiction.
Power to enforce claims against foreign ships is an essential attribute of admiralty jurisdiction and it is assumed over such ships while they are within the jurisdiction of the High Court by arresting and detaining them.
All persons and things within the waters of a State fall within its jurisdiction unless specifically curtailed or regulated by rules of international law.
The power to arrest a foreign vessel, while in the waters of a coastal State, in respect of a respect of a maritime claim, wherever arising, is a demonstrable manifestation and an essential attribute of territorial sovereignty.
This power is recognised by several international conventions.
* These conventions contain the unified rules of law drawn from different legal systems.
Although many of these conventions have yet to be ratified by India, they embody principles of law recognised by the generality of maritime States, and can therefore be regarded as part of our common law.
The want of ratification of these conventions is apparently not because of any policy disagreement, as is clear from active and fruitful Indian participation in the formulation of rules adopted by the conventions, but perhaps because of other circumstances, such as lack of an adequate and specialised machinery for implementation of the various international conventions by coordinating for the purpose the concerned Departments of the Government.
Such a specialised body of legal and technical experts can facilitate adoption of internationally unified rules by national legislation.
It is appropriate that sufficient attention is paid to this aspect of the * See the Conventions referred to above.
See also Nagendra Singh, International Maritime Conventions, British Shipping Laws, Vol.4 1060 matter by the concerned authorities.
Perhaps the Law Commission of India, endowed as it ought to be with sufficient authority, status and independence, as is the position in England, can render valuable help in this regard.
Delay in the adoption of international conventions which are intended to facilitate trade hinders the economic growth of the nation.
The British statute assimilating Indian High Courts to the position of the English High Court in respect of admiralty jurisdiction is an enabling legislation and it is but one of the strands of jurisdiction vested in the High Court by virtue of the constitutional provisions.
The jurisdiction of the High court is governed by the Constitution and the laws, and the continuance in force of the existing laws in not a fetter but an additional source of power.
Access to court for redressal of grievance being an important right of every person, it is essential that the jurisdiction of the courts is construed harmoniously and consistently with its vital function in that respect, so that absence of legislation will not jeopardise that right.
Admiralty jurisdiction, despite the peculiarities of its origin and growth rooted as it is in history and nurtured by the growing demands of international trade is nevertheless a part of the totality of jurisdiction vested in the High Court as a superior court of record, and it is not a distinct and separate jurisdiction as was once the position in England before the unification of courts.
The 1890 and 1891 Acts specifically conferred admiralty jurisdiction on the Indian High Courts by reason of their being courts of unlimited jurisdiction.
These Acts did not create any separate or distinct jurisdiction, but merely equated the Indian High Courts to the position of the England High Court (united and consolidated as that Court has been since 1875) for the exercise of admiralty powers within the jurisdiction of the former.
The contrary view expressed in some of the decisions of the High Courts referred to earlier is clearly wrong.
Once a foreign ship is arrested in Indian waters by an order of the High Court, in exercise of the admiralty jurisdiction vested in it by statute, or inherent in it as a court of record, in respect of any maritime claim against its owner, wherever the cause of action may have arisen, and whether or not the ship is subsequently released by the owner furnishing security, proceeding must continue against the owner as in any other suit.
The arrest of the vessel while in Indian waters by an order of the concerned High Court, as defined under the [section 1061 3(15)] attracts the jurisdiction of the competent court to proceed with the trial, as in the case of any other suit, as an action against the owner, and any decree obtained by the plaintiff is executable against any property of the owner available within jurisdiction, including the security furnished by him for release of the vessel.
All foreign ships entering Indian waters are presumed to know that they fall within the jurisdiction of this country during their stay here.
The vessel in question was lying in the Port of Vishakhapatnam when she was arrested in respect of a cause of action relating to cargo.
The sole contention of the defendants as regards jurisdiction was that no High Court in India was invested with admiralty jurisdiction to order the arrest of the vessel in respect of a cause of action relating to outward cargo because section 6 of the Admiralty Court Act, 1861 (read with the Colonial Courts of Admiralty Act, 1890) conferring admiralty jurisdiction on Indian High Courts confined it to `claims for damage to cargo imported '.
This contention for the reasons we have stated, has no merits.
The High Court, in our view, rightly assumed jurisdiction by the arrest of the vessel while it was lying in the port of Vishakhapatanam.
The High Court of Andhra Pradesh undoubtedly possesses jurisdiction over claims relating to inward and outward cargo.
In the circumstances, the preliminary objection to the jurisdiction of the Andhra Pradesh High Court was totally devoid of merits.
Accordingly, the appeal arising from SLP(C) No. 10542 of 1985 has to be dismissed.
In the light of our order dated 28th August, 1991 allowing the Civil Appeal No. 3392 of 1991 filed by the 3rd defendant against the order of the High Court dismissing the petition for condonation of delay in presenting O.S.A.S.R. No. 39789 of 1988, the Transferred Case No. 27 of 1987 arising from the judgment of the learned Single judge decreeing the plaintiff 's suit and the 3rd defendant 's appeal have to be heard and disposed of together on the merits, and the right forum for the purpose will be the High Court itself.
In the circumstances, the Transferred Case No. 27 of 1987 has to be returned to the High Court.
R.M. SAHAI, J. Admirality jurisdiction, an unfamiliar branch of jurisprudence, was the object matter of illuminating debate in this appeal directed against judgment of the Andhra Pradesh High Court.
But what was surprising to hear, even, in 1991 was that the admirality jurisdiction exercised 1062 by the High Courts in Indian Republic is still governed by the obsolete English Admiralty Courts Act, 1861 (referred hereinafter as `the Act ') applied by (English) Colonial Courts of Admiralty Act, 1890 (in brief `1890 Act ') and adopted by Colonial Courts of Admirality (India) Act, 1891 (Act XVI of 1891).
Yet there appeared no escape from it, notwithstanding its unpleasant echo in ears.
The shock was still greater when it transpired that this state of affairs is due to lack of legislative exercise, even, when in wake of decision of this Court in State of Madras vs C.G.Menon & Ors., ; , that `Article 372 of the Constitution cannot save this law (Fugitive Offenders Act 1881*) because the grouping is repugnant, to the concept of a sovereign democratic republic. ', the Law Commission in its Fifth Report on British Statutes applicable to India went into detail on scope of Article 372 of the Constitution and observed that the British statutes which were expressly applicable to India because India was a, `British possession ' are still supposed to be applicable to India without any change in the context, therefore, it impressed upon the urgency as far back as 1957 to enact, 'own laws on the subject matter of those statutes where it is necessary to do so and take legislative action making it clear that these statutes are no longer applicable to India. ' In pursuance of this recommendation exercise was undertaken and (The) British Statutes (Applicable to India) Repeal Act 1960 (Act 57 of 1960) was enacted on 26th December 1960 repealing as many as 259 statutes mentioned in the Schedule.
But the Admirality jurisdiction remained untouched.
In respect of Colonial Courts of Admiralty Act the recommendation of the Commission was that, ` The necessary substantive provisions of the English Statute may be incorporated into our Act XVI of 1891 so as to make it the comprehensive Indian law relating to courts of admirality. ' Unfortunately nothing was done.
Neither the law was made up to date and brought in line with international conventions on maritime law passed in 1952 etc.
nor even the salient features of English law as amended by Administration of Justice Act, 1920, and 1956 were adopted.
And rights and interests of citizen of the independent sovereign state continued to be governed by legislations enacted for colonies by the British Parliament.
Various provisions in 1890 Act have been rendered not only anomalous but even derogatory to the sovereignty of the State.
No further need be said except to express the hope that the unfortunate state of affairs shall be brought to end at the earliest.
Be that as it may the intricate issue of Admiralty jurisdiction of the Bracket supplied.
1063 Andhra Pradesh High Court a successor of High Court of Madras, to entertain a suit for arrest of a foreign ship for tort committed by the owner or master of ship while carrying cargo outside India has to be decided on the law as it stands.
Entire thrust of attack, against direction by the High Court for arrest of the foreign ship, was found on absence of any provision in 1861 Act empowering the High Court to exercise jurisdiction over any claim by the owner or consignee of India in respect of bill of lading of any goods carried out of any Indian port in any foreign ship.
True Sections 5 to 8 and 10 to 11 conferring jurisdiction on High Court of Admiralty do not provide for it.
Section 6 is confined to, `any claim by the owner or consignee or assignee of any Bill of Lading of any goods carried into any port in England or Wales in any ship (to be read as India by virtue of proviso to sub section 3 of Section 2 of Colonial Courts of Admiralty Act 1890*) for damage done to the goods or any part thereof by the Negligence or misconduct of or any breach of duty '.
But this Act had on application till 1890.
Before it the High Court of Madras enjoyed Admiralty jurisdiction under the Madras Supreme Court Act, then Letters Patent of 1862 and 1865.
Finally it came to be governed by 1890 Act, enacted, to amend the law respecting to exercise of Admiralty jurisdiction in British possession. ' It was under sub section (1) of Section 2 of this Act read with Section 2 of 1891 act that the then Presidency High Courts, being courts of unlimited civil jurisdiction, were declared court of Admiralty.
Sub section (2) of Section 2 of 1890 Act spelt out the jurisdiction of Admiralty courts.
It reads as under: "(2) The jurisdiction of a Colonial Court of Admiralty shall, subject to the provisions of this Act, be over the like places, persons, matters, and things, as the Admiralty jurisdiction of the High Court in England, whether existing by virtue of any statute or otherwise, and the Colonial Court of Admiralty may exercise such jurisdiction in like manner and to as full an extent as the High Court in England, and shall have the same regard as that Court to international law and the comity of nations.
" Each part of the sub section is inclined towards expanding jurisdiction.
It not only declared those over which the court could exercise jurisdiction but it also amplified the manner and extent of exercise of jurisdiction.
It was made co extensive with the jurisdiction exercised by the High Court in England.
Use of the expression, `existing by virtue of any Statute or * Bracket supplied.
1064 otherwise ', widened the operative field extending the limit and authority to exercise jurisdiction beyond any existing statute, to custom practice or in any other manner in which it could be exercised.
It was recognition of wide jurisdiction exercised by the High Court of England.
What then was the jurisdiction that the Court of England exercised in 1890 ? The law of Admiralty was developed by English courts both as a matter of commercial expediency and due to equity and justice.
Originally it was a part of common law jurisdiction, but the difficulty of territorial limitations, constraints of common law and the necessity to protect the rights and interests of its own citizens resulted in growth of maritime lien a concept distinct from common law of equitable lien as it represents a charge on maritime property of a nature unknown alike to the common law or equity.
The Privy Council explained it as `a claim or privilege upon a thing to be carried into effect by legal process.
* Law was shaped by exercise of discretion to what appeared just and proper in the circumstances of the case.
Jurisdiction was assumed for injurious act done on high seas and the scope was extended, `not only to British subjects but even to aliens.
** Maritime law has been exercised all over the world by Maritime powers.
In England it was part of Municipal law but with rise of Britain as empire the law grew and it is this law, that is, `Maritime Law that is administered by the Admiralty Court '***.
From the Maritime law sprang the right known as Maritime lien ascribing personality to a ship for purposes of making good loss or damage done by it or its master or owner in tort or contract.
In England it grew and developed in course of which its scope was widened from damage done by a ship to claims of salver, wages, Bottomrey, supply of necessaries and even to bills of lading.
Its effect was to give the claimant a charge on res from the moment the lien arose which follows the res even if it changed hands.
In other words a maritime lien represented a charge on the maritime property.
The advantage which accured to the maritime lienee was that he was provided with a security for his claim up to the value of the res.
The essence of right was to identify the ship as wrongdoer and compel it by the arrest to make good the loss.
Although the historical review in England dates back to the 14th Century but its statutory recognition was much later and `maritime law came to jurisprudential maturity in the first half of the 19th Century '.
**** * The Bold Buccleugh, (1851) 7 Moo.
P.C.267.
** The hailey, L.R.2 PC 193.
*** Halsbury 's Laws of England, IVth Edn., Vol.
**** Maritime Liens by D.R. Thomas.
1065 And the first statutory recognition of such right came in 1840 when the Admiralty Court Act of 1840 was enacted empowering the admiralty court to decide all questions as to the title or ownership of any ship or vessel or the procedure thereof remaining in the territory arising in any cause of possession, salvage, damage, wages or bottomrey.
By clause (6) of the Act jurisdiction was extended to decide all claims and demands whatsoever in the nature of salvage for services rendered to or damage received by any ship or sea going vessel or in the nature of towage or for necessaries supplied to any foreign ship or sea going vessel and the payment thereof whether such ship or vessel may have been within the body of a country or upon the high seas at the time when the services were rendered or damage received or necessary furnished in respect of such claims.
But the most important Act was passed in 1861 which expanded power and jurisdiction of courts and held the field till it was replaced by Administration of Justice Act, 1920.
The importance of the Act lay in introducing the statutory right to arrest the res on an action in rem.
Section 35 of the 1861 Act provided that the jurisdiction by the High Court of Admiralty could be exercised either by proceedings in rem or proceedings in personam.
`The essence of the rem in procedure is that `res ' itself becomes, as one might say, the defendant, and ultimately the `res ' the ship may be arrested by legal process and sold by the Court to meet the plaintiff 's claim.
The primary object, therefore, of the action in rem is to satisfy the claimant out of the `res '*.
If the 1840 Act was important for providing statutory basis for various types of claims then 1861 Act was a step forward in expanding the jurisdiction to claims of bill of lading.
Section 6 of the Act was construed liberally so as to confer jurisdiction and the expression `carried into any port was ' was expanded to mean not only when the goods were actually carried but even if they were to be carried.
** Further the section was interpreted as providing additional remedy for breach of contract.
*** By the jurisdiction Act of 1873 the court of Admiralty was merged in High Court of justice.
Result was that it obtained jurisdiction over all maritime cases.
Therefore, what was covered by enactments could be taken cognisance of in the manner provided in the Act but there was no bar in respect of any cause of action which was otherwise cognizable and arose in Admirality.
Section 6 of 1861 Act was confined to claim by the owner or consignee or assignee of any bill of lading of any goods carried into any port * Maritime Law by Christopher Hill.
** The Ironsides, 167 English Reports 205, The St. Cloud, 167 English Report 269, The Norway, 167 English Report 347.
*** The Ironsides, 167 English Reports 205.
1066 in England or Wales (to be read as India).
But it did not debar any action or any claim by the owner or consignee or assignee of any bill of lading in respect of cargo carried out of the port.
Even if there was no provision in 1861 Act, as such, the colonies could not be deprived under 1890 Act from exercising jurisdiction on those matters which were not provided by 1861 Act but could be exercised or were otherwise capable of being exercised by the High Court of England.
`The theory was that all matters arising outside the jurisdiction of common law i.e. outside the body of a country were inside the jurisdiction of Admiralty '*.
`That this court had originally cognisance of all transaction civil and criminal, upon the high seas, in which its own subjects were concerned, is no subject of controversy '**.
To urge, therefore, that the Admirality court exercising jurisdiction under 1890 Act could not travel beyond 1861 Act would be going against explicit language of the Statute.
Even now, the Admiralty jurisdiction of the High Court of Justice in England derived `partly from statute and partly from the inherent jurisdiction of Admiralty '***.
Observations of Lord Diplock in the Jade**** that Admiralty jurisdiction was statutory only have to be understood in the context they were made.
By 1976 the statutory law on Admiralty had become quite comprehensive.
Brother Thommen, J., had dealt with it in detail.
Therefore those observations are not helpful in deciding the jurisdiction that was exercised by the High Court in England in 1890.
From what has been narrated above it is apparent that law of Admiralty progressed gradually from ordinary courts, to courts of Admiralty and ultimately to High Court commencing in commercial expediency, equity and justice and ending with statutory enactments covering entire field from collision on ships to cargo even.
All this was existing when 1890 Act was enacted.
But the statutes of 1840 and 1861 were not exhaustive and English courts could take cognizance for various wrongs either in tort or contract.
Therefore, when colonial courts were conferred jurisdiction it was not restricted or confined to statutes, as the power was being conferred on High Courts which were, then and even now, not only courts of unlimited civil jurisdiction but higher courts possessed of every jurisdiction which was not expressly or impliedly conferred on other courts.
The * Carter History of English Courts.
** Lord Stowell in `The Hercules ' *** Halsbury 's Laws of England, IVth Edn.
**** The Jade 1976 (1) All Eng.
Reports 921.
1067 word `otherwise ' literally means in a different way.
Effect of its use in 1890 Act in law, was to confer not only statutory jurisdiction possessed of by English courts but all that which was being exercised or was capable of being exercised either under custom and practice or for sake of equity and justice.
In the Iron Sides (supra) it was observed that Act of 1861 was passed not because the power or jurisdiction prior to it did not exist but no one ventured to exercise it.
No such restriction was placed on exercise of power under 1890 Act.
Rather the Act permitted exercise of it and that too to its fullest extent.
This deliberate expansion of power and jurisdiction after existence of two statutes for nearly thirty years was founded on experience and necessity or arming the courts for every dispute that could arise relating to Admiralty jurisdiction, as the law on Admiralty was a growing law.
Its development could not be stiffled by its very nature.
It was with this intention that the Parliament used the word, `otherwise ' in 1890 Act.
No word in a statute has to be construed as surplus age.
Nor it can be rendered ineffective or purposeless.
Courts are required to carry out the legislative intent fully and completely.
The two legislations of 1840 and 1861 took care of those actions which appeared to be settled till then.
But they did not close the door for the growth of law.
They were enacted to `improve the Admiralty practice ' as the jurisdiction which were conferred by the statutes were already being exercised.
Action in personam or rem were not unknown.
It was provided statutory base only.
Statutes till 1920 in England were not creation of new rights but recognition of what was existing by practice or custom.
It can thus be safely inferred that the jurisdiction to entertain a claim for tort or breach of contract by owner or master of ship while carrying cargo outside the port could be exercised or was capable of being exercised in 1890 by the High Court of England if occasion arose.
The rationale of extending jurisdiction in Admirality over cargo carried into the port has been existence of a right in owner or consignee arising out of contract or agreement entered between him and the master or owner of the ship.
It was the enforcement of the right which was safeguarded by providing a remedy to arrest a ship if the goods were carried into any port.
Same rationale applies to redress the owner of bill of lading if the master of the ship in breach of agreement entered into any port committed tort by acting against it in course of outward journey.
Such breach would have been actionable and a suit could be filed in the court where agreement was entered.
Basis of Maritime Law has been necessity to provide remedy for wrong done on high seas.
Inclusion or expansion of 1068 jurisdiction was in relation to any cause which could have been cognisable under ordinary law.
Bottomrey, salvage, seaman wages or towage are all causes for which action could be brought in court of law but their enforcement was rendered illusory with disappearance of the person beyond territorial waters.
To overcome this difficulty this jurisdiction was created making it actionable against person and finally the res itself.
What was basic was the existence of cause of action, arising out of tort or contract in relation to the master or owner of the ship.
Applying this test the cause of action arose in Indian territory and if the owner of the ship would have remained in this country a suit for breach of contract could have been filed.
Therefore the owner of bill of lading was not precluded from approaching the Admiralty court for redress when the foreign ship which was guilty of violations appeared in Indian waters.
On this construction the colonial courts could exercise the jurisdiction in respect of cargo going outside the port in exercise of jurisdiction under Act of 1890 not on statutes but as the High Court of England could exercise such power.
Emphasis on absence of any instance in which English courts assumed jurisdiction in respect of goods carried out of English port was searching for existence of jurisdiction not in law but on precedent.
Test is not whether the jurisdiction was ever exercised by English courts but whether it was capable of being exercised.
If it could, then colonial courts were empowered to exercise it.
Reliance was placed on Yuri Maru*, a decision because of which the courts in Bombay and Calcutta got stuck, and could not see beyond 1861 Act.
Distinction on facts, apart, the court was primarily concerned if the jurisdiction of colonial court expanded or dimunited by change of jurisdiction of High Court of England by different enactments passed from time to time.
Incidentally it was also observed that there was conflict for long even in England on advantage of extending the process in rem and if a port of call could be benefited by existence of a power in all and sundry to arrest vessels found within its limits.
This observation cannot be construed as determinative of limited jurisdiction possessed by the courts.
No effort was made in the decision to adjudicate upon the impact of the expression or `even otherwise '.
Rather it turned on impossibility of automatic extension of jurisdiction of colonial court to exercise power under the English law enacted subsequently because of the use of word `existing ' in 1890 Act.
Without entering into the controversy if 1890 Act was a legislation by * 1927 Appeal Cases 906.
1069 reference or by incorporation and their consequences, on which arguments were addressed in extenso, suffice it to say that in absence of any consideration of the expression `otherwise ' this Court does not find any difficulty in construing the expression as permissive of jurisdiction.
Legislations may create a right or it may recognise one founded on custom or practice.
Admiralty statutes in England fell in latter category.
In such legislations the background of enactment, the necessity to codify it, the propose sought to be achieved by it all become relevant.
Admiralty jurisdiction in England was rooted in remote past.
It developed and expanded with rise and growth of Britain and its recognition as a superior maritime power.
Law and practice revolved round it.
Right to proceed against owner of ship for wrongs done on high seas was accepted and followed.
Statutes of 1840 and 1861 provided legislative base only.
Viewed in the background of enactment of 1890 it would be too artificial to confine the exercise of power by the High Courts in Admiralty to what was contained in 1861 Act.
Even otherwise for deciding the jurisdiction exercised by the High Court in India founded on jurisdiction exercised by the High Court of England it is not necessary to be governed by the decision given by English courts.
Law develops by pragmatic approach to problems arising under an Act and not by abdication or surrender, 1890 Act is an unusual piece of legislation expansive in scope, wider in outlook, opening out the wings of jurisdiction rather than closing in.
It 's authority and power to exercise jurisdiction was linked with power exercised by the High Court in England, the width of which was not confined to statute but went deep into custom, practice, necessity, and even exigency.
Law of 1890 apart, can the Indian High Courts after 1950 be denied jurisdiction to arrest a foreign ship to satisfy the claim of owner of a bill of lading for cargo taken outside the county? Without entering into any comparative study of jurisdiction of High Court of England and the High Courts in our country the one basic difference that exists today is that the English courts derive their creation, constitution and jurisdiction from Administration of Justice Act or Supreme Court Act but the High Courts in our country are established under the Constitution.
Under it Article 225 preserved the jurisdiction, including inherent jurisdiction, which existed on the date the Constitution came into force and Article 226 enlarged it by making it not only a custodian of fundamental rights of a citizen but as 1070 repository of power to reach its arms to do justice.
A citizen carrying on business which is a fundamental right cannot be rendered helpless on premise that the jurisdiction of High Courts stood frozen either under statute of England or any custom or practice prevailing there or the High Court of England cannot exercise the jurisdiction.
Brother T.K. Thommen, J., while dealing with right of rem and in personam has considered the justification for conferment of such right to a claimant in respect of a merchant ship traveling from port to port.
Can it be successfully urged today that such a ship or its master and owner is immune from tort or breach of contract committed by him in respect of cargo taken out of port.
A citizen of a colonial state may or may not but a citizen of an independent republic cannot be left high and dry.
The construction of law has to be in consonance with sovereignty of a state.
The apprehension that assumption of such jurisdiction would be on general attributes of sovereignty is not well founded.
This coupled with expansive jurisdiction that the High Courts enjoyed in relation to Admiralty under 1890 Act preserved under Article 225 provided justification for direction to arrest the ship, for the tortious act done by master or owner of the ship in respect of goods carried outside the port even if there was no specific provision like Section 6 of the 1861 Act.
Entertaining a claim arising out of breach of contract in relation to cargo taken out of any Indian port pertains to jurisdiction.
It must arise out of Statute.
But the power to direct arrest of a ship in exercise of the jurisdiction is one relating to competency.
The High Court in India being courts of unlimited jurisdiction, repository of all judicial power under the Constitution except what is excluded are competent to issue directions for arrest of foreign ship in exercise of statutory jurisdiction or even otherwise to effectuate the exercise of jurisdiction.
Since the jurisdiction to entertain a suit on tort or contract in relation to cargo going out of the country in a ship is found to exist under 1890 Act the High Court of Andhra Pradesh was competent to direct arrest of the foreign ship when it appeared in India waters.
The High Court, therefore, rightly negatived the objection to issue direction to arrest the ship.
Necessity to add few words to the opinion of brother Thommen, J., arose without narrating facts or extracting sections as they have been dealt in detail by him, both to impress upon the urgency of enacting up to date law on Admiralty and to express agreement only on scope of 1890 Act as well as the extensive jurisdiction enjoyed by High Courts after 1950.
1071 ORDER For the reasons stated by us in our separate but concurring judgments dated 26.2.1992, we dismiss the appeal arising from SLP(C) No. 10542 of 1985.
The Transferred Case No. 27 of 1987 is returned to the Andhra Pradesh High Court to be heard and disposed of on the merits together with the 3rd defendant 's appeal O.S.A.S.R. No. 39789 of 1988.
We make no order as to costs.
G.N. Appeal dismissed.
| The appellant vessel, which was lying in the port of Marmagao, left the port without issuing bills of lading or other documents required by the Respondent company for the goods shipped by it.
On reaching the port of destination, despite the direction of the respondent company not to deliver the goods by reason of the buyer 's failure to pay the agreed price, the appellants handed over the goods to the consignee.
Since the appellants acted in breach of duty thereby committing conversion of the goods entrusted to them, the respondent instituted a suit against the appellants invoking the admiralty jurisdiction of the Andhra Pradesh High Court by means of an action in rem.
The vessel was arrested when it entered the port of Vishakapatnam, and later released on the owner 's furnishing security by way of Bank guarantee.
In the proceedings before the High Court, the appellant raised a preliminary objection as to jurisdiction stating that the suit against a foreign ship owned by a foreign company not having a place of residence or business in India, could not proceed on the admiralty side of the High Court by an action in rem in respect of a cause of action by reason of a tort or a breach of obligation arising from the carriage of goods from an Indian port to a foreign port.
This objection was overruled by a Single Judge of the High court and later confirmed by a Division Bench, against which the present appeal has been preferred.
Finally the suit was decreed by a Single Judge and the appeal therefrom is the subject matter of the other matter before this Court, viz., the Transfer Petition.
On behalf of the appellants it was contended that the power of the High Court on the admiralty side was confined to the provisions of the Admiralty Court Act, 1861 made applicable to India by the Colonial Courts of Admiralty Act, 1890 read with the declaring certain Courts of unlimited civil jurisdiction as Colonial Courts of Admiralty, but it remained frozen as on the date of Admiralty Court Act, 1861; that the wide powers assumed by the British Courts under the subsequent statutes of that country did not enlarge the 1005 admiralty jurisdiction of the High Court in India; that section 6 of the Admiralty Court Act, 1861, the only provision relating to cargo, confined itself to inward cargo only, and therefore the case did not fall under the ambit of section 6 of the Act; and that the arrest of the vessel in purported exercise of admiralty jurisdiction in rem concerning a claim relating to outward cargo, was null and void.
On behalf of the respondents it was contended that every person has a right to approach the Court of the land for appropriate remedy in respect of claims against a foreign ship and its owner, and to deny him that right and to compel him to pursue remedy in a foreign country according to an unfamiliar system of law and practice in strange and uncertain conditions and consequently incurring high expenses with all the uncertainties of such a pursuit, was unjust and uncalled for; that all major systems of law the world over recognise the competence of the coastal State to assume jurisdiction over a foreign ship entering its waters in respect of certain well recognised claims, irrespective of where the cause of action arose or where the defendant has his place of residence or business; that the reason for such wide jurisdiction being the non availability of the foreign owner within the local jurisdiction, and the stay of the foreign ship in the waters of the coastal State being necessarily brief, jurisdiction over the ship has to be exercised by its arrest and detention by means of an action in rem; that the High Court being a court of record with unlimited jurisdiction, it was never intended by the British Parliament that the admiralty power conferred on certain High Courts should remain frozen as on the date of the passing of the Admiralty Court Act, 1861 and that the subsequent changes in the law of Great Britain should not widen the jurisdiction of the Indian High Courts; and that the colonial statutes should not be so construed as to stand in the way of the Indian High Courts exercising unlimited jurisdiction except where the jurisdiction is barred expressly or by necessary implication.
Dismissing the appeal and returning the Transferred Case to the High Court, this Court, HELD : (By the court) : The High Court of Andhra Pradesh undoubtedly possesses jurisdiction over claims relating to inward and outward cargo.
Therefore the High Court rightly assumed jurisdiction by the arrest of the appellant vessel 1006 while it was lying in the port of Vishakhapatnam.
(Per Thommen, J) : 1.
The Andhra Pradesh High Court is the successor to the Madras High Court in respect of the territories transferred from Madras and included in the State of Andhra which was formed by the Andhra State Act, 1953.
In the port of Vishakhapatnam the Andhra Pradesh High Court has thus the same jurisdiction as was vested in the Madras High Court prior to the transfer of that territory.
[1021D; 1022A] 2.1.
The fact that the High Court continues to enjoy the same jurisdiction as it had immediately before the commencement of the Constitution, as stated in Article 225 of the Constitution does not mean that a matter which is covered by the Admiralty Court Act, 1861 cannot be otherwise dealt with by the High Court, subject to its own Rules, in exercise of its manifold jurisdiction, which unless barred, is unlimited.
To the extent not barred expressly or by necessary implication, the judicial sovereignty of this country is manifested in the jurisdiction vested in the High Courts as superior courts.
[1024E,F].
It is true that the Colonial statutes continue to remain in force by reason of Article 372 of the Constitution of India, but that does not stultify the growth of law or blinker its vision or fetter its arms.
Legislation has always marched behind time, but it is the duty of the Court to expound and fashion the law for the present and the future to meet the ends of justice.
[1026B,C] Kamalakar Mahadev Bhagat vs Scindia Steam Navigation Co. Ltd., ; Mrs. Sahida Ismail vs Petko R. Salvejkov & Ors., AIR 1973 Bombay 18; Jayaswal Shipping Company vs S.S. Leelavati, AIR 1954 Calcutta 415; Rungta Sons Pvt. Ltd. & Anr.
vs S.S. Edison Mariner & Anr., 1961 62 (66) Calcutta Weekly Notes 1983; Smt.
Reena Padhi vs Jagdhir, AIR 1982 Orissa 57; National Co. Ltd. vs Asia Mariner, , overruled.
What the Colonial Courts of Admiralty Act, 1890 did was not to incorporate any particular English Statute into Indian law for the purpose of conferrring admiralty jurisdiction, but to assimilate the competent Courts in India to the position of the English High Court in the exercise 1007 of admiralty jurisdiction.
It would, therefore, appear that any expansion of Admiralty jurisdiction of the High Court in English was intended likewise to expand the jurisdiction of the Colonial Courts of Admiralty.
This should have been regarded as the position with respect to a Colonial Court of unlimited jurisdiction.
[1027H; 1028A,B] The Yuri Maru vs The Woron, , referred to.
It was because of the unlimited civil jurisdiction that was already vested in the High Courts that they were declared to be Colonial Courts of Admiralty having the same jurisdiction in extent and quality as was vested in the High Court of England by virtue of any statute or custom.
The High Courts were declared to be competent to regulate their procedure and practice in exercise of admiralty jurisdiction in accordance with the Rules made in that behalf.
There is, therefore, neither reason nor logic in imposing a fetter on the jurisdiction of these High Courts by limiting it to the provisions of an imperial statute of 1861 and freezing any further growth of jurisdiction.
This is all the more true because the Admiralty Court Act, 1861 was in substance repealed in England a long time ago.
[1029F H] Halsbury 's Laws of England, 4the Ed.
1(1), para 307; Halsbury 's Statutes of England, Vol. 1, para 9, referred to.
The wide jurisdiction vested in the English Courts is derived from ancient principles of Maritime Law developed by custom and practice as well as from subsequent statutes many of which have been incorporated in the provisions of International Conventions unifying the laws practised in several maritime countries.
[1032E F] The Geetano and Maria, (1862) 7 PD; The Gas Float Whitton, N.2 (1896), referred to.
A History of English Law, Vol.1,5 and 8; Rescoe 's Admiralty Practice, 5the Ed.; Marsden : Select Pleas of the Court of Admiralty, Vol.
I & II; Law and Custom of the Sea, Vol.
I and II; Benedict on admiralty, 6th Ed.
(1940) Vol.
I; Gilmore and Black, Law of Admiralty, (1957); A History of English Law, W.S. Holdsworth, Vol.
I, pp.
558 59, referred to.
The provision contained in section 6 of the Admiralty Court Act, 1861 limiting the jurisdiction of the Admiralty Court to claims respecting inward cargo was discarded by the Administration of Justice Act, 1920 1008 which extended the jurisdiction of the High Court to (a) any claim arising out of an agreement relating to the use or hire of a ship; (b) any claim relating to the carriage of goods in any ship, and (c) any claim in tort in respect of goods carried in any ship.
The Act thus applied to both inward and outward cargoes.
[1034B,C] 7.
The vital significance and the distinguishing feature of an admiralty action in rem is that this jurisdiction can be assumed by the coastal authorities in respect of any maritime claim by arrest of the ship, irrespective of the nationality of the ship or that of its owners, or the place of business or domicile or residence of its owners or the place where the cause of action arose wholly or in part.
[1038E F] The Fehmarn, (1958) I All E.R. 333, referred to.
Halsbury, op.
4th Ed.
I(1) para 309; D.C. Jackson, Enforcement of Maritime Claims, (1985); Gilmore and Black, The Law of Admiralty, p. 1; The Law of American Admiralty, 6th Ed.
I p.3; Rescoe 's Admiralty Practice, 5th Ed.
p.29, referred to.
It is within the competence of the appropriate Indian Courts to deal, in accordance with the general principles of maritime law and the applicable provisions of statutory law, with all persons and things found within their jurisdiction.
The power of the court is plenary and unlimited unless it is expressly or by necessary implication curtailed.
All remedies which are available to the courts to administer justice are available to a claimant against a foreign ship and its owner found within the jurisdiction of the concerned High Court.
This power of the court to render justice must necessarily include the power to make interlocutory orders for arrest and attachment before judgment.
[1046B D] The Bold Buccleaugh, ; The Jade, [1976] I All.
E.R. 921, 923; Currie vs M. Knight, ; Bardot & Anr.
vs The American Ship or Vessel Augusta, 1873 (x) Bombay High Court Reports, 110, referred to.
Enforcement of Maritime Claims, 1985 p. 9; Halsbury 's Laws of England, 4th Ed.
I p. 375; Halsbury 's Laws of England, Vol.1, para 307; referred to.
The High Court in India are superior courts of record.
They have 1009 original and appellate jurisdiction.
They have inherent and plenary powers.
Unless expressly or impliedly barred, and subject to the appellate or discretionary jurisdiction of this Court, the High Courts have unlimited jurisdiction, including the jurisdiction to determine their own powers.
[1046D E] Naresh Shridhar Mirajkar & Ors.
vs State of Maharashtra Raja Soap Factory and Ors.
vs S.P. Shantharaj and Ors., ; , distinguished.
Halsbury 's Laws of England, 4th Ed. Vol.10, para 713, referred to.
In the instant case, the Andhra Pradesh High Court, as a successor to the Madras High Court, is vested with all the appellate and original jurisdiction, including admiralty jurisdiction to order the arrest and detention of a ship.
[1047A B] 11.
In equating the admiralty jurisdiction of the Indian High Court to that of the English High Court, the Colonial Court of Admiralty Act, 1890 significantly refers to the admiralty jurisdiction of the High Court in England `whether existing by virtue of any statute or otherwise '.
This is an enabling statute, and not a statute of limitation of power.
It aids, and does not fetter, the growth of jurisdiction.
There is no reason why the words `statute or otherwise ' should be so construed as to exclude the various sources from which the admiralty jurisdiction in England developed.
Apart from statutes, the powers of that Court were derived from custom and practice and the principles developed by common law and equity as well as by the generally recognised principles of civil law developed and practised in Europe.
There is no reason why those principles should also not be drawn upon to enrich and strengthen the jurisprudence of this country, even if the jurisdiction of our courts were to be, by compulsions of history, considered to be curtailed and dovetailed to the colonial past a proposition which is neither correct nor consistent with our status as a sovereign republic.
It is time to take a fresh look at the old precedents.
[1047D H; 1048A] Delhi Judicial Service Association, Tis Hazari Court, Delhi vs State of Gujarat & Ors.
JT ; S.P. Gupta vs Union of India, [1982] 2 SCR 365, relied on.
1010 12.
It is well recognised in iternational law that a merchant ship, though generally governed by the laws of the flag State, subjects itself to the jurisdiction of a foreign State as it enters its waters.
The Geneva Convention on the Territorial Sea and the Contiguous Zone, 1958 and the Law of the Sea Convention, 1982 affirm that the sovereignty of a State extends over its internal and territorial waters.
[1048D] The Schooner Exchange v.M. Faddon & Ors., [1812] 11 U.S. (7 Cranch) 114, 143, referred to.
Nagendra Singh, International Maritime Law Conventions, British Shipping Laws; Benedict, The Law of American Admiralty, 6th Ed.
121 & 122, referred to.
Coastal States are entitled to assume jurisdiction in respect of maritime claims against foreign merchant ships lying in their waters.
These ships are liable to be arrested and detained for the enforcement of maritime claims.
The courts of the country in which a foreign ship has been arrested may determine the cases according to merits, provided they are enpowered to do so by the domestic law of the country or in any of the cases recognised by the International Convention relating to the Arrest of Seagoing Ships, Brussels, 1952.
The maritime claims in respect of which the power of arrest is recognised in law include claims relating to damage caused by any ship either in collision or otherwise; claims relating to carriage of goods in any ship whether by charterparty or otherwise, loss of or damage to goods etc.
These principles of International law, as generally recognised by nations, leave no doubt that, subject to the local laws regulating the competence of courts, all foreign ships lying within the waters of a State, including waters in ports, harbours, roadsteads and the territorial waters, subject themselves to the jurisdiction of the local authorities in respect of maritime claims and they are liable to be arrested for the enforcement of such claims.
[1049C F] 14.
In the absence of any statute in India comparable to the English statutes on admiralty jurisdiction, there is no reason why the words `damage caused by a ship ' appearing in section 443 of the should be so narrowly construed as to limit them to physical damage and exclude any other damage arising by reason of the operation of the vessel in connection with the carriage of goods.
The 1011 expression is wide enough to include all maritime questions or claims.
If goods or other property are lost or damaged, whether by physical contact or otherwise, by reason of unauthorised acts or negligent conduct on the part of the shipowner or his agents or servants, wherever the cause of action has arisen, or wherever the ship is registered, or wherever the owner has his residence or domicile or place of business, such a ship, at the request of the person aggrieved, is liable to be detained when found within Indian jurisdiction by recourse to sections 443 and 444 of the read with the appropriate rules of practice and procedure of the High Court.
These procedural provisions are but tools for enforcement of substantive rights which are rooted in general principles of law, apart from statutes, and for the enforcement of which a party aggrieved has a right to invoke the inherent jurisdiction of a superior court.
[1054G; 1055A D] Victoria, ; The Vera Cruz, ; Currie vs M.Knight, ; The Jade, (1976) 1 All.
E.R. 920, referred to.
Halsbury 's Laws of England, 4th Ed.
I(1), para 319 N. 12, referred to.
The empowers the concerned High Court to arrest a ship in respect of a substantive right.
A right conferred by the Indian Carriage of Goods by Sea Act, 1925 in respect of outward cargo is one of those rights which can be enforced by arrest and detention of the foreign ship in order to found jurisdiction over the vessel and its owners, just as it can be done in respect of inward cargo by reason of the substantive rights conferred by the Admiralty Court Act, 1861 read with the Colonial Courts of Admiralty Act, 1890, and other rules of law.
The same principle must hold good for carriage under a charterparty.
These and other laws, such as the law of contract, tort, crime, mortgage, marine insurance, customs, port operations, etc.
and the Civil and Criminal Procedure Codes as well as the relevant rules of court regulating procedure and practice together constitute the body of substantive and procedural laws governing claims relating to inward and outward cargo, and such claims are enforceable against foreign ships by recourse to arrest and detention when found within jurisdiction.
Viewed in this light, and by this reasoning, the Andhra Pradesh High Court, as a successor to the Madras High Court, does not lack admiralty jurisdiction in respect of claims to outward cargo.
[1056A D] 1012 16.
The jurisdictional questions concerning arrest of foreign ships enforcement of claims against the shipowner as a transporter of goods, which in England are regulated by the Supreme Court Act, 1981, are in many respects left unregulated by Indian legislation.
While the provisions of various international conventions concerning arrest of ships, civil and penal jurisdiction in matters of collision, maritime liens and mortgages etc. have been incorporated into the municipal laws of many maritime States, India, lags behind them in adopting these unified rules.
By reason of this void, doubts about jurisdiction often arise, as in the present case, when substantive rights, such as those recognised by the Carriage of Goods by Sea Act, are sought to be enforced.
The remedy lies, apart from enlightened judicial construction, in prompt legislative action to codify and clarify the admiralty laws of this country.
This requires thorough research and investigation by a team of experts in admiralty law, comparative law, and public and private international law.
Any attempt to codify without such investigation is bound to be futile.
[1056H; 1057A C] 17.
The judicial power of this country, which is an aspect of national sovereignty, is vested in the people and is articulated in the provisions of the Constitution and the laws and is exercised by courts empowered to exercise it.
It is absurd to confine that power to the provisions of imperial statutes of a bygone age.
Access to court which is an important right vested in every citizen implies the existence of the power of the Court to render justice according to law.
Where statute is silent and judicial intervention is required, Courts strive to redress grievances according to what is perceived to be principles of justice, equity and good conscience.
[1058E,F] S.P. Gupta vs Union of India, [1982] 2 SCR 365, relied on.
The Schooner Exchange vs M 'Faddon & Ors.
, U.S. Supreme Court Reports, Cranch , referred to.
All persons and things within the waters of a State fall within its jurisdiction unless specifically curtailed or regulated by rules of international law.
The power to arrest a foreign vessel, while the waters of a coastal State, in respect of a maritime claim, wherever arising, is a demonstrable manifestation and an essential attribute of territorial sovereignty.
This power is recognised by several international conventions.
These conventions contain the unified rules of law drawn from different legal systems.
Although many of these conventions have yet to 1013 be ratified by India, they embody principles of law recognised by the generally of maritime States, and can therefore be regarded as part of our common law.
A specialised body of legal and technical experts can facilitate adoption of internationally unified rules by national legislation.
It is appropriate that sufficient attention is paid to this aspect of the matter by the concerned authorities.
Perhaps the Law Commission of India, endowed as it ought to be with sufficient authority, status and independence as is the position in England, can render valuable help in this regard.
[1059D H; 1060A] 19.
The jurisdiction of the High Court is governed by the Constitution and the laws, and the continuance in force of the existing laws is not a fetter but an additional source of power.
Access to court for redressal of grievance being an important right of every person, it is essential that the jurisdiction of the court is construed harmoniously and consistently with its vital function in that respect, so that absence of legislation will not jeopardise that right.
[1060C,D] 20.
Once a foreign ship is arrested in Indian waters by an order of the High Court, in exercise of the admiralty jurisdiction vested in it by statute, or inherent in it as a court of record, in respect of any maritime claim against its owner, wherever the cause of action may have arisen, and whether or not the ship is subsequently released by the owner furnishing security, proceedings must continue against the owner as in any other suit.
[1060G,H] 21.
All foreign ships entering Indian waters are presumed to know that they fall within the jurisdiction of this country during their stay here.
It cannot be said that no High Court in India was invested with admiralty jurisdiction to order the arrest of the vessel in respect of a cause of action relating to outward cargo because section 6 of the Admiralty Court Act, 1861 (read with the Colonial Courts of Admiralty Act, 1890) conferring admiralty jurisdiction on Indian High Courts confined it to `claims for damage to cargo imported '.
In the instant case, the appellant vessel was lying in the port of Vishakhapatnam when she was arrested in respect of a cause of action relating to cargo.
The High Court, therefore, rightly assumed jurisdiction by the arrest of the vessel while it was lying in the port of Vishakhapatnam, as the High Court possesses jurisdiction over claims relating to inward and outward cargo.
[1061B E] 1014 (PER SAHAI.J. CONCURRING); 1.1.
The Law of admiralty progressed gradually from ordinary courts, to courts of Admiralty and ultimately to High Court commencing in commercial expedience, equity and justice and ending with statutory enactments covering entire field from collision on ships to cargo even.
All this was existing when the 1890 Act was enacted.
But the statutes of 1840 and 1861 were not exhaustive and English courts could take cognizance for various wrongs either in tort or contract.
Therefore when colonial courts were conferred jurisdiction it was not restricted or confined to statutes, as the power was being conferred on High Courts which were, then and even now, not only courts of unlimited civil jurisdiction but higher courts possessed of every jurisdiction which was not expressly or impliedly conferred on other courts.
The word `otherwise ' literally means in a different way.
Effect of its use in the 1890 Act in law, was to confer not only statutory jurisdiction possessed of by English courts but all that which was being exercised or was capable of being exercised either under custom and practice or for sake of equity and justice.
The deliberate expansion of power and jurisdiction after existence of two statutes for nearly thirty years was founded on experience and necessity of arming the courts for every dispute that could arise relating to Admiralty jurisdiction, as the law on Admiralty was a growing law.
Its development could not be striffled by its very nature.
It was with this intention that the Parliament used the word, `otherwise ' in 1890 Act.
No word in a statute has to be construed as surplusage.
Nor it can be rendered ineffective or purposeless.
Courts are required to carry out the legislative intent fully and completely.
The two legislations of 1840 and 1861 took care of those actions which appeared to be settled till then.
But they did not close the door for the growth of law.
They were enacted to `improve the Admiralty practice ' as the jurisdiction which were conferred by the statutes were already being exercised.
Action in personam or rem were not unknown.
It was provided statutory base only.
Statutes till 1920 in England were not creation of new rights but recognition of what was existing by practice or custom.
Thus, the jurisdiction to entertain a claim for tort or breach of contract by owner or master of ship while carrying cargo outside the port could be exercised or was capable of being exercised in 1890 by the High Court of England if occasion arose.
[1066E H; 1067A F] 1.2.
The rationale of extending jurisdiction in Admiralty over cargo carried into the port has been existence of a right in owner or consignee 1015 arising out of contract or agreement entered into between him and the master or owner of the ship.
It was the enforcement of the right which was safeguarded by providing a remedy to arrest a ship if the goods were carried into any port.
Same rationale applies to redress the owner of bill of lading if the master of the ship in breach of agreement entered into any port committed tort by acting against it in course of outward journey.
Such breach would have been actionable and a suit could be filed in the court where agreement was entered.
Basis of Maritime Law has been necessity to provide remedy for wrong done on high seas.
Inclusion or expansion of jurisdiction was in relation to any cause which could have been cognisable under ordinary law.
Bottomrey, salvage, seaman wages or towage are all causes for which action could be brought in court of law but their enforcement was rendered illusory with disappearance of the person beyond territorial waters.
To overcome this difficulty jurisdiction was created making it actionable against person and finally the res itself.
What was basic was the existence of cause of action, arising out of tort or contract in relation to the master or owner of the ship.
Applying this test, the cause of action arose in Indian territory and if the owner of the ship would have remained in this country a suit for breach of contract could have been filed.
Therefore the owner of bill of lading was not precluded from approaching the Admiralty Court for redress when the foreign ship which was guilty of violations appeared in Indian waters.
On this construction the colonial courts could exercise the jurisdiction in respect of cargo going outside the port in exercise of jurisdiction under the Act of 1890 not on statutes but as the High Court of England could exercise such power.
[1067F H; 1068A D] Yuri Maru; 1927 Appeal cases 906, distinguished.
State of Madras vs C.C. Menon & Ors., ; , referred to.
The Bold Buccleugh, ; The Hailey, ; The Ironsides, 167 English Reports 205; The St. Cloud, 167 English Reports 269; The Norway, 167 English Reports 347; The Hercules, ; The Jade, [1976] 1 All Eng.
Reports 921, referred to.
Halsbury 's Laws of England, 4th Ed.
1: Maritime Liens by D.R. Thomas; Maritime Law by Christopher Hill; Carter History of English Courts, referred to.
Without entering into any comparative study of jurisdiction of High 1016 court of England and the High Courts in our country, the one basic difference that exists today is that the English Courts derive their creation, constitution and jurisdiction from Administration of Justice Act or Supreme Court Act but the High Courts in our country are established under the Constitution.
Under it, Article 225 preserved the jurisdiction, including inherent jurisdiction, which existed on the date the Constitution came into force and Article 226 enlarged it by making it not only a custodian of fundamental rights of a citizen but as repository power to reach its arms to do justice.
A citizen carrying on business which is fundamental right cannot be rendered helpless on premise that the jurisdiction of High Courts stood frozen either under statute of England or any custom or practice prevailing there or the High Court of England cannot exercise the jurisdiction.
A citizen of an independent republic cannot be left high and dry.
The construction of law has to be in consonance with sovereignty of a state.
The apprehension that assumption of such jurisdiction would be on general attributes of sovereignty is not well founded.
This coupled with expansive jurisdiction that the High Courts enjoyed in relation to admiralty under the 1890 Act preserved under Article 225 of the Constitution provided justification for direction to arrest the ship, for the tortious act done by master or owner of the ship in respect of goods carried outside the port even if there was no specific provision like Section 6 of the 1861 Act.
Entertaining a claim arising out of breach of contract in relation to cargo taken out of any Indian port pertains to jurisdiction.
It must arise out of Statute.
But the power to direct arrest of a ship in exercise of the jurisdiction is one relating to competency.
The High Courts in India being courts of unlimited jurisdiction, repository of all judicial powers under the Constitution except what is excluded are competent to issue directions for arrest of foreign ship in exercise of statutory jurisdiction or even otherwise to effectuate the exercise of jurisdiction.
[1069F H; 1070A F] 3.
In the instant case, since the jurisdiction to entertain a suit on tort or contract in relation to cargo going out of the country in a ship is found to exist under 1890 Act, the High Court of Andhra Pradesh was competent to direct arrest of the foreign ship when it appeared in Indian waters.
[1070F G] 4.
In respect of Colonial Courts of Admiralty Act the Law Commission recommended that the necessary substantive provisions of the English Statute may be incorporated into the Act so as to make it the 1017 comprehensive Indian law relating to courts of admiralty.
Neither the law was made up to date and brought in line with international conventions on maritime law passed in 1952 etc.
nor even the salient features of English law as amended by Administration of Justice Act, 1920, and 1956 were adopted.
And rights and interests of citizen of the independent sovereign state continue to be governed by legislations enacted for colonies by the British Parliament.
|
: Criminal Appeal No 572 of 1981.
From the Judgment and Order dated 26.8.1980 of the Patna High Court in Criminal Appeal No. 15 of 1976.
Ranjit Kumar for the Appellants.
D. Goburdhan for the Respondent.
The Judgment of the Court was delivered by PUNCHHI, J.
This appeal by special leave is against the judgment 609 and order of the High Court at Patna dated August 26, 1980 passed in Criminal Appeal No 15 of 1976.
The facts giving rise to this appeal are that a dacoity took place at about midnight on the night intervening 5th 6th April, 1970 in the house of Dhaniram Singh, P.W.11, in village Awadhiya.
According to the prosecution 25 to 30 persons armed with guns, lathis, bhalas and gharasa etc.
committed the dacoity and apart from looting away belongings of Dhaniram Singh, his uncle Khobari Singh was shot dead and as many as 8 persons including Dhaniram Singh P.W.11 re ceived injuries.
The First Information Report was lodged by Dhaniram Singh, P.W.11, at 6.30 a.m. on April 6, 1970 at police station, Bhabhua at a distance of about 7 miles from the place of the occurrence.
In it he could name 7 persons specifically as being members of the gang of dacoits.
The remaining dacoits were left unnamed.
The investigating agency when set into motion took steps as necessary.
But at this stage, it would be sufficient to mention that neither could the investigation recover the looted property valued by the concerned P.Ws.
at about Rs. 8,000 nor could it get the particulars of a large number of other participants in the dacoity.
When the matter went to triaL before the First Additional Sessions Judge, Arrah, against the 6 named per sons and one other, the old Criminal Procedure of 1898 governed the trial and before hand there were commitment proceedings before a Magistrate in which evidence was recorded.
At the commitment stage, 10 persons were put to face the enquiry.
One accused named Kanhaiya Singh in the meantime died.
Two other accused Sukhari Singh and Gulab Gosain also died.
There remained 6 of the original accused named in the F.I.R. and one more, Ram Naresh Singh, not so named to face trial and bear the conviction.
The Learned Additional Sessions Judge convicted all the 7 accused under Section 396 I.P.C. and imposed on them a sentence of life imprisonment.
On appeal to the High Court two of them namely Ram Naresh Singh the one unnamed in the F.I.R. and Charittar Ahir, one of the so named, were acquitted but the convic tions of Munni Singh, Fekoo Singh, Behari Singh, Dadan Singh and Guput Singh, the appellants herein, were maintained.
The appellants are residents of village Awadhiya where the occurrence took place.
The victims of the crime and other prosecution witnesses are also from Awadhiya.
The village appears to be a small one consisting only of 26 27 houses comprising of various castes like Brahmins, Rajputs, 610 Kahars, Ahirs and Kurmis.
This is what Hira Singh, P.W.2 has deposed at the trial.
The first informant suggested that there was a simmering discontent between his family and the family of Sukhari Singh accused.
Munni Singh, appellant is the son of Sukhari Singh, Fekoo Singh and Behari Singh, appellants are the nephews of Sukhari Singh and Guput Singh, appellants, is the brother of Sukhari Singh.
Thus they are closely related.
There was a pond measuring about 3 acres in the village, which Sukhari Singh claimed, had been bestowed on him by the erstwhile Zamindar before the coming into force of the Zamindari Abolition Act.
He had taken control of the Tank but some time before the occurrence had sown "singhara" in it and had prevented people to let their cattle come there to drink water from it.
The Panchayat of the village when approached had taken note of it and had 3/4 days prior to the occurrence suggested to Sukhari Singh that he should rather surrender the Tank in the name of the Shiva Temple.
But, he had correspondingly suggested to the Pan chayat that the place constructed and occupied by the com plainant party Khobari Singh and others for tying their cattle at the bank of the pond, which was part of unsettled lands, should also be likewise given to the shiva Temple.
The Panchayat was not agreeable to the counter suggestion because the possession and usage of that land by Khobari Singh was very old.
With such grudge in mind, it is the case of the prosecution, that the assault was masterminded and made at the house of the complainant with the sole purpose to avenge and to commit dacoity.
The details of the occurrence are provided by Dhaniram Singh, P.W.11, the first informant.
He stated that on the day of the occurrence he was in his village having come on a month 's leave from his posting as a Weapon Senior Engineer in District Kanpur.
On the night of the incident, three cots lay spread in the outer courtyard of their house.
He was sleeping on one of them, and on the remaining two individu ally were his cousin Baliram Singh, P.W.3, and his uncle Khobari Singh (deceased).
He was awaken by some noise as if some persons were coming.
He stood up and switched on his five cell torch and saw 20 25 dacoits armed with lathis, bhallas, Garasas, and guns coming towards his house.
On his focussing the torch they stopped.
Then the dacoits also switched on their torches.
Dhaniram Singh then claims that he recognised in the torch light the accused inclusive of 5 appellants.
Munni Singh and Fekoo, appellants had guns and the remaining 5 had some other arms.
Sukhari Singh shouted kill kill.
Munni Singh then fired with his gun towards Dhaniram Singh but 611 he rolled down and by the fall hurt himself on the thigh and the gun fire did not hit him.
Then he got up and started running.
One of the dacoits hit him with a stick with an iron ring.
There was some oozing of blood but it was not profuse.
He ran for about 30 steps to get to his wheat field, which was about 2 to 3 feet below the level of his courtyard.
From there he claims to have seen the remaining part of the occurrence.
He saw that when his uncle Khobari Singh had been awakened Munni Singh appellant fired at him and he fell down.
Other dacoits who were near him started hitting him with spears.
One of the dacoits held a ladder in his hand, through which he climbed up to the roof of the inner house, from where he jumped into the female apartment and opened the outer door.
Then the dacoits entered the house and started looting and plundering.
Two dacoits scold ed his brother Baliram, P.W.3 to keep lying down on his cot.
In the occurrence, however, Baliram Singh. P.W.3, received no injury.
The dacoits were active for about 15 to 20 minutes.
On hearing the noise and commotion, other villag ers then started collecting.
The dacoits then decamped with the looted goods.
Some of the villagers followed them to some distance but the dacoits kept firing on them.
With the result that some of them were injured.
Khobari Singh and other injured persons were removed to be taken to the hospi tal but Khobari Singh died on the way and then Dhaniram Singh proceeded to the Police Station, Bhabua, taking the dead body of his uncle with him where the Office in charge, P.W.12 Ram Nagad Tiwari, recorded his statement at 6.30 a.m. on 6.4.1970.
Shri Tiwari went to the spot and saw the evi dence of dacoity in the form of things lying scattered and some of the articles left behind by the dacoits.
He had the injured persons examined medically.
He arrested the accused persons.
Finally investigation was completed by another officer and the accused persons were put up for trial as mentioned earlier.
Before the High Court, as also here, it is admitted that there was commission of dacoity in the house of the first informant on the day as alleged, in which Khobari Singh was killed and others were injured.
It is also not disputed that the dacoity being a conjoint act all persons participating in the crime would be equally liable for the killing of Khobari Singh.
Thus the only exercise before the High Court, as also here, is to determine who were the persons who took part in the commission of the dacoity.
It is note worthy that prosecution had four sets of witnesses 612 which could establish identity of the dacoity.
Three sets became redundant and only on the basis of one set was iden tity of the appellants established.
The first set consisted of three injured persons Ramadar Singh, Dinanath Singh and Dhirja Singh who were not examined at the trial by the prosecution.
This set did not help the prosecution at all.
The second set consisted of the evidence of Baliram Singh, P.W.3 Rambali Singh, P.W.4 and Jhuri Singh P. W. 9 .The names of P.Ws 4 and 9 were not mentioned in the F.I.R. and their evidence was left out of consideration by the Trial Judge as well as the High Court.
Even the statement of P.W.3 was left aside by the High Court.
So this set too did not further the prosecution case.
In the third set was the evidence of P.W.1 Bishwanath Chaubey, P.W. 5 Jokhan Bind and P.W. 8 Chirkut Singh who did not identify any of the da coits.
None of these witnesses was declared hostile.
Thus their evidence rather goes adverse to the prosecution.
The fourth set consisted of evidence of P.W.2 Hira Singh and P.W.11 Dhaniram Singh whose evidence has been relied upon by the High Court to identify the 5 appellants and on the basis of the very same evidence two co accused, that is, Ram Naresh Singh and Charittar Ahir were acquitted because P.W. 2 named one and excluded the other and P.W.11 named the other one and excluded the former, giving rise to a doubt about the complicity of those two.
Thus we are left to see whether the conviction of the appellants can be based on the evidence of these eye witnesses P.Ws 2 and 11.
We have already given a condensed version of Dhaniram Singh, P.W.11.
Now according to the Hira Singh P.W.2, his house is 4 5 houses away from the house of the complainant and when he became awake on hearing the noise he went to see the occur rence taking a torch which kept lighting.
According to him he hid himself behind a Bahaya tree and from where he could keep watching the activities of the dacoits whose faces he saw.
As he says he could identify 8 dacoits.
These were Munni Singh, Fekoo Singh Dadan Singh, Guput Singh and Behari Singh appellants as respectively armed.
In addition there were Sukhari Singh (since deceased), Ram Naresh Singh and Kanhiya Singh who are no longer in the picture.
After the departure of the dacoits he went close to the scene and found Khobari Singh to have been hit by gun shots and that his condition at that time was serious.
Then he went in the company of P.W. 11 firstly towards the hospital and then to the police Station.
According to this witness though he focussed the torch for 3 or 4 minutes before he went in hiding, the focus did not fall on the faces of the dacoits and after having gone in hiding he 613 had not lit his torch.
Yet he claims that he had identified the dacoits in the torch light.
He is also certain that no dacoit had muffled his face.
The appellants, according to him, had painted their faces but were not in a position to conceal their identity.
He admitted that 3 or 4 day prior to the incident, a Panchayat had been convened in which Sukhari Singh was asked to surrender the Tank but he said he would if Khobari Singh demolishes and surrenders the house built on the bank of the Tank first.
And further that when the Panchayat told Sukhari Singh that the house having been there for a long time, could not be demolished and even Khobari Singh was not agreeable to do so, all were angry with the accused persons on account of the Tank.
So far as Dhaniram Singh, P.W.11 is concerned, he too admits about the convening of the Panchayat 3 or 4 days earlier on which acount Sukhari Singh had nursed an angry feeling due to the happenings in the Panchayat.
With regard to the actual ocurrence, P.W. 11 says that when the first shot aimed at him had not hit him, and the second shot had been fired at his uncle, he then ran 25 30 steps and hid himself in the field of the wheat crop and while running he heard the firing of the third shot.
At that juncture he claimed to have kept lighting his torch now and then from the place of his hiding to see what was happening.
The point which rises for consideration is whether P.Ws2 and 11 could individually, with the aid of their respective torches, identify the dacoits which were 25 30 in number and would the dacoits let them be identified by letting them switch on their torches off and on as claimed ? Would these two wit nesses not have attracted attention of the dacoits to be taken care of in priority in their place of hiding ? It seems to us that seeing the formidable force of the dacoits and their number these two P.Ws. would have been so non pulsed that they would not have dared to betray their presence by switching on and off their torches especially when they were unarmed and were no match to the might of the dacoits.
These two witnesses do not claim that they could identify the dacoits by means other than their torches.
This part of the story of the prosecution obviously does not inspire confidence.
It is also worthy of notice that P.W.11 was injured on the head before he ran for safety.
That was enough to shake and frighten him.
But before the receipt of such injury he claims to have switched on his torch first and to have seen in the first glimpse the appellants and others.
But his flash of the torch was met instantaneously with numerous torch flashes by the dacoits and it was like day light as said by P.W.1 Bishwanath Chaubey.
It is 614 difficult in this situation to believe P.W. 11 that he could in a split second have such a perception so as to identify all the five appellants and some others, It is obvious and natural that behind a lit torch darkness prevails hiding the identify of the torch bearer and persons situated close.
So identity of the dacoits was not possible by P.W.11 Moreover it is ununder standable that when the dacoits had chosen dark hours for committing the dacoity, obviously to take advantage of the darkness, and when they were 25 30 in number, most of them unknown persons, where was the need for the appellants to be in the forefront to risk themselves for identification.
This view we are entertaining apart from what the High Court has opined that muffling of faces and concealment of identify by dacoits is not universally parac tised.
Thus in the facts and circumstances of the case, we entertain a grave doubt about the participation of the appellants in the crime because of the failure of the prose cution to lead convincing evidence about the identity of the appellants as dacoits.
There is even no corroboration worth the name in the form of recovery of fire arms and other weapons, or of the looted articles from the appellants, so as to lend some assurance to the particpation of the appel lants in the cirme.
It may well be that the motive asserted by the prosecution relating to the dispute about the pond may have given cause to Dhaniram Singh, P.W.11 to assume that the appellants were responsible for the dacoity commit ted in his house and for Hira Singh P.W. 2, to entertain that belief in a sweep.
For the foregoing reasons, we find it difficult to sustain the conviction of the appellants.
Accordingly, they are acquited of the charge.
The appeal is accepted.
| The appellants, the victims of the dacoity and other prosecution witnesses were residents of the village, where the crime took place in the house of P.W.11.
The accused were closely related.
P.W. 11 's cousin and uncle were P.W. 3 and the deceased, respectively, and P.W. 2 was also a close relative of P.W. 11.
There was a simmering discontent between the family of P.W. 11 and the family of the accused, Sukhari Singh.
The accused Sukhari Singh claimed that a pond was bestowed of him by the erstwhile Zamindar before the coming into force of the Zamindari Abolition Act.
As the tank was under the control of the accused, he prevented the cattle of the villagers from drinking water from it.
3/4 days prior to the occurrence of dacoity, the Pan chayat of the village suggested to the accused Sukhari Singh to surrender the tank in the name of a Shiva temple.
The accused suggested to the Panchayat the place constructed and occupied by the complainant party, (the deceased and his relatives) for tying their cattle on the unsettled lands at the bank of the pond also should be likewise given to the Shiva temple.
The Panchayat was not agreeable to the counter suggestion of the accused.
It was the case of the prosecution that the dacoity was mastermined and made at the house of the complainant with a sole purpose to avenge.
On the night intervening 5th 6th April, 1970 the P.W. 11, the first informant and his cousin, P.W.3 and his uncle, the deceased were sleeping 606 on the cots lay spread in the outer courtyard of their house.
P.W. 11 was awaken by some noise as if some persons were coming.
He stood up and switched on his five cell torch and saw 20 25 dacoits armed with lathis, bhallas, garasas, and guns coming towards his house.
On his focussing the torch they stopped.
Then the dacoits also switched on their torches.
P.W.11 recognised in the torch light the accused inclusive of 5 appellants.
Accused sukhari Singh shouted, "kill kill." Accused Munni Singh fired with his gun at P. W. 11 but the gun fire did not his him.
While P.W. 11 was running, one of the dacoits hit him with a stick with an iron ring.
There was some oozing of blood but it was not profuse.
He ran for about 30 steps to get to his wheat field, which was about 2 to 3 feet below the level of his courtyard.
From there he saw the remaining part of the occurrence.
P.W. 11 's uncle was shot by the accused Munni Singh and he fell down Other dacoits who were near him started hitting him with spears.
One of the dacoits held a ladder in his hand, through which he climbed up to the roof of the inner house, from where he jumped into the female apartment and opened the outer door.
Then the dacoits entered the house and started looting and plundering.
Two dacoits scolded his cousin P.W. 3 to keep lying down on his cot.
In the occurrence, P.W.3 received no injury.
The dacoits were active for about 15 to 20 minutes.
On hearing the noise and commotion of the vil lagers, the dacoits decamped with the looted goods.
Some of the villagers followed them to some distance but the dacoits kept firing on them.
With the result that some of them were injured.
P.W. 11 's uncle and other injured persons were removed to be taken to the hospital, but P.W. 's uncle died on the way.
Then P.W.11 proceeded to the Police Station, taking the dead body of his uncle with him, and lodged F.I.R. P.W.12 went to the spot and saw the evidence of dacoity in the form of thing lying scattered and some of the articles left behind by the dacoits.
He had the injured persons examined medically.
He arrested the accused persons Finally investigation was completed by another officer and the accused persons were put up for trial.
The matter went to trial under the old Code of Criminal Procedure before the First Additional Sessions Judge against the 6 named persons and one other.
There were commitment proceedings before a Magistrate 607 in which evidence was recorded.
At the commitment stage, 10 persons were put to face the enquiry, out of which three accused died.
There remained 6 of the original accused named in the F.I.R. and one more, not so named to face trial.
The trial court convicted all the 7 accused under Section 396, IPC and imposed on them a sentence of life imprisonment.
On appeal, the High Court acquitted two of them, namely Ram Narain Singh, the one unnamed in the F.I.R. and one Charittar Ahir, one of the so named and maintained the convictions of other accused.
This appeal by special leave was by the other accused challenging the judgment of the High Court, Allowing the appeal of the accused, this Court, HELD : 1. 01.
The prosecution had four sets of witnesses which could establish identity of the dacoity.
Three sets became redundant and only on the basis of one set was identity of the appellants established.
The first set consisted of three injured persons who were not examined at the trial by the prosecution.
This set did not help the prosecution at all.
The second set consisted of the evidence of P.W. 3, P.W.4 and P.W.9.
The names of P.Ws.4 and 9 were not mentioned in the F.I.R. and their evidence was left out of consideration by the Courts below.
Statement of P.W. 3 was left aside by the High Court.
In the third set was the evidence of P.W.I P.W.5 and P.W.8, who did not identify any of the dacoits.
None of these witnesses was declared hos tile.
Thus their evidence rather goes adverse to the prose cution.
The fourth set consisted of evidence of P.W.2 and P.W.11 whose evidence has been relied upon by the High Court to identify the 5 appellants and on the basis of the very same evidence two co accused, were acquitted because P.W.2 named one and excluded the other and P.w.11 named the other one and excluded the former giving rise to a doubt about the complicity of those two.
[611 612D] 1.02.
Seeing the formidable force of the dacoits and their number, the two P.Ws.2 and 11 would have been so non pulsed that they would not have dared to betray their presence by switching on and off their torches especially when they were unarmed and were no match to the might of the dacoits.
These two witnesses do not claim that they could identify the 608 dacoits by means other than their torches.
This part of the story of the prosecution obviously does not inspire confi dence.
It is also worthy of notice that P.W.11 was injured on the head before he ran for safety.
That was enough to shake and frighten him.
But before the receipt of such injury he claims to have switched on his torch first and to have seen in the first glimpse the appellants and others.
But his flash of the torch was met instantaneously with numerous torch flashes by the dacoits and its was like day light as said by P.W.1.
[613 F H] 1.03.
It is difficult in the situation to believe P.W.11 that he could in a split second have such a perception so as to identify all the five appellants and some others.
It is obvious and natural that behind a lit torch darkness prevails hiding the identity of the torch bearer and persons situated close.
So identity of the da coits was not possible by P.W.11.
[613 H614 A] 1.04.
In the facts and circumstances of the case, there is a grave doubt about the participation of the appel lants in the crime because of the failure of the prosecution to lead convincing evidence about the identity of the appel lants as dacoits.
There is even no corroboration worth the name in the form of recovery of fire arms and other weapons, or of the looted articles from the appellants, so as to lend some assurance to the participation of the appellants in the crime.
It may well be that the motive asserted by the prose cution relating to the dispute about the pond may have given cause to P.W.11 to assume that the appellants were responsi ble for the dacoity committed in his house and for P.W.2, to entertain that belief in a sweep.
[614 C E]
|
Petition (Civil No. 651 of 1986.
(Under Article 32 of the Constitution of India).
P.P. Rao, Ms. Bina Gupta, Ms. Vandana Saggar and Ms. Monika Mohil for the Petitioners.
V.C. Mahajan, K. Swamy, Ms. A. Subhashini and Ms. Niran jana Singh for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
This petition under Article 32 of the Costitution has been filed by Prahalad Singh claiming that he and other similarly placed Compositors working in the Government of India Presses all over India are entitled to the status and salary of Compositors, Grade I in the "highly skilled" category with effect from January 1, 1966, The said relief is claimed on the sole ground that one T.R. Thakur has already been given Grade I in the "highly skilled" category as a result of the judgment in his favour given by the Himachal Pradesh High Court.
The writ petition (C.W. 61/69) filed by T.R. Thakur was allowed by the learned Single Judge of the High Court on May 21,1971 and Letters Patent Appeal against the said judgment was dismissed on May 9, 1979.
The High Court held that the categorisation as "highly skilled" and "skilled" on the basis of seniority alone was unreasonable and discriminatory.
No special leave 154 petition against the judgment of the High Court was brought to this Court and as such the judgment has become final.
Prahalad Singh and others have claimed that they are entitled to the benefit of the judgment given by the High Court in Thakur 's case.
According to them the said judgment is applicable in principle to all the Compositors whether they were parties before the High Court or not.
This peti tion came for hearing before a Bench of this Court consist ing of R.S. Pathak, CJI, M.N. Venkatachalia, J.
The Bench in its order dated April 28, 1989 observed as under : "The principal objection to the grant of relief to the Petitioner and those for whom he claims to act is the gross delay with which the writ petition appears to have been bought in this Court.
To surmount that difficulty the petitioner relies upon the plea that the judgment of the High Court in T.R. Thakur 's case is a judgment operative in principle in favour of all compositors situated in the circumstances in which T.R. Thakur found himself.
There are other pleas which have been taken by the petitioner, but the substantial one is whether he and the other compositors can enforce in their favour the benefit grant ed in T.R. Thakur 's case although they were not parties to that proceeding.
At first blush it would seem that the High Court considered the particular facts of T.R. Thakur, the petitioner before it, and while granting relief it appears, in terms, to have confined it to T.R. Thakur.
It is an important point whether, as the petitioner now contends before us, the direction issued by the High Court can be regarded as a direction operative in re spect of all compositors employed in the Government of India Presses all over India, The point is important since the objection on the plea of laches seems to be a substantial one in view of the several compositors who have over the years been promoted to the category of "highly skilled" compositors, and interfering with their status now could mate rially prejudice them.
At the same time, it cannot be doubted that there can be cases where although the facts of a particular petitioner have been taken into consideration what the Court indents, when it adjudicates on the claim, is to lay down the law to be ap plied by the respondents to all similar situa tions.
There are other cases where relief may be granted or refused upon the consideration of a question involved the question being one which affects several persons of the category to which the petitioner belongs and the grant or refusal of the relief may turn on 155 the particular facts of that case.
Various possible categories of cases can be conceived in this context.
We think it desirable that in cases such as this the Court should formulate a set of appropriate guidelines indicating when directions rendered by the Court in one particular case can be regarded as operative in other cases.
As the matter will be governed both by principle and by the practice of the Court, it is appropriate that this case be referred to a larger Bench for consideration on this and the other points arising in it.
" This is how the writ petition has come before us for final heating.
It is not necessary to go into the merits of the question posed by the Two Judges Bench of this court because we are of the view that the High Court judgment in Thakur 's case does not lay down the correct law.
The facts which led 'to the filing of the writ petition by Thakur are as under: Prior to January 1, 1966, there was one grade of Compos itors (Rs. 110 Rs.
180) in the Government of India Presses.
In the year 1963 a committee called "The Committee for Categorisation of the Government of India Press Workers" was constituted to review the classification of posts of indus trial workers in the Government of India printing presses.
The said Committee, inter alia, made the following recommen dations : "There was an equally persistent and wide spread demand from the workers that the cate gory of Compositors should be treated as highly skilled instead of skilled as at present.
We have very carefully examined this case as well and were unable to subscribe to this demand.
Hand composing in the Govt.
of India presses is essentially a skilled job.
The Managers were, however, of the opinion that 10 15% of the Compositors are frequently expected to handle composition work of mathe matical or scientific discourses.
For this, a knowledge application of diacritical marks superior and inferior letters/figures, scien tific signs/symbols etc.
are essential.
This work, admittedly, involved much higher skill than originally hand composition.
The Commit tee,therefore, recommend that a suitable percentage of compositors should be upgraded to the highly skilled category with pay scale of Rs. 175 205.
This category should be given an appropriate designation to distinguish it from the ordinary grade of Compositors who should still be in the skilled group.
" 156 Accepting the above recommendations, the Government of India, by an order dated March 14, 1966, divided the exist ing cadre of Compositors Compositors Grade I (Rs. 150 Rs. 206) and Compositors Grade II (Rs. 11 O 180).
It was further decided that the Compositors Grade I would be classified as "highly skilled" and Compositors Grade II as "skilled".
The ratio of Grade I to Grade II was fixed as 20: 80.
The initial constitution of the cadre of Compositors Grade I was done by appointing 20% of the Compositors on the basis of seniority cure fitness but trade test was made obligatory for future promotions to Grade I.
While implementing the above said decision of the Gov ernment of India, 18 Compositors who were senior to Thakur were given the pay scale of Compositor Grade I. Thakur challenged the denial of higher pay scale of Compositor Grade I to him on the ground that he and the 18 Compositors who were promoted were performing the same duties and were holding similar posts which were inter changeable.
According to him all of them were performing the duties of "highly skilled" Compositors and as such the higher grade could not have been denied to him.
The learned Single Judge allowed the writ petition and held that the categorisation of the senior most persons as "highly skilled" was arbitrary and discriminatory.
The learned Judge issued the following directions: "In the light of the above I am of the view that the petitioner is entitled to the relief prayed for and direction is issued to the respondents not to enforce the revised scale of pay in such a manner as to subject the petitioner to a lower scale of pay than the one allowed to the compositors who have been so fixed in the scale laid down for the highly skill compositors.
" The Letters Patent Appeal filed by the Union of India against the judgment of the learned Single Judge was dis missed by the Division Bench of the High Court on the fol lowing reasoning: "The contention of the appellants, as raised by them in paragraph 5 of their return.
that by length of service a person acquires more and more skill and, therefore, the test of seniority for the purpose of putting a person in the higher category of Grade I was justi fied, not acceptable because it is very well known that a mere length of service does not always result in more skill in the working of the person concerned.
Seniority would have of course relevance in a situation where two persons having equal skill are to be consid ered.
But unless such a situation arose it is very much evident that initial placing of the 157 present incumbents on the post of Compositor in the higher category of Grade I could not have been done in total disregard of the degree of skill which each of these incumbents possessed.
" Academic pursuit and experience are two primary sources of learning.
A Compositor 's job in a printing press is a skilled job requiring special technique.
In such a job it would be reasonable to measure the standards of skill by length of experience.
The High Court, in our view, fell into error in quash ing the classification based on experience arising out of length of service.
It is obvious from the recommendations of the Committee quoted above that "highly skilled" category was created to handle the nature of work which involved higher skill than the original hand composition.
The Com positors with longer service and who were found fit for promotion were appointed to Grade I and were categorised as "highly skilled".
Experience itself is merit and can be a valid basis for classification.
This Court in State of U. P. vs j.
P. Chaurasaia; , has upheld the classifica tion based on experience as reasonable classi fication.
Jagannatha Shetty, J. speaking for this Court observed: "Article 14 permits reasonable classification founded on different bases.
It is now well established that the classification can be based on some qualities or characteristics of persons grouped together and not in others who are left out.
Those qualities or characteris tics must, of course, have a reasonable rela tion to the object sought to be achieved.
In service matters, merit or experience could be the proper basis for classification to promote efficiency in administration.
He or she learns also by experience as much as by other means.
It cannot be denied that the quality of work performed by persons of longer experience is superior than the work of newcomers.
Even in Randhir Singh case, this principle has been recognised.
O. Chinnappa Reddy, J. observed that the classification of officers into two grades with different scales of pay based either on academic qualification or experience or length of service is sustainable.
Apart from that, higher pay scale to avoid stagna tion or resultant frustration for lack of promotional avenues is very common in career service.
There is selection grade for District Judges. 'there is senior time scale in Indian Administrative Service.
There is supertime scale in other like services.
The entitlement to these higher pay scales depends upon sen iority 158 cure merit or merit cure seniority.
The dif ferentiation so made in the same cadre will not amount to discrimination.
The classifica tion based on experience is a reasonable classification.
It has a rational nexus with the object thereof.
To hold otherwise, it would be detrimental to the interest of the service itself.
" We, therefore, hold that the judgment of the Himachal Pradesh High Court in T.R. Thakur 's case does not lay down correct law and is overruled.
The only ground on which this petition is based, having become non existent, the petition ers are not entitled to the relief claimed by them and the writ petition is liable to be dismissed.
We are, however, of the view that the cadre of Composi tors Grade I 'highly skilled ' should be enlarged.
The Com positors are persistently demanding the upgrading of the whole of the cadre.
The "Committee" also recommended that suitable percentage be upgraded.
The Government created the higher grade for 20% of them.
Keeping in view the large number of Compositors all over the country and to remove stagnation we are of the opinion that the ratio between the two cadres should be 33 1/3: 66 2/3%.
We, therefore, commend to the respondents to increase the strength of the cadre of Compositor Grade I 'highly skilled ' to 33 1/3 per cent with effect from April 1, 1992.
The writ petitions is disposed of in the above terms with no order as 0 costs.
V.P.R. Petition dismissed.
| Petitioner claiming that he and other similarly placed Compositors working in the Government of India presses all over India were entitled to the status and salary of Compos itors, Grade I in the "highly skilled" category with effect from January 1, 1966 on the ground that the decision of the Himachal Pradesh High Court in Thakurs case was applicable in principle to all the Compositors, filed the present petition under Article 32 of the Constitution.
The High Court in Thakur 's case held that the categori sation as "highly skilled" and "skilled" on the basis of seniority alone was unreasonable and discriminatory.
As no special leave petition against the judgment of the High Court was brought to this Court the judgment became final.
Over ruling Thakur 's case and dismissing the petitions this Court, HELD: I.Academic pursuit and experience are two primary sources of learning.
A Compositor 's job in a printing press is a skilled job requiring special technique.
In such a job it would be reasonable to measure the standards of skill by length of experience.
The High Court fell into error in quashing the classification based on experience arising out of length of service.
[157 B] 2.
"Highly skilled" category was created to handle the nature work which involved higher skill than the original hand composition.
The Compositors with longer service and who were found fit 153 for promotion were appointed to Grade I and were categorised as "highly skilled".
Experience itself is merit and can be a valid basis for classification.
[157 C D] 3.
Keeping in view the large number of Compositors all over the country and to remove stagnation the ratio between the two cadres should be 33 1/3: 66 2/3 %.
[158 D] 4.
The respondents are directed to increase the strength of the cadre of Compositor Grade I 'highly skilled ' to 33 1/3 percent with effect from April 1, 1992.
[158 D] Thakur 's Case (Writ petition C.W. No. 61/69) dated 21.5.1971; overruled.
State of U.P.v.
J.P. Chaurasia; , ; re ferred to.
|
ivil Appeal No. 4437 of 1990.
From the Order dated 30.6.1990 of the Disciplinary Committee of the Bar Council of India in B.C.I. TR Case No. 127 of 1988.
Satish Chandra, V.B. Joshi and Umesh Bhagwat for the Appellant.
Respondent in person (NP) The Judgment of the Court was delivered by G. N. Ray, J.
This Civil Appeal is directed against the order dated June 30, 1990 passed by the disciplinary Committee of the Bar Council of India under Section 36B of the Advocate Act, 1961 in BCL Tr.
Case No. 127 of 1988 arising out of the complaint made before the Bar Council of Maharashtra in D.C. No.22 of 1987.Shri Ramesh Chandra Vit haldas Sheth made a complaint on February 9, 1987 to the D.C. No.21 of Bar Council of Maharastra against the respondent Devendra Bhaishankar Mehta,an Advocate practising in Bombay inter alia alleging professional misconduct against the said advocate.
It was alleged by the respondent complainant,that he carries on business of manufacturing at Jhalod and he owns a proprietary firm named as M/s Ravi Dyechem Manufacturing Industries and M/s Vithaldas Dye Stuff Manufacturing Company.
The complainant was in need of finan cial accommodation and was in search of a reliable financier and Mr. Balu Bhai Modi impressed the complainant that they would give financial accommodation on being satisfied about the documents of security.
It was represented to the com plainant that a firm of Solicitors run by the said Shri Devendra Bhaishankar Mehta would examine the papers for the purpose of financing and the said Shri Devendra Bhai Mehta was also an investor.
The complainant on such representation agreed to get financial loan through the said Balu Bhai Modi.
The complainant alleged that an inspection of factory and other premises at Jhalod was made by Shri Balu Bhai and he was informed that the said properties were in excellent condition and the estimated value was Rs.12 lakhs.
He 692 was also assured that since the properties were valuable and in excellent condition a lower rate of interest would be considered and he was also told that a loan up to Rs.7 lakhs would be advanced to him provided the complainant would be advanced to him provided the complainant would pay a draft or cash at the rate of 5 and 1/2% on the advance of the amount of loan towards legal and other expense.
He was also informed that a meeting of the financiers would be held including Mr. Devendra Bhai Mehta who was one of such finan ciers.
Thereafter a meeting was arranged at the residence of the said Shri Devendra Bhaishankar Mehta and in such meeting Shri Devendra Bhaishankar Mehta falsely represented to the complaint that he was an advocate of the firm of solicitors M/s Dayalji and Deepchand and he worked only for the genuine financiers and he would look to the interests of the loan seekers.
Shri Devendra Bhaishankar Mehta also represented to the complainant that he was himself a member of the internal group of the financiers who would advance the loan and hence he was not only preparing the mortgage deed for the proposed loan but also scrutinising it for his own satisfaction.
He also assured the complainant that once the mortgage deed was drafted by him the complainant would get loan within ten days because thereafter only the formalities were required to be gone into.
The said Shri Mehta induced the complainant to part with money for legal expenses and informed the complainant that out of 5, and 1/2% of the amount of loan required to be paid by the complainant by way of legal expenses, Shri Devendra Bhaishankar Mehta would keep 3 and 1/2% for the stamp duty payable to the Government and he also represented that the disbursement could be expedited only if the complainant would pay cash to Balubhai Modi on April 10, 1986.
Shri Devendra Mehta also promised that he would see that the loan proposal was passed in the internal group of meeting of the financiers of which he himself was one of the financiers and he would ensure that Shri Balu Bhai Modi would sanction the loan as early as possible.
Thereafter Shri devendra Mehta had inspected the documents and returned most of the original documents and assured the complainant that he would get loan in a few days.
On April 10, 1986 the complainant went to the office of Shri Balu B. Modi and handed over to him a sum of Rs.25,000 for the loan of Rs.7 lakhs @ 14%.
Shri Balu B. Modi told the typist to prepare the stamp receipt and also informed the complainant to arrange for the payment of balance of Rs.13,500.
The complainant informed him that he would pay the balance to Shri Devendra Mehta at the time of disbursement of loan.
Shri Balu Bhai Modi told the 693 complainant to pay to Shri Devendra Mehta within a week and he instructed the typist to put the date as April 17, 1986 by which date the complainant would pay the balance sum of Rs.13,500.
The complainant alleged that thereafter he had contacted Shri Devendra Bhaishankar Mehta who represented to the complainant that if the complainant could not pay the balance of Rs.13,500 in a week, how internal group of finan ciers would believe that the complainant would repay the loan of Rs.7 lakhs.
He, therefore, advised the complainant that he should pay a balance of Rs.13,500 and the complain ant accordingly paid the said balance sum.
Shri Devendra Bhaishankar Mehta, thereafter, made all attempts to delay the advancement of loans by unending demands and the com plainant had to forward about 200 documents to Shri Devendra Bhaishankar Mehta, but Shri Mehta ultimately conveyed to the complainant through Shri Balu Bhai Modi that as the clear ance certificate under Section 230 A(i) of the Income Tax Act had not reached the Office of the concerned authorities and as the said advancement of loan was very heavy, he would neither advance his share of finance nor he would agree to the disbursement until a sum of Rs.10,000 would be handed to Shri Devendra Bhaishankar Mehta.
The complainant caused an enquiry and came to know that the Certificate under Section 230 A(i) had reached the office on June 5, 1986.
He, howev er, paid Rs.10,000 in July,1986 to Shri Devendra Bhaishankar Mehta in the presence of Shri Balu Bhai Modi, when Shri Devendra Bhaishankar Mehta told the complainant that he would issue the receipt at the time of the disbursement of the loan and he should be trusted.
The complainant further alleged that despite such payment and other steps taken by the complainant, instead of disbursing the proposed loan, Shri Balu Bhai Modi lodged a false complaint against the complainant in Social Security Branch of Bombay Police on September 5, 1986.
The complainant thereafter made an appli cation to the C.I.D. Branch of Bombay Police on September 8, 1986.
The complainant alleged that because of the friendly relationship by the racketeers including the said Shri Balubhai Modi and Shri Devendra Bhaishankar Mehta with the police, nothing was heard about his complaint but ultimately on the personal intervention by the Commissioner of Police, Bombay, his application was duly registered and Shri Balub hai Modi was chargesheeted in Criminal Case No. 1110/86.
The complainant was advised by the police to make an application to the Bar Council against Shri Devendra Bhai Mehta.
The complainant also alleged in his petition of complaint to the State Bar 694 Council that Shri Devendra Bhai Mehta had indulged in fraudulent activities in respect of other persons and a list of witness was attached to the said latter of complaint.
As the complainant case before the State Bar Council, could not be disposed of within the statutory period , the complaint stood transferred to the Disciplinary Committee of the Bar Council of India and numbered as B.C.I. Tr.
Case No.127/88.
As aforesaid, the judgment dated June 30, 1990 in the B.C.I. Tr.
Case No.127 of 1988 is the subject matter of Civil appeal No. 4437 of 1990.
When the complaint case was pending before the Disci plinary Committee of the State Bar Council of Maharashtra, the said Disciplinary Committee called upon the appellant to file and affidavit.
Pursuant to the direction of the State Bar Council of Maharashtra, the appellant filed an affidavit dated November 26, 1987 indicating therein the particulars of the documents drafted by the appellant at the instance of the said Shri Balubhai Modi for advancing loans to different persons intending to get loan accommodation.
The complain ant respondent also deposed before the Disciplinary Commit tee of the State Bar Council and had applied for issuing summons to the witnesses namely to the deponents of the affidavits affirmed by Shri Munjibhai M. Shah and Shri Devendra Shashikant Dyanmhotre, who had stated in their affidavits that they had also become victim of fraudulent action and cheating by the said Shri Balubhai Modi in conni vance with the appellant Devendra Mehta.
The appellant op posed examination of such persons as witnesses in the pro ceedings inter alia on the ground that the said affidavits had disclosed independent grievances of the deponents and the said deponents had not complained before the Bar Coun cil.
It, however, appears that the State Bar Council of Maharashtra overruled such objections of the appellant.
The appellant in an attempt to stall the proceeding before the State Bar Council moved a Writ Petition under Articles 226 and 227 of the Constitution of India being Writ Petition No. 1897 of 1988 in the High Court of Bombay inter alia chal lenging the legality and validity of the said complaint proceeding before the State Bar Council.
Such Writ Petition, however, was rejected by the Bombay High Court on April 27, 1988 and the matter thereafter proceeded before the State Bar Council and then stood transferred to the Disciplinary Committee of Bar Council of India.
The Disciplinary Commit tee of Bar Council of India examined and recorded evidences of Prafulchandra Shah (CW 2), Munjibhai M. Shah (CW 3), Shashikant D. Dyanmhotre (CW 5), Bhawanji Bharot (CW 6) and Mahesh Ramanlal Shah (CW 4).
It may be noted here 695 that Mahesh R. Shah (CW 4) an advocate had acted for Praful chandra Shah in Criminal Case.
The appellant and complainant had also deposed in the said disciplinary proceeding before the Bar Council of India and their respective statements were also recorded.
The Disciplinary Committee of the Bar Council of India scrutinised and analysed the evidences and materials on record and by giving elaborate reasoning, the Disciplinary Committee inter alia came to the finding that it was established beyond reasonable doubt that there was a racket for defrauding and/or cheating to aspirant loanees and Shri Balubhai Modi and the appellant advocate were parties to such racket.
The Disciplinary Committee had also come to the finding that it was established that the appellant had received Rs. 10,000 from the complainant respondent on July 11, 1986.
The Disciplinary Committee also came to the finding that the appellant in connivance with the complainant defrauded the complainant in receiving large sum of money on the pretext of legal expenses and other incidental costs for advancing the proposed loan to the complainant but such loan was never advanced to the complainant and instead of disbursing the loan.
Shri Balubhai Modi got a false complaint lodged against the complainant in Social Security Branch on September 5, 1986.
The Disciplinary Committee also came to the finding that a case of professional misconduct under Section 35 of the had been established against the appel lant.
On the question of punishment to be imposed on the appellant, the Disciplinary Committee of the Bar Council of India inter alia came to the finding that in the facts and circumstances of the case, the offence of misconduct commit ted by the concerned Advocate was of a very serious nature.
The Advocate had no feeling of regret and remorse.
There was no extraneous circumstances of the basis of which the mem bers of the Committee could persuade themselves to take a lenient and liberal view about the punishment and a lenient view would not be justified in the facts of the case.
The Committee felt that the name of the said Advocate should be removed from roll of the Advocates.
The Disciplinary Commit tee has noted that the Committee has taken into considera tion the guidelines given by the decisions of this court in several namely in Re: P an Advocate ; in M. veerbhadra Rao vs Tek Chand ; for imposing the punishment on the concerned Advocate.
The Disciplinary Committee therefore passed the following order in exercise of power under Section 35(3)(d) read with Section 36 and 36 B under Section 43 of .
696 ORDER: "The name of respondent Advocate Mr. Devendra Bhaishankar Mehta, Advocate on the State Roll of the Bar Council of Maharashtra be removed from its Roll.
He shall pay Rs.2,000 as costs of these proceedings to complainant Mr. Rameshchandra Vithaldas Sheth.
" At the hearing of this appeal, it has been very strongly contended before us by the learned counsel for the appellant that the Disciplinary Committee of the Bar Cous teau of India had proceeded with a closed mind presumably being influenced by the serious nature of complaint made by the complainant respondent without appreciating properly that the appellant had no role in the matter of alleged fraudulent activities and of cheating by Shri Balubhai Modi and/or some other persons.
The appellant had only rendered the professional service as an Advocate in a fair and proper manner.
It has been contended by the learned counsel for the appellant that the appellant is a practising counsel and he was engaged by the said Shri Balubhai Modi for preparing the documents of mortgage, on inspection of the records of the complainant for advancing the proposed loan for Rs. seven lakhs.
The appellant in his professional capacity had to give his advice.
Accordingly, he had looked into the docu ments placed before him by Shri Balubhai Modi and the com plainant and prepared the draft deed for mortgage and he had also advised his client Shri Balubhai Modi for compliance of the conditions mentioned in the draft deed before advance ment of loan so that his client Shri Modi was properly secured.
The learned counsel has also contended that such action on the part of the appellant was only fair and proper and any responsible.
Advocate when engaged by a client was expected to do in the manner in which he had acted.
The learned counsel has further contended that it is not a case of the complainant or anybody that the appellant had given any advertisement for advancing loan to any person and it is also nobody 's case that he on his own had induced persons to seek such loan and/or he had referred the complainant or any other person to Shri Balubhai Modi or to any other person for getting such loan.
It has been contended by the learned counsel that it is the positive case of the complainant respondent that pursuant to the advertisement given by Shri Balubhai MOdi he had approached Shri Balubhai Modi for a loan for running his business and Shri Balubhai Modi had clearly stated to the complainant that such loan could be advanced if 697 on inspection of the properties of the complainant the financiers would decide that such loan could be advanced to the complainant and such loan would be advanced on the basis of advice to be taken from the lawyer of the financiers and on execution of proper mortgage deed, on scrutiny of the relevant papers and documents.
The appellant did not come into the picture at all when the complainant pursuant to the advertisement had contacted Shri Balubhai Modi.
It has also been submitted by the learned counsel that admittedly the complainant was referred to the appellant in his capacity as a legal practitioner engaged by the said Shri Balubhai Modi and/or the financiers.
The learned counsel has contended that only in the capacity of an Advocate engaged by a cli ent, the appellant had drafted the deed of mortgage and he had also clearly indicated to the complainant and also to the said Shri Balubhai Modi when the Conference was held in his place that for advancement of loan, the mortgage deed as drafted by him should be executed and the complainant should fulfil the terms and conditions indicated by the appellant in the draft deed.
Since the complainant failed to satisfy the terms and conditions as drafted by the appellant, he had advised Shri Balubhai Modi that he could not approve the advancement of loan.
The learned counsel has further submit ted that it is an admitted case that thereafter the com plainant got another document prepared by somebody else and the appellant refused to approve such document because the same was not drafted by him and he did not want to take any responsibility in the matter on the basis of a document not drafted by him.
The learned counsel has contended that such action on the part of the appellant clearly indicates that the appellant was a responsible lawyer who wanted to safe guard the interest of his client and despite request he did not agree to approve any document not drafted by him.
It has been submitted by the learned counsel for the appellant that if the appellant had real intention to defraud the complain ant and to be a party to the alleged racket, he would not have dealt in a straightcut manner and would not have washed his hands in the matter of execution of the document of mortgage.
The learned counsel for the appellant has further submitted that the case of payment of any money directly by the complainant to the appellant as sought to be made was not true and should not be accepted.
The appellant had received his professional fees only from his client namely, Shri Balubhai Modi.
He had further submitted that the com plainant respondent falsely stated before the Bar Council that the appellant had extorted Rs.10,000 from him and such payment of Rs.10,000 698 was made by the complainant directly to the appellant.
He has submitted that such case was not made out by the complainant in his complaints before the Police.
The complainant made embellishment to his case by falsely alleg ing that the appellant had asked the complainant to pay a sum of Rs.10,000 on the assurance that on such payment mortgage deed would be executed without any delay so that the complainant would get the loan of Rs. Seven lakhs and the appellant had actually received Rs.10,000 from him.
The learned counsel has contended that such uncorroborated testimony of the complainant about payment of Rs.10,000 by him to the appellant is not at all convincing and should not be accepted more so when such case had not been made out in the beginning and a false case of payment of Rs.10,000 was sought to be introduced at a later state.
The learned coun sel has contended that if the judgment/order under appeal is scrutinised in the proper perspective, it will clearly reveal a closed mind and a biased approach of the members of the Disciplinary Committee.
The Committee unfortunately presumed various facts against the appellant on mere surmise and conjecture for the purpose of coming to the finding that the appellant had been a member of the racket and he had taken part in defrauding and cheating the complainant a large sum of money by assuring him that a loan of Rs. seven lakhs would be advanced to him.
The learned counsel has also contended that the Disciplinary Committee has committed a grave error in law in considering the evidences of four witnesses who were total strangers to the case of alleged fraud and cheating of the complainant.
Such witnesses had no knowledge whatsoever about the alleged deal relating to the case of the complainant and they claimed to be aspirants of getting loans individually in different transactions.
The learned counsel has also submitted that the Disciplinary Committee has committed a grave error in law in considering the evidences of CW 2 Prafulchandra Shah, CW 3 Munjibhai M. Shah, CW 5 Shashikant D dyanmohtre and CW 6 Bhawanji Bharot because the alleged case of complicity of the appellant in being a member of the racket to cheat the said aspiring loanees had not been put to the appellant when he was under cross examination.
The learned counsel had further submitted that the appellant is a practising advocate and he has a status and respect in the Society.
In discharge of his professional duties, he has acted as a responsible member of the legal profession when he was engaged by Shri Balubhai Modi.
It is neither possible nor desirable for an Advocate to cause enquiries about the real intention of the client in the proposed transaction between the client 699 and a third party.
Even if it is accepted that Shri Balubhai Modi gave advertisements to dupe the intending loanees for the purpose of cheating them on false assurance of loans, the Disciplinary Committee should have adverted to the real question in issue as to whether or not the appellant himself made any false representation to the complainant and had taken part in defrauding or cheating the complainant.
The mere fact that he was engaged by a dishonest person cannot be any ground to hold that the appellant himself was guilty of misconduct only because he had acted as an advocate of a party who may be guilty of the offence of fraud or cheating.
The part played by the appellant as an advocate was required to be analysed with an open mind and with reference to the documents and evidences on record but unfortunately the Disciplinary Committee miserably failed and neglected to discharge the responsibilities and the duties and functions entrusted to the Committee.
The Committee has accepted inadmissible evidences and uncorroborated testimony of the complainant, which in the facts and circumstances of the case were required to be discarded.
It has been submitted by the learned counsel for the appellant that it is only unfor tunate that instead of holding that the complainant unjustly tried to implicate the appellant by falsely alleging against him that he was guilty of misconduct, the Disciplinary Committee, on mere suspicion has drawn adverse inferences against the appellant and based its finding which really lay in the realm of surmise and conjecture.
The learned counsel has submitted that this being a statutory appeal, this Court Should intrinsically consider the facts and circumstances of the case and should make proper evaluation of the evidences on record and in doing so should discard the improper and unjust finding made by the Disciplinary Committee.
The learned counsel for the appellant has contended that the Court may have a concern to ensure that the professional morality and standard are maintained by the members of the profession but at the same time the Court should not loose sight of the fact that any finding based on surmise and conjecture against the appellant will not only do a great harm to his avocation in life and professional career but will also cause immense harm in the matter of his standing and repute in the society and to his friends and relatives and such harms cannot be compensated in any manner.
In the facts and circumstances of the case the learned counsel for the appellant has contended, that the complainant has miser ably failed to establish the complaint made to the Discipli nary Committee and the disciplinary proceeding was liable to be dismissed with exemplary cost.
This 700 Court should therefore allow the appeal and dismiss the complaint with cost.
After giving careful consideration to the facts and circumstances of the case and materials on record and arguments advanced at the hearing of the appeal, we, howev er, do not subscribe to the view that the Disciplinary Committee of the Bar Council has proceeded with a closed mind and with a definite bias presumably being influenced by the serious nature of allegation as sought to be contended by the learned counsel for the appellant.
The Judgment and Order under appeal clearly reveal that the Disciplinary Committee has taken pains in scrutinising and analysing the facts of the case as dispassionately as practicable.
It also appears to us that the weaknesses in the case of the com plainant was not lost sight of and has been specifically adverted to by the Disciplinary Committee even when such infirmity was not pointed out by the appellant at the hear ing.
It was contended that Rs.10,000 was not advanced by the complainant and the case of such advancement of Rs.10,000 to the appellant advocate by the complainant himself was false and after thought.
The Disciplinary Committee has not only considered the case of the appellant as argued but has also taken into consideration the other possible argument in favour of the appellant though not argued.
It was on consid eration of all aspects of the matter, the Disciplinary Committee has come to the finding by giving cogent reasons therefor.
To illustrate this aspect, reference may be made to paragraph 18 of the judgment under appeal : "If really A was not merely an advocate, but also a financier, would D utter the words: "I will pay Rs.10,000 fees to A only after the registration of the documents", and even if he so utters these words, would C not feel suspect about the same ? In fairness to A.
We have addressed this question to ourselves though A did not address us on this.
But in the predicament in which C was placed, in the situation in which he was made to drive himself from pillar to post and particularly having gone out of pocket to the tune of Rs 40,000 after com plying with the necessary formalities so far and keen as he was to get the loan of Rs. 7,00,000 as early as possible, it is quite possible that his conduct might not be that of a person who would be one of the accurate calculation and assessment.
" 701 It has been strongly contended by the learned counsel for the appellant before us that the other aspirant loanees who had also approached Shri Balubhai Modi and were referred to Shri Devendra Mehta for taking legal steps to enable the said aspirant loanees to get the proposed loan should not have been examined in the case of Shri Devendra Mehta be cause they were not witnesses to the case of fraud and cheating of the complainant and they had no personal knowl edge of the case and they had also not made any complaint to the Bar Council in respect of their cases.
Such contention, in out view, is devoid of any merit and should be discarded.
The complainant specifically alleged that there was a racket to which the concerned advocate and Shri Balubhai Modi were parties.
The complainant has indicated the modus operandi by which he became victim of the fraudulent activities of the said members of the racket.
To bring home the case of racket the depositions of other persons who had also approached Shri Balubhai Modi for advancement of loan and had been dealt with by Shri Modi and Shri Devendra Mehta in similar manner and though they had to part with substantial amount towards legal and other expenses for getting the proposed loan, such loan had not been ultimately sanctioned to them, became relevant and necessary to be looked into.
As a matter of fact, before the Bombay High court the appellant also challenged the propriety and correctness of the Disciplinary Committee of the State Bar Council to examine other loanees dealt with by Shri Balubhai Modi and Shri Devandra Mehta but the High Court of Bombay did not accept such contention by holding inter alia that, read in proper context, it cannot be said that the allegation of racket was totally absent.
It may be noted here that the Disciplinary Committee was anx ious to independently assess the facts and circumstances of the dispassionate manner without being influenced by any observation of the Bombay High Court in disposing of the Writ Petition of Shri devendra Mehta.
Such anxiety is clear ly demonstrated by the observation of the Disciplinary Com mittee in paragraph 2 (c) of the judgment/order under appeal which may be quoted hereunder: "2(c) The High Court also went through C 's evidence before the State D.C and opined that read in proper context it cannot be said that the allegation of a "a racket" was totally absent therein.
All said and done, when the State D.C. properly exercised its discretion, the High Court thought it improper to entertain the writ petition under article 227 of the Constitution.
702 We must say at this stage that at the time of assessing the whole evidence at the end of full dress inquiry we have taken sufficient care and caution to see that the findings of the State D.C. on the preliminary issue and the High Court 's dismissal in limine of A 's writ petition declining to interfere with the said findings do not weigh with us for the said assessment.
Suffice it to say, we have briefly narrated the details for keeping the record straight.
" It has also been contended by the learned counsel for the appellant that the Disciplinary Committee could not appreciate the facts and circumstances of the case in their proper perspective in view of the fact that the Committee proceeded with a preconceived notion.
It was precisely on account of such a pre conceived view and bias, the Discipli nary Committee failed to appreciate that the appellant had only acted in responsible manner expected of an advocate engaged by a client.
The learned counsel has contended that it was nobody 's case that the appellant had floated a pro posal to advance loan and he had given any advertisement in response to which the complainant had come in contact of Shri balubhai Modi.
It is an admitted case that in response to an advertisement by Shri Balubhai Modi, the complainant had approached Shri Balubhai Modi for loan and only then he was referred to the appellant by Shri Modi because the appellant was engaged by Shri Modi as a counsel.
Although the appellant had always dealt with the complainant only in his capacity as an advocate engaged by Shri Modi, a false complaint was lodged by the complainant that the appellant had assured him and represented him that he himself was a financier and he should pay the amount in question to Shri Balubhai Modi and also to the appellant towards legal ex penses and other expenses so that loan for Rs.7 lakhs would be advanced to him without delay.
Such case, according to the learned counsel, could not be established by any corrob orative evidence but has been accepted by the Disciplinary committee on mere surmise and conjecture.
We are, however, unable to accept the said contention of the learned counsel.
We have carefully considered the materials on record and the reasonings of the Disciplinary Committee in the impugned judgment and we are unable to hold that the findings of the Disciplinary committee are outcome of any closed mind or bias on the part of the committee and/or findings of the Committee really lay in the realm of surmise and conjecture.
We have already indicated the anxiety of the Disciplinary Committee to dispassionately assess the facts of the case 703 without being influenced by any observation of the High Court of Bombay.
The Committee was alive to various aspects of the case and has taken care in meticulously scrutinising and analysing the evidence on record and the materials and the Committee has based its finding by giving cogent reasons and the inferences drawn from the established facts also appear to us quite reasonable.
It may be indicated at this stage that Shri Balubhai Modi had died during the pendency of the proceedings before the Disciplinary Committee of the Bar Council of India and there was no occasion to proceed further with the criminal proceeding initiated against him and/or to examine him in the instant case.
It is always permissible to draw reasonable inference from the facts established in a proceeding and such reasonable inference cannot be termed as finding based on surmises and conjec tures.
There is no doubt that in any proceeding, judicial or quasi judicial.
there is requirement of proof and such requirement cannot be substituted by surmise and conjecture.
But proof may be established directly on the basis of the evidence adduced in the proceeding or the allegation of fact may be established by drawing reasonable inferences from other facts established by evidence.
In the instant case, the committee, in our view, has referred to the admitted facts and also the facts established in evidence and on a proper analysis of the facts so established and/or admitted it has drawn reasonable inference .
The Disciplinary Commit tee deserves commendation in disposing of the complainant 's case fairly and dispassionately.
In the matter of imposition of punishment, the Disciplinary Committee has referred to the relevant decisions of this Court imposed the penalty by recording good reasons for the same.
We are not oblivious of the fact that a member of legal profession should not be permitted to be exposed to the hazards of false and malicious allegation against such member and extreme care and caution is required to be taken in dealing with the case of allegation of unfair and improp er conduct on the part of a member of legal profession.
There is no manner of doubt that the impugned decision of Disciplinary Committee has a very serious implication on the reputation and standing of the appellant in the society and to the members of his family.
friends and relatives.
The im pugned decision has also a serious bearing on the profes sional career of the appellant and avocation of life in future.
But giving out anxious thought and consideration in the matter we have not been able to come to the finding that the impugned order was improper and unjust and the findings 704 are not tenable law and/or the decision has resulted in a failure of justice to the appellant.
During the course of arguments before us, we had pointedly asked the learned counsel for the appellant to show us any material on record that in any other case on the advice tendered by the appel lant any loan was in fact given by Mr. Balu Bhai Modi in order to dispel the inference that the appellant was not a member of the racket and was only discharging his profes sional duty.
The learned counsel for the appellant was unable to show any evidence worth the name to prove the innocence of the appellant.
The evidence of many other applicants seeking loan shows that they were also duped and met the same fate as the complainant ' speaks volumes against the conduct of the appellant.
An advocate indulging in such nefarious activities is not entitled to continue as a member of legal profession which is based on the implicit faith and confi dence in the mind of the client.
From a perusal of the entire evidence placed on record and read before us, leads us to the irresistible conclusion that the appellant was not only having full knowledge about the racket but was also active member in the complicity of such racket and was get ting substantial financial advantage.
The appellant was not a silent spectator merely given his legal advice, but was an important link in the modus operandi of running a racket by Balu Bhai Modi.
It is really unfortunate that a member of a legal profession has indulged in fraudulent activities in a calculated manner for financial gain at the cost of an innocent person.
To say the least, an advocate enrolled under the , having a licence to represent the case of litigants is expected to maintain a high stand ard of morality and un impeachable sense of legal and ethi cal propriety.
It is not the case of a lapse to take appro priate steps by an Advocate and/or a case of negligence in discharging the duties so that any lenient view may be taken against the concerned advocate.
The concerned advocate has not only misused the trust reposed in him but has played an active part in defrauding or cheating the complainant who on the basis of the false representation of the concerned advocate had to part with substantial amount to his serious loss and prejudice.
In such facts and circumstances of the case, we do not find any reason to reduce the punishment imposed on the appellant.
This appeal, therefore, fails and is dismissed with costs.
| The appellant was an Advocate practising in Bombay.
Respondent No.1 (the complainant) made a complaint to the Bar Council of Maharashtra alleging professional misconduct against the appellant.
His case was that he was a proprietor of a firm engaged in a business of manufacturing.
He was in need of financial accommodation and a financier impressed upon him that on examination of his papers by a solicitors ' firm run by the appellant, he would be given loan.
He was also told that the appellant was also one of the investors.
The complainant on such representation agreed to get loan through the financier.
On inspection of properties of the complainant the financier told him that a loan upto Rs.7 lakh would be advanced to him provided he would pay at the rate of 5 1/2% on the advance of amount of loan towards legal and other expenses.
In a meeting held at the residence of the appellant in connection with the proposed loan the appellant told the complainant that he was an advocate of a certain firm and he worked only for the genuine financiers and would look to the interests of the loan seekers.
He also told that he was himself a member of the internal group of the financiers.
The appellant induced the complainant to part with certain money for legal expenses and in formed him 688 that out of 5 1/2% of the amount of loan required to be paid by him by way of legal expenses the appellant would keep 3 1/2% for the stamp duty payable to the Government.
He also told that the disbursement could be expedited only if the complainant paid cash to the financier before certain date.
On the stipulated date the complainant paid RS.25,000 to the financier.
He also paid the balance of Rs.13,500 to the appellant.
Thereafter the appellant made all attempts to delay the disbursement and asked the complainant to pay Rs.10,000 more which the latter paid.
However, the proposed loan was not disbursed and instead of it, the financier made a complaint against the complainant in the Social Security Branch.
The complainant made a complainant to the CID Branch of Bombay Police against the financier and the appellant.
The financier was chargesheeted.
On the advice of the police the complainant made an application to the Maharashtra Bar Council.
He also alleged that the appellant had indulged in fraudulent activities in respect of other persons and at tached a list of witnesses to the complaint.
The appellant challenged the proceedings before the High Court, but the Write Petition was dismissed and the proceedings before the State Bar Council continued.
The complaint before the State Bar Council could not be disposed of within the statutory period and the case stood transferred to the Disciplinary Committee of the Bar Council of India.
Meanwhile the financier died.
The Disciplinary Committee analysing the evidences dispassionately and considering the affidavits filed on behalf of both the parties as also the affidavits filed by some witnesses alleging that they had also become the victim of fraudulent action and cheating by the financier and the appellant, held that there was a racket for defrauding and/or cheating to aspirant loanees, and the financier and the appellant advocate were parties to such racket; that the appellant in connivance with the financier defrauded the complainant in receiving large sum of money on the pretext of legal expenses and other incidental costs for advancing the proposed loan to the complainant, but such loan was never advanced to him; that the appellant had received Rs.10,000 from the complainant; that a case of professional misconduct under section 35 of the had been established against the appellant.
The Committee, therefore, ordered the name of the appellant to be removed from the State Roll of the Bar Council of Maharashtra.
689 In the appeal to this Court,it was contended on behalf of the appellant that he had no role in the matter of alleged fraudulent activities of cheating by the financier and/or some other persons as he was engaged by the financier for preparing the document of mortgage after inspection of records of the complainant for advancing the proposed loan and he had only rendered the professional service as an advocate in a fair and proper manner; that the appellant had only received his professional fees from the financier and did not receive any amount from the complainant; that the finding of the Disciplinary Committee that the appellant had been a member of the racket and had taken part in defrauding and cheating the complainant was based on surmises and conjectures; and that the Disciplinary Committee committed a grave error in law in considering the evidence of witnesses who were total strangers to the case of alleged fraud and cheating.
Dismissing the appeal, this court, HELD: 1.1.
The appellant advocate has not only misused the trust reposed in him but has played an active part in defrauding or cheating the complainant who on the basis of the false representation of the appellant had to part with substantial amount to his serious loss and prejudice.
[p.704 E G] 1.2 A perusal of the entire evidence placed on record leads to the irresistible conclusion that the appellant was not only having full knowledge about the racket but was also an active member of such racket and was getting substantial financial advantage.
The appellant was not a silent spectator merely giving his legal advice, but was an important link in the modus operandi of running a racket by the financier.
[p. 704 C D] 1.3.
The evidence of many other applicants seeking loan showing that they were also duped and met the same fate as the complainant, speaks volumes against the conduct of the appellant.
[p. 704 B] 1.4.
An advocate indulging in such nefarious activities is not entitled to continue as a member of legal profession which is based on the implicit faith and confidence in the mind of the client.
[p. 704 B C] 690 1.5.
It is not the case of a lapse to take appropriate steps by and advocate and/or a case of negligence in discharging the duties so that any lenient view may be taken against the concerned advocate.
[p. An advocate enrolled under the , having a licence to represent the case of litigants is expected to maintain a high standard of morality and unimpeachable sense of legal and ethical propriety.
[p.704E] 2.
The complainant specifically alleged that there was a racket to which the appellant and the financier were parties.
He indicated the modus operandi by which he became victim of the fraudulent activities of the said members of the racket.
To bring home the case of racket, the deposi tions of other persons who had also approached the financier for advancement of loan and had been dealt with by him and the appellant in similar manner and though they had to part with substantial amount towards legal and other expenses for getting the proposed loan, such loan had not been ultimately sanctioned to them, became relevant and necessary to be looked into.
[p. 701 B D] 3.1.
It is always permissible to draw reasonable infer ence from the facts established in a proceeding and such reasonable inference cannot be termed as finding based on surmises and conjectures.
There is no manner of doubt that in any proceeding, judicial or quasi judicial, there is requirement of proof and such requirement cannot be substi tuted by surmise and conjecture.
But proof may be estab lished directly on the basis of the evidence adduced in the proceeding or the allegation of fact may be established by drawing reasonable inferences from other facts established by evidence.
[p. 703 B D] 3.2.
In the instant case, the Committee, has referred to the admitted facts and also the facts established in evidence and on a proper analysis of the facts so established and/or admitted, it has drawn reasonable inference.
The Committee was alive to various aspects of the case and has taken care in meticulously scrutinising and analysing the evidence on record and the materials, and the Committee has based its finding by giving cogent reasons and the inferences drawn from the established facts also appear quite reasonable.
The Disciplinary Commit tee deserves commendation in disposing of the complainant 's case fairly and dispassionately.
In the matter of imposition of punishment, the Disciplinary Committee 691 has referred to the relevant decisions of this Court and has imposed the penalty by recording good reasons for the same.
[p.703 A; D E] Re: P an Advocate ; and M. Veerbhadra Rao vs Tak Chand, ; , referred to.
|
Appeal No. 104[NT] of 1979.
From the Judgment and Order dated 3.10.1978 of the Punjab and Haryana High Court in 1.]".
Reference No. 60 of 1974.
191 WITH Civil Appeal Nos. 1801 to 1804/89 & 6254 (NT)/90 Dr. V.Gauri Shankar, S.Rajappa, Ms. A. Subhashini and Manoj Arora for the Appellants.
T.A.Ramaehandran and Ms. Janki Ramachandran for the Respond ents.
The Judgement of the Court was delivered by RANGANATHAN, J. These appeals involve a common question and hence can be disposed of by a common order.
The respond ent assessees are steel rolling mills engaged in the manu facture of M.S. (Mild Steel) rods, bars or rounds.
The question for consideration is whether they are entitled to a higher rate of development rebate specified in s.33(1) (b) (B) (i)(a) and to relief under s.80 I (as it stood at the relevant time) of the Income tax Act, 1961.
The answer to this question entirely turns on whether the assessees are engaged in the manufacture or production of any one or more of the articles or things specified in the relevant Schedule to the Act.
They claim that the articles manufactured by them fail under item 1 of the list of articles and things set out in the relevant Schedule which reads: "Iron and steel (Metal), ferro alloys and special steels".
This contention was rejected by Income Tax Officer but has been accepted by the Appellate Assistant Commissioner, the Tribunal and the High Court.
Hence these appeals by the Revenue.
It has been brought to our notice that there is a dif ference of judicial opinion on this issue among the High Courts.
The Calcutta High court in Indian Steel and Wire Products Ltd. vs Commissioner of Income Tax, , and the Allahabad High Court in Commissioner of Income Tax vs Kay Charan Pvt. Ltd., have answered the question in the negative and against the assessee.
On the other hand, the Kerala High Court in C.I. T.v.
Mittal Steel Re rolling and Allied Industries (1 ') Ltd. and CIT vs West India Steel Co. Ltd. , FB.
The Madras High Court in the judgment under appeal, reported as Addl.
Commissioner of Income tax v, Trich Steel Rollling Mills Ltd., , the Punjab & Haryana High Court in C.I.T. vs Krishna Copper and Steel Rolling Mills, (1979) 119 I.T.R. 256; (hereunder appeal) C.I.T.v.
Ludhiana Steel Rolling Mills, ; and the Allahabad High Court in Singh Engineering Works Pvt. Ltd. vs C.I.T., have taken a view in favour of the assessee.
This controversy needs to be resolved.
192 It may be useful, at this stage, to refer to three decisions of this Court, the decisions or observations in which have influenced the High court.
(1) The first of these is State of Madhya Bharat vs Hiralal, (1966) 17 S.T.C. 313.
This case arose under the Madhya Bharat Sales Tax Act.
Under section 5 of the said Act, two notifications had been issued.
The first notifica tion exempted from sales tax certain listed goods, one of which was "iron and steel", while the second notification specified the rates and stages lot levy of sales tax on a number of articles, one of which was"goods prepared from any metal other than gold and silver".
Hiralal, who owned a re rolling mill, purchased scrap iron locally and imported iron plates from outside and, after converting them into bars, flats and plates in his mills, sold them in the market.
He claimed exemption under the first of the above notifications.
This claim was upheld by this Court The judgment of the Court is a short one, the relevant paragraph of which reads as follows: "Learned cournsel for the State contends that the expression "iron and steel means iron and steel in the original condition and not iron and steel in the shape of bars, flats and plates.
In our view, this contention is not sound.
A comparison of the said two Notifica tions brings out the distinction between raw materials of iron and steel and the goods prepared from iron and steel; while the former is exempted from tax, the latter is taxed.
Therefore, iron and steel used as raw material for manufacturing other goods are exempted from taxation.
So long as iron and steel continue to be raw materials, they enjoy the exemption.
Scrap iron purchased by the re spondent was merely re rolled into bars, flats and plates.
They were processed for conven ience of sale.
The raw material were only re rolled to give them attractive and acceptable forms.
They did not in the process lose their character as iron and steel.
The dealer sold "iron and steel" in the shape of bars, flats and plates and the customer purchased "iron and steel" in that shape.
We, therefore, hold that the bars, flats and plates sold by the assessee are iron and steel exempted under the Notification.
The conclusion arrived at by the High Court is correct." (2) The second decision referred to is Devidass Gopal Krishnan vs State of Punjab, (1967) 20 S.T.C. 430.
Here, one batch of appellants before the Court carried on business in rolling steel.
They purchased steel scrap and steel ingots and converted them into rolled steel sections.
They 193 contended that the levy of a purchase tax on the steel scrap and ingots side by side with a sales tax on the rolled steel sections constituted double taxation of the same commodity contrary to the provision of section 15 of the .
This contention was rejected.
It was held that the process by which the steel scrap (or ingot) lost its identity and became rolled steel sections was a process of manufacture and that, since the goods purchased and those sold were different, no question of double taxation arose: (3) The third decision, Hindustan Aluminium Corporation Ltd. vs State of U.P., (1981) 48 S.T.C. 411, involved the interpretation of certain notifications issued under section 3A(2) of the U.P. Sales Tax Act, 1948.
The two notifications with which the Court was concerned prescribed rates of tax at which certain goods were taxable.
item no.6 in the notification of 1973 described the goods as: "All kinds of minerals and ores and alloys except copper, tin, zinc, nickel or alloy of these metals only.
" Item No. 1 of the second notification read: All kinds of minerals, ores, metals, and alloys including sheets and circles used in the manufacture of brass wares and scraps containing only any of the metals, copper, tin, zinc, or nickel except those included in any other notification 'issued under the Act.
" The appellant Corporation, which carried on the business of manufacturing and dealing in aluminium metal and vations aluminium products, claimed the benefit of these notifica tions for its products.
The High Court held that, while aluminium ingots, wire bars and billets would fall in the category of "metals and alloys", rolled products prepared by rolling ingots and extrusions manufactured from billets must be regarded as different commercial commodities from the ingots and billets and therefore outside the category of "metals and alloys".
Such rolled products included plates, coils, sheets, circles and strips.
The extrusions were manufactured in the shape of bars, rods, structurals, tubes, angles, channels and different types of sections.
This conclusion was upheld by this Court The Court referred to the history of the notifications issued by the State Govern ment from time to time in this behalf and came to the con clusion that the inference was irresistible that when such a notification referred to a metal, it referred to the metal in the primary or original form in which it was saleable and not to any subsequently fabricated form.
The Court rejected the contention that the word "all" used in the notification in referring to 194 "all kinds of minerals, ores, metals and alloys" should be given its fullest amplitude so as to include even subse quently fabricated forms of the metal.
The Court felt that this construction was inconsistent with the scheme of the earlier notifications to which reference had been made and observed: "While broadly a metal in its primary form and a metal in its subsequently fabricated form may be said to belong to the same genus, the distinction made between the two constitutes a dichotomy of direct significance to the con troversy before US." After referring to its earlier decisions in State of M.P.v.
Hiralal, (1966) 17 S.T.C. 313, Devi Dass Gopal Krish nan vs The State of Punjab, (1967) 20 S.T.C. 430 and State of Tamil Nadu vs Pyarelal Malhotra, (1976) 37 S.T.C. 3 19, the Court concluded: "We are of the definite opinion that the only interpretation possible is that aluminium rolled products and extrusions are regarded as distinct commercial items from aluminium ingots and billets in the notification issued under the U.P. Sales Tax Act.
" The above decisions were rendered in the context of the Sales Tax Acts and notifications thereunder.
They, however, bring out two points.
First, they make it clear that there is a real and clear dichotomy between "iron and steel" and "products or goods made of iron and steel" and, indeed, between any metal as such and the products or goods fabri cated therefrom.
This is also clear from the various entries in the relevant schedules under the Income Tax Act itself.
For instance, item 2 in the List is: "Aluminium, copper, lead and zinc (Metal).
While ingots and sheets manufactured from scrap have been held to fall under item 2, finished commercial products like alumimum pigments, aluminium arti cles and aluminium caps have been held to tall outside it.
See C.I. T.v.
Rashtriya Metal Industries Ltd., a case under the ; Indian Aluminium Co. Ltd. vs CI.T., ; (1983)140 I.T.R 114 (Cal); Jeewanlal, (1929)Ltd.
vs CI.T. and CI.T. vs Fitwell Caps P. Ltd. 'So also, item 7 refers, inter alia, to "cables" which is only a type of thick copper wire used for the transmission of electricity.
It has been held that insulated copper wires of a type known as winding wires will not fall under item 7 as they are not used for the above purpose and that an industry engaged in its manufacture is not an industry eligible for the reliefs of the kind presently under consideration: See: Hindustan 195 Wire Products vs C.I.T., This deci sion is of no direct relevance here except to point out that no atttempt was made in the case to contend that they will fall under item 2 of the Schedule which covers "aluminium, copper, lead and zinc (metals)".
Item 11 in the Schedule refers to "steel castings and forgings and malleable iron and steel castings".
The expressions "casting" and "forging" refer to processes used in the manufacture or production of articles of iron and steel and also mean, particularly when used in the plural, the articles produced by the process (vide: Glossary of Tenns published by the Bureau of Indian Standards and relating to Iron and Steel: , "Forging").
Item 21 which refers to "Seamless Tubes" also furnishes a similar indication.
There is, therefore, a distinction between the article or thing referred to in the Schedule as "iron and steel (metal)" and articles or things manufactured from "iron and steel".
Secondly, the decision in State of MB.
vs Hiralal, (1966) 17 S.T.C. 313 shows that even the expression "iron and steel" which is wider than the expression we are concerned with as it is not further qualified by the word "metal" was held to mean iron and steel used as raw material for the manufacture of other goods.
The Court held that bars, flats and plates only represented such raw material in attractive and acceptable forms.
Sri Gauri Shankar, for the Revenue, contended that the use of the appellation "metal" in the entry we are concerned with further restricts the nature of the qualify ing industry but we are not inclined to agree.
Obviously it is not used to denote the metal in its pristine form as an ore or as an extraction from the ore.
In the context of a manufacturing industry it is used, we think, for emphasising the distinction between the metal used as a raw material in the manufacture of various articles and the commercial articles made therefrom.
We would, therefore, attach the same meaning to the expression as Hiralal (supra) did.
In that case, the Court held that the bars, flats and pieces turned out by the assessee from the scrap metal were not products manufactured from the raw material but only repre sented the raw material rolled out in attractive and accept able forms.
Per contra, in Devidass Gopal Krishnan, [1962] 20 S.T.C. 430 rolled steel sections were held to be products manufactured from steel scrap and ingots.
But that will not be conclusive here because the relevant provision here contemplates something manufactured out of iron ore or iron scrap.
The question really therefore is: having regard to the nature of the iron and steel industry and its processes, do M.S. bars, rods and rounds represent the raw material for the manufacture of the articles of iron and steel or are they themselves articles made of iron and steel? For deciding the above issue, learned counsel on both sides have placed before us a good deal of literature about the iron and steel industry as well as the glossary of terms used therein: 196 (a) A succinct summary of the processes involved, illus trated by a figurative chart, is given in the very first page of "The Making, Shaping and Treating of Steel", edited by Lankford and others (10th Edition),.
page 1.
It is unnec essary to set out the process in detail here except to note that molten pig iron coming out of the blast furnace and iron scrap are fed into steel making furnaces, wherefrom by a basic oxygen process or electric process or open hearth process, molten steel is ladled out into moulds to form ingots.
There are three stages in the manufacture of the steel: (i) the first stage when ingots are obtained by Lapping and then teeming the molten steel into rectangular moulds; (ii) the second stage where semi finished steel is cast in the form of blooms, billets and slabs by reheating the ingots to an appro priate temperature and rolling or forging them into shapes; and (iii) the production from blooms, billets and slabs again by process of hot rolling, cold rolling, forging, extruding, drawing etc. of finished steel products; bars, plates, structural shapes, rails, wire, tubular products, coated and uncoated sheet steel etc.
all in the many forms required by users of steel.
The third of the processes involves heating the blooms, billets and slabs in heating furnaces and then processing them through various types of mills: (i) Structural mills : for obtaining structural shapes like beams, angles, tees, zees, channels, piling etc.
(ii) Rail mills : for producing standard rails, crane rails and joint bars; (iii) Bar mills : for producing bars which may be flat, round, halfround, triangular, square, haxagonal or octagonal; (iv) Seamless pile mills: for producing pipes and tubes and skelp mills and other tubular products; continuous Butt weld pipe mills (v) Plate mills : for manufacturing plates; and (vi) Hot strip mills : for producing sheets, strips and coils.
and cold reduction mills 197 (b)The Explanatory Not to Chapter 72 (iron and Steel) of the Harmonised Commodity Description and Coding Nomenclature (HCCN) are also on the same lines.
The chapter covers the ferrous metals (pig iron, spilgeleisen, ferro alloys and other materials) as well as certain products of the iron and steel industry (ingots and other primary products and the principal products derived therefrom) of iron or non alloy steel, of stainless steel and of other alloy steel.
It is pointed out that iron ore, waste, scrap metal, pre reduced iron ore and other ferrous waste is converted by reduction in blast furnaces or electric furnaces into pig iron or sponge iron or lump iron.
Electrolysis or other chemical processes are used only when iron of exceptional purity is required for special use.
Most of the pig iron is converted into steel in steel works but some are used in foundries (iron works) for manufacture of ingot moulds, cast iron tubes and pipes and castings and the remainder are cost into the forms of pigs or blocks, m casting machines or sand beds or produced in the form of irregularly shaped lumps (plate iron) or granulated.
Pig iron, cast iron, sponge iron waste and scrap constitute the primary steel making materials.
Steel making processes are either pneumatic or hearth proc esses and the steel produced,by these and other processes are classified in various ways.
Although molten steel may be cast (in foundries) into its final shape in,_ moulds (steel castings), most molten steel is cast into ingots in moulds.
_At the casting, pouring and solidification stages, steel is classified as 'rimming ' or effervescent, 'killed ' or:non effervescent and 'semi killed ' or balanced steel.
After they have solidified and their temperature has been equalised, the ingots are rolled into semi finished productrs (blooms, billets, rounds, slabs, sheet bars) on primary cogging or roughing mills (blooming, slabbing etc.) or converted by drop hammer or on a forging press into semi finished forg ings.
Semi finished products and, in certain cases, ingots are subsequently converted into finished products.
These may be flat products (such as wide flats, universal plates, wild coil, sheets, plates and strip) or long products (such as bars and rods, hot rolled, in irregularly wound coils, other bars, and rods, angles, shapes, sections and wire).
These products are obtained by plastic deformation, hot or cold.
The hot processes are hot rolling, forging or hot drawing and the cold processes.
, are cold rolling, extrusion, wire drawing, bright drawing, centreless grinding or precision turning.
The chapter proceeds to classify the various products in considerable detail. (c) Reference has also been made to the tariff classi fications under the and the Central Excise Tariff Act, 1975.
Our attention was also invited to the Specification and Glossary prepared for the Bureau of Indian Standards by expert Products Sectional Committees on the subject of Iron and Steel.
Extracts were also furnished 198 from the New Encyclopaedia Brittanica Macropaedia (15th Edn., Vol.21), Webster 's Third New International Dictionary, the Encyclopaedia of Chemical Technology by Kirk Othmer (3rd en., Vol.21) and a book on small scale steel making by R.D. Walker.
We do not, however, propose to discuss these ex tracts and definitions as we do not think they can assist us in coming to nay conclusion on the issue before us.
Basically the argument of counsel proceed on the following lines: Sri Ramachandran, learned counsel appearing for the assessee, contends that, in the steel making industry, the manufacture of ingots, billets, blooms, etc. represents only an intermediate stage at which the iron and steel metal becomes semi finished steel.
The semi finished steel is converted into plates, bars or rods which are described as "finished steels.
According to him, the bars, rods and rounds continue to be iron and steel_ m a finished form.
It is only finished steel that is subsequently used to manufac ture, by various processes such as rolling, cutting, shear ing, forging, hammering and so on into various kinds of products, which can be described as products of iron and steel in contrast with 'iron and steel (metal) ', the item covered under the relevant entry of the schedules.
He also draws our attention to a decision of the Calcutta High Court in Indian Aluminium Co. vs CIT, where, while following the earlier decision in Indian Steel and Wire Products Ltd. vs CIT, (1977)108 I.T.R. 802, the court observed that there is really no divergence in view between the Calcutta and Kerala views and that the real question for consideration in each case is whether the articles in ques tion constitute finished products and represent articles of iron and steel or merely represent the raw material viz. iron and steel (metal) in a different form and shape.
On the other hand, Dr. Gauri Shankar, learned counsel for the Department, submits that iron and steel ceases to be a metal when it comes out of the furnace in the primary steel mills in the form of ingots.
At the best, the next stage at which the ingots become semi finished products in the shape of billets, blooms and slabs may also be said only to convert the raw material into a different form or shape.
But, he says, by no stretch of imagination can the next stage during which the billets, blooms and slabs are heated/and passed through various types of mills enumerated earlier be considered as involving not any manufacture but only a conversion of the raw material into other forms or other shapes.
According to the learned counsel, the expres sion "iron and steel (metal)" only comprehends the iron and steel as it emerges in the form of billets, blooms and slabs from the steel mills and that all subsequent products wheth er in the form of 199 rails, rods (including wire rods), bars, angles, channels, tees, zees, pipes, tubes, sheets, strips, plates and coils turned out by the various other types of mills would consti tute articles made of iron and steel.
He also invited our attention to a clarification by the Central Board of Taxes, in response to a query from the Federation of Indian Cham bers of Commerce and Industry, that "rolling mills making bars and rods are not covered by item 1 of the Fifth Sched ule".
We have considered the arguments addressed by both counsel.
In our opinion, Sri Ramachandran is right in con tending that in interpreting the provisions under considera tion, we would do well to keep in mind the background in which concessions to certain basic industries were intro duced in the Income tax Act.
The process started with the introduction of a rebate for exporters under the Finance Act of 1963 which continued till 1966.
The Budget speech of the Finance Minister vide: (1963) 48 I.T.R. (St.) 34 indicates that the incentive was granted to assessees engaged in the manufacture of any articles in an industry specified in the First Schedule to the Industries (Development & Regulation) Act, 1951.
Item 1 of the said Schedule reads: "1.
Metallurgical Industries: A. Ferrous: (1) Iron and Steel (Metal) (2) Feno alloys (3) Iron and Steel castings and forgings (4) Iron and Steel structurals (5) Iron and Steel pipes (6) Special Steels (7) Other products of iron and steel B. Non ferrous (1) Precious metals including Gold and Silver, and their alloys; (IA) Other non ferrous metals and their alloys; (2) Semi manufactures and manufactures.
Again, in 1964,hen the Finance Act of 1964 decided to grant a rebate in the corporation tax payable by companies in order to encourage development of certain industries which occupy an important place in our economy, the list of indus tries named in the Finance Act was similar to and included many of the items, including items 1 to 3, of the list we are concerned with now.
The reliefs were given to strengthen the reserves and augment the capacity of the corporate sector to develop.
This process was 200 continued under the Finance Act of 1965: Vide, (1965) 55 I.T.R. (St.) 57 and 122 which introduced a higher develop ment rebate for machinery or plant installed for the pur poses of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule.
The Finance Act of 1966 substituted a new concession to these priority industries basic to the commercial development of the community.
This historical background reflects the intention of the legislature to grant progressively certain exemptions, reliefs or conces sions for certain types of industries which were considered important for na tional development / The industry in iron and steel and other metals figures in all these lists_) The only relevance of this background to the issue before us is that it gives an indication that the incentive, concession or relief granted under these provi sions has to be construed in a broad and comprehensive manner so as to cover all manufacturing activities legiti mately pertaining to specified core industry with no limita tion save what may be called for by the wording of a partic ular entry.
So far as items 1 and 2 are concerned, as earli er pointed out, the wording points to a distinction between the metal which is used as the base and other articles manufactured therefrom.
We have earlier pointed out that pig iron and iron scrap are fed into furnaces to produce ingots, billets and blooms.
But both are iron and steel in different form, the latter being referred to as "semi finished steel".
Likewise, we think, the bars, rods, rounds, wife rods and the like constitute the second stage in which one gets only "finished" forms of iron and steel.
Having regard to the nature and weight of the metal, it has to be "finished" to assume these forms before manufacturers of iron and steel articles can take over and proceed to manufacture articles from them by drawing wires or converting them into rails or shaping them into tees, zees, pipes, tubes and the like see CI.T. vs Tensile Steel Ltd., or, again, producing articles of iron like ploughs, shovels, pickaxes, lathes, blowers, surface guiders and drills as in C.I.T. vs Ludhiana Steel Rolling Mills, (1989) 180 I.T.R. 155 (P&H).
Whether the article produced is the raw material or an article made of iron and steel has to be decided on the basis of the nature of the article and not the kind of mill which turns it out.
It is significant that these items do not draw distinction between basic steel mills, integrated steel mills and the various other types of mills that are used in the industry which have been referred to earlier.
The Board 's clarification, referred by Dr. Gaurishankar, that the machinery and plant in "rolling mills" will not be eligible for the higher development rebate would not, there fore, seem to be justified if it intends to draw a distinc tion between the same machinery and plant when used in rolling mills and when used in other mills in the industry.
If machinery and plant installed in steel mills where the process 201 includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligi ble for the higher development rebate, it is difficult to see why the same plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of development rebate.
In considering the issue before us, we should not be classifications of stages of manufacture that may be carried away by classifi cation of stages of manufacture that may berelevant forother purposes.
We would like to emphasise, at the cost ofrepeti tion, that what we should examine is not the nature of the mill which yeilds the article but the nature of the article or thing that is manufactured and ask ourselves the question whether such article or thing can be considered as raw material for manufactrure of other articles made of the metal or is it itself an article made of the metal.
On this issue our view is, as we have already stated, that the goods in the present case fall in the former category.
We think Sri Ramachandran is right in pointing out that the mild steel rods, bars or rounds which are manufactured by the assessees here are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up articles of iron and steel such as grills or windows by applying to them processes such as cutting or turning.
The rod or the wire rods (with which some of the decisions were concerned) are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
We do not think much assistance can be derived for the interpretation of the provision before us from the Central Excise & Salt Act or the various classifications statutorily or commercially drawn up for that purpose.
They are more refined and intricate classifications for the purposes of excise duty and cannot be imported into the present context.
As we have mentioned earlier, some guidance as to inter pretation of item 1 to the schedule can be derived from item no.11, which refers to "forgings and castings".
These ex pressions obviously refer to articles obtained from the raw material iron and steel by forging and casting.
The argument in some of the decisions referred to before us that item No. 1 should be interpreted strictly because of the existence of item No. 11 seems to proceed on an erroneous basis.
It would be more appropriate to say that forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definitely intended to give relief even in respect of such articles, item 11 and (also item 21) were introduced.
In fact, there is some force in the contention urged on behalf of the assessees that even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fall under the category of "forg ings and castings" referred to in item 11.
We do not, howev er, wish to express any 202 concluded opinion on this aspect because item No. 11 was not relied upon by the assessee at any earlier stage.
In C.A. No. 1404/79, the assessee, Krishna Copper and Steel Rolling Mills, manufactured iron rods and girders out of scrap metal initially converted into billets.
Before the High Court the argument seems principally to have turned on the question whether an assessee manufacturing these arti cles out of iron scrap would be entitled to the higher development rebate.
The assessee cited a circular of the Board that, under item 2 of the schedule, the higher devel opment rebate would be available to an assessee who manufac tured articles from aluminium scrap [vide, circular no.25 D (XIX 16) dated 10th October, 1966].
The High Court, on this basis, answered the question by saying that the assessee before it was also entitled to the higher development rebate though it produced articles only from iron scrap.
This does not really answer the real question but, for the reasons we have already given, we agree with the conclusion drawn by the High Court.
For the reasons stated above we are of the opinion that the view taken by the High Courts in the present cases does not call for any interference.
The appeals, therefore, fail and are dismissed.
But in the circumstances we make no order regarding costs.
V.P.R. Appeal dismissed.
201 includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligi ble for the higher development rebate, it is difficult to see why the same plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of development rebate.
In considering the issue before us, we should not be carried away classi fications of stages of manufacture that may be relevant for other purposes.
We would like to emphasise, at the cost of repetition, that what we should examine is not the nature of the mill which yeilds the article but the nature of the article or thing that is manufactured and ask ourselves the question whether such article or thing can be considered as raw material for manufactrure of other articles made of the metal or is it itself an article made of the metal.
On this issue our view is, as we have already stated, that the goods in the present case fall in the former category.
We think Sri Ramachandran is right in pointing out that the mild steel rods, bars or rounds which are manufactured by the assessees here are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up articles of iron and steel such as grills or windows by applying to them processes such as cutting or turning.
The rod or the wire rods (with which some of the decisions were concerned) are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
We do not think much assistance can be derived for the interpretation of the provision before us from the Central Excise & Salt Act or the various classifications statutorily or commercially drawn up for that purpose.
They are more refined and intricate classifications for the purposes of excise duty and cannot be imported into the present context.
As we have mentioned earlier, some guidance as to inter pretation of item 1 to the schedule can be derived from item No. 11, which refers to "forgings and castings" These expressions obviously refer to articles obtained from the raw material iron and steel by forging and casting.
The argument in some of the decisions referred to before us that item No. 1 should be interpreted strictly because of the existence of item No. 11 seems to proceed on an erroneous basis.
It would be more appropriate to say that forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definitely intended to give relief even in respect of such articles, item 11 and (also item 21) were introduced.
In fact, there is some force in the contention urged on behalf of the assessees that even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fall under the category of "forgings and castings" referred to in item 11.
We do not, however, wish to express any 202 concluded opinion on this aspect because item No. 11 was not relied upon by the assessee at any earlier stage.
In C.A. No. 1404/79, the assessee, Krishna Copper and Steel Rolling Mills, manufactured iron rods and girders out of scrap metal initially converted into billets.
Before the High Court the argument seems principally to have turned on the question whether an assessee manufacturing these arti cles out of iron scrap would be entitled to the higher development rebate.
The assessee cited a circular of the Board that, under item 2 of the schedule, the higher devel opment rebate would be available to an assessee who manufac tured articles from aluminium scrap [vide, circular no.25 D (XIX 16) dated 10 th October, 1966].
The High Court, on this basis, answered the question by saying that the assessee before it was also entitled to the higher development rebate though it produced articles only from iron scrap.
This does not really answer the real question but, for the reasons we have already given, we agree with the conclusion drawn by the High Court.
For the reasons stated above we are of the opinion that the view taken by the High Courts in the present cases does not call for any interference.
The appeals, therefore, fail and are dismissed.
But in the circumstances we make no order regarding costs.
V.P.R. Appeals dismissed.
| The respondents assessees were engaged in the manufacture of mild steel rods, bars or rounds.
They claimed that as the articles manufactured by them fell under item 1 of the list set out in the Fifth Schedule, they were entitled to a higher rate of development rebate specified in section 33(1) (b) (B) (i) (a) and to relief under section 80 1 of the Income Tax Act, 1961.
The Income Tax Officer rejected the claim of the assessees, whereas the Appellate As sistant Commissioner, the Tribunal and High Court accepted their claim.
Hence the Revenue filed appeals before this Court.
The contentions of the appellant Revenue were that iron and steel ceased to be a metal when it came out of the furnace in the primary steel mills in the form of ingots.
In the next stage the ingots became semi finished products in the shape of billets, blooms and slabs.
It was said to be the stage where the raw materi als were converted into.
In different form or shape; that the expression "iron and steel (metal)" meant the iron and steel as it emerged in the form of billets, blooms and slabs from the steel mill and that all subse quent products whether in the form of rails, rods (including wire rods), bars, angles, channels, tees, sees, pipes, tubes, sheets, strips, plates and coils would constitute articles made of iron and steel, and that rolling mills making bars and rods were not covered by item 1 of the Fifth Schedule.
188 On the other hand, the respondents asses sees contended that in the steel industry the manufacture of ingots, billets, blooms, etc.
represented only an intermediate stage at which the iron and steel metal became semi finished steel.
When the semi finished steel was converted into plates, bars or rods, they became finished steel.
The bars, rods and rounds, which were continued to be iron and steel in a finished form, were used to manu facture the products of iron and steel by various processes, such as, rolling, cutting, shearing, forging, hammering, etc.
and that the products of iron and steel were different from that of iron and steel (metal).
Dismissing the appeals filed by the Revenue, this court, HELD: 1.
In interpreting the provisions in S.33(1)(b)(B)(i)(a), S.80 I of the Income Tax Act, 1961, the Court would do well to keep in mind the background in which concessions to certain basic industries were introduced in the Income Tax Act.
The historical background reflects the intention of the legislature to grant progressively certain exemptions, re liefs and concessions for certain types of industries, which were considered important for national development.
The industry in iron and steel and other metals figured in all the lists.
[199 C, 200 B] 2.
The incentive concession or relief granted under the provisions has to be con strued in a broad and comprehensive manner so as to cover all manufacturing activities legitimately pertaining to the specified core industry with no limitation save what may be called for by the wording of a particular entry.
So far as items 1 and 2 are concerned, the wording points to a distinction between the metal which is used as the base and other articles manufactured therefrom.
Pig iron and iron scrap are fed into furnaces to produce ingots, billets and blooms.
But both are iron and steel in different forms, the latter being referred to as "semi finished steel".
Like wise, the bars, rods, rounds, wire rods and the like constitute the second stage in which one gets only "finished" forms of iron and steel.
Having regard to the nature and weight of the metal, it has to be "finished" to assume these forms before manufacturers of iron and steel articles can take over and proceed to manufacture articles from them by drawing wires or converting them into rails or shaping them into tees, zees, pipes, tubes and the like.
[200 C E] 3.
Whether the article produced is the raw material 01, an article made of iron and steel has to be decided on the basis of the 189 nature of the article and not the kind of mill which turns it out.
It is significant that these items do not draw distinction between basic steel mills, integrated steel mills and the various other types of mills that are used in the industry.
[200 G] 4.
The departmental instructions that machinery and plant in "rolling mills" will not be eligible for the higher development rebate would not seem to be justified if it intends to draw a distinction between the same machinery and plant when used in rolling mills and when used in other mills in the industry.
If machinery and plant installed in steel mills where the process includes not merely the production of ingots, billets and the like but also the production of bars and rods are eligible for the higher development rebate, it is difficult to see why the same, plant and machinery, when installed in rolling mills which proceed, from the stage of ingots or billets, to manufacture bars and rods should not be eligible for the higher rate of devel opment rebate.
[200 G 201 B] 5.
In considering the issue, the court should not be carried away be classifications of stages of manufacture that may be relevant for other purposes.
What the court should examine is not the nature of the mill which yields the article but the nature of the article or thing that is manufactured and ask the question whether such articles or things can be considered as raw material for manufac ture of other articles made of the metal or is it itself an article made of the metal.
[201 B C] 6.
The goods in the present case fail in the former category.
The mild steel rods, bars or rounds which are manufactured by the asses sees are only finished forms of the metal and not articles made of iron and steel.
They only constitute raw material for putting up arti cles of iron and steel such as grills or windows by applying to them processes, such as cutting or turning.
The rod or the wire rods are likewise not products of iron and steel but only certain finished or refined forms of the metal itself.
[201 C D] 7.
Forging and castings are not covered by item 1 being articles made of iron and steel but that since the legislature definite ly intended to give relief even in respect of such articles, item 11 and also item 21 were introduced.
Even if MS steel rods, bars and rounds cannot be taken as iron and steel (metal), they would fail under the category of "forgings and castings" referred to in item 11.
[201 G H] 190 8.
The conclusion drawn by the High Court that the assessee was entitled to the higher development rebate, though, it produced arti cles only from iron scrap, does not call for any interference.
[202 C, D] C.I. T. vs Mittal Steel Re tolling and Allied Industries (P) Ltd., ; CI.
West India Steel Co. Ltd., (Kerala); Addl.
Commissioner of Income Tax vs Trichy Steel Rolling Mills Ltd., ; C.I.T.v.
Krishna Copper Steel Roll ing Mills, & Har yana); CI.T.v.
Ludhiana Steel Rolling Mills, & Haryana) and Singh Engineering Works Pvt. Ltd. vs CI.T., , approved.
Indian Steel and Wire Products Lid vs Commissioner of Income tax, and Commissioner of Income Tax vs Kay Charan Pvt. Ltd., ; over ruled.
State of Madhya Bharat vs Hira Lal, (1966) 17 STC 313 (S.C.) Devi Dass Gopal Krishnan vs State of Punjab, (1967) 20 STC 430 (SC); Hindustan A1uminium Corporation Ltd. vs State of (U.P., (1981) 48 STC 411 (S.C.) State of Tamil Nadu vs Pyarelal Malhotra, (1976) 37 STC 319 (SC); C.I.T.v.
Rashtriya Metal Industries Co. Ltd., ; Indian A1uminium Co. Ltd vs
C.I.T, Cal.
and Cal; Jeewanlal vs CI.T., ; C.I.T vs Fitwell Caps P. Ltd., ; Hindustan Wire Products vs CI.T 1 ; Indian Steel and Wire Products Lid vs C.I.T. ; C.I.T.v.
Tensile Steel Lid, and CI.
Ludhiana Steel Rolling Mills, & H) referred to.
Speci 'fication and Glossary By Expert Products Sectional Committee of Bureau of India Standards, New Encyclopedia Brittanica Macropaedia, 15th Edn. Vol.21; Websters, Third New International Dictionary; Encyclopaedia of Chemical Technology By Kirk Othmer, 3rd.
Vol.21;// Book on Small Scale Steel Making By R.D.Walker, The Budget Speech of the Finance Minister, (1968) 48 ITR [Statutes] 34; (1965) 55 ITR [Statutes] 57 and 122 referred to.
|
ivil Appeal Nos.
10574 10583 of 1983.
From the Judgment and Order dated 7.7.1980 of the Alla habad High Court in I.T.R. No. 948 of 1975.
V.Gourishanker, B.V. Desai, S.K. Aggarwal and Ms. Vinita Gharpade for the Appellants.
S.C. Manchanda, B.B.Ahuja, Manoj Arora and Ms. A. Subha shini (N.P.) for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, CJ.
Radhasoami Satsang, an assessee under the Income Tax Act in these appeals by special leave assails the decision of the Allahabad High Court on refer ence under Section 256 of the Income tax Act.
The following question had been referred by the Tribunal to the High Court: "Whether on the facts and in the circumstances of the case Tribunal is justified in holding that the income derived by the Radha Swami Satsang, a religious institution, is entitled to exemption under sections 11 and 12 of the income Tax Act, 1961 '." ' The ambit and purport of the question would not be properly appreciated unless the background is indicated.
The assessee is the Radhasoami Satsang, Agra.
This sect was founded by Swami Shiv Dayal Singh in 1861.
The tenets of this faith, inter alia, accept the position that God is represented on earth by a human being who is called the Sant Satguru.
The first of such gurus .was the thunder himself and he was popularly known as 'Soamiji Madharaj ' The second Satguru (1889 1898) was Rai 315 Bahadur Salig Ram and he was known as 'Bazoor Maharaj '.
The third sant Satguru was Pandit Brahma Shanker Misra (1898 1907) and was widely known as 'Maharaj Sahib '.
These three Satgurus have been regarded as the real exponents of the creed.
Out of donations and offerings made to the Satgurus, large funds were built up and properties were acquired over the years.
During the time of the third Satguru, in 1902, the members of the creed at a largely attended convention established a Central Council and the right, title and interest of all the properties movable and immovable which had by then been collected were vested in the Council under the directions of Maharaj Sahib.
In June, 1904 the constitution and bye laws of the Central Council of Radhasoami Satsang were drawn up in a formal way and a body by the name 'Radhasoami Satsang Trust ' was set up.
A trust deed was executed by some members of the Central Council in October, 1904.
A set of bye laws were also framed.
On the death of third Satguru which took place in Octo ber 1907, the oread split into two and came to be known as Swami Bagh Sect and the Dayal Bagh Satsangis respectively.
Disputes arose as to the management of the shrines and the administration of the properties which had vested in the trustees under the Trust Deed of 1904.
The Dayal Bagh Sat sangis claimed that all the properties were held in a trust for a public purpose of a charitable and religious nature and prayed for a decree by going to the Civil Court The litigation had started in the form of an application under section 3 of the Charitable and Religious Trusts Act, 1920 but was converted into a regular suit and eventually ended with the decision of the Privy Council in the case of Patel Chhotahhai and Ors.
vs Jnan Chandra Basic and Ors., AIR 1935 Privy Council 97.
The Judicial committee reversed the deci sion of the High Court and held that even if the trust came into existence it was difficult to hold that it was of a public, charitable or religious character as contemplated by the Charitable and Religious Trust Act, 1920.
The question of assessing the income for the first time arose in the assessment year 1937 38.
The Income Tax Officer relied upon the observations of the Privy Council and com pleted assessments for two years being 1937 38 and 1938 39 treating the then Satguru, Sri Madho Prasad Sinha as the assessee.
He was a retired Assistant Accounts Officer and was earning a pension.
His pension as also the income from the institution were tagged together for assessment.
The Appellate Assistant Commissioner confirmed the assessments.
Assessee then filed applications under section 66(2) of the Income tax Act of 1922 for reference.
The Commissioner took the view that the offerings though made to the Satgurus were not used for their personal benefit and held that even though no formal 316 trust had been created by the donors in respect of offer ings, the guru impressed the offerings with trust character at the time of receipt, and treated the offerings as held in trust.
He was, therefore, of the view that such offerings were exempt under section 4(3)(1) of the Income tax Act, 1922 and directed that the offerings be deleted from the assessment for the two years.
He accordingly held that no reference under Section 66(2) was necessary to be made.
an application under section 35 of the Act was later filed for ratification by pointing out that offerings received by the Satgurus consisted of interest income, property income, and income derived from sale of books and photographs etc.
and the same should also be excluded.
On 8.12.1945 the Commis sioner directed deletion thereof.
For the year 1939 40, the income tax Officer did not grant exemption under section 4(3)(1) of the Act but the appeal challenging the assessment was accepted by the Appel late Assistant Commissioner in September, 1947 upholding the assessee 's claim of exemption.
Nothing substantial happened until the assessment year 1963 64.
During this period refund applications of the Satsang were accepted by the department on the basis that the income was exempt and as tax had been deducted at source the same was refundable.
For the first time claim for refund in the years 1964 65, 1965 66 and 1966 67 was not allowed and the assessee was treated as an association of persons and taxed; subsequentiy for the assessment years 1966 67, 1967 68 and 1968 69 and 196970 assessments were also com pleted.
The Income tax Officer did not accept the assessee 's claim of exemption and proceeded to hold that the donations and contributions had been received voluntarily and had been limited to religious use but there was no obligation to do so.
The assessee appealed but the appellate authority upheld the assessments for the years referred to above.
The asses see then appealed to the Tribunal.
The Tribunal examined the matter from various aspects and held: "So far as the Radhasoami sect is concerned its properties were held only for the further ance of the object of the Satsang and this object was to propagate the religion known by the name of Radhasaomi.
This was a purely religious purpose as held by the Privy Council and therefore the objects of the assessee are clearly religious objects.
" While the Tribunal did not accept that the words 'held under trust ' merely meant a consideration of the factual position and that if the income had been applied for reli gious purpose it was unnecessary to find out whether in law a trust had been created or not.
But the Tribunal was of 317 the opinion that the words legal obligation were much wider and the activities of the Satsang could be brought within the purview of that expression.
It finally held that the assessee was entitled to the exemption claimed under section 11.
The High Court did not accept the conclusions of the Tribunal by heavily relying upon the revocability of the trust as clearly specified in the document and accepting the stand of the Revenue that exemption under section 11 was subject to the provisions of ss.60 to 63 of the Act and on the finding that the trust was revocable it upheld liability, Section 11(1) of the Act, as far as relevant, provides: "Subject to the provisions of sections 60 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income: (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and Co) where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of 25% of the income from such property;. " The conditions which have to be satisfied to entitle one for exemption, therefore, are: (a) the property from which the income is derived should be held under trust or other legal obligation.
(b) the property should be so held for charitable or religious purposes which enure for the benefit of the public.
It is well settled that no formal document is necessary to create a trust.
The reference itself accepts the position that the assessee is a religious institution.
There has been some amount of debate in the forums below as to whether Radha soami Satsang is a religion.
This Court in Acharya Jagdish waranand ,Avadhuta & Ors.
vs Commissioner of Police, Calcut ta & Anr.
; , while examining the claim of Anand Marg is to be treated as a separate religion indicat ed: "The words 'religious denomination ' in Article 25 of the Constitution must take their colour from the word 'religions ' and 318 this be so the expression religious denomina tion must also satisfy three conditions: (i) it must be a collection of individu als who have a system of beliefs of doctrines which they regard as conductive to their spiritual well being, that is, a common faith, (ii) common organisation; and (iii) designation by a distinctive name." In that case Anand Marg was held to be a 'religious denomination ' within the Hindu religion.
It is not necessary for us to decide whether Radhasoami Satsang is a denomina tion of the Hindu religion or not as it is sufficient for our purposes that the institution has been held to be reli gious and that aspect is no more in dispute in view of the frame of the question.
The question of assessment to income tax arose only following the decision of the Privy Council in the dispute between the two factions.
The Judicial Committee found that the properties which were the subjectmatter of the suit were acquired with the moneys presented to the Sant Satguru in the form of bhents or other contributions by the followers of the Radhasoami faith.
The Judicial Committee found that it was almost inconceivable that the followers of the faith when making their gifts to the Sant Satguru intended to create a trust within the meaning of the Act 14 of 1920 of which they, the donors and the worshippets, should be the beneficiaries.
The Privy Council further also found that it could not be said that the donors of the gifts were the authors of the alleged public trust.
The question was exam ined keeping the provisions of the 1920 Act in view.
The requirements of section 11 of the Income Tax Act are considerably different from what the Judicial Committee of the Privy Council was required to consider.
We have already pointed out that after 1907 the denomi nation got divided.
The claim of Dayalbagh group for exemp tion under the IncomeTax Act came for consideration before the Allahabad High Court in the case of The Secretary of State for India in Council vs Radha Swami ,Sat Sang, There it was found that the offerings made by the Dayalbagh Satsangis to Sahebji Maharaj and the property which had grown out of them and which admittedly stood in the name of the Sabha and the property which at all material times had stood in the name of the Sabha vested in the Sabha for the benefit of the Satsangis and Sahebji Maharaj had no beneficial or personal interest in that.
What has been found for the Dayalbagh Satsangis on this score is fully applica ble so far as the assessee is concerned, There is no dispute that the properties of the assessee are 319 also recorded in the name of the Sabha (Central Council) and there is no personal interest claimed by the Sant Satguru in such property.
Ever the years the Satguru has never claimed any title over, or beneficial interest in, the properties and they have always been utilized for the purpose of the religious community.
The test applied by the Privy council in the case of A 11 India Spinners ' Association vs Commis sioner of Income Tax.
Bombay is indeed applica ble to the facts of the present case and the result would then be in favour of the assessee.
We would like to point out that even if the trust was revocable, the property was not to go back to the Satguru on revocation.
The constitu tion and the bye laws on record indicate in clause 1(b): "1.
The constitutional powers of the Central Council Radhasoami Satsang . . . . are as below: (b) to collect, preserve and administer the properties movable and immovable that have been or may hereafter be dedicated to Radha soami Dayal or that may be acquired for or presented to the Radhasoami Satsang for the furtherance of the objects of the Satsang.
" This envisages that where the property was given to the Sant Satguru, it was intended for the common purpose of further ing the objects of the Sant Satguru and the Central Council had the authority to manage the property.
Clause 9 of the document stipulated that the properties would vest in the trust and clause 25 provided that the trust shall be revoca ble at the discretion of the Council and the trustees shall hold office at its pleasure.
Upon revocation the property was not to go back to the Satguru and at the most.
in place of the trust, the Central Council would exercise authority.
It is on record that there has been no Satguru long before the period of assessment under consideration.
As a fact, therefore, the Tribunal was justified in holding that the property was subject to a legal liability of being used for the religious or charitable purpose of the Satsang.
This aspect had not been properly highlighted before the High Court.
One of the contentions which the learned senior counsel for the assessee appellant raised at the hearing was that in the absence of any change in the circumstances, the Revenue should have felt bound by the previous decisions and no attempt should have been made to reopen the question.
He relied upon some authorities in support of his stand.
A full Bench of the Madras High Court considered this question in T.M.M Sankaralinga Nadar & Bros. & Ors, vs Commissioner of Income Tax, Madras, After dealing with the con cession the Full Bench expressed the following opinion: 320 "The principle to be deducted from these two cases is that where the question relating to assessment does not vary with the income every year but depends on the nature of the property or any other question on which the rights of the parties to be taxed are based, e.g., whether a certain property is trust property or not, it has nothing to do with the fluctua tions in the income; such questions if decided by a Court on a reference made to it would be res judicata in that the same question cannot be subsequentiy agitated.
" One of the decisions referred to by the Full Bench was the case of Hoystead &Ors.
vs Commissioner of Taxation Speaking for the Judicial Committee Lord Shaw stat ed: "Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be proper apprehension by the Court of the legal result either of the construction of the document or the weight of certain circum stances.
If this were permitted litigation would have no end, except when legal ingenuity is exhausted.
It is a principal of law that this cannot be permitted, and there is abun dant authority reiterating that principle.
Thirdly, the same principle namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed.
In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken.
" These observation were made in a case where taxation was in issue.
This Court in Parashuram Pottery Works Co. Ltd. vs Income Tax Officer, Circle 1, Ward A, Rajkot, at p. 10 stated: "At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversite as it must in other spheres of human activity.
" Assessments are certainly quasi judicial and these observations equally apply.
321 We are aware of the fact that strictly speaking resjudi cata does not apply to income tax proceedings.
Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.
On these reasonings in the absence of any material change justifying the Revenue to take a different view of the matter and if there was not change it was in support of the assessee we do not think the question should have been reopened and contrary to what had been decided by the Com missioner of Income Tax in the earlier proceedings, a dif ferent and contradictory stand should have been taken.
We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirma tive, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was enti tled to exemption under sections 11 and 12 of the Income Tax Act of 1961.
Counsel for the Revenue had told us that the facts of this case being very special nothinng should be said in a manner which would have general application.
We are inclined to accept this submission and would like to state in clear terms that the decision is confined to the facts of the case and may not be treated as an authority on aspects which have been decided for general application.
We direct the parties to bear their respective costs.
V.P.R. Appeals allowed.
| The then Satguru of the appellant Creed was assessed for the assessment years 1937 38, 1938 39 for the first time.
He was a retired Govt.
servant.
His pension as well as the income from the institution were assessed together.
On appeal, the Assistant Commissioner of Income tax confirmed the assessments made by the Income tax Officer.
The Income tax Commissioner under reference made under section 66(2) of the Income tax Act, 1922 held that the offerings made to the assessee Satguru were offerings as held in trust and same were exempted under section 4(3)(1) of the Act.
When an application under Section 35 of the Act was made for ratification, whether the offerings received by the assessee consisted of interest income, property income, and income derived from sale of books and photographs etc.
to be excluded, the Commissioner directed deletion thereof.
For the year 1939 40, though the Income tax Officer did not allow exemption u/s.4(3)(1) of the Act, the Appellate Assistant Commissioner allowed exemption.
Till 1963 64 the appellant was not taxed and its refund applications were accepted by the respondent Revenue.
For the assessment years 1964 65, 1965 66, 1966 67, 1967 68, 1968 69, 1969 70, the assessee appellant was as sessed, treating it to be an association of persons, and held that the donations and contributions received volun tarily had limited religious use.
When the appellant assesses appealed, the appellate authority upheld the assessments.
313 Against the orders of the Appellate authority the asses see appealed before the Income tax Tribunal.
The Tribunal allowing the appeals of the assessee, held that the assessee was entitled to the exemption claimed under Section 11 of the Income tax Act, 1961.
On the question, referred to the High Court by the Tribunal, "Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the income derived by the Radha Swami Satsang, a religious institution, was entitled to exemption under Sections 11 and 12 of the Income Tax Act, 1961?", the High Court answered the question in favour of the Revenuerespondent, holding that the trust deed was revocable and the conditions for exemption under Sections 11 and 12 of the Act were not satisfied.
Allowing the appeals of the assessee, this Court, HELD: 1.01.
Assessments are quasi judicial.
Each assess ment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have al lowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.
[320H, 321 A B] 1.02.
No formal document is necessary to create a trust.
The conditions which have to be satisfied to entitled one for exemption are: (a) the property from which the income is derived should be held under trust or legal obli gation, (b) the property should be so held for charitable or religious purposes which enure for the benefit of the pub lic.
[317 E G] 1.03.
The property was given to the Satguru for the common purpose of furthering the objects of the Sat Guru.
The property was therefore subject to a legal liability of being used for the religious or charitable purpose of the Satsang.
[319 E, F] 1.04.
The Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under Sections 11 and 12 of the Income Tax Act, 1961.
[321 D] Patel Chhotahhai and Ors.
Janan Chandra Bask and Ors., AIR 314 1935 Privy Council 97; Acharya Jagdish Waranand Avadhuta & Ors.
vs Commissioner of Police, Calcutta & Ant., , The Secretary of State for India in Council vs Radha Swami Sat Sang, ; All India Spinners 'Associ ation vs Commissioner of Income Tax, Bombay, ; TM.M. Sankaralinga Nadar & Bros. & Ors.
vs Commissioner of Income tax, Madras, ; Hoystead & Ors.
vs Commis sioner of Taxation, and Parashuram Pottery Works Co. Ltd. vs Income tax Officer, Circle 1, Ward A Rajkot, at p.10, referred to.
|
Criminal Appeal No. 710 of 1991.
From the Judgment and Order dated 29.1. 1991 of the Delhi High Court in Cr.
W.P. No. 9 of 1991.
B.Pajha and Manoj Prasad for the Appellant.
V.C.Mahajan, S.D.Sharma and S.N.Terde for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
Special leave is granted.
The appellant, Havildar Ratan Singh was tried and convicted by Summary Court martial.
He was reduced in rank and sentenced to suffer rigorous imprisonment for one year.
He filed an application under Article 226 of the Constitu tion of India before the Delhi High Court, which was dis missed by the impugned judgment.
372 3.
Although a number of questions were raised in the writ petition and the special leave petition, the ground urged by the learned counsel for the appellant before us is confined to one point.
It has been contended that having regard to the nature of the charge against the appellant, the provisions of section 34 of the (herein after referred to as the Act) are attracted, and in view of section 120 (2) of the Act, trial by summary not permitted.
The learned counsel has placed the relevant provisions of the Act indicating that the appellant would have been enti tled to a qualitatively better right of defence before a court martial other than a summary court martial which was denied to him on a wrong assumption that the case was cov ered by section 36, and not by section 34.
The question which arises in this case, is whether the Summary Court Martial had jurisdiction to try the appellant in the facts as alleged in the present case.
The charge sheet states that when fired upon by a group of terrorist militants during an armed operation against them, the appellant quitted his place without orders from his superior officer.
Section 120 of the Act states that subject to the provisions of sub section (2) of the section a summary court martial may try any offence punisha ble under the Act.
Sub section (2) reads as follows : "(2) When there is no grave reason for immedi ate action and reference can without detriment to discipline be made to the officer empowered to convene a district court martial or on active service a summary general court martial for the trial of the alleged offender, an officer holding a summary court martial shall not try without such reference any offence punishable under any of ' the sections 34, 37 and 69, or any offence against the officer holding the Court.
" The position, thus, is that if the offence is covered by section 34 and immediate action for the specified reasons is not warranted, the summary court martial shall not have jurisdiction to hold the trial.
Section 34 states that any person subject to the Act, who commits any of the offences enumerated thereunder, shall on conviction by court martial, be liable to suffer death or such less punishment as prescribed.
The offences are detailed in 12 clauses and clauses (a) and (h) appear to be relevant in the present context.
They are quoted below: "(a) shamefully abandons or delivers up any garrison, fortress, post, place or guard, committed to his charge, or which it is his duty to defend or uses any means to compel or induce any 373 commanding officer or other person to commit any or the said acts; or ****************************************** (h) in time of action leaves his commanding officer or his post,guard, picquet, patrol or party without being regularly, relived or without leave; or. " 6.
The evidence in the case, included in the paper book prepared by the appellant, indicates that the appellant while engaged in an armed action against a group of mili tants is alleged to have run away when the militants opened fire and he, thus, in a cowardly manner left his post with out permission of his superior officer.
The allegations included in the charge sheet on the basis of which the appellant was tried are also to the same effect.
The appel lant is, therefore, right in his stand that if the prosecu tion case be assumed to be correct (which he denies) he was guilty of a more serious offence under clauses (a) and (h) of section 34 of the Act than under section 36.
In reply it is contended on behalf of the respondents that the case is covered by section 36, and, therefore, the Summary Court Martial was fully authorised to try the appellant under section 120 (1).
There is no dispute that the appellant is governed by the provisions of the Act.
It is also not suggested on behalf of the respondents that there was in existence any grave reason for immediate action so as to justify trial by an officer holding summary court martial.
The Operation in which the appellant was engaged was directed against the militants who were undisputedly included in the expression 'enemy ' within section 3(x).
The impugned order is attempted to be justified solely on the ground that section 36 covers the case.
The argument overlooks the position that it is not the scope of section 36 which can answer the question raised in the present case.
The issue is whether the offence is punishable under section 34 or not.
Section 36 covers a wide range of offences and the scope of section 34 is limited to a smaller area where the offence is more serious attracting more severe punishments.
If the allegations are assumed to be true then the appellant, on the militants opening fire, shamefully abandoned the place committed to his charge and which he was under a duty to defend.
Both clauses (a) and (h) are, therefore, clearly attracted.
The impugned trial by summary court martial and the decision thereby must be held to be without jurisdiction and have to be quashed.
We do not find any merit in the other points men tioned in the writ petition or in the special leave peti tion.
They are finally rejected.
374 9.
During the course of the hearing we drew the pointed attention of the learned counsel for the appellant that if he succeeded on the basis that the Summary Court Martial was without jurisdiction, he (the appellant) may have to be retired and awarded a more severe punishment, The learned counsel, however, decided to press the point even at the risk of a second trial of the.
appellant.
The learned coun sel for the respondents stated that a fresh proceeding may now be barred by the law of Limitation, and in view of the fact that the appellant is guilty of a very serious charge, this Court should decline to exercise its power under Arti cle 136.
In reply the learned counsel for the appellant pointed out that the period of limitation for commencing a fresh proceeding against the appellant shall not expire before 05.02.92 and the apprehension expressed on behalf of the respondents that the appellant, even if guilty, may escape a trial is misconceived.
We hold that the appellant is correct.
Accordingly we set aside the impugned judgment of the High Court as also the conviction and sentence passed against the appellant by the Summary Court Martial, but allow the respondents authorities to proceed to hold a fresh trial of the appellant in accordance with law.
The appeal is accordingly allowed.
T.N.A. Appeal allowed.
| The appellant, a Havildar, was charge sheeted on the ground that during an armed action against a group of mili tants when the militants opened fire he ran away in a cow ardly manner and left his post without permission of his superior.
The respondent authorities proceeded on the ground that his offence was covered by section 36 of the and accordingly section 120 (1) of the Act was applicable.
Consequently, he was tried by a summary court Martial and was convicted and reduced in rank and imprisoned for one year.
He filed an application under Article 226 before the Delhi High Court which was dismissed.
In appeal to this Court it was contended on behalf of the appellant that having regard to the nature of the charge against him section 34 of the was attracted and in view of section 120(2) of the Act trial by summary Court was not permitted.
Allowing the apeal and setting aside the judgment of the High Court, this Court, HELD: 1.
Under section 120 (2) of the if an offence is covered by section 34 and immediate action for the specified reasons is not warranted, the summary court martial shall not have jurisdiction to hold the trial.
[372 D F] 2.
Section 36 covers a wide range of offences and the scope of 371 section 34 is limited to a smaller area where the offence is more serious attracting more severe punishments.
The opera tion in which the appellant was engaged was directed against the militants who were undisputedly included in the expres sion 'enemy within section 3 (x).
If the allegations are assumed to be true, than the appellant, on the militants ' opening fire shamefully abandoned the place comitted to his charge and which he was under a duty to defend.
Both clauses (a) and (h) of section 34 are clearly attracted.
The appel lant was therefore guilty of a more serious offence under clauses (a) and (h) of section 34 of the Act than under section 36.
1373 D G] It is also not suggested on behalf of the respondents that there was in existence any grave reason for immediate action so as to justify trial by an officer holding summary court martial.
Consequently the impugned, hed trial by Summary Court Martial and the decision thereby must be held to be without jurisdiction and is quashed.
The conviction and sentence passed against the appellant is set aside.
[373 E G] 3.
The respondents authorities can proceed to hold a fresh trial of the appellant in accordance with law.
[374. C]
|
Appeal No. 4541 of 1991.
From the Judgment and Order dated 6.8.1991 of the Punjab and Haryana High Court in C.W.P. No. 2415 of 1991.
Dr. Anand Prakash, Mrs. Veena Birbal and Raj Birbal for the Appellants.
D.R. Sehgal, S.K. Bagga and Mrs. S.K. Bagga for the Respond ents.
The Judgment of the Court was delivered by VERMA, J.
The respondent, Jagjit Singh Mehta, is em ployed at present in the Bank of India as an officer in Junior Management Grade Scale 1 and posted in a Branch Office of the Bank in District Giridih in the State of Bihar.
The respondent was earlier employed in the clerical cadre of the Bank and was posted at Chandigarh.
According to the policy contained in Annexure B read with notice dated March 28, 1988 (Annexure C), on promotion from the clerical cadre to the Officers ' Grade, the respondent had to indicate his preparedness for posting anywhere in India according to the availability of vacancies.
The respondent readily indi cated his preparedness to be posted anywhere in India by Annexure D dated April 19, 1988 when the respondent was posted as a Clerk at Chandigarh prior to his promotion as an Officer.
After getting the promotion as an officer and being posted in Bihar on the above basis, the petitioner filed Civil Writ Petition No. 2415 of 1991 in the High Court of Punjab and Haryana for a direction to the Bank to transfer him from the Bihar Zone to the Chandigarh Zone on the ground that his wife is employed as a Senior Accountant at Chandi garh.
The writ petition has been allowed by a Division Bench (M.R Agnihotri & D.S.Mehra, JJ,) of the High Court by a cryptic order dated 6.8.1991 which reads as under : "After hearing the learned counsel for the parties, we allow this petition and direct the respondents by issuing a writ of mandamus commanding the Bank of India to transfer the peti 495 tioner and post him somewhere near Chandigarh as his wife is posted as a Clerk in the office of the Advocate General, Punjab, Chandigarh.
This shall be done within a period of two months.
No costs.
" The petitioner Bank of India is aggrieved by the above order of the High Court.
Special leave is granted.
In the face of Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 according to which every officer is liable for transfer to any office or branch of the Bank of India or to any place in India and the clear provision for such a transfer in the policy (Annexure B) read with notice dated March 28, 1988 (Annexure C), it is difficult to sustain the High Court 's order.
However, learned counsel for the respondent placed reliance on para 4 (vi) of a Memorandum dated April 3, 1986 (AnnexureH) of the Government of India containing guidelines for posting of husband and wife at one station which are meant to be fol lowed also by all the Public Sector Undertakings.
Learned counsel urged that according to the statutory provisions contained in the and the Bank of India (Officers ') Service Regulations, 1979 made thereunder, the Bank is bound to follow the guidelines and directions issued by the Cen tral Government in this behalf.
There can be no doubt that ordinarily and as far as practicable the husband and wife who are both employed should be posted at the same station even if their employers be different.
The desirability of such a course is obvious.
However, this does not mean that their place of posting should invariably be one of their choice, even though their preference may be taken into account while making the deci sion in accordance with the administrative needs.
In the case of All India Services, the hardship resulting from the two being posted at different stations may be unavoidable at times particularly when they belong to different services and one of them cannot be transferred to the place of the other 's posting.
While choosing the career and a particular service, the couple have to bear in mind this factor and be prepared to face such a hardship if the administrative needs and transfer policy do not permit the posting of both at one place without sacrifice of the requirements of the adminis tration and needs of other employees.
In such a case the couple have to make their choice at the threshold between career prospects and family life.
After giving preference to the career prospects by accepting such a promotion or any appointment in an All India Service with the incident of transfer to any place in India, subordinating the need of the couple living together at one 496 station, they cannot as of right claim to be relieved of the ordinary incidents of All India Service and avoid transfer to a different place on the ground that the spouses thereby would be posted at different places.
In addition, in the present case, the respondent voluntarily gave an undertaking that he was.
prepared to be posted at any place in India and on that basis got promotion from the clerical cadre to the Officers ' grade and thereafter he seeks to be relieved of that necessary incident of All India Service on the ground that his wife has to remain at Chandigarh.
No doubt the guidelines require the two spouses to be posted at one place as far as practicable, but that does not enable any spouse to claim such a posting as of right if the departmental authorities do not consider it feasible.
The only thing required is that the departmental authorities should consid er this aspect along with the exigencies of administration and enable the two spouses to live together at one station if it is possible without any detriment to the administra tive needs and the claim of other employees.
The High Court was in error in overlooking all the relevant aspects as well as the absence of any legal fight in the respondent to claim the relief which the High Court has granted as a matter of course.
The High Court 's order must, therefore, be set aside.
Consequently, the appeal is allowed, the impugned order of the High Court is set aside and the respondent 's writ petition is dismissed.
No costs.
P. Appeal allowed.
| Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 provided that every officer was liable for transfer to any office or branch of the Bank of India or to any place in India.
The respondent was posted as a clerk in the appellant Bank at Chandigarh.
At the time of his promotion to the Junior Management Grade Scale 1, he gave an undertaking for posting anywhere in India, and was consequently posted as Branch Officer in the State of Bihar.
Thereafter, he filed a writ petition in the High Court claiming his transfer to Chandigarh Zone on the ground of his wife being employed at Chandigarh.
The writ petition was allowed.
The Bank filed appeal by special leave to this Court.
It was contended on behalf of the respondent that para 4 (vi) of Memorandum dated 3.4.1986 of the Government of India contained guidelines for posting of husband and wife at one station which were meant to be followed also by all the Public Sector Undertakings, and, according to the provisions of the Banking Compa 493 nies (Acquisition and Transfer of Undertakings) Act 1970 and the Bank of India (Officers ') Service Regulations, 1979 made thereunder, the bank was bound to follow the guidelines and directions issued by the Central Government.
Allowing the appeal of the Bank, this Court, HELD: 1.
Although the guidelines require the two spouses to be posted at one place as far as practicable the desirability of such a course being obvious yet that does not enable any spouse to claim such a posting as of right if the departmental authorities do not consider it feasible; nor does it mean that their place of posting should invaria bly be one of their choice even though their preference may be taken into account while making the decision in accord ance with the administrative needs.
The only thing required is that the departmental authorities should consider the feasibility of a suitable posting along with the exigencies of administration and enable the two spouses to live togeth er at one station if it is possible without any detriment to the administrative needs and the claim of other employees.
[pp 495 E; 496 BC] 2.
After accepting a promotion or any appointment in an All india Service, subordinating the need of the couple living together at one station, they cannot as of right claim to be relieved of the ordinary incidents of the serv ice and avoid transfer to a different place on the ground that the spouses thereby would be posted at different places.
While choosing the career and a particular service the couple have to bear in mind this factor and be prepared to face such a hardship particularly when they belong to different services.
They have to make their choice at the threshhold between career prospects and family life.
[pp 495 F H; 496 A] 3.1 In the instant case, the respondent voluntarily gave an undertaking that he was prepared to be posted at any place in India and on that basis got promotion and thereaf ter sought to be relieved of that necessary incident of an All India Service on the ground that his wife had to remain at Chandigarh.
[p. 496 AB] 3.2 In the face of Regulation 47 of the Bank of India (Officers ') Service Regulations, 1979 according to which every officer is liable for transfer to any office or branch of the Bank of India or to any place in India and the clear provision for such transfer in the policy read with the notice dated March 28, 1988, the High Court 's order cannot be sustained.
[p. The High Court was in error in overlooking all the relevant aspect as well as the absence of any legal right in the respondent to claim the relief which it granted as a matter of course.
[p. 496 CD]
|
Appeal No. 4702 of 1991.
From the Judgment and Order dated 26.8.88 of the Bombay High Court in W.P. No. 2264 of 1984.
T. Andharujina, F.H. Talyarkha, R.F. Nariman, R. Narain, Ashok Sagar and Ms Amrita Mitra for the Appellants.
K.K. Singhvi, B.N. Singhvi and Anil K. Gupta for the Re spondents.
The Judgment of the Court was delivered by 451 V. RAMASWAMI, J.
Leave granted.
The First appellant Tara Engineering and Locomotive Company Limited (hereinafter called the 'Company ') is a. company registered under the Indian Companies Act, 1913 and the second appellant is one of its Directors.
The Company is carrying on business of manufacture and sale of motor vehi cles and spare parts of motor vehicles and excavators.
Their manufacturing units are at Pune and Jamshedpur outside the Thane Municipal Corporation limits.
They have a bonded warehouse within the municipal limits in which they bring and stock motor vehicles parts 'and excavators parts from their own factories at Pune and Jamshedpur.
They also bring in parts manufactured by their ancillaries within India and also parts imported from aboard.
These products or parts are brought in bulk and thereafter taken or sent out from the Municipal limits in smaller packings depending on the re quirements of the customers in various parts of the country.
It is stated that the parts imported or purchased from others and brought in are relatively very small in quantity and the major portion of the activity related to their own factory produced parts.
On and from 1 st October, 1982 with the notification under Section 3 of the Bombay Provincial Municipal Corpora tion Act, 1949, the Thane Municipal Council became a Munici pal Corporation (hereinafter called the Corporation).
Prior to the constitution of the Corporation it was a municipality and were governed by the Thane Municipal Council constituted under the Maharashtra Municipality Act, 1965.
Prior to 1 st October, 1982 the Thane Municipal Council had granted to the Company current account facilities in respect of payment of octroi under the Maharashtra Municipalities Act, 1965 and the Maharashtra Municipalities (Octroi) Rules, 1968 made thereunder.
The Municipal Council had also granted permis sion under Rule 10 (2) to the Company for maintaining a godown or warehouse of their own.
Their is no dispute that even after the coming into existence of the Thane Municipal Corporation the appellants were permitted to have a ware house of their own and keep a current account facility without the requirement of immediate payment of octroi at the Octroi Naka.
In terms of granting those facilities the Company had made as security a cash deposit of Rs. 7 lakhs with the Corporation and had also given a Bank Guarantee for an equivalent amount as agreed to between the Company and the Corporation.
However, there is some dispute as to what were the formalities that were dispensed with in the matter of claiming refund of the octroi when the goods were export ed.
But suffice it to say at this stage that the appellants were permitted to carry out their activities of imports and exports under the current account procedure with a facility of unpacking the bulk, repacking and exporting.
452 During the period 1st January, 1983 to 31st March, 1964 it is stated that the appellants had made 1182 claims for refund.
All these claims were rejected by the letters of the Corporation dated 31.8.1983, 12.1.
1984, 5.4.1984 and 6.4.1984.
They were rejected on the following two grounds: (1) the Company had "sold" the spare parts within the octroi limit (which is co terminus with the Corporation limit) in contravention of Rule 25 (3) (d) of the Maharashtra Munici palities (Octroi) Rules, 1968 (hereinafter called the "Rules"), (2) the procedure prescribed for export and the claim of refund had not been strictly followed.
The non compliance with)the procedure prescribed referred to in the second ground according the Corporation were: (i) Form 4 of the Octroi Rules and the original invoices were not submit ted, or (ii) Forms 11 and 12 filed were incomplete and all the required information were not given or (iii) certificate of the Octroi exit Naka Officer had not been obtained.
The rejection of the claim was either on one or more than one or all the grounds mentioned above.
The appellants filed a writ petition under Article 226 in the High Court of Judicature at Bombay contending that the action of the Municipal Corpo ration in refusing refund is unconstitutional and illegal and for certain other reliefs.
The Division Bench of the High Court which heard the same dismissed the writ petition on the 26th August, 1988.
It is against this judgment that the present appeal has been filed.
It appears that during the hearing of the writ petition the learned counsel appearing for the Corporation did not counter the contention of the Company that the rejection under Rule 25 (3) (d) was not correct and the learned Judges have also recorded the same in the judgment.
But the learned counsel for the respondent before us stated that it is not correct to say that he had conceded any point and that since he could not argue that point in view of the decision of another Division Bench of the same High Court in Khandelwal Trader Akola vs The Akola Municipal Council, AIR 1985 Bombay 218 which was binding on the Bench which heard the writ petition and also in view of certain observations of this Court in Burmah Shell Company vs Belgaum Municipal, [1963] Suppl.
2 SCR 216 and Hiralal Thakorlal Dalai vs Brash Broch Municipality, he did not press the point.
We have therefore, permitted the point to be argued in this appeal.
Before we discuss the points in controversy we may state that in the counter affidavit filed in the writ petition the respondents have admitted that the Company was enjoying the current account facility prior to 1.10.
1982 and the re spondent Corporation had also given the said facility to the Company even after 1st October, 1982 on their making a cash deposit of Rs. 7 Lakhs and furnishing a Bank Guarantee for a like sum as security 453 for grant of that facility.
The respondent had also admitted that the Company had been given permission under Rule 10 (2) to maintain their own godown from 12th December, 1982.
Broadly stated under the current account facility granted, no octroi duty is recoverable in cash from the appellants at the entry octroi naka point.
However, the Company was re quired to submit a statement of goods imported in Form 5 before the 10th of the following month.
The officers of the respondent after scrutiny of the statement so filed deter mine the octroi duty payable thereon and debit the amount in the current account kept and send a demand notice to the company.
The Company is required to pay the amount to the Corporation within 15 days of the determination of duty.
The first submission of Mr. Andharujina, learned counsel for the appellants was that the sales were not for consump tion or use within the octroi limits and that the parts were sold to parties outside the octroi limits and also for consumption or use outside such limits and therefore the rejection of the claims on the ground that the spare parts were sold within the municipal limits and that it amounted to a contravention of Rule 25 (3) (d) of the Rules is ille gal.
Mr. K.K. Singhvi, the learned counsel for the Corpora tion on the other hand contended that the meaning of words "sales therein" in the definition of octroi in the Acts and in Entry 52 of List II could not be limited to sales of the goods for purposes of consumption or use within the munici pal limits.
When an importer wants to export dutiable goods tempo rarily detained by him in his own godown he shall present an intimation cumapplication for written permission in Form 11 to the Superintendent of Octroi to export such goods.
Rule 25 (3) (d) states that no such intimation shall be accepted unless: .LM15 "the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership" .LM0
The case of the Corporation was that there was a change in the ownership of the goods since a sale in law had taken place inside the octroi limits though the purchaser was residing and carrying on business outside the octroi limits and under the sale the goods were intended to be and in fact exported for the purpose of consumption and use outside the octroi limits.
Section 127 of the Bombay Provincial Municipal Corporation Act,1949 and the corresponding section 105 of the Maharashtra Municipalities Act,1965 authorises the Muncipality to levy "Octroi".
Both these Acts define 454 octroi as meaning a tax on the entry of goods into the municipal area "for consumption, use or sale therein".
The Maharashtra Municipalities (Octroi) Rules 1968 made under the Maharashtra Municipalities Act, 1965, provides for the levy, collection and refunds of octroi duty on the goods specified in the schedule thereunder and the procedure for the same.
These Rules were in force in Thane Municipality before Thane was declared as "City" under the Bombay Munici pal Corporations Act LIX of 1949.
However these Rules are continued in the Thane Municipal Corporation by virtue of paragraph 5 of Appendix IV to the Act LIX of 1949.
The legislative entry relating to the constitutional power to levy this tax is found in List II Entry 52 of the 7th Schedule to the Constitution which reads: "52.
Taxes on the entry of goods into a local area for consumption, use or sale therein".
The Bombay Municipal Boroughs Act, 1925 which was in force prior to the enactment of the Maharashtra Municipali ties Act, 1965 also contained a similar provision in section 73 enabling the Municipalities covered by that Act to levy "Octroi on animals or goods or both brought within the octroi limits for consumption or use therein".
This provi sion was amended by Amending Act 35 of 1954 by substituting the words "use or sale" for the words "or use" with effect from May 5, 1954.
In other words before 1954 the word "sale" was not included in the provision of octroi on goods which the Municipality was authorised to impose.
After the amend ment the Municipality could levy octroi on goods brought within the octroi limits "for consumption, use or sale therein".
This provision came up for consideration in Burmah Shell case (supra).
Two of the categories of transactions which were considered in this case related to transactions under which (1) goods were sold by the Company through its dealers or by itself and consumed within the octroi limits by persons other than the Company and (2) goods sold by the Company through its dealers or by itself inside the octroi limits to other persons but consumed by them outside the octroi limits.
The Company contended that the tax could not be collected on goods which were merely sold but not con sumed inside the octroi limits.
In connection with this con tention this Court considered the meaning of words "consump tion, use or sale therein" and observed: "It is not the immediate person who brings the goods into a local area who must consume them him self, the act of consumption may be post poned or may be performed by someone else but so long as the goods have been brought into the local 455 area for consumption in that sense, no matter by whom, they satisfy the requirements of the Boroughs Act and octroi is payable". " . .
The goods must be regarded as having been brought in for purposes of consumption when a person brings them either for his own use or consumption, or to put them in the way of others in the area, who are to use and consume".
And concluded holding: "In our opinion, the Company was liable to pay octroi tax on goods brought into local area (a) to be consumed by itself or sold by it to consumers direct and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area irrespective of whether such consumers bought them for use in the area or outside it.
The Company was, however, not liable to Octroi in respect of goods which it brought into the local area and which was re exported".
The ratio is thus not a mere sale inside that attracts octroi but a sale intended for consumption of the goods inside the octroi area though ultimately the person to whom it was sold for consumption does not consume the goods inside but does the same outside the limit.
After consideration of the judgment in Burmah Shell Company 's case (supra) the Gujarat High Court in one of the cases arising for refund of octroi duty paid, took the view that octroi leviable on goods brought within the octroi limits 'for consumption, use or sale therein ' and that the word 'sale ' could not be given the narrow meaning of a sale for consumption to the ultimate consumer within the octroi limits.
Accordingly if the goods were sold within the octroi limits by the importer even if it resulted in export and consumption was also outside the octroi limit, octroi duty paid is not refundable.
This decision came up in appeal before this Court and the decision of this Court is reported in Hiralal Thakorlal Dalai vs Brash Broach Municipality, On facts that case related to a con signment sale and the goods were despatched to destination outside octroi limits for consumption there.
A plea for review of the decision in Burmah Shell Company s case (supra) was also made in this case.
However a Constitution Bench rejected the request for reconsideration and held that the word "sale" in the colloquium of the words "consumption, use or sale therein" means sale for consumption within the octroi limits.
The ratio of these two decisions was consid ered by the Bombay High Court in Khandelwal Traders Akola 's case (supra), which was referred to in the Judgment under appeal.
It was held in this case also 456 that where a dealer imports goods within the octroi limits not for ultimate consumption or sale for consumption within the limits but for the purpose of export and obtain permis sion for export he is not liable to pay octroi on such goods notwithstanding that in the larger sense for purposes of export he sells the goods within the octroi limits, that is to say even where the situs of the sale could be fixed within the octroi limit.
The matter is now put beyond any pale of doubt by the latest decision of this Court in Munic ipal Council, Jodhpur vs M/s. Parekh Automobiles Ltd. & Ors., ; Rule 13 (4) of the Rajasthan Munici pal Octroi Rules, 1962 which was one of the provisions considered in this case provided that "In cases provided for in sub rule (3) (that is who is given the account current facility)amount of octroi duty payable shall be based on the total amount of the octroi as shown by the entry passes less the total amount of goods transported outside the munic ipal limits as shown by the transport passes: Provided that in computing the octroi duty payable under subsection (4), the goods trans ported outside the municipal limits shall be lessened only if such goods have not been sold within the municipal limits and if they have been exported out of such limits within a period of six months from the date of their import in such limits".
Relying on this provision the municipality in that case contended that if the sale had taken place within the octroi limits though the sale was not for consumption or use within the octroi limits, duty was payable and no refund could be claimed.
The learned Single Judge who heard the matter in the High Court did not permit the importer to raise the question that the sale took place only outside the octroi limits of Jodhpur and proceeded on the footing that the sale of product in question took place within the octroi limits of Jodhpur.
He however accepted the contention of the Indian Oil Corporation (importer) that the sale to the dealer was for the purpose of export and the dealer did export the goods outside the octroi limits and that, therefore, even if the sale was said to have been effected within the octroi limits no octroi was leviable.
Since admittedly the goods had been sold in Jodhpur octroi limits only for their on wards transmission for use and consumption in Dangia was outside the octroi limits he held that no octroi duty was payable.
This view of the learned Single Judge was confirmed on appeal by the Division Bench of the High Court.
On appeal this Court confirmed this view and held that the Indian Oil Corporation (importer) who had the current account facility and gov 457 erned by the terms of rule 13 was entitled to go on paying octroi duty "on to basis of the goods brought by it within the municipality less the goods transported outside the municipality even where the transport outside the municipal ity may be in pursuance of a sale within the municipality so long as such sale is in pursuance of an intention that the goods should be consumed or used outside the municipal limits".
In the present case the sales were to person who were carrying on business outside the limits of the Corporation and the goods were also intended to be consumed or used outside such limits and in fact the goods were also export ed.
The ratio of the decisions above referred clearly, therefore, governs this case, even if it were to be assumed that the sale in the general sense took place inside the municipal limits.
However we may state that it was the contention of the learned counsel for the appellant that the sale in fact took place outside the municipal limits and in support of this contention he relied on the following facts among others.
The spare parts were consigned by the Company to out station purchasers.
The goods were transported by the Company them selves across the octroi limits.
The consignment or lorry receipt mentioned the consignee as self.
The bills for collection were sent through Bank and the goods were not to be delivered to the consignee until the payment was made by the consignee through the Bunk.
Right of disposal expressly reserved with the vendor.
On the other hand on behalf of the Corporation it was contended that orders were both received and accepted in Thane, goods were despatched from Thane and challans were also made in the name of the buyers and the property in the goods passed within Thane.
The sale had in fact taken place within municipal area.
In fact he further contended that being a question of fact we are not entitled to go into the same in view of the finding of the High Court.
It is not necessary for us, however, to consider this aspect and we would for the purpose of this case proceed on the assumption that technically the sale in law had taken place inside the municipal limits.
Since the goods were sold by the Company to outside purchasers and the goods under the transactions of sale, were intended to be exported and were in fact exported, for consumption or use outside the municipal limits no octroi duty was leviable and the octroi duty paid on entry into the municipal limits was, therefore, liable to be refunded.
Accordingly the rejection of the refund claims on the ground that Rule 25 (3) (d) had not been strictly complied with is illegal and could not be sustained.
Such of those claims which were rejected only on the grounds of contravetion of 458 Rule 25 (3) (d) shall now be taken up by the respondent and passed for payment.
In the case of impost of octroi the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area.
Mere physical entry into the octroi limits would not attract levy of octroi.
When the goods are brought in not for consumption within the area but for temporary detention and eventual export, octroi is not leviable.
But in order to ensure, in such circumstances, that the goods are exported and to prevent evasion of octroi on goods consumed inside the octroi limit, Rules provide for deposit of a certain sum of money or the actual octroi duty payable subject to a right to get a refund of the same when the goods are exported.
When the goods in respect of which octroi was paid are exported, the octroi became refundable and that is the very scheme of the ' levy of octroi.
The octroiable event in such a case shall be deemed not have happened.
Right to refund arises because the goods are not consumed inside the area but exported and the tax becomes not leviable.
The rules merely regulate the system on which refunds shall be allowed.
The procedure prescribed and the need to adhere to the procedure shall have to be considered in the light of these legal incidence and nature of octroi duty.
Before we deal with the question whether the Company had not followed any of the procedure prescribed and the right of the Corporation to deny refund of octroi on non compli ance with any of those provisions in the Rules, it is neces sary to broadly set out the different types of procedures prescribed, depending on different purposes of imports and exports, contemplated under the Rules.
This may be broadly classified into five categories, (i) goods imported for Consumption, use or sale in the municipal area, (ii) goods imported not for consumption, use or sale within the munici pality but for immediate export, (iii) goods intended to be temporarily detained within the municipality in the bonded warehouse maintained by the Corporation and eventual export; (iv) goods intended for temporary detention in the private licensed bonded wharehouse of the importer and eventual export; and (v) goods imported by any person, mercantile firm or body which has been permitted by the municipal Corporation to keep an current account.
In the first case, since octroi is attracted on arrival of the dutiable goods at the Octroi Naka the importer pays the amount of octroi assessed by the octroi officer and takes the goods inside the municipal limits.
In the second case, the importer gives a declaration cum application that the goods are not being imported in the municipal limits for consumption, use or sale but are intended for immediate export outside the octroi limits.
He is required to deposit an amount in 459 accordance with the scale fixed under clause (b) of sub rule (1) of Rule (5).
On such deposit being made a receipt is given in the form prescribed by the Entrance Naka Inspector and a written permission cum transit pass issued by the Octroi Officer.
On arrival of the goods at the exit Naka and on surrender of the written permission cum transit pass the deposit amount is refunded.
In the third category of cases, the importer makes an application to the Octroi officer at the Entrance Naka for a written permission to deposit such goods at the bonded warehouse maintained by the Corporation.
The Octroi Officer then makes an entry on the application that the importer is allowed to proceed with the goods to the bonded warehouse.
The Officer in charge of the bonded warehouse will receive the goods and keep them in the bonded warehouse until exported.
When the importer wants to export the goods he is required to apply for a written permission cum export pass in the prescribed form and also deposit an amount equal to the octroi leviable therein.
On such deposit made a written permissioncum export pass is issued.
When the goods are taken out of the municipal limits the Officer Incharge of the Exit Naka endorses the export pass certify ing the export and the refund of the deposit is claimed thereafter producing the certificate issued by the Exit Naka Officer.
In the fourth category, the importer gives a decla ration in Form 4 that the goods are meant for temporary detention with him at his own warehouse for eventual export.
After verification of the particulars furnished in that form with the invoices and other documents produced he is re quired to deposit at the Entry Octroi Naka point itself an amount equal to the amount of full octroi duty thereon as deposit.
A receipt is given by the Octroi Inspector stating that the said amount "on account of deposit" has been recov ered.
When he wants to export the dutiable goods detained with him he presents an intimation cum application in Form 11 for written permission to export the goods.
He is also required to produce the goods at the Central Octroi officer along with the application.
On satisfaction that all the conditions prescribed have been fulfilled and after verifi cation of the goods a written permission cum refund export pass in Form No. 12 is given to the importer.
On presenta tion of these documents the Octroi officer at the Exit Naka gives a certificate that the goods mentioned therein have passed octroi limits and with that the refund application is made and refund obtained.
The instant case falls under the fifth category.
The Company has been permitted by the Municipal Corporation to keep the dutiable goods in a bonded warehouse of their own with a current account facility.
The rules which were relied on by the Respondent and some of which are said to have not been complied with by the Company may be set out: "10.
Maintenance of Bonded Warehouses.
460 (1) x x x (2) A Council may permit any importer to maintain a private Bonded Warehouse for keep ing goods which are imported by such importer for temporary detention and eventual export and grant a licence to such importer for that purpose subject to the conditions and restric tions laid down in such licence.
A fee shall be charged for such licence at the rates specified in the bye laws relating to the grant of such licence." "14.
Declarations to be made by importer, etc. (1) On arrival of any dutiable goods at the Octroi Naka, the Octroi Officer shall call upon the importer or the driver of the Vehicle or conveyance or the person incharge of the pack animal or other persons bringing the goods (a) X X X X (b) X X X X (C) X X X X (d) to make a declaration in Form 4, in respect of the goods intended for temporary detention with himself and eventual export; (e) to make a declaration in Form 5, in respect of the goods imported by, or on behalf of, any person, mercantile firm or body which has been permitted by the Council to keep an account current under Section 142; "15.
Procedure for assessment and recovery of octroi.
(4) On receipt of a declaration in Form 5 under the last preceding rule, the Octroi Officer shall ascertain whether the name of the person, mercantile firm or body on whose behalf the goods are being imported is on the list of persons, firms or bodies allowed to keep an account current, and if so, check the goods with the details entered in the declara tion and fill up the certificate below the declaration and issue a pass in Form 6.
The Octroi Officer shall forward all such declara tions together with a list in duplicate there of to the Central Octroi Officer for further action in accordance with the provisions of Section 142.
"24.Procedure for temporary detention of dutiable goods meant for eventual export, with importer himself.
(1) Where dutiable goods intended for temporary detention within the octroi 461 limits and eventual export are to be detained by the importer at his residence or a Bonded Warehouse licensed under sub role (2) of rule 10 within the octroi limits, he may do so on giving a declaration to the Octroi officer in Form 4, and on payment of an amount equal to the amount of full octroi due thereon as deposit either in cash or in the form of Bank Guarantee at the Entrance Naka.
(2) In case the importer cannot export the goods without breaking bulk or without assem ble and testing in the case of machinery, he shall do the same only with the sanction of the Superintendent of Octroi in the presence of an officer deputed for this purpose by the said Superintendent.
Such goods, if necessary shall be formed into packages, which may be sealed and marked by the Officer so deputed.
"25.Procedure for export of dutiable goods temporarily detained with importer. (1) When the importer wants to export dutiable goods detained with him, he shall present an intima tion cum application for written permission in Form 11 to the Superintendent of Octroi to export such goods, giving necessary details; and produce such goods for verification on any working day during the hours fixed by the Chief Officer at the Central Octroi Office or at any other Branch Office, as may be estab lished by the Council for the purpose.
(2) A separate intimation cum application shall be given by each importer or his own goods.
One such intimation cumapplication shall be sufficient for a single consignment.
When such consignment contains goods of dif ferent descriptions, full details shall be given separately in the intimation cum appli cation.
Not more than one intimation cum application for export can be given by an importer for goods passing through an Exit Naka in a day.
(3) No such intimation cum application shall be accepted unless (a) it is complete in all respects and signed by the importer himself or by a person authorised by him in writing in this behalf; (b) it is supported by the receipt for the deposit paid at the time of import and is accompanied by the original invoice, if any, filed at the time of import; 462 (c) the goods produced for inspection and intended to be exported are, subject to the provisions of sub rule (2) of the last preced ing rule, identical with what they were at the time of import.
(d) the exporter and the importer of these goods are one and the same person and such articles have not undergone change of ownership.
The requirement of clause (c) shall not be applicable in the case of dutiable goods to which sub rule (3) or (4) of the last preceding rule applies.
(4) On receipt of such intimation cum applica tion and on arrival of the goods intended for export, at the Central Octroi Office or Branch Office, the Superintendent of Octroi or any officer authorised by him shall (a) satisfy himself that all the condi tions prescribed above are fulfilled; (b) verify that the goods actually pro duced for inspection are as described in the intimation cum application and in the relevant import invoice, if any, or in the import declaration in Form 4, and seal and mark such goods whenever deemed necessary; and (c) issue a written permission cum refund export pass in Form 12 after obtaining a specimen signature of the importer or his authorised agent on such pass.
(5) The importer accompanied by an escort, if provided by the Council, shall then take the goods beyond the octroi limits through the Exit Naka within the time limit and by the route specified in the pass.
Before crossing the Exit Naka, the impoter shall present the goods to the Octroi Officer at the Exit Naka for inspection, with the pass.
The time limit shall be fixed with due regard to the distance of the Exit Naka from the Central Octroi Office or the Branch office, but in no case it shall exceed 12 hours from the time of issue of the permission cumrefund export pass.
(6) The Octroi Officer at the Exit Naka, on presentation of such goods as well as the pass, shall satisfy himself that (a) the pass as well as the goods are presented within the specified time limit; 463 (b)the seals or marks, if any, are inact; and (c) the goods actually tally with those men tioned in the pass.
On being so satisfied, he shall make relevant entries in the register maintained for the purpose, obtain signature of the importer thereon, sign a certificate as given on the pass, deliver the same to the importer and allow the goods to pass beyond the octroi limits.
Provision for refund of deposit. (1) When any goods for which a deposit has been paid under rule 24 at the time of their import are exported, the amount of deposit recovered shall, subject to the provision of sub rule (2), be refunded.
(2) The refund shall be admissible, if all the conditions below are satisfied. (a) The refund is applied for within one month from the date of e x port.
(b) The goods are exported out of the octroi limits within a period of six months of their import.
(c) The application for refund is supported by a duly certified written permission cum refund export pass.
(d) All the conditions in sub rule (3) of rule 25 are fulfilled.
(e) The amount claimed as refund is with drawn within three months from the date of intimation to the importer to receive the amount.
(f) The goods exported were declared to be intended for temporary detention with the importer and eventual export at the time of import: Provided that the said period of six months shall not apply to goods imported by the Food Corporation of India established under section 3 of the Food Corporation Act, 1964.
Procedure for refund.
(1) The Applica tion for refund of deposit shall be made in Form 13 by the importer himself or by his duly authorised agent in this behalf in writing on any working day during the hours fixed for money transactions by the Council at the Central Octroi Office within one month from the date of the actual export.
If the last day for claiming refund falls on a public holiday such application shall be accepted on the next working day.
464 (2) Such application shall be accompanied by the duly certified relevant written permis sion cure refund export pass and shall contain reference to the connected export intimation cum application already given by the importer.
There shall be a separate application for each written permission cure refund export pass.
(3) If the refund application is in order and satisfies all the conditions specified in the last preceding rule, the amount of the refund shall be correctly determined subject to the limitation prescribed in the next succeeding rule".
Value, weight, etc.
of goods for purposes of refund.
When the refund is claimed in respect of goods on which duty is leviable ad valorem, the value for the purposes of refund shall be the value as per invoice on the strength of which the duty was originally paid together with such cost of carriage and other incidental charges that were then deter mined.
Where the value was determined in the absence of invoice on the basis of market rate prevalent on the day of import, that value only should be considered and not the market price prevalent in the local market on the day of export".
FORM 4 (Rules 14, 24 and 25) Declaration in respect of the dutiable goods imported into the Municipal octroi limits, which are intended for temporary detention with the importer and eventual export.
To The Octroi Officer, Octroi Naka No. . . . .
Municipal Council.
I, . . . . (insert full name and address of the importer) hereby declare that the below mentioned goods are meant for temporary detention with me at . . (specify address at which to be kept) for eventual export outside the octroi limits.
I am willing to pay an amount equal to the amount of full octroi due thereon as deposit either in cash or in the form of Bank Guarantee and may claim refund according to the rules if these goods are exported outside limits within six months from the date of their import.
The below mentioned details are true and according to the original invoice, true copy of which is filed herewith.
The said invoice covers all the goods im ported by me as per Bill of Entry/Railway Receipt/Goods Transport Memo/Air consignment Note No. . .dated . . 465 Sr.
No No.and Description Weight Value Senders Rem No &date descri of the or plus all name& arks of ption of goods goods incidental address import packages charges in full document which are to given seper ately 1 2 3 4 5 6 7 8 Full residential/business address of the importer.
Date . .
Signature of the Importer I have checked the above particulars with the invoice and verified the goods, which are found to be correct.
True copy of the invoice appended is verified and found to be correct.
The weight or quantity or value, together with the incidental charges declared, is correct.
The taxable weight/quantity/value of the goods is . . and the rate of octroi . . Date. .
Inspector/Clerk.
The amount of Rs. . on account of deposit has been recovered under receipt No. . . dated . . . Date . .
Inspector/Clerk. FORM5 (Rules 14 and 15) Declaration in respect of the dutiable goods imported on behalf of person, firm, or body allowed to keep an account current.
To, The Cetroi Officer, Octroi Naka No. . Municipal Council.
I,. . . . (insert the full name and address of the importer) hereby declare that the below mentioned goods are being imported into the Municipal Octroi limits on behalf of . . . (insert the name of persons, firm or body allowed to keep an account current) and that the below mentioned value and weight/quantity of the goods is true and correct and is according to the original invoice, true copy of which is filed herewith.
The said invoice fully covers all the goods imported by me today as per Bill of Entry/Railway Receipt/Goods Transport Memo/Air Consignment Note No. . dated . . , I further undertake to produce the said invoice for your inspection whenever demanded by you within one year from today.
466 To be filled in by the importer To be filled in at the Central Octroi Office 1.Sr.
No. 2.
Bill of Entry 'Railway Receipt ' Goods Transport Memo/ Air Consignment Note.
Number description of packages.
Goods.
Value plus incidental charges which are to be given seperately.
7.Rate of Ovctroi.
Amount of Octroi recoverable.
Date. .Signature of the importer Dues entered in I have checked the above particulars Account Current with the invoice and verified the goods, Date . . which are found to be correct.
True Octroi copy of the invoice appended is Superintendent verified and found to be correct.
The weight or quantity or value, together with the incidental charges declared, is correct.
Issued pass No . dated . Date . . .
Inspector/Clerk FORM6 (Rule 15) Pass for goods imported on behalf of person, firm or body allowed to keep an account current .
Municipal Council:. .Municipal Council Book No. Entrance Naka No. : Book No. En trance Naka No. Counterfoil of pass Pass for goods imported by in account current . (Name of Person, firm or body) Description No. and Description Weight, Description of the quantity of packages goods or value 1 2 3 Dated . . Dated . .
Entrance Naka Inspector/Clerk Entrance Naka Inspector/Clerk 467 Form 11 (Rules 25 and 26) Intimation cum application for written permission for Export of Goods Temporarily detained with the Importer To The Superintendent of Octroi, . .
Municipal Council.
Sir, I. . . . . (insert the full name and address of the importer) hereby declare my intention to export the goods to. . .through
Naka No. . as detailed below.
The certified copy of original invoice/invoices under which these goods were imported are appended herewith.
I have produced the goods for actual verification.
Kindly grant me the permission to carry the goods to the said Naka.
Description Quantity Date of Import Deposit Gross No. of the (Number of Import invoice receipt weight goods bags or & No. of No. and number & cases) entrance date date Naka 1 2 3 4 5 6 7 Value Amount to be Number of Name and How Remarks refunded Refund Export address of exported pass granted the consignee 8 9 10 11 12 13 Date . . .
Signature of Importer Verified the contents and the weight as above and found correct.
Countersigned.
Octroi Officer.
Signature of the Refund Inspector/Clerk.
Receipt No. . 468 FORM Rule 25) Written Permission cum Refund Export Pass Receipt No. . . Date . . . 19 Sl.
Month Name and Name and Description Quantity Gross No. and address of address of of the (number of weight date the impoter the consignee goods bags or cases) 1 2 3 4 5 6 7 Value Deposit How Exist Date & time by Whether Remarks to be exported Naka which the goods goods refunded No. should reach the sealed or Export Naka escort given 8 9 10 11 12 13 14 *Fee for Written Permission Cum Refund Pass Rs . .
Miscellaneous Receipt No. . , dated. . , Signature of the importer Signature of Octroi Officer I hereby certify that the goods mentioned above have passed outside the octroi limits this day the. . of the month. . 19 Time. . . a.m./p.m.
in my presence Railway receipt. . /Vehicle No. .
The seals, if any, thereon were intact when the goods were presented to me for verification.
Date . . .
Signature of the Exist Naka Officer Naka No. . *This fee should be levied in accordance with the bye laws framed under section 338 for granting permission to take the goods from the Central Octroi Office or Branch Office to the Exist Naka.
FORM13 (Rule 29) Application for Refund of Deposit To The Superintendent of Octroi, . .
Municipal Council.
469 Sir, I, . . . the resident of. . hereby apply for refund of deposit as per enclosed Written Permis sion cum Refund Export Pass No. . .dated. . , as the goods mentioned in the pass were exported on. .under my intimation cum application, dated. . , I therefore, request you to grant the refund of Rs. . and oblige.
Enclosure: Date. .
Signature of Importer On a reading of these rules it appears to be that Rules 24, 25 and 28 in terms would apply only to cases failing under category four, stated above.
The declaration in Form 4 referred to in Rule 24 and deposit of the amount equivalent to octroi duty payable at the entry point, production of the goods for verification at the Central Octroi Office are all consistent with its being applicable to a case where dutia ble goods are imported for temporary detention and eventual export by a person having a bonded warehouse of his own contemplated in Rule 14 (1) (d) and not Rule 14 (1) (e).
However, Rules 29 and 30 are general in terms and may be invoked in both the cases falling under Rule 14 (1) (d) and (e).
Sub rule (3) of Rule 29 refers to the compliance of the conditions in Rule 28 and that is how it may be said that the provisions of Rule 28 are attracted to the cases of a person having a bonded warehouse and the facility of account current.
However, the Rules have to be read and applied in such way that they do not conflict with but are consistent with the facility of current account given to the Company.
Form 5 which is applicable to a case falling under Rule 14 (1) (e) does not require the Company (importer) to give a declaration at the time of arrival of the goods at the entry Naka point that the "goods are meant for temporary detention with" the Company at its warehouse "for eventual export outside the octroi limits".
The Company need not also make any deposit with the Naka Inspector at the point of entry.
An amount equivalent to the octroi duty payable in respect of the goods is only entered in the account current after the goods have reached the warehouse and verified by the Octroi Officer.
Form 4is not applicable to the case of the Company which has got a current account facility.
The Compa ny, is, therefore, bound to give a declaration only in Form 5, and need not give a declaration as in Form 4 nor is there any obligation to deposit an amount equivalent to the full octroi duty with the Octroi Inspector at the Entry Naka Point.
Further reference to original invoices/in Forms 4 and 5 is only for the purpose of checking the particulars en tered into in the forms.
The production of an invoice is not, having regard to the 470 purpose of such production, to be insisted blindly.
If the particulars furnished in the form including weight/quantity or value could be established satisfactorily by other docu ments, we have no doubt that will be sufficient compliance with the Rules.
Column 5 of Form 11 also refers to invoice and the date of invoice.
This is again to correlate the goods exported with the goods imported.
If the identity of the goods could be established by evidence other than the production of invoices that should satisfy the Rules.
The invoice as such has no bearing on the liability of the goods for octroi or the right of the Company for refund.
So far as the production of the original invoices are concerned, the learned counsel for the Company pointed out that the goods are brought from their own manufacturing units at Pune and Jamshedpur and it will only be a stock transfer and this requirement of producing original invoice could not be complied with and is not applicable.
Under the current account procedure the invoices, if any and all the other documents are verified when the goods reach the ware house with reference to the description of the goods, weight/quantity, value and other particulars and it is only after verification the octroi duty leviable is determined and amount is debited in the account current and the demand also is issued.
The learned counsel for the appellant also referred to certain documents to show that for every category of arti cle, the Company has given a distinctive number and the goods are easily identifiable and the number of items or quantity imported are all record in the register and com puterised for easy verification.
It is these identifying numbers of the articles that are mentioned in the intima tion cure application for written permission for export.
He also relied on the fact that the Company has no manufactur ing unit within the Thane Municipality.
Similarly, Column 6 of Form II also could not be complied with as it is not applicable to a person who is having current account facili ty.
So far as the value is concerned the learned counsel for the appellants have fairly stated that the respondent was taking 72% of the list price of the articles for determining octroi payable, for which he has no objection.
In fact, he has suggested that since the Company publishes the price list periodically and that which shows the current price at any point of time may be taken as the basis for such valua tion.
The Octroi Exit Naka Officer had refused to give the certificate of export pass on the ground that the particu lars in Columns 5 and 6 of Form 11 could not be verified as the original invoices and the deposit receipts were not produced.
Since these columns could be filled only to the extent possible by a person having an account current facil ity and there is no dispute about the export of the goods mentioned therein the refusal to give the export pass cer tificate.
by the Exit Naka Officer could not be sustained.
471 The next point to be considered is the procedure to be followed when the importer wants to "breaking the hulk" and repack the goods in smaller quantities and also the proce dure relating to filling up Forms 11 and 12 and the refund applications in such circumstances.
Rules 24 (2.) states that for breaking the bulk and repacking in smaller pack ages, sanction of the Superintendent of Octroi is necessary and the "breaking bulk" shall also be done in the presence of an officer deputed for this purpose.
Rule 62 of Chapter VIII of the Schedule to the Bombay Provincial Municipal Corporation Act, 1949 provides that subject to the standing orders not less than 90% of the octroi paid on any goods shall be refunded if such goods are exported beyond the limits of the city within six months of payment: "provided that. (C) in the case of goods which have been broken bulk prior intimation has been given to the officers specified in this behalf in the standing orders and the place or places of storage have been reported to him from time to time".
Paragraph 5 of Appendix IV to this Act which we have noticed earlier states that the rules flamed under the Municipal Act shall "in so far as it is not inconsistent with the provisions of this Act, continue in force".
Rule 62 of Chapter VIII forms part of the Act.
The learned counsel for the appellant, therefore, contended that Rule 62 shall prevail and prior intimation of the intention to 'breaking bulk ' shall be enough and there was no necessity for the Company to get the sanction of the Superintendent of Octroi or break the bulk in the presence of an officer deputed for the purpose as required under sub rule (2) of Rule 24.
In other words according to the learned counsel Rule 24 (2) of the Octroi Rules is inconsistent with Rule 62 of Chapter VIII of the Schedule to the Act and to the extent. _ of inconsistency it shall be deemed to be not applicable.
On the other hand the learned counsel for the respondent con tended that Rule 62 (c) deals with prior intimation and Rule 24 (2) deals with the sanction and breaking of the bulk in the presence of an officer deputed for that purpose and both the rules can stay together and operate and there is no inconsistency.
We are not impressed with the argument that there is an inconsistency between Rule 62 and Rule 24 (2).
The intimation contemplated in Rule 62 imply that the break ing the bulk shall be done with the knowledge of the octroi authorities.
But it Cannot be said that the rules further provide that after intimation the breaking of the bulk shall be done in the presence of the officers and after sanction that would in any case be inconsistent.
Both the rules thus can stand together.
In H.M.M. Limited vs Administrator, ; this Court had occasion to consider the effect of non com pliance with this require 472 ment of a similar provision, on the right to get refund.
Shortly stated the facts in that case were these: The appel lant brought into the municipal limits Horlicks in bulk containers (large steel drums) for being packed in unit containers (glass bottles) at the packing station in Banga lore and thereafter exported outside the municipal limits.
In respect of the milkfood so exported in glass bottles the appellants sought refund of octroi on the ground that there was no consumption, use or sale within the municipal limits and the goods were exported.
Rule 24 of the Octroi Rules that were in force in Bangalore city provided: "24. 0n all articles on which octroi duty has been paid and which are subsequently exported beyond the octroi limits without breaking bulk, refunds shall, subject to the following rules, be granted at the rate originally charged at the time of import; provided that no such refunds shall, except in the ease of timber imported and re exported in log be granted unless such goods are exported within three months from the date on which octroi was levied".
Relying on this provision it was contended by the Munic ipality that breaking the bulk amounted to "use" within the municipal limits attracting levy of octroi and no refund was permissible.
The refund application had also not been made within three months from the date on which octroi was levied.
It was admitted that the appellants had not followed that procedure prescribed in Rule 24.
This Court held that mere transferring of a bulk product in small containers like packets or bottles for the purpose of sale does not amount to use of the goods in the sense the word is used in rela tion to levy of octroi.
It was further held that the words "without breaking bulk" is not an expression of art and that meant only transferring the product from the drums by break ing the seal of the drums, to the bottles for the purpose of exporting or for taking them out of the municipal limits, and that would not amount to either use or consumption of the Horlicks powder within the municipal limits attracting the levy of octroi.
The ratio of the judgment clearly is that merely on the ground that the goods are not exported in bulk as originally imported, the levy does not become valid or that the import er who exported the goods loses his right to a refund of the octroi paid.
The goods neither loose their identity nor cease to be identifiable.
Once we reach the conclusion that there is no consumption or use, octroi is not attracted and if any levy has been made and the amount collected, the same becomes legally refundable even when the goods are exported in parts and in smaller packages.
This is particu 473 larly so because in the case of goods not consumed or used within the octroi area but exported there is a constitution al bar for the levy of octroi.
In this connection we may also refer to another decision reported in Municipal Committee, Khurari vs Dhannalal Sethi & Ors., [1969] I SCR 166.
The rules considered in that case also provided that an application for refund was to be made in the prescribed form and that the exporter after filling in the particulars had to present his application at the office appointed for that purpose.
There were other rules which provided an elaborate procedure to be followed at the time of export of the goods.
These rules related to the octroi officers satisfying himself that the goods brought for export agree with those mentioned in the application, presentation of the claim within the prescribed time, iden tifying of the goods exported with those imported and other matters.
This Court held that: "these rules do provide a procedure which an exporter wishing to claim refund has to fol low.
But the question is whether in a case where an exporter has not done so, is he disentitled from claiming the refund.
The real difficulty in the way of the appellant Commit tee is that though the rules lay down a proce dure which such an applicant has to follow, they do not provide at the same time that an applicant for refund who has failed to follow the procedure laid down in r.r. 35 to 39 would be disentitled to claim the refund.
In the absence of such a provision coupled with the categorical language of r. 27 giving a right to an exporter of dutiable goods to claim 7/8th of the duty paid on such goods on their import, it becomes difficult to uphold the denial by the appellant Committee of the right of respondents 1 and 2 such a refund.
We are, therefore, of the opinion that in the present state of the rules, the appeal must fail though for reasons different from those given by the Board of Revenue and the High Court".
It may be pertinent to mention that the Maharashtra Municipalities (Octroi) Rules, 1968 also do not contain any specific provision that an applicant for refund who has failed to follow the procedure would be disentitIed to claim the refund.
It may be noted that the amount collected which is equivalent to the octroi duty payable on the goods, on entry into the octroi limits while in detention in the warehouse is only as a deposit pending export of the goods.
The other aspect is that once octroi is not leviable the deposit made by the importer pending export is in the nature of a trust and refundable in the event of the export of the goods.
Further in a given set of facts, whether the rules have been complied with will have 474 to be tested having regard to the nature of the particular transaction and whether the object of the procedure provided is otherwise fully satisfied.
` Rule 28 also merely states that the refund shall be admissible if all the conditions in sub rule 2 of that Rule are satisfied.
The object of requiring intimation or sanction and presence of an officer when breaking the bulk in the scheme of octroi levy and refund is to ensure that dutiable goods do not escape the assessment and refunds are made only in respect of goods exported.
In other words the whole requirement relates to the identification of the goods.
In that sense if the same is otherwise complied with the right to refund cannot be denied.
These rules cannot be read as enabling the municipality to levy and collect octroi even in cases where the goods have not been imported for consumption or use.
As held by this Court in Kirpal Singh Duggal vs Municipal Board, Ghaziabad, ; the octroi rules are intended to regulate the system on which the refunds shall be allowed and paid.
What are merely matters of procedure which the municipality was entitled to require compliance with in granting refund cannot be treated as condition precedent for the entitlement of the refund itself.
The Constitution prohibits levy of tax except in accordance with law.
When the goods are not imported for consumption or use within the octroi area the municipality ceases to have any constitutional right to levy octroi.
If the goods therefore have merely entered into the octroi limits and passed out of the same no octroi duty is attracted.
The concept of octroi as held by this Court in Burma Shell s case (supra) may include "the bringing in of goods in a local area so that the goods come to a repose there".
It is this concept that is reflected in Rule 28 (2) Co) when it requires evidence that the goods were exported out of the octroi limits within a period of six months of their im ports.
The learned counsel for the appellants Mr. Andharuji na had expressed certain difficulties in satisfying the Corporation that the goods imported were exported within the period of six months as provided in the rules in view of certain peculiar circumstances in this case.
He pointed out the goods received in bulk are small small items and there are about 16000 distinctive types of articles and when the bulks are broken and each of the categories items are mixed up together it becomes difficult for him to individually identify when the goods were received and when they were exported.
However, he was sure that the goods were exported before six months.
When this difficulty was pointed out during the pendency of the appeal, as an interim direction this Court by Order dated 1.5.
1989 directed the parties to proceed on the basis that the goods which came in first had gone out first unless some factors or features indicate otherwise.
This is not equitable principle unknown to law.
Even as early as in 1816 with reference to money paid on account to a creditor, in Clayton 's case (1814) 475 23 All.
E.R. Rep. P. 1, it was held that in the absence of an agreement to the contrary, in the case of current account containing debit and credit entries there is a presumption that the first item on the credit side of the account is intended to be applied in the payment of the first item on the debit side of the account.
This is an equitable princi ple which could be followed in the instant case and it may be presumed that the goods which came in first have gone out first and the six months period could be determined on that basis.
In any case in view of the interim direction given by this Court on May 1,1989 that may be usefully be followed for the future also in this case.
To sum up: Having regard to the nature and incidence of octroi unless the octroiable goods are consumed or used or are meant to reach an ultimate user or consumer in the octroi area no octroi is leviable.
The words 'sale therein in the words "consumption, use or sale therein in the defi nition octroi means sale of octroiable goods to a person for the purpose of consumption or use by such person in the octroi area.
If sale was intended for consumption or use in the octroi area whether the purchaser actually consumed inside or outside octroi area is irrelevant.
Rules 24 to 30 and the forms in the system of levy of octroi are intended to regulate the procedure for collection, identification of dutiable goods and correlation of goods exported with the goods imported for the purpose of refunds of octroi collect ed.
In view of constitutional bar octroi is not leviable if the goods are not brought into the octroi area for purposes of consumption or use in the area but for export and in fact exported by the importer himself or the sale by him occa sions the export.
Compliance with the procedure prescribed in the Rules for filing claims of refunds are not condition precedent for the right or eligibility for refund or the liability to refund but are provisions regarding proof of export of the goods imported and are not meant to be exhaus tive either.
They are to be interpreted and understood in that sense.
The object of the Rules fixing a period of limitation for export however is different.
The export cannot be put in perpetual doubt and the goods may be con sidered to have come to a repose if they were not exported within a particular period provided in the rules.
Applying these principles to the instant case, on facts the rejection of refund applications on the ground that Rule 25 (3) (d) had not been complied with was illegal.
Since the rejection of the claims for refund was merely on the ground that either Form 4 and original invoices were not produced or columns 5 and 6 of Form 11 or the corresponding columns in Form 12 had not been filled with reference to an original invoice or Form 4 or deposit receipt and the refusal to issue export pass certificates on those very grounds which we have stated are untenable the other orders of rejections are also invalid.
If the goods are mixed up and unidentifia ble 476 due to breaking bulk and repacking in smaller and assorted packages before export the principle that the first export was of the goods first imported, subject to any evidence available to the contrary, may be applied and the six months period prescribed for export may be determined accordingly.
When these appeals were pending by way of interim ar rangement this Court by order dated 25.4.1990 directed that in order to obviate the difficulty of identifying the goods at the time of export by reason of the breaking of the)bulk and in order avoid doubts, the respondent Corporation may depute their officer or officers on all working days at the warehouse of the Company to supervise the breaking of the bulk subject to the Company reimbursing the entire monthly payments and other allowances to be paid to the said officer or officers as per bill or pay slips sent by the Corporation to the Company.
We think that this procedure could be con tinued and followed in future also so that while the pur poses of the rules are served the free trade and commerce of the Company which is stated to have a large turnover is also not affected.
The learned counsel for the respondent then contended that the appellants have recovered the amounts paid by them by way of octroi duty from the dealers or the customers to whom they had sold the goods and therefore they are in any case not entitled to get a refund.
The argument was that if refund is ordered it would amount to allowing the appellants to unjustly enrich themselves at the cost of the public to whom the burden had already been passed.
This argument is based on the ground that in the selling price the company had merged the octroi duty originally paid as deposit and if a refund is made the company would be getting an additional amount over and above normal price which they would have charged but for the fact that they were initially asked to deposit octroi.
There is no evidence that any of the arti cles sold by the Company is subject to any price control by the Government or that the Company had charged any octroi separately in the bills, Invoices and the other documents of sale to the outside purchasers produced before us do not also show that any octroi was separately charged and col lected by the Company.
It may be mentioned that in the rejoinder filed by the appellant in the writ petition they have specifically denied that they "have recovered the amount paid by them by way of octroi duty from the dealers to whom they had sold the goods or that the dealers in turn have recovered the octroi duty from the customers".
In view of this the question of unjust enrichment does not arise.
477 This appeal is accordingly allowed on the above terms.
There will 'however be no order as to costs.
T.N.A. Appeal allowed.
| The appellant company was carrying on business of manu facture and sale of motor vehicles, spare parts of motor vehicles and excavators.
Their manufacturing units were located outside the municipal limits of the respondent corporation.
Pursuant to the permission granted by the Respondent Corporation under Rule 10(2) of 446 the Maharashtra Municipalities (Octroi) Rules, 1968 the appellant company was maintaining a bonded warehouse within the municipal limits of the Respondent Corporation.
The motor vehicles parts and excavators parts brought from the Company 's own factories as well parts imported from abroad were stored in this warehouse.
These products were brought in bulk and thereafter taken or sent out from the Municipal limits in smaller packings depending on the requirements of the customers in various parts of the country.
The appellants were also granted current account facilities without the requirement of immediate payment of octroi at the Octroi Naka.
Accordingly, the appellants were carrying out their activities of imports and exports under the current account procedure with facility of unpacking the bulk, repacking and exporting.
Under the Octroi Rules the octroi becomes refundable when the goods in respect of which octroi was paid are exported out of octroi limits within 6 months of their im port.
During the period 1st January, 1983 to 31st March, 1984 the appellant Company made 1182 claims for refund of octroi which were rejected by the Corporation on the grounds: (1) the Company had "sold" the spare parts within the octroi limits of the Corporation in contravention of Rule 25(3) (d) of the Maharashtra Municipalities (Octroi) Rules, 1968; (2) the procedure prescribed for export and the claim of refund had not been strictly followed.
The appellants filed a writ petition under Article 226 in the High Court of Bombay contending that the action of the Municipal Corporation in refusing refund was unconstitu tional and illegal.
The Division Bench of the High Court dismissed the writ petition.
The Company filed an appeal in this Court against the decision of the High Court.
In appeal to this Court it was contended on behalf of the appellant (i) since the sales were not for consumption or use within the octroi limits and that the parts were sold to parties outside the octroi limits and also for consump tion or use outside such limits the rejection of the claims by the Respondent Corporation on the ground that the sales were within the municipal limits in contravention of rule 25(3) (d) of the Rules is illegal; (ii) Under Rule 62 of Chapter VIII of the Schedule to Bombay Provincial Municipal Corporation Act, 1949, prior intimation of the intention to 'break the bulk ' is enough and there is no necessity for the company to get the sanction 447 of Superintendent of Octroi or break the bulk in the presence of an officer deputed for the purpose as required under sub rule (2) of Rule 24 of the Maharashtra Municipali ties (Octroi) Rules, 1968; Rule 24(2) of the Octroi Rules is inconsistent with Rule 62 and to the extent of inconsistency it shall be deemed to be not applicable.
On behalf of the respondent Corporation it was contended (i) that the meaning of words "sales therein" in the defini tion of octroi in the Acts and in Entry 52 of List II of VII Schedule to the Constitution could not be limited to sales of the goods for purposes of consumption or use within the municipal limits; (ii) there was a change in the ownership of the goods since a sale in law had taken inside the octroi limits though the purchaser was residing and carrying on business outside the octroi limits and under the sale the goods were intended to be and in fact exported for the purpose of consumption and use outside the octroi limits; (iii) that while Rule 62 (c) deals with prior intimation Rule 24(2) deals with the sanction and breaking of the bulk in the presence of an officer deputed for that purpose and both the rules can stay together and operate and there is no inconsistency; (iv) since the appellants have recovered the amounts paid by them by way of octroi duty from their deal ers or customers they are not entitled to refund; ordering of refund would amount to allowing the appellants to unjust ly enrich themselves at the cost of the public to whom the burden had already been passed.
Allowing the appeal, this Court, HELD: 1.
In the case of impost of octroi the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area.
Mere physical entry into the octroi limits would not attract levy of octroi.
When the goods are brought in not for consumption within the area but for temporary detention and eventual export, octroi is not leviable.
The octroiable event in such a case shall be deemed not to have happened.
This is particularly so because in the case of goods not consumed or used within the octroi area but exported there is a constitutional bar for the levy of octroi.
In view of the constitutional bar, octroi is not leviable if the goods are not brought into the octroi area for purposes of consumption or use in the area but for export and in fact exported by the importer himself or the sale by him occasions the export.
[458 B C, 472 H, 473 A, 475 E] 1.1 Having regard to the nature and incidence of octroi unless the octroiable goods are consumed or used or are meant to reach an 448 ultimate user or consumer in the octroi area no octroi is leviable.
The words 'sale therein ' in the words 'consump tion, use or sale therein ' in the definition octroi means sale of octroiable goods to a person for the purpose of consumption or use by such person in the octroi area.
If sale was intended for consumption or use in the octroi area whether the purchaser actually consumed inside or outside octroi area is irrelevant.
Therefore octroi rules cannot be read as enabling the municipality to levy and collect octroi even in cases where the goods have not been imported for consumption or use.
[475 C, 474 B] Burmah Shell Co. vs Belgaum Municipal, ll963I Suppl.
2 S.C.R. 216; Hira Lal Thakur Lal Dalai vs Brash Broach Munic ipality, ; Municipal Council of Jodhpur vs Parekh Automobiles Ltd. & Ors., ; and H.M.M. Ltd. vs Administrator, ; , relied on.
Khandelwal Traders Akola vs The Akola Municipal Council, AIR 1985 Born.
218, approved.
1.2 Since the goods were sold by the Company to outside purchasers and the goods under the transactions of sale were intended to be exported and were in fact exported, for consumption or use outside the municipal limits no octroi duty was leviable and the octroi duty paid on entry into the municipal limits was, therefore, liable to be refunded.
Accordingly the rejection of the refund claims on the ground that Rule 25(3) (d) had not been strictly complied with is illegal and could not be sustained.
[457 G H] 2.
Once octroi is not leviable the deposit made by the importer pending export is in the nature of a trust and refundable in the event of the export of the goods.
[473 G H] 2.1 Under the octroi scheme, when the goods in respect of which octroi is paid are exported, the octroi becomes refundable.
Right to refund arises because the goods are not consumed inside the area but exported and the tax becomes not leviable.
[458 C] 2.2 If there is no consumption or use, octroi is not attracted and if any levy has been made and the amount collected, the same becomes legally refundable even when the goods are exported in parts and in smaller packages.
[472 H] 3.
The rules merely regulate the system on which refund shall 449 be allowed.
In a given set of facts, whether the rules have been complied with will have to be tested having regard to the nature of the particular transaction and whether the object of the procedure provided is otherwise fully satis fied.
[458 D, 473 H, 474 A] 3.1 The object of requiring intimation or sanction and presence of an officer when breaking the bulk in the scheme of octroi levy and refund is to ensure that dutiable goods do not escape the assessment and refunds are made only in respect of goods exported.
In other words the whole require ment relates to the identification of the goods.
In that sense if the same is otherwise complied with the right to refund cannot be denied.
[474 A B] 3.2 Rules 24 to 30 of the Maharashtra Municipalities (Octroi) Rules, 1968 and the forms in the system of levy of Octroi are intended to regulate the procedure for collection identification of dutiable goods and correlation of goods exported with the goods imported for the purpose of refunds of octroi collected.
[475 D] The rules do not contain any specific provision that an applicant for refund who has failed to follow the procedure would be disentitled to claim the refund.
[473 G] 3.3 Compliance with the procedure prescribed in the Rules for filing claims of refunds are not conditions prece dent for the right or eligibility for refund or the liabili ty to refund but are provisions regarding proof of export of the goods imported and are not meant to be exhaustive ei ther.
They are to be interpreted and understood in that sense.
[475 E F] Municipal Committee Khurari vs Dhannalal Nethi & Ors., ; ; Kirpal Singh Duggal vs Municipal Board, Ghaziabad, ; , applied.
3.4 Since the rejection of the claims for refund was merely on the ground that either form 4 and original in voices were not produced or columns 5 and 6 of Form 11 or the corresponding columns in Form 12 had not been filled with reference to an original invoice or Form 4 or deposit receipt and the refusal to issue export pass certificates on those very grounds are untenable the orders of rejection are invalid.
1475 G H] 4.
The object of the Rules fixing a period of limitation for 450 export however is different.
The export cannot be put in perpetual doubt and the goods may be considered to have come to a repose if they were not exported within a particular period provided in the rules.
[475 F] 4.1 However an equitable principle could be followed in this regard and it may be presumed that the goods which came in first have gone out first.
If the goods are mixed up and unidentifiable due to breaking bulk and repacking in smaller and assorted packages before export the principle that the first export was of the goods first imported, subject to any evidence available to the contrary, may be applied and the six months period prescribed under Rule 28(2) (b) for export may be determined accordingly.
[475 A B, H, 476 A] Clayton 's case; , , applied.
There is no inconsistency between Rule 62 and Rule 24(2).
The intimation contemplated in Rule 62 imply that the breaking the bulk shall be done with the knowledge of the octroi authorities.
But it cannot be said that the rules further provide that after intimation the breaking of the bulk shall be done in the presence of the officers and after sanction that would in any case be inconsistent.
Therefore, both the rules can stand together.
[471 F G] 6.
There in no evidence that any of the articles sold by the Company is subject to any price control by the Gov ernment or that the Company had charged any octroi separate ly in the bills.
Documentary evidence do not also show that any octroi was separately charged and collected by the Company.
Therefore the question of unjust enrichment does not arise.
[476 F H]
|
ence No. 1 of 1991.
(Under Article 143 of the Constitution of India).
G. Ramaswamy, Attorney General, V.R. Reddy, Addl.
Solic itor General, F.S. Nariman, T.R. Andhyarujina, Dr. Y.S. Chitale, S.S. Javali, K. Parasaran, A.K. Ganguli, K.K. Venugopal, A.S. Nambiar, Shanti Bhushan, P.P. Rao, P.P. Muthanna, K. Subramanian, Curiae Joseph, N.N.Gangadeb, Ms. A. Subhashini, Ms. Niranjana Singh, M.Veerappa, Subhash Sharma.
Mohan Katarki, Atul Chitale, K.H. Nobin Singh, Subbanna, A. Subba Rao, G. Umapathy, E.C. Agarwala, P.N. Ramalingam, Smt.
Shante Vasudevan, P. Krishnamurthy, P.K. Manohar, K.V. Viswanathan, Shalid Rizvi, Ashok Mukhoty, Mrs. Sangeeta Garg, Jayant Bhushan, T.T. Kunhikanan, M.D.B. Raju, G. Prabhakar, N. Ganpathi, S.R. Bhat, P. Mahale and P.R. Pamasesh for the appearing parties.
A.K. Sen, Venkataraman and C.S. Vaidyanathan for the Inter vener.
The Report of the Court was delivered by SAWANT, J. On July 27, 1991 the President, under Article 143 of the Constitution, referred to this Court three ques tions for its opinion.
The Reference reads 'as follows.
: "Whereas, in exercise of the powers conferred by Section 4 of the (hereinafter referred to as "the Act").
the Central Government constituted a Water Disputes Tribunal Called "the Cauvery Water Disputes Tribunal" (hereinafter called "the Tribunal") by a notification dated 2 June, 1990, a copy where of is annexed here to, for the adjudi 516 cation of the Water Dispute regarding the Inter State River Cauvery; WHEREAS on 25 June 1991, the Tribunal passed an interim Order (hereinafter referred to as "the Order"), a copy whereof is annexed here to; WHEREAS, differences have arisen with regard to certain aspects of the Order; WHEREAS, on 25 July 1991, the Governor of Karnataka promulgated the Kamataka Cauvery Basin Irrigation Protection Ordinance, 1991 (hereinafter referred to as "the Ordinance"), a copy whereof is annexed hereto; WHEREAS, doubts have been expressed with regard to the constitutional validity of the Ordinance and its provisions; WHEREAS, there is likelihood of the constitu tional validity of the provisions of the Ordinance, and any action taken thereunder, being challenged in Courts of law involving protracted and avoidable litigation; WHEREAS, the said differences and doubts have given rise to a public controversy which may lead to undesirable consequences; AND WHEREAS, in view of what is hereinbefore stated, it appears to me that the following questions of law have arisen and are of such nature and of such public importance that it is expedient to obtain the opinion of the Supreme Court of India thereon; NOW, THEREFORE, in exercise of the powers conferred upon me by clause (1) of Article 143 of the Constitution of India, I, Ramaswamy Venkataraman, President of India, hereby refer the following question to the Supreme Court of India for consideration and report thereon, namely: (1) Whether the Ordinance and the provi sions thereof are in accordance with the provisions of the Constitution; (2) (i) Whether the Order of the Tribunal constitutes a report and a decision within the meaning of section 5 (2) of the Act; and (ii) Whether the Order of the Tribunal is required to be published by the Central Gov ernment in order to make it effective; 517 (3) Whether the Water Disputes Tribunal constituted under the Act is competent to grant any interim relief to the parties to the dispute.
" To appreciate the significance of the questions referred and our answers to them, it is necessary to understand the factual background which has led to the Reference.
The river Cauvery is an inter State river and is one of the major rivers of the Southern Peninsula.
The basin area of the river and its tributaries has substantial spread over within the territories of the two States, namely.
Karnataka and Tamil Nadu, Karnataka being the upper riparian State and Tamil Nadu being the lower riparian State.
The other areas which are the beneficiaries of the river water are the territories comprised in the State of Kerala and in the Union Territory of Pondicherry.
The total length of the river from its head to its outflow into the Bay of Bengal is about 802 kms.
It travels about 381 kms.
in Southern East ernly direction before it reaches the border of Karnataka and Tamil Nadu.
It also constitutes boundary between the said two States to an extent about 64 kms.
and then tra verses a distance of about 357 kms.
in Tamil Nadu before joining the sea.
There were two agreements of 1892 and 1924 for sharing the water of the river between the areas which are predomi nantly today comprised in the State of Karnataka and Tamil Nadu, and which were at the time of the agreements comprised in the then Presidency of Madras on the one hand and the State of Mysore on the other.
The last agreement expired in 1974.
The river presently covers three States of Karnataka, Tamil Nadu and Kerala and the Union Territory of Pondicher ry.
The present State of Tamil Nadu has an area of about 43,868 sq.
of the Cauvery River basin, reducing the basin area which at the time of the agreement was about 49,136 sq.
As against this the basin area of the said river which was about 28,887 sq.
in the State of Mysore has increased to about 34,273 sq.
in the present State of Karnataka.
The contributions made to the flows of the Cauvery River by Karnataka.
Tamil Nadu and Kerala, according to the State of Karnataka is 425 TMC, 252 TMC and 113 TMC respectively together amounting to 790 TMC According to the State of Tamil Nadu, the contributions of the three States respec tively are 392 TMC, 222 TMC and 126 TMC respectively togeth er amounting to 740 TMC.
The Study Team appointed by the Central Government in 1974 worked out the appropriations of the respective States as follows: Karnataka 177 TMC, Tamil Nadu including Pondicherry 489 TMC and Kerala 5 TMC.
518 In 1956 the Parliament enacted the for the purpose of regulation and development of inter State rivers and river valleys find also the Inter State Water Disputes Act, 1956 for adjudication of disputes with regard to the use, distribution or control etc.
of the said waters.
In 1970 Tamil Nadu invoked the provisions of Section 3 of the and requested the Central Government for reference of the dis pute between the two States, viz. Tamil Nadu and Karnataka to a Tribunal under the Act.
The Central Government initiat ed negotiations between the two States.
Simultaneously, Tamil Nadu moved this Court by means of a suit under Article 131 of the Constitution being Suit No.1 of 1971 seeking a direction to the Union Government to constitute a Tribunal and to refer the dispute to it.
In the said suit, Tamil Nadu applied for an interim order to restrain the S;ate of Karna taka from proceeding with and executing the projects men tioned therein.
This Court by its Order of 25th January, 1971 dismissed the application for interim relief.
It appears that the negotiations between the two states which were going on in the meanwhile, resulted in the con stitution of a Fact Finding Committee in June 1972 which was set up to ascertain facts, amongst others as to the avail ability of water resources, the extent of utilisation and the nature of the areas in the respective States within the river basin, and their requirements.
In view of the consti tution of the Committee, Tamil Nadu withdrew its suit.
The Fact Finding Committee submitted its Reports in December, 1972, and August 1973.
A Central Study Team headed by Shri CC.
Patel, then Addl.
Secretary to Government of India, in the Ministry of Irrigation was also set up to examine the question of assessing the savings of water in the existing and planned projects of the three States in the Cauvery basin.
The recommendation of the Study Team on improvement and modernisation of the irrigation system including the strengthening of the works and the lining of channels, integrated operations of the reservoirs within the Cauvery basin, scientific assessment of water requirement in the command area and for monitoring the releases from the reservoirs for an efficient tie up between the rain fall and command, water requirement and release were announced at the Inter State Conference of June 1974.
Further negotiations resulted in what is known as "the 1976 Understanding".
This Understanding envisaged the appor tionment of the surplus water in the ratio of 30:53:17 amongest the States of Tamil Nadu, Karnataka and Kerala respectively.
In the case of savings, the Study Team pro posed the apportionment in the ratio of 87 TMC to Karnataka, 4 TMC to Tamil Nadu and 34 TMC to Kerala.
519 It appears that in spite of the information gathered through the Fact Finding Committee and the Study Team set up by the Union Government, the negotiations were not fruitful.
In 1983, Tamil Nadu Ryots Association presented a petition to this Court under Article 32 of the Constitution being Writ Petition No. 13347 of 1983.
The petition sought issue of a writ of mandamus to the Central Government requiring it to refer the dispute to a Tribunal under the Act.
The peti tion was also accompanied by an application seeking interim relief.
The State of Tamil Nadu supported the Writ Petition.
Notices were issued to the respondents including the Union Government and the State of Karanataka.
The petition re mained pending in this Court for nearly seven years.
No application for interim relief was moved during this period.
Although the inter State meetings continued to be held during this period, nothing worthwhile emerged out of them.
Hence, in June 1986, the State of Tamii Nadu lodged a Letter of Request under Section 3 of the Act with the Central Government for the Constitution of a Tribunal and for refer ence of the water dispute for adjudication to it.
In the said letter, Tamil Nadu primarily made a grievance against the construction of works in the Karnataka area and the appropriaion of water upstream so as to prejudice the inter ests down stream in the State of Tamil Nadu.
It also sought the implementation of the agreements of 1892 and 1924 which had expired in 1974.
At the hearing of the Writ Petition filed by the Tamil Nadu Ryots Association, the Central Government left the matter to the Court.
This Court taking into consideration the course of negotiations and the length of time which had passed, by its judgment dated May 4, 1990 held that the negotiations between the two States had failed and directed the Union Government to constitute a Tribunal under Section 4 of the Act.
In pursuance of the directions given by this Court, the Union Government by its notification dated June 2, 1990, constituted the Cauvery Water Disputes Tribunal and by another Notification of the even date referred to it the water dispute emerging from Tamil Nadu 's Letter of Request dated July 6, 1986.
The Cauvery Water Disputes Tribunal (hereinafter re ferred to as the "Tribunal") commenced its first sitting on 20th July, 1990.
On that day, Tamil Nadu submitted a letter before the Tribunal seeking interim reliefs.
The Tribunal directed Tamil Nadu to submit a proper application.
There upon Tamil Nadu and the Union Territory of Pondicherry submitted two separate applications for interim reliefs being CMP Nos. 4 and 5 of 1990.
520 The interim relief claimed by Tamii Nadu was that Karna taka be directed not to impound or utilise water of Cauvery river beyond the extent impounded or utilised by them as on 31 5 1972.
as agreed to by the Chief Ministers of the basin States and the Union Minister for Irrigation and Powers.
It further sought passing of an order restraining Karnataka from undertaking any new projects, dams, reservoirs, canals and/or from proceeding further with the construction of projects, dams, reservoirs.
canals etc.
in the Cauvery basin.
In its application for interim relief Pondicharry sought a direction from the Tribunal both to Karnataka and Tamil Nadu to release the water already agreed to i.e., 9.355 TMC during the months of September to March.
The Tribunal considered simultaneously both the applica tions for interim reliefs as well as the procedure governing the trial of the main dispute.
It directed the disputant States to file their pleading by way of statements of cases and also required the States of Karnataka and Kerala to submit their replies to the applications for interim reliefs made by Tamil Nadu and Pondicherry.
By September 1990, all the disputant States submitted their first round of plead ings or statements of cases.
By November 1990, Karnataka and Kerala also submitted their replies to the applications for interim reliefs.
The Tribunal gave time to the States to submit their respective counter statements in reply to the Statements of cases filed earlier in the main dispute.
It appears that before the disputant states submitted their counter statements in the main dispute, the Tribunal heard the applications for interim reliefs since Tamil Nadu had, in the meanwhile, filed an application being CMP No.9 of 1990 as an urgent petition to direct Karnataka as an emergent measure to release at least 20 TMC of water as the first instalment, pending final orders on their interim application CMP No.4/ 90.it appears that this application was filed on the ground that the samba crop could not he sustained without additional supplies at Mettur reservoir in the Tamil Nadu State" Besides contesting the application on merits, both Karnataka and Kerala raised a preliminary ' objection to the jurisdiction of the Tribunal to entertain the said application and to grant any interim relief.
The preliminary objection was that the Tribunal constituted under Act, had a limited jurisdiction.
It had no inherent powers as 'an ordinary Civil Court has, and there was no provision of law which authorised or conferred jurisdiction on the Tribunal to grant any interim relief.
The Tribunal heard the parties both on the preliminary objection as well 521 as on merits, and by its Order of January 5, 1991.
among other things, as follows : ".
This Act is a complete code in so far as the reference of a dispute is concerned.
In the circumstances.
in our opinion, the Tribu nal is authorised to decide only the 'water dispute ' or disputes which have been referred to it.
If the Central Government is of the opinion that there is any other matter con nected with or relevant to the 'water dispute ' which h,ks already been referred to the Tribu nal.
it is always open to the Central Govern ment to refer also the said matter as a dis pute to the Tribunal constituted under Section 4 of the Act.
Further, no water dispute can be referred by the Central Government unless the Central Government is of the opinion that the said dispute cannot be settled by negotia tions.
In fact, no water dispute can be adju dicated without its reference to the Tribunal.
The interim reliefs which have been sought for even if the same are connected with or rele vant to the water dispute already referred, cannot be considered because the disputes in respect of the said matters have not been referred by the Central Government to the Tribunal.
Further, neither there is any aver ment in these petitions that the dispute related to interim relief cannot be settled by negotiations and that the Central Government has already formed the opinion that it shall be referred to the tribunal.
In case the petitioners of CMP Nos. 4,5 and 9 of 1990 are aggrieved by the conduct of the State of Karnataka and an emergent situation had ari sen, as claimed.
they could have raised a dispute before the Central Government and in case the Central Government was of the opinion that the said dispute could not be settled by negotiations, the said dispute could also have been referred by the Central Government to the Tribunal.
In case such a dispute had been referred then it would have been open to the Tribunal to decide the said dispute which decision would then be final and binding on the parties.
X X X X X From the letter dated 6.7.
1986, which was the request made on behalf of the State of Tamil Nadu to the Central Government referring the dispute to the Tribunal.
it is clear that the dispute which has been referred to this Tribunal in regard to the executive action taken by the Karnataka State in construct 522 ing Kabini, Hemavathi, Harangi, Swarnavathi and other projects and expanding the ayacuts and the failure of the Karnataka Government to implement the agreements of 1892 and 1924 relating to the use, distribution and the control of Cauvery waters.
No interim dispute in regard to the release of waters by the Karnataka Government from year to year subse quent to the date of the request made by the State of Tamil Nadu was at all referred to the Tribunal.
The Tribunal has been called upon to decide the main water dispute, which, when adjudicated upon, would undoubtedly be binding on the parties.
In view of the above, we are of the opinion that the Tribunal cannot enter tain the prayer for interim relief unless the dispute relating to the same is specifically referred to the Tribunal.
X X X X X X X X X The observations made by Hon 'ble Supreme Court in Union of India vs Paras Lamines (P) Ltd., ; were in relation to the Appellate Tribunal constituted under the .
It was held that the Tribu nal functions is a court within the limits of its jurisdiction.
Its area of jurisdiction is defined but within the bounds of its jurisdic tion it has all the powers expressly and impliedly granted.
The Supreme Court while discussing the extent of the power of the Tribunal in respect of the grant made by a particular Statute held that the Tribunal will have all incidental and ancillary powers for doing of such acts or employing all such means as are reasonably necessary to make the grant effective.
The import of the decision of the Hon 'ble Supreme Court is that the Tribunal will have incidental and ancillary powers while exercising the powers expressly con ferred.
These incidental and ancillary powers must relate to the actual dispute referred and not to any other matter including granting of interim reliefs which are not at all subject matter of reference.
In our opinion what the Supreme Court intended to hold was that the Tribunal has incidental and ancillary powers to pass orders in respect of a reference for adjudication of which it has been constituted.
It has not, however, further laid (sic.) that it has also inciden tal and ancillary powers to grant relief in respect of a dispute which has not at all been referred.
In the instant case, the water dispute which has been referred to us is that which emerges from the letter of the State of 522 Tamil Nadu dated 6th July, 1986.
The Tribunal will have the power to pass such consequential orders as are required to be made while decid ing the said dispute and will also have inci dental and ancillary powers which will make the decision of the reference effective but these powers are to be exercised only to enable it to decide the reference effectively but not to decide disputes not referred in cluding a dispute in regard to grant of inter im relief/interim reliefs.
X X X X X X X X X.
The Second submission raised by the learned counsel for Tamil Nadu namely to the effect that the Tribunal alone could exercise juris diction in respect of a water dispute by virtue of Article 262 of the Constitution of India and in case Tribunal holds otherwise the State of Tamil Nadu will be left with no remedy available to it, it may be stated that since we have taken the view that in case a water dispute really arises and such water dispute could not be resolved by negotiations then it will be open to the Central Government to refer the said dispute to the Tribunal for adjudication, the question of not having a remedy for a wrong does not arise before the Tribunal.
The Central Government if it finds that the dispute is connected with or related to the water dispute already referred to the Tribunal, it is open to it to refer the said dispute also to the Tribunal in regard to the granting of an interim relief.
" In the view that it took, as above, the Tribunal held that it could not entertain the said applications for grant of interim reliefs as they were not maintainable in law, and dismissed the same.
Being aggrieved, the State of Tamil Nadu approached this Hon 'ble Court by means of special leave petitions under Article 136 of the Constitution against the orders passed both in the original application for interim relief being CMP No.4 of 1990 as well as in the application for urgent interim relief being CMP No.9 of 1990.
So did the Union Territory of Pondicherry against the order passed by the Tribunal in its application for interim relief being CMP No.5 of 1990.
These special leave petitions which were later on converted into Civil Appeals Nos.303 04 of 1991 and Civil Appeal No. 2036 of 1991 respectively, were heard together and disposed of by this Court by its judgment dated April 26.1991.
While allowing the appeals this Court held as follows: 524 "Thus, we hold that this Court is the ultimate interpreter of the provisions of the Inter State Water Disputes Act, 1956 and has an authority to decide the limits, powers and the jurisdiction of the Tribunal constituted under the Act.
This Court has not only the power but obligation to decide as to whether the Tribu nal has any jurisdiction or not under the Act, to entertain any interim application till it finally decides the dispute referred to it.
X X X X X X X X X A perusal of the order of reference dated 2.6.90 as already extracted above clearly goes to show that the Central Government had re ferred the water disputes regarding the inter State river Cauvery and the river valley thereof, emerging from letter dated 6th July, 1986 from the Government of Tamilnadu.
Thus all the disputes emerging from letter dated 6th July, 1986 had been referred to the Tribu nal.
The Tribunal committed a serious error in omitting to read the following important paragraph contained in the aforesaid letter dated 6,7.86." This Court then quoted the said paragraph from the said letter of 6.7. 1986 which reads as follows: "REQUEST FOR EXPEDITIOUS ACTION IN REFERRING TIlE DISPUTE TO TRIBUNAL. ' From 1974 75 onwards, the Government of Karna taka has been impounding all the flows in their reservoirs.
Only after their reservoirs are filled up, the surplus flows are let down.
The injury inflicted on this State in the past decade due to the unilateral action of Karna taka and the suffering we had in running around for a few TMC of water every time and crops reached the withering stage has been briefly stated in note (Enclosure XXVIII).
It is patent that the Government of Karnataka have badly violated the inter State agreements and caused irreparable harm to the age old irrigation in this State.
Year after year, the realisation at Mettur is failing fast and thousands of acres in our ayacut in the basin are forced to remain fallow.
The bulk of the existing ayacut in Tamil Nadu concentrated mainly in Thanjavur and Thiruchirappalli districts is already gravely affected in that the cultivation operations are getting long delayed, traditional double crop lands are getting reduced to single crop lands and crops even in the single crop lands are withering and falling for want of adequate wettings 525 at crucial times.
We are convinced that the in ordinate delay in solving the dispute is taken advantage of by the Government of Karnataka in extending their canal systems and their ayacut in the new projects and every day of delay in adding to the injury caused to our existing irrigation.
" The Court then proceeded to observe as fol lows: "The above passage clearly goes to show that the State of Tamilnadu was claiming for an immediate relief as year after year.
the realisation of Mettur was failing fast and thousands of acres in their ayacut in the basin were forced to remain fallow.
It was specifically mentioned that the inordinate delay in solving the dispute is taken advan tage of by the Government of Karnataka in extending their canal systems and their ayacut in the new projects and every day of delay is adding to the injury caused to their existing irrigation.
The Tribunal was thus clearly wrong in holding that the Central Government had not made any reference for granting any interim relief.
We are not concerned, whether the appellants are entitled or not, for any interim relief on merits, but we are clearly of the view that the reliefs prayed by the appellants in their C.M.P. Nos. 4, 5 and 9 of 1990 clearly come within the purview of the dispute referred by the Central Government under Section 5 of the Act.
The Tribunal has not held that it had not incidental and ancil lary powers for granting an interim relief, but it has refused to entertain the C.M.P. Nos.4,5 and 9 on the ground that the reliefs prayed in these applications had not been referred by the Central Government.
In view of the above circumstances we think it is not necessary for us to decide in this case, the larger question whether the Tribunal consti tuted under the Water Disputes Act has any power or not to grant any interim relief.
In the present case the appellants become enti tled to succeed on the basis of the finding recorded by us in their favour that the re liefs prayed by them in their C.M.P. Nos. 4,5 and 9 of 1990 are covered in the reference made by the Central Government.
It may also be noted that at the fag end of the arguments it was submitted before us on behalf of the State of Karnataka that they were agreeable to proceed with the C.M.P.s on merits before the Tribunal on the terms that all party States agreed that all questions arising out of or connected with or relevant to the water dis pute (set out in the respective pleadings of the respective parties), including all 526 applications for interim directions/reliefs by party States be determined by the Tribunal on merits.
However, the above terms were not agreeable to the State of Tamilnadu as such we have decided the appeals on merits.
" In view of its findings as above, this court by the said order directed the Tribunal to decide CMPs Nos. 4, 5 and 9 of 1990 on merits.
In pursuance of these directions, the Tribunal heard the said applications of Tamil Nadu and Pondicherry.
It appears that before the Tribunal, objections were again raised on behalf of the State of Karnataka with regard to the maintainability of the applications filed by Tamil Nadu and Pondicherry for interim reliefs.
The Tribunal did not countenance the said objections holding that the direction given by this Court was binding on it.
The Tribu nal then proceeded to decide the applications on merits and by its order dated June 25, 1991 held as follows: "When we are deliberating whether any emergent order ought to be passed, our prime considera tion ought to be to preserve, as far as possi ble, pending final adjudication the rights of the panics and also to ensure that by unilat eral action of one party, other party is not prejudiced from getting appropriate relief at the time of the passing of the final orders.
We ought to also endeavour to prevent the commission of any act by the panics which might impede the Tribunal from making final orders in conformity with the principles of fair and equitable distribution of the waters of this inter State river.
x x x x x x x x x .
At this stage it would be neither feasible nor reasonable to determine how to satisfy the needs of the each State to the greatest extent possible with a minimum of detriment to others.
We do not also propose at this stage to enter into the question whether the present use of water of the river Cauvery either by the State of Tamil Nadu or the State of Karnataka is the most beneficial use to which the water could be put to.
x x x x x x x x x .
We do not propose to examine at this stage the legality or justifiability of erec tion of these reservoirs, dams, canals, etc.
The said matters may be gone into if found necessary at the appropriate stage.
In this case it would be in accordance with justice to fix the annual releases into Mettur Dam by making average of the same for a number of normal years in the immediate past.
X X X X X X X X X 527 .
We have already mentioned that at the present stage we would be guided by considera tion of balance of convenience and maintenance of the existing utilisation so that rights of the parties may be preserved tilt the final adjudication. ".
The Tribunal then directed the State of Karnataka to release water from its reservoirs in Karnataka so as to ensure that 205 TMC water is available in Tamil Nadu 's Mettur reservoir in a year from June to May. The Tribunal further directed Karnataka to regulate the release of water every year in the manner stated in the order.
The monthly quota of the water was to be released in four equal instal ments every week, and if there was not sufficient water available in any week the deficit was directed to be made good in the subsequent week.
The Tribunal also directed Tamil Nadu to deliver to Pondicherry 6 TMC water for its Karaikal region in a regulated manner.
In addition, the Tribunal directed Karnataka not to increase its area under irrigation by the waters of Cauvery, beyond the existing 11.2 lakh acres.
The Tribunal then observed that its said order would remain operative till the final adjudication of the dispute referred to it.
Thereafter on July 25, 1991 the Governor of Karnataka issued an Ordinance named "the Karnataka ,Cauvery Basin Irrigation Protection Ordinance, 1991" which reads as fol lows: "An Ordinance to provide in the interest of the general public for the protection and preservation of irrigation in irrigable areas of the Cauvery basin in Karnataka dependent on the waters of the Cauvery river and its tribu taries.
Whereas the karnataka Legislative Council is not in Session and the Governor of Karnataka is satisfied that circumstances exists which render it necessary for him to take immediate action for the protection and preservation of irrigation in irrigable areas office Cauvery basin in Karnataka dependent on the water of Cauvery river and its tributaries.
Now, therefore, in exercise of the power conferred under clause (1) of Article 213 of Constitution of India, I, Khurshed Alam Khan.
Governor of Karnataka am pleased to promulgate the following Ordinance, namely: 1.Short title, extent and commencement: (1) This Ordinance may be called the Karnataka Cauvery Basin Irrigation Protection Ordinance, 1991.
528 (2) It extends to the whole of the State of Karnataka.
(3) It shall come into force at once.
Definition: Unless the context other wise requires: (a) "Cauvery basin" me,ms the basin area of the Cauvery river and its tributaries lying within the territory of the State of Karnata ka.
(b) "Irrigable area" means the areas specified in the Schedule.
(c) "Schedule" means the Schedule annexed to this Ordinance.
(d) "Water year" means the year commenc ing with the 1st of June of a Calendar year and ending with the 31st of May of the next Calendar year.
Protection of Irrigation in irrigable area: (1) It shall be the duty of the State Government to protect, preserve and maintain irrigation from the waters of the Cauvery river and its tributaries in the irrigable area under the various projects specified in the Schedule.
(2) For the purpose of giving effect to sub section (1) the State Government may abstract or cause to be abstracted, during every water year, such quantity of water as it may deem requisite.
from the flows of the Cauvery river and its tributaries.
in such manner and during such intervals as the State Government or ,my Officer, not below the rank of an Engineer in Chief designated by it, may deem fit ,red proper.
Overriding effect of the Ordinance: The provisions of this Ordinance.
(,red of ,my Rules and Orders made thereunder), shall have effect not with standing anything contained in any order, report or decision of any Court or Tribunal (whether made before or after the commencement of this Ordinance), save and except a final decision under the provisions of sub section (2) of section 5 read with section 6 of the . 5.
Power to remove difficulties: If any difficulty arises in giving effect to the provisions of this Ordinance, the State Government may, by order, as occasion 529 requires, do anything (not inconsistent with the provisions of this Ordinance) which ap pears to be necessary for purpose of removing the difficulty.
Power to make rules: (1) The State Government may, by Notifi cation in the Official Gazette make rules to carry out the purpose of this Ordinance.
(2) Every rule made under this Ordinance shall be laid as may be after it is made, before each House of the State Legislature while it is in Session for a total period of thirty days which may be comprised in one Session or in two or more Sessions and if before the expiry of the said period, either House of the State Legislature makes any modification in any rule or order directs that any rule or order shall not have effect, and if the modification or direction is agreed to by the other House, such rule or order shall thereafter have effect only in such modified form or be no effect, as the case may be." The Schedule mentioned in the Notification refers to the irrigable areas in Cauvery basin of karnataka under various projects including minor irrigation works.
Hot on the heels of this Ordinance, the State of Karna taka instituted a suit under Article 131 against the State of Tamil Nadu and others for a declaration that the Tribu nal 's order granting interim relief was without jurisdiction and, therefore, null and void etc.
Another development which may be noticed is that the Ordinance has since been replaced by Act No.27 of 1991.
The provisions of the Act are a verbatim reproduction of the provisions of the Ordinance except that in Section 4 of the Act the words "any court or" are omitted and Section 7 is added repealing the Ordinance.
The omission of the above words excludes this court 's order dated April 26, 1991 from the overriding effect of the said provision.
Reference to the Ordinance hereafter will include reference to the Act also unless the context otherwise requires.
It is in the context of these developments that the President has made the Reference which is set out in the beginning.
Before us are arraigned the State of Tamil Nadu and the Union Territory of Pondicherry on the one hand the States of Karnataka and Kerala on 530 the other with the Union of Indian taking no side on the issues arising out of the Reference.
There are also inter veners on both sides.
The contentions of the parties are summarised hereafter.
The contentions also include a plea on both sides not to answer either all or one or the other question raised in the Reference for reasons differently advanced.
These pleas will also be dealt with at their proper places.
Before we deal with the contentions, it is necessary to note certain features of the Reference which are also alluded to in the contentions of the parties.
The Reference is made under Article 143 (1) of the Constitution of India seeking opinion of this Court under its advisory jurisdiction.
As has been stated in the preamble of the Reference and is also not disputed before us, the first two questions are obviously the outcome of the dispute relating to the sharing of waters between Tamil Nadu and Pondicherry on the one hand and Karnataka and Kerala on the other and the developments that took place in the said dispute till the date of Reference.
As has been contended on behalf of Tamil Nadu and Pondicherry, even the third question has a relation to the dispute and the said events, and is not general in nature though it is couched in general terms.
According to them, the question has been posed with an oblique motive of getting over the judgement of this Court dated April 26, 1991 and the consequent order of the Tribu nal dated June 25, 1991.
Hence the said question should not be answered.
Their other contention is that if the question is general in nature, it requires no answer at all.
The contentions of the parties on the questions referred may now be summarised.
With reference to Question 1 the State of Karnataka contends, in the light of the presumption of constitutional validity which ordinarily attaches to a legislation, that the onus lies heavily on the party challenging the same to show that the impugned Ordinance (now Act) is ultra vires the Constitution.
The impugned legislation clearly falls within the competence of the State legislature under Entry 17 as well as Entries 14 and 18 of List II in the Seventh Shedule of the Constitution.
Water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power fall within Entry 17 of List II (hereinafter referred to as 'Entry 17 ') and the State Legislature has every right to legislate on the subject and this legislative power is subject only to Entry 56 of List I (hereinafter referred to as 'Entry 56 ').
That Entry deals with regulation and development of inter State rivers and river valleys to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest.
This Entry, it is contended, does not denude the States of the power to 531 legislate under Entry 17, since it merely empowers the Union, if Parliament has by law declared it to be in public interest, that the 'regulation and development of inter State rivers and river valleys should, to the extent the declaration permits, be taken under the control of the Union.
On a plain reading of the said Entry it is evident that barring regulation and development ' of an inter State river, subject to the declaration, the Central Government is not conferred with the power to legislate on water, etc., which is within the exclusive domain of the State legisla tures.
The being the only legislation made by Parliament under Entry 56, and the scope of the declaration in section 2 thereof being limited 'to the extent hereinafter provided ', that is to say provided by that statute, and no River Board having been constituted thus far in respect of and inter State river under the said law, the power to legislate under Entry 17 is not whittled down or restricted.
Thus, contends the State of Karnataka, the merely authorises the Union to set up a River Board with a view to take under its control the regu lation and development of inter State rivers without in any manner restricting or controlling the legislative power under Entry 17.
But in the absence of the constitution of a River Board for Cauvery, it is contended that the State of Karnataka retains full legislative power to make laws as if Entry 17 has remained untouched.
Further, the executive power of the Union under Article 73 cannot extend to any State with respect to matters on which the State alone can legislate in view of the field having been covered by Arti cle 162 of the Constitution.
Since the Act enacted under Article 262 of the Constitution does not attract any Entry in list 1, it is a law essentially meant to provide for the adjudication of a dispute with respect to the use, distribu tion or control of waters of, or in, any inter .State river or river valley and does not, therefore, step on the toe of Entry 17.
What the Ordinance (now Act) seeks to do is to impose by section 3 a duty on the State Government to pro tect, preserve and maintain irrigation from Cauvery waters in the irrigable areas failing within the various projects specified in the Schedule to the said legislation.
The State of Karnataka, therefore, contends that the impugned legisla tion is clearly within the scope of the State 's power to legislate and is, therefore, intra vires the Constitution.
A forteriori, the power to legislate conferred on the State legislature by Entries 14, 17 and 18 of List II, cannot be inhibited by an interim order of the Tribunal since the scheme of the Act envisages only one final report or deci sion of the Tribunal under section 5 (2) which would have to be gazetted under section 6 thereof.
Until a final adjudica tion is made by the Tribunal determining the shares of the respective StaLes in the waters of an inter State river, the States would be free to make optimum use of water within the State and the Tribunal cannot interfere with such use under the guise of an interim order.
Consequently it was open to the 532 Karnataka Legislature to make a law ignoring or overriding the interim order of the Tribunal.
With regard to Question 2 (i) of the Reference, the State of Karnataka contends that the scheme of the Act does not envisage the making of an interim order by the Tribunal.
Section 5 of the Act provides that after a Tribunal has been constituted under section 4, the Central Government shall refer the water dispute and any matter appearing to be connected with, or relevant to, the water dispute to the Tribunal for adjudication.
On such Reference the Tribunal must investigate the matters referred to it and forward a report setting out the facts found by it and giving its decision on the matters referred to it.
If upon considera tion of the decision, the Central Government or any State Government is of opinion that anything contained therein requires explanation or that guidance is needed upon any point not originally referred to the Tribunal, such Govern ment may within three months from to decision again refer the matter for further consideration, and on such reference, the Tribunal may forward a further report giving such expla nation and guidance as it deems fit and thereupon the deci sion of the Tribunal shall be deemed to be modified accord ingly.
Section 6 then enjoins upon the Central Government to publish the decision of the Tribunal in the Official Gazette and on such publication 'the decision shall be final and binding on the parties to the dispute and shall be given effect to by them '.
It is contended by the State of Karnata ka that the scheme of the aforestated provisions clearly envisages that once a water dispute is referred to the Tribunal ' the Tribunal must 'investigate ' the matters re ferred to it and forward a report to the Central Government 'setting out the facts found by it ' and 'giving its deci sion ' on the matters referred to it.
It is this decision which the Central Government must publish in the Official Gazette to make it final and binding on the parties to the dispute.
The State of Karnataka, therefore, contends that the scheme of the Act contemplates only one final report made after full investigation in which findings of fact would be set out along with the Tribunal 's decision on the matters referred to it for adjudication, and does not con template an interim report based on half baked information.
Finality is attached to that report which records findings of facts based on investigation and not an ad hoc:, tenta tive and prima facie view based on no investigation or cursory investigation.
The State of Karnataka, therefore, contends that since the interim order was not preceded by an investigation of the type contemplated by the Act, the said order of 25th June, 1991 could not be described as 'a re port ' or 'a decision ' under section 5(2) of the Act and hence there could be no question of publishing it in the gazette.
It is, therefore, contended that no finality can attach to such an order which is neither a report nor a decision and even if published in the 533 gazette it cannot bind the parties to the dispute and can have no efficacy in law/. On Question 2(ii), it is, there fore, contended that since there was no investigation, no findings on facts, no report and no decision, the Central Government is under no obligation to publish the interim order of the Tribunal.
With reference to Question 3, the State of Karnataka reiterates that the scheme of the Act clearly envisages a final report to be given by the Tribunal on conclusion of the investigation and after the Tribunal has reached firm conclusions on disputed questions of fact raised before it by the contesting parties.
It is only thereafter that it can in its report record its decision which on being gazetted becomes final and binding on the parties.
The words 'any matter appearing to be connected with or relevant to water dispute ' employed in section 5(1) of the Act, do not contem plate reference of an interim relief matter nor can the same empower the Tribunal to make an interim order pendente lite.
The Act has deliberately not conferred any power on the Tribunal to make an interim order for the simple reason that a water dispute has many ramifications, social, economic and political, and involves questions of equitable distribution of water which cannot be done without a full fledged inves tigation of the relevant data material including, statisti cal information.
In the very nature of things, therefore, it is impossible to think that the Act envisaged the making of an interim order.
While conceding that certain kinds of interlocutory orders which are processual in nature can be made by the Tribunal to effectuate the purpose of the Act, namely, adjudication of a water dispute, no interim relief or order can be granted which will affect the existing rights of the parties because that would in effect deprive the concerned State of the power to legislate in respect of water under Entry 7 and/or make executive orders in that behalf under Article 162 of the Constitution.
The jurisdic tion conferred on the Tribunal under the Act to adjudicate upon a water dispute does not extend to grant of interim relief.
The State of Karnataka, therefore, contends that having regard to the purpose, scope and intendment of the Act, the Tribunal constituted thereunder has no power or authority to grant any interim relief which would have the effect of adversely interfering with its existing rights, although while finally adjudicating the dispute it can override any executive or legislative action taken by the State.
Since the allocation of flow waters between the con cerned States is generally based on the principle of 'equi table apportionment ', it is incumbent on the Tribunal to investigate the facts and all relevant materials before deciding on the shares of the concerned States which is not possible at the interim stage and hence the legislature has advisedly not conferred any power on the Tribunal to make an interim order affecting the existing rights of the concerned parties.
The 534 State of Karnataka, therefore, urges that this question deserves to be answered in the negative.
The State of Kerala has in its written submissions of 10th August, 1991 by and large supported the stand taken by the State of Karnataka.
It contends that the provisions of the Act enacted under Article 262 of the Constitution con stitute a complete Code and the Tribunal has been conferred the powers of a civil court under the Civil Procedure Code only in respect of matters enumerated in section 9(1) of the Act.
The power to grant interim relief is conspicuously absent and in the absence of an express provision in this behalf, the Tribunal, which is a creation of the Act, can have no jurisdiction to grant interim relief.
It would be advantageous to state the contention of the State of Kerala in its own words: ". .Tribunal has no jurisdiction or power to make an interim award or grant any interim relief to a party unless the dispute relating to the interim relief has itself been referred to the Tribunal." (Paragraph 1.5) This is further amplified in paragraph 3.3 of its submissions as under.
: "Such a relief can be granted to a party if that forms the subject matter of a separate reference to the Tribunal by the Central Government.
In such a situation, the order of the Tribunal, would constitute a separate report and decision within section 5(2) of the Act which would then be published by the Central Government and would, therefore, be binding on the parties.
" It is, however, the stand of Kerala that no specific refer ence for grant of interim relief w,ks made to the Tribunal and hence the interim order of 25th June, 1991 does not constitute a report and a decision within the meaning of section 5(2) and hence the Central Government is not expect ed to gazette the same.
Unless the same is gazetted finality cannot attach to it nor can it bind the parties.
Therefore, contends the State of Kerala, the Tribunal had no jurisdic tion to grant interim relief which it h,ks granted by its aforesaid interim order.
Hence the said order has no effica cy in law and can be ignored.
On the question of issuance of the Ordinance, the State of Kerala contends, that such a legislation falls within the scope and ambit of Entry 17 and is, therefore, perfectly legal and constitutional and is not in any manner inconsist ent with Entry 56 nor does it trench upon any part of the 535 declaration in section 2 of the or any of the provisions thereof.
Thus according to Kerala, the legis lative competence to pass such a statute vests in the State legislature under Entry 17 and, therefore, the Governor of Karnataka was competent to issue the Ordinance under Article 213 of the Constitution.
However, in the course of his submissions before this Court, Mr. Shanti Bhushan, counsel for the State of Kerala departed from the stand taken in the written submission and contended that the scheme of the Act does not confer any power whatsoever on the Tribunal to make an interim order and, therefore, the only remedy available to a State which apprehends any action by the upper riparian State likely to adversely affect its right, i.e. the rights of its people, is to move the Supreme Court under Article 131 of the Con stitution notwithstanding the provisions of Article 262 and section 11 of the Act.
According to the learned counsel since the scope of Article 262 read with the scheme of the Act does not contemplate a Reference regarding the grant of interim relief to the Tribunal constituted under the Act, the field is left open for a suit to be instituted under Article 131 of the Constitution.
Mr. Shanti Bhushan went so far as to contend that even if the Act had invested power in the Central Government such a provision would have been hit by Article 262 itself as the scope of that Article is limit ed while Article 131 is wider in scope.
Thus according to counsel, this Court 's majority view expressed by Kasliwal, J.in Civil Appeals Nos. 303,304 & 2036 of 1991 which held that there was a reference to the Tribunal for grant of interim relief is not consistent with the true meaning and sope of Article 262 and the provisions of the Act and this Court should not feel bound by it if it agrees with coun sel 's interpretation for to do so would be to render wrong advice to the President.
It is thus manifest that counsel 's submissions are a clear departure from the written submis sion filed by the State on 10th August, 1991.
The State of Tamil Nadu contends that ordinarily a dispute between (i) the Government of India and one or more States or (ii) between the Government of India and any State or States on one side and one or more other States on the other or (iii) between two or more States would be governed by Article 131 of the Constitution and, subject to the provisions of the Constitution, the Supreme Court alone would have jurisdiction if and insofar as the dispute in volves any question (whether of law or fact) on which the existence or extent of a legal right depends.
Article 131 begins with the words 'subject to the provisions of the Constitution ' and hence it must be read subject to Article 262 of the Constitution.
Article 262 enables Parliament to provide by law for the adjudication of any dispute or com plaint with respect to the use, distribution or control of the 536 waters of, or in, any inter State river or river valley.
That law may, notwithstanding anything contained in the Constitution, provide that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any such dispute or complaint as is referred to above.
In exer cise of power conferred by this provision., the Parliament enacted the Act and by section 11 provided as under: "Notwithstanding anything contained in any other law, neither the Supreme Court nor any other court shall have or exercise jurisdic tion in respect of any water dispute which may be referred to a Tribunal under this Act." While Article 262(2) begins with the words 'notwith standing anything in this constitution ', section II begins with the words 'Notwithstanding anything contained in any other law ' which conveys that all courts including the Supreme Court are debarred from exercising jurisdiction in respect of any water dispute which may be referred to the tribunal for adjudication.
It is, therefore, contended that the Tribunal required to perform a purely judicial function which but for Article 262 and section 11 of the Act would have been performed by a Court of law.
An independent high level machinery consisting of a Chairman and two other members nominated by the Chief Justice of India from amongst sitting Judges of the Supreme Court or of a High Court is to constitute the Tribunal for adjudicating the water dispute.
As the Tribunal is invested with the State 's judicial function it has all the trappings of a civil court and it is inconceivable that such a high powered judicial body would not be empowered to make interim orders or grant interim relief, particularly when it is empowered even to override an existing legislation or inter fere with a future legislation.
Since the Tribunal is a substitute for the Supreme Court (but for Article 262 and section 11 of the Act, Article 131 would have applied) it is reasonable to infer that all the powers which the Supreme Court under Article 131 can be exercised by the Tribunal while adjudicating a water dispute and, therefore, the power to grant interim relief inheres in such a Tribunal without the need for an express provision in that behalf.
A Tribunal on which is conferred a jurisdiction to adjudicate as to the prejudicial effect of a future legislation or executive action must of necessity possess the power to make interim orders interdicting a prejudicial act.
The State of Tamil Nadu, therefore, contends that a high powered Tribunal like the present one which is a substitute for this Court must be presumed to have jurisdiction to grant an appropriate inter im relief.
Such an ancillary and incidental power always inheres in a Tribunal which discharges judicial 537 functions.
It is, therefore, contended that Question 3 must be answered in the affirmative.
Without prejudice to the generality of the above submis sion, the State of Tamil Nadu contends that insofar as the question of jurisdiction to grant interim relief concerning the Cauvery water dispute is concerned, the decision of this Court dated 26th April, 1991 in Civil Appeals Nos. 303, 304 and 2036 of 1991 operates as resjudicata and is binding on the contesting parties regardless of the view that this Court may take on the generality of the question referred for decision.
It must be recalled that this Court in its judgment of 26th April, 1991 came to the conclusion that the reference made to the Tribunal included the question of grant of interim relief and this conclusion based on the interpretation of the terms of the reference dated 2nd June, 1990 read with letter dated 6th July, 1991 was clearly binding on the concerned parties and the Tribunal 's interim order on the merits of the matter made in pursuance of this Court 's directive to decide on merits is equally binding and cannot be disturbed in proceedings arising out of a Refer ence under Article 143 (1) of the Constitution.
If the question of grant of interim relief forms part of the Refer ence, the Tribunal is duty bound to decide the same and such decision would constitute a report under Section 5(2) of the Act which the Central Government would be duty bound to publish as required by section 6 of the Act.
It is further contended that in the view of the State of Tamil Nadu a Tribunal constituted under the Act has inherent jurisdiction to grant interim relief as pointed out earlier, whether or not the question regarding grant of interim relief is spe cifically referred, and its decision thereon would consti tute a report under section 5(2) of the Act liable to be published in the official Gazette as required by section 6 thereof.
If there is any ambiguity in the interim order the same can be taken care of under section 5(3) of the Act.
The State of Tamil Nadu, therefore, contends that both parts of Question 2 deserve to be answered in the affirmative.
So far as Question 1 of the Reference is concerned, the State of Tamil Nadu contends that the Karnataka Ordinance (now Act) is ultra vires the Constitution for diverse rea sons.
It is contended that the real object and purpose of the legislation is to unilaterally nullify the Tribunal 's interim order after having failed in the first round of litigation.
It is contended that the State of Karnataka had and has no right to unilaterally decide the quantum of water it will appropriate or the extent to which it will diminish the flow of Cauvery waters to the State of Tamil Nadu and thereby deny to the people of Tamil Nadu their rightful share in the Cauvery waters.
The right to just and reasona ble use of water being a matter for adjudication by the Tribunal, no single State can by the use of 538 its legislative power arrogate upto itself the judicial function of equitable apportionment and decide for itself the quantum of water it will use from the inter State river regardless of the prejudice it would cause to the other State by its unilateral action.
Such a power cannot be read in entry 17 as it will be destructive of the principle that such water disputes are justiciable and must be left for adjudication by an independent and impartial special forum to which it is referred, namely, the Tribunal constituted for resolving the dispute, and not by unilateral executive or legislative interference.
It is, therefore, contended that the object of the legislation not being bona fide, the same cannot be allowed to stand as it has the effect of overruling a judicial order passed by a Tribunal specially appointed to adjudicate on the water dispute between the parties thereto.
On the question of legislative competence, the State of Tamil Nadu contends that the statute is ultra vires the Constitution for the following reasons: (a) the Ordinance (now Act) is ultra vires the Constitution as it seeks to override or neutralise the law enacted by Parliament in exercise of power conferred by Article 262 (and not Article 246 read with the relevant entry in the Seventh Sechedule) of the Consti tution.
A State Legislature can have no power to legislate with regard to a water dispute as it would be incongruous to confer or infer such power in a State legislature to destroy what a judicial body has done under a Central law; (b) the impugned legislation purporting to be under Entry 17 of List II has extra territorial operation, in that, it directly impinges on the rights of the people of Tamil Nadu to the use of Cauvery waters.
(c) the impugned legislation is con trary to the Rule of Law and a power not comprehended even by Article 262 cannot be read into the legislative power of the State for it would pervert the basic concept of justice, and (d) the impugned legislation is violative of the fundamental fights of the inhabitants of Tamil Nadu guranteed by Articles 14 and 21 of the Constitution, in that, the action of Karnataka is wholly arbitrary and in total disregard of the right to life of those inhab itants in Tamil Nadu who survive on Cauvery waters.
539 The State of Tamil Nadu strongly contends that in a civi lised society governed by the Rule of Law, a party to a 'lis ' water dispute cannot be owed to arrogate to itself the fight to decide on the dispute or to nullify an interim order made by a Tribunal in obedience to the decision of the apex court by abusing the legislative power under Entry 17 under which the impugned legislation purports to be.
Without raising any preliminary objection and without prejudice to its afore mentioned contentions, the State of Tamil Nadu contends that the jurisdiction of this Court under Article 143 of the Constitution is discretionary and this Court should refrain from answering a Reference which i in general terms without background facts and is likely to entail a roving inquiry which may ultimately prove academic only.
Secondly, the State of Karnataka has immediately after the interim order instituted a suit, being Original Suit No.1 of 1991, in this Court in which it has prayed for a declaration that the interim order of the Tribunal dated 25th June, 1991 is without jurisdiction, null and void, and for setting aside the said order.
It is contended that while on the one hand the decision of this Court, per Kasliwal, J., has become final and is res judicate between the parties thereto, on the other hand the State of Karnataka is raking up the same question of jurisdiction before this court in a substantive suit with a view to overreaching this Court 's earlier order.
The Presidential Reference in terms refers to disputes and differences having arisen out of the Tribunal 's interim order which, it is said, has given rise to a public controversy likely to result in undesirable consequences.
Such matters, contends the State of Tamil Nadu, can be effectively countered by the concerned Government and do not call for a Presidential Reference.
If there is any doubt or difficulty in the implementation of the impugned order recourse can always be had to section 5(3) of the Act.
In the circumstances it is urged that this Court should refuse to answer the Reference.
The Union Territory of Pondicherry contends that the promulgation of the Ordinance (now Act) is intended to further protract the long standing water dispute which came to be referred to the Tribunal only after this Court issued a mandamus in that behalf and is likely to prejudicially affect the interest of the State as well as the farmers and other inhabitants who utilise the water from river Cauvery.
It is contended that the said legislation is unconstitution al and is a piece of colourable legislation for the follow ing reasons: (a) the power of the State Legislature to enact a law on the subject falling in Entry 17 List II, is subject to the provisions of Entry 56 in List 1, and once Parliament had made a declaration in that behalf in section 2 of the River Boards 540 Act, the State Legislature was not competent to enact the impugned law, (b) once the Central Government had entrusted the Cauvery water dispute to an independent Tribunal under the provisions of the Act, it was not constitutionally permissi ble for Karnataka to enact the impugned law, (c) in the case of flowing water the riparian States have no ownership or proprie tary right therein except in the usufruct thereof and, therefore, the power to legislate therein under Entry 17 of List II can extend to only the usufructurary right subject to the right of a riparian State to get the customary quantity of water, (d) the objective of the impugned legis lation is to set at naught the interim order of the Tribunal and to the extent it seeks to interfere with the exercise of judicial powers it is unconstitutional, (e) the impugned legislation is violative of Article 21 of the Constitution as it is intended to diminish the supply of water to Tamil Nadu and Pondicherry which is also against the spirit of Articles 38 and 39 of the Constitution, and (f) the impugned legislation seeks to eclipse the interim order of the Tribunal constituted under an Act made in virtue of Article 262 of the Constitution and being in conflict with the Central legislation is void for repugnancy.
For the above reasons, Pondicherry contends that the Ordinance (now the Act) is constitutionally invalid.
As regards Question 2 it is contended that the water dispute referred to the Tribunal comprised the issue regard ing the grant of interim relief as held by Kasliwal, J. and hence the interim order made by the Tribunal constitutes a report within the meaning of section 5(2) of the Act and consequently the Central Government is obliged to publish it is required by section 6 of the Act.
Once it is so published it will operate as a decision in rem but even without publi cation it is binding on Karnataka as a decision in personam.
If any explanation or guidance is required it can be had from the Tribunal by virtue of section 5(3) of the Act.
Once the time for seeking explanation or guidance is over the law enjoins on the Central Government the obligation to publish the report under section 6 of 541 the Act.
Both the elements of Question 2 must, contends Pondicherry, be answered in the affirmative.
So far as Question 3 is concerned, it is contended that the Tribunal constituted under the Act, though not a Court, has all the attributes of a Court since it is expected to discharge a judicial function and must, therefore, be pre sumed to have 'incidental and ancilliary powers ' to grant interim relief, if equity so demands.
That is so because the jurisdiction of all courts including this Court is taken away by virtue of section 11 of the Act read with Article 262(2) of the Constitution.
The Tribunal is, therefore, required to discharge the judicial function of adjudicating a water dispute between two or more States and must, there fore, be deemed to possess the inherent power to grant interim relief which inheres in all such judicial bodies.
Absence of an express provision conferring power to grant interim relief does not detract from the view that such power inheres in a Tribunal which is called upon to dis charge an essentially judicial function.
For discharging such a function it is essential that the Tribunal must possess inherent power to pass interim orders from time to time in aid of adjudication.
The Union Territory of Pondi cherry is, therefore, of the view that Question 3 must be answered in the affirmative.
Six intervention applications have been filed by differ ent persons and bodies from Karnataka including the Advocate General of the State in support of the case of Karnataka raising contentions more or less similar to those raised by the State itself.
One intervention application is filed by the Tamil Nadu Society which had preferred the original Writ Petition in which a mandate to constitute a Tribunal under the Act was given.
The contentions raised by the interveners are covered in the written submissions filed by the State of Tamil Nadu and need not be reiterated.
The said intervener has also filed written submissions through counsel Shri Ashok Sen which we shall deal with in the course of this judgment.
Of the three questions which have been referred to this Court under Article 143(1) of the Constitution, there can be no dispute, and indeed there was none, that question 2 arises solely and entirely out of the Tribunal 's order granting interim relief.
The question is whether that order constitutes a report within the meaning of section 5(2) of the Act and is required to be published in the gazette of the Central Government to make it effective.
The first question refers ' to the constitutional validity of the Karnataka Ordinance (now the Act).
Although this question does not specifically refer to the Cauvery water dispute or the interim order passed by the Tribunal, the preamble of the said statute leaves no doubt that it is concerned with the protection and preservation of irrigation in irrigable 542 areas of the Cauvery basin in Karnataka dependent on the waters of the Cauvery river and its tributaries '.
The provi sions of the said law extracted earlier leave no manner of doubt that the State Government has been charged with the duty to abstract or cause to be abstracted, during every water year, such quantity of water as it may deem requisite, from the flows of river Cauvery and its tributaries, 'not withstanding anything contained in any order, report or decision of any. .
Tribunal ', whether made before or after the commencement of the said law, save and except a final decision under section 5(2) read with section 6 of the Act.
There can, therefore, be no doubt that if the provi sions of this special Karnataka enactment become legally effective, the Tribunal 's order dated 25th June, 1991 grant ing interim relief would stand eclipsed.
In that view of the matter Question 1 is clearly intertwined with the Cauvery water dispute referred to the Tribunal and the interim order made by that body.
The third question, it was contended by Tamil Nadu and Pondicherry, though innocent in appearance and apparently general in nature, is in fact likely to nullify the interim order of the Tribunal.
There can be no doubt that this Court 's opinion on Question 3 will certainly have a bearing on the interim order of the Tribunal.
Bearing this in mind we may now proceed to deal with the questions referred to this Court in the light of the submissions made at the Bar. 7.
We will deal with the respective contentions with refer ence to each of the questions.
Question No. I To examine the validity of the contentions advanced on this question it is first necessary to analyse the relevant provisions of the Constitution.
The distribution of legislative powers is provided for in Chapter I of Part XI of the Constitution.
Article 245, inter alia states that subject to the provisions of the Constitution, Parliament may make laws for the whole or any part of the territory of India and the legislature of the State may make laws for the whole or any part of the State.
Article 246 provides, among other things, that subject to clauses (I)and (2) of the said Article, the legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumer ated in the State List in the Seventh Schedule.
Clauses (1) and (2) of the said Article refer to the Parliament 's exclu sive powers to make laws with respect to any of the matters enumerated in the Union List and the power of the Parliament and the legislature of the State to make laws with respect to any of the matters enumerated in the Concurrent List.
Article 248 gives 543 the Parliament exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or the State List.
Entry 56 of the Union List reads as follows: "Regulation and development of inter State rivers and river valleys to the extent to which such regulation and development under the control of the Union is declared by Par liament by law to be expedient in the public interest.
" A reading of this Entry shows that so far as inter State rivers and river valleys are concerned, their regulation and development can be taken over by the Union by a Parliamen tary enactment.
However, that enactment must declare that such regulation and development under the control of the Union is expedient in the public interest.
Entry 17 in the State List reads as follows: "Water, that is to say, water supplies, irri gation and canals, drainage and embankments, water storage and water power subject to the provisions of Entry 56 of List I." An examination of both the Entries shows that the State has competence to legislate with respect to all aspect of water including water flowing through inter State rivers, subject to certain limitations, viz. the control over the regulation and development of the inter State river waters should not have been taken over by the Union and secondly, the State cannot pass legislation with respect to or affect ing any aspect of the waters beyond its territory.
The competence of the State legislature in respect of inter State river waters is, however, denuded by the Parliamentary legislation only to the extent to which the latter legisla tion occupies the field and no more, and only if the Parlia mentary legislation in question declares that the control of the regulation and development of the inter State rivers and river valleys is expedient in the public interest, and not otherwise.
In other words, if a legislation is made which fails to make the said declaration it would not affect the powers of the State to make legislation in respect of inter State river water under Entry 17.
Entry 14 of List II relates, among other things, to agriculture.
In so far as agriculture depends upon water including river water, the State legislature while enacting legislation with regard to agriculture may be competent to provide for the regulation and development of its water resources including water supplies, irrigation and canals, drainage and embankments, water storage and water power which are the subjects men 544 tioned in Entry 17.
However, such a legislation enacted under Entry 14 in so far as it relates to inter State river water and its different uses and the manners of using it, would also be, it is needless to say, subject to the provi sions of Entry 56.
So also Entry 18 of List II which speaks, among other things, of land improvement which may give the State Legislature the powers to enact similar legislation as under Entries 14 and 17 and subject to the same restric tions.
Entry 97 of the Union List is residuary and under it the Union has the power to make legislation in respect of any matter touching inter State river water which is not enumer ated in the State List or the Concurrent List.
Correspond ingly, the State legislature cannot legislate in relation to the said aspects or matters.
Article 131 of the Constitution deals with original jurisdiction of the Supreme Court and states as follows: "131.
Original Jurisdiction of the Supreme Court Subject to the provisions of this Constitution, the Supreme Court shall, to the exclusion of any other court, have original jurisdiction in any dispute (a) between the Government of India and one or more States; or (b) between the Government of India and any State or States on one side and one or more other States on the other; or (c) between two or more States, if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends: Provided that the said jurisdiction shall not extend to a dispute arising out of any treaty, agreement, covenant, engagement, sanad or other similar instrument which, having been entered into or executed before the commence ment of this Constitution, continues in opera tion after such commencement, or which pro vides that the said jurisdiction shall not extend to such a dispute.
" It is clear from the Article that this Court has origi nal jurisdiction, among other things, in any dispute between two or more States where the 545 dispute involves any question whether of law or fact on which the existence and extent of a legal right depends except those matters which are specifically excluded from the said jurisdiction by the proviso.
However, the Parlia ment has also been given power by Article 262 of the Consti tution to provide by law that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any dispute or complaint with respect to the use, distribu tion or control of the water of, or in, any interState river or river valley.
Section 11 of the Act, namely, the Inter State Water Disputes Act, 1956 has in terms provided for such exclusion of the jurisdiction of the courts.
It reads as follows: "Sec.
11 Notwithstanding anything contained in any other law, neither the Supreme Court nor any other court shall have or exercise jurisdiction in respect of any water dispute which may be referred to a Tribunal under this Act.
" This provision of the Act read with Article 262 thus excludes original cognizance or jurisdiction of the inter State water dispute which may be 'referred to the Tribunal established under the Act, from the purview of any Court including the Supreme Court under Article 13 1. 9.
We may now analyse the provisions of the Karnataka Ordinance in question the text of which is already repro duced.
Its preamble states, that it is issued (i) to provide for the protection and preservation of irrigation in irriga ble areas of the Cauvery basin in Karnataka dependent on the waters of the Cauvery river and its tributaries, and (ii) that the Governor of Karnataka was satisfied that circum stances existed which rendered it necessary for him to take immediate action for the said protection and preservation.
The irrigable areas of which protection and preservation is sought by the Ordinance are mentioned in the Schedule to the Ordinance.
Admittedly the Schedule includes the irrigable area as existing in 1972 during the tenure of the agreement of 1924 between Karnataka and Tamil Nadu as well as the increase in the same since 1972 till the date of the Ordi nance as well as the areas which are committed to be brought under irrigation on account of some of the projects men tioned in Column II of the Schedule.
Clause 3(1) of the Ordinance then makes a declaration of the duty of the State Government to protect, preserve and maintain irrigation from the waters of the Cauvery river and its tributaries in the said irrigable area.
Sub clause (2) of the said clause then gives powers to the State Government to abstract or cause to be abstracted during every water year (which is defined as the year commencing with 1st of June of a calendar year and ending with 31st May of next calendar year), such quantity of water as it may deem requisite, from the flows of the Cauvery river and its tributaries and in such manner and during such intervals as 546 the State Government or any officer not below the rank of an Engineer inChief designated by it may deem fit and proper.
(Emphasis supplied).
This clause, therefore, vests in the State Government or the Officer designated by it, an abso lute power to appropriate any quantity of water from the Cauvery river and its tributaries and in any manner and at any interval as may be deemed fit and proper.
The power given by the clause is unrestricted and uninhibited by any consideration save and except the protection and preserva tion of the irrigable area of the Karnataka State.
Clause 4 is still more absolute in its terms and opera tion inasmuch as it declares that the Ordinance and any rules and orders made thereunder shall have effect notwith standing anything contained in any Order, report or decision of any court or tribunal (whether made before or after the commencement of the Ordinance) save and except a final decision under the provisions of sub Section (2) of Section 5 read with Section 6 of the .
Clause (5) states that when any difficulty arises in giving effect to the provisions of this Ordinance, the State Government may, by order, as occasion requires, do anything which appears to be necessary for the purpose of removing the difficulty, and clause (6) gives power to the State Government to make rules to carry out the purpose of the Ordinance.
Clauses (4), (5) and (6) read together show that the Ordinance, Rules and Order made thereunder will prevail over any order, report or decision of any court including the Supreme Court and, of course, of the Tribunal under the Inter State Water Dispute Act.
The only decision which is excluded from the overriding effect of the Ordinance is the final decision of the Water Disputes Tribunal given under Section 5 (2) read with Section 6 of the . 10.
The object of these provisions of the Ordinance is obvious.
Coming close on the Order dated 25th June, 1991 of the Tribunal and in the context of the stand taken by the State of Karnataka that the Tribunal has no power or juris diction to pass any interim order or grant any interim relief, it is to override the said decision of the Tribunal and its implementation.
The Ordinance has thus the effect of defying and nullifying any interim order of the Tribunal appointed under a law of the Parliament.
This position is not disputed before us on behalf of the State of Karnataka.
The other effect of the Ordinance is to reserve to the State of Karnataka exclusively the right to appropriate as much of the water of river Cauvery and its tributaries as it deems requisite and in a manner and at periods it deems fit and proper, although pending the final adjudication by the Tribunal.
It cannot be disputed that the Act, viz., the Inter State Water Disputes Act, 1956 is not a legislation under Entry 56.
In the first instance Entry 56 547 speaks of regulation and development of inter State rivers and river valleys and does not relate to the disputes be tween the riparian States with regard to the same and adju dication thereof.
Secondly, and even assuming that the expression "regulation and development" would in its width, include resolution of disputes arising therefrom and a provision for adjudicating them, the Act does not make the ' declaration required by Entry 56.
This is obviously not an accidental omission but a deliberate disregard of the Entry since it is not applicable to the subject matter of the legislation.
Thirdly, no Entry in either of the three Lists refers specifically to the adjudication of disputes with regard to inter State river waters.
The reason why none of the Entries in the Seventh Sched ule mention the topic of adjudication of disputes relating to the inter State river waters is not far to seek.
Article 262 of the Constitution specifically provides for such adjudication.
The Article appears under the heading "Dis putes relating to Waters", and reads as follows: "262.
Adjudication of disputes relating to waters of interState rivers or river valleys. ******************************************* (1) Parliament may by law provide for the adjudication of any dispute or complaint with respect to the use, distribution or control of the waters of, or in, any inter State river or river valley.
(2) Notwithstanding anything in this Constitution, Parliament may by law provide that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any such dispute or complaint as is re ferred to in clause (1).
" An analysis of the Article shows that an exclusive power is given to the Parliament to enact a law providing for the adjudication of such disputes.
The disputes or complaints for which adjudication may be provided relate to the "use, distribution or control" of the waters of, or in any inter State river or river valley.
The words "use", "distribution" and "control" are of wide import and may include regulation and development of the said waters.
The provisions clearly indicate the amplitude of the scope of adjudication inasmuch as it would take within its sweep the determination of the extent, and the manner, of the use of the said waters, and the power to give directions in respect of the same.
The language of the Article has, further to be distinguished from that of Entry 56 and Entry 17.
Whereas Article 262 (1) speaks of adjudication of any dispute or complaint and that too with respect to the use, distribution or control of the waters of or 548 in any inter State river or river valleys, Entry 56 speaks of regulation and development of inter State rivers and river valley.
Thus the distinction between Article 262 and Entry 56 is that whereas former speaks of adjudication of disputes with respect to use, distribution or control of the waters ' of any inter State river or river valley, Entry 56 speaks of regulation and development of inter State rivers and river valleys.
(Emphasis supplied).
Entry 17 likewise speaks of water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of Entry 56.
It does not speak either of adjudication of disputes or of an inter State river as a whole as indeed it cannot, for a State can only deal with water within its territory.
It is necessary to bear in mind these distinctions between Article 262, Entry 56 and Entry 17 as the arguments and counter arguments on the validity of the Ordinance have a bearing on them.
We have already pointed out another important aspect of Article 262, viz., Clause (2) of the Article provides that notwithstanding any other provision in the Constitution, Parliament may by law exclude the jurisdiction of any court including the Supreme Court in respect of any dispute or complaint for the adjudication of which the provision is made in such law.
We have also noted that Section 11 of the makes such a provision. 13.
The said Act, as its preamble shows, is an Act to pro vide for the "adjudication of disputes relating to waters of inter State rivers and river valleys".
Clause (c) of Section 2 of the Act defines "water dispute" as follows: "2.
In this Act, unless the context otherwise requires, (a). . . . (b). . . (c) "water dispute" means any dispute or difference between two or more State Govern ments with respect to (i) the use, distribution or control of the waters of, or in, any inter State river or river valley; or (ii) the interpretation of the terms of any agreement relating to the use, distribu tion or control of such waters or the imple mentation of such agreement; or (iii) the levy of any water rate in contravention of the prohibition contained in section 7" 549 Section 3 of the Act states that if it appears to the Government of any State that the water dispute with the Government of another State of the nature stated therein, has arisen or is likely to arise, the State Government may request the Central Government to refer the water dispute to a Tribunal for adjudication.
Section 4 of the Act provides for the constitution of a Tribunal when a request is re ceived for referring the dispute to a Tribunal and the Central Government is of the opinion that the water dispute cannot be settled by negotiations.
Section 5 of the Act requires the Tribunal to investigate the matter referred to it and forward to the Central Government the report of its findings and its decision.
The Central Government has then to publish the decision under Section 6 of the Act which decision is final and binding on the parties to the dispute and has to be given effect to by them.
These dominant provi sions, among others, of the Act clearly show that apart from its title, the Act is made by the Parliament pursuant to the provisions of Article 262 of the Constitution specifically for the adjudication of the disputes between the riparian States with.
regard to the use, distribution or control of the waters of the inter State rivers or river valleys.
The Act is not relatable to Entry 56 and, therefore, does not cover either the field occupied by Entry 56 or by Entry 17.
Since the subject of adjudication of the said disputes is taken care of specifically and exclusively by Article 262, by necessary implication the subject stands excluded from the field covered by Entries 56 and 17.
It is not, there fore, premissible either for the Parliament under Entry 56 or for a State legislature under Entry 17 to enact a legis lation providing for adjudication of the said disputes or in any manner affecting or interferring with the adjudication or adjudicatory process of the machinery for adjudication established by law under Article 262.
This is apart from the fact that the State legislature would even otherwise be incompetent to provide for adjudication or to affect in any manner the adjudicatory process or the adjudication made in respect of the inter State river waters beyond its territory or with regard to disputes between itself and another State relating to the use, distribution or control of such waters.
Any such act on its part will be extraterritorial in nature and, therefore, beyond its competence.
Shri Venugopal has in this connection urged that it is Entry 97 of the Union List which deals with the topic of the use, distribution and control of waters of an inter State river.
The use, distribution and control of the waters of such rivers, by itself is not a topic which is covered by Article 262.
It is also, according to him, not a topic covered by Entry 56 which only speaks of regulation and development of inter State rivers and river valleys meaning thereby the entirety of the rivers and river valleys and not the waters at or in a particular place (emphasis supplied).
Further, the regulation and development, according to him, has nothing to do with the 550 use, distribution or allocation of the waters of the inter State river between different riparian States.
That topic should, therefore, be deemed to have been covered by the said residuary Entry 97.
With respect to the learned counsel, it is not possible to accept this interpretation of the Entry 97.
This is so firstly because, according to us, the expression "regulation and development of Inter State rivers and river valleys" in Entry 56 would include the use, distribution and allocation of the waters of the inter State rivers and river valleys between different riparian States.
Otherwise the intention of the Constituent Assembly to provide for the Union to take over the regulation and development under its control makes no sense and serves no purpose.
What is further, the which is admittedly eracted under Entry 56 for the regulation and development of inter State rivers and river valleys does cover the field of the use, distribution and allocation of the waters of the inter State rivers and river valleys.
This shows that the expression "regulation and development" of the inter State rivers and river valleys in Entry 56 has legislatively also been construed to include the use, distribution or allocation of the waters of the inter State rivers and river valleys between riparian States.
We are also of the view that to contain the opera tion of Entry 17 to the waters of an inter State river and river valleys within the boundaries of a State and to deny the competence to the State legislature to interfere with or to affect or to extend to the use, distribution and alloca tion of the waters of such river or river valley beyond its territory, directly or indirectly, it is not necessary to fail back on the residuary Entry 97 as an appropriate decla ration under Entry 56 would suffice.
The very basis of a federal Constitution like ours mandates such interpretation and would not bear an interpretation to the contrary which will destroy the constitutional scheme and the Constitution itself.
Although, therefore, it is possible technically to separate the "regulation and development" of the inter State river and river valley from the "use, distribution and allocation" of its water, it is neither warranted nor neces sary to do so.
The above analysis of the relevant legal provisions dealing with the inter State rivers and river valleys and their waters shows that the Act, viz., the can be enacted and has been enacted only under Article 262 of the Constitution.
It has not been enacted under Entry 56 as it relates to the adjudication of the disputes and with no other aspect either of the inter State river as a whole or of the waters in it.
It will be pertinent at this stage also to note the true legal position about the inter State river water and the rights of the riparian States to the 551 same.
In State of Kansas vs State of Colorado, [206] US 46 the Supreme Court of the United States has in this connec tion observed as follows: "One cardinal rule, underlying all the rela tions of the States to each other, is that of equality of right.
Each State stands on the same level with all the rest.
It can impose its own legislation on no one of the others and is bound to yield its own view to none". " . the action of one State reaches, through the agency of natural laws into the territory of another State, the question of the extent and the limitation of the rights of the two States becomes a matter of justiciable dispute between them . this court is called upon to settle that dispute in such a way as will recognise the equal rights of both and at the same time establish justice between them".
"The dispute is of a justiciable nature to be adjudicated by the Tribunal and is not a matter for legislative jurisdiction of one State. ".
"The right to flowing water is now well set tled to be a right incident to property in the land; it is a right publici juris, of such character that, whilst it is common and equal to all through whose land it runs, and no one can obstruct or divert it, yet as one of the beneficial gifts of Providence, each proprie tor has a right to a just and reasonable use of it, as it passes through his land, and so long as it is not wholly obstructed or divert ed, or no larger appropriation of the water running through it is made than a just and reasonable use, it cannot be said to be wrong ful or injurious to a proprietor lower down".
"The right to the use of the flowing water is publici juris, and common to all the riparian proprietors; it is not an absolute and exclu sive right to all the water flowing past their land so that any obstruction would give a cause of action; but it is a right to the flow and enjoyment of the water subject to a simi lar right in all the proprietors to the rea sonable enjoyment of the same gift of provi dence.
It is therefore only for an abstraction and deprivation of this common benefit or for an unreasonable and unautho rised use of it that an action will lie." 16.
Though the waters of an inter State river pass through the territories of the riparian States such waters cannot be said to be located in any one 522 State.
They are in a state of flow and no State can claim exclusive ownership of such waters so as to deprive the other States of their equitable share.
Hence in respect of such waters, no State can effectively legislate for the use of such waters since its legislative power does not extend beyond its territories.
It is further an acknowledged prin ciple of distribution and allocation of waters between the riparian States that the same has to be done on the basis of the equitable share of each State.
What the equitable share will be will depend upon the facts of each case.
It is against the background of these principles and the provi sions of law we have already discussed that we have to examine the respective contentions of the parties.
The Ordinance is unconstitutional because it affects the jurisdiction of the Tribunal appointed under the Central Act, viz., the which legisla tion has been made under Article 262 of the Constitution.
As has been pointed out above, while analysing the provisions of the Ordinance, its obvious purpose is to nullify the effect of the interim order passed by the Tribunal on 25th June, 1991.
The Ordinance makes no secret of the said fact and the written statement filed and the submissions made on behalf of the State of Karnataka show that since according to the State of Karnataka the Tribunal has no power to pass any interim order or grant any interim relief as it has done by the order of 25th June, 1991, the order is without juris diction and.
therefore, void ab initio.
This being so.
it is not a decision, according to Karnaaka, within the meaning of Section 6 and not binding on it and in order to protect itself against the possible effects of the said order, the Ordinance has been issued.
The State of Karnataka has thus arrogated to itself the power to decide unilaterally whether the Tribunal has jurisdiction to pass the interim order or not and whether the order is binding on it or not.
Secondly, the State has also presumed that till a final order is passed by the Tribunal, the State has the power to appropri ate the waters of the river Cauvery to itself unmindful of and unconcerned with the consequences of such action on the lower riparian States.
Karnataka has thus presumed that it has superior rights over the said waters and it can deal with them in any manner in the process, the State of Karna taka has also presumed that the lower ripar in States have no equitable rights and it is the sole judge as to the share of the other riparian States in the said waters.
What is further, the State of Karnataka has assumed the role of a judge in its own cause.
Thus, apart from the fact that the Ordinance directly nullifies the decision of the Tribunal dated 25th June, 1991.
it also challenges the decision dated 26th April, 1991 of this Court which has ruled that the Tribunal had power to consider the question of granting interim relief since it was specifically referred to it.
The Ordinance further has an extra territorial 553 operation insasmuch as it interferes with the equitable rights of Tamil Nadu and Pondicherry to the waters of the Cauvery river.
To the extent that the Ordinance interferes with the decision of this Court and of the Tribunal appoint ed under the Central legislation, it is clearly unconstitu tional being not only in direct conflict with the provisions of Article 262 of the Constitution under which the said enactment is made but being also in conflict with the judi cial power of the State.
In this connection, we may refer to a decision of this Court in Municipal Corporation of the City of Ahmedabad etc.
vs New Shorock Spg.
& Wvg.
Co., Ltd. etc.
; , The facts in this case were that the High Court as well as this Court had held that property tax collected for certain years by the Ahmedabad Municipal Corporation was illegal.
In order to nullify the effect of the decision, the State Government introduced Section 152A by amendment to the Bombay Provincial Municipal Corporation Act the effect of which was to command the Municipal Corporation to refuse to refund the amount illegally collected despite the orders of this Court and the High Court.
This Court held that the said provision makes a direct in road into the judicial powers of the State.
The legislatures under the Constitution have, within the prescribed limits, power to make laws prospec tively as well as retrospectively.
By exercise of those powers a legislature can remove the basis of a decision rendered by a competent court thereby rendering the decision ineffective.
But no legislature in the country has power to ask the instrumentalities of the State to disobey or disre gard the decisions given by the courts.
Consequently, the provisions of sub section (3) of section 152A were held repugnant to the Constitution and were struck down.
To the same effect is another decision of this court in Madan Mohan Pathak vs Union of India & Ors.
; , In this case a settlement arrived at between the Life Insurance Corporation and its employees had become the basis of a decision of the High Court of Calcutta.
This settlement was sought to be scuttled by the Corporation on the ground that they had received instructions from the Central Government that no payment of bonus should be made by the Corporation to its employees without getting the same cleared by the Government.
The employees, therefore, moved the High Court, and the High Court allowed the petition.
Against that, a Letters Patent Appeal was filed and while it was pending, the Parliament passed the Life Insurance Corporation (Modi fication of Settlement) Act, 1976 the effect of which was to deprive the employees of bonus payable to them in accordance with the terms of the settlement and the decision of the Single Judge of the High Court.
On this amendment of the Act, the Corporation withdrew its appeal and refused to pay the bonus.
The employees having approached this Court chal lenging the constitutional validity of the said 554 legislation, the Court held that it would be unfair to adopt legislative procedure to undo a settlement which had become the basis of a decision of the High Court.
Even if legisla tion can remove the basis of a decision, it has to do it by alteration of general rights of class but not by simply excluding the specific settlement which had been held to be valid and enforceable by a High Court.
The object of the Act was in effect to take away the force of the judgment of the High Court.
The rights under the judgment would be said to arise independently of Article 19 of the Constitution.
Yet another decision of this Court on the point is P. Sambamurthy & Ors.
vs State of Andhra Pradesh & Anr.
, ; In this case what was called in question was the insertion of Article 371 D of the Consti tution.
Clause (5) of the Article provided that the order of the Administrative Tribunal finally disposing of the case would become effective upon its confirmation by the State Government or on the expiry of three months from the date on which the order was made, whichever was earlier.
The proviso to the clause provided that the State Government may by special order made in writing for reasons to be specified therein, modify or annul any order of the Administrative Tribunal before it became effective and in such a case the order of the Tribunal shall have effect only in such modi fied form or be of no effect.
This court held that it is a basic principle of the rule of law that the exercise of power by the executive or any other authority must not only be conditioned by the Constitution but must also be in accordance with law, and the power of judicial review is conferred by the constitution with a view to ensuring that the law is observed and there is compliance with the re quirement of the law on the part of the executive and other authorities.
It is through the power of judicial review conferred on an independent institutional authority such as the High Court that the rule of law is maintained and every organ of the State is kept within the limits of the law.
If the exercise of the power of judicial review can be set at naught by the State Government by overriding the decision given against it.
it would sound the death knell of the rule of law.
The rule of law would be meaningless as it would be open to the State Government to defy the law and yet get away with it.
The proviso to el.
(5) of article 37 I D was therefore, violative of the basic structure doctrine.
The principle which emerges from these authorities is that the legislature can change the basis on which a deci sion is given by the Court and thus change the law in gener al which will affect a class of persons and events at large.
It cannot, however, set aside an individual decision inter parties and affect their rights and liabilities alone.
Such an act on the part 555 of the legislature amounts to exercising the judicial power of the State and to functioning as an appellate court or Tribunal.
The effect of the provisions of section 11 of the present Act, viz., the read with Article 262 of the Constitution is that the entire judicial power of the State and, therefore, of the courts including that of the Supreme Court to adjudicate upon original dispute or complaint with respect to the use, distribution or control of the water of, or in any inter State river or river valleys has been vested in the Tribunal appointed under Section 4 of the said Act.
It is, therefore, not possible to accept the submission that the question of grant of interim relief falls outside the purview of the said provisions and can be agitated under Article 131 of the Constitution.
Hence any executive order or a legislative enactment of a State which interferes with the adjudicatory process and adjudication by such Tribunal is an interference with the judicial power of the State.
In view of the fact that the Ordinance in question seeks directly to nullify the order of the Tribunal passed on 25th June, 1991, it impinges upon the judicial power of the State and is, therefore, ultra vires the Constitution.
Further, admittedly, the effect of the Ordinance is to affect the flow of the waters of the river Cauvery into the territory of Tamil Nadu and pondicherry which are the lower riparian States.
The Ordinance has, therefore, an extra territorial operation.
Hence the Ordinance is on that ac count beyond the legislative competence of the State and is ultra vires the provisions of Article 245 (1) of the Consti tution.
The Ordiance is also against the basic tenets of the rule of law inasmuch as the State of Karnataka by issuing the Ordinance has sought to take law in its own hand and to be above the law.
Such an act is an invitation to lawless ness and anarchy, inasmuch as the Ordinance is a manifesta tion of a desire on the part of the State to be a judge in its own cause and to defy the decisions of the judicial authorities.
The action forebodes evil consequences to the federal structure under the Constitution and opens doors for each State to act in the way it desires disregarding not only the rights of the other States, the orders passed by instrumentalities constituted under an Act of Parliament but also the provisions of the Constitution.
If the power of a State to issue such an Ordinance is upheld it will lead to the break down of the Constitutional mechanism and affect the unity and integrity of the nation.
In view of our findings as above on the unconstitution ality of the Ordinance, it is not necessary for us to deal with the contention advanced 556 on behalf of Tamil Nadu and Pondicherry that the Ordinance is unconstitutional also because it is repugnant to the provisions of the which is admittedly enacted under Entry 56. 19.
We also do not propose to deal with the contentions advanced on behalf of both sides with reference to Articles 19 (1) (g) and 21 of the Constitution.
On behalf of Karnata ka the said Articles are invoked to support the Ordinance contending that the Ordinance has been issued to protect the fundamental rights of its inhabitants guaranteed to them by the said Articles which rights were otherwise been denied by the Tribunals ' order of 25th June, 1991.
As against it, it was contended on behalf of Tamil Nadu that it was the Ordi nance which was designed to deny to its inhabitants the said rights.
Underlying the contentions of both is the presump tion that the Tribunal 's order denies to Karnataka and ensures to Tamil Nadu the equitable share in the river water.
To deal with the said contentions is, therefore, to deal with the factual merits of the said order which it is not for us to examine.
Of the same genre are the contentions advanced on behalf of Karnataka, viz., that they"order creats new rights in favour of Tamil Nadu and leads to inequitable consequences so far as Karnataka is concerned.
For the same reasons, we cannot deal with these contentions either.
Question No. 3: 20.
Question 3 is intimately connected with Question 2.
However, Question 3 itself has to be answered in two parts, viz., whether a Water Disputes Tribunal constituted under the Act is competent to grant any interim relief (i) when no reference for grant of interim relief is made to the Tribu nal, and (ii) when such reference is made to it.
It was contended on behalf of Karnataka and Kerala that the answer to the second part of the question will also depend upon the answer to the first part.
For if the Tribunal has no power to grant interim relief, the Central Government would be incompetent to make a reference for the purpose and the Tribunal in turn will have no jurisdiction to entertain such reference, even if made.
And if the Tribunal has no power to grant interim relief, then the order made by the tribunal will not constitute a report and a decision within the meaning of Section 5 (2) and hence it would not be required to be published by the Central Government under Section 6 of the Act in order to make it effective.
Further if the Tribu nal has no such power to grant interim relief then the order passed by the Tribunal on 25th June, 1991 will be void being without jurisdiction and, therefore, to that extent the Ordinance issued by the State of Karnataka will not be in conflict with the provisions of the Act, viz., the Inter State Water Disputes Act, 1956.
557 21.
This Court by its decision of April 26, 1991 has held, as pointed out above, ,that the Central Government had made a reference to the Tribunal for the :consideration of the claim for interim relief prayed for by the State of Tamil Nadu and hence the Tribunal had jurisdiction to consider the said request being a part of the Reference itself.
Implicit in the said decision is the finding that the subject of interim relief is a matter connected with or relevant to the water dispute within the meaning of Section 5 (1) of the Act.
Hence the Central Government could refer the matter of granting interim relief to the Tribunal for adjudication.
Although this Court by the said decision has kept open the question, viz., whether the Tribunal has incidental, ancil lary, inherent or implied power to grant the interim relief when no reference for grant of such relief is made to it, it has in terms concluded the second part of the question.
We cannot, therefore, countenance a situation whereby Question 3 and for that matter Questions 1 and 2 may be so construed as to invite our opinion on the said decision of this Court.
That would obviously be tantamount to our sitting in appeal on the said decision which it is impermissible for us to do even in adjudicatory jurisdiction.
Nor is it competent for the President to invest us with an appellate jurisdiction over the said.
decision through a Reference under Article 143 of the Constitution.
Shri Nariman, however, contended that the President can refer any question of law under Article 143 and, therefore, also ask this Court to reconsider any of its decisions.
For this purpose, he relied upon the language of clause (1) of Article 143 which is as follows: "143.
Power of president to consult Supreme Court(1) If at any time it appears to the President that a question of law or fact has arisen, or is likely to arise, which is of such a nature and of such public importance that it is expedient to obtain the opinion of the Supreme Court upon it, he may refer the question to that Court for consideration and the Court may, after such hearing as it thinks fit, report to the President its opinion thereon.
" In support of his contention he also referred us to the opinion expressed by this Court in re: The , The Ajmer Merwara (Extension of Laws) act, 1947 and the States (Laws) Act, 1950 ; For the reasons which follow, we are unable to accept this conten tion.
In the first instance, the language of clause (1) of Article 143 far from supporting Shri Nariman 's contention is opposed to it.
The said clause empowers the President to refer for this Court 's opinion a question of law or fact which has arisen or is likely to arise.
When this 558 Court in its adjudicatory jurisdiction pronounces its au thoritative opinion on a question of law it cannot be said that there is any doubt about the question of law of the same is res integra so as to require the President to know what the true position of law on the question is.
The deci sion of this Court on a question of law is binding on all courts and authorities.
Hence under the said clause the, President can refer a question of law only when this Court has not decided it.
Secondly, a decision given by this Court can be reviewed only under Article 137 read with Rule 1 of Order XL of the Supreme Court Rules 1966 and on the condi tions mentioned therein.
When, further, this Court overrules the view of law expressed by it in an earlier case, it does not do so sitting in appeal and exercising an appellate jurisdiction over the earlier decision.
It does so in exer cise of its inherent power and only in exceptional circum stances such as when the earlier decision is per incuriam or is delivered in the absence of relevant or material facts or if it is manifestly wrong and productive of public mischief.
See: The Bengal Immunity Company Ltd. vs The Stale of Bihar & Ors., Under the Constitution such appel late jurisdiction does not vest in this Court; nor can it be vested in it by the President under Article 143.
To accept Shri Nariman 's contention would mean that the advisory jurisdiction under Article 143 is also an appellate juris diction of this Court over its own decision between the same parties and the executive has a power to ask this Court to revise its decision.
If such power is read in Article 143 it would be a serious inroad into the independence of judici ary.
So far as the opinion expressed by this Court in re The (supra) is concerned, as the Reference itself makes clear, what was referred was a doubt expressed by the President on the decision of the Federal Court in Jatindra Nath Gupta vs The Province of Bihar & Ors., which was delivered on 20th May, 1949.
The Federal Court at that time was not the apex court.
Upto 10th Octo ber, 1949, the appeals from its decisions lay to the Privy Council including the appeal from the decision in question.
The decisions of the Federal Court were not binding on the Supreme Court as held in Hari Vishnu Kamath vs Syed Ahmad Ishaque & Ors., ; Hence it was not a case where the President had referred to this Court for its opinion a decision which had become a law of the land.
Hence the case in re The (supra) does not support the contention.
The provisions of clause (2) of Article 374 of the Constitution also do not help Shri Nariman 's contention since the said provisions relate to the transitional period and the "judgments and orders of the Federal Court" referred to therein are obviously the interim judgments and orders in the 559 suits, appeals and proceedings pending in the Federal Court at the commencement of the Constitution and which stood transferred to the Supreme Court thereafter.
This is also the view taken by a Division Bench of Bombay High Court in State of Bombay vs Gajanan Mahadev Badley, AIR [1954] Bombay 351.
This view has been confirmed by this Court in Delhi Judicial Service Association, Tis Hazari Court, Delhi etc.
vs State of Gujrat & Ors. etc.
JT Para graphs 32 to 37 of the judgment deal with this subject specifically.
Both Shri Parasaran and Shri Venugopal requested us not to answer the first part of Question 3 on the ground that the said part of the question is purely theoretical and general in nature, and any answer given would be academic because there will be no occasion to make any further inter im order or grant another interim relief in this Reference.
According to him, the recitals of the order of Reference have bearing only on Questions 1 and 2, and the second part of Question 3.
They have no bearing on the first part of Question 3 and since the Reference has been made in the context of particular facts which have no connection with the theoretical part of Question 3, the same should be returned unanswered as being factually unwarranted.
On behalf of karnataka and Kerala, however as pointed out above, it was urged that we should answer the said part of the question for the reasons stated there.
Shri Shanti Bhushan in this connection relied upon the decision of this Court in A.R. Antulay vs
R.S Nayak & Anr,.
[1988] Suppl.
1 SCR 1.
He pointed out that by the said decision the direc tions given by this Court in its earlier decision were held to be void being without jurisdiction and the same were quashed.
In view of this precedent he submitted that a similar course is open to this Court and the decision dated April 26,1991 given by this Court may also be declared as being without jurisdiction and void.
In A.R. Antulay 's case (supra) two questions were specifically raised, viz., (i) whether the directions given by this Court in R.S. Nayak vs A.R. Antulay, ; , (hereinafter referred to as 'R.S Nayak 's case ') withdrawing the Special Case No.24 of 1982 and Special Case No.3 of 1983 arising out of a com plaint filed by a private individual pending in the court of Special Judge, Greater Bombay and transferring the same to the High Court of Bombay in breach of Section 7 (1) of the Criminal Law Amendment Act, 1952 (which mandates that the offences as in the said case shall be tried by a Special Judge only) thereby denying at least one right of appeal to the appellant, was violative of Articles 14 and 21 of the Constitution and whether such directions were at all valid or legal and, (ii) if such directions were not valid or legal, whether in view of the subsequent orders passed by this 560 Court on 17th of April, 1984 in a writ petition challenging the validity of the order and judgment of this Court in R.S. Nayak 's case whereby this Court had dismissed the writ petition without prejudice to the right of the petitioner 10 approach this Court with an appropriate review petition or to file any other application which he may be entitled in law to file, the appeal filed was sustainable and the grounds of the appeal were justiciable.
The latter question was further explained by stating that the question was whether the directions given in R.S. Navak 's case in a proceedings interparties were binding even if bad in law or violative of Articles 14 and 21 of the Constitution and as such were immune from correction by this Court even though they caused prejudice and did injury.
It may be stated here that the said proceedings had come before this Court by way of a special leave petition against an order passed by the learned Judge of the High Court to whom the said case came to be assigned subsequently in pursuance of the directions given in R.S. Nayak 's case.
By the order passed by the learned judge, as many as 79 charges were framed against the appellant and it was decided not to proceed against other named coconspirators.
In the special leave petition filed to challenge the said order, two questions which we have stated above were raised and leave was granted.
This Court in that case held that (i) the directions given by this Court in R.S. Nayak 's case were violative of the limits of jurisdic tion of this Court since this Court could not confer juris diction on a High Court which was exclusively vested in the Special Judge under the provisions of the criminal Law Amendment Act of 1952; (ii) the said directions deprived the appellant of his fundamental rights guaranteed under Arti cles 14 and 21 of the Constitution since the appellant had been treated differently from other offenders and he was deprived of a right of appeal to the High Court; (iii) the directions were issued without observing the principle of audi alteram partem and (iv) the decision given was per incuriam.
Shri Shanti Bhushan urged that since in that case this Court had quashed its own earlier directions on the ground that the High Court had no jurisdiction to try the offence and this Court could not confer such jurisdiction on it, in the present case also the decision of the Court dated April 26, 1991 may be ignored for having proceeded on the basis that the Tribunal had jurisdiction to pass interim relief when it had no such jurisdiction.
We are afraid that the facts in A.R. Antulay 's case (supra) are peculiar and the decision has to be confined to those special facts.
As this court has pointed out in the said decision, in the first instance, the directions which were given for withdrawing the case from the Special Judge to the High Court were without hearing the appellant.
Those directions deprived the appellant of a right of appeal to the High Court and thus were prejudicial to him.
There was, therefore, a manifest breach of the 561 rule of audi alteram paneto.
Secondly, while giving the impugned directions, the Court had not noticed that under the said Act of 1952, the Special Judge had an exclusive jurisdiction to try the offence in question and this being a legislative provision, this court could not confer the said jurisdiction on the High Court.
The Court also pointed out that to the extent that the case was withdrawn from the Special Judge find sent to the High Court, both Articles 14 and 21 were violated.
The appellant was discriminated against and the appellant 's right of appeal which was an aspect of Article 21 was affected.
It would, thus, appear that not only the directions given by this Court were with out jurisdiction but they were also per incuriam and in breach of the principles of natural justice.
They were further violative of the appellant 's fundamental rights under Articles 14 and 21 of the Constitution.
None of the said defects exists in the decision of this Court dated April 26, 1991.
It cannot be said that this Court had not noticed the relevant provisions of the The Court after perusing the relevant provi sions of the Act which were undoubtedly brought to its notice, has come to the conclusion that the Tribunal had jurisdiction to grant interim relief when the question of granting interim relief formed part of the Reference.
There is further no violation of any of the principles of natural justice or of any provision of the Constitution.
The deci sion also does not transgress the limits of the jurisdiction of this Court.
We are, therefore, of the view that the decision being inter parties operates as res judicata on the said point and it cannot be reopened.
We, however, agree with the contention that it is not necessary to answer the first part of Question 3.
The con text in which all the questions are referred to as and the preamble of the Reference amply bear out that the questions have been raised against the background a particular set of facts.
These facts have no bearing on the first part of Question 3 which is theoretical in nature.
It is also legit imate to conclude that this part of the question was not prompted by the need to have a theoretical answer to compre hend situations in general.
Our answer to the second part of the question should meet the exigencies of the situation.
Question No. 2: 25.
Coming now to Question 2, although the question is split into two parts, they deal with the same aspect of the sub ject inasmuch as the answer to the first part would automat ically answer the second part of the question.
This situa tion, like the first question, relates to the specific order of the Tribunal dated June 25, 1991.
Hence, our opinion will have to be he legal merits of the said order.
562 Sub section (1) of Section 5 expressly empowers the Central Government to refer to the Tribunal not only the main water dispute but any matter appearing to be connected with or relevant to it.
It cannot be disputed that a request for an interim relief whether in the nature of mandatory direction or prohibitory order, whether for the maintenance of status quo or for the grant of urgent relief or to pre vent the final relief being rendered infructuous, would be a matter connected with or relevant to the main dispute.
In fact, this Court, by its said decision of April 26, 1991, has in terms held that the request of the State of Tamil Nadu for granting interim relief had been referred by the Central Government to the Tribunal and directed the Tribunal to consider the request on merits, the same being a part of the Reference.
Hence the order of the Tribunal will be a report and decision within the meaning of Section 5 (2) and would have, therefore, to be published under Section 6 of the Act in order to make it effective.
One of the contentions advanced in this behalf was that the Order of the Tribunal dated June 25, 1991 does not purport to be and does not state to be a report and deci sion.
It only states that it is an order.
Secondly, the said order cannot be report and decision within the meaning of Section 5 (2) of the Act because: (i) the Tribunal can make report only after final adjudication of the dispute and there cannot be adjudication without investigation.
There is no provision for interim investigation and interim finding and report; (ii) the Tribunal could not have made the report because its own showing: (a) pleadings were not complete, parties had not yet placed on record all their documents and papers etc.; (b) there was no investigation of the matters, the investigation could have been done only after disclosure of documents followed by a detailed hearing, the evidence and arguments of the parties and judicial finding in conso nance with natural justice; (c) the assessors appointed to assess on the technical matters conducted their proceedings without consultation with the engineers of the State.
Some times the engineers of Tamil Nadu were called for consulta tion in the absence of engineers of Karnataka.
The summoning of documents and information by the assessors was also casual and did not conform to the principles of natural justice and fair play.
A copy of the advice given by the assessors to the members of the Tribunal was not made avail able to the parties; (d) the Tribunal has stated "at this stage it would not be feasible nor reasonable to determine how to satisfy the needs of each State to the greatest possible extent with the minimum detriment to others".
Such an approach is contrary to the concept of an investigation contemplated by the Act and hence no interim order for interim relief could be made on such investigation not contemplated under the Act before making any order; (ii) it is only the decision which find 563 support from the report of the Tribunal which in turn must be the result of a full and final investigation in full which is required to be published under Section 6 of the Act and not an order such as the one passed by the Tribunal.
The present order is neither a decision nor an adjudication and hence cannot be published.
The contention that since the Order does not say that it is a report and decision and, therefore, it is not so under Section 5(2) of the Act is to say the least facetious.
Either the Order is such a report and decision because of its contents or not so at all.
If the contents do not show that it is such a report, it will not become one because the Order states so.
As is pointed out a little later the con tents of the Order clearly show that it is a report and a decision within the meaning of Section 5(2).
Some of the aforesaid submissions relate to the merits of the Order passed and its consequences rather than to the jurisdiction and the power of the Tribunal to pass the said Order.
While giving our opinion on the present question, we are not concerned with the merits of the order and with the question whether there was sufficient material before the Tribunal, whether the Tribunal had supplied the copies of the advice given by the assessor to the respective parties and whether it had heard them on the same before passing the Order in question.
The limited question we are required to answer is whether the order granting interim relief is a report and a decision within the meaning of Section 5(2) and is required to be published in the official Gazette under Section 6 of the Act.
It is needless to observe in this connection that the scope of the investigation that a Tribu nal or a court makes at the stage of passing an interim order is limited compared to that made before making the final adjudication.
The extent and the nature of the inves tigation and the degree of satisfaction required for grant ing or rejecting the application for interim relief would depend upon the nature of the dispute and the circumstances in each case.
No hard and fast rule can be laid down in this respect.
However, no Tribunal or court is prevented or prohibited from passing interim order on the ground that it does not have at that stage all the material required to take the final decision.
To read such an inhibition in the power of the Tribunal or a court is to deny to it the power to grant interim relief when Reference for such relief is made.
Hence, it will have to be held that the Tribunal constituted under the Act is not prevented from passing an interim order or direction, or granting an interim relief pursuant to the reference merely because at the interim stage it has not carried out a complete investigation which is required to be done before it makes its final report and gives its final decision.
It can pass interim orders on such material as according to it is appropriate to the nature of the interim order.
564 28.
The interim orders passed or reliefs granted by the Tribunal when they are not of purely procedural nature and have to be implemented by the parties to make them effec tive, are deemed to be a report and a decision within the meaning of Sections 5 (2) and 6 of the Act.
The present Order of the Tribunal discusses the material on the basis of which it is made and gives a direction to the State of Karnataka to release water from its reservoirs in Karnataka so as to ensure that 205 TMC of water is available in Tamil Nadu 's Mettur reservoir in a year from June to May. It makes the order effective from 1st July, 1991 and also lays down time table to regulate the release of water from month to month.
It also provides for adjustment of the supply of water during the said period.
It further directs the State of Tamil Nadu to deliver 6 TMC of water for the Karaikal region of the Union Territory of Pondicherry.
In addition, it directs the State of Karnataka not to increase its area under irrigation by the waters of the river Cauvery beyond the existing 11.2 lakh acres.
It further declares that it will remain operative till the final adjudication of the dispute.
Thus the Order is not meant to be merely declarato ry in nature but is meant to be implemented and given effect to by the parties.
Hence, the order in question constitutes a report and a decision within the meaning of Section 5 (2) and is required to be published by the Central Government under Section 6 of the Act in order to be binding on the parties and to make it effective.
The contention that Section 5 (3) of the Act cannot apply to the interim orders as it is only the final decision which is meant to undergo the second reference to the Tribu nal provided for in it has no merit.
If the Tribunal has, as held above, power to make an interim decision when a refer ence for the same is made, that decision will also attract the said provisions.
The Central Government or any State Government after considering even such decision may require an explanation or guidance from the Tribunal as stated in the said provisions and such explanation and guidance may be sought within three months from the date of such decision.
The Tribunal may then reconsider the decision and forward to the Central Government a further report giving such explana tion or guidance as it deems fit.
In such cases it is the interim decision thus reconsidered which has to be published by the Central Government under Section 6 of the Act and becomes binding and effective.
We see, therefore, no reason why the provisions of Section 5(3) should prevent or inca pacitate the Tribunal from passing the interim order.
Once a decision, whether interim or final, is made under Section 5(2) it attracts the provisions both of subSection (3) of that Section as well as the provisions of Section 6 of the Act.
As pointed out earlier, the present Order having been made pursuant to the decision of this Court dated April 26, 1991 in C.As.
Nos.303 04 of 565 1991 on a matter which was part of the Reference as held by this Court in the said decision, cannot but be a report and a decision under Section 5(2) and has to be published under Section 6 of the Act to make it effective and binding on the parties.
This legal position of the said order is not open for doubt.
To question its efficacy under the Act would be tantamount to flouting it.
Before concluding we may add that the question whether the opinion given by this Court on a Presidential Reference under Article 143 of the Constitution such as the present one is binding on all courts was debated before us for a considerable length of time.
We are, however, of the view that we need not record our opinion on the said question firstly, because the question does not form part of the Reference and secondly, any opinion we may express on it would again be advisory in nature.
We will, therefore, leave the matter where it stands.
It has been held adjudicatively that the advisory opinion is entitled to due weight and respect and normally it will be followed.
We feel that the said view which holds the field today may usefully continue to do so till a more opportune time.
Our opinion on the questions referred to us is, there fore, as follows:.
Question No.1.
The Karnataka Cauvery Basin Irrigation Pro tection Ordinance, 1991 passed by the Governor of Karnataka on 25th July, 1991 (now the Act) is beyond the legislative competence of the State and is, therefore, ultra vires the Constitution.
Question No.2.
(i) The Order of the Tribu nal dated June 25, 1991 constitutes report and decision within the meaning of Section 5 (2) of the ; (ii) the said Order is, therefore, required to be published by the Central Gov ernment in the official Gazette under Section 6 of the Act in order to make it effective.
Question No.3.
(i) A Water Disputes Tribu nal constituted under the Act is competent to grant any interim relief to the parties to the dispute when a reference for such relief is made by the Central Government; (ii) whether the tribunal has power to grant interim relief when no reference is made by the Central 566 Government for such relief is a question which does not arise in the facts and circumstances under which the Reference is made.
Hence we do not deem it necessary to answer the same.
| In pursuance of the directions given by this Court in a Writ Petition filed by the Tamil Nadu Ryots ' Association, the Union Government, by its notification dated June 2, 1990, constituted the Cauvery Water Disputes Tribunal under Section 4 of the for adjudication of the dispute regarding sharing of water of the inter State river Cauvery between the States of Karnata ka, the upper riparian State, Tamil Nadu, the lower riparian State, and Kerala and the Union Territory of Pondicherry.
By another notification of the same date, it also referred the water dispute emerging from the Letter of Request lodged by the State of Tamil Nadu under Section 3 of the Inter State Water Disputes Act with the Central Government on the fail ure of the negotiations between the parties in this regard, for reference of the dispute to a Tribunal for adjudication.
In the Letter of Request the State had made a grievance against construction of works in Karnataka area and the appropriation of water upstream so as to prejudice the interests downstream in the State of Tamil Nadu, and also sought the implementation of the agreements of 1892 and 1924, which had been entered into when most of the areas in these States comprised in the then Presidency of Madras and the then State of Mysore.
The last of the agreements had expired in 1974 and though the understanding of 1976 had been reached, further negotiations in the matter had failed and hence the State of Tamil Nadu had lodged the aforesaid Letter of Request.
Before the Tribunal, the State of Tamil Nadu submitted an application for interim relief praying that State of Karnataka be directed not to impound or utilise water of Cauvery river beyond the extent impounded or utilised by them as on 31.5.1972, as agreed to by the Chief Ministers of the basin States and the concerned Union Minister and an order restraining Karnataka from undertak 499 ing any new projects, dams, reservoirs, canals and/or from proceeding further with the construction of those already commenced in the Cauvery basin.
The Union Territory of Pondicherry also sought a direction both to Karnataka and Tamil Nadu to release the water already agreed to during the months of September to March.
Meanwhile, Tamil Nadu filed an urgent petition to direct Karnataka, as an emergent measure, to release at least 20 TMC of water as the first instalment, pending final orders on their interim application.
Besides contesting the application on merits, both Karnataka and Kerala raised a preliminary objection that the Tribunal constituted under the Act had a limited jurisdic tion, and had no inherent powers as an ordinary Civil Court has, and there was no provision of law which authorised or conferred jurisdiction on the Tribunal to grant any interim relief.
The Tribunal held that since the question of grant ing interim relief was not referred to it, the applications interim relief were not maintainable.
On appeal by the State of Tamil Nadu and the Union Territory of Pondicherry, this Court held that reliefs prayed for in the applications for interim relief and direc tions, were covered in the reference and fell within the purview of the dispute referred to it by the Central Govern ment under Section 5 of the later State Water Disputes Act.
Accordingly, the Court directed the Tribunal to decide the applications for interim relief and directions on merits.
Rejecting the objections once again raised by the State of Karnataka, as regards the maintainability of the applica tions for interim relief, the Tribunal passed an order directing the State of Karnataka, to ensure that 205 TMC water was available in Tamil Nadu 's Mettur reservoir every year.
Tamil Nadu was also directed to deliver to Pondicherry 6 TMC water.
The Tribunal also directed Karnataka not to increase its area under irrigation by the waters of Cauvery, beyond the existing area.
The order was to remain operative till the final adjudication of the dispute referred to it.
The Tribunal 's order thus gave rise to the issuance of the Karnataka Cauvery Basin Irrigation Protection Ordinance, 1991 by the State of Karnataka nullifying the Tribunal 's order.
The ordinance was subsequently replaced by Act No. 27 of 1991.
500 The State of Karnataka also instituted a suit under Article 131 against the State of Tamil Nadu and others for a declaration that the Tribunal 's order granting interim relief was without jurisdiction and, therefore, null and void, etc.
Under these circumstances, the President of India made a Reference to this Court under Article 143(1) of the Consti tution seeking advisory opinion on: (a) whether the Ordi nance and the provisions thereof were in accordance with the provisions of the Constitution, (b) whether the Tribunal 's order constituted a report and a decision within the meaning of Section 5(2) of the , and whether the same was required to be published by the Govern ment of India in order to make it effective, and (c) whether a Water Disputes Tribunal constituted under the Inter State Water Disputes.
Act was competent to grant any relief to the parties to the dispute.
It was contended on behalf of the State of Karnataka that the legislation clearly fell within the competence of the State Legislature under Entry 17 as well as Entries 14 and 18 of List II in the Seventh Schedule of the Constitu tion and the State Legislature had every right to legislate on the subject and this legislative power was subject only to Entry 56 of List I which, however, did not denude the States of the power to legislate under Entry 17, and, in the absence of the constitution of a River Board for Cauvery, as envis aged under Entry 56, the State retained full legisla tive power to make laws as if Entry 17 had remained un touched; that the executive power of the Union under Article 73 could not extend to any State with respect to matters on which the State alone could legislate, in view of the field having been covered by Article 162 of the Constitution; that since the Inter State River Disputes Act enacted under Article 262 of the Constitution did not attract any Entry in List I, it was law essentially meant to provide for the adjudication of a dispute with respect to the use, distribu tion or control of waters of, or in, any inter State river or river valley and did not, therefore, step on the toe of Entry 17, that the Ordinance, which became Act subsequently, only sought to impose by section 3, a duty on the State Government to protect, preserve and maintain irrigation from Cauvery waters in the irrigable areas failing within the various projects specified in the Schedule to the said legislation, and, therefore, the legislation was clearly within the scope of the State 's power to legislate and was intra vires the Constitution.
A fortiori, the power to legislate conferred on the State Legislature by Entries 14, 17 and 18 of List 501 II, could not be inhibited by an interim order of the Tribu nal, since the scheme of the Act envisaged only one final report or decision of the Tribunal under section 5(2) which would have to be gazetted under section 6 thereof, and therefore, it was open to the Karnataka Legislature to make a law ignoring or overriding the interim order of the Tribu nal; that the scheme of the Act did not envisage the making of an interim order by the Tribunal; once a water dispute was referred to the Tribunal, it must 'investigate ' the matters referred to it and forward a report to the Central Government setting out the facts found by it and giving its decision on the matters referred to it, and the Central Government must publish this decision in the official ga zette to make it final and binding on the parties to the dispute, and since the interim order was not preceded by such an investigation, the said order could not be described as 'a decision ' under section 5(2) of the Act, and conse quently, the Central Government was under no obligation to publish the interim order, that the words 'any matter ap pearing to be connected with or relevant to water dispute ' employed in section 5(1) of the Act did not contemplate reference of an interim relief matter, nor could the same empower the Tribunal to make an interim order pendente lite, and, therefore, having regard to the purpose, scope and intendment of the Act, the Tribunal constituted thereunder had no power or authority to grant any interim relief which would have the effect of adversely interfering with its existing rights, although while finally adjudicating the dispute it could override any executive or legislative action taken by the State, and since the allocation of flow of waters between the concerned States was generally based on the principle of 'equitable apportionment ', it was incum bent on the Tribunal to investigate the facts and all rele vant materials before deciding on the shares of the con cerned States which was not possible at the interim stage and hence the legislature had advisedly not conferred any power on the Tribunal to make an interim order affecting the existing rights of the concerned parties, and that the President could refer any question of law under Article 143 and therefore, also ask the Supreme Court to reconsider any of its decisions.
In its written statement, the State of Kerala, by and large, supported the stand of the State of Kerala.
However, subsequently it was submitted that since neither the scheme of the Act conferred any power on the Tribunal to make an interim order nor the scope of Article 262 read with the scheme of Act contemplated making of a Reference in that regard, the only remedy available to a State 502 which apprehended any action by the upper riparian State likely to adversely affect the rights of its people, was to move the Supreme Court under Article 131 of the Constitu tion, notwithstanding the provisions of Article 262 and section 11 of the Act; and accordingly, this Court 's view that there was a Reference to the Tribunal for grant of interim relief was not consistent with the true meaning and scope of Article 262 and the provisions of the Act and this Court should not feel bound by it.
The State of Tamil Nadu contended that ordinarily a dispute between two or more States would be governed by Article 131 of the Constitution and, subject to the provi sions of the Constitution, the Supreme Court alone would have jurisdiction if and in so far as the dispute involved any question whether of law or fact on which the existence or extent of a legal right depended, that the Tribunal was required to perform a purely judicial function which, but for Article 262 and section 11 of the , would have been performed by a court of law, that since the Tribunal was a substitute for the Supreme Court, it was reasonable to infer that all the powers exer cised by the Supreme Court under Article 131 could be exer cised by the Tribunal while adjudicating a water dispute and, therefore, the ancillary and incidental power to grant interim relief inhered in such a Tribunal without the need for an express provision or any specific reference to it in that behalf; that apart, the decision of this Court dated 26th April, 1991 that the reference to the Tribunal included the question of grant of interim relief operated as res judicata and was binding on the contesting parties regard less of the view that this Court might take on the generali ty of the question referred for decision; if the question of granting of interim relief formed part of the Reference, the Tribunal was duty bound to decide the same and even other wise, it had inherent jurisdiction to grant interim relief, whether or not the question regarding grant of interim relief was specifically referred, and therefore, its deci sion would constitute a report under section 5(2) of the Act and was liable to be published in the official Gazette as required by section 6; that if there was any ambiguity in the interim order the same could be taken care of under section 5(3) of the Act; that the Ordinance in question was ultra rites the Constitution for diverse reasons; the real object and purpose was to unilaterally nullify the Tribu nal 's interim order after having failed in the first round of litigation; the State of Karnataka had no right to uni laterally decide the quantum of water it would appropriate or the extent to which it would diminish the flow of Cauvery waters to 503 the State of Tamil Nadu and thereby deny to the people of Tamil Nadu their rightful share in the Cauvery waters; the right to just and reasonable use of water being a matter for adjudication by the Tribunal, no single State could, by the use of its legislative power arrogate unto itself the judi cial function of equitable apportionment and decide for itself the quantum of water it would use from the inter State river regardless of the prejudice it would cause to the other State by its unilateral action; such a power could not be read in Entry 17 as it would be destructive of the principle that such water disputes were justiciable and must be left for adjudication by an independent and impartial special forum to which it was referred, namely, the Tribunal constituted for resolving the dispute, and not by unilateral executive or legislative interference, and, therefore, the object of the legislation not being bona fide, the same could not be allowed to stand as it had the effect of over ruling a judicial order passed by a Tribunal specially appointed to adjudicate on the water dispute between the parties thereto; it sought to override or neutralize the law enacted by Parliament in exercise of power conferred by Article 262 and not Article 246 read with the relevant entry in the Seventh Schedule) of the Constitution; a State Legislature could have no power to legislate with regard to a water dispute as it would be incongruous to confer or infer such power in a State Legislature to destroy what a judicial body has done under a Central law; it had extra territorial operation, in that, it directly impinged on the rights of the people of Tamil Nadu to the use of Cauvery waters; it was also contrary to the Rule of Law, and a power not comprehended even by Article 262 could not be read into the legislative power of the State for it would pervert the basic concept of justice; and was also violative of the fundamental rights of the inhabitants of Tamil Nadu guaran teed by Articles 14 and 21 of the Constitution, in that, the action of Karnataka was wholly arbitrary and in total disre gard of the right to life of those inhabitants in Tamil Nadu who survived on Cauvery waters; it was further contended that in a civilised society governed by the Rule of Law, a party to a 'lis ' water dispute could not be allowed to arrogate to itself the right to decide on the dispute or to nullify an interim order made by a Tribunal in obedience to the decision of the apex court, by abusing the legislative power under Entry 17 under which the legislation purported to be; moreover, the jurisdiction of this Court under Arti cle 143 of the Constitution was discretionary and this Court should refrain from answering a Reference which was in general terms without background facts and was likely to entail a roving inquiry which may ultimately prove academic only; secondly, 504 the State of Karnataka had immediately after the interim order instituted a suit in this Court in which it had prayed for a declaration that the interim order of the Tribunal dated 25th June, 1991 was without jurisdiction, null and void, and for setting aside the said order; while on the one hand, the decision of this Court had become final and was res judicata between the parties thereto, on the other hand, the State of Karnataka was raking up the same question of jurisdiction before this Court in a substantive suit with a view to over reaching this Court 's earlier order; the Presidential Reference in terms referred to disputes and differences having arisen out of the Tribunal 's interim order which was said to have given rise to a public contro versy likely to result in undesirable consequences; such matters could be effectively countered by the concerned Government and did not call for a Presidential Reference; if there was any doubt or difficulty in the implementation of the order in question, recourse could always be had to section 5(3) of the Act and hence, this Court should refuse to answer the Reference.
The Union Territory of Pondicherry, contended that the promulgation of the Ordinance (now Act) was intended to further protract the long standing water dispute which came to be referred to the Tribunal only after this Court issued a mandamus in that behalf and was likely to prejudicially affect the interest of the State as well as the farmers and other inhabitants who utilised the water from river Cauvery, that the said legislation was unconstitutional and was a piece of colourable legislation, that in the case of flowing water the riparian States had no ownership or proprietary right therein except in the usufruct thereof and, therefore, the power to legislate therein under Entry 17 of List II could extend to only the usufructuary right subject to the right of a riparian State to get the customary quantity of water; that the Ordinance was also void for repugnancy, being in conflict with the Central legislation, and also violative of Article 21 of the Constitution as it was in tended to diminish the supply of water to Tamil Nadu and Pondicherry, which was also against the spirit of Articles 38 and 39 of the Constitution,that since the water dispute referred to the Tribunal comprised the issue regarding the grant of interim relief, as held by this Court, the interim order made by the Tribunal constituted a report within the meaning of section 5(2) of the Act and, consequently, the Central Government was obliged to publish it, as required by section 6 of the Act: and when so published it would operate as a decision in rem: but even without publication it was binding, on Karnataka as a decision in personam since the jurisdiction of all courts including 505 the Supreme Court was taken away by virtue Of section 11 of the Act read with Article 262(2) of the Constitution, and the Tribunal had all attributes of a Court; it was required to discharge the judicial function of adjudicating a water dispute between two or more States and must be deemed to possess the inherent incidental and ancillary power to grant interim relief which inhered in all such judicial bodies, and absence of an express provision in that behalf did not detract from the view that such power inhered in a Tribunal.
Six intervention applications were also filed by differ ent persons and bodies from Karnataka, including the Advo cate General of the State in support of the case of Karnata ka.
An intervention application raising the contentions similar to those of State of Tamil Nadu was also filed by the Tamil Nadu Ryots ' Association which had preferred the original Writ Petition on which a mandate to constitute the Tribunal was given.
Answering the Reference, this Court, HELD: 1.1 The Karnataka Cauvery Basin Irrigation Protection Ordinance 1991 promulgated by Governor of Karna taka on 25th July, 1991 (subsequently enacted by the State Legislature as Act No. 27 of 1991) is beyond the legislative competence of the State and, is therefore, ultra vires the Constitution.
[565 E] 1.2 The object of the provisions of the Ordinance is obvious coming close on the Order of the Tribunal and in the context of the stand taken by the State of Karnataka that the Tribunal has no power or jurisdiction to pass any inter im relief, it is to override the said decision of the Tribu nal and its implementation.
The Ordinance has thus the effect of defying and nullifying any interim order of the Tribunal appointed under a law of the Parliament.
The other effect of the Ordinance is to reserve to the State of Karna taka exclusively the right to appropriate as much of the water of river Cauvery and its tributaries as it deems requisite and in a manner and at periods it deems fit and proper, although pending final adjudication by the Tribunal.
[546 F G] 1.3 The Ordinance affects the jurisdiction of the Tribu nal appointed under the Central Act, viz., the inter State Water Disputes Act, which has been made under Article 262 of the Constitution.
506 The State of Karnataka has arrogated to itself the power to decide unilaterally whether the Tribunal has jurisdiction to pass the interim order or not and whether the order is binding on it or not.
The State has presumed that till a final order is passed by the Tribunal, the State has the power to appropriate the waters of the river Cauvery to itself unmindful of and unconcerned with the consequences of such action on the lower riparian States, that it has supe rior rights over the said waters and it can deal with them in any manner, and the lower riparian States have no equita ble rights and that it is the sole judge as to the share of the other riparian States in the said waters.
Moreover, it has assumed the role of a judge in its own cause.
[552 C, F G] 1.4 Apart from the fact that the Ordinance directly nullifies the decision of the Tribunal, it also challenges the decision of this Court, which has ruled that the Tribu nal had power to consider the question of granting interim relief since it was specifically referred to it.
The Ordi nance further has an extra territorial operation inasmuch as it interferes with the equitable rights of Tamil Nadu and Pondicherry to the waters of the Cauvery river.
To the extent that the Ordinance interferes with the decision of this Court and of the Tribunal appointed under the Central legislation, it is clearly unconstitutional being not only in direct conflict with the provisions of Article 262 of the Constitution under which the said enactment is made, but being also in conflict with the judicial power of the State.
1552 H, 553 A] 1.5 The legislature can change the basis on which a decision is given by the Court and thus change the law in general, which will affect a class of persons and events at large but it cannot set aside an individual decision inter parties and affect their rights and liabilities alone.
Such an act on the part of the legislature amounts to exercising the judicial power of the State and to functioning as an appellate court or Tribunal.
[554 H, 555 A] Municipal Corporation of the City of Ahmedabad etc.
vs New Shorock Spg.
& Wvg.
Co. Ltd. etc.
; ; Madan Mohan Pathak vs Union of India & Ors.
; , and P. Sambamurthy & Ors.
vs State of Andhra Pradesh & Anr., ; , referred to.
1.6 Any executive order or a legislative enactment of a State which interferes with the adjudicatory process and adjudication by such Tribunal is an interference with the judicial power of the State.
In view of the fact that the Ordinance in question seeks directly to 507 nullify the order of the Tribunal, it impinges upon the judicial power of the State.
[555 C D] 1.7 Further, admittedly, the effect of the Ordinance is to affect the flow of the waters of the river Cauvery into the territory of Tamil Nadu and Pondicherry which are the lower riparian States.
The Ordinance has, therefore, an extra territorial operation, and is thus beyond the legisla tive competence of the State and is ultra vires the provi sions of Article 245(1) of the Constitution.
[555 E] 1.8 The Ordinance is also against the basic tenets of the rule of law inasmuch as the State of Karnataka by issu ing the Ordinance has sought to take law in its own hand and to be above the law.
Such an act is an invitation to law lessness and anarchy, inasmuch as the Ordinance is a mani festation of a desire on the part of the State to be a judge in its own cause and to defy the decisions of the judicial authorities.
The action forebodes evil consequences to the federal structure under the Constitution and opens doors for each State to act in the way it desires disregarding not only the rights of the other States, the orders passed by instrumentalities constituted under an Act of Parliament but also the provisions of the Constitution.
If the power of a State to issue such an Ordinance is upheld it will lead to the break down of the Constitutional mechanism and affect the unity and integrity of the nation.
[555 F G] 2.1 Under Article 131, this Court has original jurisdic tion, among other things, in any dispute between two or more States where the dispute involves any question whether of law or fact on the existence and extent of which a legal right depends except those matters which are specifically excluded from the said jurisdiction by the proviso.
However, the Parliament has also been given power by Article 262 of the Constitution to provide by law that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any dispute or complaint with respect to the use, distribution or control of the water of, or in, any inter State river or river valley.
Section 11 of the , has in terms provided for such exclusion of the jurisdiction of the Courts.
Thus, Section 11 of the Act read with Article 262 excludes original juris diction of the inter State water dispute which may be re ferred to the Tribunal established under the Act from the purview of any Court including the Supreme Court under Article 131.
1544 H, 545 A B] 2.2 The has been enacted only under Article 262 of the Constitution, and not under Entry 56, 508 as it relates to the adjudication of the disputes and with no other aspect either of the inter State river as a whole or of the waters in it.
[550 G] 2.3 Entry 56 speaks of regulation and development of interState rivers and river valleys and does not relate to the disputes between the riparian States with regard to the same and adjudication thereof.
Even assuming that the ex pression "regulation and development" would in its width, include resolution of disputes arising out therefrom and a provision for adjudicating them, the Act does not make the declaration required under Entry 56.
This is obviously not an accidental omission, but a deliberate disregard of the Entry since it is not applicable to the subject matter of the legislation.
Further no Entry in either of the three Lists refers specifically to the adjudication of disputes with regard to inter State river waters, the reason being that Article 262 of the Constitution specifically provides for such adjudication.
[547 A C] 2.4 An analysis of Article 262 shows that an exclusive power is given to the Parliament to enact a law providing for the adjudication of disputes or complaints relating to "use, distribution or control" of the waters of, or in any inter State river or river valley.
The words "use", "distri bution" and "control" are of wide import and may include regulation and development of the said waters.
The provi sions clearly indicate the amplitude of the scope of adjudi cation, inasmuch as it would take within its sweep the determination of the extent, and the manner, of the use of the said waters, and the power to give directions in respect of the same.
[508 F G] 2.5 The language of the Article has, further to be distinguished from that of Entry 56 and Entry 17.
Whereas Article 262(1) speaks of adjudication of any dispute or complaint and that too with respect to the use, distribution or control of the waters of or in any inter State river or river valley, Entry 56 speaks of regulation and development of inter State rivers and river valleys.
Thus, the distinc tion between Article 262 and Entry 56 is that whereas former speaks of adjudication of disputes with respect to use, distribution or control of the waters of any inter State river or river valley, Entry 56 speaks of regulation and development of inter State rivers and river valleys.
Entry 17 likewise speaks of water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of Entry 56.
It does not speak either of adjudication of disputes or of an 509 inter State river as a whole and State can only deal with water within its territory.
[547 H, 548 A C] 2.6 The Inter State Disputes Act, 19S6 is made pursuant to the provisions of Article 262 specifically for adjudica tion of the disputes between the riparian States with regard to the use, distribution or control of the waters of the inter State rivers or river valleys, and is not relatable to Entry 56 and, therefore, does not cover either the field occupied by Entry $6 or by Entry 17.
Since the subject of adjudication of the said disputes is taken care of specifi cally and exclusively by Article 262, by necessary implica tion the subject stands excluded from the field covered by Entries 56 and 17.
It is not, therefore, permissible either for the Parliament under Entry $6 or for a State legislature under Entry 17 to enact a legislation providing for adjudi cation of the said disputes or in any manner affecting or interfering with the adjudication established by law under Article 262.
This is apart from the fact that the State legislature would even otherwise be incompetent to provide for adjudication or to affect in any manner the adjudicatory process or the adjudication made in respect of the inter State river waters beyond its territory or with regard to disputes between itself and another State relating to the use, distribution or control of such waters.
Any such act on its part will be extra territorial in nature and, therefore, beyond its competence.
[549 C F] 2.7 It is not correct to say that it is Entry 97 of the Union List,which deals with the topic of use, distribution and control of the waters of an inter State river.
This is so because the expression "regulation and development of inter State rivers and river valleys" in Entry 56 would include the use, distribution and allocation of the waters of the inter State rivers and river valleys between differ ent riparian States.
Otherwise, the intention of the Con stituent Assembly to provide for the Union to take over the regulation and development under its control makes no sense and serves no purpose.
Further, the , which is admittedly enacted under Entry 56 for the regula tion and development of inter State rivers and river val leys, does cover the field of the use, distribution and allocation of the waters of the inter State rivers and river valleys, indicating that the expression "regulation and development" in Entry 56 has legislatively also been con strued to include the use, distribution or allocation of the waters of the inter State rivers and river valleys between riparian States.
To contain the operation of Entry 17 to the waters of an inter State river and river valleys 510 within the boundaries of a State and to deny the competence to the State legislature to interfere with or to affect or to extend to the use, distribution and allocation of the waters of such river or river valley beyond its territory, directly or indirectly, it is not necessary to fail back on the residuary Entry 97, as an appropriate declaration under Entry 56 would suffice.
The very basis of a federal Consti tution mandates such interpretation and would not bear an interpretation to the contrary which will destroy the con stitutional scheme and the Constitution itself.
Although, therefore, it is possible technically to separate the "regulation and development" of the interState river and river valley from the "use, distribution and allocation" of its waters, it is neither warranted nor necessary to do so.
[549 G, 550, B F] 2.8 Though the waters of an inter State river pass through the territories of the riparian States such waters cannot be said to be located in any one State.
They are in a state of flow and no State can claim exclusive ownership of such waters so as to deprive the other States of their equitable share.
Hence in respect of such waters, no State can effectively legislate for the use of such waters since its legislative power does not extend beyond its territo ries.
It is further an acknowledged principle of distribu tion and allocation of waters between the riparian States that the same has to be done on the basis of the equitable share of each State.
What the equitable share will be will depend upon the facts of each case.
[551 H, 552 A B] 3.1 The order of the Tribunal dated 25th June, 1991 granting interim relief constitutes a report and a decision within the meaning of Section 5(2) of the .
The said order is, therefore, required to be published by the Central Government in the Official Gazette under Section 6 of the Act in order to make it effective.
[565 F G] 3.2 Sub section (1) of Section 5 expressly empowers the Central Government to refer to the Tribunal not only the main water dispute, but any matter appearing to be connected with or relevant to it.
A request for an interim relief, whether in the nature of mandatory direction or prohibitory order, whether for the maintenance of status quo or for the grant of urgent relief or to prevent the final relief being rendered infructuous, would be a matter connected with or relevant to the main dispute.
In fact, this Court, by its decision of April 26, 1991, has in terms held that the request of the State of Tamil Nadu for granting interim relief had been referred by the Central Government to the Tribunal and directed the Tribunal to 511 consider the request on merits, the same being a part of the Reference.
Hence the order of the Tribunal will be a report and decision within the meaning of Section 5(2) and would have, therefore, to be published under Section 6 of the Act in order to make it effective.
[562 A C] 3.3 It is not correct to say that since the Order does not say that it is a report and decision it is not so under Section 5(2) of the Act.
Either the Order is such a report and decision because of its contents or not so at all.
If the contents do not show that it is such a report, it will not become one because the Order states so.
The contents of the order clearly show that it is a report and a decision within the meaning of Section 5(2).
[563 B] 3.4 The scope of the investigation that a Tribunal or a Court makes at the stage of passing an interim order is limited compared to that made before making the final adju dication.
The extent and the nature of the investigation and the degree of satisfaction required for granting or reject ing the application for interim relief would depend upon the nature of the dispute, and the circumstances in each case.
No hard and fast rule can be laid down in this respect.
However, no Tribunal or court is prevented or prohibited from passing interim orders on the ground that it does not have at that stage all the material required to take the final decision.
To read such an inhibition in the power of the Tribunal or a court is to deny to it the power to grant interim relief when Reference for such relief is made.
Hence, the Tribunal constituted under the Act is not pre vented from passing an interim order or direction, or grant ing an interim relief pursuant to the reference merely because at the interim stage it has not carried out a com plete investigation which is required to be done before it makes its final report and gives its final decision.
It can pass interim orders on such material as according to it is appropriate to the nature of the interim order.
[563 E H] 3.5 The interim orders passed or reliefs granted by the Tribunal when they are not of purely procedural nature and have to be implemented by the parties to make them effec tive, are deemed to be a report and a decision within the meaning of Sections 5(2) and 6 of the Act.
[564 A] 3.6 In the instant case, Order of the Tribunal discusses the material on the basis of which it is made and gives a direction to the State of Karnataka to release water from its reservoirs in Karnataka so as to ensure that 205 TMC of water is available in Tamil Nadu 's 512 Mettur reservoir in a year from June to May. It makes the order effective from 1st July, 1991 and also lays down a time table to regulate the release of water from month to month.
It also provides for adjustment of the supply of water during the said period.
It further directs the State of Tamil Nadu to deliver 6 TMC of water for the Karaikal region of the Union Territory of Pondicherry.
In addition, it directs the State of Karnataka not to increase its area under irrigation by the waters of the river Cauvery beyond the existing 11.2 lakh acres.
It further declares that it will remain operative till the final adjudication of the dispute.
Thus, the order is not meant to be merely declara tory in nature but is meant to be implemented and given effect to by the parties.
Hence, the order in question constitutes a report and a decision within the meaning of Section 5(2) and is required to be published by the Central Government under Section 6 of the Act in order to be binding on the parties and to make it effective.
1564 B D] 3.7 It is not correct to say that Section 5(3) of the Act cannot apply to the interim orders as it is only the final decision which is meant to undergo the second refer ence to the Tribunal provided in it.
If the Tribunal has power to make an interim decision when a reference for the same is made, that decision will also attract the said provisions.
The Central Government or any State Government alter considering even such decision may require an explana tion or guidance from the Tribunal as stated in the said provisions and such explanation and guidance may be sought within three months from the date of such decision.
The Tribunal may then reconsider the decision and forward to the Central Government a further report giving such explanation or guidance as it deems fit.
In such cases it is the interim decision thus reconsidered which has to be published by the Central Government under Section 6 of the Act and becomes binding and effective.
Therefore, there is no reason why the provisions of Section 5(3) should prevent or incapacitate the Tribunal from passing the interim order.
Once a deci sion, whether interim or final, is made under Section 5(2) it attracts the provisions both of sub section (3) of that Section as well as the provisions of Section 6 of the Act.
[564 E G] 4.1 A Water Disputes Tribunal constituted under the InterState Water Disputes Act is competent to grant any interim relief to the parties to the dispute when a refer ence is made by the Central Government.
Whether the Tribunal has power to grant relief when no reference is made for such relief is a question which does not 513 arise in the facts and circumstances under which the Refer ence is made.
1565 H, 566 A] 4.2 This Court has held by its order dated 26th April, 1991 that the Central Government had made a reference to the Tribunal for the consideration of the claim for interim relief prayed for by the State of Tamil Nadu and hence the Tribunal had jurisdiction to consider the said request being a part of the Reference itself.
Implicit in the said deci sion is the finding that the subject of interim relief is a matter connected with or relevant to the water dispute within the meaning of Section 5(1) of the Act.
Hence the Central Government could refer the matter of granting inter im relief to the Tribunal for adjudication.
Although this Court has kept open the question, viz., whether the Tribunal has incidental, ancillary.
inherent or implied power to grant the interim relief when no reference for grant of such relief is made to it, it has in terms concluded second part of the question.
[557 A C] 4.3 It is impermissible for this Court to sit in appeal even in adjudicatory jurisdiction, nor is it competent for the President to invest this Court with an appellate juris diction, over the said decision through a Reference under Article 143 of the Constitution.
[557 D] 4.4 It is not correct to say that the question of grant of interim relief falls outside the purview of the provi sions of Section II of the Inter State Water Dispute Act and can be agitated under Article 131 of the Constitution.
The effect of the provisions of Section I 1 of the Act read with Article 262 of the Constitution is that the entire judicial power of the State, and, therefore, of the courts including that of the Supreme Court to adjudicate upon original dis pute or complaint with respect to the use, distribution or control of the water of, or in any inter State river or river valleys has been vested in the Tribunal appointed under Section 4 of the said Act.
1555 B D] 5.
It is not correct to say that the President can refer any question of law under Article 143 and, therefore, also ask this Court to reconsider any of its decisions.
In the first instance, the language Of clause (1) of Article 143 is opposed to such a proposition.
The clause empowers the President to refer or this Court 's opinion a question of law or fact which has arisen or is likely to arise.
When this Court in its adjudicatory jurisdiction pronounces its authoritative opinion on a question of law, it cannot be said that there is any doubt about the question of law or the same is res integra so as to 514 require the President to know what the true position of law on the question is.
The decision of this Court on a question of law is binding on all courts and authorities.
Hence, under the said clause the President can refer a question of law only when this court has not decided it.
Secondly, a decision given by this Court can be reviewed only under article 137 read with Rule I of Order XL of the the Supreme Court Rules 1966 and on the conditions mentioned therein.
When, further, this Court overrules the view of law ex pressed by it in an earlier case, it does not do so sitting in appeal and exercising an appellate jurisdiction over the earlier decision.
It does so in exercise of its inherent power and only in exceptional circumstances such as when the earlier decision is per incuriam or is delivered in the absence of relevant or material facts or if it is manifestly wrong and productive of public mischief.
[557 E H, 558 A C] The , The Ajmer Merwara (Extension of Laws) Act, 1947 and the Part C States (Laws) Act, , distinguished.
The Bengal Immunity Company Ltd. vs The State of Bihar & Ors., , relied on.
Jatindra Nath Gupta vs The Province of Bihar & Ors., ; Hari Vishnu Kamath
Syed Ahmad Ishaque & Ors., ; ; Delhi Judicial Service Association.
Tis Hazari Court, Delhi etc.
vs State of Gujarat & Ors.
, JT State of Bombay vs Gajanan Mahadev Badley, AIR 1954 Bombay 351, referred to.
5.2 Under the Constitution appellate jurisdiction over the earlier decision does not vest in this Court; nor can it be vested in it the President under Article 143.
If it is accepted that the President can ask this Court to reconsider any of its decisions it would mean that the advisory juris diction under Article 143 is also an appellate jurisdiction of this Court over its own decision between the same par ties and the executive has a power to ask this Court to revise its decision.
If such power is read in Article 143 it would be a serious inroad into the independence of judi ciary.
[558 D] 5.3 The facts in A.R.Antulay 's case arc peculiar and the decision therein has to be confined to those special facts.
Further the decision being inter parties operates as res judicata and cannot be reopened.
[560G, 561 E] 515 A.R.Antulay vs K.S. Nayak & Anr., [1988] Suppt.
1 SCR 1 and R. S.Nayak vs
A R. Antulay; , , referred to.
No opinion is expressed on the question whether the opinion given by this Court on a Presidential Reference under Article 143 of the Constitution, such as the present one, is binding on all courts, firstly, because the question does not form part of the Reference, and, secondly, any opinion expressed on it would again be advisory.
However, adjudicatively it has been held by this Court that the advisory opinion is entitled to due weight and respect and normally, it will be followed.
The said view holds the field today and may usefully continue to do so till a more oppor tune time.
[565 C D]
|
ivil Appeal No. 1945 of 1992.
From the Judgment and Order dated 4.1.1991 of th Kerala High Court in C.R.P. No. 1830 of 1990 Mathai M. Paikeday and C.N. Sreekumar for the Appellant.
P.S. Poti and Ms. Malini Poduval for the Respondent.
The Judgment of the Court was delivered by S.C. AGRAWAL, J.
Special leave granted.
This appeal filed by the landlord arises out of a petition filed under Sections 11(3) and 11(4)(ii) of the Kerala Buildings (Lease & Rent Control) Act, 1965 (hereinafter referred to as 'the Act ') for the eviction of the respondent from the building situate in the city of Cochin.
The building in question was let out to the respondent by the father of the appellant on May 1, 1972 and he has been carrying on hotel business on the same.
The said building stands on a portion of 13 cent of land owned by the appellant.
The appellant was employed with Bharat Gold Mines Ltd. and was due to retire on September 30, 1981.
Prior to his retirement, the appellant filed the eviction petition before the Rent Controller, Ernakulam on January 15, 1981 wherein the appellant pleaded that after his retirement from service, he wanted to settle down in Cochin and except the building in question, he has no other house to reside and that the said building was required by him bona fide for his occupation.
It was also pleaded by the appellant that the respondent was using the property in such a manner as to materially and permanently reduce its value, utility and purpose.
The said petition was contested by the respondent on the ground that the building is not suitable for residential purposes inasmuch as it consists of two adjoining sheds and there is no toilet facility in the same and that it is not possible to reside therein.
It was further pleaded that the appellant has a house and plot in the name of his wife within the municipal limits of Cochin Corporation and the same is suitable for the residence of the appellant and his family members and further there is a lot of vacant land on the back of the building and the same is suitable for constructing a house.
The respondent denied that the property was being used in such a way as to reduce its utility.
By his order dated February 20, 74 1989, the Rent Controller dismissed the said petition of the appellant and found that the appellant had failed in proving his bona fide need of the building and he was not entitled to an order of eviction under S.11(3) of the Act and that he has also failed to adduce adequate evidence to prove that the respondent was indulging in an activity which has destroyed the value and utility of the property materially and permanently and he could not seek eviction under Section 11(4)(ii) of the Act.
The said order of the Rent Controller was reversed in appeal by the Appellate Authority by its judgment dated July 18, 1990.
The Appellate Authority agreed with the finding recorded by the Rent Controller that the appellant could not seek the eviction of the respondent under s.11(4)(ii) of the Act but it disagreed with the finding of the Rent Controller that the respondent was not liable to be evicted under S.11(3) of the Act.
The Appellate Authority held that the appellant had succeeded in establishing the bona fide need set up by him.
On revision under S.20 of the Act, the High Court, by its judgment dated January 4, 1991, set aside the finding recorded by the Appellate Authority regarding the bona fide need of the building for his occupation and agreed with the view of the Rent Controller that the appellant had failed to establish that he was entitled to evict the respondent on the ground of bona fide need under s.11(3) of the Act.
Feeling aggrieved by the said decision of the High Court, the appellant has filed this appeal.
As indicated earlier, although the appellant had sought eviction of the respondent under s.11(3) as well as s.11(4)(ii), but the Rent Controller and the Appellate Authority have both found against him on s.11(4)(ii).
The scope of the present appeal is confined to the question whether the respondent is liable to be eviction on the ground of bone fide need of the appellant for his personal occupation under s.11(3) of the Act.
Sub section (3) of s.11 of the Act and the second proviso thereto provide as follows: "(3) A landlord may apply to the Rent Control Court for an order directing the tenant to put the landlord in possession of the building if he bona fide needs the building for his own occupation or for the occupation by any member of his family dependent on him: XXX XXX XXX Provided further that the Rent Control Court shall not give any direction to a tenant to put the landlord in possession, if such 75 tenant is depending for his livelihood mainly on the income derived from any trade or business carried on in such building and there is no other suitable building available in the locality for such person to carry on such trade or business: XXX XXX XXX" At this stage, it may also be mentioned that in exercise of its revisional jurisdiction under s.20 of the Act, the High Court can "call for and examine the records relating to any order passed or proceedings taken under this Act by such authority for the purpose of satisfying itself as to the legality, regularity or propriety of such order of proceeding and may pass such order in reference thereto as it thinks fit".
It is no doubt true that the scope of the revisional jurisdiction conferred under s.20 is wider than that conferred under s.115 CPC.
But at the same time, a revision under s.20 cannot be equated with an appeal.
Moreover, the revision power conferred under s.20 also embraces an order passed by the Appellate Authority.
While considering the provisions conferring revisional power couched in a language similar to that contained in section 20 of the Act, this Court has laid down that the power conferred on the High Court is essentially a power of superintendence and despite the wide language employed, the High Court should not interfere with the findings of fact of the subordinate authority merely because it does not agree with the said findings.
[See : Dattonpant Gopalvarao Devakate vs Vithabrao Maruthirao Janagaval, [1975 Supp.
SCR 67; M/s Sri Raja Lakshmi Dyeing Works & Ors vs Rangaswamy Chettiar, AIR 1980 SC 1253].
The revisional Court must be reluctant to embark upon an independent reassessment of the evidence and to supplant a conclusion of its own, so long as the evidence on record admitted of and supported the one reached by the court below.
[See : Rajbir vs section Chokesiri & Co., ; , at p.37] In the instant case, the Appellate Authority, after considering the evidence on record, has found that the appellant had retired from service and he has no building of his own in the city.
The Appellate Authority has further found that before the building was let out to the respondent the same was being used for residential purposes and the mere fact that it lacks in certain facilities for being used for residential purposes by itself will not indicate that the claim of the appellant is false and from the evidence on record, it would appear that after some modifications and repairs it can be 76 used as a residential building.
In view of the decision of the High Court in Devaky vs Krishnakutty, (1987) 1 Ker.
L.T. 671, the Appellate authority held that the appellant could claim eviction of the building under s.11(3) even if the building in question requires some modifications or alterations provided that he is able to establish the bona fide need set up by him.
The Appellate Authority also held that merely because the appellant was residing comfortably in a building owned by his son would not disentitle him from seeking eviction on the ground that he wants to set up his residence under a roof of his own and that such a desire was quite natural.
The Appellate Authority also observed that the testimony of appellant, as P.W> 1, with regard to his bona fide requirement of the building for his residence could be believed and the mere bald assertion of the respondent, as R.W.1, that there was no bona fide need on the part of the appellant, by itself, was not a sufficient ground to disbelieve the testimony of the appellant.
In the light of the aforesaid finding, the Appellate Authority held that the appellant had succeeded in establishing the bona fide need set up by him.
The High Court, in exercise of its revisional power, has set aside the aforesaid findings recorded by the Appellate Authority for the following reasons: (1) The appellate Authority had erroneously proceeded on the basis that there is no pleading by the respondent that the bona fide requirement set up by the appellant is false; (2) Instead of examining severally the circumstances relied upon by the Rent Controller and to see whether they were sufficient to support the finding of the Rent Controller, the Appellate Authority should have considered the cumulative effect of all the facts and circumstances established in the case on the question of bona fides of the claim made in the petition; and (3) The Appellate Authority had totally omitted to consider whether the respondent tenant was entitled to the benefit of the second proviso to sub section (3) of s.11 of the Act.
On a consideration of the pleadings and evidence the High Court found that the appellant is the owner of 13 cents of land and only a small portion of the said land in occupied by the buildings and the remaining 77 land is lying vacant behind the building and structures sought to be recovered and the appellant can construct a house over it.
The High Court has also found that the appellant is living in reasonable spacious residential accommodation with modern amenities with his son and it is difficult to believe that the claim as put forward by the appellant in the petition is honest in the circumstances of the case.
The High Court further held that the building sought to be recovered is admittedly used for commercial purposes from 1971 onwards and it is a 'L ' shaped structure consisting of two halls and a temporary shed which is being used as the kitchen of the hotel and there is no latrine or bathroom in the building and that in view of the nature, location and structural peculiarities of the buildings, absence of essential amenities like latrine, bathroom and privacy, the very limited space available for occupation and the status of the respondent as a person who retired after a period of 30 years of service as well placed employee of a wellknown company, the assertion of the appellant that he is ready to live in any condition could not be accepted as true and genuine.
The High Court was of the view that the principle laid down in the decision in Devaky vs Krishnakutty (supra) would not help appellant in this case.
The question whether the building is required bona fide by the appellant for his own residence is primarily one of fact and the finding recorded by the Appellate Authority after considering the evidence on record could not be interfered with by the High Court in exercise of the revisional jurisdiction under Section 20 of the Act because it could not be said that the said finding recorded by the Appellate Authority was not supported by the evidence on record.
The said finding was reversed by the High Court on the basis of a reassessment of the said evidence.
We find it difficult to agree with the reasons given the High Court for embarking on this reassessment of evidence.
Although the Appellate Authority has observed that there in no specific pleading by the respondent in the counter that the bona fide requirement set up by the appellant is false but in spite of the said observation the Appellate Authority has examined whether the said claim of the appellant is false and after considering the evidence adduced by both the parties, the Appellate Authority has found that the claim of the appellant is not false.
Similarly, the High Court is not right in holding that in its approach to the question of bona fides of the claim made in the petition the Appellate Authority has not considered the cumulative effect of all the facts and circumstances established in the case.
On a consideration of the various circumstances the Appellate Authority chose 78 of accept the testimony of the appellant, as P.W.1 as against that of the respondent, as R.W.1 and on that basis found that the appellant had succeeded in establishing the bona fide need set up by him.
The consideration which weighed with the High Court in taking a view contrary to that taken by the Appellate Authority do not, in our opinion, justify interference in exercise of revisional jurisdiction.
That the appellant has been living with his son in the house belonging to him (son) cannot lead to the inference that the claim of the appellant that he wants to live in a house of his own is false and not bonafide.
The same is true about the building in question not having the requisite facilities and being not in a fit condition for residence because the appellant can make suitable repairs and alterations in the same to make it fit for residential purposes.
The claim of the landlord that he needs the building bona fide for his personal occupation cannot be negatived on the ground that the building require repair and alterations before the landlord can occupy the same.
In Devaky vs Krishnankutty (supra), it has been observed: :. once the landlord establishes that he bona fide required the building for his occupation or the occupation of any member of his family, he can recover possession of the building from the tenant irrespective of the fact whether he would occupy the same with or without making any alterations." (p.673) We are in agreement with this view which is in consonance with the decision of this Court in Ramniklal Pitambrardas Mehta vs Indradaman Amratlal Sheth, ; In that case, it has been laid down: ".
The mere fact that he intends to make alterations in the house either on account of his sweet will or on account of absolute necessity in view of the condition of the house, does not affect the question of his requiring the house bona fide and reasonably for his occupation, when he has proved his need for occupying the house.
There is no such prohibition either in the language of cl.(g) or in any other provision of the Act to the effect that the landlord must occupy the house for residence without making any alterations in it.
There could not be any logical reason for such a prohibition.
"(p.5) Similarly in sub section (3) of section 11 there is no prohibition that 79 a landlord must occupy the house for residence without making any alterations in it.
The finding recorded by the Appellate Authority, after considering the pleadings and evidence on record, that the appellant has succeeded in establishing that he needs the building bona fide for his own occupation must, therefore, be restored.
The High Court was, however, right in taking the view that before passing a decree for eviction on the ground of bona fide need of the landlord under section 11(3) of the Act, it was necessary for the Appellate Authority to consider whether the tenant was entitled to the benefit of the second proviso to sub section (3) of section 11 of the Act and that the Appellate Authority has omitted to consider the matter from this angle.
The said proviso precludes the passing of an order for eviction of a tenant who is depending for his livelihood mainly from the trade or business carried on in such building and there is no other suitable building available in the locality for him to carry on such trade or business.
After adverting to the second proviso to sub section (3) of section 11, the Rent Controller has observed: ".
The respondent has proved that he is depending upon the income from the business conducted in the petition schedule building for his livelihood.
The petitioner attempted to prove that the respondent is having other hotels elsewhere in the city, but without any success.
Though the respondent has not taken any steps to prove the non availability of other suitable buildings in the locality by summoning the Accommodation Controller, I do not thing that was a fatal lapse on the part of the respondent because he has adduced evidence in that regard through his witnesses.
" The learned Rent Controller has, however, not recorded any definite finding on this question because he had come to the conclusion that the appellant had failed to prove the bona fide need of the buildings.
Since the Appellate Authority had reversed the finding recorded by the Rent Controller on bona fide need of the appellant for the building, it was necessary for the Appellate Authority to have considered the matter in the light of the second proviso to sub section (3) of section 11 and it should have recorded a finding on the question whether the respondent could invoke the protection of the said proviso.
In the circumstances, we are of the view 80 that the matter should be remanded to the Appellate Authority for considering the question whether the respondent can invoke the protection of the second proviso to section 11(3) of the Act.
In the result, the appeal is allowed.
The judgment and order of the Kerala High Court dated January 4, 1991 is set aside.
The order of the Appellate Authority dated July 18, 1990 to the extent it directs the eviction of the respondent under Section 11(3) of the Act is also set aside and the matter is remanded to the Appellate Authority for considering the matter in the light of the second proviso to section 11(3) of the Act.
It is, however, made clear that we are not upsetting the finding recorded by the Appellate Authority that the building is required bona fide by the appellant for his own occupation.
The parties are left to bear their own costs.
V.P.R. Appeal allowed.
| The appellant 's father let out the disputed building wherein the tenant respondent carried out the hotel business.
The appellant landlord filed an eviction petition on 15.1.81 before the Rent Controller stating that after his retirement from service on 30.9.1981, he wanted to settle down in that town and as he had no other house to reside, the disputed building was required by him bona fide for his occupation; that the respondent tenant was using the property in such a manner as to materially and permanently reduce its value, utility and purpose.
The respondent contended that the building was not suitable for residential purposes; that the appellant had a house and plot in his wife 's name within the town; that there was a lot of vacant land on the back side of the tenanted building, which was suitable for house construction and that the property was not being used in such a way as to reduce its utility.
The trial court dismissed the eviction petition of the landlord, holding that as he failed in proving his bona fide need of the building, the landlord was not entitled to an order of eviction under Section 11(3) of the 71 Kerala Buildings (Lease & Rent Control) Act, 1965 and as the landlord failed to prove that the tenant was using the building in such a way to destroy its value and utility, he was not entitled to an order under section 11(4)(ii) of the Act.
On appeal, the Appellate Authority reversed the order of the Rent Controller.
The High Court in revision set aside the order of the Appellate Authority, against which the present appeal by special leave was filed before this Court by the landlord.
On the question, whether the respondent was liable to be evicted on the ground of bona fide need of the appellant for his personal occupation under section 11(3) of the Act, this Court allowing the landlord 's appeal, HELD:1.1.
The scope of the revisional jurisdiction conferred under section 20 is wider than that conferred under section 115 CPC.
But at the same time, a revision under section 20 cannot be equated with an appeal.
[75 C] 1.2.
The revisional power conferred on the High Court is essentially a power of superintendence and despite the wide language employed, the High Court should not interfere with the findings of fact of the subordinate authority merely because it does not agree with the said findings.
[75 E] Dattonpant Gopalverao Devakate vs Vithabrao Maruthirao Janagaval, [1975] Supp.
SCR 67; M/s. Sri Raja Lakshmi Dyeing Works & Ors.
vs Rangaswamy Chettiar, AIR 1980 SC 1253, followed.
The revisional court must be reluctant to embark upon an independent reassessment of the evidence and to supplant a conclusion of its own,so long as the evidence on record admitted on and supported the one reached by the court below.
[75 F] Rajbir vs section Chokesiri & Co., at p.37, followed.
The question whether the building is required bona fide by the appellant for his own residence is primarily one of fact and the finding recorded by the Appellate Authority after considering the evidence on 72 record could not be interfered with by the High Court in exercise of the revisional jurisdiction under Section 20 of the Act because it could not be said that the said finding recorded by the Appellate authority was not supported by the evidence on record.
[77 E] 2.2.
The fact that the appellant has been living with his son in the house belonging to him (son) cannot head to the inference that the claim of the appellant that he want to live in a house of his own is false and not bona fide.
The same is true about the building in question not having the requisite facilities and being not in a fit condition for residence because the appellant can make suitable repairs and alterations in the same to make it fit for residential purposes.
[78 B C] 2.3.
The claim of the landlord that he needs the building bona fide for his personal occupation cannot be negatived on the ground the the building requires repairs and alterations before the landlord can occupy the same.
[78 D] 2.4.
There is no prohibition that a landlord must occupy the house for residence without making any alterations in it.
[78 H 79A] Devaky vs Krishnankutty, , approved.
Ramniklal Pitambardas Mehta vs Indradaman Amratlal Sheth, ; , followed.
Before passing a decree for eviction on the ground of bona fide need of the landlord under section 11(3) of the Act, it was necessary for the Appellate Authority to consider whether the tenant was entitled to the benefit of the second proviso to sub section (3) of section 11 of the Act which precludes the passing of an order for eviction of a tenant who is depending for his livelihood mainly from the trade or business carried on in such building and there is no other suitable building available in the locality for him to carry on such trade or business.
[79 C] 3.2.
Since the Appellate Authority has omitted to consider the matter from this angle the matter should be remanded to the Appellate Authority for considering the question whether the respondent can invoke the protection of the second proviso to section 11(3) of the Act.
[79 G 80A] 73
|
ivil Appeal No. 2446 of 1991.
From the Judgement and Order dated 11.10.1990 of the Bombay High Court in F.A. No. 649 of 1990.
Mrs. C.M. Chopra for the Appellant.
Respondent in person.
The Judgment of the Court was delivered by KULDIP SINGH, J.
His parents advertised for " homely non medico" bride.
Her parents responded.
Marriage took place on January 24, 1988 at Noida near Delhi.
They hardly lived as husband and wife at Pune for about seven months when on August 16, 1988 the husband filed a petition under Section 13 of the Hindu Marriage Act for dissolution of Marriage on the ground of cruelty.
He alleged "she had a habit of smoking" and "it was found that she was in the habit of drinking and even once came drunk to the applicant 's house and abused everybody".
He further alleged " it was found by the applicant that she was working as a model prior to marriage and he found few pictures of the respondent in bikini and semi nude clothes in magazines".
She vehemently denied the allegations and claimed that the she was a homely, vegetarian, non smoking, teetotaller and faithful house wife.
The Family Court at Pune proceeded ex parte and granted divorce decree by the order dated November 30, 1989.
Wife 's application for setting aside the ex parte decree was dismissed by the Family Court on June 24, 1990.
The High Court by its judgment dated October 10/11, 1990 unheld the findings of the Family Court with the modification that in place of decree for dissolution of marriage it granted a decree for judicial separation.
This appeal by way of special leave is by the wife against the judgments of the courts below.
85 During the pendency of the divorce proceedings before Family Court, Pune, the wife filed a petition, on May 1, 1989, before this Court seeking transfer of the case from the Family Court, Pune to Delhi.
This Court granted ad interim stay of the proceedings before the Family Court, Pune.
The stay remained operative till September 11, 1989 when this Court dismissed the transfer petition and vacated the stay.
Thereafter the husband appeared before the Family Court on September 15, 1989 whereas the appellant wife remained absent.
Notices were sent by registered post to the wife on her address at Noida and also at her Delhi address given by her in the proceedings before this Court.
The notice came back with the remarks "not found".
The Family Court ordered substituted service and a notice was published in the "Times of India" New Delhi of dated October 24.1989 asking the wife to appear before the Family Court on November 16, 1989 or the proceedings would be taken ex parte.
On November 16, 1989 the Family Court ordered ex parte proceedings.
The issues were framed on November 21, 1989, the evidence of the husband was recorded on November 25, 1989 and the judgment was pronounced on November 30, 1989.
The appellant filed an application dated December 18, 1989 for setting aside the ex parte divorce decree wherein she stated that after she was forced to leave her matrimonial home at Pune, she was residing with her parents at Noida.
She further stated that in October/November, 1989 she had gone to reside with her brother at Delhi.
According to her she applied to the Army Authorities claiming maintenance out of her husband 's salary.
Respondent husband is an Army officer.
The Army Authorities sent a letter dated December 14, 1989 to her father wherein it was mentioned that his daughter 's application for maintenance allowance could not be entertained because the husband had already obtained a divorce decree from the court.
A copy of the Family Court Judgment granting divorce decree to the husband was also annexed to the letter.
The appellant claims that for the first time, on or about December 14, 1989, She came to know through her father that the respondent had already been granted an ex parte divorce decree by the Family Court.
The appellant in her application inter alia stated as under: "The applicant submits that the applicant did not receive any notice/letter/summons or communication from this Hon 'ble Court 's office.
Even there was no intimation given by postal 86 authorities and the applicant honestly states that till the receipt of the letter from the Army H.Q. New Delhi, she was not aware of the date of proceeding.
The applicant submits, the applicant was under bona fide belief that she will receive a notice from this Hon 'ble Court.
As such and being far from Pune, either in Noida ( U.P.) or at New Delhi, it was not possible for her to approach this Hon 'ble Court for any enquiry since she was also not permitted to appear through the lawyer. .At any rate and in any event, the applicant also did not come across the public notice published in Times of India, New Delhi on 24th October 1989 as stated in the decree.
The applicant submits, the applicant had every intention to resist the marriage petition filed by the opponent since the same was absolutely false, frivolous and out and out false, and has been resisted by the applicant by filing written statement, preliminary objection including to approach the Supreme Court of India.
The intention of the applicant was clear.
The applicant submits, the applicant was also advised by her Advocate that she will receive a fresh notice in due course of time after the stay was vacated by the Hon 'ble Supreme Court of India from this Hon 'ble Court.
The applicant states, she resides at a far long distance from Pune.
She was also refused any assistance of lawyer.
The applicant has no relation or any representative who can look after her in the present proceeding in Pune.
It was in these circumstances, the applicant was prevented by sufficient cause from appearing in the marriage petition proceeding No.561/89 and as such the said decree is required to be set aside . .
The applicant states, the applicant is unable to maintain herself, she has no source of income . .
The applicant submits because of the passing of ex parte decree, she has been refused maintenance allowance.
The applicant also prays for granting of maintenance allowance pending final disposal of this application." The Family Court dismissed the application for setting aside ex parte divorce decree on the following reasoning: "But where the party itself knows that stay obtained by it has been vacated, there appears no warrant for the proposition that again a notice is required to be given to the said party.
I do 87 not think that such advice was really given to the applicant.
The applicant has not produced any evidence to the effect that she received such advice from a lawyer.
It is her own statement.
It is a self serving statement and can hardly be believed.
I think that if the applicant was really keen and desirous to contest matrimonial petition, she would have at once made enquiries to find out as to when the next date for hearing in this court was fixed after her application for transfer of the case was dismissed by the Supreme Court and the stay obtained by her was vacated.
The order of vacating the stay was passed on 11th September 1989 by the Hon 'ble Supreme Court and the applicant knew fully well about it.
The opponent who had also appeared in the Supreme Court in connection of that matter did appear in this Court on 15.9.1989.
The record of P.A. No. 561/89 shows that opponent applied for issuing of notice to the present applicant.
The notice was issued by registered post on two separate addresses.
One of the address was the one shown by applicant herself in Supreme Court petition and the other address was the one which was admitted to be her address in the matrimonial petition (which was address of her father at Delhi).
Both these notices were sent by registered post in due course.
The court waited till return of this notice.
On both these envelops postal authorities have endorsed that the present applicant was not found on these addresses.
The opponent had, therefore, made application that the applicant was avoiding to take notice and hence substituted service by publishing in Times of India be made.
Accordingly, a notice was published as per order of the Court on opponent 's application.
Thus the contention of the respondent that she had no notice of the further proceeding in marriage petition does not appear convincing.
As stated already in the first instance, there was no necessity for her to wait for receipt of the notice in the circumstances of the present case.
The notices sent to her were obviously evaded, otherwise there was no reason why the applicant was found on either of the addresses which she admits to be the correct addresses.
Even if she was not present, there was no reason why other major members of the family did not accept these notices.
And lastly the publication of the notice 88 in one of the most widely circulated newspaper at Delhi was sufficient notice to the applicant.
" The High Court upheld the reasoning and the conclusions reached by the Family Court and dismissed the appeals filed by the wife.
The respondent appeared before us in person and himself argued his case.
The learned counsel for the appellant raised the following points for our consideration: (a) That the Family Court and the High Court grossly erred in dismissing the application filed by the appellant for setting aside the ex parte proceedings; (b) That the divorce petition was filed hardly seven months after the marriage.
Section 14 of the Hindu Marriage Act provides "it shall not be competent for any court to entertain any petition for dissolution of a marriage by a decree of divorce, unless at the date of the presentation of the petition one year has elapsed since the date of the marriage".
The divorce petition should have been dismissed as not competent in terms of Section 14 of the Hindu Marriage Act; (c) that even on merits the divorce decree is based on no evidence.
The allegations in the divorce petition are wholly vague.
In any case the evidence of Major Ved Prakash being wholly interested and contrary to the record the courts below fell into grave error in accepting serious allegations against the appellant on the basis of his evidence; (d) that the High Court acted illegally in substituting the decree of divorce to that of a decree for judicial separation.
The High Court should have dismissed the divorce petition.
We may take up the Fist Point.
The appellant filed written statement before the Family Court, Pune vehemently denying the allegations made against her by the respondent.
She also raised preliminary objections regarding the maintainability of the divorce petition.
She filed a transfer petition before this Court which was dismissed in September, 1989.
She filed another transfer petition which was dismissed by this Court on April 12,1990 with the following observations: 89 "It is open to the petitioner to move the High Court under Section 24, Code of Civil Procedure for consideration of her prayer that the case be transferred to another Judge.
On the merits of this prayer, we decline to make any observation.
It would appear that the case is now listed before the Family Judge at Pune on 13.4.90.
It will be appropriate that having regard to the apprehension expressed by the petitioner the Court should not proceed with the matter until her prayer for transfer is considered by the High Court.
We accordingly direct the Family Court, Pune to stay further proceeding in the case, a period of 60 days from today to enable the petitioner to approach the High Court.
" It is no doubt correct that the appellant did not approach the High Court for the transfer of the case but the fact remains that she was been seriously contesting the divorce proceedings and it would not be fair to assume that she deliberately choose to abstain from the Family Court and was intentionally avoiding the summons.
The Family Court and the High Court have held that after the dismissal of the transfer petition and vacation of stay by this Court the appellant wife should have, on her own, joined the proceeding before the Family Court.
According to the courts below no notice for appearance was required to be sent to the parties after the stay was vacated.
It is not necessary for us to go into the question as to whether a fresh notice to the parties is necessary where the superior Court vacates the stay order and as a consequence the proceeding recommence before the court below.
We are of the view that in the fact and circumstances of this case the interest of justice required the issue of such a notice.
The admitted facts in this case are as under: (i) While dismissing the transfer petition and vacating the stay order this Court did not fix any date for the appearance of the parties before the Family Court, Pune (ii) The Family Court had permitted the assistance of a lawyer to the appellant wife in the following terms: "As applicant is from Delhi and it would cause hardship, permission is granted 90 for engaging an Advocate for pleading her case only for the purpose of presenting applications or serving notices and noting the orders of the Court.
" (iii) The appellant did not engage a lawyer to represent her before the Family Court, Pune.
(iv) The appellant wife was residing with her parents at Noida (Delhi).
Even the distance between Noida and Pune was a big hassle for the appellant especially when she had no counsel to look after the proceedings before the Family Court, Pune.
We are of the view that in the facts and circumstances of this case she was justified in her assumption that the proceedings before the Family Court would be resumed after fresh notice to the parties.
The applicability of the Rules of natural justice depends upon the facts and circumstances of each case.
We are of the view that in the facts and circumstances of this case she was justified in her assumption that the proceedings before the Family Court would be resumed after fresh notice to the parties.
The applicability of the Rules of natural justice depends upon the facts and circumstances of each case.
We are of the view that in this case fair play and the interest of justice required the issuance of a fresh notice to the parties after the stay order was vacated by this Court.
We do not, therefore, agree with the findings of the Courts below to the contrary.
In any case realising the requirements of natural justice the Family Court, sent two registered notices to the appellant at her Noida address and also at the address given by her in the proceedings before this Court.
Unfortunately, both the notices came back with the endorsements that the appellant could not be found on the given addresses.
There is no material on the record to reach a conclusion that the appellant refused to receive the notices.
There is also nothing on the record to show as to whether the postal authorities made any efforts to deliver the registered letters to any of the appellant 's relations at the given addresses.
The courts below are wholly unjustified in holding that the appellant refused to receive the notices and further that the said notices could have been received by any of her relations on the given addresses.
After the notices sent by registered post were received back, the Family Court did not make any attempt to serve the appellant through the process of the Court.
The appellant was no stranger to the respondent.
She was his wife.
It could not have been difficult for him to find out the address where she was staying.
Under the circumstances, resort to the substitute service by way of publication in the newspaper was not justified.
91 We are, therefore, of the view that there was sufficient cause for the non appearance of the appellant in the matrimonial petition before the Family Court.
The view we have taken on the first point, it is not necessary to deal, with the other points raised by the learned counsel for the appellant.
We, therefore, set aside the order of the Family Court dated June 24, 1990 and allow the appellant 's application dated December 18, 1989 and set aside the ex parte decree passed against the appellant in Marriage petition No. A 561/89.
As a consequence the judgment of the Family Court, Pune dated November 30, 1989 and the judgment of the High Court in First Appeal No. 649/90 dated October 10/11, 1990 are also set aside.
The appellant had asked for transfer of her case from the Principal Judge, Family Court, Pune to some other court and this Court gave liberty to the appellant to move the High Court for the said purpose.
We are satisfied that the reason given by the appellant for such transfer and the apprehensions entertained by her are wholly unjustified.
We ar, however, of the view that the Principal Judge, Family Court Pune, has taken the grievances made by the appellant before this Court rather seriously and has commented adversely about the same.
With a view to do complete justice between the parties we direct that this case be transferred from the file of Principal Judge, Family Court, Pune to the Principal Judge, Family Court, Bombay.
The parties are directed to appear before the Principal Judge, Family Court, Bombay on June 22, 1992.
Before concluding we wish to place on record that we tried to persuade the parties to live together and in the alternative to settle their dispute amicably but with no result.
We allow the appeal in the above terms with no order as to costs.
N.V.K. Appeal allowed.
| The parties to the appeal were married on January 24, 1988 at Noida near Delhi.
They hardly lived as husband and wife at Pune for about seven months when on August 16, 1988 the husband Respondent filed a petition under Section 13 of the Hindu Marriage Act, 1956 for dissolution of the marriage on the ground of cruelty.
He alleged that the wife had a habit of smoking and drinking and even once came drunk to the house and abused everybody.
The wife vehemently denied the allegations and claimed that she was a homely, vegetarian, non smoking, teetotaler and faithful house wife.
During the pendency of the aforesaid divorce proceeding before the Family Court,Pune, the wife filed a petition, on May 1, 1989, before this Court seeking transfer of the case from the Family Court, Pune to Delhi.
This Court granted ad interim stay of the proceedings which remained operative till September 11, 1989 when the Transfer Petition was dismissed 82 and the stay become vacated.
Thereafter, the husband appeared before the Family Court on September 15, 1989 whereas the wife remained absent.
Notice were sent by registered post to the wife on her address at Noida and also at her Delhi address given in the proceedings before this Court.
The notices having come back with the remarks "not found", the Family Court ordered sub stituted service, and a notice was published in a Delhi daily newspaper asking the wife to appear before the Family Court on November 16, 1989.
The wife not having appeared on the said date the Family Court ordered ex parte proceedings.
The issues were framed on November 21, 1989, evidence of the husband was recorded on November 25,1989 and the judgment was pronounced on November 30, 1989, granting the husband a divorce decree.
The wife filed an application dated December 18, 1989 for setting aside the ex parte divorce decree.
She contended that she was forced to leave the matrimonial home at Pune and was residing with her parents at Noida, and that in October/November, 1989 she had gone to reside with her brother at Delhi, that she applied to the Army Authorities claiming maintenance out of her husband 's salary, and that the Army Authorities sent a letter dated December 14, 1989 to her father informing that the application for maintenance could not be entertained as the husband had already obtained a divorce decree from the Court.
She further contended that for the first time on or about December 14, 1989 she came to know from her father that her husband had been granted an ex parte divorce decree by the Family Court.
The Family Court dismissed the application for setting aside ex parte divorce decree, and the High Court upheld the reasoning and conclusions reached by the Family Court and dismissed the appeals filed by the wife.
In the appeal to this Court by the wife it was contended that: (1) The Family Court and the High Court grossly erred in dismissing the application filed by the appellant for setting aside the ex parte proceedings; (2) the divorce petition should have been dismissed as not competent in terms of Section 14 of the Hindu Marriage Act as the Statutory period of one year had not lapsed since the date of marriage, (3) even on merits the divorce decree is based on no evidence, the allegations in the divorce petition 83 being wholly vague, and (4) the High Court acted illegally in substituting the decree of divorce to that of a decree for judicial separation.
Allowing the Appeal, this court, HELD: 1.
The appellant filed written statement before the Family Court,Pune denying the allegations made against her by the respondent.
She also raised preliminary objections regarding the maintainability of the divorce petition.
Though her transfer petitions before this Court were dismissed in September, 1989 and on April 12, 1990 and that she did not approach the High Court for transfer of her case, the fact remains that she has been seriously contesting the divorce proceedings and it would not be fair to assume that she deliberately chose to abstain from the Family Court, and was intentionally avoiding the summons.
In the facts and circumstances of this case, the appellant was justified in her assumption that the proceedings before the Family Court would be resumed after fresh notice to the parties.
The applicability of the Rules of natural justice depends upon the facts and circumstances of each case.
Fair play and the interest of justice in this case required the issuance of a fresh notice to the parties after the stay order was vacated by this Court.
The Family Court, sent two Registered notice to the appellant at her Noida address and also at the address given by her in the proceedings before this Court.
Unfortunately, both the notices came back with the endorsements that the appellant could not be found on the given addresses.
On the record there is no material to reach a conclusion that the appellant refused to receive the notices, or to show whether the postal authorities made any efforts to deliver the registered letters to any of the appellants ' relations at the given addresses.
The Courts below are therefore wholly unjustified in holding that the appellant refused to receive the notices and further that the said notices could have been received by any of her relations on the given addresses.
After the notices sent by registered post were received back, the Family Court did not make any attempt to serve the appellant through the process of the Court.
The appellant was not stranger to the respondent.
She was his wife.
It could not have been difficult for him to find out the address where she was staying .
Under the circumstances resort to the 84 substitute service by way of publication in the newspaper was not justified.
There was, therefore,sufficient cause for the non appearance of the appellant in the matrimonial petition before the Family Court.
With a view to do complete justice between the parties it is directed that this case be transferred from the file of the Principal Judge, Family Court, Pune to the Principal Judge, Family Court, Bombay, and the parties are directed to appear before the Principal Judge, Family Court Bombay.
|
Civil Appeal Nos.
10803 to 10805 of 1983.
From the Judgment and Order dated 17.12.1980 of the Madras High Court in Tax Cases Nos. 261 of 1974 and 9 & 10 of 1977.
K. Parasaran, G. Umapathy, Mrs. Indu Malini Ananthachari for C.S. Vaidyanathan for the Appellant.
Ranbir Chandra for Ms. A Subhashini for the Respondent.
The Judgment of the Court was delivered by KULDIP SINGH, J.
The question for our consideration in these appeals is whether Gangabai Charities, a trust operating in the city of Madras, is entitled to exemption under Section 11(1)(a) of the Income Tax Act, 1961 (the Act).
Gangabai executed a document dated September 13, 1958 which was described as a deed of trust.
The trust was named as "Ganga Bai Charities".
In the trust deed Ganga Bai gave effect to her desire to construct and provide a building for the benefit of the public to be used for religious, charitable, cultural and social purposes.
She contributed Rs.34,000 to the trust fund.
With that fund a plot of land was purchased and the construction begun.
The fund was augmented by her son Seetha Rama Rao from his own contributions as well as from outside donations.
The building was completed at the cost of about Rs. six lakhs.
Ever since the construction of the building it is being let out as a marriage mandapam to be used by 629 the members of the public as such.
the income derived from letting out the Kalyana Mandapam came to Rs.1.06,392.00 in the year ending March 31, 1963.
For the subsequent years also the income was substantial.
The trust was also running a printing press and sizable income was being earned from the press.
The Income tax Officer took the view that the income earned by the trust was taxable.
The contention of the trust that the income derived from the property was being held wholly for religious and charitable purposes and as such was exempt under Section 11 of the Act, was rejected.
On appeal the Appellate Assistant Commissioner reversed the Income tax Officer and held that the Ganga Bai Charities was a charitable trust and its income was entitled to exemption under Section 11 of the Act.
On further appeal by the department, the tribunal upheld the decision of the Commissioner but remitted the assessment to the Income tax Officer to find out as to what extent in each year the trust income or accumulations were expended for charitable purposes.
The Income Tax Appellate Tribunal referred the following question to the High Court under Section 256(1) of the Act: "Whether is has been rightly held that the income of the trust would be entitled to exemption under Section 11 of the Income Tax Act, 1961?" The High Court by its judgment dated December 17, 1980 answered the question in the negative and against the assessee.
These appeals by way of special leave for against the judgment of the High Court.
Section 11(i)(a) of the Act, to the relevant extent, is reproduced hereunder: 11.
Income from property held for charitable or religious purposes (I) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India. .
The above quoted provisions make it clear that a trust has to satisfy 630 the following conditions in order to claim benefit of Section 11(1)(a) of the Act: (1) The income is derived from property held under the trust.
(2) The trust is wholly for charitable or religious purposes.
(3) The exemption is permissible to the extent to which such income is applied to such purposes in India.
The appellant trust has been created under a deed of trust dated May 30, 1978 and as such we have to look into the contents of the trust deed of find out as to whether the conditions precedent for claiming exemption under section 11(1)(a) of the Act are satisfied.
The tribunal and the High Court have also based their conclusions on the interpretation of the trust deed.
It is not disputed that the appellant trust derived the income from the property held under it but the existence of other conditions necessary to claim exemption under Section 11(1)(a) of the Act have been seriously disputed by the Revenue before us.
We have minutely examined the trust deed and have given our thoughtful consideration to its contents.
The relevant paragraphs of the trust deed from where the purposes of the trust can be spelled out are reproduced hereunder: "WHEREAS the Settler, has long cherished a desire to construct and provide a building in Purasawalkam, Madras for the benefit of the Public to be used by them for religious, charitable and/or cultural and social purposes, to secure religious benefit for herself and satisfy a long felt need of the Public in this part of this city.
" "NOW THIS INDENTURE WITHNESSTH that in pursuance of the premises the settlor above named doth hereby declare that the plot of land above mentioned and more particularly described in the schedule below was purchased by her for Rs.24,000 on 9.9.1957 for the express purpose of constructing a building thereon and dedicating the same for use by the public inter alia for Religious, Charitable and Cultural purposes and doth hereby create an irrevocable Trust of the said property for the purposes aforesaid.
" 631 "The settlor further declares that immediately after such purchase she, the settlor relinquished all her rights thereto and dedicated the said plot of land for the use of the public for the purposes above mentioned and put the said plot of land in the possession of her son Shri K. Seetharam Rao, with a direction to construct a building thereon for the use of the public for religious, charitable, social, cultural and other allied purposes." "That the Trust property , more particularly described in the schedule below shall be used for religious, charitable, social, cultural and other allied purposes". "That the Trustee shall have, as the construction proceeds, power to make any suitable alterations in the plan already submitted by him and sanctioned the Corporation of Madras, in such manner as to him may seem necessary and that the Trustee may after the completion of the building let or allow the said building or such portion of portions of the said building for the use of the public for social cultural, religious educational etc., purposes, free or at such rents and such terms and conditions as he thinks proper in the interests of the Trust; for holding and conducting religious discourses, for running schools for the development of Sanskrit learning free or at such rents and on such terms and conditions as the Trustee things reasonable and proper in the interests of the Trust".
On a careful reading of the above quoted paragraphs of the trustdeed it is not possible to cull out in clear terms a specific charitable/religious object to conclude that the trust was set up wholly for charitable or religious purposes.
The "religious, charitable, cultural and social" purposes referred to in the deed are not avowed as the objectives of the trust itself.
What the founder of the trust intended to convey was that the building to be constructed out of the funds provided by her and supplemented from other sources, must be held for the benefit of the public for being used by them for religious, charitable, cultural or social purposes.
We cannot read the contents of above quoted paragraphs as the objects of the trust, these are only the objects of those who wish to put the trust property to use.
On a careful consideration of the language of the trust deed, we are of the view that the intention of the founder was to provide a building for the benefit 632 of the public to be used by them for religious, charitable and/or cultural and social purposes.
It is no where stated in the trust deed that the trust itself has been created for the purpose of carrying out any of such objectives.
The holding and conducting of religious discourses and the running of schools for the development of Sanskrit have also been mentioned from the point of view of the users of the trust property.
These are some of the purposes for which the public can be permitted to use the property.
The crux of the statutory exemption under Section 11(1)(a) of the Act is not the income earned from property held under the trust but the actual application of the said income for religious and charitable purposes.
It is, therefore, necessary to indicate in the trust deed the broad objectives for which the income derived from the property is to be utilised.
There is no mention in the trust deed as to how the income derived from the trust property is to be utilised.
The public uses the building on payment of rent to the trustees.
What is to be done with the money so collected has not been provided in the trust deed.
There is no mandate in the trust deed that the income derived from the trust property is to be spent on religious or charitable purposes.
We are satisfied that on a proper construction of the trust deed it does not meet the requirements of Section 11(1)(a) of the Act.
We find no infirmity in the judgment of the High Court.
We entirely agree with the reasoning and the conclusions reached therein.
Mr. Prasaran invited our attention to paragraphs 5 and 6 of the special leave petition wherein it is stated that Mr. Justice V. Balasubrahmanyan who delivered the judgment in this case on behalf of the two Judge Bench of the High Court had given opinion in this case as special counsel for the Income tax Department and in the said opinion the Department was advised to go to the High Court by seeking a reference.
It was also opined that the trust was ineligible for the exempltion for the reasons which were given therein.
It is further mentioned inthe special leave petition that the petitioner came to know about this aspect only after the judgment was pronounced on December 17, 1980.
None of the parties brought this aspect to the notice of the learned Judge at the hearing or at any time before or after the conclusion of the hearing.
Mr. Prasaran contends that it would be in the interests of justice if the matter be remanded back to High Court for rehearing.
We are not inclined to agree with the learned counsel.
The 633 tribunal pronounced its order on February 28, 1974 and the High Court decided the reference seven years thereafter.
The opinion must have been given immediately after the tribunal 's order and as such due to lapse of time the learned Judge could not have remembered the `routine opinion ' he gave as a busy lawyer several years ago.
The judgment was delivered by the High Court after hearing detailed arguments from both sides.
All the points raised by the assessee have been dealt with and decided on the basis of judicious reasoning.
In any case we have heard mr. K. Prasaran, learned Senior Advocate for the appellant and have examined the trust deed minutely and carefully.
The view taken by the High Court is the only view which can be taken in this case and we affirm the same.
The appeal is, therefore, dismissed with costs.
We quantify the costs as Rs. 10,000.
V.P.R. Appeals dismissed.
| A trust namely, "Ganga Bai Charities" was created on 13.9.1958, to construct and provide a building for the benefit of the public to be used for religious, charitable cultural and social purposes.
The founder of the trust contributed Rs. 34,000 to the trust fund.
With that fund a plot of land was purchased and the construction of a building was begun.
The fund was augmented by her son from his own contribution as well as from outside donations.
The building was completed at the cost of about Rs. six lakhs and it was let out as a marriage mandapam to be used by the members of the public.
The income derived from letting out the Kalyana Mandapam came to Rs.1,06,392.00 in the year ending March 31, 1963.
For the subsequent years also the income was substantial.
The trust was also running a printing press and seizable income was being from the press.
Income tax proceedings were initiated against the trust.
The appellant trust contended that the income derived from the property was being held wholly for religious and charitable purposes and as such was exempt under Section 11 of the Income Tax Act.
The Income tax Officer holding that the income earned by the trust was taxable, rejected the contention of the trust.
On appeal the Appellate Assistant Commissioner reversed the Income tax Officer 's order, holding that the trust was a charitable trust and its income was entitled to exemption under Section 11 of Act.
627 On further appeal by the department, the Tribunal upheld that decision of the Commissioner but remitted the assessment to the Income tax Officer to find out as to what extent in each year the trust income or accumulation were expended for charitable purposes.
The Income Tax Appellate Tribunal referred the following question to the High Court under Section 256(1) of the Act: "Whether it had been rightly held that the income of the trust would be entitled to exemption under Section 11 of the Income Tax Act, 1961?" The High Court answered the question in the negative and in favour of the department, against which these appeals were filed by the assessee trust by special leave before this Court.
On the question, whether the Gengabai Charities, a trust was entitled to exemption under Section 11(1)(a) of the Income Tax Act, 1961, this Court dismissing the appeals of the assessee trust, HELD : 1.01.
The crux of the statutory exemption under Section 1(1)(a) of the Income Tax Act, 1961 is not the income earned from property held under the trust but the actual application of the said income for religious and charitable purposes.
It is, therefore, necessary to indicate in the trust deed the broad objectives for which the income derived from the property is to be utilised.
There is no mention in the trust deed as to how the income derived from the trust property is to utilised.
The public uses the building on payment of rent to the trustees.
What is to be done with the money so collected has not been provided in the trust deed.
There is no mandate in the trust deed that the income derived from the trust property is to be spent on religious or charitable purposes.
[632 C D] 1.02.
On a careful reading of the trust deed it is not possible to cull out in clear terms a specific charitable/religious object to conclude that the trust was set up wholly for or religious purposes.
The "religious, charitable, cultural and social" purposes referred to in the deed are not avowed as the objectives of the trust itself.
What the founder of the trust intended to convey was that the building to be constructed out of the funds provided by her and supplemented from other sources, must be heed for the benefit of the public for being used by them for religious, charitable, cultural or social purposes.
[631 F G] 628 1.03.
The intention of the founders was to provide a building for the benefit for the benefit of the public to be used by them for religious, charitable and/or cultural and social purposes.
It is nowhere stated in the trust deed that the trust itself has been created for the purpose of carrying out any of such objectives.
The holding and conducting of religious discourses and the running of schools for the development of Sanskrit have also been mentioned from the point of view of the users of the trust property.
These are some of the purposes for which the public can be permitted to use the property.
[631H 632B] 1.04.
On a proper construction of the trust deed it does not meet the requirements of Section 11(1)(a) of the Act.
[632E]
|
Civil Appeal No. 3047 of 1992.
From the Judgement and Order dated 30.7.1984 of the Patna High Court in Civil Writ Jurisdiction Case No. 373 of 1977.
M.L. Verma and S.K. Sinha for the Appellant.
A.K. Srivastava for the Respondents.
The Judgement of the Court was delivered by SHARMA, J.
The question arising in this case is whether a matter, if it comes within the scope of section 40 of the Bihar and Orissa Co operative Societies Act, 1935 (hereinafter referred to as the Act) has to be excluded from the purview of Section 48 of the Act.
Special leave is granted. 3.
The facts relevant for the decision of this appeal are in a short 894 compass.
The respondent No.1 was Depot Manager under the appellant Marketing Union Limited and during his tenure as such, a shortage of coal was detected.
A claim was accordingly made for the said loss by the appellant and a reference was made to the Assistant Registrar, Co operative Societies respondent No.3, under Section 48 of the Act.
The Assistant Registrar absolved the respondent No.1 from the alleged liability and an appeal was filed by the appellant under Section 48(6) of the Act before the Joint Registrar, Co operative Societies, respondent No.2, who are accepted the appellant 's case, rejected the defence and made an award accordingly.
This was challenged before the Patna High Court by a writ application under Article 226 of the Constitution of India.
The High Court held that since the matter was covered by the provisions of Section 40, Section 48 could not apply.
Consequently the award was held to be illegal.
So far section 40 was concerned, it was pointed out that the claim had to be rejected on the ground of limitation.
Thus without considering the other questions raised by the parties, the High Court allowed the writ petition by the impugned judgement which is under challenge in the present appeal.
It has been contended on behalf of the appellant that the provisions of Section 48 are wide enough to embrace the dispute which has been the subject matter of the present case and they cannot be given a narrow interpretation so as to exclude their application to cases which may also be covered by Section 40.
In reply reliance has been placed on behalf of the respondent No.1 on the decision in Purnea Ministerial Government Officer 's Co operative Society Ltd.v.
Abdul Quddus, (1969) B.L.J.R. Vol.
11 969 which has found favour with the High Court.
Section 40 pertaining to surcharge, provides that if as a result of an audit or inquiry it appears to the Registrar that any person who has taken part in the organisation or management of the society or any past or present officer of the society has either made a payment contrary to law or has been guilty of misappropriation or of having committed similar acts detailed therein, the Registrar may inquire into the matter and make an order requiring him to contribute an appropriate sum by way of compensation to the assets of the society.
The second Proviso to sub section (1) of the said section says that no such order shall be passed in respect of any act or ommission which had occurred more than six years earlier.
The provisions of sub section (1) of Section 48 (omitting the explanations which are not relevant for the present issue) dealing with Disputes are in the 895 following terms: "(1) If any dispute touching the business of a registered society (other than a dispute regarding disciplinary action taken by the society or its managing committee against a paid servant of the society) arises (a) amongst members, past members, persons claiming through members, past members or deceased members, and sureties of members, past members or deceased members, whether such sureties are members or non members; or (b) between a member, past member, persons claiming through a member, past member or deceased member, or sureties of members, past members or deceased members, whether such sureties are members or non members and the society, its managing committee or any officer, agent or servant of the society; or (c) between the society or its managing committee and any past or present officer, agent or servant of the society; or (d) between the society and any other registered society; or (e) between a financing bank authorised under the provisions of sub section (1) of Sec. 16 and a person who is not a member of a registered society; such dispute shall be referred to the Registrar: Provided that no claim against a past member or the estate of a deceased member shall be treated as a dispute if the liability of the past member or of the estate of the deceased member has been extinguished by virtue of Sec. 32 or Sec. 63".
The claim of the appellant against the respondent No.1 is clearly covered by clause (c) of sub section (1) above and, therefore, could have been validly referred to the Registrar under Section 48.
The argument, however, is that since the matter is covered by Section 40, Section 48 should be held to be inapplicable.
The High Court agreed and made the following observations: 896 "It is well known proposition of law that when a matter falls under any specific provision then if must be governed by that provision and not by general provisions (Generalia specialibus non derogant)".
The High Court has in its judgement assumed that whenever a specific remedy is made available in law the other remedy, more general in nature, necessarily gets excluded.
Validity of plural remedies, if available under the law, cannot be doubted.
If any standard book on the subject is examined, it will be found that the debate is directed to the application of the principle of election, where two or more remedies are available to a person.
Even if the two remedies happen to be inconsistent,they continue for the person concerned to choose from, until he elects one of them, commencing an action accordingly.
In the present case there is no such problem as no steps under Section 40 were ever taken by the appellant.
The provisions of Section 48 must, therefore, be held to be available to the appellant for recovery of the loss.
7.Our view that a matter which may attract Section 40 of the Act will continue to be governed by Section 48 also if the necessary conditions are fulfilled, is consistent with the decision of this Court in Prem Jeet Kumar V. Surender Gandotra and others, [1991] Supp. 2 S.C.C. 215, arising under the Delhi Co operative Societies Act, 1972.
The two Acts are similar and Sections 40 and 48 of the Bihar Act and Sections 59 and 60 of the Delhi Act are in pari materia.
The reported judgement followed an earlier decision of this Court in Pentakota Srirakulu vs Co operative Marketing Society Ltd.; , We accordingly hold that the High Court was in error in assuming that the application of provisions of Section 48 of the Bihar Act could not be applied to the present case for the reason that Section 40 was attracted.
So far the question of limitation is concerned it is true that as in the Delhi Act, a period of six years was fixed under the Bihar Act also by second Proviso under Section 40 (1), which reads thus: "Provided further that no order shall be passed under this sub section in respect of any act or omission mentioned in clauses (a), (b), (c) or (d) except within six years of the date on which such act or omission 897 occurred.
" It will be observed that the six years rule of limitation, however, is limited for the purpose of section 40, and cannot govern the reference under section 48.
The relevant provision of section 48 is to be found in the Proviso to section 48(1) which has been quoted above.
For determining its impact on the present case it is necessary to examine the Proviso closely.
Firstly, both the Proviso and section 63 of the Act are concerned only where the claim is against a member.
Even if the Proviso be assumed to govern a dispute between the society and its past or present officer or servant it cannot come to the aid of the present respondent No.1 because he was dismissed from service on 15.10.1966 and he was directed to deposit the disputed amount within 30 days therefrom.
The dispute was referred for adjudication under section 48 on 12.12.1966 and the reference was registered as Award Case No. 25 of 1968 on 03.08.1968.
Thus all these steps were taken within a period of two years.
No reliance, therefore, can be placed on either section 32 or 63.
The case of Putnea Ministerial government Officers ' Co operative Society Ltd. (Supra) is clearly distinguishable.
The respondent there was a member of the Society in question and had taken a loan which was the subject matter of the dispute.
As was pointed out by the High Court the claim had stood barred by limitation and, therefore, it was held that the reference was incompetent in view of the Proviso to section 48(1).
The High Court in the present case was, in the circumstances, not entitled to rely on this decision and its conclusions must be set aside as being erroneous in law.
However, since in the judgement it is stated that several other questions were also raised on behalf of the respondent No.1 (who was the writ petitioner) which remained undecided, the case requires reconsideration by the High Court on the remaining points.
Accordingly the impugned judgement is set aside and the writ petition is remitted to the High Court for fresh decision in accordance with the observations in the present judgement.
The appeal is allowed but in the circumstances without costs.
U.R. Appeal allowed.
| During the tenure of respondent 1 as Depot Manager of the Bihar State Cooperative marketing Union Ltd., a shortage of coal was detected.
The appellant Cooperative Union made a claim for the loss, and a reference was made to the Assistant Registrar, cooperative societies under section 48 of the Bihar and Orissa Cooperative Societies Act 1935.
section 48(1)(c) deals with disputes between the Society.
and a past or present officer or agent of the Society.
Section 40 provides for investigation by the Registrar where upon an audit or enquiry such officer has been found guilty of misappropriation or similar acts.
The Assistant Registrar in an enquiry under Section 48 absolved respondent 1.
This was reversed by the Joint Registrar and an award made accordingly.
The Patna High Court in a writ application under Article 226 by respondent 1 held that since the matter was covered by Section 40, Section 48 could not apply and set aside the award.
The High Court relied on the maxim generalia specialibus non derogant.
The claim under section 40 was rejected on the ground of limitation under second proviso to Section 40 which prescribe a period of six years.
Allowing the appeal, this Court, HELD : 1.
Validity of plural remedies, if available under the law, cannot be doubted.
Even if the two remedies are inconsistent, they continue for the person concerned to choose from, until he elects one of them, commencing an action accordingly.
A matter which may attract Section 40 will continue to be governed by Section 48 also if the necessary conditions 893 are fulfilled.
In the present case no steps under Section 40 were ever taken by the appellant.
The provisions of Section 48 are available to the appellant for the recovery of the loss.
[896C D] Prem Jeet Kumar vs Surender Gandotra & Ors., [1991] Supp.
2 SCC 215 and Pentakota Srirakulu vs Co operative Marketing Society Ltd., ; , followed.
The claim of the appellant against respondent 1 is clearly covered by Section 48(1)(c) and therefore was validly referred to the Registrar under Section 48.
[895G] 3.
The six year rule of limitation in Proviso under Section 40(1) is limited for the purpose of Section 40, and cannot govern a reference under Section 48.
Even otherwise, on facts the claim is not barred by limitation.
[897B] Purnea Ministerial Government Officers ' Co operative Society Ltd. vs Abdul Quddus, , distinguished.
Matter remitted to the High Court for decision on the remaining issues.
[897F]
|
Civil Appeal Nos.
2593 2599 of 1980.
From the Judgements and Orders dated 23.5.79, 30.5.79, 25.6.79, 26.6.79 and 9.7.1979 of the Kerala High Court in M.F.A. Nos. 69, 76, 80, 81, 83, 89 and 75 of 1977.
A.T.M. Sampath for the Appellant in C.A. No. 2593/80.
V.A. Bobde, O.C. Mathur, Ms. Meera and D.N. Mishra for the Appellant in C.A. No. 2594 99/80.
V.A. Bobde, O.C. Mathur, Ms. Meera and D.N> Mishra for the Respondent in C.A. No. 2593/80.
N.N. Goswamy, V.C. Mahajan, Hemant Sharma and Mrs. Anil Katiyar for the Respondent.
The Judgements of the Court were delivered by SHARMA, J.
The learned counsel for the respondent has, in support of his stand, placed reliance on several decisions of this Court and the High 912 courts in which the notification in identical terms has been construed in the way as is suggested on behalf of the Corporation.
Although Mr. Bobde, learned counsel for the appellant has advanced an argument, which on the face of it, appears to be attractive, I think that in view of the consistent interpretation of the notification which has been followed in the country, the question should not be reopened for fresh consideration.
Accordingly, I agree that all these appeals should be dismissed but without costs.
MOHAN, J. These appeals can be dealt with by a common judgement since the question of law to be decided is one and the same.
It is enough if we note the facts in Civil Appeal No. 2599 of 1980.
The appellant is a company incorporated under the Companies Act.
It has its registered office at Jew Town in Mattancherry.
It is engaged in the business of clearing and forwarding at the Port of Cochin situated in Willingdon Island.
It is authorised to transact its business at the Cochin Custom House under the terms of Section 202 of the Sea Customs Act read with the Rules made thereunder and a licence was issued under the said provisions.
The appellant received a notice dated 3.1.75 enclosing certain notification whereby the Employees State Insurance Act (hereinafter referred to as the Act) was extended to certain classes of establishments specified in the Schedule wherein 20 or more persons are employees or were employed during that period.
The appellant replied that it did not fall under the purview of the said notification.
Therefore, the appellant was not liable to comply with any of the provisions of the Act.
Another letter dated 8.9.75 was received by the appellant calling it upon to furnish certain details.
This was replied to by a letter dated 20.9.75 whereunder the details were furnished.
Thereafter a notice dated 7.11.75 with which were enclosed certain printed forms, was received by the appellant.
The appellant replied on 18.11.75 denying liability to pay any contribution under the Act.
The stand of the appellant was that the company does not come within the notification dated 18.9.74 as the appellant was not a shop and was carrying on business of clearing and forwarding at the Cochin Port.
In reply to the said letter the appellant received a letter dated 9.12.75 stating that the Insurance Inspector who visited the appellant found 20 persons employed in the shop.
It was functioning as shipping, clearing and forwarding agents.
The appellant served the customers.
Therefore, it was a shop within the 913 dictionary meaning of the term and called upon the appellant to submit the returns.
Contending that the appellant does not render any service to customers at its office, it was merely carrying on clearing and forwarding business by processing the documents at Custom House, no service being rendered at the appellant 's office establishment, it was urged that it could not be called a shop within the dictionary meaning.
An application was moved under Section 75 of the Act before the Employees, Insurance Court, Calicut to decide the dispute and to hold that the appellant was not a shop within the purview of the Act and, therefore, the Act itself was inapplicable.
Objections were preferred on behalf of the Regional Director, Employees State Corporation that in view of the notification dated 18.9.74 supplemented by the other notifications dated 2.12.74 and 22.3.75, the appellant 's business would fall within the ambit of the said notifications.
The Government of Kerala issued those notifications with a view to extend benefits to the employees working in other sections of organized labour such as shops and establishments.
The Employees Insurance Court by a judgement dated 29.1.77 in E.I.C. No. 1/76 held that the appellant would be covered with effect from six months after 21.12.74.
In the result, the appellant was brought within the notification.
Against this order, M.F.A. No. 75 of 1977 was preferred to the High Court of Kerala.
A Division Bench by its judgement dated 25.6.79, following its earlier judgement held that the term "shop" as understood in the scheme of the Act is not merely a place where the business of purchase and sale takes place but it is a place where there is commercial activity arising from customer service.
In that sense, the establishment of the appellant has to be understood to fall within the purview of the term "shop".
Accordingly the appeal was dismissed.
Hence, the civil appeals, leave having been granted by an order dated 3.11.80.
Mr. Bobde, learned counsel for the appellants would raise the following submissions.
The Act primarily applies to factories.
Of course, the Act could be extended to other establishments by means of a notification.
In the instant case, a notification dated 16.9.74 catalogues six establishments one of which 914 is shop.
Though "shop" would take within it other establishments like hotels or restaurants yet they have come to be specifically mentioned.
In view of that enumeration of other establishment in contradiction to shops the word "shop" must be held to relate to a place where commercial activity of buying and selling merchandise takes place otherwise the enumeration of other establishment becomes meaningless.
As to what is the meaning of "shop" could be gathered from Wharton 's Law Lexicon 14th Ed. 929 and Words and Phrases Legally Defined 2nd Ed. 73.
The next submission of the learned counsel is in view of the fact that the notification specifically enumerates the other establishments, the intention has been clearly brought out not to give a wider meaning of the term "shop" as otherwise the term "shop" itself would be enough to cover other establishments like hotels, restaurants, cinema etc.
From this point of view, the activity carried on by the appellant merely processing the document at the customs clearing house without rendering any service to the customers at the appellant 's office or establishment cannot be said to fall within the meaning of "shop".
Therefore, the approach of the High Court and the authorities would require to be set aside.
It must be held that the notification has no application to the appellant 's business.
In opposition to this, Mr. Goswamy, learned counsel appearing on behalf of Employees, State Insurance Corporation would submit that the word "shop" is wide in its amplitude.
It means a place where any kind of commercial activity is pursued and where services are rendered to the customers.
In so far as the appellant is carrying on the business of clearing and forwarding and rendering service which are part of carrier 's job certainly it will be a shop.
It caters to the needs of exporters and importers.
It is a systematic commercial activity or an economic activity.
Hence, it would be a shop within the meaning of the notification.
Merely because every establishment may fall within the scope of the term "shop" as enumerated, it does not, in any way, restrict the meaning of the word "shop".
The object of enumeration is to envelop as many establishments as possible without leaving room for any doubt, where, therefore, the word "shop" alone would be enough to cover the activities of the appellant, it is not necessary to further enumerate and specifically bring within the scope of the notification the activities of the appellant.
Regard must be had in 915 this connection that this is a social welfare legislation.
This Court had always taken the view that as far as permissible the endeavour of the Court must to be cover those employees than to deny the benefit of these provisions.
In support of these submissions the cases in Hindu Jea Band Jaipur vs Regional Director, Employees ' State Insurance Corporation, Jaipur etc.
; , and M/s. International Ore & Fertilizers (India) Pvt. Ltd. vs Employees ' State Insurance Corporation; , are cited.
Thus it is submitted that no exception could be taken to the impugned judgement.
Mr. A.T.M. Sampath, learned counsel appearing for the appellant adopts the arguments of Mr. Bobde while the respondent opposes in the same vein.
The Employees State Insurance Act is an Act to provide certain benefits to employees in case of sickness, maternity and employment injury and make provision for certain other matters in relation thereto.
The Act is an outcome of a policy to provide remedy for the widespread evils arising from the consequences of national poverty.
Indeed, it is a piece of social security.
Under Section 1 (4), in the first instance, it is made applicable to all factories.
The Act envisages the extension of benefit to the employees in other establishments or class of establishments , industrial, commercial, agricultural or otherwise.
The extension of benefit is to be done by means of a notification by the appropriate Government.
Thus the benefits conferred by the Act cover a large area of employees than what the Factories Act and the akin legislations intended.
The conclusion is inescapable that it is a welfare legislation.
The endeavour of the Court should be to place a liberal construction so as to promote its objects to which a reference has been made.
In the instant case, the impugned notification runs as follows: "GOVERNMENT OF KERALA No. 22877/E2/73/LBR LABOUR (E) DEPARTMENT TRIVANDRUM, DT.
18.9.74 916 NOTIFICATION S.R.O.
In exercise of the powers conferred by sub section (5) of Section 1 of the (Central Act 84 of 1948), the Government of Kerala, in consultation with the Employees ' State Insurance Corporation and with the approval of the Central Govt.
hereby given notice of its intention to extend the provisions of the said Act to the clauses of the Establishments specified in the Schedule annexed hereto, on or after 29.3.1975.
____________________________________________________________ Description of establishments Areas in which the establis hment are situated ____________________________________________________________ The following establishments 1.
Trivandrum, Navaikulam where on twenty or more persons and Pazhayakunnumel (Kil are employed for wages on any day imanoor) in Trivandrum of the preceding twelve months, District.
namely.
Quilon, Kundara, Chatha nnur, Kottaraka, Punalur an Sast hamcotta in Quilon District.
(i) Hotels; 3.
Alleppey, Kayamkulam and Shertailai in Alleppey District.
(ii) Restaurants; 4.
Kottayam town in kottayam District.
(iii) Shops 5.
Ernakulam and Cochin in Ernakulam District.
(iv)Road Motor Transport 6.
Trichur town in Trichur establishment; (v) Cinema including preview 7.
Palghat town in Palghat theatres; District.
(iv)Newspaper establishments 8.
Kozhikode town in as defined in Section 2 Kozhikode District and (d) of the Working Journalists (Conditions of Service) 9.
Cannanore town, Tellich and Miscellaneous Provisions erry and Baliapatam in Act, 1955 (5 of 1955).
Cannanore District in the State of Kerala.
By order of the Governor, Sd/ U. Mahabala Rao, Secretary to Government" 917 As it could be seen, six kinds of establishments wherein 20 or more employees are or were employed for wages on any day of the preceding 12 would months fall within the scope of the notification.
Item 3 says "shops".
Therefore, the argument is while "shop" could cover the other establishments like hotels or restaurants in view of the specific enumeration the activities of clearing and forwarding carried on by the appellant unless specifically enumerated cannot be brought within the word "shop".
This argument takes us to the meaning of "shop".
Wharton 's Law lexicon 14th Ed.
Page 929: "Shop a place where things are kept for sale, usually in small quantities, to the actual consumers.
By Shops Act, 1912, s.19, "shop" includes any premises where any retail trade or business is carried on: retail trade or business ' includes the business of a barber or hairdresser, but not the sale of programmes, etc., at places of amusement.
" Words and Phrases Legally Defines 2nd Ed. 73: "Shop" includes dwelling house and warehouse, or other place of business, or place where business is transacted.
"Shop" includes any premises, and any vehicle, stall or place other than premises.
on or in which any retail trade or business is carried on " It has also come up for consideration in the rulings of this Court while interpreting a similar notification.
In Hindu Jea Band, Jaipur (supra) it was held thus: "The first contention urged in support of the petition is that since the petitioner was not selling any goods in the place of its business but was only engaged in arranging for musical performances on occasions such as marriages etc.
its business premises cannot be called a "shop".
We do not agree with the narrow construction placed by the petitioner on the expression "shop" which appears in the notification issued under section 1(5) of the Act which is a beneficent legislation.
The word shop has not been defined in the Act.
A shop is no doubt an 918 establishment (other than a factory) to which the Act can be extended under section 1(5) of the Act provided other requirement are satisfied.
In Collins English Dictionary the meaning of the word shop is given thus: "(i) a place esp.
a small building for the retail sale of goods and service and (ii) a place for the performance of a specified type of work; workshop.
" It is obvious from the above meaning that a place where services are sold on retail basis is also a shop.
It is not disputed that the petitioner has been making available on payment of the stipulated price the services of the members of the group of musicians employed by it on wages.
We, therefore, hold that the place where the petitioner has been carrying business is a shop to which the Act is applicable by virtue of the notification referred to above.
The first contention, therefore, fails" Again, in M/s. International Ore & Fertilizers (India) Pvt. Ltd. vs Employees ' State Insurance Corporation ; at 206 the following useful observations are found: "The word "shop" is not defined in the Act or in the notification issued by the State Government.
According to the Shorter Oxford English Dictionary the expression "shop" means "a house or building where goods are made or prepared for sale and sold".
It also means a "place of business" or place where one 's ordinary occupation is carried on".
In ordinary parlance a "shop" is a place where the activities connected with the buying and selling of goods are carried on.
The evidence produced in the case shows that the petitioner is carrying on its business at its business premises in Secunderabad.
At that place the petitioner carries on the commercial activity facilitating the emergence of contracts of sale of goods between its foreign principals and the State Trading Corporation/Minerals and Metals Trading Corporation of India.
It arranges for the unloading of the goods under its supervision and for the survey of the goods despatched by its foreign principals at the ports on behalf of its foreign principals and on the goods being delivered to the Central Government it collects the price payable by the government and remits it to its foreign principals.
All these activities are directed and controlled from its. 919 premises at Secunderabad.
It is thus clear that the activities carried on by the petitioner constitute trading activities although the goods imported from abroad are not actually brought to the said premises and delivered to the purchaser there.
In our opinion it is not actually necessary that the delivery of the goods to the purchaser should take place at the premises in which the business of buying or selling is carried on to constitute the said premises into a "shop".
The delivery of the goods sold to the purchaser is only one aspect of trading activities.
Negotiation of the terms of sale, carrying on of the survey of the goods imported, arranging for the delivery of the goods, sold, collection of the price of the goods sold etc.
are all trading activities.
The premises where the business is carried out by the petitioner is undoubtly a shop as the activities that are carried on there relate only to the sale of goods which are imported to India.
The petitioner acts as the agent of its foreign principals who are the sellers.
The petitioner directs and controls all the activities from the premises in question.
If orders are received at a place which ultimately fructify into sale and the resulting trading activity is directed from there that place comes to be known as a "shop".
In our view the Employees ' Insurance Court placed a very narrow interpretation on the expression "shop" while upholding the contention of the petitioner by confining "shop" to a place where goods are actually stored and delivered pursuant to a sale.
We agree with the decision of the High court that while construing a welfare legislation like the Act and the notification issued thereunder a liberal construction should be placed on their provisions so that the purpose of the legislation may be allowed to be achieved rather than frustrated or stultified.
" In this case, the argument advanced on behalf of the appellant is slightly different, namely, other kinds of establishments which can easily fall within the definition of "shop" have been enumerated.
Hence, a specific enumeration, so as to include the appellant 's business activity, is to be insisted upon.
In our considered view, this argument cannot be accepted.
First of all, merely because other establishments which are akin to shop are enumerated, it does not, in any manner, oblige us to give a narrow meaning to the word "shop" nor does it any way dilute the meaning of 920 "shop".
As rightly contended by the learned counsel for the respondent, the object is to envelope as many establishments as possible without leaving any room for doubt.
That is precisely what the notification intends to do.
The appellant is carrying on stevedoring, clearing and forwarding operations.
Clearing the documents, even it be in the custom house, is the carrier 's job.
It cannot be gainsaid that the appellant is rendering service to cater the needs of exporters and importers and others who want to carry the goods further.
Therefore, it is a shop carrying on a systematic economic or a commercial activity.
This would be enough to bring the appellant without specifically enumerating the specific activities carried on by the appellant.
Merely because shop has been enumerated along with other similar establishment we do not think any further specific enumeration is necessary to cover the appellant.
Thus we reject the contentions raised on behalf of the appellant.
The appeals stand dismissed.
There shall be no order as to costs.
T.N.A. Appeals dismissed.
| The Government of Kerala issued a Notification dated 18.9.1974 under Section 1 (5) of the extending the provisions of the Act to six kinds of establishments viz. Hotels, Restaurants, Shops, Road Transport Motor Establishments, Cinemas and Newspaper Establishments.
The appellant Company, carrying on the business of clearing and forwarding at the port of Cochin, received notice for payment of its contribution under the Act.
Denying its liability to pay, it filed an application before the Employees ' Insurance Court under Section 75 of the Act, contending that the Notification was not applicable to it because its establishment was not a shop, but the same was dismissed.
On appeal a Division Bench of the High Court held that the establishment of the appellant falls within the purview of the term `shop '.
In appeals to this Court it was contended on behalf of the appellant that (1) though `shop ' would take within it other establishments like hotels or restaurants yet they have come to be specifically mentioned.
In view of that enumeration of other establishment in contradistinction to shops the 910 word `shop ' must be held to relate to a place where commercial activity of buying and selling merchandise takes place otherwise the enumeration of other establishment becomes meaningless; (2) in view of the fact that the notification specifically enumerates the other establishments, the intention has been clearly brought out not to give a wider meaning of the term `shop ' as otherwise the term `shop ' itself would be enough to cover other establishments like hotels, restaurants, cinema etc.
From this point of view, the activity carried on by the appellant merely processing the document at the customs clearing house without rendering any service to the customers at the appellant 's office of establishment cannot be said to fall within the meaning of `shop '.
Dismissing the appeals, this Court HELD: Per Sharma, J.
In view of the consistent interpretation of the notification which has been followed in the country, the question should not be reopened for fresh consideration.
[912 B] Per Mohan, J. (For Himself and Venkatachala, J.) Concurring: 1.
The Employee 's State Insurance Act is an Act to provide certain benefits to employees in case of sickness, maternity and employment injury and makes provision for certain other matters in relation thereto.
Under Section 1(4), in the first instance, it is made applicable to all factories.
But the Act envisages the extension of benefit to the employees in other establishments or class of establishments, industrial commercial, agricultural or otherwise.
The extension of benefit is to be done by means of a notification by the Appropriate Government.
Thus the benefits conferred by the Act cover a large area of employees than what the Factories Act and the akin legislations intended.
The conclusion is inescapable that it is a welfare legislation.
The endeavour of Court should be to place a liberal construction so as to promote its object.
The object is to envelop as many establishments as possible without leaving any room for doubt.
That is precisely what the Notification intends to do.
[915D, E,F,920 A] 2.
The Notification catalogues six establishments one of which is `shop '.
Merely because other establishments which are akin to shop are enumerated, it does not, in any manner, oblige the Court to give a narrow 911 meaning to the word `shop ' nor does it any way dilute the meaning of `shop '.
The appellant is carrying on stevedoring, clearing and forwarding operations.
Clearing the documents, even it be in the custom house, is necessary for the export or import of goods.
These services form part of the carriers job.
It cannot be gainsaid that the appellant is rendering service to cater the needs of exporters and importers and others who want to carry the goods further.
Therefore, it is a shop carrying on a systematic economic or a commercial activity.
This would be enough to bring the appellant without specifically enumerating the specific activities carried on by the appellant.
[913H, 919H, 920A B] Hindu Jea Band, Jaipur.
vs Regional Director Employees ' State Insurance Corporation, Jaipur, ; and M/s International Ore & Fertilizers (India) Pvt. Ltd. vs Employees ' State Insurance Corporation; , , relied on.
Wharton 's Law Lexicon, 14th Edn. 929 and Words and Phrases Legally defined, 2nd Edn. 73, referred to.
|
ivil Appeal No. 3284 of 1992 From the Judgement and Order dated 18.2.1992 of the Delhi High Court in Civil Writ Petition No. 2259 of 1991.
R.K. Garg, K.L. Vohra, Rajeev Sharma and D.K. Garg for the Appellants.
Arun Jaitley, V.B. Saharya, Ashok Bhan and B.K. Prasad for the Respondents.
The Judgement of the Court was delivered by SHARMA,J. Heard the learned counsel for the parties.
Special leave is granted.
The respondents in this appeal have successfully invoked the jurisdiction of the High Court under Article 226 of the Constitution for enforcement of a private right to immovable property against the appellants who are two brothers and who are resisting the claim.
The question is as to whether the writ jurisdiction in the High Court is available for the enforcement of such a right claimed by and against private individuals.
906 3.
The dispute relates to a house property in Delhi.
A suit for eviction of the appellants from the building is pending in the trial court.
According to the case of the respondent No. 1, who is the owner of the property, she had let out the same to one Shri B.K. Pandey who later illegally handed over the possession thereof to the appellant no.1.
According to the further case of the respondent, the portion of the said house property which is subject matter of the present case is beyond the purview of the pending suit.
The occasion for initiating the present proceeding with respect to this portion arose, it is said, on account of the high handedness of the appellants who illegally trespassed beyond the area which is the subject matter of the pending suit, and indulged in several illegal activities.
In other words, the appellants are trespassers and are guilty of mischievous conduct.
However, instead of filing a suit in the civil court or making an appropriate prayer for amendment of her plaint in the pending suit, she through respondent no.2 holding power of attorney, approached the High Court directly by a writ petition under Article 226 for issuance of appropriate direction restraining the appellants from disturbing the lawful possession of the respondents.
The Delhi Administration and the Commissioner of Police, Delhi, were also impleaded as parties with a prayer that appropriate order should be issued against them also and they should be directed not to register any further false and vexatious complaint against them at the instance of the appellants.
It is her case that the appellants have been getting undue police help and are being encouraged to commence frivolous criminal cases against respondent no.1 and her agent.
The appellants denied the allegations of fact made against them and also challenged the maintainability of the writ petition.
Although the fact that a suit between the parties was already pending in the civil court was known to the High Court, it proceeded to pass a short order stating: "There is already a civil suit pending between the parties.
Except the prayer in regard to access to the backyard, no other relief can be granted in this writ petition.
We direct respondents 3 and 4 to remove the grill for access 907 to the backyard in the presence of the police and representatives of the petitioners on Sunday, 23rd February 1922 at 11.00 a.m. so that the access of the petitioner to the servants quarters is not stopped." 6.
Mr. Arun Jaitley, the learned counsel appearing on behalf of respondent No. 1 has supported the impugned judgement on the ground that prayer for issuing a direction against Delhi Administration and Commissioner of Police who were respondent nos.
1 and 2 was also made.
It has to be appreciated that the present appellants were respondent nos.
3 and 4 before the High Court; and the High Court has by the impugned order, considered it fit to allow the prayer of the respondents against them for removal of the grills for access to the backyard.
According to the stand of the landlord respondent, since the police were taking a partisan attitude against her, the filing of a writ petition became necessary.
We are unable to follow this argument.
There is no doubt that the dispute is between two private persons with respect to an immovable property.
Further, a suit covering either directly a portion of the house property which is in dispute in the present case or in any event some other parts of the same property is already pending in the civil court.
The respondent justifies the step of her moving the High Court with a writ petition on the ground of some complaint made by the appellants and the action by the police taken thereon.
We do not agree that on account of this development, the respondent was entitled to maintain a writ petition before the High Court.
It has repeatedly been held by this court as also by various High Courts that a regular suit is the appropriate remedy for settlement of disputes relating to property rights between private persons and that the remedy under Article 226 of the constitution shall not be available except where violation of some statutory duty on the part of a statutory authority is alleged.
And in such a case, the court will issue appropriate direction to the authority concerned.
If the grievance of the respondent is against the initiation of criminal proceedings, and the orders passed and steps taken thereon, she must avail of the remedy under the general law constitutional jurisdiction to be used for deciding disputes, for which remedies, under the general law, civil or criminal, are available.
It is not intended to replace the ordinary remedies by way of a suit or application available to a litigant.
908 The jurisdiction is special and extra ordinary and should not be exercised casually or lightly.
We, therefore, hold that the High Court was in error in issuing the impugned direction against the appellants by their judgement under appeal.
The appeal is accordingly allowed, the impugned judgement is set aside and the writ petition of the respondents filed in the High Court is dismissed.
There will be no order as to costs.
G.N. Appeals allowed.
| During the pendency of a suit for eviction of the appellants from the property of Respondent No.1, the appellants were alleged to have trespassed beyond the area which was the subject matter of the suit and indulged in several illegal activities.
Thus according to Respondents, the appellants were guilty of mischievous conduct.
The Respondents instead of filing a suit in the Civil Court or making appropriate prayer for amendment of the plaint in the pending suit field a Writ Petition before the High Court for issuance of appropriate direction retraining the appellants from disturbing the lawful possession of the respondents.
The Administration and Commissioner of Police were also impleaded as parties and a direction sought against them not to register any further false and vexatious complaints against the Respondents since undue Police help to the appellants was apprehended.
The High Court gave certain directions to the appellants as regards Respondents ' access to the backyard.
The present appeal by special leave, is against the said orders of the High Court.
On the question whether the Writ jurisdiction of High Court would be available for enforcement of a private right to immovable property claimed by and against private individuals: Allowing the appeals, this Court HELD: 1.
A regular suit is the appropriate remedy for settlement 905 of disputes relating to property rights between private persons and that the remedy under Article 226 of the Constitution shall not be available except where violation of some statutory duty on the part of statutory authority is alleged.
And in such a case, the Court will issue appropriate direction to the authority concerned.
[907 E, F] 2.
If the real grievance of Respondent No.1 is against the initiation of criminal proceeding and the orders passed and steps taken thereon, she must avail of the remedy under the general law including the Criminal Procedure Code.
The High Court cannot allow the constitutional jurisdiction to be used for deciding disputes, for which remedies under the general law, civil or criminal, are available.
It is not intended to replace the ordinary remedies by way of a suit or application available to a litigant.
The jurisdiction is special and extra ordinary and should not be exercised casually or lightly, [907 F H]
|
ition (Civil) No. 677 of 1991.
(Under Article 32 of the Constitution of India) WITH Civil Appeal Nos.400 403 of 1992.
Shanti Bhushan, Somnath Chatterjee, Biswarup Gupta, Bhaskar Gupta, G.L. Sanghi, Arun Jaitley, Dr. Debi Pal, Anil Diwan A.K. Sen, Harish N. Salve, H.S. Prihar, Kuldip section Parihar, Gopal Subramanium, Abhijit Chatterjee, B. Lahiri, J.B. Dadachanji, S.Sukumaran, R.F. Nariman, G.S. Chatterjee, Ms. Sumita Chatterjee, Ms. Mridula Ray, Arun Madan, Ms. Priya Hingorani, Ms. Radha Rangaswamy, C.N. Sreekumar, Rathin Das, Ranjit Ghose, Sushil Kumar Jain, Sudhanshu Atreya and Dr. A.M. Singhvi for the appearing parties.
The Judgment of the Court was delivered by KASLIWAL, J.
Special Leave granted in all the petitions.
This litigation is an upshot of the earlier case Reserve Bank of India vs Peerless General Finance and Investment Company Ltd. and Others, ; decided on January 22,1987.
In 1978 th Prize Chits and Money Circulation Scheme (Banning) Act, 1978 (in short `the Banning Act, was enacted `to ban the promotion or conduct of prize chits or money circulation schemes and for matters connected therewith or incidental `hereto. ' The question which arose in the above case was whether the Endowment Scheme piloted by the Peerless General Finance and Investment Company Ltd., (hereinafter in short `the Peerless ') fell within the definition of `Prize Chits ' within ' the meaning of Sec. 2(e) of the above Banning Act.
By a letter dated July 23, 1979, the Reserve Bank of India pointed out to the Peerless that the schemes conducted by it were covered by the provisions of the Banning Act which had come into force w.e.f. December 12, 1978.
On September 3, 1979 the Peerless filed a writ petition in the Calcutta High Court for a declaration that the Prize Chits Banning Act did not apply to the business carried on by the Peerless.
A similar writ petition was filed questioning a notice issued by the Madhya Pradesh Government on the same lines as that issued by the West Bengal 419 Government.
A learned Single Judge of the High Court dismissed both the writ petitions but appeals preferred by the Peerless under the Letters Patent were allowed by a Division Bench of the Calcutta High Court.
It was declared that the business carried on by the Peerless did not come within the mischief of the Prize Chits Banning Act.
Against the judgment of the Division Bench of the Calcutta High Court, the Reserve Bank of India, the Union of India and the State of West Bengal preferred appeals before this court.
The question considered in the above case was ``Is the endowment scheme of the Peerless Company a Prize Chit within the meaning of Section 2(e) of the Prize Chits and Money Circulation Schemes (Banning) Act? ' ' This court held that section 2(e) does not contemplate a scheme without a prize and, therefore, the Endowment Certificate Scheme of the Peerless Company was outside the Prize Chits Banning Act.
Appeals filed by the Reserve Bank of India, the Union of India and the State of West Bengal were accordingly dismissed.
Chinnappa Reddy,J. observed: ``It is open to them to take such steps as are open to them in law to regulate schemes such as those run by the Peerless Company to prevent exploitation of ignorant subscribers.
Care must also be taken to protect the thousand of employees.
We must also record our dissatisfaction with some of the schemes of the Life Insurance Corporation which appear to us to be even less advantageous to the subscribers than the Peerless Scheme.
We suggest that there should be a complete ban on forfeiture clauses in all savings schemes, including Life Insurance Policies, since these clauses hit hardest the classes of people who need security and protection most.
We have explained this earlier and we do wonder whether the weaker sections of the people are not being made to pay the more affluent sections! Robbing Peter to pay Paul? It was further observed ``We would also like to query what action the Reserve Bank of India and the Union of India are taking or proposing to take against the mushroom growth of finance and investment companies ' ' offering staggeringly high rates of interest to depositors leading us to suspect whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings.
One has only to look at the morning 's newspaper to be greeted by advertisements inviting deposits and offering interest at astronomic rates.
On January 1, 1987 one of the national newspapers published from Hyderabad, where one of us happened to be spend 420 ing the vacation, carried as many as ten advertisements with `banner headlines ' covering the whole of the last page, a quarter of the first page and conspicuous spaces in other pages offering fabulous rates of interest.
At least two of the advertisers offered to double the deposit in 30 months, 2000 for 1000, 10,000 for 5,000, they said.
Another advertiser offered interest ranging between 30 per cent to 38 per cent for periods ranging between six months to five years.
Almost all the advertisers offered extra interest ranging between 3 per cent to 6 per cent if deposits were made during the Christmas Pongal season.
Several of them offered gifts and prizes.
If the Reserve Bank of India considers the Peerless Company with eight hundred crores invested in government securities, fixed deposits with National Banks etc.
unsafe for depositors, one wonders what they have to say about the mushroom non banking campanies which are accepting deposits, promising most unlikely return and what action is proposed to be taken to protect the investors.
It does not require much imagination to realise the adventurous and precarious character of these business.
Urgent action appears to be called for to protect the public.
While on the one hand these schemes encourage two vices affecting public economy, the desire to make quick and easy money and the habit of excessive and wasteful consumer spending, on the other hand the investors who generally belong to the gullible and less affluent classes have no security whatsover.
Action appears imperative. ' ' Khalid, J., another learned Judge aggreeing with the judgment of Chinnappa Reddy, J., further added his short but important concluding paragraph as under : ``I share my brother 's concern about the mushroom growth of financial companies all over the country.
Such companies have proliferated.
The victims of the schemes, that are attractively put forward in public media, are mostly middle class and lower middle class people.
Instances are legion where such needy people have been reduced penniless because of the fraud played by such financial vultures.
It is necessary for the authorities to evlove fool proof schemes to see that fraud is not allowed to be played upon persons who are not conversant with the practice of such financial enterprises who pose themselves as benefactors of people. ' ' Taking note of the weighty observations made by this Court, the 421 Reserve Bank of India in exercise of the powers conferred by Section 45 (J) and 45 (K) of the (hereinafter referred to as the Act) and of all the powers enabling it in this behalf and considering it necessary in the public interest issued certain directions by notification No. DFC.55/DG(O) 87 dated the 15th May, 1987 (hereinafter referred to as the `directions of 1987 ').
The constitutional validity of these directions of 1987 was challenged by Timex Finance and Investment Company Ltd. (hereinafter referred to as `Timex Company ') by filing a writ petition in the Calcutta High Court before the learned Single Judge.
The learned Single Judge granted an interim order in terms of prayers (g) and (h) of the writ petition.
The Reserve Bank of India aggrieved against the interim order filed an appeal before the Division Bench.
A stay petition was also moved on behalf of the Reserve Bank of India for staying the operation of the order dated 7th October, 1988 passed by the learned Single Judge.
After hearing the stay petition for sometime, the Division Bench of the High Court listed the appeal as well as the stay petition for final disposal.
The Division Bench of the High Court disposed of the appeal as well as the writ petition by an order dated March 23, 1990 and arrived to the following and conclusions. "(a) Reserve Bank of India is empowered to issue directions to the residuary non banking companies under the provisions of Section 45J and 45K of the for the interest of thousands of depositors.
(b) However, to the extent such directions are found to be prohibitory or not workable and as such unreasonable must be held to be beyond the powers of the Reserve Bank of India.
(c) The impugned directions providing that they represent irreducible minimum for safeguarding the interest of and for preventing exploitation of small and unwary depositors cannot be implemented without suitable modification.
It is not reasonably practicable to comply strictly with the directions as they stand by the writ petitioners and the similarly situated companies.
The Supreme Court in Peerless case (Supra). .reserved the liberty to the Reserve Bank of India to take such steps as are open to them in law to regulate the schemes such as those granted by the Peerless to prevent exploitation of subscribers and to protect thousands of employees.
The impugned directions without modifications will run counter to the aforesaid directions of the Supreme Court.
(d) The business of savings and investments carried on by the company and similarly situated companies having not been declared unlawful or banned, power of the Reserve Bank of India to regu 422 late such business cannot be permitted to be prohibitory resulting in the ultimate closure of the business carried on by the writ petitioner company and other similarly situated companies.
If the modifications as suggested by us are not implemented and if ultimately the business is closed down and the company goes into liquidation, the hard earned money of thousands of depositors will be lost and the employees would also lose their job.
If even after modifications are made to the impugned directions in terms of this order, any company fails to comply with such directions, the Government may take such steps as are open to them to protect the interests of the thousands of small depositors and numerous employees.
(e) The reasons why the impugned directions cannot be complied with and held to be unworkable and unreasonable are mainly because of the definition of liability assigned in the impugned directions.
The impugned directions, as they stand now, cannot be implemented by the residuary non banking companies without incurring loss irrespective of their net worth.
According to the impugned directions, the liability is the amount of money deposited by the depositions plus the amount of interest whether or not due to them according to the terms of the respective contracts at the given point of time.
In other words, the entire collection with the interest, Bonus, etc.
whether payable or not would be the liability of the Company.
This leaves no fund for working.
If the definition of liability is amended as suggested by us, it will be possible for the companies to generate working capital.
In our view, liability in clause 6 and in other clauses of the impugned directions should be construed to mean total amount of contractual dues of the depositors including interest, premium, bonus or other advantages by whatever name called, accrued on the amount according to the terms of contract.
Section 45J and 45K of the Act do not authorise the Reserve Bank of India to introduce a concept of liability which is contrary to the accepted commercial practice and trading principles.
The impugned directions have failed to make distinction between the actual liability in presenti and a liability de futuro.
Liberty must be reserved to the companies to adopt normal accountancy practice recognised and accepted in the trading circles so long as such accounting practice provides for payment of the liability to the depositors in accordance with the contractual obligations.
However, the Reserve Bank of India may, having regard to the facts and circumstances of each case issue directions regulating the administrative and management expenses and expenditure on com 423 mission and publicity.
In the impugned directions no restriction has been imposed on the expenditure by a residuary non banking company on any of these heads.
In our view, the impugned directions without modifications, instead of suppressing the mischief, will only lead to adverse unworkable and/or impracticable results inasmuch as if the residuary non banking companies cannot comply with such directions in toto, such companies have to go out of existence.
This cannot be the object of the impugned directions.
If the liability in terms of the contractual obligations is provided not only in the accounts but also by suitable investment in terms of Clause 6 of the directions, in our view, all the residuary non banking companies, irrespective of their net worth, will be able to carry on the business.
(f) Every residuary non banking company shall disclose its Books of Accounts and balance sheet the aggregate amount of liability accrued and payable to the depositors in accordance with the terms of the contract.
(g) The directions contained in clause 6 for deposit or investment and the liability shall be read subject to the modification of the designation of the liability as aforesaid.
(h) The directions are prospective.
The period of deposit and the date of return with respect to all certificates issued prior to 15th May 1987 have been excluded from the purview of the directions as per clause 18 (1).
This exemption should include all contractual obligations on those certificates.
(i) All funds prior to the issue of the directions should be allowed to be kept in the manner as was being done by the respective residuary non banking company.
The direction with regard to the investment shall be applicable from the money collected and/or received on and after 15th May 1987.
The companies shall be allowed reasonable time to make good the deficiency in the investment required to be made in terms of the directions after 15th May 1987.
(j) We are not unmindful of the fact that exercise of power by legislature and executive is subject to judicial restraint.
The only check on judicial exercise of power is the self imposed dicipline of judicial restraint.
But although the courts in exercise of judicial power are not competent to direct the enactment of a particular provision of law, if the statutory directions suffer from arbitrariness, the court is competent to issue necessary direction so that the statutory directions may be brought in conformity 424 with law.
As we have held that the Reserve Bank of India has transgressed the statutory power to the extent indicated elsewhere in the judgment, we are of the view that the Reserve Bank of India shall modify the directions and make them reasonable and workable to safeguard the interest of depositors and protect the employees. ' ' The Division Bench also considered an application filed by Favourite Small Investment Company and by order dated 20th December, 1990 directed that the Reserve Bank of India should revoke the prohibitory order and permit Favourite Small Investment Company to accept fresh deposits and carry on new business.
It may be noted that the Peerless filed a petition before the High Court for becoming a party respondent.
The High Court by order dated 31st August, 1990 allowed the said application and further ordered that the cause title and the records proceedings of appeal, memorandum of appeal and the paper book filed be amended accordingly.
The Peerless also moved an application for clarification of the judgment and order dated 23rd March, 1990.
It prayed that suitable provision should be made for a depositor who wants back the money before maturity.
If the depositor intends to get refund of the money invested before the expiry of actual contract period, he should be required to keep the funds for a minimum period in accordance with the contract.
Before maturity he can only take loan but not the principle amount with interest.
The amounts of returns should also be less than 5 per cent to provide for the collection and other expenses of the non banking companies.
The Division Bench of the High Court took the view that the order dated 23rd March, 1990 required clarification as it was not made clear as to whether non residuary banking companies are under an obligation to pay discontinued certificates before the stipulated period in the contract, if so what would be the rate of interest.
The Division Bench by order dated December 24, 1990 clarified its earlier order dated 23rd March, 1990 as under : ``(a) If the contract by and between the company and the depositor provides that no payment on discontinued certificate will be made before the expiry of the term stipulated in the contract, in such cases, if the certificate is discontinued any time before such stipulated term and payment is made to the depositors according to the terms and conditions of the contract, in other words, on the expiry of the term stipulated in the contract, such depositor shall be paid interest at the rate of 8% compound per annum, but in such a case the company will be at liberty to deduct an amount not exceeding 5% from the total return in or to provide for collection and other expenses incurred in connection with these 425 discontinued certificates (b) In cases where certificates are discontinued before or after the stipulated term but the depositors obtain refund only upon maturity of the certificates such refund shall be made to depositors with compound interest at the rate 8 % per annum without any deduction whatsoever.
(c) Since no payment will be made against the discontinued certificates to the depositors in such cases shall be permitted to take loan, if they so intend, against the payment made till discontinuance of such terms and conditions as the company may stipulate.
" The Reserve bank of India aggrieved against all the above orders of the Calcutta High Court has filed appeals against the orders dated 23 rd March, 1990.
31st August, 1990, 20th December, 1990 and 24th December, 1990.
The Peerless General Finance and Investment Company Ltd., has also filed a writ petition No. 677 of 1991 directly before this Court under Article 32 of the Constitution of India.
In view of the fact that the questions raised in the appeals filed by the Reserve Bank of India against the orders of the High Court and in the civil writ petition filed by the Peerless Company are common, the same were heard together and are disposed of by a single order.
Interlocutory applications were also filed on behalf of the employees of the Peerless Company, agents of Peerless Company working in the field, and some of the depositors in the Peerless company.
We have heard them also.
The main controversy centers round paragraphs (6) and (12) of the directions of 1987 and as such the same are reproduced in full.
Paragraph (6) Security for depositors On and from 15th May 1987 (1) Every residuary non banking company shall deposit and keep deposited in fixed deposits with public sector banks or invest and keep invested in unencumbered approved securities (Such securities being valued at their marked value for the time being), or in other investments, which in the opinion of the company are safe, a sum which shall not, at the close of business on 31st December 1987 and thereafter at the end of each half year that is, 30th June and 31st December be less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable: 426 Provided that of the sum so deposited or invested (a) not less than ten percent shall be in fixed deposits with any of the public sector banks.
(b) not less than 70 percent shall be in unapproved securities; (c) not more than 20 percent or ten times the net owned funds of the company, whichever amount is less, shall be in other investments, provided that such investments shall be with the approval of the Board of Directors of the Company.
Explanation : "Net owned funds" shall mean the aggregate of the paid up capital and free reserves as appearing in the latest audited balance sheet of the company as reduced by the amount of accumulated balance of loss, deferred revenue expenditure and other intangible assets, if any, as disclosed in the said balance sheet.
(2) Every residuary non banking company shall entrust to one of the public sector banks designated in that behalf, deposits and securities referred to in clauses (a) and (b) of the proviso to subparagraph (1) to be held by such designated bank for the benefit of the depositors.
Such securities and deposits shall not be withdrawn by the residuary non banking company, or otherwise dealt with, except for repayment to the depositors.
(3) Every residuary non banking company shall furnish to the Reserve Bank within thirty days from the close of business on 31st December 1987 and thereafter at the end of each half year that is as on 30th June and 31st December, a certificate from its auditiors, being members of Institute of Chartered Accountants, to the effect that the amounts deposited in fixed deposits and the investments made are not less than the aggregate amounts of liabilities to the depositors as on 30th June and 31st December of that year.
Explanation : For the purpose of this paragraph, (a) "Aggregate amounts of liabilities" shall mean total amount of deposits received together with interest, premium, bo 427 nus or other advantage by whatever name called accrued on the amount of deposits according to the terms of contract.
(b) "approved securities" means; the securities in which the Trustee is authorised to invest trust money by any law for the time being in force in India and bonds or fixed deposits issued by any corporation established or constitued under any Central or State enactments.
(c) "public sector banks" means, the State Bank of India, the Subsidiary Banks and the corresponding new banks referred to in Section 45(1) of the (2 of 1934).
(d) "unencumbered approved securities" shall include the approved securities lodged by the company with another institution for advances or any other credit arrangements to the extent to which such securities have not been drawn against or availed of.
Paragraph (12) Every residuary non banking company shall disclose as liabilities in its books of accounts and balance sheets the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors.
We would first deal with the legal objections raised on behalf of the Peerless and other companies.
It has been submitted on behalf of the Peerless and other companies that the directions of 1987 are ultra vires of Section 45J and 45K of the Reseve Bank of India Act, 1934.
None of the said sections authorises the Reserve Bank to frame any directions prescribing the manner of investment of deposits received or the method of accountancy to be followed or the manner in which its balance sheet and books of accounts are to be drawn up.
It has been contended that Section 45J has no manner of application in the present case.
Section 45K (3) of the Act on which reliance has been placed on behalf of the Reserve Bank, merely provides that the Reserve Bank may, if it considers necessary in the public interest so to do, give directions to non banking institutions either generally or to any non banking institutions in particular, in respect of any matters relating to or connected with receipts of deposits, including the rate of interest payable on such deposits and the purpose for which deposits will be received.
According so Sec.
45K (4) if any non banking institution fails to comply with any direction given by the bank under sub 428 section (3) the Reserve Bank may prohibit the acceptance of deposits by that non banking institution.
It is thus submitted that on a plain reading of Sec.
45K (3) the Reserve Bank is only competent to frame the directions regarding receipt of deposits and such power of direction does not extend to providing the manner in which deposits can be invested or the manner in which the liabilities are to be disclosed in the balance sheet or books of accounts of the company.
It is further submitted that the power under subs.
(4) is to prohibit acceptance of deposits and as such the permissible field of direction making is limited to receipt of deposits and nothing more.
The Reserve Bank of India in framing the directions of 1987 which is a subordinate piece of legislation has clearly over stepped the bounds of the parent statue of Sec.
45K (3) of the Act.
It is further argued that the Reserve bank cannot contend that paragraphs 6 and 12 of the directions of 1987 are covered within the powers conferred on the Reserve Bank under Sec.
45L (1) (b) of the Act.
It is submitted that the Reserve Bank had at no point of time expressed its intention to invoke its powers under Sec.
45L. Even before the Division Bench of the Calcutta High Court the Reserve Bank did not rely on Sec.
45L as alleged source of its power to issue the impugned directions nor the Reserve Bank referred to Sec.
45L in its pleadings before the High Court.
Wherever the Reserve Bank of India wanted to invoke its power under Sec 45L of the Act, it has expressly mentioned that it was exercising its powers under Sec.
45L. In the case of non banking financial companies (Reserve Bank) directions 1977, or the miscellaneous non banking companies (Reserve Bank) Directions, 1977 it has expressly said that it was invoking its powers under sec.
45L of the Act, whereas in the case of the impugned directions, the Reserve Bank has only referred to sections 45J and 45K of the Act.
The Reserve Bank of India itself in the affidavit filed before the High Court had stated that the directions of 1987 were framed after careful deliberations at the highest level and now it cannot take the stand that the source of its power in framing the impugned directions was exercised under sec 45L of the Act.
It is further contended that in order to invoke the powers under sec 45L of the Act it has to state that the Reserve Bank was satisfied for the purpose of enabling it to regulate the credit system of the country to its advantage and it was necessary to give such institutions directions relating to the conduct of business by financial institution or institutions.
In order to exercise its powers under sec.
45L of the Act, it has to apply its mind for the purpose of arriving at the statutorily required satisfaction.
In fact, such recital is necessary since such satisfaction is a pre conditions for the Reserve Bank to exercise its powers under section 45L of the Act.
On the other hand it has been contended on behalf of the Reserve 429 Bank that the power of the Reserve Bank to regulate deposit acceptance activities of non banking and financial institutions under Chapter IIIB of the Act cannot be disputed.
The Reserve Bank has power to issue the impugned directions under Section 45J, 45K and 45L of the Act.
The pith and substance of Para 6 of the directions of 1987 is to ensure that deposits received from the public are invested in a manner to secure the repayment of the deposits.
A deposit is, by definition, a sum of money received with a corresponding obligation to repay the same.
Thus, the repayment of the deposit is an integral part of the transaction of a receipt of deposit.
It is contended that the expression "receipt of deposit" must be construed liberally, in the light of the nature of the provisions as well as in the light of the wide language used in the provision.
It is also argued that even if the impugned directions of 1987 are not covered under the powers conferred under Sections 45J and 45K of the Act, those are squarely covered by Section 45L of the Act.
It is submitted that various provisions under the Act are enabling in nature and confer overlapping powers.
Even if there is no recital of Sec.
45L, it would not be of much consequence, if such exercise of power can be related to Sec.
45L of the Act.
We have considered the arguments advanced by learned counsel for the parties.
Chapter IIIB laying down provisions relating to non banking institutions receiving deposits and financial institutions was inserted in the , by virtue of Act 55 of 1963 w.e.f. 1.2.1964.
Section 45J, 45K (3) & (4) and 45L 1 (b) relevant for our purpose are given as under : Sec.
45J "The Bank may, if it considers necessary in the public interest so to do, by general or special order, (a) regulate or prohibit the issue by any non banking institution of any prospectus or advertisement soliciting deposits of money from the public; and (b) specify the conditions subject to which any such prospectus or advertisement, if not prohibited, may be issued.
Section 45K (1) . . (2) . . (3) The Bank may, if it considers necessary in the public interest so to do, give direction to non banking institutions either generally or to any 430 non banking institution or group of non banking institutions in particular, in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received.
(4) If any non banking institution fails to comply with any direction given by the Bank under sub section (3), the Bank may prohibit the acceptance of deposits by that non banking institution.
Section 45L (1) If the bank is satisfied that for the purpose of enabling it to regulate the credit system of the country to its advantage it is necessary so to do; it may (a) . . (b) give to such institutions either generally or to any such institution in particular, directions relating to the conduct of business by them or by it as financial institutions or institution.
A combined reading of the above provisions unmistakably goes to show that the Reserve Bank if considers necessary in the public interest so to do can specify the conditions subject to which any prospectus or advertisement soliciting deposits of money from the public may be issued.
It can also give directions to non banking institutions in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received.
This latter power flows from sub section
(3) of Sec.
45K of the Act.
The Bank under this provision can give directions in respect of any matters relating to or connected with the receipt of deposits (emphasis added).
In our view a very wide power is given to the Reserve Bank of India to issue directions in respect of any matters relating to or connected with the receipt of deposits.
It cannot be considered as a power restricted or limited to receipt of deposits as sought to be argued on behalf of the companies that under this power the Reserve Bank would only be competent to stipulate that deposits cannot be received beyond a certain limit or that the receipt of deposits may be linked with the capital of the company.
Such interpretation would be violating the language of Sec.
45K (3) which furnishes a wide power to the Reserve Bank to give any directions in respect of any matters relating to or connected with the receipt of deposits.
The Reserve Bank under this provision is entitled to give directions with regard to the manner in which the deposits are to be invested and also the manner in which such deposits are to be disclosed in the balance sheet or books of accounts of the company.
The word `any ' quali 431 fying matters relating to or connected with the receipt of deposits in the above provision is of great significance and in our view the impugned directions of 1987 are fully covered under Sec.
45K (3) of the Act, which gives power to the Reserve Bank to issue such directions.
As a proposition of law we agree with the contention of the learned counsel for the Reserve Bank that when an authority takes action which is within its competence, it cannot be held to be invalid merely because it purports to to be made under a wrong provision, if it can be shown to be within its power under any other provision.
Learned counsel in this regard has placed reliance on Indian Aluminium Company etc.
vs Kerala State Electricity Board; , In our view as already held above, the Reserve Bank was competent and authorised to issue the impugned directions of 1987, in exercise of powers conferred under Section 45K (3) of the Act.
Having cleared the ground of ultra vires we must now turn to the main challenge posed on behalf on the Peerless and other companies and employees.
Mr. Harish Salve made the leading arguments on behalf of the Reserve Bank of India.
His main thrust of the argument was that the Reserve Bank of India had issued these directions of 1987 in order to carry out observations made by this Court in Peerless case (supra) and in the public interest of safeguarding the money of the depositors in such companies.
The Reserve Bank considered it necessary that the interest of millions of small depositors of rural areas should be made safe and may not be devoured by a mushroom of companies with no stake.
According to Mr. Salve it was not the intention of the Reserve Bank to put any restrictions in the manner or conduct of business to be done by such companies.
But the most important factor weighing in the mind of the Reserve Bank was to safeguard the money of the depositors.
It was not the concern of the Reserve Bank as to how and in what manner these companies would regulate their expenses or would be able to conduct such business for earning more profits.
According to the Reserve Bank of India these companies cannot be allowed to spend a mighty of deposits for meeting their own expenses.
They should find out their own resources for meeting the expenses.
According to the Reserve Bank the rate of interest to be paid by these companies to the depositors has been fixed as 10 per cent per annum.
They could easily invest such amount in bonds issued by public sector corporation and earn interest at the rate of 14 per cent per annum or more and thereby earn a profit of 4 per cent and regulate their expenses within the limits of such profits.
It was submitted that the propensity of the 432 problem has increased manifold in view of the fact that the amount of deposits and investments has gone to staggering heights worth several thousand crores of lower middle class persons living mostly in the rural areas.
A bogey of employment hazards of several thousand regular employees and still a large number of agents working in the field cannot deter the Reserve Bank to lay down some directions which may act harshly and resulting in lessening of profits of such companies.
It was also submitted that according to the affidavit submitted before this Hon 'ble Court on behalf of the Reserve Bank of India it has been stated that prior to 1987 directions, there were 747 such companies which were conducting deposit scheme.
At present they could classify only 392 such companies as required information for classifying of the remaining companies had not been received.
Most of such companies have not designated their banks as it required under paragraph (6) of the directions and in most of such cases amounts invested in bank deposits and approved securities fall much short of deposit liabilities.
The companies operating in these areas also at times become untraceable in that a number of show cause notices issued have been returned as "addressee not known" etc.
In some cases those who have chosen to reply have given evasive replies.
It has been further stated in the affidavit that most of these companies did not comply with the financial discipline sought to be imposed upon them and have avoided and abhorred any scrutiny into their accounts.
It has thus been submitted that to get over these difficulties, the directions of 1987 attempt to provide a steady, stable identificable and monitorable method by which the companies will be able to disclose all their true liabilities and also utilise the money raised from the depositors for investment in safe indentifiable and quantifiable securities instead of investing them in other ventures.
This will ensure complete security to the depositors at all times and will also make the accounts of the companies comprehensible and easy to monitor.
As regards the formula laid down by the High Court it has been submitted that if a variable as against a fixed and definite percentage of investment with respect to amounts collected by way of each instalment is permitted it would be impossible to find out and verify whether the amounts invested are in accordance with the directions at any given point of time when there are thousands of certificates with different and varying maturity periods.
In the circumstances, the formula laid down by the High Court is self defeating and also deprives the depositor of the security envisaged under the directions.
It was also submitted on behalf of the Reserve Bank that it is an admitted position that the business of RNBCs is to collect funds from the public and invest the same in Government securities and bank deposits.
In 433 the application forms and in the advertisement 's issued by these companies it is expressly held out to the public that their moneys are safe with the banks and in Government securities.
It is the very nature of their business which makes it non viable if they are to give fair return to the depositors and private security for the repayment of their money.
The scheme of control as provided in the directions of 1987 might be harsh but the same is in conformity with the assertions held out by these companies to the public at large.
These directions subject the companies to proper discipline by monitoring their actions and such directions cannot be considered as unreasonable.
The reasonableness of the directions when looked at from the point of view of the depositors for whose safeguard they have been issued, is beyond question.
Return provided and the security to be given through proper investment cannot be faulted on any ground.
Thus what seems to be an impossible situation for these companies is not due to the impugned directions but because of the nature of business itself.
The funds are collected at exhorbitant costs and on that account it becomes difficult for the companies to give a fair return to the depositors.
These companies are not genuine investment companies.
If they want to do genuine investment business they can do so by choosing freely their investment, but in that case Reserve Bank of India directions applicable to such companies would permit them to accept deposits not exceeding 25 per cent of paid up capital and reserve.
The directions of 1987 had not imposed any restriction on the right to carry on business but those directions only place a restriction with respect to one of the modes of raising reserves i.e. through public deposits.
It has been further argued that the reasonableness of the directions has not to be looked into from the point of view of the company to whom any such restrictions will be irksome and may therefore be regarded as unreasonable.
The framing of the directions are only regulatory in nature keeping in view the interest of the depositors without unduly jeopardising the interest of the employees.
Keeping this in mind it has been provided that the minimum return would be at 10 per cent, though there are govt.
and public sector bonds which pay interest at a much higher rate.
Even presently bank deposits and other company deposits give return varying between 13 to 15 per cent.
There is no limitation on the quantum of deposits with reference to the overall capital as shown in the case of companies governed by the Companies (Acceptance of Deposits) Rules 1975, Non Banking Financial Companies (Reserve Bank) Directions, 1977.
The linking of deposits with capital as in the case of other regulations is a measure to secure the interest of the depositors namely e.g. Companies (Acceptance of Deposit) Rules, 1975, ensure that the assets 434 are at least three times the deposits received.
In view of the low or total non existent capital of the RNBCs, it was not possible to secure the deposits in this manner.
Instead, it has been provided that the entire liability towards the depositors should be invested and no part of the deposits be utilised for payment of commission etc.
or incurring other expense.
In any event, even if, the directions do not prescribe existence of owners capital as security, it does not imply that it is permissible to use the deposits received to bridge the time gap between income and expenditure.
Merely because the directions do not fix a ceiling on the rate of commissions it does not imply that the Reserve Bank has granted its permission to payment of high commission or incurring of large expenses on management etc.
The RNBCs are free to incur such expenses and organize their business as they desire as long as the depositors are fully secured at all times.
The contention that the business of the RNBCs will close down if the directions of 1987 are to be adhered to is not based on facts and misconceived in law.
A perusal of Directors ' Report of Peerless for the years 1988, 1989 and 1990 clearly go to show that they did not consider the company in any financial difficulty and in fact paid larger dividends even after complying with the impugned directions of 1987.
It has thus been submitted that given a wide latitude in judging the validity of economic legislation on the touch stone of reasonableness, in the absence of patent arbitrariness but having nexus with the public objective sought to be attained, the durations cannot be condemned as being violative of Article 19(1) (g).
The result of the contentions put forward on behalf of RNBCs would be that in the case of endowments repayable after, say 10 years, there will be nothing due and payable in the first nine years and as such there would be no need of investing any sums for the first nine years.
The interpretation placed by the respondent companies upon the judgment of the High Court is that it is now open to them to determine as per their own peculiar estimate, what would be sufficient to meet the liabilities towards the deposits and accordingly such amount would be their "aggregate liability".
According to the Peerless Company if it deposits 75 per cent of the first year 's subscription, it is adequate to cover its liabilities to the depositors.
On the other hand as per Timex Company a deposit of only 50 per cent of the first year 's subscription would be adequate to cover its liabilities to the depositors.
Whereas the Favourite Company contends that investment of 40 per cent of the first year 's subscription will be adequate to cover the liabilities to the depositors.
It has been submitted that according to well accepted accounting practice where any sum is received as a loan or as a deposit it has to be shown as a liability together with accrued interest irrespective of when it is due.
The amount contributed by the depositors being a capital receipt and not a revenue receipt cannot under any circumstances be shown in the 435 balance sheet otherwise then at its full value.
Moreover, being a capital receipt, it cannot be credited to the profit and loss accounts since Part II of Schedule VI to the requires that the amounts to be shown in the profit and loss accounts should be confined to the income and expenditure of the company.
Thus, crediting a part of the first and subsequent year 's deposit instalments to the profit and loss account and not showing them fully as a liability in the balance sheet would be a contravention of the provisions of the .
It has been further submitted on behalf of the Reserve Bank that the question which arises for consideration is whether liability to the depositors can be calculated on an actuarial basis.
It may be noted that actuarial basis is normally adopted (a) in respect of items of income and expenditure, (b) where there is a significant element of uncertainty.
Thus, in so far as the liability arising out of the repayment to the depositors of the amount capitalised by him is considered, the actuarial basis cannot be adopted and this liability must always be stated at its full value.
The principle of actuarial valuation is in opposite for the business of RNBCs.
It has also been submitted that the formula laid down by the High Court about the quantum of investments to be made by RNBCs is incapable of effectively monitoring and hence the provisions made in the directions of 1987 regarding security to depositors would be rendered wholly illusory.
Such impossibility in the monitoring has been demonstrated as follows: (A) These companies do not fix a definite but variable percentage of investment with respect to amounts collected by way of each instalment under the certificates of deposits; e.g. Peerless would invest 75 % of the collections made out of 1st instalment (retaining and taking to P & L A/c, 25 %) and 82 % out of 2nd instalment and so on.
At any given point of time, there will be thousands of deposit certificates with varying maturity and the amounts collected would be an impossibility to find out and verify whether the amounts invested are in accordance, with the proportion fixed by the companies with respect to each instalment.
Regulatory authority would have to depend entirely on these companies for doing its monitoring exercise.
(B) Each company fixes its own proportion of investment with respect to each instalment based on the projected yield from its investment; e.g. Favourite Finance Company claims that it needed to invest only 40 % of the amounts collected by way of 1st instalment claiming that the projected yield from its investment would be 14.8 %.
This would compound the impossibility of monitoring further.
436 It has thus been argued that the formula laid down by the High court is self defeating and depriving altogether benefits of security provisions given to depositors under the directions of 1987.
Mr. Somnat Chatterjee, learned senior counsel appearing on behalf of Peerless Company contended that the Peerless being the largest RNBC in india having an impeccable record of public service decided to give effect to the directions of 1987 as it wanted to avoid any confrontation with Reserve Bank and further not to give an impression of seeking to avoid "regulatory control", tried its best to comply with the said directions w.e.f. 15th May, 1987 till 31st March, 1989.
However, from its working results it appeared bonafide to the Board of Directors of Peerless that it was impossible to carry on its traditional business for any longer period without incurring huge losses.
The company as such decided to approach the High Court for obtaining the benefit of judgment delivered in the Timex case.
The Peerless has only challenged a part of Paragraph 6 of the directions of 1987 and the consequential direction contained in para 12 which shows that Peerless does not wish to remain outside of the regulatory controls of Reserve Bank but challenges only those directions which make the business totally unworkable.
There has been no attempt on the part of Peerless to carry on its business in a manner which may jeopardize the interest of any depositor or which will not protect fully every paisa deposited with Peerless at all points of time.
No real complaint was made by or on behalf of Reserve Bank as to any depositor of Peerless running a risk of loss of any amount or that it has carried on or is carrying on the business in an undesirable manner.
It has been submitted that Peerless should not be made to suffer for the illegality or improprieties, if any committed by any other RNBC and neither Peerless nor its 14 lac field agents, 3 thousand field officers and 4 thousand direct employees should be made to suffer.
The result of following directions of 1987 would be that all the above agents, officers and employees of the Peerless could loose their jobs and their family members will be thrown on the streets.
The Peerless had abolished the provision of forfeiture in all its schemes as early as in 1986 that is even prior to coming into force of the directions of 1987.
The Peerless has been compelled to challenge paragraphs 6 and 12 of the directions of 1987 since enforcement of these provisions would result in complete annihilation of the undertaking of Peerless in the near future.
It was further contended that it is inherent in the business carried on by Peerless and other similar RNBCs that the working capital is generated out of the subscriptions received from the certificate holders.
Such business comprises in collecting subscriptions from depositors either in lumpsum 437 or in instalments and such deposits are paid back with the guaranteed accretions, bonus, interest etc.
in terms of the contract at the end of the stipulated term.
Through this business such companies have rendered great and commendable service to the nation in mobilizing small savings and giving a boost to the movement of capital formation in the country.
Such companies have placed at the disposal of Governmental institutions including public sector banks and other financial institutions huge deposits which could not be collected by the said financial institutions themselves or by anybody in the organised sector.
The method followed by the companies in carrying on the aforesaid business is that a certain portion of the subscriptions received by it is transferred to the profit and loss account shown as income, and the same is used to defray inevitable working capital requirements of the company, namely, payment of agent 's commission, management expenses, staff salaries and other overheads.
However, the balance of the subscriptions (excluding the appropriated part) is transferred to a fund each year and the corpus of the fund is invested in turn in interest bearing investment.
The Peerless company initially used to transfer approximately 95 % of the first year 's subscriptions to the profit and loss account and used to invest the subscriptions received from the second year onwards.
However, at present, Peerless is appropriating 25 % of the first year 's subscription to the profit and loss account and investing the balance 75 % in the manner and mode prescribed by paragraph 6 of the directions of 1987.
It has been contended that the investment is planned in such a manner that at the end of the contractually stipulated maturity period or at any other point of time when any sum of money may become contractually payable to a depositor, an RNBC is always in a position to pay all its conractual dues to the certificate holder.
There is thus no threat to the safety of the depositors money inspite of the aforesaid transfer of a portion of the subscription received to the profit and loss account showing it as income and utilising it for meeting the working capital requirements.
It was pointed out that Peerless had been assessed to income on the basis of above method of accounting and no objection has ever been taken by the revenue authorities or by the auditors of Peerless or even by R.B.I. before the issuance of the directions of 1987.
It was submitted that the Peerless was incorporated in the year 1932 when it used to carry on life insurance business.
It changed over to the present form of business from 1956 and since then it has been carrying on such business with the full knowledge of R.B.I. as well as other concerned authorities.
The R.B.I. never objected to the accounting system followed by the Peerless.
In view of the abolition of the forfeiture clause the alleged risk to the depositors has become totally non existent.
It was further argued that the R.B.I. framed regulatory measures in 1973 such miscellaneous non banking companies (Reserve Bank) Directions, 1973.
438 The Reserve Bank granted exception to Peerless from the provisions of the said Directions of 1973, by an order dated 3rd December, 1973.
The Favourite Small Investments Limited filed a writ petition challenging the refusal of Reserve Bank to grant exemption to them from the provisions of the said 1973 Directions to granting such exemption to Peerless.
In the said writ petition the R.B.I. filed an affidavit justifying the denial of exemption to Favourite Small Investments Ltd. and in the aforesaid affidavit submitted in detail the accounting procedure of Peerless including the fact that Peerless was transferring a portion of the subscriptions to the profit and loss account as income and it also certified that the said method was a permissible business method and by following the said method Peerless would be in a position to pay all contractual dues of the certificate holders at the end of the maturity period.
Thus the said system of accounting which is called an actuarial system of accounting was found satisfactory by the R.B.I. The said affidavit filed in the Favourite 's case has been quoted in the Peerless case in ; , and the said actuarial system of accounting was not held as impermissible or against any recognized method of accounting.
It was also contended on behalf of the Peerless that the interest of depositors is certainly an important consideration but the interest of the depositors is not impaired in any manner whatsoever by the method of accountancy now being followed by Peerless and in fact by all similar companies, namely, appropriation of a part of the subscription to the profit and loss account and meeting the working capital requirements out of the same.
In respect of the above contention certain charts were also produced during the course of arguments and from such charts it was sought to establish that except for the first two years the principal amount paid by a subscriber is always covered by matching investment.
Further, on the date on which a deposit becomes contractually repayable, there is full coverage of such liability.
It was submitted on behalf of All India Peerless Field Officers Association that the said association represents about 14 lac field workers.
These 14 lac persons are engaged by Peerless on the basis of individual contracts of engagements and earn their livelihood solely by collecting business for Peerless.
For collecting such business Peerless pays to them commission at a contractual agreed percentage on the value of business collected.
The said field officers have to meet all expenses for procuring such business such as travelling expenses, boarding, lodging, office and administrative expenses etc.
out of such commission.
Field officers have to undertake long tours and have to travel into remote villages to reach the small depositors.
It has been submitted that if the directions of 1987 are upheld, the undertaking of Peerless will face inevitable closure and almost 439 14 lac field officers will lose their only source of livelihood and will be virtually thrown on the streets.
The field officers and their families will face starvation and extreme penury in case the validity of such directions is upheld.
Thus any restriction which would be prohibitive or which would result in closure of the undertaking of Peerless would be against public interest.
We have heard the arguments of learned counsel for the parties.
It may be made clear at the outset that questions raised in these cases regarding the validity of paragraphs 6 and 12 of the directions of 1987 cannot be determined merely by taking into consideration the working of the financial soundness of the one company alone like Peerles but the matter has to be examined in a broader perspective of all RNBCs.
We have to keep in mind, while deciding the controversies raised in the arguments, such RNBCs which are doing the same kind of business of taking deposits and returning the same to the certificate holders after a gap of 7 to 10 years along with interest, bonus etc.
In the affidavit submitted before this Court on behalf of Reserve Bank of India it has been stated that prior to 1987 directions, there were 747 such companies which were conducting this business under various deposit schemes.
At present they could classify 392 such companies spread over across the entire country.
According to the above affidavit, as on 31st March, 1990 in the eastern zone out of 185 companies, only 35 have filed the annual returns and out of which only 30 have filed the balance sheet.
Similarly, out of 140 companies in the northern zone only 28 have filed annual returns and 32 have filed balance sheet.
A perusal of the returns given by 51 of these companies discloses that 35 companies have a negative net worth (i.e. their losses far exceed their share capital and reserves) which necessarily means that they have not only wiped out the share capital and reserves but their liabilities are far in excess.
Only 16 companies have a positive net worth including Peerless.
It has been further pointed out in the affidavit that apart from Peerless the aggregate capital investment by 15 companies is Rs. 158 lacs only.
As against this, the negative net worth of the 35 companies aggregated to Rs. 3.6 crores.
Despite large accumulated losses (in some cases with meager or nominal capital) these companies apart from Peerless, have realised deposits to the tune of Rs. 86 crores.
Apart from the financial parameters most of these small companies are family concerns.
Most of such companies have not designated their banks as is required under Paragraph 6 of the directions and in most of such cases amounts deposited in banks and approved securities fall much short of deposit liabilities.
It has also been pointed out in the affidavit that the companies operating in these areas also at times become untraceable in that a number of show cause notices issued have been returned as "ad 440 dressee not known" etc.
Thus we have to keep in mind the above mushroom of companies also which have set foot in this sort of business.
It would also be important to note that most of the depositors in such companies belong to the rural areas and who are persons belonging to lower middle class, small agriculturists and small traders, pensioners etc.
These companies advertise their schemes widely in beguiling terms.
Through such advertisements they lure the small savings of the poor ignorant villagers through a special structure of agents, special agents, different kinds of organisers and so on.
The agents commission for the first years subscription is very high and which offers incentive to the agents on securing a fresh business and a disincentive to collect subscriptions of subsequent years.
It is a matter of common experience and knowledge that most rural folk particularly those belonging to the lower strata of society will not pay their subscriptions regularly unless somebody takes the trouble of collecting their subscription with the same enthusiasm as may be shown in enrolling the subscribers in the beginning.
It is no doubt correct that these companies do tap and collect the deposits from such areas where the agents of public sector banks or public sector companies or instrumentalities of the state are unable to reach.
Thus these companies mop up a large amount of money for ultimately investing in the nationalised bank or other Govt.
owned corporations or companies.
However, the Reserve Bank considered the safety of the money of the depositors as the paramount consideration in issuing the direction of 1987.
It cannot be disputed that the interest of the employees as well as the field officers and agents have also to be taken into consideration while deciding the reasonableness of the impugned directions.
It may be further noted that in the Reserve Bank of India vs Peerless Company case (supra) this Court though came to the conclusion that the Endowment Certificate Scheme of the Peerless company was outside the Prize Chit and Money Circulation Schemes (Banning) Act, still it was observed that it would be open to the Reserve Bank to take such steps as are open to them in law to regulate schemes such as those run by the Peerless company to prevent exploitation of ignorant subscribers though care must also be taken to protect the thousands of employees.
The Court expressed grave concern with regard to the mushroom growth of `financial investment companies ' offering staggeringly high rates of interests to depositors leading to the suspicion whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings.
It was clearly pointed out that if the Reserve Bank of India considers the Peerless company with 800 crores invested in Govt.
securities, fixed deposits with national banks etc.
unsafe for depositors one wonders what they have to say about the mushroom of non banking companies which are accepting 441 deposits promising most unlikely returns and as such what action was proposed to be taken by the R.B.I. to protect the investors.
In the above background the Reserve Bank came forward with the impugned directions of 1987.
Before examining the scope and effect of the impugned paragraphs 6 and 12 of the directions of 1987, it is also important to note that Reserve Bank of India which is bankers bank is a creature of Statute.
It had large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bonafides of the Reserve Bank in issuing the impunged directions of 1987.
The Reserve Bank plays an important role in the economy and financial affairs of India and one of its important functions is to regulate the banking system in the country.
It is the duty of the Reserve bank to safeguard the economy and financial stability of the country.
While examining the power conferred by Sec.
58A of the on the Central Govt.
to prescribe the limits upto which, the manner in which and the conditions subject to which deposits may be invited or accepted by non banking companies, this Court in Delhi Cloth and General Mills, etc.
vs Union of India, etc.
; , observed as under: "Mischief was known and the regulatory measure was introduced to remedy the mischief.
The conditions which can be prescribed to effectuate this purpose must a fortiori, to be valid, fairly and reasonably, relate to checkmate the abuse of juggling with the depositors/investors ' hard earned money by the corporate sector and to confer upon them a measure of protection namely availability of liquid assets to meet the obligation of repayment of deposit which is implicit in acceptance of deposit.
Can it be said that the conditions prescribed by the Deposit Rules are so irrelevant or have no reasonable nexus to the objects sought to be achieved as to be arbitrary? The answer is emphatically in the negative.
Even at the cost of repetition, it can be stated with confidence that the rules which prescribed conditions subject to which deposits can be invited and accepted do operate to extend a measure of protection against the notorious abuses of economic power by the corporate sector to the detriment of depositors/investors, a segment of the society which can be appropriately described as weaker in relation to the mighty corporation.
One need not go so far with Ralph Nadar in `America Incorporated ' to establish that political institutions may fail to arrest the control this everwidening power of corporations.
And can one wish away the 442 degree of sickness in private sector companies? To the extent companies develop sickness, in direct proportion the controllers of such companies become healthy.
In a welfare state, it is the constitutional obligation of the state to protect socially and economically weaker segments of the society against the exploitation by corporations.
We therefore, see no merit in the submission that the conditions prescribed bear no relevance to the object or the purpose for which the power was conferred under Sec.
58A on the Central Government.
" The function of the Court is to see that lawful authority is not abused but not to appropriate to itself the task entrusted to that authority.
It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power.
It must keep within the limits of the authority committed to it.
It must act in good faith and it must act reasonably.
Courts are not to interfere with economic policy which is the function of experts.
It is not the function of the Courts to sit in Judgment over matters of economic policy and it must necessarily be left to the expert bodies.
In such matters even experts can seriously and doubtlessly differ.
Courts cannot be expected to decide them without even the aid of experts.
The main grievance raised on behalf of respondent companies is that if the provisions of paragraphs 6 and 12 of the directions of 1987 are complied with, the companies will be left without any fund to meet their working capital.
It would be impossible to run the business without a working capital and to meet even reasonable expenses incurred for payment of agents commission, management expenses and other overhead expenses.
During the course of hearing the counsel for the companies had relied on some charts to show the unworkability and unreasonableness of the impugned paragraphs 6 and 12 of the directions.
It was also pointed out that the arguments made on behalf of the Reserve Bank overlooked the fact that in case of investments in long term schemes such as Indira Vikas Patra and Kisan Vikas Patra the companies will not be able to utilise its return from such investment before the end of the minimum period for which these schemes operate.
The respondent companies will thus be left without any income during the period of operation of such schemes and cannot meet its working capital requirements.
It has been submitted that the directions of 1987 really amount to prohibition of the business in a commercial sense without reasonable basis and are thus violative of article 19(1) (g) of the Constitution.
In support of the above contention reliance has been placed on Mohammad Yasin vs The Town Area Committee, Jalalabad and another; , ; Premier Auto 443 mobiles Ltd. and anothers vs Union of India; , and on Shree Meenakshi Mills Ltd. vs Union of India ; It has also been contended that it is now well settled by plethora of judicial pronouncements that the restrictions on any business caused by regulations should not be more than what would be necessary in the interest of the general public and such restrictions should not overreach the scope of the objects achieved by the regulations.
The contention on behalf of the Reserve Bank is that the directions have been made in public interest of safeguarding the interest of millions of depositors and the Reserve Bank is not concerned and while doing so it was rightly thought necessary by the Reserve Bank that the companies cannot be permitted to incur the expenses out of the corpus of the depositors money.
The business carried on by the companies to restructure their organization by curtailing its expenses.
If such middlemen or brokers are not able to earn a large profit as was done before the enforcement of the impugned directions, it lies with the companies to continue or not such business when the margin of profit is curtailed.
These companies want to do the business without having any stake of their own.
The companies doing such business cannot be subjected to the scheme of control applied to other financial and non financial companies for the simple reason that they have no capital and their schemes are for a period much longer than three years.
After the decision of the Supreme Court in Peerless case these directions of 1987 were issued after mature consideration with the help and advice of experts.
Paragraph 6 of the impugned directions according to the Reserve Bank lays down provisions for security of depositors.
it prescribes the mode of investment of funds collected by the companies.
It cannot be disputed that while collecting deposits the companies clearly hold out to the members of the public that the moneys so collected by them shall be invested in Government securities or kept deposited with the banks and they also assure the depositors that their moneys are safe and secure.
On the basis of such representations and on the strength of exaggerated and misleading advertisements these companies collect huge amounts of deposits from a large number of small, poor and uninformed depositors and that too in such investment spread over a long period.
The contention on behalf of the Reserve Bank of India is that in the above context these companies carry on their activities wholly with the funds provided by the public by way of deposits and hardly have any capital of their own.
In these circumstances it has been urged on behalf of the Reserve Bank that the provisions made in paragraph 6 of, the impugned directions are abso 444 lutely reasonable and are for ensuring repayment of deposits.
It has been submitted that it is common knowledge that small depositors cannot have recourse to courts for recovering their amounts if the companies do not repay the deposits.
The direction in paragraph 6 enjoins on these companies to deposit in fixed deposits with public sector banks or unencumbered approved securities or in other investments, a sum which shall not, at the close of business on 31st December, 1987 and thereafter at the end of each half year i.e. 30th June and 31st December not less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable.
Thus according to the above provision whole of the aggregate amounts of the liabilities to the depositors whether or not such amounts have become repayable, is required to be deposited or invested.
10 % of such amount is required to be deposited in public sector banks and 70 % in approved securities and 20 % has been allowed to be invested by the company according to its own choice.
In order to understand the rigour of the directions laid down in paragraph `6 ', it would be necessary to understand the scope of other directions as well.
Paragraph 4 of the directions lays down that the deposit shall not be accepted for a period of less than 12 months or more than 120 months i.e. one years from the date of receipt of such deposits.
The normal standard applied to non financial and financial companies is that they cannot accept deposits for a period of more than 36 months (except housing finance company).
Thus the companies before us have been permitted to conduct their schemes extending over to a long period upto 120 months.
This is a special kind of concession provided to the companies of the kind before us.
Paragraph 5 of the directions relates to the minimum rate of return fixed at 10 % per annum for a deposit with a maturity of 10 years.
It is a matter of common knowledge that in the present times even the public sector corporations and banks and other financial and non financial companies pay interest at much more higher rates ranging from 14 to 18 %.
Thus according to the above scheme the respondent companies and the others doing such business can easily earn a profit of 4 to 5 % on their investments.
In case of a request of the depositors for repayment of the deposit before maturity then the amount payable by the company by way of interest etc., shall be 2 % less than what could have been ordinarily paid by the company by way of interest if the deposit had run the full contractual period.
However, the question of repayment before maturity or after how many years will depend entirely on the terms and conditions of the contract of such deposit.
Paragraph 12 of the directions of 1987 enjoins upon the company to disclose as liabilities in its books of accounts and 445 balance sheets the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors.
Under Clause (a) to the explanation to clause 3 of paragraph `6 ' "Aggregate Amounts of Liabilities" shall mean total amount of deposits received together with interest, premium, bonus or other advantage by whatever name called, accrued on the amount of deposits according to the terms of contract.
Thus the company is required to deposit or invest the aggregate amounts of its liabilities having accrued on the amount of deposits according to the terms of contract.
Without going into the figures shown in the various charts, it is clear that if the directions contained in paragraphs 6 and 12 of the directions of 1987 are to be carried out, the companies are not left to utilise any amount out of the deposits as working capital to meet the expenses.
In our view the Reserve Bank is right in taking the stand that if these companies want to do their business, they should invest their own working capital and find such resources elsewhere with which the Reserve Bank has no concern.
If we look at the Annual Report and Accounts of Peerles for the years 1988, 1989 and 1990 it is clear that it had conducted its business following the impugned directions of 1987 and still had earned substantial profits in these years.
It is clear that Peerless is a company having established as back as in 1932 and had substantial funds to invest the entire amount of deposits and had met the expenses out of its accumulated profits of the past years.
This shows that the business can be run and profit can be earned even after complying with the impugned directions of 1987 issued by the Reserve Bank.
It is not the concern of this court to find out as to whether actuarial method of accounting or any other method would be feasible or possible to adopt by the companies while carrying out the conditions contained in paragraphs 6 and 12 of the directions of 1987.
The companies are free to adopt any mode of accounting permissible under the law but it is certain that they will have to follow the entire terms and conditions contained in the impugned directions of 1987 including those contained in paragraphs 6 and 12.
It is not the function of the Court to amend and lay down some other directions and the High Court was totally wrong in doing so.
The function of the Court is not to advise in matters relating to financial and economic policies for which bodies like Reserve Bank are fully competent.
The Court can only strike down some or entire directions issued by the Reserve Bank in case the Court is satisfied that the directions were wholly unreasonable or violative of any provisions of the Constitution or any Statute.
It would be hazardous and risky for the courts to tread an unknown path and should leave such task to the expert bodies.
This court has repeatedly said that matters of economic policy ought to be left to the Government.
While dealing with the validity of an order passed on September 30, 1977 fixing a retail price of mustard oil not 446 exceeding Rs. 10 per kilogram in exercise of powers conferred by Section 3 of the Essential Commodities Act, a bench of 7 Judges of this Court in M/s Prag Ice & Oil Mills and another vs Union of India and Nav Bharat Oil Mills and another vs Union of India ; observed as under: "We have listened to long arguments directed at showing us that producers and sellers of oil in various parts of the country will suffer so that they would give up producing or dealing in mustard oil.
It was urged that this would, quite naturally, have its repercussions on consumers for whom mustard oil will become even more scarce than ever ultimately.
We do not think that it is the function of this Court or of any Court to sit in judgment over such matters of economic policy as must necessarily be left to the Government of the day to decide.
Many of them, as a measure of price fixation must necessarily be, are matters of prediction of ultimate results on which even experits can seriously err and doubtlessly be differ.
Courts can certainly not be expected to decide them without even the aid of experts".
In Shri Sitaram Sugar Company Limited and another vs Union of India & others with U.P. State Sugar Corporation Ltd., and another vs Union of India & Others, ; this Court observed as under: "Judicial review is not concerned with matters of economic policy.
The Court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either.
The Court does not supplant the "feel of expert" by its own views.
When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonableness.
In all such cases, judicial inquiry is confined to the question whether the findings of fact are reasonably on evidence and whether such findings are consistent with the laws of the land.
In R.K. Garg vs Union of India & others, etc.
; , at p. 690 a Constitution Bench of this Court observed as under: "Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc.
It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, be 447 cause it has to deal with complex problems which do not admit of solution through any doctrinaire or strait jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature.
The Court should feel more inclined to give judicial defence to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved.
Nowhere has this admonition been more felicitously expressed than in Morey vs Doud where Frankfurter, J. said in his Inimitable style: "In the utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative Judgment.
The legislature after all has the affirmative responsibility.
The courts have only the power to destroy, not to reconstruct.
When these are added to the complexity of economic regulation, the uncertainty, the liability to error the bewildering conflict of the experts, and the number of times the judges have been overruled by events self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability".
It may also be noted that it is not possible for the Court to determine as to how much percentage of deposit of first instalment should be allowed towards expenses which may consist of commission to agents, office expenses etc.
Even amongst the three companies viz.
Peerless, Timex and Favourite, there is a difference in this regard.
According to the Peerless 25 %, Timex 50 % and Favorite 60 % of the deposits of the first instalment would be necessary for generating the working capital for meeting the genuine expenses.
Thus it would depend from company to company based on various factors such as paid up capital, percentage of commission paid to the agents, rate of interest paid to the depositors, period of maturity for repayment, office expenses and various other factors necessary to mop up working capital out of the depositors money.
We cannot ignore the possibility of persons having no stake of their own starting such business and after collecting huge deposits from the investors belonging to the poor and weaker section of the society residing in rural areas, and to stop such business after a few years and thus devouring the hard earned money of the small investors.
It cannot be lot sight that in such kind of business, the agents always take interest in finding new depositors because they get a high rate of commission out of the first instalment, but they do not have same enthusiasm in respect of deposit of subsequent instalments.
In these circumstances, if the Reserve Bank has issued the 448 directions of 1987 to safeguard the larger interest of the public and small depositors it cannot be said that the directions are so unreasonable as to be declared constitutionally invalid.
It has been vehemently contended before us on behalf of the Peerless employees and field agents that in case the impugned directions are not struck down, the Peerless will have to close down its business and several thousands of employees and their family and several lakhs of field agents would be thrown on the street and left with no employment.
We do not find any force in the above contention.
So far as Peerless is concerned there is no possibility of its closing down such business.
It has already large accumulated funds collected by making profits in the past several years.
Thus it has enough working capital in order to meet the expenses.
We are not impressed with the argument of Mr. Somnath Chatterjee, Learned Senior Advocate for the Peerless that after some years the Peerless will have to close down its business if directions contained in paragraphs 6 and 12 are to be followed.
The working capital is not needed every year as it can be rotated after having invested once.
If the entire amount of the subscribers is deposited or invested in the proportion of 10 % in public sector banks, 70 % in approved securities and 20 % in other investments, such amounts will also start earning interest which can be added and adjusted while depositing or investing the subsequent years of deposits of the subscribers.
In any case it lies with the new entrepreneurs while entering such field of business to make arrangement of their own resources for working capital and for meeting the expenses and they cannot insist in utilising the money of the depositors for this purpose.
So far as the companies already in this field they must have earned profits in the past years which can be utilised as their working capital.
It is important to note that the impugned directions of 1987 have been made applicable from 15th May, 1987 prospectively and not retrospectively.
Thus under these directions the question of depositing the entire amount of subscriptions would only apply to the deposits made after 15th May, 1987.
We may also observe that the impugned directions of 1987 as well as any other directions issued from time to time by the Reserve Bank relating to economic or financial policy are never so sacrosanct that the same cannot be changed.
Even the financial budget for every year depends on the economic and financial policy of the Government existing at the relevant time.
So far as the impugned directions are concerned if it is found in future that the same are not workable or working against the public interest, the Reserve Bank is always free to change its policy and scrap or amend the directions as and when necessary.
We have no doubt 449 that if in times to come the Reserve Bank feels that business of the kind run at present by Peerless and other companies, in terms of the directions of 1987 are not yielding the result as envisaged by the Reserve Bank, it will always be prepared to consider any new proposals which may be conducive both in the interest of the large multitude of the investors as well as the employees of such companies.
Mr. Shanti Bhushan, learned Senior Counsel appearing on behalf of the Reserve Bank made a candid statement on behalf of the Reserve Bank that the Reserve Bank would always be prepared to consider any new proposal which would observe the public interest.
In the result I set aside the orders of the High Court and allow the appeals arising out SLP Nos.
6930 30 A of 1991, 7140 of 1991 and 3676 of 1991 filed by the Reserve Bank of India and dismiss the wirt petition No. 677 of 1991.
No order as to costs.
K.RAMASWAMY, J. While respectfully agreeing with my learned brother since the issues bear far reaching seminal importance, I propose to express my views as well.
This Court in Reserve Bank of India etc.
vs Peerless General Finance and Investment Co. Ltd. & Ors.
; , for short `first Peerless case ' while holding that does not attract "Recurring Deposits Schemes", pointed out that the schemes harshly operate against the poor sections of the society who require security and protection; urgent action appeared to be called for and was imperative to protect the public and emphasized to evolve fool proof scheme to prevent fraud being played upon persons not conversant with practices of the financial enterprises who pose themselves as benefactors of the people.
In pursuance thereof the appellant, Reserve Bank of India, for short `RBI ' issued Residuary Non Banking Companies (Reserve Bank) Directions, 1987 for short `the Directions '.
The short shift with avid eye into the relevant provisions of the 2 of 1934 for short `the Act ' and "the directions" would enable us to come to grips with the scope of the scheme of the directions, its purpose and operation.
Chapter III(B) of the Act deals with the power of RBI to regulate non banking institutions receiving deposits.
Section 45 (1) (bb) defines deposit includes and shall be deemed always to have included "any receipt or money by way of deposit or loan or in any other form but does not include. " exceptions are not relevant and hence are omitted.
Section 45(1) (c) defines `financial institution ' to mean any non banking institution which carries on its business, or part of its business, in any of the following activities; clauses (i) to (v) are omitted, clause (vi) collect 450 ing for any purpose of any scheme or arrangement by whatever name called, monies in lump sum or otherwise by way of subscription. or in any other manner by awarding prizes or gifts. , whether in cash or kind or disbursing monies in any other way to persons from whom monies are collected or to any other persons but does not include. the exclusions are not relevant and hence omitted.
Section 45J empowers that RBI may, if it considers necessary in the public interest so to do, by general or special order, (a) regulate or prohibit the issue by any non banking institution of any prospectus or advertisement soliciting deposits of money from the public; and (b) specify the conditions, subject to which any such prospectus or advertisement, if not prohibited, may be issued.
Section 45K empowers the RBI to collect information from non banking institution as to deposit and to give directions that every non banking institution shall furnish to the Bank, in such form, at such intervals and within such time, such statements, information or particulars relating to or connected with deposits received by the non banking institution, as may be specified by RBI by general or special order including the rates of interest and other terms and conditions on which they are received.
Under sub section (3) thereof the RBI is entitled to issue in the public interest directions to non banking institution in respect of any matter relating to or connected with the receipt of deposits including the rates of interest payable on such deposits and the periods for which deposits may be received.
The use of the adjective `any ' matter relating to or connected with the receipt of deposits is wide and comprehensive to empower the RBI to issue directions in connection therewith or relating to the receipt of deposits.
But exercise of power is hedged with and should be "in the public interest.
" Section 45L provides that if the RBI is satisfied that for the purpose of enabling it "to regulate the credit system of the country to its advantage it is necessary so to do"; it may give to such institutions either generally or to any such institution, in particular, "directions relating to the conduct of business" by them or by it as financial institution or institutions including furnishing of information of particulars "relating to paid up capital, reserves or other liabilities", the "investments" whether "in the Government securities" or "otherwise", the persons to whom, and the purposes and periods for which; finance is provided "the terms and conditions", including "the rates of interest", on which it is provided.
Section 45Q provides that the provisions of this chapter shall have effect "notwithstanding anything inconsistent therewith contained in any other law" for the time being in force or any instrument having effect by virtue of any such law.
The directions became operative from May 15, 1987.
They would apply to every Residuary Non Banking Company for short `R.N.B.C ' 451 which receive any deposit scheme in lump sum or in instalment by way of contribution or subscription or by sale of units of certificates or other instruments or "in any other manner" vide Clause II of the definition.
Clause III(A) defines deposits as defined in s.45(1) (bb) of the Act.
Paragraph 4 regulates receipt of deposits for a period not less than 12 months and not more than 120 months from the first day of the receipt of the deposit.
Paragraph 5 prescribes minimum rate of return of 10 per cent per annum (to be compounded annually) on the amount deposited.
The proviso empowers R.N.B.C. at the request of the depositor to make repayment of the deposit, after the expiry of a period of one year from the date of the deposit but before the expiry of the period the deposit with two per cent reduced rate of interest from 10 % interest.
Paragraph 6, the heart of the directions consists of three sub paragraphs with explanations.
The marginal note expresses "security for depositors".
Sub paragraph (1) thereof provides that on and from May 15, 1987 every R.N.B.C. shall deposit and keep deposited in fixed deposits with public sector banks or invest and keep invested in unencumbered approved securities (such securities being valued at their market value for the time being), or in other investments, which in the opinion of the company are safe, a sum which shall not, at the close of business on 31 st December, 1987 and thereafter at the end of each half year that is, 30th June and 31st December be less than the aggregate amounts of the liabilities to the depositors whether or not such amounts have become payable.
The proviso specifies that the sum so deposited or invested (a) not less than 10 per cent shall be in fixed deposits with any of the public sector banks (b) not less than 70 per cent shall be in approved securities; and (c) not more than 20 per cent or 10 times the net owned funds of the company, whichever amount is less, shall be in other investments.
Provided that such investments shall be with the approval of the Board of Directors of the company, the explanation "Net Owned funds" shall mean the aggregate of the paid up capital and free reserves as appearing in the latest audited balance sheet of the company as reduced by the amount of accumulated balance of loss, deferred revenue expenditure and other intangible assets, if any, as disclosed in the said balance sheet.
Sub paragraph (2) enjoins toe R.N.B.C to entrust to one of the public sector banks designated in that behalf.
Deposits and securities referred to in clauses (a) and (b) of the proviso to sub paragraph (1) to be held by such designated bank is for the benefit of the depositors.
Such securities and deposits shall not be withdrawn by the R.N.B.C. or otherwise dealt with, except for repayment to the depositors.
Sub paragraph (3) obligates it to furnish to the R.B.I. within 30 days from the close of business on 31st December, 1987 and thereafter at the end of each half year i.e., as on 30th June and 31st December, a certificate from its auditors, being member of institute of Chartered Accountants, to the effect 452 that the amounts deposited in fixed deposits and the investment made are not less than "the aggregate amounts of liabilities to the depositors" as on 30th June and 31st December of that year.
Explanation thereto makes explicit what the "aggregate amount of liabilities"; "approved securities"; and "public sector banks" and "unencumbered approved securities" are meant to be the details of which are not necessary for the purpose of this case.
Paragraph 7 abolishes the power of the R.N.B.C. of forfeiture of deposits; paragraph 8 prescribes particulars to be mentioned in the form soliciting deposits; paragraph 9 enjoins issuance of the receipts to the depositors and paragraph 10 obligates to maintain the register with particulars of depositors mentioned therein.
Paragraph II enjoins its Board of Directors to furnish the information in their report as envisaged therein.
Paragraph 12 which is also material for the purpose of this case provides that every R.N.B.C. shall disclose as liabilities in its books of accounts and balance sheets, the total amount of deposits received together with interest, bonus, premium or other advantage, accrued or payable to the depositors.
Paragraph 13 enjoins to supply to R.B.I. copies of the balance sheets and accounts together with Directors report.
Paragraph 14 obligates the company to submit returns to the R.B.I. in the manner envisaged thereunder.
R.N.B.C. has to submit balance sheet, returns etc.
to the department of the Financial Companies as per paragraph 15.
Paragraph 16 obligates R.N.B.C. to comply with the requirement of the non banking financial companies and miscellaneous non banking companies (Advertisement) Rules, 1977 etc.
and actual rate of interest etc.
to the depositor.
Paragraph 17 applies to the prospective R.N.B.C. to furnish information in Schedule C. Paragraph 18 accords transitory power and paragraph 19 empowers the R.B.I., if it considers necessary to avoid any hardship or for any other just and sufficient reasons, to grant extensions of time to comply with or exempt, any company or class of companies, from all or any of the provisions of the directions either generally or for any specified period, subject to such conditions as the RBI may impose and paragraph 20 excludes the applicability of paragraph 19 of the Non Banking Financial Companies (Reserve Bank) Directions, 1977.
The High Court declared paragraphs 6 and 12 to be ultra vires of article 19(1)(g) and 14 of the Constitution holding that though the directions do not expressly prohibit the business of receiving any deposit under any scheme or arrangement in lump sum or in instalment by way of contribution or subscription by R.N.B.C. in effect the operation of the directions inhibit the existing business and prohibits the future companies to come into being.
As seen the public purpose of the directions is to secure for the depositors, return of the amounts payable at maturity together with interest, bonus, premium or any other advantage accrued or payable to the 453 depositors.
To achieve that object every R.N.B.C. is enjoined to deposit and keep deposited in fixed deposit and invest and keep invested in unencumbered approved securities a sum which shall not, at the close of each half year, be less than the aggregate amount of the liability to the depositors whether or not such amount has become payable.
The object, thereby, is to prohibit deployment of funds by R.N.B.C. in any other manner which would work detrimental to the interest of the depositors.
The question emerges whether paragraph 6 and 12 are ultra vires of Articles 19(1)(g) and 14 of the Constitution.
Article 19(1)(g) provides fundamental rights to all citizens to carry on any occupation, trade or business.
6 thereof empowers the State to make any law imposing, in the interest of the general public, reasonable restrictions on the exercise of the said rights.
Wherever a statute is challenged as violative of the fundamental rights, its real effect or operation on the fundamental rights is of primary importance.
It is the duty of the court to be watchful to protect the constitutional rights of a citizen as against any encroachment gradually or stealthily thereon.
When a law has imposed restrictions on the fundamental rights, what the court has to examine is the substance of the legislation without being beguiled by the mere appearance of the legislation.
The Legislature cannot disobey the constitutional mandate by employing an indirect method.
The court must consider not merely the purpose of the law but also the means how it is sought to be secured or how it is to be administered.
The object of the legislation is not conclusive as to the validity of the legislation.
This does not mean the constitutionality of the law shall be determined with reference to the manner in which it has actually been administered or operated or probably been administered or operated by those who are charged with its implementation.
The court cannot question the wisdom, the need or desirability of the regulation.
The state can regulate the exercise of the fundamental right to save the public from a substantive evil.
The existence of the evil as well as the means adopted to check it are the matters for the legislative judgment.
But the court is entitled to consider whether the degree and mode of the regulation whether is in excess of the requirement or is imposed in any arbitrary manner.
The court has to see whether the measure adopted is relevant or appropriate to the power exercised by the authority or whether over stepped the limits of social legislation.
Smaller inroads may lead to larger inroads and ultimately result in total prohibition by indirect method.
If it directly transgresses or substantially and inevitably effects the fundamental right, it becomes unconstitutional, but not where the impact is only remotely possibly or incidental.
The court must lift the veil of the form and appearance to discover the true character and the nature of the legislation, and every endeavor should be made to have the efficacy of fundamental right maintained and the legislature is 454 not invested with unbounded power.
The court has, therefore, always to guard against the gradual encroachments and strike down a restriction as soon as it reaches that magnitude of total annihilation of the right.
However, there is presumption of constitutionality of every statute and its validity is not to be determined by artificial standards.
The court has to examine with some strictness the substance of the legislation to find what actually and really the legislature has done.
The court would not be over persuaded by the mere presence of the legislation.
In adjudging the reasonableness of the law, the court will necessarily ask the question whether the measure or scheme is just, fair, reasonable and appropriate or is it unreasonable, unnecessary and arbitrary interferes with the exercise of the right guaranteed in Part III of the Constitution.
Once it is established that the statute is prima facie unconstitutional, the state has to establish that the restrictions imposed are reasonable and the objective test which the court to employ is whether the restriction bears reasonable relation to the authorized purpose or an arbitrary encroachment under the garb of any of the exceptions envisaged in Part III.
The reasonableness is to the necessity to impose restriction; the means adopted to secure that end as well as the procedure to be adopted to that end.
The court has to maintain delicate balance between the public interest envisaged in the impugned provision and the individual 's right; taking into account, the nature of his right said to be infringed; the underlying purpose of the impugned restriction; the extent and urgency of the evil sought to be remedied thereby; the disproportion of the restriction imposed, the prevailing conditions at the time, the surrounding circumstances; the larger public interest which the law seeks to achieve and all other relevant factors germane for the purpose.
All these factors should enter into the zone of consideration to find the reasonableness of the impugned restriction.
The court weighs in each case which of the two conflicting public or private interest demands greater protection and if it finds that the restriction imposed is appropriate, fair and reasonable, it would uphold the restriction.
The court would not uphold a restriction which is not germane to achieve the purpose of the statute or is arbitrary or out of its limits.
This Court in Joseph Kuruvilla Vellukunnel vs Reserve Bank of India & Ors.
,[1962] Suppl.
3 SCR 632, held that the RBI is ``a bankers ' bank and lender of the last resort. ' ' Its objective is to ensure monetary stability in India and to operate regulate the credit system of the country.
It 455 has, therefore, to perform a delicate balance between the need to preserve and maintain the credit structure of the country by strengthening the rule as well as apparent credit worthiness of the banks operating in the country and the interest of the depositors.
In under developed country like ours, where majority population are illiterate and poor and are not conversant with banking operations and in under developed money and capital market with mixed economy, the constitution charges the state to prevent exploitation and so the RBI would play both promotional and regulatory roles.
Thus the R.B.I. occupies place of ``pre eminence ' ' to ensure monetary discipline and to regulate the economy or the credit system of the country as an expert body.
It also advices the Government in public finance and monetary regulations.
The banks or non banking institutions shall have to regulate their operations in accordance with, not only as per the provisions of the Act but also the rules and directions or instructions issued by the RBI in exercise of the power thereunder.
Chapter 3B expressly deals with regulations of deposit and finance received by the R.N.B.Cs.
The directions, therefore, are statutory regulations.
In State of U.P. vs Babu Ram, ; , this Court held that rules made under a statute must be treated, for all purposes of construction or obligations, exactly as if they were in that Act and are to the same effect as if they contained in the Act and are to be judicially noticed for all purposes of construction or obligations.
The statutory rules cannot be described or equated with administrative directions.
In D.V.K. Prasada Rao vs Govt.
of A.P., AIR 1984 AP 75, the same view was laid.
Therefore, the directions are incorporated and become part of the Act itself.
They must be governed by the same principles as the statute itself.
The statutory presumption that the legislature inserted every part thereof for a purpose to and the legislative intention should be given effect to, would be applicable to the impugned directions.
The R.B.I. issued the directions to regulate the operations of the R.N.B.Cs., to safeguard the interest of the depositors.
Payment of interest, bonus, premium or other advantage, in whatever name it may be called is reward for waiting or parting with liquidity.
It is paid because of positive time preference (one rupee today is preferred to one rupee tomorrow)on the part of the depositor.
Therefore, the directions avowed to preserve the right of the depositors to receive back the amount deposited with the contracted rate of interest; it aims to prevent depletion of the deposits collected from the weaker segments of the society and also tends to effect free flow of the business of the R.N.B.Cs.
who would desire to operate in their own way.
The question, therefore, emerges whether the directions in paras 5 and 12 violate articles 14 and 19(1)(g) of the Constitution.
456 The solidarity of political freedom hinges upon socio economic democracy.
The right to development is one of the most important facets of basic human rights.
The right to self interest is inherent in right to life.
Mahatma Gandhiji, the Father of the Nation, said that ``Every human being has a right to live and therefore to find the wherewithal to feed himself, and where necessary, to clothe and house himself ' '.
Article 25 of the Universal Declaration of Human Rights provides that ``everyone has a right to a standard of living adequate for the health and well being of himself and of his family, including food, clothing, housing and medical care. ' ' Right to life includes the right to live with basic human dignity with necessities of life such as nutrition, clothing, food, shelter over the head, facilities for cultural and socio economic well being of every individual.
article 21 protects right to life.
It guarantees and derives therefrom the minimum of the needs of existence including better tomorrow.
Poverty is not always an economic problem alone.
Very often it is a social as well as human problem.
An agriculturist, an industrial worker, the daily wage earner, rickshaw puller and small self employed teacher, artisan, etc.
may have an earning but may be prone to spend his/her entire earnings, apart from on daily necessities of life, on socio religious occasions, fairs, festivals etc.
The urge for better tomorrow and prosperous future; the clamour for freedom from want of any kind and social security, make the vulnerable segments of the society to sacrifice today 's comforts to save for better tomorrow.
The habit of saving has an educative value for thrift.
It endeavors to bring an attitudinal change in life.
It enables individuals to assess future specific needs and to build up a financial provision for the purpose.
The habit of saving becomes a way of life and harnesses the meagre resources to build up better future.
During the days of rising prices, small savings serve as instrument to mop up the extra purchasing power.
In addition to wage a war against poverty, waste, unwise spending, hoarding and other activities, habit of saving also enables family budgeting and postponing expenditure which can be deffered in favour of better utilisation in future.
To strengthen the urge for thrift and streamline the social security, the disadvantaged need freedom from exploitation and Art.46 of the constitution enjoins the State to protect the poor from all forms of exploitation and social injustice.
Investment agencies or commercial banks are intermediaries between savers and investors.
They embark upon deposit mobilisation campaign to mop up the limited resources.
Commercial banks or financial investment agencies, be it public sector or private sector, are vying with one another to scale new heights in deposit growth each year, devising 457 different deposit schemes to suit the individual needs of the depositors or savers.
Mushroom growth of non banking agencies put afloat diverse schemes with alluring offers of staggering high rate of interest and other catchy advantages which would generate suspicion of the bona fides of the offer.
But gullible depositors are lured to make deposits.
It is not uncommon that after collecting fabulous deposits, some unscrupulous people surreptitiously close the company and decamp with the collections keeping the depositors at bay.
Therefore, the need to regulate the deposits/subscriptions, in particular, in private sector became imperative to prevent exploitation or mismanagement as social justice stratagem.
The directions are, therefore, a social control measure over the R.N.B.Cs., in matters connected with the operation of the schemes or incidental thereto.
The direction to investment in the channelised schemes at the given percentage in clauses (a) and (b) of proviso to para 6(1) was intended to deposit or keep deposited the collections in fixed deposit in the public sector banks or invest or keep invested in unencumbered approved securities so as to ensure safety, steady growth and due payment to the subscribers at maturity of the principal amount and the interest, bonus, premium or other advantage accrued thereon.
The amounts deposited shall not be less than the total aggregate amounts of liabilities to the subscribers.
The deposits or securities shall not be withdrawn or otherwise be dealt with except for a repayment to the subscribers.
It should always be shown to be a liability till date of the repayment.
This court in Hatisingh Mfg. Co. Ltd. & Anr.
vs Union of India & Ors.
; , held that freedom to carry on trade or business is not an absolute one.
In the interest of the general public, the law may impose restrictions on the freedom of the citizen to start or carry on his business, whether an impugned provision imposing a fetter on the exercise of the fundamental right guaranteed by article 19(1)(g) amounts to a reasonable restriction imposed in the interest of general public, must be adjudged not in the background of any theoretical standard or pre determinate patterns, but in the light of the nature and the incidence of the right, the interest of the general public sought to be secured by imposing restrictions and the reasonableness of the quality and the extent of the fetters imposed by the directions.
The credit worthiness of R.N.B.Cs.
undoubtedly would be sensitive.
It thrives upon the confidence of the public, on the honesty of its management and its reputation of solvency.
The directions intended to promote ``freedom ' ' and ``facility ' ' which are required to be regulated in the interest of all concerned.
The directions as a part of the scheme of the Act would be protected from the attack.
Vide Latafat Ali Khan & Ors.
vs State of U.P., 458 The R.N.B.C. is required to conduct its business activities in the interest of the depositors or subscribers who are unorganised, ignorant, gullible and ignorant of the banking operations.
If, however, the acts of R.N.B.C. is detrimental to the interest of the depositors, etc.
the R.B.I. has power in Chapter 3B to issue directions and the R.N.B.C. is bound to comply with the directions and non compliance thereof visits with penal action.
Admittedly except Peerless General Insurance, the other companies do not have either paid up capital or reserve fund worth the name.
Peerless was established in the year 1932 and over the years it built up reserve fund.
R.N.B.Cs. are carrying their business by crediting the entire first year 's collections as a capital receipt under actuarial accounting method.
In the affidavit of Sri S.S. Karmic, the Chief Officer of the RBI filed on August 13, 1991, it was stated that prior to the directions, 747 R.N.B.Cs. were doing the business.
As on that date only 392 R.N.B.Cs. were notified to be existing.
Out of them 178 are in West Bengal, 15 in Assam, 26 in Orissa, 6 in Manipur and Meghalaya, 26 in Punjab, 64 in U.P., 22 in Delhi, etc.
As on March 31, 1990 out of 185, 35 R.N.B.Cs.
alone submitted annual returns, and out of them only 30 have filed their balance sheets.
28 R.N.B.Cs.
in the northern region filed their annual returns and 23 filed their balance sheets with incomplete date.
35 of them have negative net worth (loss for exceeding their share capital and reserve).
Apart from Peerless, the aggregate capital investment of 15 companies accounted to Rs. 158 lacs.
The negative net worth of the 35 companies referred to above would aggregate to Rs.3.6 crores.
They raised, apart from Peerless, deposits to the tune of Rs. 86 crores.
Many of them have not even designated their banks as required under para 6 of the direction.
The amount invested in bank deposits and approved securities fell much short of their deposit liabilities.
Verona Commercial Credit and Investment Company, one of the respondents, have accumulated losses to the tune of Rs. 3.8 crores.
As per balance sheet their assets are inadequate to meet the liability.
Favourite Small Scale Investment, one of the respondents as on December 12, 1989, even their provisional balance sheet shows that total liability towards depositors is Rs. 44.62 crores while its investment in banks and Government security is only Rs. 13 crores.
The cash on hand was Rs. 1.74 crores.
Rs.8 crores were shown to be loans and advances.
The accumulated losses are Rs.22.19 crores as against total share capital and reserve of Rs. 20.73 lacs.
It is, thus, clear on its face that while total liabilities are Rs. 49.09 crores, the assets including doubtful loans and advances aggregate to Rs. 26 crores.
An inspection into the affairs of the said company conducted in February, 1990 disclosed that upto the end of 1989 the deposit liabilities including interest would be in the region of 459 over Rs. 132 crores.
The difference between the inspection and the balance sheet would be due to actuarial principle.
It had committed default to pay to its depositors to the tune of Rs. 5.4 crores, which is a gross under estimate.
Sri Somnath Chatterjee, the learned Senior Counsel for the Peerless and adopted by other counsel, contended that paragraphs 6 and 12 are totally unworkable.
Its compliance would jeopardise not only the existing companies but also the very interest of the depositors and large workmen.
No new company would be set up.
The direction given in the first Peerless case was to keep in view the interest of the workmen as well; in effect it was given a go bye.
At least 25% of collections would be left over as working capital of the company, to carry on its business in a manner indicated by the impugned judgment, so that no depositor would lose his money and no workmen would lose his livelihood and it will be in consonance with public interest.
Shri G.L. Sanghi, the learned Senior Counsel for Timex, contended that 50% of collection would be necessary to comply with the impugned directions and another company pleaded for 40%.
Further contention of Shri Chatterji was that the actuarial accounting neither violates any law, nor objected to by the Income tax Department.
Crediting the first year 's subscription in the accounts as capital receipt would generate company 's working capital for its successful business by meeting the expenditure towards establishment, the commission and a part of profits.
Forfeiture clause was already dated before the directions were issued.
Interest at 10% with annual compounding would be reasonable return to the subscribers which is being ensured to the depositors.
The directions issued by the High Court, subject to the above modifications, would subverse the above purpose.
Paras 6 and 12, otherwise, are arbitrary and prohibitive violating their fundamental right to do business assured by articles 19(1)(g) and 14.
Sri Harish Salve resisted the contentions with ability.
Para 12 is myocardium and para 6 ' is the heart of the directions without which the directions would be purified corpse.
On the respondents own showing, for the first two years, by actuarial accounting, the liabilities, as against deposits, are inadequate.
The regulation intends to preserve the corpus of the deposits and the interest payable thereon as on date to be a tangible and unencumbered asset at all times, though not repayable.
Indisputably the depositors/subscribers stand as unsecured creditors.
Undoubtedly every measure cannot be viewed or interpreted in the event of catastrophe overtaking the company.
The catchy and alluring but beguiled terms of offer attract the vulnerable segments of the society to subscribe and keep subscribing the small savings for better tomorrow.
460 But many a time, by the date of maturity, their hopes are belied and aspirations are frustrated or dashed to ground.
They remain to be helpless spectators with all disabilities to recover the amounts.
Pathetic financial position of some of the companies enumerated herein before would amply demonstrate the agony to which the poor subscribers would be subjected to.
The fixed deposits and unencumbered securities as per Clauses (a) and (b) of the proviso to paragraph 6(1) would be 80% of the collections of the year of subscription and Shri Chatterji contends to reduce it to 75% and to allow free play to use the residue in their own way.
The difference is only 5% and others at vagary.
The objects of the direction are to preserve the ability of the R.N.B.C. to pay back to the subscribers/depositors at any given time; safety of the subscribers ' money and his right to unencumbered repayment are thus of paramount public interest and the directions aimed to protect them.
The directions cannot and would not be adjudged to be ultra vires of arbitrary by reason of successful financial management of an individual company.
An over all view of the working system of the scheme is relevant and germane.
The obligation in paragraph 12 of periodical disclosure in the accounts of a company of the deposits together with the interest accrued thereon, whether or not payable but admittedly due as a liability, is to monitor the discipline of the operation of the schemes and any infraction, would be dealt with as per law.
The certificate by a qualified Chartered Accountant is to vouchsafe the correctness and authenticity of accounts and would and should adhere to the statutory compliance.
The settled accounting practice is that a loan or deposit received from a creditor has to be shown as a liability together with accrued interest whether due or deferred.
The actuarial accounting applies to revenues and costs to which the concept of the ``going concern ' ' can be adopted.
Therefore, in providing the costs of the company it can set apart its costs on the basis that liability is created for interest, bonus etc.
payable in foreseeable future.
Undoubtedly the actuarial principle applied by the L.I.C. or the gratuity schemes are linked with life of the assured or the premature death before retirement of an employee, but R.N.B.C. in its contract does not undertake any such risk.
The deposit is a capital receipt but not a revenue receipt and its full value shall be shown in the account books of balance sheet as liability of the company.
It cannot be credited to the profit and loss account.
Para II of Schedule VI of the requires that the amount shown in the profit and loss account should be confined to the income and expenditure of the company.
Para 12 of the directions is, thus, in consonance with the .
Moreover, in its advertisement and the application forms, 461 the R.N.B.C. expressly hold out to the public that their monies are safe with the bank and in the Government securities.
Paragraph 6(1) of the directions only mandates compliance of the promise held out by an R.N.B.C. for repayment at maturity.
Sub para (3) of para 6 keeps the deposits unencumbered and to be utilised by the company only for repayment.
In other words, paragraph 6 only elongates the contract in the public interest to safeguard the interest of the vulnerable sections of the depositors.
The R.B.I. cannot be expected to constantly monitor the working of the R.N.B.C. in its day to day function.
The actuarial basis cannot be adopted by the R.N.B.Cs.
and the liability must always be reflected in its balance sheet at its full value.
Compliance of the direction in para 12, dehors any method of accountancy adopted by a company, intended to discipline its operations.
No one can have fundamental right to do any unregulated business with the subscribers/depositors ' money.
Even the banks or the financial companies are regulated by ceiling on public deposits fixing nexus between deposits and net worth of the company at the ratio of 3:1, i.e. 25% of the capital net worth.
No one would legitimately be expected to get immediate profits or dividend without capital investment.
The effect of the clause (a) and (b) of the provision to paragraph 6(1) of the direction, no doubt, freezes the right to profit for a short time, and fastens an incidental and consequential obligation to mop up paid up capital or investment towards establishment and commission charges to tide over teething trouble.
But that is no ground to say that it is impossible for compliance, nor could it be said that the directions are palpably arbitrary or unreasonable.
Anyone may venture to do business without any stake of his own but is subject to the regulations.
A new company without any paid up capital, no doubt,cannot be expected to come into existence nor would operate its business at initial existence with profits.
Clause (c) of the provision to paragraph 6(1) of the directions gives freedom on leeway to invest or rotate, not more than 20 per cent of collections etc.
in any profitable manner at its choice as a prudent businessman to generate its resources to tide over the teething troubles till it is put on rail to receive succor to its existence, without inhibiting the company 's capacity to mop up small savings, and the directions do not control its operation.
The only rider is the approval of the Board of Directors which is inherent.
Absence of imposition of any limit on quantum of deposit with reference to paid up capital or reserve fund like non banking financial companies, etc.
is a pointer in this regard.
Thus there is a reasonable nexus between the regulation and the public purpose, namely, security to the depositors ' money and the right to repayment without any impediment, which undoubtedly is in the public interest.
462 Looking from operational pragmatism, the restrictions though apparently appears to be harsh in form, in its systematic working, it would inculcate discipline in the business management, subserve public confidence in the ability of the company to honour the contractual liability and assure due repayment at maturity of the amount deposited together with interest, etc, without any impediment.
In other words, the restrictions in paragraph 6 of the directions intended to elongate the twin purposes, viz.habit of thrift among the needy without unduly jeopardising the interest of the employees of the companies and the R.N.B.Cs working system itself in addition to safety and due payment of depositors ' money.
True, as contended by Shri Chatterji that there arises corresponding obligation to pay higher amount of commission to its agents and the commitment should by kept performed and the confidence enthused in the agents.
But it is the look out of the businessman.
The absence of ceiling on the rate of commission would give choice between the company and its agents to a contract in this regard and has freedom to manage its business.
The R.N.B.Cs.
are free to incur such expenses and organize their business as they desire including payment of commission as they think expedient.
But the subscribers/depositors 'liability, under no circumstances would be in jeopardy and the directions were designed to ensure that the interest of the subscribers/depositors is secured at all times, prescribing investment of an equal sum to the total liability to the subscribers/depositors.
Paragraph 12 is only a bridge between the depositors and the promise held out and the contract executed in furtherance thereof as a monitoring myocardium to keep the heart in paragraph 6 functioning without any hiatus.
It is settled law that regulation includes total prohibition in a given case where the mischief to be remedied warrants total prohibition.
Vide Narendra Kumar vs Union of India, ; But the directions do not do that but act as a siphon between the subscriber/depositor and the business itself.
Therefore, they are neither palpably arbitrary nor unjust not unfair.
The mechanism evolved in the directions is fool proof, as directed by this court in first Peerles case, to secure the interest of the depositors, as well is capable to monitor the business management of every R.N.B.C.
It also, thereby, protects interest of the employees/field staff/commission agent etc.
as on permanent basis overcoming initial convulsions.
It was intended, in the best possible manner, to subserve the interest of all without putting any prohibition in the ability of a company to raise the deposit, even the absence of any adequate paid up capital or reserve fund or such pre commitment of the owner, to secure such deposits.
Thus the directions impose only partial control in the public interest of the depositors.
The deposits invested or keep invested qua the com 463 pany always remained its fund till date of payment at maturity or premature withdrawal in terms of the contract.
The effect of the impugned judgment of the Calcutta High Court namely redefinition of the aggregate liabilities as contractual liabilities due and payable would have the effect of requiring the R.N.B.Cs.
to deposit an amount equal to the sum payable only in the year of maturity allowing free play to the R.N.B.Cs.
to use the subscriptions/deposits in its own manner during the entire earlier period, jeopardise the security of the subscribers/depositors and are self defeating.
The sagging mismanagement prefaced hereinabove would be perpetrated and the depositor was always at the mercy of the company with all disabilities, killing the very goose namely the thrust to save for prosperous future or to tide over future needs.
It is well settled that the court is not a Tribunal from the crudities and inequities of complicated experimental economic legislation.
The discretion in evolving an economic measures, rests with the policy makers and not with the judiciary.
Indian social order is beset with social and economic inequalities and of status, and in our socialist secular democratic Republic, inequality is an anathema to social and economic justice.
The constitution of India charges the state to reduce inequalities and ensure decent standard of life and economic equality.
The Act assigns the power to the RBI to regulate monitory system and the experimentation of the economic legislation, can best be left to the executive unless it is found to be unrealistic or manifestly arbitrary.
Even if a law is found wanting on trial, it is better that its defects should be demonstrated and removed than that the law should be aborted by judicial fiat.
Such an assertion of judicial power deflects responsibilities from those on whom a democratic society ultimately rests.
The court has to see whether the scheme, measure or regulation adopted is relevant or appropriate to the power exercised by the authority.
Prejudice to the interest of depositors is a relevant factor.
Mismanagement or inability to pay the accrued liabilities are evils sought to be remedied.
The directions designed to preserve the right of the depositors and the ability of R.N.B.C. to pay back the contracted liability.
It also intended to prevent mismanagement of the deposits collected from vulnerable social segments who have no knowledge of banking operations or credit system and repose unfounded blind faith on the company with fond hope of its ability to pay back the contracted amount.
Thus the directions maintain the thrift for saving and streamline and strengthen the monetary operations of R.N.B.Cs.
The problems of Government are practical and do require rough accommodation.
Illogical it may be and unscientific it may seem to be, left to its working and if need be, can be remedied by the R.B.I. by 464 pragmatic adjustment that may be called for by particular circumstances.
The impugned directions may at first blush seem unjust or arbitrary but when broached in pragmatic perspective the mist is cleared and that the experimental economic measure is manifested to be free from the taints of unconstitutionality.
Para 19 of the directions empowers the RBI to extend time for compliance or to exempt a particular company or a class thereof from all or any of the provisions, either generally or for a specified period subject to such conditions as may be imposed.
Power to exempt would include the power to be exercised from time to time as exigencies warrant.
An individual company or the class thereof has to place necessary and relevant material facts before the R.B.I. of the hardship and the need for relief.
A criticism of arbitrariness or unreasonableness may not be ground to undo what was conceived best in the public interest.
What is best is not always discernible.
The wisdom of any choice may be disputed or condemned.
Mere errors of Government are not subject to judicial review.
The legislative remedy may be ineffective to mitigate the evil or fail to achieve its purpose, but it is the price to be paid for the trial and error inherent in the economic legislative efforts to grapple with obstinate social issues.
It is proper for interference in judicial review, only, when the directions, regulations or restrictions are palpably arbitrary, demonstrably irrelevant or disriminatory.
Exercise of power then can be declared to be void under article 13 of the Constitution.
So long as the exercise of power is broadly within the zone of reasonableness, the court would not substitute its judgment for that of legislature or its agent as to matters within their prudence and power.
The court does not supplement the feel of the experts by its own values.
It is settled law that so long as the power is traceable to the statute mere omission to recite the provision does not denude the power of the legislature or rule making authority to make the regulations, nor considered without authority of law.
Section 114 (h) of the Evidence Act draws a statutory presumption that official acts are regularly performed and reached satisfactorily on consideration of relevant facts.
The absence of reiteration of objective satisfaction in the preamble as of one under s.45L does not denude the powers, the R.B.I. admittedly has under s.45L to justify the actions.
Though s.45L was neither expressly stated nor mentioned in the Preamble of the directions of the required recitation of satisfaction of objective facts to issue the directions from the facts and circumstances it is demonstrated that the R.B.I. had such satisfaction in its consideration of its power under s.45L when the directions were issued .
Even otherwise s.45K (3) itself is sufficient to uphold the directions.
465 The impugned directions are thus within the power of the R.B.I. to provide tardy, stable, identifiable and monitorable method of operations by each R.N.B.C. and its compliance of the directions.
This will ensure security to the depositors at all times and also make the accounts of the company accurate, accountable and easy to monitor the working system of the company itself and continuance of its workmen.
The directions in paragraphs 6 and 12 are just, fair and reasonable not only to the depositors, but in the long run to the very existence of the company and its continued business itself.
Therefore, they are legal, valid and constitutionally permissible.
The Writ Petition is dismissed and the appeals are allowed.
The Writ Petitions filed in the High Court stand dismissed.
No costs in this Court.
G.N. Petition dismissed Appeals allowed.
| While pronouncing its Judgment in Reserve Bank of India vs Peerless General Finance and Investment Co. Ltd., ; , this Court observed that it would be open to the Reserve Bank of India (RBI) to take such steps as were open to it in law to regulate 407 the savings schemes run by Residuary Non Banking Companies (RNBCs) to prevent exploitation of ignorant investors while at the same time taking care to protect the thousands of employees working in such companies.
This Court also expressed grave concern at the mushroom growth of financial investment companies offering staggering rates of interests to depositors leading to suspicion whether these companies were speculative ventures floated to attract unwary and credulous investors and capture their hard earned savings.
Pursuant to the said observations of this Court and keeping in mind the public interest, the RBI in exercise of its powers under sections 45J and 45K of the , and of all powers enabling it in that behalf, issued certain directions by way of Notification No. DFC 55/DG (O) 87 dated 15.5.1987.
A Writ Petition was filed before the High Court challenging the constitutional validity of the said directions issued by the RBI.
A Single Judge of the High Court passed certain interim orders.
Being aggrieved against the interim orders, the RBI preferred an appeal before the Division Bench.
The Division Bench disposed of the appeal as well as the Writ Petition.
It held that the RBI was empowered to issue directions to the Residuary Non Banking Companies in the interest of depositors; but to the extent such directions were found to be prohibitory or unworkable and as such unreasonable, would be beyond the powers of RBI.
Peerless which became a party respondent, filed an application for clarification of the judgment, as regards payment against discontinued certificates.
The High Court clarified that in such cases the depositors be allowed to take loan against payments made till discontinuance on such terms and conditions as the company may stipulate.
The present appeals were filed by RBI against the orders of the High Court.
A Writ Petition has been filed directly before this Court, challenging the directions as being ultra vires of sections 45J and 45K of the as also violative of the provisions of the constitution.
On behalf of the Writ Petitioners it was contended that since the 1987 directions issued by RBI were in the nature of subordinate legislation, it was clear that RBI overstepped the bounds of the 408 parent statute; that the source of power for issuing the directions as being derived from section 45L was only an after thought; that from the working results it appeared impossible to carry on the traditional business for any longer period without incurring huge losses; that from in the business carried on by Peerless and other similar RNBCs that the working capital is generated out of the subscriptions received from the certificate holders either in lump sum or in instalments and such deposits are paid back with the guaranteed accretions, bonus, interest etc.
in terms of contract at the end of the stipulated term; that the interest of the depositors has not been impaired in any manner whatsoever by the method of accountancy followed by Peerless and all similar companies, namely, appropriation of a part of the subscription to the profit and loss account and meeting the working capital requirements out of the same.
On behalf of the appellant RBI, it was contended that it had the power to issue the said directions, that the said directions were issued in pursuance to this Court 's observations, and in public interest; that the said directions had not imposed any restriction on the right to carry on business but only placed a restriction with respect to one of the modes of raising reserves i.e. through public deposits; that the directions cannot be condemned as being violative of Article 19(1) (g); and that formula laid down by the High Court was self defeating and deprived altogether the benefits of security provisions given to depositors under the 1987 directions.
On behalf of the Peerless Field Officers Association, it was contended that if the directions of 1987 were to be upheld, the undertakings of Peerless would face inevitable closure and almost 14 lac field officers would lose their only source of livelihood.
Allowing the appeals filed by RBI and dismissing the Writ Petition filed by the Finance Companies, this Court, HELD: Per Kasliwal, J 1.1 The Reserve Bank was competent and authorised to issue the impugned directions of 1987, in exercise of powers conferred under Section 45K(3) of the Act.
[431 C] 1.2 A combined reading of Section 45J, 45K and 45L of the unmistakably goes to show that the Reserve Bank if it considers necessary in the public interest so to do, can specify the conditions subject to which any prospectus or advertisement soliciting deposits of money from the public may be 409 issued.
It can also give directions to non banking institutions in respect of any matters relating to or connected with the receipt of deposits, including the rates of interest payable on such deposits, and the periods for which deposits may be received.
This latter power flows from sub section (3) of Section 45K of the Act.
The Bank under this provision can give directions in respect of any matters relating to or connected with the receipt of deposits.
Thus a very wide power is given to the RBI to issue dirctions in respect of any matters relating to or connected with the receipt of deposits.
It cannot be considered as a power restricted or limited to receipt of deposits only.
Such an interpretation would be violating the language of section 45K (3) which furnishes a wide power to the Reserve Bank to give any directions in respect of any matters relating to or connected with the receipt of deposits.
The Reserve Bank under this provision is entitled to give directions with regard to the manner in which the deposits are to be invested and also the manner in which such deposits are to be disclosed in the balance sheet or books of accounts of the company.
The word `any ' qualifying matters relating to or connected with the receipt of deposits in the above provision is of great significance and directions of 1987 are fully covered under Section 45K (3) of the Act, which gives power to the Reserve Bank to issue such directions.
[430 D H; 431 A] 1.3 When an authority takes action which is within its competence, it cannot be said to be invalid merely because it purports to be made under a wrong provision, if it can be shown to be within its power under any other provision.
[431 B] Indian Aluminium Company etc.
vs Kerala State Electricity Board; , , relied on.
2.1 The function of the Court is to see that lawful authority is not abused but not to attain itself the task entrusted to that authority.
It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power.
It must keep within the limits of the authority committed to it.
It must act in good faith and it must act reasonably.
Courts are not to interfere with economic policy which is the function of experts.
It is not the function of the Courts to sit in Judgment over matters of economic policy and it must necessarily be left to the expert bodies.
The function of the Court is not to advice in matters relating to financial and economic policies for which bodies like Reserve Bank are fully competent.
It would be hazardous and risky for the Courts to tread an 410 unknown path and should leave such task to the expert bodies.
[442 C D] 2.2 Reserve Bank of India which is banker 's bank is a creature of Statue.
It has large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bonafides of the Reserve Bank in issuing the impugned directions of 1987.
The Reserve Bank plays an important role in the economy and financial affairs of India and one of its important functions is to regulate the banking system in the country.
It is the duty of the Reserve Bank to safeguard the economy and financial stability of the country.
In fact the directions of 1987 were issued by RBI after mature consideration with the help and advice of experts.
[441 B D, 443 D E] Delhi Cloth and General Mills etc.
vs Union of India etc.
; , ; M/s Prag Ice & Oil Mills and Anr.
vs Union of India; , ; Shri Sitaram Sugar Company Limited and Anr.
vs Union of India & Ors.
, ; ; R.K. Garg vs Union of India & Ors. etc.; , , relied on.
The Reserve Bank was right in taking the stand that if the companies want to do their business, they should invest their own working capital and find such resources elsewhere with which the Reserve Bank has no concern.
[445 C] 4.
It is not the concern of this Court to find out as to whether actuaial method of accounting or any other method would be feasible or possible for the companies to adopt while carrying out the conditions contained in paragraphs 6 and 12 of the directions of 1987.
The companies are free to adopt any mode of accounting permissible under the law but it is certain that they will have to follow the entire terms and conditions contained in the directions of 1987 including those contained in paragraphs 6 and 12.
[445 E F] 5.1 It is not possible for the Court to determine as to how much percentage of deposit of first instalment should be allowed towards expenses which may consist of commission to agents, office expenses etc.
It would depend from company to company based on various factors such as paid up capital, percentage of commission paid to the agents, rate of interest paid to the depositors, period of maturity for repayment, office expenses and various other factors necessary to mop up working capital out of the depositors money.
411 One cannot ignore the possibility of persons having no stake of their own starting such business and after collecting huge deposits from the investors belonging to the poor and weaker sections of the society residing in rural areas, and to stop such business after a few years thus devouring the hard earned money of the small investors.
In such kind of business, the agents always take interest in finding new depositors because they get a high rate of commission out of the first instalment, but they do not have same enthusiasm in respect of deposit of subsequent instalments.
In these circumstances if the Reserve Bank has issued the directions of 1987 to safeguard the larger interest of the public and small depositors it cannot be said that the directions are so unreasonable as to be declared constitutionally invalid.
[447 E H, 448 A] 5.2 It cannot be said that the directions of 1987 amount to prohibition of the business in a commercial sense and without reasonable basis.
Nor are the directions violative of Article 19(1) (g) of the Constitution of India.
[442 G H, 443 A B] Mohammad Yasin vs The Town Area Committee, Jalalabad and Anr., ; ; Premier Automobiles Ltd. and Anr vs Union of India, ; ; Shree Meenakshi Mills Ltd. vs Union of India, ; , referred to.
So far as Peerless is concerned there is no possibility of its closing down such business.
It has already large accumulated funds collected by making profits in the past serveral years.
Thus it has enough working capital in order to meet the expenses.
It cannot be said that after some years Peerless will have to close down its business if the directions contained in paragraphs 6 and 12 are to be followed.
The working capital is not needed every year as it can be rotated after having invested once.
If the entire amount of the subscriptions is deposited or invested in the proportion of 10% in public sector banks, 70% in approved securities and 20% in other investments, such amounts will also start earning interest which can be added and adjusted while depositing or investing the subsequent years ' deposits of the subscribers.
In any case it lies with the new entrepreneurs while entering such field of business to make arrangement of their own resources for working capital and for meeting the expenses and they cannot insist in utilising the money of the depositors for this purpose.
So far as the companies already in this field they must have earned profits in the past years which can be utilised as their working capital.
It is important to note that the direc 412 tions of 1987 have been made applicable from 15th May, 1987 prospectively and not retrospectively.
[447 H; 448 C F] 7.
The directions of 1987 as well as any other directions issued from time to time by the Reserve Bank relating to economic or financial policy are never so sacrosanct that the same cannot be changed.
Even the financial budget for every year depends on the economic and financial policy of the Government existing at the relevant time.
So far as the impugned directions are concerned if it is found in future that the same are not workable or working against the public interest, the Reserve Bank is always free to change its policy and scrap or amend the directions as and when necessary.
If at any time, the Reserve Bank feels that the business of the kind run at present by the Peerless and other companies in terms of the directions of 1987 are not yielding the result as envisaged by the Reserve Bank, it will always be prepared to consider any new proposals which may be conductive both in the interest of the large multitude of the investors as well as the employees of such companies.
[448 G H, 449 A B] Per Ramaswamy, J. (Concurring) : 1.
The directions of 1987 issued by RBI are within the power of the RBI to provide tardy, stable, identifiable and monitorable method of operations by each RNBC and its compliance of the directions.
This will ensure security to the depositors at all times and also make the accounts of the company accurate, accountable and easy to monitor the working system of the company itself and continuance of its workmen.
The directions in paragraphs 6 and 12 are just, fair and reasonable not only to the depositors, but in the long run to the every existence of the company and its continued business itself.
Therefore, they are legal, valid and constitutionally permissible.
[464 G H, 465 A] 2.
Section 45K of the empowers the RBI to collect information from non banking institutions as to deposit and to give directions that every non banking institution shall furnish to the Bank, in such form, at such intervals and within such time, such statements, information or particulars relating to or connected with deposits received by the non banking institution, as may be specified by RBI by general or special order including the rates of interest and other terms and conditions on which they are received.
Under sub section (3) thereof the RBI is entitled to issue 413 in the public interest directions to non banking institutions in respect of any matter relating to or connected with the receipt of deposits including the rates of interest payable on such deposits and the periods for which deposits may be received.
The use of the adjective `any ' matter relating to or connected with the receipt of deposits is wide and comprehensive to empower the RBI to issue directions in connection therewith or relating to the receipt of deposits.
But exercise of the power is hedged with and should be `in the public interest '.
[450 C F] 3.1 The State can regulate the exercise of the fundamental right to save the public from a substantive evil.
The existence of the evil as well as the means adopted to check it are the matters for the legislative judgment.
But the court is entitled to consider whether the degree and mode of the regulation is in excess of the requirement or is imposed in an arbitrary manner.
The Court has to see whether the measure adopted is relevant or appropriate to the power exercised by the authority or whether it over stepped the limits of social legislation.
Smaller inroads may lead to larger inroads and ultimately result in total prohibition by indirect method.
If if directly transgresses or substantially and inevitably affects the fundametal right, it becomes unconstitutional, but not where the impact is only remotely possible or incidental.
The Court must life the veil of the form and appearance to discover the true character and the nature of the legislation, and every endeavour should be made to have the efficacy of fundamental right maintained and the legislature is not invested with unbounded power.
The Court has, therefore, always to guard against the gradual encroachments and strike down a restriction as soon as it reaches that magnitude of total annihilation of the right.
[453 F H, 454 A] 3.2 In the interest of the general public, the law may impose restrictions on the freedom of the citizen to start or carry on his business.
Whether an impugned provision imposing a fetter on the exercise of the fundamental right guaranteed by Article 19(1) (g) amounts to a reasonable restriction imposed in the interest of general public, must be adjudged not in the background of any theoretical standard or pre determinate patterns, but in the light of the nature and the incidence of the right, the interest of the general public sought to be secured by imposing restrictions and the reasonableness of the quality and the extent of the fetters imposed by the directions.
The credit worthiness of RNBCs undoubtedly would 414 be sensitive.
It thrives upon the confidence of the public, on the honesty of its management and its reputation of solvency.
The directions intended to promote `freedom ' and facility which are required to be regulated in the interest of all concerned.
[457 E F] Hatisingh Mfg. Co. Ltd. & Anr.
vs Union of India & Ors.
, ; ; Latafat Ali Khan & Ors.
vs State of U.P., [1971] Supp.
SCR 719, relied on.
There is presumption of constitutionality of every statute and its validity is not to be determined by artificial standards.
The court has to examine with some strictness the substance of the legislation to find what actually and really the legislature has done.
The court would not be over persuaded by the mere presence of the legislation.
In adjudging the reasonableness of the law, the court will necessarily ask the question whether the measure or scheme is just, fair, reasonable and appropriate or unreasonable, unnecessary and arbitrarily interferes with the exercise of the right guaranteed in of the Constitution.
The Court has to maintain a delicate balance between the public interest envisaged in the challenged provision and the individual 's right taking into account the nature of his right said to be infringed, the underlying purpose of the restriction, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the restriction imposed, the prevailing condition at the time, the surrounding circumstances, the larger public interest which the law seeks to achieve and all other relevant factors germane for the purpose.
All these factors should enter into the zone of consideration to find the reasonableness of the impugned restriction.
The Court weighs in each case which of the two conflicting public or private interest demands greater protection and if it finds that the restriction imposed is appropriate, fair and reasonable, it would uphold the restriction.
The court would not uphold a restriction which is not germane to achieve the purpose of the statute or is arbitrary or out of its limits.
[454 B C, E G] 5.
The directions are incorporated and became part of the Act itself.
They must be governed by the same principles as the statute itself.
The statutory presumption that the legislature inserted every part thereof for a purpose and the legislative intention should be given affect to, would be applicable to the directions of 1987 as well.
[445 E] 6.1 The RBI issued the directions to regulate the operations 415 of the RNBCs, to safeguard the interest of the depositors.
Payment of interest, bonus, premium or other advantage, in whatever name it may be called is reward for waiting or parting with liquidity.
It is paid because of positive time preference (one rupee today is preferred to one rupee tomorrow) on the part of the depositor.
Therefore, the directions avowed to preserve the right of the depositors to receive back the amount deposited with the contracted rate of interest; it aims to prevent depletion of the deposits collected from the weaker segments of the society and also tends to affect free flow of the business of the RNBCs who would desire to operate in their own way.
[455 F H] 6.2 Mushroom growth of non banking agencies put afloat diverse schemes with alluring offers of staggering high rate of interest and other catchy advantages which would generate suspicion of the bona fides of the offer.
But gullible depositors are lured to make deposits.
It is not uncommon that after collecting fabulous deposits, some unscrupulous people surreptiously close the company and decamp with the collections keeping the depositors at bay.
Therefore, the need to regulate the deposits/subscriptions, in particular in private sector became imperative to prevent exploitation or mismanagement as a social justice strategem.
[457 A B] 6.3 RBI occupies place of `pre eminence ' to ensure monetary discipline and to regulate the economy or the credit system of the country as an expert body.
It also advises the Government in public finance and monetary regulations.
The banks or non banking institutions shall have to regulate their operations in accordance with not only as per the provisions of the Act but also the rules and directions or instuctions issued by the RBI in exercise of the power thereunder.
Chapter 3B of the expressly deals with regulations of deposit and finance received by the RNBCs.
The directions, therefore, are statutory regulations.
[455 B D] Joseph Kuruvilla Vellukunnel vs Reserve Bank of India & Ors., [1962] Suppl.
3 SCR 632; State of U.P. vs Babu Ram, ; ; D.V.K. Prasada Rao vs Govt.
of A.P., AIR 1984 A.P. 75, relied on.
The objects of the direction are to preserve the ability of the RNBC to pay back to subscribers/depostitors at any given 416 time; safety of the subscribers ' money and his right to unencumbered repayment are thus of paramount public interest and the directions aimed to protect them.
The directions cannot and would not be adjudged to be ultra vires or arbitrary by reasons of successful financial management of an individual company.
An overall view of the working system of the scheme is relevant and germane.
[460 C D] 8.
The obligation in paragraph 12 of periodical disclosure in the accounts of a company of the deposits together with the interest securd thereon, whether or not payable, but admittedly due as a liability, is to monitor the discipline of the operation of the schemes and any infraction, would be dealt with as per law.
The certificate by a qualified Chartered Accountant is to vouchsafe the correctness and authenticity of accounts and would and should adhere to the statutory compliance.
[460 D E] 9.
The settled accounting practice is that a loan or deposit received from a creditor has to be shown as a liability together with accrued interest whether due or deferred.
The actuarial accounting applies to revenues and costs to which the concept of the `going concern ' can be adopted.
Therefore, in providing the costs of the company it can set apart its costs on the basis that liability is created for interest, bonus etc.
payable in foreseeable future.
Undoubtedly the actuarial principle applied by the LIC or the gratuity schemes are linked with life of the assured or the premature death before retirement of an employee, but RNBC in its contract does not undertake any such risk.
The deposit or loan is a capital receipt but not a revenue receipt and its full value shall be shown in the account books or balance sheet as liability of the company.
It cannot be credited to the profit and loss account.
of Schedule I of the requires that the amount shown in the profit and loss account should be confined to the income and expenditure of the company.
Para 12 of the directions is, thus, in consonance with the .
Paragraph 6 only elongates the contract in the public interest to safeguard the interest of the vulnerable sections of the depositors.
The RBI cannot be expected to constantly monitor the working of the RNBC in its day to day function.
The actuarial basis cannot be adopted by the RNBCs.
and the liability must always be reflected in its balance sheet at its full value.
Compliance of the direction in para 12, dehors any method of accountancy adopted by a company, intended to discipline its operations.
[460 E H, 461 A C] 417 10.
Regulation includes total prohibition in a given case where the mischief to be remedied warrants total prohibition.
The directions of 1987 are neither palpably arbitrary nor unjust nor unfair.
The mechanism evolved in the directions is fool proof, to secure the interest of the depositors, as well as capable of monitoring the business management of every RNBC.
It also protects the interest of the employees/field staff/commission agents etc.
on permanent basis over coming initial convulsion.
It was included, in the best possible manner, to subserve the interest of all without putting any prohibition in the ability of a company to raise the deposit, even the absence of any adequate paid up capital or reserve fund or such pre commitment of the owner, to secure such deposits.
[462 E G] Narendra Kumar vs Union of India, ; , relied on.
Reserve Bank of India etc.
vs Peerless General Finance and Investment Co. Ltd. & Ors.
; , , referred to.
So long as the power is traceable to the statute, mere omission to recite the provision does not denude the power of the legislature or rule making authority to make the regulations, nor consiered without authority of law.
The asbsence of reiteration of objective satisfaction in the preamble as of one under Section 45L does not denude the powers; the RBI admittedly has the power under Section 45L, to justify the actions.
Though Section 45L was neither expressly stated nor mentioned in the Preamble of the directions of the required recitation or satisfaction of objective facts to issue the directions, from the facts and circumstances it is demonstrated that the RBI, had such satisfaction in its consideration the power under Section 45L, when the directions were issued.
Even otherwise Section 45K (3) itself is sufficient to uphold the directions.
[464 F H] 1.2.
The court has to see whether the scheme, measure or regulation adopted is relevant or appropriate to the power exercised by the authority.
Prejudice to the interest of depositors is a relevant factor.
Mismanagement or inability to pay the accrued liabilities are evils sought to be remedied.
The directions of 1987 designed to preserve the right of the depositors and the ability of RNBC to pay back the contractual liability.
It also intended to prevent mismanagement of the deposits collected from vulnerable social segments who have no knowledge of banking operations or credit system and repose unfounded blind faith on the company with fond hope of its ability to pay back the contracted amount.
Thus the directions maintain 418 the thrift for saving and streamline and strengthen the monetary operations of RNBCs.
[463 E G]
|
N: Criminal Appeal No. 483 of 1980.
From the Judgment and Order dated 6.11.79 of the Andhra Pradesh High Court in Crl.
A. No. 789 of 1979.
T.V.S.R. Krishna Sastry, Vishnu Mathur and V.B. Saharya, Amicus curiee (NP) for the Appellants.
G. Prabhakar for the Respondent.
The Judgment of the Court was delivered by KASLIWAL, J.
Twelve persons were challaned for the murder of Nethala Veeraswamy, a resident and Sarpanch of village Ramaraogudem in Eluru Taluq, West Godavari District (A.P.) in the night of 31.12.1977.
Learned Sessions Judge, West Godavari Division, Eluru tried the case and relying on the evidence of P.Ws. 1,2 and 7 in toto and the evidence of P.W.3 to some extent convicted all the accused persons for the offences charged under Section 302 read with Section 149 I.P.C. and awarded each one of them sentence of imprisonment for life and other minor terms of imprisonment for other offences.
On appeal the High Court set aside the conviction and sentence of seven accused persons, namely, Dasari Bhaskara Rao (A 4), Kali China Krishna (A 5), Namburi Lakshmana (A 8), Namburi Ramulu (A 9), Namburi Prasada Rao (A 10), Mada Govardhana Rao (A 11) and Kali Kamaka Rao (A 12).
The High Court confirmed the conviction of the remaining five accused persons Mullagiri Vajram (A 1), Mada Lakshmandas (A 6) and Gandi Abraham (A 7) under Section 302 read with Section 149 I.P.C. and sentenced them to imprisonment for life.
The High Court further held that as these accused had been sentenced for the main offence under Section 302 read with Section 149 I.P.C. there was no need of separate sentence under Sections 148 and 147 I.P.C.
The five accused A 1, A 2, A 3, A 6 & A 7 have come before this Court in appeal against the order of the High Court by grant of Special Leave.
Mada Lakshmandas (A 6) expired during the pendency of appeal before this Court as such the appeal filed by him was dismissed as having abated by order dated 8.4.1992.
We are now concerned in this appeal with the four accused appellants A 1, A 2, A 3 and A 7.
We have gone through the Judgment of the lower courts and have perused the record and have considered the arguments advanced by learned counsel for the parties.
The High Court has considered the prosecution evidence in detail and has placed reliance on the statements of P.Ws. 1,2,3 and 4 as eye witnesses of the incident.
The High Court has placed implicit reliance on the testimony of P.W.2 and who was a clerk working in the panchayat office of Ramaraogudem and had accompanied the deceased in an autorickshaw and had seen the incident.
We find no infirmity in the statement of P.W.2 and the High Court has rightly placed reliance on his evidence.
Learned counsel for the accused persons submitted that even if the statement of P.W.2 is taken to be correct, no offence is made out so far as accused (A 3) is concerned.
Learned counsel in this regard submitted that P.W.2 in the cross examination has admitted that he did not state the name of A 3 in his statement recorded under Section 164 Cr.
It was also submitted that though P.W. 2 stated that he had given the name of A 3 in his statement recorded at the inquest but the name of A 3 does not find mention in exhibit D 7, the statement of P.W.2 recorded at the inquest.
We see force in the aforesaid contention.
A perusal of the statement of P.W.2 shows that he did not make a mention of the name of A 3 in his statement recorded under Section 164 Cr.
P.C. and also in his statement exhibit D 7 recorded at the inquest.
In view of these circumstances the accused A 3 is also entitled to the benefit of doubt.
It was next contended by learned counsel on behalf of the accused A 2 and A 7 that P.W.2 in the cross examination admitted that after the incident he had gone to police station seven or eight times.
He had gone to the police station as he was asked by the police.
He also admitted that at that time accused persons were in police lock up.
On the basis of the aforesaid statement of P.W.2 it was contended that when P.W.2 had gone to the police station scene or eight times after the incident the possibility of his seeing the accused (A 2) and (A 7) in the police station cannot be ruled out.
It was thus contended that any identification parade held on 25.1.1978 and 26.1.1978 has no value as P.W.2 had already seen the accused persons in the police station.
We find no force in this contention.
Exhibits P 16 and P 17 are the proceedings of identification parade held on 25.1.1978 and 26.1.1978 respectively.
A perusal of these documents shows that P.W.2 Garapati Krishnavatharam had himself stated that he had prior acquaintance with Mullagiri Yesupadam (A 2) and Gandi Abraham (A 7).
The High Court has examined this aspect of the matter and has rightly arrived to the conclusion that P.W.2 in his evidence has stated that he came to know the names of the accused from the children of the deceased and it was not unnatural for a person, who resides in a village for a period of two months and especially when they reside opposite to the residence of the president(deceased) in whose office he was working as a clerk to know the names of the persons residing nearby.
P.W.2 himself admitted at the time of holding the identification parade that he had prior acquaintance with A 2 and A 7.
P.W.2 is a witness of sterling worth and both the trial court and the High Court have placed reliance on his testimony.
He had identified A 1, A 2 and A 7 in the Court.
Their conviction is not based on the identification parade but on the statement of P.W.1 AND P.W.2 made during the trial as eye witness.
It is established beyond any manner of doubt that there were two factions and long standing rivalry in between the two groups in the Village.
The accused persons belonged to the group headed by A 6, A 7 and the deceased was the leader of the other group.
Nethalaveeraswamy the deceased was given merciless beatings and was done to death in the midnight of 31.12.1977.
He was found to have 26 external injuries as recorded in the autopsy of his dead body conducted by the Doctor.
It has also been found established by the learned trial court as well as by the High Court that A 1 inflicted injuries by and axe and A 2 by a spear and A 7 was Court that A 1 inflicted injuries by an axe and A 2 by a spear and A 7 was among the other persons who inflicted injuries by a stick.
It has also come in the evidence of P.W. 19, Inspector of Police that the accused persons had absconded and on 9.1.1978 on information by 5.00 A.M., he along with mediators visited Ramaraogudem and the absconded accused were hiding in the house of A 7.
He surrounded the house with his staff, guarded the house and in that house he found the twelve persons against whom the case was challaned.
It has also been proved by the prosecution that A 7 was the leader of the rival faction against the deceased.
Thus we find that there is no infirmity at all in the reasoning and conclusion arrived at by the High Court so far as accused A 1, A 2 and A 7 are concerned.
In the result we allow the appeal so far as Dasari Bhima Rao (A 3) is concerned and he is acquitted of all the charged levelled against him his bail bonds shall stand discharged.
The appeal filed by Mullagiri Vajram (A 1), Mullagiri Yesupadam (A 2) and Gandi Abraham(A 7) is dismissed.
They shall surrender to their bail bonds and serve out the sentence awarded to them by the High Court.
N.P.V. Appeal disposed of .
| Twelve persons, including the appellants, were challaned for the murder of Sarpanch of a village.
Relying on the evidence of P.Ws. 1,2 and 7 in toto and that of P.W.3 to some extent, the Sessions Judge convicted all the accused persons for the offences under Section 302 read with Section 149 I.P.C. and awarded sentence of imprisonment for life and other minor terms of imprisonment for other offences.
On appeal, the High Court set aside the conviction and sentence of seven accused persons, namely, A 4, A 5, A 8 to 12 and confirmed the conviction of the remaining five accused persons, A 1, A 6 and A 7 under Section 302 read with Section 149 I.P.C. and sentenced them to imprisonment for life.
These five accused filed an appeal, by special leave, before this Court.
During the pendency of the appeal one of the accused appellants died and as such appeal filed by him was dismissed as having abated.
On behalf of the accused persons it was submitted that even if the statement of P.W. 2 was taken to be correct no offence was made out so far as accused A 3 was concerned, inasmuch as P.W.2 had admitted in the cross examination that he did not state the name of A 3 in his statement recorded under Section 164 Cr.
P.C., and that the name of A 3 was also not found in Exhibit D 7, the statement of P.W.2 recorded at the inquest, and that since P.W.2 had gone to police station seven or eight times after the incident, there was a possibility of his seeing the accused, A 2 and A 7 in the police lock up and hence the identification parades held had no value.
Disposing of the appeal, this Court, HELD: 1.1.
There is no infirmity at all in the reasoning and conclusions arrived at by the High Court so far as accused A 1, A 2 and A 7 are concerned.[24 B] 1.2 It is established beyond any manner of doubt that there were two factions and long standing rivalry in between the two groups in the village.
The accused persons belonged to the group headed by A 6, A 7 and the deceased was the leader of the other group.
The deceased was given merciless beatings and was done to death in the midnight.
He was found to have 26 external injuries as recorded in the autopsy of his dead body conducted by the Doctor.
It has also been found established by the trial court as well as by the High Court that A 1 inflicted injuries by an axe and A 2 by a spear and A 7 was among the other persons who inflicted injuries buy a stick.
It has also come in the evidence of P.W.19, Inspector of Police, that the accused persons had absconded and after a few days of the incident, on information, he, alongwith mediators, visited the village and the absconded accused were hiding in the house of A 7.
He surrounded the house with hes staff, guarded it and found therein, the twelve persons against whom the case was challaned.
It has also been proved by the prosecution that A 7 was the leader of the rival faction against the deceased.
[23 F H, 24 A] 1.3.
The High Court has considered the prosecution evidence in detail and has placed reliance on the statements of P.Ws.1 to 4 as eye witnesses of the incident.
The High Court has placed implicit reliance on the testimony of P.W.2.
a clerk in the deceased 's office, and who had accompanied the deceased in an autorickshaw and seen the incident.
There is no infirmity in the Statement of P.W.2 and the High Court has rightly placed reliance on his evidence.
[22 D,E] 1.4.
P.W.2 himself admitted at the time of holding the identification parade that he had prior acquaintance with A 2 and A 7.
P.W.2 is a witness of sterling worth and both the trial court and the High Court have placed reliance on his testimony.
He had identified A 1, A 2 and A 7 in the Court.
Their conviction is not based on the identification parade but on the statement of P.W.1 and P.W.2 made during the trial as eye witness.
[23 E] 1.5.
A perusal of the statement of P.W.2 shows that he did not make a mention of the name of A 3 in his statement recorded under Section 164 Cr.
and also in his statement, Exhibit D 7, recorded at the inquest.
In the circumstances, the circumstances, the accused A 3 is also entitled to the benefit of doubt.
[22 G] 1.6.
In the result, A 3 is acquitted of all the charges levelled against him, and the conviction and sentence of the other appellants, A 1, A 2 and A 7 are confirmed.
[24 c]
|
Appeal No. 2822 of 1979.
from the Judgment and Order dated 28.9.1978 of the Punjab and Haryana High Court in Civil Revision No. 480 of 1977.
E.C. Agrawala for the Appellants.
Bishambar Lal Khanna and Ms. Geetanjali Mohan for the Respondents.
The Judgment of the Court was delivered by KASLIWAL, J.
This appeal by grant of special leave is directed against the judgment of Punjab & Haryana High Court dated September 28,1978.
The short controversy raised in the present case is regarding the date from which the period of limitation shall commence under Article 137 of the .
According to the facts found established on record, Grubachan Singh respondent was delivered actual possession of 135 Kanals of land and symbolical possession of 62 kanals, 13 marlas on June 13,1963 in execution of decree for pre emption obtained by him.
According to the decree, Gurbachan Singh was only entitle to actual possession was concerned, it was beyond the terms of the decree.
Ladha Singh, father of the appellants having come to know about the said mistake, filed a suit for declaration and for permanent injunction in the year 1965.
The said suit was decreed in favour of Ladha Singh and the said declaratory decree was affirmed in appeal by the Additional District on actual possession of the portion over which symbolical possession was recorded in execution proceedings.
It remains undisputed that the aforesaid judgment given by the Additional District Judge, Karnal dated 12.5.1969 became final.
Gurbachan Singh has now filed a suit for partition in the year 1973 claiming not only 135 kanals on which he had obtained actual physical possession, but also 62 Kanals and 13 marlas on which he had been granted symbolical possession in the execution proceedings in 1963.
After the filing of the suit for partition, the appellants filed an objection petition under Sections 47/152/151 of the code of Civil Procedure Praying that necessary correction may be made in revenue record by restitution of excessive area wrongly delivered to the decree holder.
The respondent decree holder contested the above application.
Apart from the other objections, one the ground raised was that the objection petition was barred by limitation as the same was not filed within three years of the order dated 13.6.1963 under which the symbolical possession was given to the decree holder.
The Learned Sub Judge First Class, Karnal held that the limitation will only start to run when the respondent decree holder tried to interfere in the possession of the petitioners by filing the partition proceedings in the year 1973.
It was also held that the decree holder had already obtained possession of the area measuring 135 Kanals to which he was entitled under the decree and he was not entitled to retain the possession of the excessive area of 62 Kanals, 13 marlas of which only symbolical possession was given to him.
It was thus, held that the possession of the land measuring 62 Kanals, 13 marlas of which symbolical possession was obtained was to be restored in favour of the objector judgment debtor.
Aggrieved against the aforesaid order, the decree holder filed a revision before the High Court.
Learned Single Judge allowed the revision on the ground that the limitation in case of such applications is three years and as the symbolical possession had been delivered on June 13,1963, the present application filed on July 22,1973 was barred by time.
The High Court further held that actual possession of the land was never delivered by the Executing Court and it was only symbolical possession which was delivered.
Thus, for the purpose of restitution, if at all, there was a necessity to move the application, the same could be done within three years from the date of the delivery of the symbolical possession.
The High Court, as such allowed the revision and set aside the order of the Executing Court and dismissed the application filed by the judgment debtor.
3 We have heard Learned Counsel for the parties and have gone through the record.
It is not in dispute that Article 137 of the shall govern the present case.
Article 137 reads as under: table ====== "137.
Any other application for which Three years.
When the no period of limitation is provided right to apply elsewhere in this Division.
accrues.
" table ===== The period of limitation under Article 137 is three years which commences from the date when the right to apply accrues.
The question when such right to apply accrues will depend on the facts and circumstances of each case.
In the present case in execution of the decree for pre emption on 13.6.1963, the delivery of symbolical possession on an area measuring 62 Kanals, 13 marlas was wrongly recorded.
Ladha Singh, father of the appellants continued to remain in possession over the aforesaid land and he also filed declaratory suit challenging the recording of the delivery of symbolical possession in favour of the decree holder.
The Said declaratory suit was decreed in favour of Ladha Singh by the trial court and was affirmed by the Additional District Judge by order dated 12.5.1969.
No in actual possession of the land.
The decree holder now in 1973 filed suit for partition claiming land on the basis of order dated 13.6.1963.
The appellants as such submitted an objection petition under Sections appellants as such submitted an objection petition under Sections 47/152/151 of the Code of Civil Procedure in the Executing Court on 22.71973 for rectifying the mistake and for restitution of the land for which symbolical possession was wrongly recorded.
In the aforesaid admitted facts, we are of the view that the period of limitation under Article 137 would commence when actual threat of dispossession commenced i.e. on taking the proceedings for partition in the 1973.
The High Court in our view was not right in holding that the limitation in the facts and circumstances of the present case would commence from 13.6.1963 and not in 1973.
Even otherwise, it is a case where by mistake excess land beyond the terms of the decree was recorded by way of symbolical possession in favour of the Decree holder even in written arguments submitted before this court.
This error has been rightly corrected by the Executing Court on an objection petition filed under Section 47 of the Code of Civil Procedure read with Section 151.
Apart from that the judgment in the declaratory suit filed by Ladha singh in this regard has also become final and binding on the decree holder.
We, therefore, do not consider it proper in the interest of justice to prolong this litigation by remanding the matter to the High Court as prayed in the alternative on behalf of the respondents.
We find support in the view taken by us on the decision of this Court in Merla Ramanna vs Nallaparaju and others, , in which it was held that an application by a party to the suit to recover possession of properties which had been taken delivery of under a void execution sale would be in time under Article 181 (corresponding Article 137 of the ), if it was filed within three years of dispossession.
In the result, we allow this appeal, set aside the judgment of the High Court dated 28.9.1978 and restore the judgment of the Executing Court dated 19.2.1977.
No order as to costs in the facts and circumstances of the case.
| In execution of decree for pre emption obtained by the respondent he was delivered actual possession as well as symbolic possession of lands.
According to the decree, the respondent was only entitle to actual possession, and so far as the delivery of symbolic possession was concerned, it was beyond the terms of the decree.
The father of the appellants having come to know about the aforesaid mistake, filed a suit for declaration and for permanent injunction in the year 1965, which was decreed in his favour, and the said declaratory decree was affirmed in appeal by the Additional District Judge on 12.5.1969, but the relief of injunction was denied as he was in actual possession of the portion over which symbolic possession was recorded in execution proceedings.
This order became final.
The respondent in the appeal filed a suit for partition in the year 1973 claiming not only the lands in which he had obtained actual physical possession, but also the lands on which he was granted symbolic possession in the execution proceedings in 1963.
After the filing of the suit for partition, the appellants filed an objection petition under sections 47,151 and 152 of the Code of Civil Procedure praying that necessary correction may be made in revenue record by restitution of excessive area wrongly delivered to the decree holder.
The respondent decree holder contested the application and one of the ground raised was that the objection petition was barred by limitation as the same was that the objection petition was barred by limitation as the same was not filed within three years of the order dated 13.6.1963, under which symbolic possession was given to the decree holder.
The Sub Judge held that the limitation will only start to run when the respondent decree holder tried to interfere in the possession of the petitioners by filing the partition proceedings in the year 1973.
It was also held that the decree holder had already obtained possession of the land to which he was entitled under the decree and he was not entitled to retain the possession of the excessive area of which only symbolic possession was given to him.
Aggrieved by the aforesaid order, the decree holder filed a revision before the High Court, and a Single Judge allowed the revision on the ground that the limitation in case of such applications was three years, and the symbolic possession having been delivered on June 13,1963, the application filed on July 22,1973 was barred by time.
It was further held, that actual possession of the land was never delivered by the Executing Court and it was only symbolical possession which was delivered, and for the purpose of restitution, if at all, there was a necessity to move the application, the same could be done within three years from the date of the delivery of the symbolical possession.
The order of the Executing Court was accordingly set aside, and the application filed by the judgment debtor was dismissed.
In the appeal to this Court, on the question regarding the date from which the period of limitation shall commence under Article 137 of the .
Allowing the appeal, this Court, HELD : The period of limitation under Article 137 is three years which commences from the date when the right to apply accrues.
The question when such right to apply accrues will depend on the facts and circumstances of each case.
[17 E] In the instant case, in execution of the decree for pre emption on 13.6.1963 the delivery of symbolic possession on an area measuring 62 canals, 13 marlas was wrongly recorded.
The father of the appellants continued to remain in possession over the aforesaid land and he also filed a declaratory suit challenging the recording of the delivery of symbolical possession in favour of the decree holder.
The suit was decreed in his favour by the trial court and confirmed by the Additional District Judge by order dated 12.5.1969.
In 1973 the decree holder filed the suit for partition claiming the land on the basis of order dated 13.6.1963.
An objection petition was submitted by the appellants in the Executing Court on 22.7.1973 of rectifying the mistake and for restitution of the land for which symbolical possession was wrongly recorded.
The period of limitation under Article 137 would therefore commence when actual threat of dispossession commenced i.e. on taking the proceedings for partition in the year 1973.
[17 F H, 18 A] The High Court was not right in holding that the limitation would commence from 13.6.1963 and not in 1973.[18 B] This is a case where by mistake excess land beyond the terms of the decree was recorded by way of symbolical possession in execution proceedings.
This fact is not disputed by the decree holder.
This error has been rightly corrected by the Executing Court on an objection petition filed under section 147 of the Code of Civil Procedure read with section 151.
The judgment in the declaratory suit has also become final and binding on the decree holder.
It is not considered proper in the interest of justice to prolong this litigation by remanding the matter to the High Court.
The judgment of the High Court dated 28.9.1978 is therefore set aside and the judgment of the Executing Court dated 19.2.1977 is restored.
[18 C D F] Merla Ramanna vs Nallaparaju and Others,[1995] 2 S.C.R. 938, relied on.
|
Civil Appeal Nos.4255 57 of 1992.
From the Judgment and order dated 15.10.1991,28.11.1991 and 17.12.1991 of Madhya Pradesh Administrative Tribunal, Jabalpur in O.A.Nos.
140 of 1990 and 3024 of 1991 and T.A. No.35 of 1988.
U.N. Bachawat, B.S. Banthia, G. Prakash, L.C. Agrawala, K.K. Chagotra and Indra Makwana for the Appellants.
S.S. Ray, A. Raghuvir, A.K. Sen. Dr. N.M. Ghatate, S.K. Gambhir, Vivek Gambhir, S.K. Jain, A.P. Dhamija, R.B. Misra, N.D.B. Raju, Anand Prasad, S.V. Deshpande and S.K. Agnihotri for the Respondents.
The Judgments of the Court was delivered by KASLIWAL, J. Special leave granted in all the above cases.
All the above appeals are disposed of by a common order, as identical questions of law are involved in these cases.
For the purpose of understanding the controversy raised in all these cases, we are stating the facts of appeal arising out of special leave petition No. 2507 of 1992.
The appellants and the private respondents were Sub Engineers in Public Health Engineering Department of Government of Madhya Pradesh.
They are governed by Madhya Pradesh Public Health Engineering (Gazetted) Service Rules 1980 (hereinafter referred to as `the Rules ').
Under Schedule IV of the Rules, the next higher post for promotion from the post of Sub Engineers in Civil or Mechanical is the post of Assistant Engineers.
The minimum period for Sub Engineer to qualify for promotion to the post of Assistant Engineer is 12 years for diploma holders and 8 years for such Sub Engineers who obtain degree of graduation in the course of service.
Earlier 60 per cent quota for the posts of Assistant Engineers was fixed by direct recruitment and 40 percent by promotion from the Sub Engineers, Draftsman and Head Draftsman.
By and executive order dated 7.2.1989, quota of direct recruitment was reduced to 50 percent and the quota by promotion increased to 50 per cent.
This 50 per cent quota by promotion with which we are concerned in the above cases has been sub divided in the following manner: (i) Diploma holder Sub Engineers completing 12 years of service 35% (ii) Draftsman & Head Draftsman completing 12 years of service 5% (iii) Graduate Sub Engineers completing 8 years of service 10% In the above cases we are now concerned with the third category of cases which deal with the promotion of Graduate Sub Engineers Completing 8 years of service.
The State Government had been applying the principle of counting the seniority of Graduate Sub Engineers from the date of their continuous officiation irrespective of the date on which such diploma holder Sub Engineer acquired degree of graduation in engineering.
On this basis, the Departmental promotion Committee took into consideration 30 Graduate Sub Engineers for promotion to the post of Assistant Engineers.
The D.P.C. by order dated 4.12.1989 prepared a panel of 18 Graduate Sub Engineers found suitable for promotion to the post of Assistant Engineer.
The Government by order dated 6.12.1989 promoted M.B. Joshi and six others as Assistant Engineer who are appellants in appeal arising out of special leave petition No. 2507 of 1992.
The private respondents in this appeal filed application No. 140/90 in Madhya Pradesh Administrative Tribunal, Jabalpur challenging the aforesaid orders dated 4.12.1989 and 6.12.1989.
The contention of these persons before the Tribunal was that the seniority for the purpose of promotion to the post of Assistant Engineers in 10 per cent quota of Graduate Sub Engineers completing 8 years of service ought to have been considered from the date of attaining the Graduate degree of engineering and not from the date of appointment as sub Engineer.
The Tribunal placing reliance on its earlier decision in T.A. No. 771/88 Sanaulla Sunzani vs State of M.P. & 5 others, held that the seniority of diploma holder Sub Engineers acquiring the degrees of graduation in engineering for inclusion in the gradation list of Sub Engineers should be counted from the dates of acquisition of graduation in engineering or of any other equivalent degree and not from the dates of their initial entries as Sub Engineers.
Applying to aforesaid principle laid down in Sanaulla 's case, the Tribunal held that the applicants (private respondents in the appeal) having secured the degrees in engineering prior to respondents 3 to 9 (the appellants in the appeal) will rank higher in the gradation list of Graduate Sub Engineers.
The Tribunal as such allowed the petition filed before them and directed the State Government and Engineer in Chief, Public Health Engineering Department to convene a special D.P.C. to consider applicants for promotion to the post of Assistant Engineers as on 4.12.1989 and if found suitable for promotion, promote them and give them seniority over respondents 3 to 9 within 4 months of the date of receipt of the order.
The short controversy arising in these cases relates to the determination of seniority amongst the diploma holder Sub Engineers who acquired the degree of graduation in engineering during the period service qualifying them for promotion in 8 years to the post of Assistant Engineer.
It is an admitted position that there is no specific rule governing such situation.
Relevant extracts of Schedule IV of the Rules as published in the Madhya Pradesh Gazette dated 27.2.1981 issued in Hindi read as under: Mr. S.S. Ray, learned senior counsel appearing on behalf of the appellants contended that so far as the post of Sub Engineers is concerned, the minimum qualification prescribed is diploma holder.
Initially, in the Public Health Engineering Department till 1980, fresh degree holders used to get job directly as Assistant Engineers and the diploma holders used to be appointed as Sub Engineers.
Thereafter on account of unemployment, the degree holders also started seeking appointments as Sub Engineers.
However, so far as the post of sub Engineer was concerned, the seniority was determined on the basis of the date of appointment on the post of Sub Engineer irrespective of the fact that the person joining such post was a degree holder or a diploma holder.
The scale of pay was similar and the diploma holder and degree holder Sub Engineers stood on the same footing and their gradation list was prepared on the basis of length of service in the cadre of Sub Engineers.
The next higher post for promotion from the post of Sub Engineer is the post of Assistant Engineer.
Every diploma holder sub Engineer became eligible for promotion to the post of Assistant Engineer after having completed 12 years of service.
The Government however, considered it proper to reduce this period of 12 years to 8 years in case of such diploma holder Sub Engineers who obtained a degree of engineering during the continuance of their service as Sub Engineer as a sort of incentive to improve the qualification while continuing in service.
It was thus, submitted by Mr. Ray that it is a well settled principle of service jurisprudence that where the rules are silent, the seniority is always determined on the basis of length of service amongst the employees appointed on a similar post in the same cadre.
It was thus, submitted that obtaining a degree during the continuation of service as Sub Engineer simply accelerated the entitlement to promotion for the post of Assistant Engineer from 12 years to 8 years but it did not in any manner disturb the seniority which was already settled on the basis of length of service on the post of Sub Engineer.
It was submitted that the D.P.C. rightly prepared the panel of selection and the Government took a correct decision in issuing the order dated 6.12.1989.
Mr. Ashok Sen, learned senior counsel appearing on behalf of the respondents contended that it was necessary to obtain the degree of engineering for being qualified for promotion to the post of Assistant Engineer within a period of 8 years instead of 12 years.
It was further argued that the period of 8 years can only be counted from the date when the diploma holder Sub Engineer acquired the degree of engineering and not prior to said date.
Mr. Sen further placed reliance on N. Suresh Nathan & Another vs Union of India & Others, [1992] Supp.1 SCC 584, and submitted that this case clinches the issue raised in these cases and is no longer open for consideration.
We have given our careful consideration to the arguments advanced on behalf of learned counsel for the parties.
We may first deal with N. Suresh Nathan 's case (supra) on which strong reliance is placed by Mr. Ashok Sen.
In this case, the Recruitment Rules for the post of Assistant Engineer in the Public Works Department, Pondicherry, prescribing the educational and other qualifications for appointment by direct recruitment and promotion came for consideration.
For direct recuits, the qualification prescribed was a Degree in Civil Engineering of a recognised University or Diploma in Civil Engineering from a recognised institution with three years, professional experience.
For appointment by promotion of Section Officers now called junior Engineers, the qualification prescribed was as under: "1.
Section Officers possessing a recognised Degree in Civil Engineering or equivalent with three years ' service in the grade failing which Section Officers holding Diploma in Civil Engineering with six years ' service in the grade 50 percent.
Section Officers possessing a recognised Diploma in Civil Engineering with six years ' service in the grade 50 per cent.
" The dispute in the above case was whether a diploma holder Junior Engineer who obtains a degree while in service becomes eligible for appointment as Assistant Engineer by promotion on completion of three Years ' service including therein the period of service prior to obtaining the degree or the three years ' service including therein the period of service prior to obtaining the degree or the three years ' service as a degree holder for this purpose is to be reckoned from the date he obtains the degree.
The Central Administrative Tribunal held that the applicants diploma holders were entitled to be considered for promotion to the post of Assistant Engineer on par with the other degree holder Junior Engineers taking due note of their total length other degree holder junior Engineers taking due note of their total length of service rendered in the grade of Junior Engineers taking due note of their total length of service rendered in the grade of grade of junior of Junior Engineer.
Such a consideration should be alongside other Junior Engineers who might have acquired the necessary degree qualification earlier than the applicants, while holding the post of Junior Engineer.
This Court allowed the appeal and set aside the above order of the Tribunal.
While allowing the appeal, this Court held as under: "In our opinion, this appeal has to be allowed.
There is sufficient material including the admission of respondents diploma holders that the practice followed in the department for a long time was that in the case of diploma holder Junior Engineers who obtained the degree during service, the period of three years ' service in the grade for eligibility for promotion as degree holders commenced from the date of obtaining the degree and the earlier period of service as diploma holders was not counted for this purpose.
This earlier practice was clearly admitted by the respondents diploma holders in para 5 of their application made to the Tribunal at page 115 of the paper book.
This also appears to be the view of the Union Public Service Commission contained in their letter dated December 6, 1968 extracted at pages 99 100 of the paper book in the counter affidavit of respondents 1 to 3.
The real question, therefore, is whether the construction made of this provision in the rules on which the past practice extending over a long period is based is untenable to require upsetting it.
If the past practice is based on one of the possible constructions which can be made of the rules then upsetting the same now would not be appropriate.
It is in this perspective that the question raised has to be determined." This Court then considered the Recruitment Rules applicable in the said case and then held that the entire scheme did indicate that the period of three years ' service in the grade required for degree holders according to Rule 11 as the qualification for promotion in that category must mean three years ' service in the grade as a degree holder, and therefore, that period of three years can commence only from the date of obtaining the degree and not earlier.
It was further held that the service in the grade as a diploma holder prior to obtaining the degree cannot be counted as service in the grade with a degree for the purpose of three years ' service as a degree holder.
This Court then observed: "In our opinion, the contention of the appellants degree holders that the rules must be construed to mean that the three years ' service in the grade of a degree holder for the purpose of Rule 11 is three years from the date of obtaining the degree is quite tenable and commends to us being in conformity with the past practice followed consistently.
It has also been so understood by all concerned till the raising of the present controversy recently by the respondents.
The Tribunal was, therefore, not justified in taking the contrary view and unsettling the settled practice in the department." A perusal of the above observations made by this Court clearly show that the respondents diploma holders in that case had admitted the practice followed in that department for a long time.
It was clearly laid down in the above case that if the past practice is based on one of the possible constructions which can be made of the rules then upsetting the same now would not be appropriate.
It was clearly said "it is in this perspective that the question raised has to be determined.
" It was also observed as already quoted above that the Tribunal was not justified in taking the contrary view and unsettling the settled practice in the department.
That apart the scheme of the rules in N. Suresh Nathan 's case was entirely different from the scheme of the Rules before us.
The rule in that case prescribed for appointment by promotion of Section Officers/Junior Engineers provided that 50 per cent quota shall be from Section Officers possessing a recognised degree in Civil Engineering or equivalent with three years ' service in the grade failing which Section Officers holding Diploma in Civil Engineering with six years ' service in the grade.
The aforesaid rule itself provided in explicit terms that Section Officers possessing a recognised Degree in Civil Engineering was made equivalent with three years ' service in the grade.
Thus, in the scheme of such rules the period of three years ' service was rightly counted from the date of obtaining such degree.
In the cases in hand before us, the scheme of the rules is entirely different.
In the cases before us 50 per cent of the posts of Assistant Engineers has to be filed by direct recruitment of persons having degree of graduation in engineering.
The remaining 50 per cent of the vacant posts are to be filled by promotion from the lower cadre of sub Engineer and Draftsman.
Out of this 50 per cent, 35 per cent quota is fixed for diploma holders who have completed 12 years of service on the post of sub Engineer, 5 percent quota for Draftsman who have completed 12 years of service and the remaining 10 per cent with which we are concerned has been kept for such Sub Engineers who during the continuation of their service obtained a degree of graduation or equivalent in engineering and in that case the period of service is reduced from 12 from 8 years.
The Rules in our case do not contemplate any equivalence of any period of service with the qualification of acquiring degree of graduation in engineering as was provided in express terms in N. Suresh Nathan 's case making three years service in the grade equivalent to degree in engineering.
In our opinion, in the rules applicable in the cases before us clearly provide that the diploma holders having obtained a degree of engineering while continuing in service as sub Engineers shall be eligible for promotion to the post of Assistant Engineer in 8 years of service and quota of 10 per cent posts has been earmarked for such category.
If we accept the contention of Mr. Ashok sen, it would defeat the very scheme and the purpose of giving incentive of adding educational qualification by diploma holders while continuing in service in case the period of 8 years ' is counted from the date of obtaining graduate degree in engineering.
It may be noted that no such argument was raised even from the side of the respondents before the Tribunal.
If such interpretation as now sought to be advanced by Mr. Ashok Sen, learned senior counsel is accepted, no relief could have been granted to the respondent Satish Kumar Pandey.
We would illustrate the above position on admitted facts that Shri Satish Kumar Pandey had joined as Sub Engineer on 23.8.1980, but had acquired the degree of engineering in May, 1987.
In that situation, Mr. Satish Kumar becomes eligible only in May 1995 and he could not be considered as eligible in December 1989 when these Sub Engineers were considered for promotion as Assistant Engineers.
Even othrwise, if this period of 8 years is counted from the date of acquiring degree then this incentive of adding the qualification during the continuation of service and getting the advantage of acceleration in promotion in 8 years would for all practical purposes become nugatory and of no benefit.
It is further important to note that in the cases before us, the Government itself has been adopting the practice and making promotion as contended by the appellants and we are upholding such practice.
In N. Suresh Nathan 's case also this Court had upheld the practice followed by the Government.
It is also well settled principle of service jurisprudence that in the absence of any specific rule, the seniority amongst persons holding similar posts in the same cadre has to be determined on the basis of the length of service and not on any other fortuitous circumstance.
Though, in the cases of special leave petitions filed by Shri Ram Sharan Gupta & Others vs The State of M.P. & Others and Shri N.N. Asthana & Another vs Shri Harish Kumar Ahuja & Others, the parties belonged to the Irrigation Department of the State of Madhya Pradesh and were governed with different set of rules, but the controversy arising in these cases is amply covered with the view taken by us and determined in the manner indicated above.
In these circumstances mentioned above, we are clearly of the view.
that the Tribunal was wrong in determining the seniority from the date of acquiring degree of engineering and it ought to have been determined on the basis of length of service on the post of Sub Engineer and the State the basis of length of service on the post of Sub Engineer and the State Government was right in doing so and there was no infirmity in the orders passed by the Government.
In the result, we allow these appeals, set aside the orders of the Tribunal dated 15.10.1991, 28.11.1991 and 17.9.1991 and 8upheld the orders passed by the Government in all these cases.
In the facts and circumstances of the case, no order as to costs.
Appeals allowed.
| The appellants and the private respondents were Sub Engineers in Public Health Engineering Department of the Government.
The minimum period for Sub Engineer to qualify for promotion to the post of Assistant Engineer was 12 years for diploma holders and 8 years for such Sub Engineers who obtained the degree of graduation in the course of service.
By an executive order dated 7.2.1989, quota of direct recruitment was reduced to 50 per cent and the quota by promotion from the Sub Engineers, Draftsman, increased to 50 per cent.
The 50 per cent quota by promotion was sub divided.
The promotion quota for category of the Graduate Sub Engineers completing 8 years of service was 10%.
The principle of counting the seniority was from the date of their continuous officiation irrespective of the date on which such diploma holder Sub Engineer acquired degree of graduation in engineering.
The Departmental Promotion Committee considered the cases of 30 Graduate Sub Engineers for promotion to the post of Assistant Engineers and by order dated 4.12.1989 it prepared a panel of 18 Graduate Sub Engineers found suitable for promotion to the post of Assistant Engineer.
On 6.12.1989 the Government promoted one M.B.Joshi and six others as Assistant Engineer, who are appellants in appeal arising out of Special Leave Petition No.2507 of 1992.
The Private respondents in the appeal, filed and application in the State Administrative Tribunal challenging the orders dated 4.12.1989 and 6.12.1989.
They contended that the seniority for the purpose of promotion to the post of Assistant Engineers in 10 per cent quota of Graduate Sub Engineers completing 8 years of service ought to have been considered from the date of attaining the graduate degree of engineering and not from the date of attaining the graduate degree of engineering and not from the date of appointment as Sub Engineer.
The Tribunal allowed the petition placing reliance on its earlier decision in Sanaulla Sunzani V. State of M.P. & Ors., T.A. No. 771/88.
The Tribunal held that the applicants (private respondents in the appeal) having secured the degrees in engineering prior to respondents 3 to 9 ( the appellants in the appeal) would rank higher in the graduation list of Graduate Sub Engineers.
It directed the State Government and Engineer in Chief, Public Health Engineering Department to convene a special D.P.C. to consider the applicants for promotion to the post of Assistant Engineers as on 4.12.1989 and if found suitable for promotion, promote them and give them seniority over respondents 3 to 9.
Identical questions of law were involved in all the appeals (C.A. Nos. 4255 57 of 1992), which were preferred against the judgments of the Tribunals.
The appellants contended that so far as the post of Sub Engineers was concerned, the minimum qualification prescribed was diploma holder and the seniority was determined on the basis of the date of appointment on the post of Sub Engineer irrespective of the fact that the person joining such post was a degree holder or a diploma holder; that the scale of pay was similar and the diploma holder and degree holder Sub Engineers stood on the same footing and their gradation list was prepared on the basis of length of service in the cadre of Sub Engineers that in the service jurisprudence where the rules were silent, the seniority was always determined on the basis of length of service amongst the employees appointed on a similar post in the same cadre; that obtaining a degree during the continuation of service as Sub Engineer simply accelerated the entitlement to promotion for the post of Assistant Engineer from 12 years to 8 years but it did not in any manner disturb the seniority which was already settled on the basis of length of service on the post of Sub Engineer; and that the D.P.C. rightly prepared the panel of selection and the Government took a correct decision in issuing the order dated 6.12.1989.
2 The respondents contended that it was necessary to obtain the degree of engineering for being qualified for promotion to the post of Assistant Engineer within a period of 8 years instead of 12 years; that the period of 8 years to be counted from the date when the diploma holder Sub Engineer acquired the degree of engineering and not prior to said date.
Allowing the appeals, this Court, HELD: 1.1.
It is a well settle principle of service jurisprudence that in the absence of any specific rule, the seniority amongst persons holding similar posts in the same cadre has to be determined on the basis of the length of service and not on any other fortuitous circumstance.[12 B] 1.2.
The Government itself has been adopting the practice and making promotion as contended by the appellants.
Such practice is upheld by the Court.
[12 A] 1.3.
The Rules do not contemplate any equivalence of any period of service with the qualification of acquiring degree of graduation in engineering.
The Rules clearly provide that the diploma holders having obtained a degree of engineering while continuing in service as Sub Engineer shall be eligible for promotion to the post of Assistant Engineer in 8 years of service and quota of 10 per cent posts has been earmarked for such category of persons.
[11 C D] 1.4.
If the period of 8 years is counted from the date of acquiring degree then this incentive of adding the qualification during the continuation of service and getting the advantage of acceleration in promotion in 8 years would for all practical purposes become nugatory and of no benefit.
[11 G H] 1.5.
The Tribunal was wrong in determining the seniority from the date of acquiring degree of engineering and it ought to have been determined on the basis of length of service on the post of Sub Engineer and the State Government was right in doing so and there was no infirmity in the orders passed by the Government.
[12 D E] N. Suresh Nathan & Anr.
vs Union of India & Ors., [1992] Supp.1 SCC 584, explained.
|
ivil Appeal Nos. 2684 90 of 1982 etc.
From the Judgment and order dated 23.12.1981 of the Madras High court in Tax Cases (Revision) Nos.206 210, 586 and 825 of 1979.
M.L. Verma, G.L. Sanghi, S.K. Verma, Manoj Prasad, Ms. Minoti Mukherji, A.K. Srivastava, R. Mohan, T. Raja, R. Nedumaran and K. Ram Kumar for the appearing parties.
The Judgment of the court was delivered by RANGANATHAN, J.
By its judgment dated 23.12.1981, report as Ramco cement Distribution Co.(p) Ltd. vs The State of Tamil Nadu, (1982) 51 S.T.C. 171, The Madras High Court disposed of a batch of 48 sales tax revision cases arising out of the assessments, to local sales Tax(T.N.S.T) as well as Central sales Tax (C.S.T), of Ramco Cement Distribution Co. (p) Ltd. (16 cases).
Madras Cements Ltd. (8 cases), Dalmia Cement Bharat Ltd. (21 cases) and India cement Ltd. (3 cases).
The question at issue were answered partly in favour of Revenue and partly in favour of the assessees.
C.A. Nos. 5306 5336/1985 preferred by the state of Tamil Nadu arise out of 31 of these cases; 9 relating to Ramco Cements, 16 relating to Dalmia cements and 6 relating to Madras Cements.
C.A. No. 2684 to 2690/82 are appeals by Ramco Cements and C.A. No. 4043 4044/1982 are by Madras cements from the same judgment.
C.A. Nos. 315 319/1983 arise out of the other 5 cases relating to Dalmia Cements.
C.A. Nos 280 281/1989 arise out of a judgment of the High Court dated 17.1.1985 which dismissed two revision tax cases pertaining to Dalmia Cements.
One of the question involved in these cases was decided in favour in of the assessee by following the decision in 51 S.T.C. 171.
As the question involved are common, all these appeals are being disposed of by a common judgment.
In doing so, we shall refer to the fact in the appeals pertaining to Ramco Cements.
It is common ground that the facts in other cases are similar and that the decision reached in the case of Ramco Cements will govern the other appeals as well.
Ramco Cement Distribution Co. Ltd. (hereinafter referred to as 'the assessee ') are the selling agents of M/s. Madras Cements Ltd., Rajapalayam, For the assessment year 1969 70 , they were assessed to sales tax on a taxable turn over of Rs. 2,37,66,245 which included an amount of Rs. 29,71,527, representing freight charges.
The assessee claimed exclusion of freight charges in computing the taxable turnover on the ground that freight had been independently charged in the invoice.
It relied on the decision of the supreme court in the case of Hyderabad Asbestos Cements products Ltd. vs state of Andhra Pradesh, (1969) 24 S.T.C. 487.
This contention was rejected by the assessing authority, the appellate authority as well as the Tribunal.
Aggrieved by the above orders the assessee preferred revisions to the High court were enunciated as follows at the commencement of its judgment: (i) Whether the freight charges incurred by a dealer in the despatch of cement to the place of the customer could be deducted from the total turnover of the dealer under the Central sales Tax Act, (ii) Whether the packing charges being the cost of the packing materials used by the dealer in packing cements for being delivered to his customers could be properly excluded from his turnover for the assessment of sales tax; (iii) Whether the excise duty paid on packing materials used by a dealer for packing cement to be sold to his customers can be excluded in his total turnover.
These questions were answered by the High Court as follows: "In tax revision cases arising under the Central sales Tax act, we hold that the freight, packing charges and excise duty on packing materials have to be included in the sale price for the computation of sales tax.
In cases arising under the Tamil Nadu General Sales Tax Act and Tamil Nadu Additional Sales Tax Act, we hold that freight, packing changes and excise duty on packing materials are not liable to be included in the sale price for the computation of the sale price.
The assessees are not liable to pay additional sales tax on freight, packing materials and excise duty on packing materials in those cases arising under the Tamil Nadu Additional sales Tax Act.
" The High court certified the case to be one fit for appeal the Supreme Court and hence these appeals.
Both the asseesses as well as the state urges that, the High court having held that the amounts in question were liable to be included in the turnover for purpose of Central sales Tax, ought to have also held that these amounts were liable to be included in the taxable turnover for purposes of Tamil Nadu Additional sales Tax Act.
On the other hand, on behalf of the assessees it is contended that, even for the purposes of C.S.T., the freight charges, the cost of packing materials and excise duty on the packing materials should have been excluded in the computation of the taxable turnover.
It is thus there are cross appeals before us.
We have heard learned counsel on both sides.
In our opinion, so far as C.S.T is concerned, the issue in the present case is July and directly covered by the decision of this court in Hindustan Sugar mills Limited vs State of Rajasthan, (1979) 43 S.T.C.13.
AS stated earlier, the assessee relied strongly on the decision of this court in Hyderabad Asbestos cement Products Ltd. vs state of Andhra Pradesh, (1969) 24 S.T.C. 487 but this decision has been considered and explained in the Hindustan sugar Mills case.
We do not wish to state the facts or discuss the issues at great length since, in our opinion, they are all facts and issue at great length sine, in our opinion, they are all facts and issues that were under consideration by this Court in Hindustan Sugar Mills Ltd. Learned counsel for the assessee contended that the Cement Control order, the terms of which sales of cement were effected during the relevant period by all cement manufactures, had no relevance to the question presently at issue.
According to them all that the Cement Control order laid down was that cement could not be sold at a price higher than a price fixed by the Cement Control order on terms described "as free on rail (F.O.R.), destination" It did not stand in the way of cement manufacturers with various purchasers that the letter should bear the freight charges.
In view of this, it was submitted that the terms of the cement control order do not alter the principal enunciated by this court in the Hyderabad Asbestos Cement products case.
It was then urged that, in fact, the assessees had entered into contracts with the purchasers which clearly stipulated that the freight will be payable by the letter.
The following terms and conditions of sale were cited before us as an instance of the type of contracts entered into by the assessees: " Condition 2 : Once the consignment is handed over to the carriers and a receipt is obtained, the responsibility of the company ceases.
The company does not accept any liability for any delay, shortage, damage or loss of goods in transit.
Claims should be lodged with the carriers by buyers directly.
Condition 3 : The consignees shall arrange to take delivery against indemnity bond, should the railway receipt or bill of lading not reach them in time.
The company is not liable in any manner whatsoever and is also not responsible for any demurrage or damages that may accrue due to non receipt or late receipt of railway receipt or bill of lading by the consignees.
Condition 4 : Prices shall be charged as ruling on the date of despatch of the goods and the company shall not be responsible for any variation in prices.
The price of the cement supplied to the buyers shall be the current general gross list price charged by the company, free on rail less such discount as may be fixed by the company from time to time.
But the terms and the times of delivery and the payments therefore shall be in the absolute discretion of the company who may vary the same from time to time.
Each despatch shall be a separate contract.
Condition 10 : The condition of any railway receipt shall be binding on the buyer and the date of delivery shall mean the date of the railway receipt and in the case of consignments sold free on rail destination, the railway freight shall be nevertheless payable by the buyers at the destinations.
Condition 11 : The buyer shall further be responsible for any additional freight, should transport by expensive route be undertaken or should the quantity despatched be less than a wagon load.
Condition 12 : In the case of road deliveries, freight will be allowed upto the nearest rail head to the destination or actual transport charges whichever is less or according to the instruction of the control authorities from time to time.
Condition 13 : The buyer shall put up his claim with the Railways direct whenever amounts are collected in excess of the freight indicated in the Railway receipt.
The company will allow freight only at the scheduled wagon load rate basing themselves on these terms and conditions, learned counsel for the assessee contended that this was a case where, despite the terms of the control order, the assessees chose to sell the goods free on rail and that the liability to pay point where the goods were loaded on rail and that the liability to pay freight was entirely that of the purchasers.
It was contended that these contracts were not inconsistent with or repugnant to the terms of the Cement Control Order and that on the same basis as the decision of this court in the Hyderabad Asbestos Cement products Ltd. case, the assesses are entitled to exclude the amounts of freight as not forming the part of the turn over at all.
Interesting as these arguments are, we find that they are merely a repetition of what was urged in the case of Hindustan Sugar Mills Ltd. In that case also the point urged was that the Cement Control order only fixes the maximum price and that there was nothing to prevent the producer opted to sell his cement at price lower than the control price and allow credit to the purchaser where the smaller amount by deducting the freight, the sale price can only be the smaller amount of the bill.
The second argument, based in the terms of the contract between the parties, was also addressed in the Hindustan Sugar Mills case.
There also clauses 5,8 and 11 of the general terms and condition of supply were strongly relied upon on behalf of the assessee.
Under those terms and conditions, it was specifically mentioned that although the price of cement was on the basis of F.O.R. destination railway station, consignments would nevertheless be despatched 'freight to pay ' and credit afforded in the bill for the amount of freight payable and that the purchaser should accordingly arrange to pay railway freight or road transport charges at the destination at the time of taking delivery.
This Court, after referring to the above contention, pointed out that, if the terms and conditions of the contract had stood alone, the assessee might have been entitled to succeed in excluding the freight charges on the principle of Hyderabad asbestos cement Products Ltd. case but that relief could not be given to the assessee in view of the scheme and provisions of the cements control order and their implications.
The terms of the Cement control order have been fully analysed and discussed at pages 33 to 35 of the report.
There is, therefore no difference either on facts or in principal between this case and the Hindustan Sugar Mills Ltd. case.
on the other hand, as pointed out by the learned Judges in that case, the whole purpose of the cement control order was do not find any reason to doubt or dissent from the decision in the Hindustan Sugar Mills Ltd. case.
On the other hand, as pointed out by the learned Judges in that case, the whole purpose of the Cement Control order was cement should be available for sale at all places in the country at a controlled price.
No doubt, the price was described as a maximum beyond which the sale price could not go but the intention, which was also carried out by all the suppliers, was that cement was to be sold at what may be described as a controlled price on terms 'free on rail destination '.
In other words, the producer was entitled to the controlled price irrespective of the amount of freight which might have been incurred in respect of the transaction.
Having regard to the fact that the freight on consignments to places near the factory and consignments to places to places far away from the factories could show a lot of variation, the control order created a machinery by which all freight charges were credited to common account ad any particular cement manufacturer incurring more than a specified amount was entitled to be reimbursed for the excess freight incurred by him.
As the learned Judges pointed out in the earlier decision, the whole control order proceeds on the footing that the freight charges are to be met by the producer and that he was entitled to a cosolidated price irrespective of the freight he may have incurred.
In this view of the matter, the sale price, on the terms of the Central sales Tax Act, could only be the controlled price as fixed by the cement control Order.
We find that the factual position in these cases is also not as described by the learned counsel for the assessee.
The assessee 's arguments in this regard were sought to be highlighted by the production of one of the invoices by which certain goods were despatched by Dalmia cements to Karaikal.
It is interesting to see that this invoice mentions F.O.R. cement price as the controlled price stipulated in the Cement Controlled Order, and this is also what is contemplated by condition 4 set out earlier.
To this is added a central Excise Duty.
Thereafter, the assessee purports to give credit for railway freight and a net price, which is described as net price F.O.R. with a liability on the purchasers to bear the railway freight the invoice need not have contained all the details which it purports to contain including all the above calculations starting with the F.O.R. price at the controlled rate.
In such an event all that the assessee need have done was to invoice the purchasers at the net price F.O.R. Works Siding and despatch the goods under 'freight to pay ' .
It is also interesting to see that the invoice specifically includes a deposit to " cover any levy of sales tax on freight" .
It is clear that the invoice has been drawn up in terms of the control order.
The price charged by the assessee is F.O.R. Central Excise Duty has been added on this footing.
The invoice mentions the amount of railway freight and permits it to be deducted only because the freight will be paid to the Railways by the Purchasers on behalf of the assessee and credit is given therefor in the invoice.
This process is necessary because the amounts of freight for which credit has been given have to be eventually adjusted while settling accounts between the manufacturer of cement and obtaining reimbursement, if any , from the pool account.
The producer will have to satisfy the concerned authorities that, in certain instances, the freight paid is in excess of the freight which a producer can be called upon to pay in terms of para 9 of the Cement Control order.
In our opinion the invoice placed before us only reinforce the factual and legal position outlined by this Court in the Hindustan Sugar Mills Ltd. case in regard to the purpose and effect of the terms of the Cement Control Order.
For the reasons above mentioned, we are of the opinion that the High court was fully justified in applying the decision in Hindustan Sugar Mills Ltd. to the present case and denying the benefit of deduction of freight charges from the controlled price to arrive at the turnover of the assessee for the purpose of the Central sales Tax Act.
Turning now to the appeals filed by the state, the contention, as earlier mentioned, is that the High court should have arrived at the same conclusion on the provisions of the Tamil Nadu General Sales Tax Act and Additional sales Tax Act as it did under the Central Sales Tax Act and that in view of the decision of this Court in the Hindustan Sugar Mills case the relief granted for purpose of the local sales tax is erroneous.
In coming to a different conclusion on the provisions of the local sales Tax Act from that reached in respect of the Central Act, the High Court has relied upon the fact that the local sales tax is charged not on the turnover of the dealer but only on his taxable turnover.
The explanation 'taxable turnover ' has been defined in section 2(p) as follows: "2(p) 'taxable turnover ' means the turnover of which a dealer shall be liable to pay tax as determined after making such deduction from his total turnover and in such manner as may be prescribed .
" The Tamil Nadu General sales Tax Rules, 1959, have prescribed rules for the determination of the taxable turnover.
Rules 6 reads thus: " Rules 6 The tax or taxes under section 3,4 or 5 shall be levied on the taxable turnover of the dealer .
In determining the taxable turnover, the amount specified in the following clause shall, subject to the conditions specified in the following clauses shall, subject to the conditions specified therein, be deducted from the total turnover of a dealer (a) all amounts for goods specified in the Third Schedule to the Act are sold; (b) all amounts for which goos exempted by a Notification under Section 17 are sold or purchased, as the case may be provided that the terms and conditions, if any, for the exemption in the notification are complied with; (c) all amounts falling under the following three heads when specified and charged for by the dealer, separately with out including him in the price of the goods sold (i) freight; (ii)(omitted); (iii) charges for delivery; (cc) all amounts falling under the head charged for packing, that is to say, cost of packing materials and cost of labour.
(i) when charged for by the dealer separately without including such amounts in the price of the goods sold in respect of the goods liable to tax at the hands of the assessee; and (ii) whether or not such amounts are specified and charged for by the dealer separately, in respect of the goods not liable to tax the hands of the assessee".
The High Court has held that since freight is one of the items specified in clause (i) of rule 6(c) and since the assessee have specified and charged for freight separately in their invoices, they ar entitled to the deduction of the freight in the computation of the taxable turnover.
This is the short ground on which the High court has reached, in respect of the local Act, a conclusion different from that reached in respect of the central Act.
We agree with the learned counsel for the state of Tamil Nadu that, in coming to the above conclusion, the High court has over looked the significance of the inclusion of the words "without including them in the price of the goods sold" in clause (c).
These words make it clear it clear that the freight charges are not to be deducted in the computation of the taxable turnover merely because they are specified and charged for separately by the dealer.
A further pre requisite for their deduction is that these charges should not have been included in the price of the goods sold.
This takes us back to the consideration as to whether the price charged for by the assessee includes freight or not, which we have discussed elaborately in respect of the levy of Central sales tax.
once we comp to the conclusion as we have that freight has been included as part of the price sold and that the liability to pay the freight remains with the dealer, though permitted to be set off against the sale price by the purchaser or consumer, it follows that the deduction of the freight as a separate items in the computation of taxable turnover is not permissible.
Rule 6(c) will apply only in cases where the sale price charged does not include the freight charges and the dealer separately collects freight from the consumer without including the same in the sale price.
IN fact this aspect has been made clear in three decisions of this court dealing with similar rules.
In Tungabhadra Industries Ltd. vs Commercial Tax officer, Kurnool, (1960) 11 S.T.C. 827, the dealer claimed deduction of railway freight form the amount of price of the goods sold as stated in the bill on the strength of rule 5(1) (g) of the madras General sales Tax (Turnover and Assessment ) Rules, 1939, which is in precisely the same terms, as rules 6, which is now being considered by us.
The claim was negative by this court.
It observed : "The appellant claimed exemption on a sum of Rs. 3,88, 377 13 3 on the ground that it represented the freight in respect of the ground that it represented the freight in respect of the goods sold by the appellant, asserting that they had been charged for separately.
The assessing officer rejected the claim and this rejection was upheld by the departmental authorities and by the High Court in revision.
It would be seen that in order to claim the benefit of this exemption the freight should (i) have been specified and charged for by the dealer separately, and (ii) the same should not have been included in the price of the goods sold.
The learned Judges of the High Court held that neither of these conditions was satisfied by the bills produced by the appellant.
We consider, the decision of the High Court on this point was correct.
In the specimen bill which the learned counsel for the appellants has placed before us, after setting out the quality sold by weight (23, 760 lb.) the price is specified as 15 annas 9 pies per lb.
and the total amount of the price is determined at Rs. 23,388 12 0.
From this the railway freight of Rs. 1,439 12 0 is deduced and the balance is shown as the sum on which sales tax has been computed.
From the contents of this invoice it would be seen that the appellant has charged a price inclusive of the railway freight and would therefore be outside the terms of rule 5(1) (g) which requires that in order to enable a dealer to claim the deduction it should be charged for separately and not included in the price of goods sold.
The conditions of the rule not having been complied with, the appellant was not entitled to the deduction in respect of freight.
" The same conclusion was reached by this Court in Dyer Meakin Breweries Ltd. vs State of Kerala, (1970) 26 S.T.C. 248.
Here, the appellant company which manufactured liquor at various places in U.P. and Haryana, transported the goods from its breweries and distilleries to its place of business in Ernakulam and sold them there.
When selling liquor to the customers the appellant made out separate bills for ex factory price and for "freight and handling charges".
The appellant claimed that the amount charged for "freight and handling charges" incurred by it in transporating the goods from the breweries and distilleries to the warehouse in Kerala were eligible for deduction under rule 9(f) of the Kerala General Sales Tax Rules, 1963, a rule which is in the same terms as rule 6, with which we are now concerned in the present case.
This claim was negatived by this Court.
The Court obvserved: "It is common ground that the sale of the liquor took place in Ernakulam.
The company arranges to transport liquor for sale from the factories to its warehouse t Ernakulam.
It was not brought for any individual customer.
All the expenditure incurred s prior to the sale and was evidently a component of the price for which the goods were sold.
it is true that separate bills were made out for the price of the goods ex factory and for" freight and handling charges".
But, in our judgment, the Tribunal was right in holding that the exemption under clause (f) of rule 9 applied when the freight and charges for packing and delivery are found to be incidental to the sale and when they are specified and charged for by the dealer separately and expenditure in curred for freight and packing and delivery charges prior to the sale and for transporting the goods from the factories to the warehouse of the company is not admissible under rule 9(f) .
Rule 9(f) seeks to exclude only those charges which are incurred by the dealer either expressly or by necessary implication for and no behalf of the purchaser after the sale when the dealer undertakes to transport the goods and to deliver the same or where the expenditure is incurred as an incident of sale.
It is not intended to exclude forms the taxable turnover any component of the price, expenditure incurred by the dealer which he had to incur before sale and to make the goods available to the intending customer at the place of sale.
" In Johar and sons(p) Ltd. vs Tax officer Ernakulam, (1971) 27 S.T.C.120, The same question arose, again in the context of the Kerala General sales Tax Rules, 1963.
The court followed the decision in Dyer Meakin Breweries Ltd. case.
It was pointed out that the decision in Tungabhadra Industries Ltd. had rested on the facts of the case without going into the interpretation of the relevant rule of the Madras General Sales Tax (Turnover and Assessment ) Rules, 1939.
It was, held that the Dyer Meakin decision would apply to the case before the court.
A number of subsequent decisions has also held to a like effect : C.C.T. vs Ashoka Marketing Ltd.,(1973) 32 S.T.C. 411, State of Mysore vs Panyam Cements and Mineral Industries Ltd. (1974) 33 S.T.C. state of Tamil Nadu vs parry and company (1976) 38 S.T.C. 122, state of Tamil Nadu vs Chettinad Cement Corporation Ltd.,(1976) 38 S.T.C. 519 and Premier Breweries Ltd. vs state of Karnataka, (1984) 56 S.T.C. 14 we are, therefore, of the opinion that High court was in error in trying to distinguish the decision in the Hindustan Sugar Mills case and in excluding freight charges from the taxable turnover for the purpose of the Tamil Nadu Act.
The position in regard to packing charges as well as the excise duty on packing charges is also no different.
As pointed out by this court in the Hindustan Sugar Mills case and in Commissioner of sales Tax vs Rai Bharat Das & Bros., [1988] 71 S.T.C. 277 (SC), packing charges from part of "sale price" because the expression " any sum charged for anything done by the dealer in respect of the goods" used in the definition in section 2(h) of the Central sales Tax Act, 1956, squarely covers such charges, as packing is an integral element of the transaction of sale and packing charges are an integral part of the sale price.
Once this is so, it follows that these charges and the excise duty thereon cannot be excluded from the turnover for purpose of the Central sales Tax Act.
Nor will, for the reasons earlier discussed in relation to freight charges, the assessee be in a position to claim a deduction in respect of these charges by virtue of rule 6(cc) of the sales Tax Rules.
In our view, this position has been correctly set out, applying the decision in the case of Rai Bharat Das and Bros., in state of Tamil Nadu vs Vanniaperumal & co., (1990) 76 S.T.C. 203, Dalmia cement (Bharat) Ltd. vs state of Tamil Nadu, (1991) 81 S.T.C. 327 and Dalmia Cement (Bharat) Ltd. vs state of Tamil Nadu, (1991) 83 S.T.C. 442.
we are, therefore, of the opinion that the packing charges and excise duty thereon cannot also be deducted in computing the taxable turnover for the purpose of the Tamil Nadu Acts.
We, therefore, hold (i) That the freight charges could be included in arriving at the taxable turnover for purposes of C.S.T. and T.N.S.T.; and (ii) that packing charges and excise should be included in arriving at the taxable turnover for purposes of both C.S.T. and T.N.S.T.
The appeals by the state of TAmil Nadu are accordingly allowed and the appeals filed by the assessee ar dismissed.
There will, however, be no order regarding costs.
N.P.V. C.A. Nos.2684 90,4043 44/82 315 19/83 dismissed.
C.A. Nos 5306 36/85 and 280 81/89 allowed.
| The appellants assessees in the first set of appeals were selling agents of appellants in the second set of appeals.
For the assessment year 1996 70, they were assessed to sales tax on taxable turn over of Rs. 2,37,66,245 which included an amount of Rs. 29,71,527 representing freight charges.
The assessee claimed exclusion of freight charges in computing the taxable turnover on the ground that freight had been independently charged in the invoices.
This was rejected by the assessing authority, the appellate authority as well as Tribunal.
Aggrieved, the assessee preferred revisions to the High court.
The High court held that in cases arising under the Central sales Tax Act, the freight, packing charges and excise duty on packing materials had to be included in the sale price for the computation of sales tax, that in cases arising under the Tamil Nadu General sales Tax Act and Tamil Nadu Additional sales Tax Act, freight, packing charges and excise duty on packing materials were not liable to be included in the sale price for the computation of the sale price, and that the assessees were not liable to pay additional sales tax on freight, packing materials and excise duty on packing materials in the cases arising under the Tamil Nadu Additional sales Tax Act.
Aggrieved, both the as well as well as the state Government filed appeals before this Court.
On behalf of the state it was contended that the High court, having held that the amounts in question were liable to the included in the turnover for purposes of Central sales Tax Act, ought to have also held that these amounts were liable to be included in the taxable turnover for purposes of Tamil Nadu General sales Tax Act and the Tamil Nadu Additional sales Tax Act also, and relief granted for purposes of the local sales tax was erroneous.
On behalf of the assessees, it was contended that, even for the purpose of C.S.T., the freight charges, the cost of packing materials and the excise duty on the packing materials should have been excluded in the computation of the taxable turnover, that the Cement Control order, under the terms of which sales of cement were effected during the relevant period by all cement manufacturers, had no relevance to the question at issue, that all that the cement control order laid down was that Cement could not be sold at a price higher than a price fixed by the cement control order on terms described " as free on rail (F.O.R) , destination ', that the order did not stand in the way of cement manufacturers charging a price less than the ceiling fixed under the order, nor did it preclude individual contracts by the cement manufacturers with various purchasers that the latter should bear the freight charges that the assessees had and that the assessees had entered into contract with the purchasers which clearly stipulated that the freight would be payable by the latter, as per terms and condition of sale, the instant case was one where, despite the terms of the control order, the assessees chose to sell the goos free on rail at the point where the goods were loaded on rail and that the liability to pay freight was entirely that of the purchasers , and that these contracts were not inconsistent with or repugnant to the terms of the cement control order and therefore, the assessees were entitled to exclude the amounts of freight as not forming the part of the turnover at all.
Allowing the appeals of the state and dismissing those of the appellant dealers, this court, HELD: 1.
The freight charges should be included in arriving at the taxable turnover for purposes of Central sales Tax as Tamil Nadu sales Tax Act; and the packing charges and excise duty thereon should also be included in arriving at the tax able turnover or purposes of both central sales Tax and Tamil Nadu sales Tax.
[94 D,E] 2.1 The whole purpose of the cement control order was that cement should be available for sale at all places in the country at a controlled price.
No. doubt, the price was described as a maximum beyond which the sale price could not go but the intention, which was also carried out by all the suppliers, was that cement was to be sold at what may be described as a controlled price on terms 'free ' on rail destination '.
In other words, the producer was entitled to the controlled price irrespective of the amount of freight which might have been incurred in respect of the transaction.
Having regard to the fact that the freight on consignments to places near the factory and consignments places far away from the factories could show a lot of variation the control order created a machinery by which all freight charges were credited to a common account and any particular cement manufacturer incurring more than a specified amount was entitled to the reimbursed for the excess freight incurred by him.
The whole control order proceeds on the footing that the freight charges are to be met by the producer and that he was entitled to a consolidated price irrespective of the freight he may have incurred.
Hence the sale price, on the terms of the Central sales Tax Act, could only be the controlled price as fixed by the Cement control order.
[87 F H; 88 A C] Hindustan Sugar Mills Ltd. vs State of Rajasthan, (1979) 43 S.T.C.13, relied on.
Hyderabad Asbestos Cements products Ltd. vs State of Andhara Pradesh, (1969) 24 S.T.C.487, distinguished.
2.2 The High court was, therefore, fully justified in denying the benefit of deduction of freight charges from the controlled price to arrive at the turnover of the assessee for ter purpose of the central sales Tax Act.
[89 C] 3.1.
In coming to the different conclusion in respect of the local Act, from that reached in respect of the Central Act , viz., that since freight was one of the items specified in clause (i) of Rule 6 (c) of Tamil Nadu General sales Tax Rules, 1959, and since the assessees had specified and charged for freight separately in their invoices, they were entitled to the deduction of the freight in the computation of the taxable turnover, the High court has over looked the significance of the inclusion of the words " without including them in the price of the goods sold" in clause (c) of the Tamil Nadu General Sales Tax Rules.
These words make it clear that the freight charges are not to be deducted in the computation of the taxable turnover merely because they are specified and charged for separately by the dealer.[90 G,H; 91 A] 3.2.
A further pre requisite for their deduction is that these charges should not have been included in the price of the goods sold.
Once it is concluded that freight has been included as part of the price sold and that the liability to pay the freight remains with the dealer, though permitted to be set off against the sale price by the purchaser or consumer, it follows that the deduction of the freight as separate item in the computation of taxable turnover is not permissible.
Rule 6(c) will apply only in cases where the sale price charged does not include the freight charges and the dealer separately collect freight from the consumer without including the same in the sale price.
The High court was, therefore, in error in excluding freight charges from the taxable turnover for the purpose of the Tamil Nadu Act.
[91 A C; 93 F] Tungabhadra Industries Ltd. vs Commercial Tax officer, Kurnool, (1990) 11 S.T.C. 827; Dyer Meakin Breweries Ltd. vs State of Kerala , (1970) 26 S.T.C 248; Johar & sons (p) Ltd. vs sales Tax officer, Ernakulam, (1971) 27 S.T.C.120; C.C.T. V. Ashok Marketing Ltd., (1973) 32 S.T.C.411; State of Mysore vs Panyam cements and Mineral Industries Ltd., (1974)33 S.T.C. 407; State of Tamil Nadu vs Parry and company,(1976) 38 S.T.C.122; State of Tamil Nadu vs Chettinad cement Corporation Ltd., (1976) 38 S.T.C.519 and premier Breweries Ltd. vs state of Karnataka, (1984) 56 S.T.C. 14, relied on.
The position in regard to packing charges as well as the excise duty thereon is also no different.
Packing charges from part of " sale price" because the expression " any sum charged for anything done by the dealer in respect of the goods" used in the definition in Section 2(h) of the central sales Tax Act.
Nor will, the assessee be in a position to claim a deduction in respect of these charges by virtue of Rule 6(c) of the Sales Tax Rules.
Therefore, the packing charges and excise duty thereon cannot also be deducted in computing the taxable turnover for the purpose of the Tamil Nadu Acts.[93 G, H; 94 A C] Hindustan Sugar Mills Ltd. vs State of Rajasthan & ors.
, (1979) 43 S.T.C. 13 and Commissioner of sales Tax vs Rai Bharat Das & Bros.,(1988) 71 S.T.C. 277 (SC), relied on.
State of Tamil Nadu vs Vanniaperumal & Co., (1990) 76 S.T.C.203; Dalmia Cement (Bharat) Ltd. vs State of Tamil Nadu, (1991) 81 S.T.C. 327; Dalmia Cement (Bharat) Ltd. vs State of Tamil Nadu, (1991) 83 S.T.C.442, approved.
|
l Leave petition (c) No. 4748 of 1991.
From the Judgment and Order dated 21.1.91 of the Bombay High Court in W.P. No. 3481 of 1990.
N.B. Shetye, P.M. Pradhan and A.M. khanwilkar for the petitioner.
Dushyant Dave, Beliram Vakil, Abrar Ali, Ajit Yogi, Gajender Lal, Mukul Gupta and Ms. Sonia Khan for the Respondents.
The Judgment of the court was delivered by SAWANT, J.
The petitioner is diploma holder in Engineering and holds the post of Executive Engineer in the respondent Corporation.
Till 1974, the promotion post of the superintending Engineer was available both for diploma holders and degree holders according to merit cum seniority.
This was so according to the practice followed by the Corporation without making any rules or regulation in that behalf.
In 1974, the corporation made regulation by passing a resolution by passing a resolution and continued the same practice.
Admittedly, the regulation were not made under section 64 of the Maharashtra Industrial Development Act, 1961 [hereinafter referred to as the 'Act '] under which the respondent corporation was created.
Thereafter in 1988, the corporation passed a resolution, for the first time,.
making 75 per cent of the posts of superintending engineers available to the executive Engineers holding degrees and 25 per cent to the Executive Engineers who were diploma holders.
This resolution was also admittedly not a regulation made under the said section 64.
But for this resolution, the petitioner who was senior to respondent NO. 2 would have been promoted to the post of Superintending Engineer on 31st October, 1990.
However, since respondent No.2 was a degree holder, he got the said resolution and was promoted to the said post on that date.
It is this promotion which was challenged by the petitioner by a writ petition in the High Court.
The High Court by the impugned judgment dismissed the said petition.
Two contentions were raised before us.
(i) that no classification could be made among the Executive Engineers on the basis of their educational qualification for the purpose of promotion to the post of superintending Engineer, since they belong to the same cadre of Executive Engineers and do the same work.
There was also a common seniority of the Executive Engineers maintained.
hence the classification was discriminatory in nature and violative of Articles 14 and 16 of the Constitution .
(ii) that if at all such a discrimination was permissible, it could be made only be a statutory rule or regulation framed under Section 64 of the said Act.
A mere resolution or an executive instruction could not effect such discrimination.
We find not merit in either of the two contentions.
It is now well settled that for the purpose of promotion, a valid classification can made among the members holding the same post on the basis of their qualification.
In state of Jummu & Kashmir vs Triloki Nath Khosa & Ors., ; , a Constitution Bench of his court has clearly held that such a classification is permissible and does not violate Articles 14 and 16 of the Constitution the Court has observed there that in state of Mysore & Anr.
vs P. Narasing Rao, ; and The Union of India and others vs Dr.(Mrs.) S.B. Kholi; , , it was already held that classification on the basis of educational qualification was permissible.
The Court then referred to Roshan Lal Tandon vs Union of India, ; and distinguished it on the facts by pointing out that it was a case of the direct recruits and promotees integrated into one cadre.
Once they were integrated they lost their birth birth marks, viz. the different sources from which they were recruited.
[Emphasis supplied].
The court pointed out that Roshan Lal 's case [supra] was thus no authority for the proposition that if direct recruits and promotees are integrated into one class they cannot be classified for purposed of promotion on a basis other than that in the case before the them the classified for purpose of promotion on a basis other than that they were drawn from different sources.
The court also pointed out that the very Bench which decided Roshan Lal 's case [supra] held about a fortnight later in Narsingh Rao 's case [supra t] that higher educational qualifications were a relevant consideration for fixing higher pay scale and , therefore, matriculates Tracers could be given a higher scale than non matriculate Tracers thought their duties were identical .
The court, further on the same reasoning distinguished Mervyn Coutindo & Ors.
Collector of Customs Bombay & Ors.,[1966] 3 SCR 600 and S.M. Pandit and others, etc.
vs state of Gujarat and others, AIR 1972 SC 252 by pointing out that both the cases related to the classification made on the basis of the sources of recruitment and not on the basis of educations.
The court then concluded : "We are therefore of the opinion that though persons appointed directly and by promotion were integrated into a common class of Assistant Engineers, they could, for purposes of promotion to the cadre of Executive Engineers, be classified on the basis of educational qualification.
The rule providing that graduates shall be eligible for such promotion to the exclusion of diploma holders does not violate Articles 14 and 16 of the Constitution and must be upheld.
" The reliance placed by Shri Shetye appearing for the petitioner on a later decision of a Bench of two learned judges of this Court in H.C. Sharma and others vs Municipal Corporation of Delhi and others; , 372 is, we are afraid, not justified.
It was a case where no separate quota for promotion to the post of Assistant Engineer was kept for degree holder Junior Engineers and diploma holder Junior Engineers.
The degree holders Junior Engineers had sought a relief that such a quota be kept.
It is while dealing with this relief claimed, that this Court had observed that it could not be don e except by carving out two classes in the same category of junior Engineers.
It may be observed that it was not a case where the classification was already made which was challenged before the Court.
It was case where the writ petitioners wanted such a classification to be made.
It is for the authorities if they so desire, taking into consideration the nature of work, the requisite qualification for the work and the necessity for making such a classification that quotas could be prescribed on the basis of educations.
It is true that the following observation made in that case while dealing with the relief claimed, do support the petitioner: " Prayer No. 4 is to declare the petitioner Graduate Engineers as a separate category amongst Junior Engineers and give them equal quota like the Diploma holder Junior Engineer`s out of the 50% quota for promotion a Assistant Engineers.
This cannot be done except by carving out two classes in the same category of Junior Engineers o the basis merely of their qualification which is not permissible in law though the creation of selection grade in the same category on the basis of merit and on seniority is well known and permissible.
The Junior Engineers do the same kind of work and bear the same responsibility whatever their qualification, whether they are Degree holders or Diploma holders. " However , these observations have been made without noticing the decision in Khosa 's case (supra).
Hence, the observation are per incuriam as regards the next contention, admittedly neither the practice followed till 1988, nor the resolution passed by the respondent Corporation in 1988 nor the resolution passed in accordance with section 64 of the Act.
It is well settled that in the absence of rule or regulation the authority can prescribe service conditions by executive instructions and this is what was done till the year 1988 and is also sought to be done since 1988 by the impugned resolution.
The proposition that in the absence of the rules and regulations, the authority can act by executive instruction finds direct support in Mysore state Road Transport Corporation vs Gopinath Gundachar char, {1968] 1 SCR 767 and vs Balasubramaniam and others vs Tamil Nadu housing Board and others; , In view of the above, the petition stands dismissed.
G.N Petition dismissed.
| The petitioner, a diploma holders in Engineering, was Executive Engineer in the respondent Corporation.
He would have been promoted as superintending Engineer, but for a Resolution passed in 1988 making 75% of the posts of Superintending Engineers available to Executive Engineers with diploma in Engineering degrees and 25% to Executive Engineers with diploma in Engineering Respondent No.2 who junior to petitioner but had engineering degree was promoted as superintending Engineer.
The petitioner challenged the promotion of Respondent No. 2 before the High court by way of a writ petition.
The High court having dismissed the same, the petitioner preferred the present special Leave petition.
On behalf of the petitioner, it was contended that since there was a common seniority list of Executive Engineers, any classification on the basis of education qualification was discriminatory and violative of Articles 14 and 16 of the Constitution; and that in the absence of any statutory rule or regulation, a mere resolution could not effect such discrimination.
Dismissing the petition, this court, HELD: 1.1.
It is now well settled that for the purpose of promotion, a valid classification can be made among the members holding the same post on the basis of their qualification.
Such a classification is permissible and does not violate Articles 14 and 16 of the Constitution.
[99 A B] 1.2.
It is for the authorities if they so desire, taking into consideration the nature of work, the requisite qualification for the work, and the necessity for making a classification, to prescribe quotas on the basis of educational qualification.
[99 D] State of Jammu & Kashmir vs Triloki Nath Khosa & ors., [1974]1 SCR 771, followed.
H.C. Sharma & ors.
vs municipal corporation of Delhi & ors.
; , , referred to.
In the instant case, admittedly neither the practice followed till 1988, nor the resolution passed by the respondent Corporation in 1988 was a regulation passed in accordance with section 64 of the Act.
However, it is well settled that in the absence of a rule or regulation, the authority can prescribe service conditions by executive instructions and this is what was done till year 1988 and is also sought to be done since 1988 by the resolution under challenge.
[100 A,B] Mysore state Road Transport Corporation vs Gopinath Gundachar char; , and V. Balasubramaniam and others vs Tamil Nadu Housing Board and others, [1987]4 SCC 738, relied on.
|
Civil Appeal Nos.
4507 and 4508 of 1992.
From the Order dated 20.1.1992 of the Central Administrative Tribunal, Madras in O.A No. 925 of 1900.
K.T.S. Tulsi, Addl.
Solicitor General, Kapil Sibal, C.V.S., Rao, C. Ramesh and Ranjit Kumar for the Appellant.
P.P. Rap, V. Balachandran, R.P. Oberoi and B.S. Gupta for the Respondents.
The Judgment of the Court was delivered by MOHAN J.
Leave granted.
Both these appeals can be dealt with by a common judgment since identical issues are involved.
They are directed against the judgment of the judgment Central Administrative Tribunal, Madras dated 23.1.1992.
S.L.P. No. 7138/92 is preferred by Union of India while S.L.P. No. 6494/92 is filed by the affected party (Dr. M. Khalilullah).
The parties are referred to as mentioned in S.L.P. No. 7138/92.
The facts are as under.
The President of India sanctioned 35 posts in super time grade of Central Health Services in the scale of Rs.5900 200 6700 plus non practising allowance at the normal rates as admissible to other similar posts.
The sanction was upto 29.2.98.
The sanction was conveyed by the Under Secretary to the Government of India, Ministry of Health and Welfare, New Delhi on 26.8.1987.
After the creation of these posts, proposals were sent to the Union Public Service Commission for convening the meetings of the Departmental Promotion Committee for selection of the Candidates for Promotion.
The Union Public Service Commission approved to amend Rule 4(6) of Central Health Service Rules of 1982.
It also approved the method of recruitment, field of selection and principles of seniority to fill up these 35 posts as a one time measure in the absence of notified recruitment rules.
In its communication dated 29.9.88 the Union Public Service Commission besides referring to the above approvals specifically, stated: "These 35 posts may be treated as common posts both at present and in future to be included in the category of the floating posts for the Teaching and Non Teaching sub cadres mentioned in Rule 4(6) of the CHS Rules of 1982.
The eligibility conditions for promotion will be 3 years of regular service as Professor/Specialist Grade I with 17 years of regular service in Group `A '".
In the end, the Commission advised that the basis of eligibility and the eligibility list might be circulated to all concerned, their objections invited and settled before the meeting of Departmental Promotion Committee (Health).
It also requested that the final eligibility list might be sent to the Union Public Service Commission.
On 3.11.88, this decision was conveyed to all the concerned parties stating that it has been decided to fill up the posts by selection method i.e. merit with regard to seniority.
The eligibility conditions for promotion will be 3 years of regular service in Group `A '.
Together with that letter was enclosed the eligibility list of Professors.
On the basis of the Principles stated in the letter, errors/omissions/objections etc.
Were to be intimated to the Ministry within one month.
In the eligibility list include, Dr. P. Rajaram, the first respondent, was assigned rank No. 13 while Dr. Khalilullah, the third respondent was assigned the rank No. 24.
On 20.9.1989 , in accordance with the guidelines dated 10.3.89, the Departmental Promotion committee met for selection of officers for the promotion to the super time grade posts of director professor in the Central Health Service.
It requires to be stated that these posts were extended from time to time.
Each extension was for a period of one year.
Ultimately by an order dated 2.4.1992, it has been extended for a period of one year up to 28.2.1993.
Consequent upon the selection by Union Public Service by an order dated 17.1.1990, the President was pleased to appoint under Rule 4(10) of the Central Health Services Rules, 1982 the officers of Specialist Grade I of the Teaching Specialist sub cadre of the Central Health Service to supertime grade of the Teaching Specialist sub cadre of the Central Health Service.
They were posted as Director Professors on an officiating basis in the pay scale of Rs. 5900 6700 plus non practising allowance @ Rs.950 p.m.
The dates of promotions were indicated against each of the appointee.
As far as Dr. Rajaram, the first respondent is concerned, he was assigned rank No. 14 and the date of promotion was as 1.4.1989 while respondent No. 3, Dr. M. khalilullah was assigned rank No.4 and the date of promotion was as 1.4.1989.
Paragraph 3 of the order specifically states that the above promotions will be personal to the officers concerned and the posts Presently held by them will stand upgraded to the Supertime grade in the scale of Rs.5900 6700 plus non practising allowance @ Rs.950 p.m. in terms of Ministry 's order No. A 11011/5/88 CHS IV, dated 15.3.1989.
This will continue till the upgraded Posts are held by the officers being promoted now.
Aggrieved by the order dated 17.1.1990, the first respondent (Dr. Rajaram) preferred an application No. 925 of 1988 on 6.7.1990.
In that application, he had stated that he was senior to Dr. B.S. Rana, Dr. M. Khalilullah, Dr. K.K. Jain and Dr. D.D.S. Kulapathy.
They should not have been show above him.
The promotion was only on the basis of seniority.
In opposition to this, the respondent in the application who has secured a higher rank urged that the Departmental Promotion Committee had ranked Dr. Rajaram at serial No. 14 on the basis of merit.
The criterion for promotion is only merit.
Before the Tribunal, the scope of Rule 4 sub rule (10), clause (iii) of Central Health Service Rules, 1982 (hereinafter referred to as "the Rules") came up for interpretation.
The Tribunal, in the impugned judgment, accepted the contention of Dr. Rajaram and held that promotion for the post of director/Professor should be made on the basis of seniority.
Consequently, it directed that he be posted above the respondents who had been named in the application.
It is under these circumstances, the present S.L.Ps. have preferred by Union of India as well as by Dr. Khalilullah.
Mr. Kapil Sibal, learned counsel appearing for Dr. M. Khalilullah after taking us through the rules submits that rule 4(10) (i) of the Rules deals with 35 newly created floating common posts in the supertime grade Rs.5900 6700 in the Teaching and Non Teaching specialist sub cadre.
These posts were in addition to the authorised strength of posts in the supertime grade.
The authorised strength of both categories of Teaching and Non Teaching sub cadres is reflected in Schedule II.
Rule 4(10) (ii) stipulates that promotions to these posts are to be made on the basis of common eligibility list to be drawn separately for the Teaching Specialist sub cadre and the Non Teaching Specialist sub cadre.
This has to be without reference to any of the specialities in respective sub cadres.
Rule 4(10)(iii) stipulates that the eligibility list shall be made after the officer concerned has been duly assessed by a Departmental Promotion Committee in regard to the officer 's suitability for holding the post with the condition that the said officer should have completed three years of regular service as Professor (Specialist) Grade I.
This rule does not stipulate the manner in which the suitability of the said officer is to be assessed by the Departmental Promotion Committee.
Schedule IV of the Rules talks of the constitution of the Departmental promotion Committee.
It is clearly stipulated that in each meeting of the Departmental Promotion Committee the Chairman/Member, Union Public service Commission shall chair the Departmental promotion Committee.
The guidelines stipulate that the Departmental Promotion Committees constituted under the respective Service Rules shall judge the suitability of officers for promotion to selection as well as non selection posts.
Here again, the Union Public service commission should be associated with Departmental Promotion Committee in respect of Central Civil Services Posts belonging to grade `A ' where promotion is based on the principle of selection unless it has been decided by the Government of India not to associate the Union Public Service Commission.
The Union Public Service Commission need not be associated in respect of posts belonging to Grade A if the promotion is based not on the Principles of selection but on seniority cum fitness.
Wherever the Union Public Service Commission is associated with Departmental Promotion Committee, the Chairman or a Member of the Commission will preside over the meeting of Departmental Promotion Committee.
When Schedule IV requires that the Departmental Promotion Committee(Services) ought to be Presided over by the Chairman or Member of the Union Public service Commission itself suggests that the said posts ought to be filled in by way of selection rather than on the basis of seniority cum fitness.
Consequently, the word `suitability ' in Rule 4(10) (iii) in the context of nature of posts, its grade, can only mean suitability for the purposes of being selected to the said Post.
This submission is made on the basis that Rule 4(10) is a complete code in itself.
Even if this post falls outside the Schedule ii, the basis of promotion cannot be seniority.
In terms of Rule 3 of the Rules, the Central health service consists of persons appointed to the service under sub rule (5) of Rule 4 and rules 7 & 8.
It is the contention of the appellant that under Rule 4(3), Government of India is entitled to make temporary additions to or reductions in the strength of `duty posts ' in the various grades as deemed that these are posts with designations specified in Part A of Schedule II whether permanent of temporary.
When this definition is read along with Rule 4(1) (ii) and Rule 4(1) (iii), it is clear that temporary additions or reductions in the number of duty posts can take place from time to time.
These 35 floating/common posts were created for the first time on August 26, 1987 and administrative orders have thereafter been issued from time to time extending the creation of the said `duty posts ' without amending Schedule II.
Certainly, these posts were part of authorised strength at the time of initial constitution of the Service.
Rule 8 contemplates that any vacancy arising in any one of the grades referred to in Schedule II shall be filled in, as provided in rule 8(4) (ii).
The difference between Rule 4(10) (iii) and rule 8(4) (ii) is that whereas in the latter the promotion is to be made with reference to a post in the Teaching Specialist sub cadre or the Non Teaching Specialist sub cadre on account of any vacancy occurring therein, in a particular speciality, in the case of the former, notwithstanding the fact that one of the 35 floating/common posts may be held by a particular person of a particular speciality, the said post can go to a person not belonging to that speciality, since the Teaching Specialist sub cadre forms a class by itself which comprises 29 specialities.
It is in this context, therefore, that the said posts could not be included in schedule II, since specialities.
It is, therefore, clear that whereas the word `selection ' used in Rule 8(4) (ii) is with reference to inter se merit of persons belonging to a particular speciality with reference to a vacancy occurring in a speciality but with reference to the inter se merit of candidates based on their confidential reports and assessed by the Departmental Promotion Committee belonging to any of the 29 specialities, who would be considered most suitable to be promoted, since the concept of seniority cum fitness cannot possibly be applied to a common set of posts without reference to any speciality.
Thus, it is submitted that to determine the meaning of suitability, the same yard stick must be adopted.
In any event, these are highly specialised posts.
Hence, it is unthinkable that the promotions to these posts is based on the principle of seniority cum fitness and not on the basis of selection.
The word `suitability ' will have to be interpreted as seniority cum fitness.
Otherwise, it would be liable to struck down as unconstitutional being violative of Articles 14 and 16 of the Constitutions.
Therefore, it is submitted that the Rule must be so interpreted as not to violate the fundamental rights.
The Tribunal had gone wrong in adopting the principle of seniority and its interpretation of rules cannot be sustained.
Learned counsel for Union of India, Shri K.T.S. Tulsi, supporting the arguments of Shri Kapil Sibal, urged that the order creating these posts clearly mentioned that the posts are created in the super time cadre of Central Health service.
Rule 4(10) (ii) and (iii) as amended merely prescribe the procedure for preparation of eligibility list.
This procedure is nowhere prescribed in any other Rule.
This was because of the fact that the 35 posts were created as floating posts.
They did not pertain to any particular super speciality or sub cadre of Professor/Director.
Therefore, criteria for preparation of eligibility list had to be prescribed for determining inter se ranking between the sub cadre.
Merely because Rule 4(10) (iii) contains the word `suitability ', the said Rule does not supersede alter or amend the criteria for selection.
The word `suitability ' will have to be understood in the light of the guidelines of Departmental Promotion Committee.
These 35 posts referred to in Rule 4(10) are an integral part of the cadre.
The said posts were not added to Schedule Ii, forming part of the temporary strength of the cadre.
However, on August 10, 1992, the said posts have been added to Schedule Ii so as to make its intention clear that the promotion is to be governed by all the relevant rules and not by Rule 4 (10) when read in isolation from the remaining Rules.
Thus, it is submitted that the reasoning of the Tribunal is unsupported.
Mr. P.P. Rao, learned counsel on behalf of Dr. P. Raja Ram would urge as under.
The initial argument particularly on behalf of the Union of India was that these floating/common posts of super time grade of teaching Specialist sub cadre formed part of authorised strength of the Central Health Service in terms of Rule 4(10).
This was contested by this respondent that Schedule II has not been amended till date so as to include these posts.
Instead of frankly admitting the mistake, there was a deliberate attempt to justify the inclusion of these 35 posts as part of Schedule II.
This is nothing but misleading the Court.
This alone is enough to dismiss the Special Leave Petition.
Even on merits, Rule 4(10) states that the posts are to be filled up by the method of promotion and on the basis of an eligibility list.
The note also lays down that the eligibility list shall be prepared with regard to the date of completion of the prescribed qualifying years of service in their respective grades, by the officers.
Further clause (iii) of sub Rule (10) adds the requirements of assessment by a Departmental Promotion Committee in regard to the suitability of each officer for holding the post while considering his case for promotion on the basis of common eligibility list.
The words 'his suitability" in the said clause (iii) are very significant.
They postulate assessment of suitability of each candidate in the order in which the names appear in the common eligibility list drawn on the basis of continuous qualifying service rendered by them in the feeder Grade.
The scheme of sub Rule (10) totally rules out selection on the basis of relative merit of all eligible candidates.
The difference between `common Posts ' and `floating posts ' is that while in `common posts ', a Professor on being promoted to one of the `common posts ', a Professor on being promoted to one of the `common posts ' moves to that post and vacates the post of Professor previously held by him, while in floating posts ' the post held by him is upgraded and he continues to work in the same speciality, in the same institution.
The guidelines of the Departmental Promotion Committee are not of any assistance.
Therefore, no argument can be advanced on this basis.
If guidelines were governed, there was no purpose in adding Rule 4(10) (ii) and (iii).
The basic distinction between the selection posts and non selection posts is, whether it is to be filled by a comparative assessment on merit of all eligible candidates or on the basis of continuous length of service.
The guidelines say that there is no need to make comparative assessment of records of the officers but it should categorise the officers as fit or non fit.
It is a clear indication that there is no comparative assessment involved.
The common eligibility list which talks of Rule 4(10) is nothing but a combined seniority list of officers in different specialities drawn with reference to the date of completion of the prescribed qualifying years of service.
It is also incorrect to contend that it is a duty post as defined under Rule 2(e).
Such an expression as 'duty post is absent under Rule 4(10)".
When these posts had been created in order to release stagnation in addition to authorised strength, presence of Chairman of Member of Union Public Service Commission at the Departmental Promotion Committee does not make a non selection post as selection post simply because the guidelines say in the case of non selection posts, Union Public Service Commission need not be associated.
The fact that this respondent did not raise any objection to the letter dated 3.11.1988, will not, in any manner, deprive him of his right if the Rules confer such a right.
lastly, it is submitted that if two views are possible, the view taken by the Tribunal should be upheld.
Thus, no interference is warranted.
We shall now proceed to consider the merits of the above contentions.
35 posts in super time grade of Central Health Service in the scale of Rs.5900 200 6700 plus non practising allowance at the normal rates admissible to similar posts were created.
These posts were to last till 29.2.1988.
Time and again, they were extended.
The Rules which were relevant to appreciate the controversy whether the promotion is on the basis of seniority or on the basis of merit may now be seen.
In exercise of the power conferred under the proviso to Article 309 of the Constitution, the Rules called Central Health Service Rules, 1982 were framed.
Rule 3 speaks of the constitution of Central Health Service.
This service is to consist of persons appointed to the service under the Rules 4(5),7 and 8.
Rule 4 speaks of authorised strength of service.
Sub rule (1) of this Rule states that the authorised strength of duty posts and the deputation posts are as specified in Schedule II.
Under sub rule (3), the Government is empowered to made temporary additions or reductions in the strength of both : (i) the duty posts (ii) deputation posts.
sub rule 6(i) and (ii) may be quoted as follows: (6) (i) "The Controlling Authority shall upgrade five posts in the grade of Specialist Grade I to supertime grade (three posts in the Teaching Specialist Sub cadre as Director Professor and two posts in the Non Teaching Specialist Sub Cadre or Public Health sub cadre as Specialist (Consultant) and twenty five posts in the grade of Specialist Grade II in the non Teaching Specialist Sub cadre or Public Health Sub cadre or Associate Professor in the Teaching Specialist Sub cadre in the grade of Specialist Grade I without altering the combined authorised strength of posts of the respective sub cadre from which these posts are temporarily upgraded.
(6) (ii) The promotions under this sub rule shall be made on the basis of a common eligibility list covering all officers in the respective sub cadres without regard to any specialities.
" It requires to be carefully noted that what is talked of is a common eligibility list.
In other words, this has only reference to eligibility.
This is an aspect which we want to emphasise even in the beginning.
Then, we come to sub rule (10) which was introduced on 30.5.1989 which specifically deals with these 35 newly created floating/common posts in the super time grade of Rs. 5900 6700.
These 35 posts are made up of 20 posts in the Teaching Specialist sub cadre as Director Professor and 15 posts in the Non Teaching Specialist sub cadre as Consultant.
These posts will be in addition to the authorised strength.
It is common ground that these posts were created to release stagnation.
Earlier to this amendment, these posts in the Teaching Specialist Sub cadre were alone open to Professors from all specialities.
They were : (i) Director, G.B. Pant Hospital, New Delhi.
(ii) Dean, Moulana Azad Medical Collage, New Delhi.
(iii) Principal, Lady Harding Medical Collage , New Delhi.
(iv) Director, JIPMER, Pondicherry.
(v) Dean, JIPMER, Pondicherry.
(vi) Deputy Director General (Medical), D.T.E., DGH, New Delhi.
As could be seen, the promotion posts available were very few and were restricted to certain specific specialities.
This led to stagnation.
Therefore, the floating posts (20+15) were created to be filled in the grade of Professor/Specialist Grade I (Rs.4500 5700).
It was in this background Rule 4(10) was introduced.
That lays down : "There shall be 35 newly created floating/common posts in the supertime grade of Rs.5900 6700 (Twenty posts in the teaching specialist sub cadre as Director Professor and fifteen posts in the Non Teaching Specialist sub cadre as Consultant) which will be in addition to the authorised strength of posts in supertime grade of Rs. 5900 6700 in different sub cadres of Central Health Service.
" Further clause (ii) of the above Rule lays down as follows: "The promotions under this sub rule shall be made on the basis of a common eligibility list to be drawn separately for Teaching Specialist sub cadre and Non Teaching Specialist sub cadre covering all officers in the respective sub cadres viz. Teaching and Non Teaching without regard to any specialities".
Here again, it talks of eligibility.
In our opinion, eligibility means interlacing of seniority list of different specialities.
Clause (iii) reads as under : " The appointment against such posts shall be made only if the officer concerned has been duly assessed by a Departmental Promotion Committee in regard to his suitability for holding the post and has been working in the grade of Professor/Specialist Grade I on a regular basis for not less than three years, failing which has been working as a Professor/Specialist Grade I with 17 years of regular service in Group `A ' post".
The note is also made for our purpose that states : "The eligibility list shall be prepared with reference to the date of completion by the officers of the prescribed qualifying years of service in the respective grades.
However, in case of persons who have been appointed on the same date the seniority shall be determined as under : (a) Where the eligible officers were considered by the same D.P.C. the seniority shall be based on the order of merit.
(b) If there is no order of merit, the seniority shall be on the basis of seniority in the feeder grade.
(c) If there is no seniority in the feeder grade or it is not possible to determine the seniority even in the feeder grade, the length of regular service in the feeder grade shall be the guiding factor for determining the seniority.
(d) if length of service in the feeder grade is also the same, regular service in the next lower grade shall be taken into account, failing which date of birth.
" It may be seen that clause (iii) states that the appointment is to be made only if the officer concerned has been duly assessed by a Departmental Promotion Committee in regard to his suitability for holding the Post.
Such a consideration will arise only if the concerned officer has been working in the grade of Professor/Specialist Grade I for a period not less than three years.
The alternative qualification is 17 years of regular service in Group `A ' post and the concerned officer has been working as a Professor or Specialist Grade I.
This clause does not lay down the manner in which the suitability of the officer is to be assessed.
However, It is noteworthy that suitability is to be assessed by a Departmental Promotion Committee.
As to what is stated can be seen, when we look at Rule 2 which contains definitions.
Rule 2(c) says as under : "Departmental Promotion Committee means a group `A ' Departmental Promotion Committee specified in Schedule IV for considering the cases of promotion or confirmation in Group `A ' Posts are of the scale of Rs.2200 4000 and above.
Schedule III defines the method of recruitment, the field of selection for promotion and the minimum qualifying service in the immediate lower grade or lower grades for appointment or promotion of officers to group `A ' duty posts and deputation posts in the Central Health service".
In Note 1 of the said Schedule, it is stated thus : "Promotion to the post of Associate Professor (non functional selection grade), Associate Professor, Specialist Grade II (non functional selection grade), Specialist Grade II (Senior Scale) in non teaching and Public health sub cadres, Chief Medical Officer (non functional selection grade) and Senior Medical Officer will be on non selection basis.
All the remaining posts are selection posts".
When it says all the remaining posts are selection posts, it is obvious that the posts with which we are concerned are selection posts.
Schedule IV lays down the composition of Departmental Promotion Committee.
With regard to the Teaching Specialist sub cadre posts, super time and Specialist Grade I (Professor), the Departmental Promotion Committee shall consist of the following : (i) Chairman.
Chairman/Member, Union Public Service Commission : (ii) Secretary or his nominee, Ministry of Health and Family Welfare ; Member (iii) Director General of Health Services or his nominee : Member.
(iv) One Departmental officer nominated by the Secretary, Ministry of Health and Family Welfare : Member.
When Rule 4 (10) (iii) talks of Departmental Promotion Committee, it is only this Departmental Promotion Committee in accordance with Schedule IV that is thought of.
There guidelines issued under the office memorandum of Government of India dated April 10, 1989.
Under this Office Memorandum, the various instructions have been updated and consolidated.
Under these guidelines, the Departmental Promotion Committee so constituted shall judge the suitability of the officers for promotions to selection posts.
it has already been seen that these are selection posts as per Schedule II of the Rules.
In Paragraph 2.1 with reference to the post in question carrying a scale of Rs.5900 6700 or equivalent.
The minimum status of Officer who should be member of Departmental Promotion Committee is prescribed as Secretary or Additional Secretary to Government of India.
Paragraph 2.2 of the guidelines states as follows : "The Union Public Service Commission (UPSC) should be associated with DPCs in respect of all Central Services/posts belonging to Group `A ' where promotion is based on the principles of selection unless it has been decided by the Government not to associate the UPSC with a Group `A ' DPC.
The UPSC need not be associated in respect of posts belonging to Group `A ', if the promotion is based not on the principles of selection but on seniority cum fitness".
Paragraph 2.4 also stresses the fact that whenever the Union Public Service Commission is associated with the Departmental Promotion Committee the Chairman or a Member of the Commission will preside over the meeting of the Departmental Promotion Committee.
The contention of Mr. P.P. Rao, learned counsel for the respondents that the nature of the post or the method of promotion need not be decided with reference to the guidelines is not correct.
In Rule 4, sub rule (10), clause (iii), to which a reference has already been made, the assessment is required to be done by a Departmental Promotion Committee.
It is for such a Committee that guidelines have been prescribed.
Therefore, we cannot altogether ignore these guidelines.
From the above two paragraphs it is clear that if there is to be an assessment the principle of selection is involved.
On the contrary, if it were merely a seniority cum fitness there is no need to associate the Union Public Service Commission as pointed out in Paragraph 2.3 of the guidelines.
All these lead only to one conclusion that these are selection posts.
Having arrived at this conclusion then the question would be what exactly is the meaning of the word "suitability".
That is dealt with apart from Rule 4, sub rule (10), clause (iii), also under guidelines in Paragraph 6.1.2.
The Departmental Promotion Committee is to devise its own method and procedure for objective assessment of suitability of candidates.
It is noteworthy in paragraph 6.3.1 that the procedure for the preparation of the panel for promotion by the Departmental promotion Committee is delienated.
Clause (ii) is very important and we extract the same: "In respect of all posts which are in the level of Rs.3700 5000 and above, the benchmark grade should be `very good '.
However officers who are graded as `Outstanding ' would rank en bloc senior to those who are graded as `Very Good ' and placed in the select panel according upto the number of vacancies, officers with same grading maintaining their inter se seniority in the feeder post".
(Emphasis supplied) In contradistinction to this when we look at paragraph 7 of the guidelines, which deals with non selection method, that dispenses with the requirement to make a comparative assessment of the records.
In such a case what is required is to categorise the officers as fit or not yet fit for promotion on the basis of the assessment of the record of service.
In so far as we are concerned with selection this paragraph does not have any application whatever.
Thus, therefore, the word "suitability" in Rule 4(10) (iii) having regard to the nature of the post and grade, could only mean suitability for the purposes of being selected to the said post.
(Emphasis supplied) Further, the expression "suitability" in the said clause does not, in any manner, supersede alter or amend the criteria of selection Prescribed in the remaining rules as is applicable to super time grade post.
When the expression "suitability" is construed harmoniously with other rules, the process of selection is inescapable as rightly contended by Mr. K.T.S. Tulsi, learned additional solicitor General.
The argument of Mr. Rao that if these posts are by the method of selection, clauses (ii) and (iii) and a note thereunder are wholly unnecessary in Rule 4(10), overlooks the fact that these clauses deal only with eligibility.
It is a common case between the parties that these 35 floating posts were created by sub rule (10) of the Rule 4 in addition to the authorised strength.
If as per the rule, for the post falling under authorised strength the method of selection is adopted for the authorised strength it must equally apply to the post created in addition to the authorised strength.
Though a good deal of controversy arose during the course of the arguments whether these posts had been included in Schedule II or not, it was vehemently commented upon by Mr. P.P. Rao, learned counsel, that an inaccurate statement was made by Union of India that controversy pales into insignificance because of the Gazette Notification dated 10th of August, 1992 including these 35 newly floating/common posts in Schedule II.
Therefore, if these posts form part of the authorised strength as to what would be the bearing of Rule 8(4)(ii), requires to be considered.
A careful reading of Rule 8(4)(ii) reveals that departmental promotion to higher post in the respective special cadres and specialities within the sub cadre concerned shall be made on the basis of selection on merit.
It implies that, should vacancy arise in a particular speciality, this method is to be adopted.
In contradistinction to this, under rule 4(10)(iii) even though one of the floating or common posts may be held by a particular person of a particular speciality, the said post can go to a person not belonging to that speciality.
The teaching, speciality sub cadre, forms a class within itself since it comprises of 29 specialities.
Thus it follows the word "selection" used in Rule 8(4)(ii) with reference, to inter se merit of persons belonging to a particular speciality with regard to the vacancy occurring in that speciality.
Lastly, we may refer to one important fact.
The first respondent (Dr. Raja Ram) was served with a copy of letter dated 3.11.1988.
That clearly states that the 20 posts of Director Professor of Super time grade are to be filled up by selection method, merit with regard to seniority.
Therefor, the decision of Government of India had been conveyed to the first respondent.
The first respondent when he was put on notice should have immediately voiced his protest.
Of course, the failure to protest would not deprive him of a legitimate right if he is entitled to in law.
However, it is one of the points to be borne in mind.
The Departmental Promotion Committee met on 20th September, 1989 and the minutes have been placed before us.
After examination of the character rolls of the senior most eligible officers the committee assessed the officers as given in Annexure I.
The first respondent, Dr. Raja Ram was rated as "very good" while the rating for the other doctors is as follows : 1.
Dr. B.S. Rana (2nd respondent ) : Outstanding 2.
Dr. M. Khalilullah (3rd respondent ) : Outstanding 3.
Dr. K.K. Jain (4th respondent ) : Outstanding 4.
Dr. D.D.S. Kulapathy (5th respondent ) : Outstanding Where respondents 2 to 5 are rated outstanding, they go `en bloc ' above the first respondent since the first respondent is merely "very good".
This is because of the application of clause II of paragraph 6.3.1 of the guidelines quoted above.
It was on this basis the Departmental Promotion Committee assigned rank No.14 to the first respondent, Dr. Raja Ram.
Pursuant to this, the President of India issued the impugned order of promotion dated 17th of January, 1990.
Paragraph 3 of the order, which we have quoted above, clearly states that the promotions will be personal to the officers concerned and the posts presently held by them will stand upgraded to the super time grade in the scale of Rs.5900 6700 plus non practising allowance at Rs.950 per mensem in terms of the Ministry 's order dated 15.3.89.
Above all these, we cannot lose sight of the fact that for posts of this character in super time grade carrying high salary, promotion could not be accorded merely on the basis of seniority.
In our considered view, it should be on merit.
For the foregoing reasons, we are clearly of the opinion that the Tribunal had erred in merely adopting seniority as the basis of promotion and not merit.
It is needless for us to consider whether these are duty posts since we have taken the view that these posts fall within Schedule II of the Rules.
In the result, we set aside the impugned judgment of the Tribunal and allow these appeals without costs.
The reason why we are not awarding costs in favour of the appellants is because of a specific objection by Mr. P.P. Rao that these posts have not been included in Schedule II by amending the said Schedule.
In respect of this, the Union of India persisted in the argument that they had been included in Schedule II.
Of Course after the Gazette Notification dated 10.9.92 the position may be different.
But that does not mean that the earlier incorrect statements by the Union of India could be overlooked.
Appeals allowed.
| 35 posts in super time grade of Central Health Services were sanctioned and proposals were sent to the Union Public Service Commission(UPSC) for convening departmental Promotion Committee (DPC) meetings for selection of candidates.
UPSC approved to amend Rule 4(6) of Central Health service Rules of 1982.
It also approved the method recruitment, field of selection and principles of seniority to fill up the 35 posts as one time measure in the absence of notified recruitment rules.
The Commission also stipulated that these 35 posts were to be treated as common posts to be included in the category of floating posts for the teaching and non teaching sub cadres mentioned in Rule 4(6) of Central Health Services Rules, 1982.
The eligibility condition stipulated was three years as Professor failing which 17 years of regular service in Group `A '.
The Communication of UPSC together with the eligibility list of Professors was circulated and errors/objections etc.
were to be intimated to the Ministry within one month.
The DPC met and selected candidates.
Respondent No.1 was assigned 14th rank and Respondent No.3 was assigned 4th rank.
The selected candidates were promoted and appointed.
Respondent No.1 filed an application before the Central Administrative Tribunal claiming that he was senior to respondent No.3 and others doctors and since the promotion was only on the basis of seniority and directed that Respondents arrayed in the application before it.
Being aggrieved by the Tribunal 's order, Union of India preferred the first of the two appeals.
Respondent No.3 in that appeal has preferred the other appeal.
On behalf of the appellants/respondent No.3, it was contended that Rule 4(10)(ii) and (iii) as amended merely prescribed the procedure for preparation of eligibility test; that the procedure has not been prescribed in any other Rule as the posts were created as floating posts: that the posts did not pertain to any particular super speciality or sub cadre if Professor/Director and so the criteria for preparation of eligibility list gad to be prescribed for determining inter se ranking between the sub cadres; that merely because Rule 4(10)(iii) contained the word `suitability ' it did not supersede, alter or amend the criteria for selection and that the word `suitability ' has to be understood in the light of the guidelines of DPC.
Allowing the appeals, this Court, HELD: 1.1.
If there is to be an assessment of merit, the principle of selection is involved.
on the contrary, if it were merely a seniority cum fitness there is no need to associate the Union public Service Commission as pointed out in the guidelines.
All these lead only to one conclusion that these are selection posts.
That is dealt with apart from Rule 4, sub rule (10), clause (iii), and also under paragraph 6.1.2 of the guidelines issued by the Government of India.
According to the guidelines the Departmental Promotion Committee is to devise its own method and procedure for objective assessments of suitability of candidates.
It is note worthy in Paragraph 6.3.1 that the procedure for the preparation of the panel for promotion by the Departmental promotion Committee is delineated.
[51 C,D] 1.2.
Paragraph 7 of the guidelines deals with non selection method and it dispenses with the requirement to make a comparative assessment of the records.
In such a case what is required is to categorise the officers as fit or not yet fit for promotion on the basis of assessment of the record of service.
Therefore, the word "suitability" in Rule 4(10)(iii) having regard to the nature of the post and grade could only mean suitability for the purposes of being selected to the said post.
[51 G, H; 52 A] 2.
It is a common case between the parties that these 35 floating posts were created by sub rule 10 of rule 4 in a addition to the authorised strength.
If as per the rule, for the post falling under authorised strength the method of selection is adopted it must equally apply to the post created in addition to the authorised strength.
A careful reading of Rule 8(4)(ii) reveals that departmental promotion to higher post in the respective special cadres and specialities within the sub cadre concerned shall be made on the basis of selection on merit.
It implies that, should vacancy arise in a particular speciality , this method is to be adopted.
In contradistinction to this, under Rule 4(10)(iii) even though one of the floating or common posts may be held by a particular person of a particular speciality, the said post can go to a person not belonging to that speciality.
Comprises of 29 specialities.
Thus it follows the word "selection" used in Rule 8 (4)(ii) is with reference to inter se merit of persons belonging to a particular speciality with regard to the vacancy occurring in that speciality.[52 D H] 3.
The first respondent was served with a copy of letter dated 3.11.1988 in which the appellant clearly stated that the 20 posts of Director/Professor of super time grade are to be filled by selection method viz. merit with regard to seniority.
Therefore, the decision of Government of India had been conveyed to the first respondent and he should have immediately voiced his protest.
Of course, the failure to protest would not deprive him of a legitimate right if he is entitled to in law.
[53 A,B] 4.
After examination of the character roll of the senior most eligible officers the committee assessed the officers.
The first respondent was rated as "very good" while the rating for respondents 2 to 5 was outstanding".
So they go en bloc above the first respondent since the first respondent is merely "very good".
This is because of the application of clause Ii of paragraph 6.3.1.
of the guidelines.
It was on this basis the Departmental Promotion Committee assigned rank No. 14 to the first respondent.
Pursuant to this the President of India issued the order of promotion dated 17th January, 1990.
Paragraph 3 of the order clearly states that the promotions will be personal to the officers concerned and the posts presently held by them will stand upgraded to the super time grade in the scale in terms of the Ministry 's order dated 15.3.1989.
Hence the Tribunal was in error in merely adopting seniority as the basis of promotion and not merit.
[53 C G]
|
tion (Crl.) No. 1061 of 1982.
(Under Article 37 of Constitution of India) Prem Bhai and Prem Singh, Commnr.
Supreme Court, Justice B.L. Loombha, Chairman, Legal Aid, Advisory Board, U.P., M.K. Ramamurthi, B. Datta, Yogeshwar Prasad, Ms. Chandan Ramamurthi, M.A. Krishnamoorthy, Ms. Rachna Joshi, D.D. Sharma, A.S. Pundir, R.P. Srivastava, S.N. Terdol, Hemant Sharma, Ms. Anil Katiyar, C.V.S. Rao and Ms.
Sangeeta Aggarwal for the appearing parties.
The following Order of the Court was delivered: On the basis of a letter received from Banwasi Seva Ashram operating in Mirzapur District of Uttar Pradesh Writ Petition (Criminal) No. 1061/82 under Article 32 of the Constitution of India was registered.
Meanwhile the National Thermal Power Corporation Limited (NTPC) decided to set up a super thermal plant on part of the lands which were subject matter of the writ petition.
NTPC got itself impleaded as a party in the writ petition and claimed that the completion of the project was a time bound programme and as such the land earmarked for the project be made free from prohibitive directions of this Court in the writ petition.
The writ petition was disposed of by an order dated November 20, 1986.
This Court issued comprehensive directions and appointed a Board of Commissioners to supervise the implementation of the said directions.
This Court has been monitoring the project during all these years in terms of the directions issued on November 20, 1986.
By this order we are finally disposing of the proceedings and the monitoring process so far as the NTPC is concerned.
The directions dated November 20, 1986 relevant for this purpose are as under: "(1) So far as the lands which have already been declared as reserved forest under Section 20 of the Act, the same would not form part of the Writ Petition and any direction made by this Court earlier, now or in future in this case would not relate 860 to the same.
In regard to the lands declared as reserved forest, it is, however, open to the claimants to establish their rights, if any, in any other appropriate proceeding.
We express no opinion about the maintainability of such claim." "(5) The land sought to the acquired for the Rihand Super Thermal Power Project of the NTPC shall be freed from the ban of dispossession.
Such land is said to be about 153 acres for Ash Pipe Line and 1643 acres for Ash Dyke and are located in the villages of Khamariya, Parbatwa, Jheelotola, Dodhar and Jarha.
Possession thereof may be taken,. ., but such possession should be taken in the presence of one of the commissioners who are being appointed by this order and a detailed record of the nature and extent of the land, the name of the person who is being dispossessed and the nature of enjoyment of the land and all other relevant particulars should be kept for appropriate use in future.
Such records shall be duly certified by the Commissioner in whose presence possession is taken and the same should be available for use in all proceedings that may be taken subsequently.
The NTPC has agreed before the Court that it shall strictly follow the policy on "facilities to be given to land oustees" as placed before the Court in the matter of lands which are subjected to acquisition for its purpose.
The same shall be taken as an undertaking to the Court.
" Mr. Datta learned senior advocate appearing for the NTPC has stated that the NTPC has already taken actual/symbolic possession of 1375 acres of land.
In respect of 1004 acres of the said land a notification under Section 4 of the (hereinafter called `the Act ') was issued and the proceedings for declaring the said area as reserved forest were undertaken.
The remaining 371 acres were part of Gaon Sabha land and ownership in the said land vested in the State Government.
According to Mr. Datta this land measuring 1375 acres is under the possession of NTPC and the project construction is in progress.
Mr. Ramamurthy, on the other hand, has contended that the actual possession of whole of the area is not with the NTPC and the Adivasi/land owners are still in possession of their respective holdings.
861 Mr. Datta further states that apart from 1375 acres, mentioned above, the NTPC has yet to obtain possession of 465 acres of land which is reserved forest under Section 20 of the Act.
In view of the directions quoted above the lands which have been declared as reserved forest under the Act are not the subject matter of the writ petition and as such no direction can be issued by this Court in that respect.
In this order, we are concerned with 1004 acres of land which is subject matter of Section 4 Notification under the Act.
We have to ensure that the rights of the oustees are determined in their respective holdings and they are properly rehabilitated and adequately compensated.
According to the summary of rehabilitation package filed on the record by Mr. Datta there are 678 families which have been ousted from the land.
Mr. Ramamurthy, however states that there are more than 1500 families which are likely to be affected by the take over of 1004 acres of land by the NTPC.
We direct that the following measures to rehabilitate the evictees who were in actual physical possession of the lands/houses etc.
be taken by the NTPC in collaboration with the State Government.
The NTPC shall submit a list of the evictees claimants to the District Judge, Sonebharda before April 15, 1992.
Mr. Prem Singh shall also submit the list of the evictees to the District Judge by April 15, 1992.
The District Judge Sonebhadra shall be the authority to finalise the list of the evictees.
One plot of land measuring 60 ' x 40 ' ' to each of the evictee families be distributed for housing purposes through the district administration.
Mr. Datta has informed us that the plots of the said measurements have already been given to 641 families.
We direct that the remaining evictees be also given the plots.
Shifting allowance of Rs. 1500 and in addition a lumpsum rent of Rs. 3000 towards housing be given to each of the evictee families.
Free transportation shall be provided for shifting.
Monthly subsistence allowance equivalent to loss of net income from the acquired land to be determined by the District Judge Sonebhadra subject to a maximum of Rs. 750 for a period of 10 years.
The said 862 payment shall not be linked with employment or any other compensation.
Unskilled and semi skilled posts in the project shall be reserved for the evictees subject to their eligibility and suitability.
7.The NTPC shall give preference to the oustees in employment in class III and IV posts under its administration subject to their suitability and eligibility.
The evictees be offered employment through the contractors employed by the NTPC.
The jobs of contractors under the administration of the NTPC be offered to the evictees.
The shops and other business premises within the NTPC campus be offered to the evictees.
The NTPC shall operate for the benefit of the evictees selfgenerating employment schemes such as carpentary training (free tools to be provided after completion of training), carpet weaving training, sericulture, masonary training, dairy farming, poultry farming and basket weaving training etc.
The NTPC shall provide facilities in the rehabilitative area such as pucca roads, pucca drainage system, hand pumps, wells, portable water supply, primary school, health centre, Panchayat Bhavan, electricity connections, bank and Sulabh Sauchalaya complex etc. 13.
The NTPC shall also provide hospitals, schools, adult education classes and sports centres for the evictees.
The Deputy Commissioner Sonebhadra shall supervise and ensure that the above rehabilitation measures directed by us are fully complied with by the NTPC and other authorities.
As regards compensation in respect of lands, crops etc.
Mr. Datta states that crop compensation at Rs. 850 per acre per year has been paid to the oustees.
He states that a sum of Rs. 16,44,529.68 paise has been paid to the oustees in this respect.
He further states that Rs. 1 crore and Rs. 507500 have further been deposited by the NTPC with the State 863 Government on March 13, 1991 and January 20, 1992 respectively.
According to him out of the said amount, Rs. 48,35,649.17 paise have so far been paid to the oustees as land compensation at the rate of Rs. 10,000 per acre.
It is not disputed that Rs. 850 per acre per year for the crops and Rs. 10,000 per acre for the land has been determined as provisional compensation.
We direct that the provisional compensation at the above rates be paid to the oustees, if not already paid, within 8 weeks from today.
In this respect we further issue the following directions: (a) The District Judge, Sonebhadra shall be authority to determine the compensation in respect of land, crop, house and any other legitimate claim based on existing rights of the oustees.
(b) Mr. Prem Singh, Commissioner along with the Project Officer of the NTPC and Sarpanch of the area concerned shall verify the extent of the property of the oustees who have been or are likely to be evicted from the actual physical possession of the lands/houses etc.
It has been stated before us that such verification can be done within a period of two months.
We direct that the verification be completed before April 15, 1992.
The rights determined by Mr. Prem Singh and party shall be subject to the final approval of District Judge, Sonebhadra.
(c) The District Judge, Sonebhadra shall issue notices to all the claimants before May 15, 1992 asking them to file their respective claims for compensation.
The evictees, may also on their own, whether they have received provisional compensation or not prefer their claims for compensation to the District Judge Sonebhadra before August 1, 1992.
(d) The District Judge Sonebhadra shall finally decide all the compensation claims expeditiously preferably before March 31, 1993.
The orders passed by the District Judge in each case shall be treated as the orders under Section 17 of the Act as amended by the Uttar Pradesh Act 25 of 1965.
(e) Any party, not satisfied with the order of the District Judge, may have recourse to any remedy available under law.
With the above directions we finally close the proceedings in respect of the lands in possession of the NTPC.
R.P. Petition disposed of.
| This Court, by its order dated 20.11.1986, while disposing of Writ Petition (Crl.) No. 1061 of 1982, gave comprehensive directions for rehabilitation of Adivasis/landholders affected by the Rihand Super Thermal Power Project to be set up by the National Thermal Power Corporation Limited (NTPC), and appointed a Board of Commissioners to supervise the implementation of the said directions.
Since then this Court was monitoring the project.
Disposing of the proceedings and the monitoring process so far as the NTPC was concerned, this Court, HELD: In order to ensure that the rights of the oustees are determined in their respective holdings and they are properly and adequately compensated, the NTPC shall take, in collaboration with the State Government, the following measures to rehabilitate the evictees who were in actual physical possession of the lands/houses etc.
: (i) The NTPC shall submit a list of the evictees claimants to the District Judge, Sonebhadra who shall be the final authority to finalise the list.
(ii) One plot of land measuring 60 ' x 40 ' to each of the evictee families be distributed for housing purposes through the district administration.
(iii) Shifting allowance of Rs. 1500 and in addition a lumpsum rent of Rs. 3000 towards housing be given to each of the evictee families.
858 (iv) Free transportation shall be provided for shifting.
(v) Monthly subsistence allowance equivalent to loss of net income from the acquired land to be determined by the District Judge Sonebhadra subject to a maximum of Rs. 750 for a period of 10 years.
The said payment shall not be linked with employment or any other compensation.
(vi) Unskilled and semi skilled posts in the project shall be reserved for the evictees.
(vii) The NTPC shall give preference to the oustees in employment in class III and IV posts under its establishment.
(viii) The evictees be offered employment through the contractors employed by the NTPC.
(ix) Jobs of contractors under the administration of the NTPC be offered to the evictees.
(x) The shops and other business premises within the NTPC campus be offered to the evictees.
(xi) The NTPC shall operate for the benefit of the evictees selfgenerating employment schemes such as carpentry training (free tools to be provided after completion of training) carpet weaving training, sericulture, masonary training, dairy farming, poultry farming and basket weaving training etc.
(xii) The NTPC shall provide facilities in the rehabilitative area such as pucca roads, pucca drainage system, handpumps, wells, portable water supply, primary school, adult education classes, health centre, Panchayat Bhavan, sports centres, electricity connections, bank and sulabh Sauchalaya complex etc.
The Deputy Commissioner Sonebhadra shall supervise and ensure that the rehabilitation measures are fully complied with.
(xiii) As regards compensation for crops and land, the provisional compensation at the rate of Rs. 850 per acre per year for crops and Rs. 10,000 per acre for the land be paid to the oustees.
[pp.861B H; 862A H; 863A B] 859 The District Judge Sonebhadra shall be the authority to determine the compensation.
The orders passed by the District Judge shall be treated as orders under section 17 of the Indian Forest Act, as amended by U.P. Act 25 of 1965.
[p.863B,F]
|
Special Leave Petition (C) No. 4325 of 1992.
From the Judgment and Order dated 6.3.1992 of the Punjab and Haryana High Court in Civil Revision No. 2830 of 1991.
Dr. A.M. Singhvi and Ms. Kirti Misra for the Appellant.
D.V. Sehgal, S.M. Sarin, P.N. Puri, Ranbir Singh Yadav and G.K. Bansal for the Respondent.
The Judgment of the Court was delivered by S.C. AGRAWAL, J.
This petition for special leave to appeal arises out of proceedings for eviction initiated by the respondent (landlord) against the petitioner (tenant) under section 13A of the East Punjab Urban Rent Restriction Act, 1949 (hereinafter referred to as `the Act '), as amended by Act No. 2 of 1985.
The proceedings relate to a residential house in Chandigarh which was let out to the petitioner by the respondent.
The respondent was initially employed as Accounts Officer with the Finance Department of the Government of Haryana.
In 1969, he went on deputation with the Haryana Agricultural University (hereinafter referred to as `the University ').
His services were transferred to the University by the Government of Haryana with effect from November 1, 1975, and while he was employed on the post of Comptroller in the University he retired from service with effect from February 28, 1991.
Claiming to be a `specified landlord ' within the meaning of section 2(hh) of the Act, the respondent moved a petition seeking eviction of the petitioner under section 13A of the Act before the Rent Controller, Chandigarh.
The said petition was dismissed by the Rent Controller by order dated August 5, 1991 on the view that the respondent did not fall within the ambit of the definition of `specified landlord ' since he had failed to show that he was holding or has held an appointment in a public service or post in connection with the affairs of the Union or of the State.
The respondent filed a revision petition before the High Court under section 18 A(8) of the Act which was allowed by the High Court by judgment dated March 6, 1992.
The High Court held that the respondent, at the time of his retirement from the post of Comptroller in the University, was holding an appointment in connection with the affairs of the State and hence he is a specified landlord within the meaning of section 2(hh) of the Act.
The High Court further found that the respondent had fully satisfied the conditions as contained in section 13 A of the Act and he was entitled to recover the possession of the premises in dispute from the petitioner.
Allowing the revision, the High Court set aside the order of the Rent Controller and accepted the petition filed by the respondent under section 13 A of the Act for ejectment of the petitioner.
The High Court further directed as under: "However, the respondent is allowed one month 's time to vacate the premises provided he pays the entire arrears of rent within 15 days from today, and also files an undertaking with the Court of the Rent Controller to the effect that he shall hand over the vacant possession of the premises on the expiry of aforesaid period.
" On March 16, 1992, the petitioner moved a petition in the high Court under section 151 CPC seeking three months, time to vacate the house and for waiving the requirement of filing of an undertaking.
The said petition was rejected by the High Court by order dated March 18, 1992.
Thereafter, the petitioner submitted an undertaking dated March 20, 1992 before the Rent Controller wherein the petitioner after referring to the direction contained in the order of the High Court dated March 6, 1992 gave the following undertaking: "That the respondent hereby gives undertaking that he will vacate the premises and shall handover the vacant possession of the premises on the expiry of one month from 6.3.92 as per the order of Hon 'ble High Court, subject to his rights for filing SLP in the Hon 'ble Supreme Court against the order of eviction.
The respondent has already sent draft for the rent for the month of March 1992 to the petitioner and he is not in arrears of rent.
" On March 21, 1992, the petitioner filed the special leave petition under Article 136 of the Constitution in this Court.
On the said petition the following order was passed on March 26, 1992: "To come up in normal course.
In the meantime, no dispossession to be effected.
" On April 9, 1992, an order was passed in the following terms: "Issue notice returnable within two weeks.
In the meantime, stay of eviction to continue." .
In response to the said notice, the respondent filed a counter affidavit on April 18, 1992 wherein an objection has been raised that in view of the undertaking given by him the petitioner cannot invoke the jurisdiction of this Court under Article 136 of the Constitution.
Shri D.V. Sehgal, the learned senior counsel appearing for the respondent, has submitted that in view of his having taken the benefit of direction contained in the order of the High Court allowing him one month 's time to vacate the premises on his filing an undertaking that he shall hand over vacant possession of the premises on the expiry of aforesaid period and his having submitted a written undertaking in accordance with the said direction, the petitioner is precluded from assailing the judgment of the High Court by invoking the jurisdiction of this Court under Article 136 of the Constitution.
Shri Sehgal has urged that the fact that the petitioner has qualified his undertaking by using the words "subject to his rights for filing SLP in the Hon 'ble Supreme Court against the order of eviction" would not alter the position.
In support of his aforesaid submission Shri Sehgal has placed reliance on the decisions of this Court in Thacker Hariram Motiram vs Balkrishan Chatbrabhu Thacker & Ors., [1989] Supp.
2 SCC 655; Vidhi Shanker vs Heera Lal, [1987] Supp.
SCC 200 and Ramchandra Jai Ram Randive vs Chandanmal Rupchand & Ors., [1987] Supp.
SCC 254.
Dr. A.M. Singhvi, the learned counsel appearing for the petitioner, has, however, laid stress on the fact that the undertaking had to be given by the petitioner in the peculiar circumstances arising on account of this Court being closed due to vacations from March 16, 1992 to March 20, 1992.
Dr. Singhvi has submitted that the petitioner has not taken any undue advantage by giving the undertaking inasmuch as before giving the under taking, he had moved an application for extension of time before the High Court wherein he had clearly indicated that he intended to file a special leave petition in this Court against the order of the High Court dated March 6, 1992 and this was also expressly stated in the undertaking filed in the Court wherein it is mentioned that the undertaking was subjected to his right to file the special leave petition in this Court against the order of eviction.
Dr. Singhvi has urged that in view of the aforesaid facts and circumstances the decisions on which reliance has been placed by Shri Sehgal would have no application to the present case.
In view of the judgment of the High Court allowing the petition for eviction filed by the respondent, the petitioner was liable to be evicted from the premises forthwith.
Under the direclions given by the High Court, the petitioner could continue in occupation of the premises for a period of one month on his (i) paying the entire arrears of rent within 15 days from the date of the judgment; and (ii) filing an undertaking with the court of Rent Controller to the effect that he shall hand over the vacant possession of the premises on the expiry of the period of one month.
The petitioner made an effort to obtain extension of time for vacating the premises without furnishing the undertaking and he filed a petition for the purpose before the High Court.
The said petition was, however, dismissed by the High Court.
Having failed in his attempt to obtain extension of time for vacating the premises without furnishing an undertaking the petitioner had two options open to him, (i) to avail the protection from eviction from the premises for 3a period of one month by tiling an undertaking as directed, or (ii) not to avail the said protection and run the risk of immediate eviction.
The petitioner chose the first option.
In order to avail the protection from eviction from the premises for a period of one month he filed the requisite undertaking in the court of the Rent Controller within the period of 15 days prescribed under the directions of the High Court.
The statement in the undertaking that it was subject to the rights of the petitioner to file special leave petition in this Court against the order of eviction, does not, in our view, have any effect on the legal consequences flowing as a result of the filing of the undertaking by the petitioner.
By furnishing the said undertaking the petitioner elected to avail the protection from eviction from the premises and he enjoyed the said protection till the passing of the order by this Court on March 26, 1992, staying dispossession of the petitioner.
Having elected to avail the protection from eviction under the order dated March 6, 1992 passed by the High Court, by filing the requisite undertaking, the petitioner cannot be permitted to assail the said order.
Law does not permit a person to both approbate and reprobate.
This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that "a person cannot say at one time that a transaction is valid any thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage".
[See: Verschures Creameries Ltd. vs Hull and Netherlands Steamship Co. Ltd., (1921) 2 R.B. 608, at p.612, Scrutton, L.J].
According to Halsbury 's Laws of England, 4th Edn.
,Vol. 16, "after taking an advantage under an order (for example for the payment of costs) a party may be precluded from saying that it is invalid and asking to set it aside".
(para 1508).
In Thacker Hariram Motiram vs Balkrishan Chatbrabhu Thacker & Ors.(supra), this Court was dealing with a similar situation.
The High (Court, while deciding the second appeal in an eviction matter gave the appellant (tenant) one year 's time subject to his giving an undertaking within a period of three weeks stating that vacant possession would be handed over within the aforesaid time.
The appellant gave an undertaking in accordance with the said terms wherein he undertook that he would vacate and give vacant possession of the suit premises by December 31, 1985, i.e., to say after one year if "by that time no stay order from the Supreme Court is received as I intend to file an appeal in the Supreme Court".
It was held that in view of the said undertaking the petitioner could not invoke the jurisdiction of this Court under Article 136 of the Constitution and he should abide by the terms of the undertaking, and it was observed "This undertaking filed by the appellant in our opinion is in clear variation with the oral undertaking given to the learned Judge which induced him to give one year 's time.
a We do not wish to encourage this kind of practice for obtaining time from the court on one plea of filing the undertaking and taking the different stand, in applications under Article 136 of the Constitution." (p.655) Similarly in Vidhi Shanker vs Heera Lal (supra) and Ramchandra Jai Ram Randive vs Chandanmal Rupchand & Ors.
(supra), this Court declined to exercise its discretion under Article 136 of the Constitution in cases where the petitioner had given an undertaking in the High Court and had obtained time to vacate the premises on the basis of such undertaking.
We are, therefore, of the opinion that the petitioner, having given an undertaking in pursuance to the directions given by the High Court in the Judgment dated March 6, 1992, and having availed the protection from eviction on the basis of the said undertaking, cannot be permitted to invoke the jurisdiction of this Court under Article 136 of the Constitution and assail the said judgment of the High Court.
In that view of the matter, we do not consider it necessary to deal with the submissions urged by Dr. Singhvi that the respondent, being an employee of the University at the time of his retirement, was not a 'specified landlord ' under section 2(hh) of the Act.
The special leave petition is, accordingly, dismissed but without any orders as to costs.
V.P.R. Petition dismissed.
| A residential house was let out to the petitioner by the respondent.
The respondent was initially employed as Accounts Officer with the Finance Department of the Government.
In 1969, he went on deputation with the Haryana Agricultural University.
While he was employed on the post of Comptroller in the University he retired from service with effect from February 28, 1991.
Claiming to be a "specified landlord" within the meaning of Section 2(hh) of the East Punjab Urban Rent Restriction Act, 1949, the respondent moved a petition seeking eviction of the petitioner under section 13A of the Act before the Rent Controller.
The petition was dismissed by the Rent Controller on the view that the respondent did not fall within the ambit of the definition of "specified landlord", since he failed to show that he was holding or had held an appointment in a public service or post in connection with the affairs of the Union or of the State.
The respondent filed a revision petition before the High Court under section 18 A(8) of the Act, which was allowed by the High Court on March, 1992.
The High Court held that the respondent, at the time of his retirement from the post of Comptroller in the University, was holding an appointment in connection with the affairs of the State and hence he was a specified landlord within the meaning of section 2(hh) of the Act and that the respondent had fully satisfied the conditions as contained in section 13 A of the Act and he was entitled to recover the possession of the premises in dispute from the petitioner.
The High Court allowed one month 's time for the petitioner to vacate the premises subject to his paying the entire arrears of rent within 15 days from the date of the order and filing an undertaking that he would hand over the vacant possession of the premises on the expiry of the aforesaid period.
On March 16, 1992, the petitioner moved a petition in the High Court under section 151 CPC seeking three months ' time to vacate the house and for waiving the requirement of filing of an undertaking.
The High Court rejected the petition.
Thereafter, the petitioner submitted an undertaking dated March 20, 1992 before the Rent Controller wherein the petitioner referred to the direction contained in the order of the High Court dated March 6, 1992.
On March 21, 1992, the petitioner filed the special leave petition under Article 136 of the Constitution in this Court and succeeded to get an order staying dispossession on March 26, 1992.
In response to the notice issued on the Special Leave Petition, the respondent filed a counter affidavit raising an objection that in view of the undertaking given by the petitioner, the jurisdiction of this Court under Article 136 of the Constitution could not be invoked.
The respondent landlord submitted that in view of petitioner tenant 's having taken the benefit of direction contained to the order of the High Court allowing him one month 's time to vacate the premises on his filing an undertaking that vacant possession of the premises would be handed over on the expiry of the period and his having submitted a written undertaking in accordance with the direction, the petitioner was precluded from assailing the judgment of the High Court by invoking the jurisdiction of this Court under Article 136 of the Constitution.
The petitioner tenant submitted that he did not take any undue advantage by giving the undertaking; that prior to the undertaking, he had moved an application for extension of time before the High Court wherein he had clearly indicated that he intended to file a special leave petition in this Court against the order of the High Court dated March 6, 1992 and that it was also expressly stated in the undertaking filed in the Court wherein it is mentioned that the undertaking was subject to his right to file the special leave petition in this Court against the order of eviction.
Dismissing the special leave petition, this Court, HELD: 1.01 Law does not permit a person to both approbate and reprobate.
This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument.
[263 F] 1.02 The petitioner, having given an undertaking in pursuance to the directions given by the High Court in the judgment dated March 6, 1992 and having availed the protection from eviction on the basis of the said undertaking, cannot be permitted to invoke the jurisdiction of this Court under Article 136 of the Constitution and assail the said judgment of the High Court.
[264 H] 1.03 The statement in the undertaking, that it was subject to the rights of the petitioner to file special leave petition in this Court against the order of eviction, does not have any effect on the legal consequencew flowing as a result of the filing of the undertaking by the petitioner.
[263 D] Verschures Creameries Ltd. vs Hull and Netherlands Steamship Co. E Ltd., at p. 612; Thacker Hariram Motiram vs Balkrishan Chatbrabhu Thacker & Ors., [1989] Supp.
2 SCC 655 and Vidhi Shanker vs Heera Lal 1987 Supp.
SCC 200; Ramchandra Jai Ram Randive vs Chandanmal Rupshand & Ors., [1987] Supp.
SCC 254, referred to.
Halsbuly 's Laws of England, 4th Edn.
16, para 1508, referred to.
|
Civil Appeal No 3244 of 1988.
From the Judgement and Order dated 8.7.1988 of the Karnataka High Court in W.A. No.560 of 1983.
K.N. Bhat S.K. Kulkarni and Ms. Kiran Suri for the Appellant S.N Bhat M.Veerappa and K.H Nobin Singh for the respondents.
The Judgment of the Court was delivered by N.P. SINGH, J.
This appeal has been filed against an order passed by the High Court, on a writ application filed by the petitioner respondent (hereinafter referred to as "the respondent") quashing the order of termination of the service of the respondent.
The respondent was appointed as a Lecturer in Surgical Oncology on 3rd July, 1981.
He was to be on probation for a period of one year from the date of his appointment which period could have been extended at the discretion of the competent authority.
One of the conditions provided is as follows : "Failure to complete the period of probation to the satisfaction of the competent authority will render you liable to be discharged from service.
" Before the expiry of one year, the impugned order of termination was issued on 30th January, 1982 saying: "In accordance with the decision of the Governing Council at its meeting held on 28th January, 1982 the services of Dr. Pandurang Godwalkar, Lecturer in Surgical Oncology (on probation), Kidwai Memorial Institute of Oncology, Bangalore are terminated with effect from the afternoon of 30 January, 1982, as per Rule 4 of the Conditions of Service Rules (Annexure 2 Chapter I) of the Institute.
He is paid one month 's salary in lieu of one month 's notice required as per rules." Although the order under challenge was order of termination simpliciter, the validity thereof was questioned by the respondent on the ground that an order of dismissal had been passed in the garb of an order of termination.
According to the respondent, some complaints had been made against him to the Director of the Institute who instead of initiating a departmental proceeding on basis of charges levelled against the respondent, put up the matter before the Governing Council of the Institute for termination of the service of the respondent during the period of probation.
The learned Judge in view of the assertions made on behalf of the respondent directed the institute to produce the original records including certain documents and papers which had been marked as confidential.
From the note of the Director it appeared that complaints had been made in respect of performance of the duties by the respondent.
In that note it was also mentioned that the respondent was unsympathetic towards the patients.
It had also brought to the notice of the Governing Council that the respondent had attempted to obtain the signatures.
of some of the patients on the petitions stating that he was a good doctor.
On one occasion it was reported that the respondent had taken away a girl on his scooter and brought her back late in the night.
The said girl was an attendant to a patient in the hospital.
The learned Judge came to the conclusion that as the service of the petitioner had been terminated because of the complaints made against him it really amounted to his removal for the misconduct alleged in the note of the Director.
According to the learned Judge the Institute should have initiated a departmental proceeding in respect of the alleged charges and only after due enquiry any action should have been taken.
There is no dispute that the service of the respondent had been terminated during the period of probation The appointment of the respondent was with a clear condition that failure to complete the period of probation to the satisfaction of the competent authority shall render him liable to be discharged from the service.
Relevant part of Rule 4 of the Conditions of Service Rules is as follows : "4. TERMlNATION : 1.
All appointments shall be terminable on a notice in writing either by the appointing authority or the employee without assigning any reason as set below : a) During the period . one month of probation.
b) After completion of the period 1 of probation. months.
c) The notice referred to in rule (1) above shall not be necessary if in lieu thereof an amount equal to the pay and allowance for the period of notice is paid. . . . " Generally in connection with an order of termination, a question is raised before the court as to what is the motive behind the termination of the service of the employee concerned whether the reason mentioned in the order of termination has to be accepted on its face value or the background in which such order of termination simpliciter has been passed should be examined to find out as to whether an officer on probation or holding a temporary appointment has been, in fact, dismissed from the service without initiating any departmental enquiry.
If an employee who is on probation or holding an appointment on temporary basis is removed from the service with stigma because of some specific charge, then a plea cannot be taken that as his service was temporary or his appointment was on probation, there was no requirement of holding any enquiry, affording such an employee an opportunity to show that the charge levelled against him is either not true or it is without any basis.
But whenever the service of an employee is terminated during the period of probation or while his appointment is on temporary basis, by an order of termination simpliciter alter some preliminary enquiry it cannot he held that as some enquiry had been made against him before the issuance of order of the termination it really amounted to his removal from service on a charge as such penal in nature When an appointment is made on probation, it presupposes that the conduct, performance, ability and the capacity of the employee concerned have to be watched and examined during the period of probation.
He is to be confirmed after the expiry of probation only when his service during the period of probation is found to be satisfactory and he is considered suitable for the post against which he has been appointed.
The principle of tearing of the veil for finding out the real nature of the order shall be applicable only in a case where the Court is satisfied that there is a direct nexus between the charge so levelled and the action taken.
If the decision is taken, to terminate the service of an employee during the period of probation, after taking into consideration the overall performance and some action or inaction on the part of such employee then it cannot be said that it amounts to his removal from service as punishment.
It need not be said that the appointing authority at the stage of confirmation or while examining the question as to whether the service of such employee be terminated during the continuance of the period of probation is entitled to look into any complaint made in respect of such employee while discharging his duties for purpose of making assessment of the performance of such employee.
Even it such employee while questioning the validity of an order of termination simpliciter brings on the record that some preliminary enquiry or examination of some allegations had been made that will not vitiate the order of termination.
Reference in this connection may be made to the case of Oil and Natural Gas Commission vs Dr. Mohd. section Iskender Ali; , where it was pointed out that a temporary employee is appointed on probation for a particular period only in order to test whether his conduct is good and satisfactory so that he may be retained" .
It was also said that even if misconduct negligence inefficiency may be the motive or the influencing factor which induced the employer to terminate the service of the employee which such employe admittedly had under the terms of the appointment such termination cannot be held to be penalty or punishment.
Same view has been reiterated in connection with appointment on temporary or ad hoc basis in the cases of Ravindra Kumar Misra vs U.P. State Handloom Corpn.
Ltd, ; State of Uttar Pradesh vs Kaushal Kishore Shukla, ; and Triveni Shankar Saxena vs State of U.P., Judgements Today On behalf of the respondent reliance was placed on the case of Anoop Jaiswal vs Government of India, ; In that case the service of the appellant had been terminated during the period of probation.
On the materials on record it was held by this Court that the order of termination really amounted to punishment because the real foundation of the action against the appellant was the act of misconduct on June 22, 1981.
The aforesaid judgment is of no help to who respondent because in that case a clear finding was recorded by this Court that the service of the appellant had been terminated because of a particular misconduct alleged against him which had never been enquired into.
So far the facts of the present case are concerned the Governing Council examined the different reports in respect of the respondent during the period of probation and considered the question as to whether he should be allowed to continue in the service of the Institute.
The decision appears to have been taken by the Governing Council on the total and overall assessment of the performance of the respondent, in terms of the condition of the appointment and Rule aforesaid.
Accordingly the appeal is allowed and the judgment of the High Court is set aside.
However, in the circumstances of the case, there will be no order as to costs.
G.N Appeal allowed.
| The respondent was appointed as a Lecturer in the appellant Institute and was put on probation for one year.
During the probation period his services were terminated.
The respondent challenged the same before the High Court by way of a Writ Petition contending that actually order of dismissal has been passed in the garb of an order of termination; and that the Director of the institute instead of initiating a departmental proceeding on the basis of some charges levelled against him, placed the matter before the governing council of the Institute termination of his services.
The High Court gave its finding that since the service of the petitioner had been terminated because of the complaints made against him, it really amounted to his removal for alleged misconduct and so the institute should have initiated a departmental proceeding and only after due enquiry any action should have been taken.
Being aggrieved by the High Courts order, the appellant Institute has preferred the present appeal.
Allowing the appeal, this Court, HELD: 1.1.
When an appointment is made on probation, it pre supposes that the conduct, performance, ability and the capacity of the employee concerned have to be watched and examined during the period of probation.
He is to be confirmed after the expiry of probation only when his service during the period of probation is found to be satisfactory and he is considered suitable for the post against which he has been appointed.
The principle of tearing of the veil for finding out the real nature of the order shall be applicable only in a case where the Court is satisfied that there is a direct nexus between the charge so levelled and the action taken.
If the decision is taken to terminate the service of an employee during the period of probation, after taking into consideration the overall performance and some action or inaction on the part of such employee then it cannot be said that it amounts to his removal from service as punishment.
The appointing authority at the stage of confirmation or while examining the question as to whether the service of such employee be terminated during the continuance of the period of probation, is entitled to look into any complaint made in respect of such employee while discharging his duties for purpose of making assessment of the performance of such employee.
[254 E H; 255 A] 1.2.
Even if such employee while questioning the validity of an order of termination simpliciter brings on the record that some preliminary inquiry or examination of some allegations had been made, that will not vitiate the order of termination.
[255 B] Oil and Natural Gas Commission vs Dr. Mohd section Iskender Ali ; ; Ravindra Kumar Misra vs U.P. State Handloom Corpn.
Ltd., [1987] suppl.
SCC 739; State of Uttar Pradesh vs Kaushal Kishore Shukla, ; and Triveni Shankar Saxena vs State of U.P., J.T. 1992 (1) S.C. 37, relied on.
Anoop Jaiswal vs Government of India, ; distinguished.
|
N: Criminal Appeal No. 183 of 1993.
From the Judgment and order dated 11.5.1992 of the Allahabad High Court in Criminal Appeal No. 1791 of the 1979.
Bahar U. Bargi and Anis Suhrawardy for the Appellant.
The following Order of the Court was delivered: The petitioner was convicted by the Special Judge, Mathura under Section 5(2) of the Prevention of Corruption Act and was sentenced to two years rigorous imprisonment and a fine of Rs. 200.
He filed an appeal before the Allahabad High Court which was dismissed for default of the appearance Or the petitioner and his counsel, when the appeal was called out for preliminary hearing.
An application for restoration of the appeal made thereafter has also dismissed by the order which has been challenged before this Court in the present special leave petition.
The question which arises in this case is whether an appeal filed under Section 374 of the Criminal Procedure Code by an accused against his conviction and sentence could be dismissed for the default of the appellant in prosecuting the appeal either in person or through counsel.
Notice was issued in the special leave petition indicating that the matter would be finally disposed of at the notice stage itself.
The office report indicates that notice has been served, but there is no appearance on behalf of the respondent State.
Special leave is granted.
The High Court in its order dated 14th November, 1990 dismissing the appeal for non prosecution, relied upon the observations of this Court in Ram Naresh Yadav and others vs State of Bihar, AIR 1987 SC 1500 to the following effect: "The court can dismiss the appeal for non prosecution and enforce discipline or refer the matter to the Bar Council with this end in view.
But the matter can be disposed of on merits only after hearing the appellant or his counsel.
The learned counsel for the appellant has contended that the appeal could not have been dismissed for default on the ground of absence of the appellant or his counsel to appear and press the appeal.
The argument appears to be well founded.
As enjoined by Section 382 of the Code of Criminal Procedure, the appeal has to be filed in the form of a petition.
Section 384 (omitting sub sections (3) and (4) which are not relevant in the present context) quoted below deals with summary disposal of appeal: "384.
Summary dismissal of appeal: (1) If upon examining the petition of appeal and copy of the judgment received under Sec. 382 or Sec.
383, the Appellate Court considers that there is no sufficient ground for interfering, it may dismiss the appeal summarily: Provided that (a) no appeal presented under Sec. 382 shall be dismissed unless the appellant or his pleader has had a reasonable opportunity of being heard in support of the same; (b) no appeal presented under Sec.
383 shall be dismissed except after giving the appellant a reasonable opportunity of being heard in support of the same, unless the Appellate Court considers that the appeal is frivolous or that the production of the accused in custody before the Court would involve such inconvenience as would be disproportionate in the circumstances of the case; (c) no appeal presented under Sec. 383 shall be dismissed summarily until the period allowed for preferring such appeal has expired.
(2) Before dismissing an appeal under this section, the Court may call for the record of the case.
It will be seen that the very opening words of the Section require the Appellate Court to examine the petition of appeal and copy of the impugned judgment in considering whether there is any sufficient ground for interfering with the same.
Sub section (2) provides that the Court may call for the records of the case even at the preliminary stage.
It is, thus clear, that the duty of the appellate court to examine the petition of appeal and the judgment under challenge and to consider the merits of the case before dismissing the appeal summarily is not dependent on the appellant or his counsel appearing before the Court to press the appeal.
As soon as a petition of appeal is presented under Section 382 or 383 it becomes the duty of the appellate court to consider the same on merits, even in the absence of the appellant and his counsel before dismissing the same summarily.
In a case where the appellant has been sentenced to imprisonment and he is not in custody when the appeal is taken up for preliminary hearing, the Appellate Court can require him to surrender, and if the appellant fails to obey the direction, other considerations may arise, which may render the appeal liable to be dismissed without consideration of the merits, but that is altogether a different matter with which we are not concerned in the present case.
Here, the appellant 's advocate was not present to argue the appeal when the case was called out and in the restoration application filed subsequently, attempt was made to explain the default, which, of course, did not succeed.
The question is, whether in the circumstances, the High Court could have dismissed the appeal for default, and if not, whether the prayer for restoration should have been allowed.
As is manifest from the provisions of Criminal Procedure Code, referred to above, the High Court should have either examined the appellant 's petition of appeal and the judgment under challenge, itself or appointed a counsel to assist the Court, but could not have proceeded to dismissed the same on the ground that the Advocate for the appellant was not present.
The position of a criminal appeal is not the same as in a civil appeal governed by the Civil Procedure Code.
comparison of the provisions of Section 384 with those of Order 41, Rules 11 and 17 of the Civil Procedure Code clearly brings out the difference.
Rule 17, Order 41 of Civil Procedure Code in express terms provides that an appeal may be dismissed on the ground of absence of the appellate when the appeal is called out, and Rule 19 provides for its restoration on the appellant offering sufficient cause for his non appearance.
In the case of a criminal appeal the corresponding provisions are not to be found in the Code of Criminal Procedure.
On the other hand the Code in express terms requires the matter to be considered on merits.
Thus a criminal appeal cannot be dismissed for non prosecution, and this is the reason as to why the Criminal Procedure does not contain any special provision like Order 41, Rule 19.
The law was correctly laid down in Shyam Deo Pandey & Ors.
v State of Bihar, a case governed by the old Criminal Procedure Code.
The position in this regard remains the same under the new Code.
Even earlier, the High Courts were following this very principle is clear from the observations Emperor vs Balumal Hotchand and Others, 39 Criminal law Journal 890 and Ramesh Nanu vs State of Gujarat, 17 Gujarat Law Reporter 350.
in Emperor vs Balumal Hotchand and others, it was observed thus: That the law requires that before an Appellate Court dismisses and appeal summarily, it shall read a copy of the judgment, and then, if there is no sufficient ground for interfering, it may dismiss the appeal summarily.
it was emphasized that the dismissal of the appeal shall depend on the exercise by the judgment, and not upon the failure of the accused to press his appeal.
In view of the clear language of the Code of Criminal Procedure and the other reasons mentioned above we are constrained to hold that the observations of this Court in AIR 1987 Supreme Court page 1500 relied Upon by the High Court in the case before us, cannot be treated as having laid down the law correctly.
The High Court was, therefore, not right in dismissing the appeal on the ground of non appearance of the appellant or his counsel and it should have, therefore, allowed the prayer of restoration of the criminal appeal under its inherent power.
In the result, the present appeal is allowed, the orders of the High Court are set aside, the Criminal Appeal No. 1791 of 1979 before the High Court is restored and the matter is remitted to the High Court for consideration and decision on merits in accordance with law.
T.N.A Appeal allowed.
| The appellant was convicted under Section 5(2) of the Prevention of Corruption Act and was sentenced to two years rigorous imprisonment and a fine of Rs. 200.
He filed an appeal under Section 374 of the Criminal Procedure Code before the Allahabad High Court which was dismissed for default of the appearance of the appellant and his counsel.
An application for restoration of the appeal made thereafter was also dismissed.
In appeal to this Court it was contended on behalf of the appellant that the appeal could not have been dismissed for default on the ground of absence of the appellant or his counsel to appear and press the appeal.
Allowing the appeal and setting aside the orders of the High Court, this Court, HELD: 1.
The High Court was not right in dismissing the appeal on the ground of non appearance of the appellant or his counsel and it should have allowed the prayer of restoration of the criminal appeal under its inherent power.
[310 C] 2.
Under Section 384 of the Criminal Procedure Code it is the duty of the appellant court to examine the petition of appeal and the judgment under challenge and to consider the merits of the case before dismissing the appeal summarily.
The said duty is not dependent on the appellant or his counsel appearing before the Court to press the appeal.
As soon as a petition of appeal is presented under Section 382 or 383 it becomes the duty of the appellate court to consider the same on merits, even in the absence of the appellant and his counsel before dismissing the same summarily.
Therefore, the High Court should have either examined the appellant 's petition of appeal and the judgment under challenge, itself or appointed a counsel to assist the Court, but could not have proceeded to dismiss the same on the ground that the advocate for the appellant was not present.[308 H; 309 A, C] 3.
The position of a criminal appeal is not be same as that of a civil appeal.
A comparison of the provisions of Section 384 of Criminal Procedure Code with those of Order 41, Rules 11 and 17 of the Civil Procedure Code clearly brings out the difference.
Rule 17, Order 41 of Civil Procedure Code in express terms provides that an appeal may be dismissed on the ground of absence of the appellant when the appeal is called out, and Rule 19 provides for its restoration on the appellant offering sufficient cause for his non appearance.
However, in the case of a criminal appeal the corresponding provisions are not to be found in the Code of Criminal Procedure.
On the other hand the Code in express terms requires the matter to be considered on merits.
Thus a criminal appeal cannot be dismissed for non prosecution.
[309 D, E] Ram Naresh Yadav & Ors vs State of Bihar, A.I.R. 1987 S.C. 1500, dissented form.
Shyam Deo Pandey & Ors.
vs state of Bihar, [1971 Suppl.
S.C.R. 133, relied on.
Emperor vs Balumal Hotchand and Ors., and Ramesh Nanu vs State of Gujarat, 17 Gujarat Law Reporter 350, referred to.
|
N: Criminal Appeal No. 646 of 1992.
From the Judgment and Order dated 3.4.92 of the Gujarat High Court in Crl.
A. No. 161 of 1992.
T.U.Mehta, N.N. Keshwani, Ashok D. Shah, R.N. Keshwani and S.K. Gupta for the Appellant.
Anip Sachthey and Badri Nath for the Respondent.
The Judgment of the Court was delivered by YOGESHWAR DAYAL, J.
On 4th September, 1992 this Court had directed issue of notice on the Special Leave Petition as well as on application for bail returnable in four weeks and it was indicated that the matter will be heard and finally decided on that date.
However, there is no appearance on behalf of the State today.
Leave granted.
The matter is being disposed of.
This is an appeal by Special Leave against the judgment of the Division Bench of the Gujarat High Court dated 3rd April, 1992.
Four accused persons were tried by Special Judge, Ahmedabad.
Out of the said four accused only one of the accused person, namely accused No. 2, a Food Inspector has been convicted of offences punishable under Section 161 of the Indian Penal Code and Sections 5(1) (d) and 5(2) of the Prevention of Corruption Act, 1947.
The three other accused were acquitted by the learned Special Judge.
The State tiled the appeal against the acquittal of the three acquitted accused whereas accused No. 2 filed an appeal against his conviction and sentence.
The High Court dismissed the appeal of the State against the acquittal of accused No.1, 3 and 4 and at the same time dismissed the appeal of accused No. 2.
Accused No. 2 has come up to this Court by way of a Special Leave Petition against the aforesaid decision of the Division Bench.
The prosecution case is that the complainant Mohanlal Chhatramal Samnani is running a shop and inter alia dealing in Kimam opposite Maninagar Railway Station, Ahmedabad.
On 7th January, 1984, the Chief Inspector in the Health Department (accused No.1) and accused No. 2 (appellant herein) and accused No. 4, who were working under him as Food Inspectors, had approached the complainant at his shop and stated that they had been inspecting the food articles for adulteration and took a bottle of Kimam and opened it for sample and the complainant told them that it may be taken in sealed condition but they refused to do so and stated that the sample would not be passed and the complainant would be put to difficulties.
This was stated by accused No. 1 who further stated that the complainant should be practical.
The complainant enquired as to what was meant by being practical and the accused No. 2 (appellant) replied that "being practical" means "money".
The complainant then enquired as to the amount and he was told Rs. 5,000.00.
The complainant was not willing to make such payment.
However, he was pressurised.
The complainant stated that he did not have that much money and, therefore, he was asked to pay whatever the amount he could pay immediately and the complainant opened his `galla ' and gave Rs. 600.00 to accused No. 1.
The next day, on 8th January, 1984, accused No. 4 had come to his shop and enquired whether the money had been arranged but the complainant replied that it could not be done.
However, under pressure he gave Rs. 500.00 to accused No. 4 and asked for more time for making arrangement for more amount.
Thereafter, after about 15 days accused Nos. 2 & 4 had come to his shop demanding illegal gratification and the complainant requested for four days time.
After four days again the accused Nos. 2 & 4 came to his shop and the complainant again stated that the money could not be arranged and he may be given two days time.
After great difficulties, on complainant making a promise that he would pay the amount with 100% certainty, and on this final promise, accused Nos. 2 & 4 asked the complainant to keep the money ready on 30th January, 1984 at 3.00 p.m.
On 30th January, 1984 the complainant approached the office of the Anti Corruption Bureau and gave his complainant.
Two Panchas were called by the A.C.B.
In the presence of those two Panchas, the numbers of 40 currency notes of Rs. 100.00 each were noted done in two batchs of 20 each.
Each of these currency notes was treated with anthracene powder and a demonstration was made and shown to thc complainant and the Panchas.
One bundle of Rs. 2000.00 was to be given to accused No. I and another bundle was to be given to accused Nos. 2 & 4.
Panch No. 1 was to remain with the complainant and Panch No. 2 was to remain with the raiding party.
After making this preliminary panchnama raided party went to Maninagar and the complainant and Panch No. 1 went to the shop at about 6.30 p.m. and the others waited outside a little away.
After about an hour accused No. 2 came to the shop and the complainant asked accused No. 2 to come and sit but the accused No. 2 replied that he was in a hurry and asked the complainant to come with him where another Inspector was waiting near the Post Office.
Therefore, the complainant went with accused No. 2 and Panch No. 1 followed them.
Accused No. 3 and Jinto (absconding accused) were waiting and accused No. 2 introduced them to the complainant and asked the complainant as to what he had done about the money which was earlier talked about.
The complainant replied that he had brought the money.
The accused No. 2 demanded the same and the complainant took out the bundle of currency notes from one of his pockets and gave it to accused No. 2 who accepted it by his right hand and asked the complainant as to how much it was and the complainant replied that it was Rs. 2,000.00 and accused No. 2 asked as to for how many persons it was and the complainant replied that it was for three persons.
The accused No. 2 asked accused No. 3 to count the same and while Modi, accused No.3, was counting the same, the complainant gave the signal and the raiding party which had followed them immediately came there alongwith Panch No. 2.
All of them wont to the shop of the complainant where Modi was asked to give currency notes to the Panchas and exercise of ultra violet Iamp was undertaken and in the ordinary light, hands of each of the three Food Inspectors did not indicate any light change.
Thereafter, under ultra violet light, hands of all were seen and the hands of Panch No. 2 and the members of the raiding party did not show any change on their hands.
The hands of accused No.2 (appellant) were seen in the ultra violet light and the four fingers and thumb of the right hand showed the light blue colour and white sparkle.
So also was the position with regard to the right hand fingers and thumb of Jinto and his clothes, namely the right hand pocket of the pant, so also the fingers and thumb of both the hands of accused No.3, Modi, and the left hand pocket and the woollen cap of Modi showed white sparkle and the light blue colour.
The numbers of currency notes were compared with the numbers which were recorded in the preliminary panchnama and they were found to tally.
The currency notes also showed the anthracene powder in the ultra violet light.
The complainant 's hands were also seen and they also showed the anthracene powder in ultra violet light so also both his inside pockets of the coat.
Thereafter, the complainant and the Panchas went to the residence of accused No.1.
The complainant alongwith Panch No.1 went to the first floor of the flat of accused No.1.
Accused No.1 opened the door and asked these people to come inside and made them sit.
The complainant offered money to accused No.1.
He, however, refused to accept the same and, therefore, they came Out and no raid was made.
As stated earlier all the accused were tried by the learned Special Judge and accused Nos. 1, 3, & 4 were acquitted and ultimately the appeal of the State against their acquittal was dismissed by the High Court.
The High Court dismissed the appeal of accused No.2 also after noticing (i) that the Panchas did not recognize any of the accused persons; (ii) that there is no corroboration to what had happened in the meetings preceding the raid on 30th January, 1984; (iii) that the evidence of the complainant was disinterested and did not require any corroboration; and (iv) that the hands of accused No.2 were seen in ultra violet light and four fingers and thumb of the right hand showed the light blue colour and white sparkle.
The High Court had acquitted accused Nos. 3 & 4 in spite of the fact that their fingers have also showed light blue colour and white sparkle in ultra violet light but the High Court was not prepared to rely on that circumstance alone with the uncorroborated testimony of the complainant.
Since according to the High Court no demand had been made by accused Nos. 3 and 4 from the complainant for any bribe.
It will be noticed that not only the two Panchas could not recognize any of the accused persons but there is no corroboration to the various statements of the complainant vis a vis accused Nos. 1 to 4 by the police officials who constituted the raiding party either.
The raiding party including the police officials reached the spot at a time when they could neither hear the talk, if any, between the accused No. 2 and the complainant nor could see the alleged acceptance of money by accused No.2 and passing it on to accused No.3.
We are thus left with the sole testimony of the complainant and the test of seeing anthracene powder on the hands and fingers of accused No.2.
The High Court had acquitted accused No.3 and did not find it safe to convict him on the sole testimony of the complainant supported by the test of seeing anthracene powder on the hands and fingers of accused No.3.
in ultra violet light.
But on the same evidence the High Court upheld the conviction of accused No.2 relying on the same evidence which was rejected vis a vis accused No.3.
The High Court felt that the complainant was totally dis interested in the success of the raid and could not be called interested person and thus felt no need for corroboration of his statement.
The fact remains that the High Court totally ignored the statement of the complainant made during cross examination on behalf of accused No.2.
In his cross examination the complainant stated; "It is true that accused No.2 used to carry out raids on and often on Pan gallas.
It is true that I had felt that he is harassing businessmen selling Pan and Masalas.
It is true that is why we thought of teaching him a lesson.
It is true that in my statement before police, I have not stated that when accused No.1 asked as to why have you come, then I told that I am Kimamwala of Maninagar and according to talk with Shantilal, I have come to give money.
" It is clear that it is not a case merely of a complainant from whom bribe was demanded and he was forced to pay the same but the complainant had thought of teaching a lesson to accused No.2 for harassing the businessmen selling Pan Masalas and, therefore, it could not be said that the complainant was not interested in success or otherwise of the raid.
In fact the High Court acquitted accused No.3, though the evidence against him was the same as it was against accused No.2.
When the High Court could not find it safe to rely on the uncorroborated statement of the complainant while upholding the acquittal of accused No.3 we also find it unsafe to rely on the pise dixit of the complainant which is unsupported by both the Panch witnesses and the police officials who formed the raiding party for upholding the conviction of accused No.2, appellant before us.
The result is that the appeal succeeds, the conviction and sentence of the appellant is set aside and the appellant is acquitted.
N.V.K. Appeal allowed.
| The prosecution case was that the complainant was running a shop and dealing in Kimam and that on 7th January, 1984, the Chief Inspector in the Health Department (accused No.1) and accused No. 2 (appellant in the appeal), accused No. 3 and accused No. 4 who were working as Food Inspectors had approached the complainant at his shop and stated that a they had been inspecting food articles for adulteration, and took a bottle of Kimam and opened it for sample and when the complainant told them that it may be taken in sealed condition, they refused to do so and stated that the sample would not be passed and the complainant would be put to difficulties, unless he paid Rs. 5,000.
The complainant was not wiling to make such payment but he was pressurised.
On the next day, 8th January, 1984 accused No. 4 came to the shop to enquire whether the money had been arranged.
He was given Rs. 500 and the balance was promised to be given on 30th January, 1984.
On 30th January, 1984 the complainant approaehed the office of the Anti Corruption Bureau and gave his complaint.
Two Panchas were called by the A.C.B., the number of 40 currency notes of Rs. 100 each were noted done in two batches of 20 each, the currency notes were treated with anthracene powder, a demonstration was made and shown to the complainant and the Panchas.
Panch No.1 was to remain with the complainant and Panch No. 2 was to remain with the raiding party.
The complainant and Panch No.1 went to the stop at about 6.00 p.m. and when accused No. 2 demanded the money, the complainant gave it to him, when he was apprehended by the raiding party.
The hands of accused No. 2 (appellant) were seen in the ultra violet light and the four fingers and thumb of the right hand showed the light blue colour and white sparkle.
The currency notes also showed the anthracene powder in the ultra violet light.
Thereafter, the complainant and Panchas went to the residence of accused No. 1.
The complainant offered money to accused No. 1.
He, however, refused to accept the same, and, therefore no raid was made.
All the four accused were tried by the Special Judge for offences under section 161 of the Indian Penal Code read with Sections 5(1) (d) and 5(2) of the Prevention of Corruption Act.
Accused Nos. 1, 3 and 4 were acquitted while accused No. 2 was convicted and sentenced by the Special Judge.
The State filed an appeal against the acquittal of the three accused whereas accused No. 2 filed an appeal against his conviction and sentence.
The High Court dismissed both the appeals.
It noticed that: the Panchas did not recognise any of the accused persons; there is no corroboration as to what had happened in the meetings preceding the raid on 30th January, 1984; the evidence of the complainant was disinterested and did not require any corroboration; and the hands of accused No. 2 when seen in ultra violet light the four fingers and thumb of the right hand showed the light blue colour and white sparkle.
Allowing the appeal, and setting aside the conviction and sentence, this Court, HELD: 1.
The High Court had acquitted the accused No. 3 and did not find it safe to convict him on the sole testimony of the complainant supported by the test of seeing anthracene powder on the hands and fingers of accused No. 3 in ultra violet light, but on the same evidence upheld the conviction of accused No. 2 relying on the same evidence which was rejected vis a vis accused No. 3.
[272 G] 2.
When the High Court could not find it safe to rely on the uncorroborated statement of the complainant while upholding the acquittal of accused No.3 it is unsafe to rely on the ipse dixit of the complainant which is unsupported by both the Panch witnesses and the police officials who formed the raiding party for upholding the conviction of accused No. 2, appellant.
[273 E] 3.
Not only the two Panchas could not recognise any of the accused persons but there is no corroboration to the various statements of the complainant vis a vis accused Nos.
1 to 4 by the police officials who constituted the raiding party either.
The raiding party including the police officials reached the spot at a time when they could neither hear the talk, if any, between the accused No. 2 and the complainant nor could see the alleged acceptance of money by accused No. 2 and passing it on to accused No. 3.
[272 E] 4.
The High Court totally ignored the statement of the 2complainant made during cross examination on behalf of accused No. 2, that he had thought of teaching accused No. 2 a lesson for harassing businessmen selling Pan and Masalas.
[273 A] 5.
It is clear that this is not a case merely of a complainant from whom bribe was demanded and he was forced to pay the same but the complainant had thought of teaching a lesson to accused No. 2 for harassing the businessmen selling Pan Masalas and therefore, it could not be said that the complainant was not interested in success or otherwise of the raid.
[273 D]
|
Appeal Nos.
4734 35 of 1992.
From the Judgment and Order dated 8.5.1992 of the Madhya Pradesh High Court in Misc.
Petition Nos.
48] and 533 of 1992.
Shanti Bhushan, N.C. Jain, S.K. Agnihotri and Ashok K. Singh for the Appellant.
Kapil Sibal, N.S. Kale, A.P. Dhamija, S.K. Jain, Manmohan, section Atreya, Pradeep Agarwal, Basant Bhai Mehta, Ravindra Srivastava, R.N. Srivastava, B.V. Desai and S.V. Deshpande for the Respondents.
The Judgment of the Court was delivered by VERMA, J.
The petitioner State of Madhya Pradesh in both these petitions seeks leave to appeal under Article 136 of the Constitution against the common judgment and order dated 8.5.1992 of the High Court of Madhya Pradesh in Miscellaneous Petition Nos. 481 of 1992 and 533 of 1992 under Article 226 of the Constitution.
The High Court has allowed both these writ petitions.
The material facts are these.
In Miscellaneous Petition No. 3909 of 1987 tiled in public interest by Kailash Joshi, then Leader of the Opposition in Madhya Pradesh Vidhan Sabha and now a Cabinet Minister in Madhya Pradesh, relating to the affairs of the Churhat Children 's Welfare Society and the lottery conducted by it, the M.P. High Court by its judgment dated 20.1.1989 issued a direction for setting up an independent high power agency to bold an inquiry into the affairs of the said Society of which respondent 1 Ajay Singh was one of the office bearers.
In compliance of that direction, the State Government passed a resolution on 24.2.1989 and also issued notification of the same date having the effect of setting up a Commission of Inquiry consisting of Justice S.T. Ramalingam, a Judge of the Madras High Court to investigate into the affairs of the said Society and the lottery conducted by it.
The resolution and notification are as under : "Bhopal, the 24th February, 1989 No. F. 1 3 89 l(i) E.C.
Whereas the High Court of Madhya Pradesh in its order dated the 20th January 1989 in M.P. No. 3909/87 Kailash Joshi versus State of Madhya Pradesh and others has directed that an inquiry be made by an independent high power agency into the affairs of the Churhat Children 's Welfare Society and how the share of its profits derived from all or any other draws have been utilized and to take such action as may be required under the law against the said Society and its organizing agent and that the State Government is of the view that the said order of the High Court should be implemented and carried out and whereas the State Government is also satisfied that this is a definite matter of public importance which calls for an inquiry to be made, the State Government hereby appoints an independent high power agency presided over by Shri Justice S.T. Ramalingam, Judge of the Madras High Court.
The Headquarters of the Agency shall be at Jabalpur, Madhya Pradesh.
The terms of reference for inquiry by the aforesaid Agency shall be as under: (1) How the affairs of the Churhat Children s Welfare Society are conducted and how the share of the profit derived and the money collected through lottery has been utilised ? (2) What is the amount collected draw wise, by the agent and the Society and what is the tax liability as per the Madhya Pradesh lottery (Niyantran Tatha Kar) Adhiniyam, 1973 ? (3) Whether any irregularities, illegalities and offences were committed in organizing the lottery, holding of draws of lottery, distribution of prizes, and in that event, the person responsible for the same; (4) Any other matter incidental or connected with the above subject matter of enquiry.
(4) The Agency may complete its enquiry and submit its report to the State Government within a period of six months from the date of issue of this Notification.
By order and in the name of the Governor of Madhya Pradesh, R.C. Shrivastava, Secy" "Bhopal, the 24th February, 1989 No. F.1 3 89 I(i) E.C. Whereas by Government of Madhya Pradesh Resolution dated the 24th February 1989 and Notification No. F.1 3 89 I(i) E.C., dated the 24thFebruary 1989 an independent High Power Agency presided over by Shri S.T. Ramalingam, Judge of the Madras High Court has been set up to hold an inquiry into the affairs of the Churhat Children 's Welfare Society; And whereas the State Government having regard to the nature of the inquiry to be made and other circumstances of the case is of the opinion that provisions contained in sub sections (2) to (5) of Section 5 of the , should be made applicable to the aforesaid Agency; Now,therefore, in exercise of the powers conferred by sub section (1) of Section 5 of the , the State Government hereby directs that the provisions of sub sections (2) to (5) of Section 5 of the said Act shall apply to the above described Agency.
By order and in the name of the Governor of Madhya Pradesh, R.C. Shrivastava, Secy".
According to the terms of the above notification, the inquiry was to be completed within a period of six months from the date of issue of the notification.
As the inquiry could not be completed within that period, by a notification dated 1.8.1990 the period for completing the inquiry was extended upto 22.8.1991; then by another notification dated 16.8.1991 the period was extended upto 31.3.1992; and then by another notification dated 27.3.1992 the period for completing the inquiry stands extended upto 31.3.1993.
In the meantime, Justice S.T. Ramalingam became due to retire as a Judge of the Madras High Court on 30.6.1991 on attaining the age of superannuation and, therefore, he wrote a letter dated 19.3.1991 to the Chief Secretary of the State drawing attention to this fact and requesting that necessary modalities be worked out well in time for his continuance as Commission of Inquiry in the light of the guidelines issued by the Government of India for the benefits and emoluments payable to a Judge on his retirement in such a situation.
Just Ramalingam mentioned in that letter some of the facilities he expected, to which he would not be entitled from the Government of Tamil Nadu on his retirement.
The Chief Secretary R.P. Kapoor sent a reply to Justice Ramalingam by DO No. 504/CS/91 dated 9.4.1991 as under: "My dear Hon 'ble Justice Ramalingam, Thank your very much for your letter No. 53 of 19th March, 1991.
The issues raised in your letter regarding the tenure of the Commission and the terms and conditions after your superannuation are under active consideration of the Government and I will be in a position to inform your after a final view is taken in this case.
In the meanwhile may I request that the proceedings may be continued so that the inquiry can be completed at the earliest possible.
With very kind regards, Yours sincerely, Sd/ (R.P. Kapoor)" `This letter of the Chief Secretary apart from promising to give an early reply also requested Justice Ramalingam to continue with the inquiry so that the same could be completed early.
While the promised reply from the State Government Justice Ramalingam was awaited, the State Government, without further reference to Justice Ramalingam, issued a notification dated 10.7.1991 as under: "Bhopal, the 10th July, 1991 No. F.1 6 91 I (8 Ka).
Whereas, an independent high power agency comprising of a single member namely Justice S.T. Ramalingam, Judge of the Madras High Court was appointed under this Department Notification No. F.1 3 89 I(i) E.C., dated the 24th February 1989; And whereas Justice S.T. Ramalingam has retired as Judge of the Madras High Court, on 30th of June 1991; And whereas for continuing in the said agency after retirement Justice Shri S.T. Ramalingam has placed certain terms and conditions which have not been found possible for the Government to accept.
Now, therefore, in exercise of the powers conferred by sub section (3) of Section 3 of the (No. LX of 1952), the State Government hereby appoint Justice Shri G.G. Sohani, retired Chief Justice, High Court of Patna (Bihar) as single member of the said agency in place of Justice Shri S.T. Ramalingam.
Accordingly this Department Notification Nos.
(I)F.1 3 89 I(i) E.C. dated the 24th February 1989, (2) F.1 3 89 1(i) E.C., dated the 24th February 1989 and (3) F.1 3 89 I(i) E.C. dated the 24th February 1989, shall stand amended to this extent.
By order and in the name of the Governor of Madhya Pradesh S.K. Misra, Secy.
Accordingly, by this notification, the State Government replaced Justice S.T. Ramalingam with Justice G.G. Sohani, retired Chief Justice of Patna High Court as the sole member of the Commission of Inquiry.
The appointment of Justice G.G. Sohani in place of Justice S.T. Ramalingam was challenged in the M.P. High Court by a writ petition M.P. No. 2359 of 1991 by respondent No. 1 Ajay Singh.
By an interim order dated 30.7.1991 passed by the High Court, the operation of the above notification dated 10.7.1991 was stayed.
During the pendency of that writ petition, Justice G.G. Sohani conveyed to the State Government his disinclination to continue with the assignment and tendered his resignation.
Consequently, the High Court dismissed that writ petition as infructuous on 5.9.1991.
It was only thereafter that the Chief Secretary of the State Government sent a letter dated 12.9.1991 in continuation of his earlier letter dated 9.4.1991 to Justice Ramalingam which is as under : "This is in continuation to my earlier letter No. 504/CS/91 dated 9th April, 1991 regarding the arrangement for the Commission of Enquiry (Churhat Children Welfare Society and Lottery), consequent to your superannuation as a Judge of the Madras High Court.
The State Government have considered your communications about the inconveniences you were facing in coming to Jabalpur for want of Air link between Madras and Jabalpur.
The State Government have also considered the terms and conditions mentioned in your letter of 19th March, 1991.
On careful consideration of all aspects mentioned in your communications it has not been possible for the State Government to accept the terms and conditions set out in your letter of 19th March for taking up the work of the above mentioned Enquiry Commission after your superannuation.
The State Government had accordingly appointed Justice Mr. G.G. Sohani, retired Chief Justice of the Patna High Court to be the single Member of the Commission.
I am, however, happy to convey the deep appreciation of the State Government for the services rendered by you in the Commission in spite of all the personal inconvenience it has caused.
The Hon 'ble Chief Minister had made a general mention of it in the Vidhan Sabha on the 4th July, 1991.
Delay in reply to your letter is regretted.
It was caused because of the litigation arising out of the appointment of Justice Sohani which was since been decided.
Wishing you and your family a very happy life after your superannuation.
Yours sincerely, R.P. Kapoor" The State Government thereafter issued another notification dated 9.1.1992 as under: "Bhopal, the 9th January 1992 No. F.1 6 91 I (8 Ka).
Whereas in exercise of the powers conferred by sub section (3) of Section 3 of the Commissions of Enquiry Act, 1952 (No. LX of 1952) Justice Shri G.G. Sohani, retired Chief Justice, High Court of Patna (Bihar) was appointed as single member of an independent high power agency constituted under this department notification No. F.1 3 89 I(i) E.C., dated 24th February 1998 in place of Justice Shri S.T. Ramalingam vide this department Notification No. F.1 6 91 I(8 Ka), dated the 10th July 1991; And whereas Justice Shri G.G. Sohani, retired Chief Justice, High Court of Patna (Bihar) has since withdrawn his consent to work as single member of the said agency; Now, therefore, in exercise of the powers conferred by sub section (3) of Section 3 of the Commissions of Enquiry Act, 1952 (No.LX of 1952), read with Section 21 of the General Clause Act, 1987 (No. 10 of 1897), the State Government hereby appoint Justice Shri Kamlakar Choubey, retired Judge of the Allahabad High Court as a single member of the said agency in place of Shri G.G. Sohani.
Accordingly this department Notification Nos.
(1) F.1 3 89 l(i) E.C., dated 24th February, 1989, (2) F.1 3 89 I (i) E.C., dated 24th February, 1989, and (3) F.1 3 89 I (i) E.C., dated the 24th February, 1989, shall stand amended to this extent.
By order and in the make of the Governor of Madhya Pradesh In this manner, the State Government after replacing Justice S.T. Ramalingam first by Justice G.G. Sohani, thereafter replaced him by Justice Kamlakar Choubey, a retired Judge of the Allahabad High Court, as the sole member of the Commission.
It is unnecessary to refer to the terms and conditions of appointment of Justice Kamlakar Choubey which were detailed in the General Administration Department Memo.
dated 23.3.1991 and are referred in the High Court judgment, which include the facility of a Camp Office for him at Varanasi and other facilities of vehicle, telephone and staff etc.
The appointment of Justice Kamlakar Choubey as the sole member constituting the Commission of Inquiry in this manner resulting in the replacement of Justice S.T. Ramalingam initially appointed for the purpose and to writ petitions M.P. Nos. 481 of 1992 and 533 of 1992 for quashing the notification dated 9.1.1992 appointing Justice Kamlakar Choubey.
Challenge to the notification dated 10.7.1991 issued earlier appointing, Justice G.G. Sohani is academic in view of Justice Sohani having resigned as indicated earlier.
The remaining significance of the validity of the notification dated 10.7.1991 appointing Justice G.G. Sohani relates only to the State Government 's power to appoint another person in place of Justice S.T. Ramalingam in the above circumstances.
The challenge of the writ petitioners before the High Court was that during the continuance as the single member of the Commission of Inquiry of Justice S.T. Ramalingam, there was no power in the State Government to replace him as the member of the Commission and, therefore, the appointment first of Justice G.G. Sohani and on his refusal, of Justice Kamlakar Choubey, being without any authority, was invalid.
On this basis, the relief of quashing the notification dated 9.1.1992 appointing Justice Kamlakar Choubey was sought.
In substance, the argument was that there being no vacancy in the office, the power under Section 3(3) of the , which is available only to fill any vacancy could not be invoked and there was no other source of power available to the State Government for this purpose.
The argument of the learned Advocate General on behalf of the State Government was that a vacancy had arisen in the membership of the Commission on account of Justice Ramalinga 's retirement from Madras High Court on 30.6.91, and there being his implied resignation indicated by his inclination to continue on the terms and conditions suggested by him, which the State (Government did not consider feasible, the power of the State Government under Section 3(3) of the to fill the implied vacancy was available.
It was also urged by the learned Advocate General that vacancy in the office of the single member of the Commission was also implied from the fact that the appointment of Justice S.T. Ramalingam as the Commission of Inquiry was also his status as a sitting Judge of the Madras High Court and, therefore, his retirement as a Judge resulted in creation of the vacancy.
The learned Advocate General also placed reliance on Section 16 of the , in aid of the State Government 's power under Section 3(3) of the .
Another submission of the learned Advocate General was that the State Government was the sole judge in this matter and was, therefore, competent to choose the person for making or continuing the inquiry in view of the power available under Section 3 of the lead with Section 16 of the .
The learned counsel appearing on behalf of Kailash Joshi placed reliance on Section 3(2) of the Commission of Inquiry Act read with Section 14 of the to support the State Government 's action appointing Justice Kamlakar Choubey contending that the State Government had power to reconstitute the Commission replacing Justice S.T. Ramalingam by another person.
An argument challenging the locus standi of the writ petitioner was also faintly urged by counsel for Kailash Joshi.
The High Court allowed the writ petitions and quashed the notification dated 9.1.1992 appointing Justice Kamlakar Choubey.
It held that there was no vacancy in the office of the single member of the Commission to empower the State Government to fill the vacancy under Section 3(3) of the .
On a construction of the provisions of the and those of the relied on in support of the rival contentions, the High Court came to the conclusion that there was neither any valid reason or ground nor any power available in the State Government to replace Justice S.T. Ramalingam by another person as was purported to be done by First appointing Justice G.G. Sohani and then Justice Kamlakar Choubey, both of whom were also retired Judges.
The objection to locus standi for the writ petitioners was also rejected.
The relevant part of the directions made by the High Court is as under: 42.
As a result of the aforesaid discussion, the petition succeeds and is hereby allowed.
The notification dated 10.7.1991 (Annexure H) and the consequent notification based thereon dated 9.1.1992 (Annexure M) are hereby quashed.
It is open to the State Government to propose to Hon 'ble Shri Justice S.T. Ramalingam the terms and conditions or his continuance as a member of the Commission equivalent to, loss or more favourable than those offered and fixed for Hon 'ble Shri Justice Kamlakar Choubey.
Thereafter depending on his reply the State Government may continue or discontinue his appointment or substitute another member in his place.
It is also made clear that it would be open to Justice Ramalingam to accept the terms and conditions offered by the State Government of Madhya Pradesh or to resign from the office, by taking a decision in that behalf early, so that the work of the Commission is not unduly hampered and it is completed well within the extended period i.e. before 31st March, 1993 . . " Hence, these petitions for grant of special leave.
Leave granted.
Shri Shanti Bhushan, learned senior counsel for the State of Madhya Pradesh, expressly gave up the argument advanced before the High Court of the implied resignation of Justice S.T. Ramalingam giving rise to a vacancy or any implied vacancy on retirement of Justice Ramalingam as a Judge of the Madras High Court to enable exercise of power under Section 3(3) of the for first appointing Justice G.G. Sohani and then Justice Kamlakar Choubey in place of Justice S.T. Ramalingam The case of the State of Madhya Pradesh in this Court was confined by Shri Shanti Bhushan to only one point.
The only contention of Shri Shanti Bhushan is that the aid of Section 21 of the is available to the State Government for exercising its powers under the `to add to, amend or vary ' the notification issued initially appointing Justice S.T. Ramalingam as the sole member of the Commission which enables the State Government to reconstitute the Commission by replacing Justice S.T. Ramalingam with any other person in the circumstances of the case.
He argued that it is in exercise of this power that the period fixed initially for completion of the inquiry could be amended since, to the extent the provisions in the are silent, recourse can be had to Section 21 of the for making a suitable addition, amendment or variation of the initial notification.
According to learned counsel, the power to rescind any notification being provided in Section 7 of the , such a power in Section 21 of the was not available, but not so the power given by Section 21 of the to add to, amend or vary any notification.
Shri Shanti Bhushan also referred to Section 8 A of the as an indication to support his submission of the Government 's power to reconstitute the Commission even during the availability of the person so appointed even though, he stated, Section 8 A is not the source of power for reconstitution of the Commission.
In reply, Shri Kapil Sibal, learned senior counsel for respondent No.1, submitted that the scheme of the does not permit invoking Section 21 of the except for enlarge ment of the period for completion of the inquiry by amendment of the notification only to that extent since the only situations in which reconstitution of the Commission can be made are provided in the itself and, therefore, the context rules out the applicability of Section 21 of the for any such purpose.
Shri Sibal also submitted that the construction suggested by Shri Shanti Bhushan is alien to the scheme of the .
Shri Sibal added that Section 8 A of the was enacted for an entirely different purpose, to ensure continuity of the Commission 's work and has nothing to do with its reconstitution.
Shri N.S. Kale, learned counsel for Kailash Joshi, while supporting the submission of Shri Shanti Bhushan added that Sections 14 and 16 of the are also available to support the impugned notifications issued by the State Government.
In the ultimate analysis, the controversy surviving before us on the rival contentions is considerably narrowed.
In substance, the only surviving controversy now is whether in the scheme of the , the power `to add to, amend or vary ' any notification given by Section 21 of the is available to reconstitute a Commission of Inquiry constituted under Section 3 of the by replacing the sole member appointed initially with another person during the availability of the sole member initially appointed.
The validity of the aforesaid impugned notifications dated 10.7.1991 appointing Justice G.G. Sohani and dated 9.1.1992 appointing Justice Kamlakar Choubey to replace Justice S.T. Ramalingam depends on the answer to this question which alone now survives for decision.
A reference to the object and purpose of an enactment in the nature of the would be worthwhile before proceeding to examine its scheme and the provisions therein.
The object of the enactment, to the extent it is relevant, while construing the meaning of its provisions may be of assistance.
The Commissions of Inquiry Act, 1955 is similar to and is modelled on the corresponding English statute and provides this historical back ground for the Indian statute.
The purpose of such an enactment is aptly summarised in the speech of Lord Salmon on `Tribunals of Inquiry ' as under : "In all countries, certainly in those which enjoy freedom of speech and a free Press, moments occur when allegations and rumours circulate causing a nation wide crisis of confidence in the integrity of public life or about other matters of vital public importance.
No doubt this rarely happens, but when it does it is essential that public confidence should be restored, for without it no democracy can long survive.
This confidence can be effectively restored only by thoroughly investigating and probing the rumours and allegations so as to search out and establish the truth.
The truth may show that the evil exists, thus enabling it to he rooted out, or that there is no foundation is the rumours and allegations by which the public has been disturbed.
In either case, confidence is restored.
How, in such circumstances, can the truth best be established ?" It is for the purpose of ascertaining the truth in such circumstances that the has been enacted.
While construing the provisions of the enactment, it would be useful to bear in mind its object if occasion arises for illumination of any grey areas with reference to the object of the enactment as a permissible aid to construction.
The was enacted to provide for the appointment of Commissions of Inquiry and for vesting such Commissions with certain powers.
Section 2 of the Act contains definitions.
Section 3 provides for appointment of a Commission of Inquiry.
Sub section (1) of Section 3 lays down that a Commission of Inquiry for the purpose of making an inquiry into any definite matter of public importance may be appointed by the appropriate Government it is of opinion that it is necessary so to do and shall make such an appointment if a resolution in this behalf is passed by each House of Parliament or, as the case may be, the Legislature of the State, by notification in the Official Gazette.
Sub section (2) of Section 3 says that the Commission may consist of one or more members appointed by the appropriate Government, and where the number is more than one, one of them may be appointed as the Chairman.
Sub section (3) of Section 3 enables the appropriate Government to fill any vacancy which may arise in the office of a member of the Commission whether consisting of one or more than one member, at any stage of an inquiry.
Sub section (4) of Section 3 requires the appropriate Government to cause to be laid before each House of Parliament or, as the case may be, the Legislature of the State, the report, if any, of the Commission of Inquiry together with a memorandum of the action taken thereon, within a period of six months from the submission of the report by the Commission to the appropriate Government.
Section 4 prescribes that the Commission shall have the powers or a civil court while trying a suit under the Code of Civil Procedure in respect of the matters mentioned therein.
Section 5 deals with the additional powers of the Commission.
Section 5 A relates to the power of the Commission for conducting investigation pertaining to inquiry.
Section 5 B deals with the power of the Commission to appoint assessors.
Section 6 provides for the manner of use of the statements made by persons to the Commission.
Section 6 A provides that some persons are not obliged to disclose certain facts.
Section 7 deals with the manner in which a Commission of Inquiry appointed Section 3 ceases to exist in case its continuance is unnecessary.
It provides for a notification in the Official Gazette by the appropriate Government specifying the date from which the Commission shall cease to exist if it is of the opinion that the continued existence of the Commission is unnecessary.
Where a Commission is appointed in pursuance of a resolution passed by the Parliament or as the case may be, the Legislature of the State, then a resolution for the discontinuance of the Commission is also to be passed by it.
Section 8 A provides that the inquiry is not to be interrupted by reason of vacancy or change in the constitution of the Commission and it shall not be necessary for the Commission to commence the inquiry afresh and the inquiry may be continued from the stage at which the change took place.
Section 8 B prescribes that persons likely to be prejudicially affected by the inquiry must be heard.
Section 8 C deals with the right of cross examination and representation by legal practitioner of the appropriate Government, every person referred to in Section 8 B and, with the permission of the Commission, any other person whose evidence is recorded by the Commission.
Sections 9, 10 and 10 A relate to ancillary matters while Section 12 contains the rule making power of the appropriate Government.
Section 11 provides that the Act is to apply to other inquirying authorities in certain cases and where the Government directs that the said provisions of this Act shall apply to that authority and issues such a notification, that authority shall be deemed to be a Commission appointed under Section 3 for the purposes of this Act.
Admittedly, it is by virtue of Section 11 that the Commission of Inquiry appointed in the present case is deemed to be a Commission appointed under Section 3 for the purposes of this Act because the Commission was constituted by a resolution of the Government pursuant to the direction of the M.P. High Court in the writ petition filed in public interest by Kailash Joshi as indicated earlier.
For the purposes of this case, the material provisions of the enactment are Sections 3, 7 and 8 A apart from Section 21 of the with reference to which the rival contentions were made.
These provisions are as under : The "3. Appointment of Commission. (1) The appropriate Government may, if it is of opinion that it is necessary so to do, and shall, if a resolution in this behalf is passed by each House of Parliament or, as the case may be, the Legislature of the State, by notification in the Official Gazette, appoint a Commission of Inquiry for the purpose of making an inquiry into any definite matter of public importance and performing such functions and within such time as may he specified in the notifications and the commission so appointed shall make the inquiry and perform the functions accordingly: Provided that where any such Commission has been appointed to inquire into any matter (a) by the Central Government, no State Government shall, except with the approval of the Central Government, appoint another Commission to inquire into the same matter for so long as the Commission appointed by the Central Government is functioning; (b) by a State Government, the Central Government shall not appoint another Commission to inquire into the same matter for so long as the Commission appointed by the State Government is functioning, unless the Central Government is of opinion that the scope of the inquiry should be extended to two or more States.
(2) The Commission may consist of one or more members appointed by the appropriate Government, and where the Commission consists of more than one member one of them may be appointed as the Chairman thereof.
(3) The appropriate Government may, at any stage of an inquiry by the Commission fill any vacancy which may have arisen in the office of a member of the Commission (whether consisting of one or more than one member).
(4) The appropriate Government shall cause to be laid before each House of Parliament or, as the case may be, the Legislature of the State, the report, if any, of the Commission on the inquiry made by the Commission under sub section (1) together with a memorandum of the action taken thereon, within a period of six months of the submission of the report by the Commission to the appropriate Government. ' "7.
Commission to cease to exist when so notified. (1) The appropriate Government may, by notification in the Official Gazette, declare that (a)a Commission (other than a Commission appointed in pursuance of a resolution passed by each House of Parliament or, as the case may be, the Legislature of the State) shall cease to exist, if it is of opinion that the continued existence of the Commission is unnecesary; (b) a Commission appointed in pursuance of a resolution passed by each House of Parliament or as the case may he, the Legislature of the State, shall cease to exist if a resolution for the discontinuance of the Commission is passed by each House of Parliament or, as the case may be, the Legislature of the State.
(2) Every notification issued under sub section (1) shall specify the date from which the Commission shall cease to exist and on the issue of such notification, the Commission shall cease to exist with effect from the date specified therein." "8 A. Inquiry not to be interrupted by reason of vacancy or change in the constitution of the Commission. (1) Where the Commission consists of two or more members, it may act notwithstanding the absence of the Chairman or any other member or any vacancy among its members.
(2) Where during the course of an inquiry before a Commission, a change has taken place in the constitution of the Commission by reason of any vacancy having been filed or by any other reason, it shall not be necessary for the Commission to commence the inquiry afresh and the inquiry may be continued from the stage at which the change took place.
" The "21.
Power to issue, to include power to add to, amend, vary or rescind, notifications, orders, rules or bye laws.
Where, by any Central Act or Regulation, a power to issue notifications, orders, rules or bye laws is conferred, then that power includes a power, exercisably in the like manner and subject to the like sanction and conditions (if any) to and to, amend, vary or rescind any notifications, orders, rule or bye laws so issued.
" It may be mentioned that sub sections (3) and (4) of Section 3 and Section 8 A were inserted while Section 7 was substituted in the by the Commissions of Inquiry (Amendment) Act, 1971 (No.79 of 1971) as a result of the recommendations of the Law Commission of India made in paras 26 and 34 of its 24th Report.
In para 26, the recommendation made was to amend Section 3 of the Act `to provide expressly for the filling up of vacancy or for an increase in the number of members whenever the Government thinks it necessary or expedient to do so '.
In para 34 of the Report, the recommendation was to insert a new section 8 A in the light of the proposed amendment in Section 3 to clarify that `it is not necessary for the Commission to recommence its inquiry if a change takes place in the constitution of the Commission during the pendency of an inquiry '.
The legislative history of sub section (3) of Section 3 and Section 8 A inserted simultaneously by amendment of the Act shows their interrelation and the object of enacting Section 8 A is to clarity that the inquiry is not required to recommence or be interrupted by reason of the filling of any vacancy or decrease in the number of members of the Commission.
Section 8 A along with Sections 8 B and 8 C inserted simultaneously by amendment in the principal Act relate to the procedure of the Commission and were inserted to provide for specific situations while Section 8 contains the general power of the Commission to regulate its own procedure.
The real question for decision in the present case is: Whether the appropriate Government after constituting the Commission under Section 3 of the Act is empowered to reconstitute the Commission substituting another person as the sole member in place of the initial appointee? In substance, it is this power that the State Government claims to have exercised in the present case and is attempted to be justified by the argument advanced by Shri Shanti Bhushan to support the appointment first of Justice G.G. Sohani and then of Justice Kamlakar Choubey in place of Justice S.T. Ramalingam.
To recapitulate, the argument of Shri Shanti Bhushan is that the power of reconstituting the Commission in this manner is available to the State Government under Section 21 of the which can be invoked in aid of the power of the Government under Section 3 of the .
Section 8 A of the is referred to by Shri Shanti Bhushan as an indication of the existence of this power in the State Government even though he does not rely on it as a source of this power.
Shri Kapil Sibal, on the other hand, contends that the scheme of the enactment shows that the appropriate Government cannot interfere with the working of the Commission after its constitution except in the manner expressly provided in the Act and Section 7 is a clear indication that interference with the functioning of the Commission is not permissible in any other manner.
Shri Sibal contends that Section 21 of the is not available to support the Government 's action in the present case.
Shri Shanti Bhushan concedes that there is no express provision in the empowering the Government to replace or substitute the sole member of a Commission with another person during the continuance of the Commission, but he submits that this is implicit in the power to appoint a Commission and designate its personnel under sub sections (1) and (2) of Section 3 of the read with the power to amend or vary any notification available under Section 21 of the .
Shri Shanti Bhushan also conceded that the aid of Section 21 of the is available only if the context and the scheme of the so permits.
He submitted that the Government 's power to extend the time specified in the initial notification for completing the work of the Commission is not to be found in any express provision in the , but is exercised by amendment of the initial notification only under Section 21 of the .
According to Shri Shanti Bhushan, the appointment of a Commission is under sub section (1) and it is under sub section (2) of Section 3 that the person constituting the Commission is appointed even though it may be a simultaneous process.
The replacement of the member initially appointed to constitute the Commission, according to learned counsel, is by re exercise of the power under sub section (2) of Section 3.
The submission is that the Commission appointed under sub section (1) of Section 3 continues while it may be reconstituted by replacement of the member which is done under sub section (2).
In our opinion, the power of the Government to appoint a Commission of Inquiry and name the person or persons constituting it is in sub section (1) of Section 3 and is not an exercise divided between subsections (1) and (2) of Section 3 as suggested by Shri Shanti Bhushan.
Sub section (2) merely confers the power in the Government to appoint a Commission consisting of one or more members and provides that if there be more than one member of the Commission, then one of them may be appointed Chairman of the Commission.
lt is not as if sub section (1) deals with mere appointment of a Commission of Inquiry without clothing it with its personnel and the power to appoint the member/members thereof is to be found only in sub section (2).
That apart, there is nothing in any of these provisions to suggest that the Government has the power to reconstitute the Commission after its appointment by replacing the existing sole member with another person, Sub section (3) deals expressly with the Government 's power to fill any vacancy which may have arisen since the constitution of the Commission.
The question of replacement of a member appointed initially is obviously beyond its scope.
Sub section (3) inserted by amendment in Section 3 of the is a clear contra indication to the construction suggested by Shri Shanti Bhushan of sub sections (1) and (2) of Section 3 in the scheme of the Act.
If the construction suggested by Shri Shanti Bhushan be correct, there was no need to make this amendment and insert sub section (3) which is a clear indication of the limit and extent to which the power of reconstitution of the Commission can be exercised by the Government after the Commission has been constituted.
As the Law Commission 's Report itself indicates, this amendment became necessary to provide expressly in the statute for the Government 's power to till any vacancy after the initial constitution Whatever may have been the position prior to insertion of sub section (3) in Section 3, there can be no doubt that after its insertion, the scheme of the enactment excludes the power of reconstitution of the Commission in a manner not expressly provided therein.
In view of sub section (3), it is not permissible to construe sub sections (1) and (2) of Section 3 in any other manner.
If the scheme of the enactment gave such wide power to reconstitute a Commission after its initial constitution and permitted replacement or substitution of the existing member of a Commission with another person sans sub section (3) of Section 3, the power to fill any vacancy was not required to be provided separately ahat the Commission functions as an independent a gency free from any govern mental control after its constitution.
It follows that after appointment the tenure of members of the commission should not be dependent on the will of the Government to secure their independence.
A body not so independent is not likely to enjoy the requisite public confidence and may not attract men of quality and self respect.
In such a situation the object of the enactment would be frustrated.
[302 H. 303 A C] Minerva Mills Ltd. v, There Workers, ; distinguished.
The State of Bihar vs D. N. Ganguly.; , , relied on.
in Rangachari and Soshit Karamchari respectively reiterated in State of Punjab vs Hira Lal, ; , and Comptroller and Auditor General of India, Gian Prakash vs K.S. Jagannathan & Anr., ; In Rangachari it was held, 'The condition precedent may refer either to numerical inadequacy of representation in the services or even to the qualitative inadequacy of representation '.3
In the context the expression, 'adequately represented imports consideration of size as well as values, numbers as well as the nature of appointments '.4
But, inadequacy of representation is creative of jurisdiction only.
It is not measure of backwardness.
That is why less rigorous test or lesser marks and competition amongst the class of unequals at the point of entry has been approved both this Court and American courts.
But a student admitted to a medical or engineering college is further not granted relaxation in passing the examinations.
In fact this has been explained as valid basis in American decisions furnishing justification for racial admissions on lower percentage.
Rationale appears to be that every one irrespective of the source of entry being subjected to same test neither efficiency is effected nor the equality is disturbed.
After entry in service the class is one that of employees.
If the social scar of backwardness is carried even, thereafter the entire object of equalisation stands frustrated.
No further classification amongst employees would be justified as is not done amongst students.
Constitutional, legal or moral basis for protective discrimination is redressing identifiable backward class for historical injustice.
That is they are today, what they would not have been but for the victimisation.
Remedytuting the Comm ission.
The enactment, therefore, also provides in Section 7 the only situation in which the Government can rescind the notification issued under Section 3 constituting the Commission.
To the extent to which express provision is made in the enactment, it is common ground, Section 21 of the cannot be invoked.
These aspects have to be borne in mind while considering the tenability of the submission made by Shri Shanti Bhushan with the aid of Section 21 of the .
It is common ground before us that Section 21 of the can be invoked only if, and to the extent, if any, the context and the scheme of the so permits.
The general power in Section 21 of the is to add to, amend, vary or rescind any notification etc.
In the context of reconstitution of the Commission, the power to fill any vacancy in the office of a member of the Commission is expressly provided in sub section (3) of Section 3 of the Commission of Inquiry Act.
Similarly, the power to discontinue the existence of the Commission when it becomes unnecessary can be exercised by issue of a notification in accordance with Section 7 of the Act which results in rescinding the notification issued under Section 3 constituting the Commission.
Thus, the power to rescind any notification conferred generally in Section 21 of the is clearly inapplicable in the scheme to the which expressly provides for the exercise of this power in relation to a Commission constituted under Section of the Act.
The only material remaining general powers in Section 21 of the are the power to `amend ' or `vary ' any notification.
The extent to which the constitution of the Commission can be amended or varied by filling any vacancy in the office of a member as provided in the is also obviously excluded from the purview of Section 21 of the which cannot be invoked for this purpose.
The surviving question, therefore, is: Whether there is power to reconstitute the Commission by replacement or substitution of the existing member, though not provided in the by invoking the residuary power to amend or vary any notification under Section 21 of the ? In the first place, in a case like the present where the scheme of the does provide for amendment and variation of the notification issued under Section 3 for the purpose of reconstitution of the Commission in the manner indicated, even that power to amend or vary any notification by virtue of Section 21 of the must be taken as excluded by clear implication in the sphere of reconstitution of the Commission.
Moreover, the power to amend or vary cannot include the power to replace or substitute the existing composition of the Commission with an entirely new composition.
Shri Shanti Bhushan submitted that the time specified in the initial notification for completing the task of the Commission is enlarged by subsequent notification and this is done in exercise of the general power available under the to extend time.
This submission does not support the argumentof learned counsel that the general power under Section 21 of the is also available to reconstitute the Commission by replacement or substitution of its sole member.
The aid of Section 21 of the general Clauses Act for enlargement of time does not conflict with the context or scheme of the .
The context as well as the scheme of the clearly indicate that Section 21 of the cannot be invoked to enlarge the Government 's power to reconstitute the Commission constituted under Section 3 of the Act in a manner other than that expressly provided in the .
There being no express power given by the to the appropriate Government to reconstitute the Commission of Inquiry constituted under Section 3 of the Act by replacement or substitution of its sole member and the existence of any such power being negatived by clear implication, no such power can be exercised by the appropriate Government.
The scheme of the enactment is that the appropriate Government should have no control over the Commission after its constitution under Section 3 of the Act except for the purpose of filling any vacancy which may have arisen in the office of a member of the Commission apart from winding up the Commission by issuance of a notification under Section 7 of the Act if the continued existence of the Commission is considered unnecessary.
The vacancy in the office of a member of the Commission may arise for several reasons, including resignation by the member, when the Government 's power to fill the vacancy under Section 3(3) of the Act can be exercised.
Even though a case of implied resignation creating an implied vacancy was set up by the State of Madhya Pradesh before the High Court, that stand was rightly abandoned before us by Shri Shanti Bhushan.
We have no doubt that the rule of construction embodied in Section 21 of the cannot apply to the provisions of the relating to reconstitution of a Commission constituted thereunder since the subject matter, context and effect of such provisions are inconsistent with such application.
Moreover, the construction made by us best harmonises with the subject of the enactment and the object of the legislation.
Restoring public confidence by constituting a Commission of Inquiry to investigate into a 'definite matter of public importance ' is the purpose of such an exercise.
It is, therefore, the prime need that the Commission functions as an independent agency free from any governmental control after its constitution.
It follows that after appointment, the tenure of members of the commission should not be dependent on the will of the Government, to secure their independence.
A body not so independent is not likely to enjoy the requisite public confidence any may not attract men of quality and self respect.
In such a situation, the object of the enactment would be frustrated.
This aspect suggests that the construction made by us, apart from harmonising the provisions of the statute, also promotes the object of the enactment while the construction suggested by the appellant frustrates both.
Shri Shanti Bhushan placed reliance on the decision in Minerva Mills Ltd. vs Their Workers, 1 19541 S.C.R. 465.
In that decision, the power of the appropriate Government under Section 7 of the 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 references made to the previous tribunal which had not been disposed of by that tribunal was upheld.
Shri Shanti Bhushan contended that the observations made in that decision are not confined to the exercise of that power on the expiry of the tenure of the tribunal first constituted.
It was clearly indicated in that decision that 'when the life of the first tribunal automatically came to end by efflux of time, no question of vacancy in the office really arose and, therefore, it was not a case falling under sub clause (2) of Section 8 but the situation that arose fell within the ambit of Section 7 '.
The observations made in that decision have to be read in the context of the facts of that case.
That decision is clearly distinguishable.
On the other hand, Shri Kapil Sibal placed reliance on The State of Bihar vs D.N. Ganguly & Others, [1959] S.C.R. 1191.
This decision also related to the reference of a dispute under the .
It was pointed out that 'it was well settled that the rule of construction embodied in Section 21 of the can apply to the G provisions of a statute only where the subject matter, context, and effect of such provisions are in no way inconsistent with such application .
On this basis it was held that it did not apply to Section 10(1) of the .
On a construction of Section 10(1 ) of the , it was held that it does not confer on the appropriate Government the power to cancel or supersede a reference made thereunder in respect of an industrial dispute pending adjudication by the tribunal constituted for that purpose.
Reliance placed on Section 21 of the on behalf of the Government to invoke such a power by necessary implication was clearly negatived.
The decision of this Court in Minerva Mills Ltd. (supra) was distinguished as we have already indicated.
In our opinion, the ratio in D.N. Ganguly (supra) supports the view taken by us in the present case that Section 21 of the cannot be invoked to support the impugned action of the State of Madhya Pradesh as contended by Shri Shanti Bhushan.
The construction suggested by Sri Shanti Bhushan is inconsistent with the provisions and the scheme of the and must, therefore, be rejected.
Admittedly, the power under Section 3(3) of the was not available to the State of Madhya Pradesh in the facts of the present case to appoint any other person replacing Justice S.T. Ramalingam as the sole member of the Commission of Inquiry.
The power under sub sections (1) and (2) of Section 3 read with Section 21 of the or even Sections 14 or 16 thereof was also not available for this purpose, for the reasons given earlier.
Accordingly, the notification dated 10.7.1991 appointing Justice G.G. Sohani and the notification dated 9.1.1992 appointing Justice Kamlakar Choubey were both invalid.
It is not unlikely that Justice G.G. Sohani may have resigned forming the same opinion when his appointment was challenged.
However, the State of Madhya Pradesh did not choose to reflect and reconsider the legality of its action in spite of the resignation of Justice G.G. Sohani and it continued to move in the wrong direction by making another invalid appointment of Justice Kamlakar Choubey.
Consequently, these appeals are dismissed and the impugned judgment of the High Court quashing the notifications dated 10.7.1991 and 9.1.1992 is sustained for the aforesaid reasons given by us.
The State of Madhya Pradesh shall, in view of the retirement of Justice S.T. Ramalingam as a Judge of the Madras High Court in the meanwhile, take necessary action to finalise his terms and conditions in accordance with the guidelines issued by the Government of India in this behalf.
Such action be taken promptly to avoid any undue delay in completion of the Commission 's task.
No costs.
N.P.V. Appeal dismissed.
| : Section 21 Power to add to amend or vary or rescind any notification Whether could be invoked to reconstitute the Commission of Inquiry by replacement of substitution of the existing members, though not provided in the scheme of the Act.
Pursuant to the direction given by the State High Court, the appellant State by a Notification dated 24.2.1989, constituted a Commission of Inquiry under the (Commission of Inquiry) Act, 1952, to investigate into the affairs of the children 's Welfare Society, of which Respondent No.1 was an office bearer and appointed a sitting Judge of the High Court of another State as the sole member of the Commission.
The inquiry was to be completed within a period of six months, but the period was extended from time to time.
Meanwhile, the sole member became due to retire as a Judge of the High Court on attaining the age of superannuation and, therefore, he wrote a letter dated 19 3.1991 to the Chief Secretary of the appellant State drawing attention to this fact and requesting that the necessary modalities be worked out well in time for his continuance as Commission of Inquiry, in the light of the guidelines issued by the Government of India for the benefits and emoluments payable to a Judge on his retirement in such a situation.
The Judge also mentioned some of the facilities he expected, to which be would not be entitled from the State Government on his retirement.
The Chief Secretary sent a reply dated 9.4.1991 to the Judge promising to give an early reply and requesting him to continue with the inquiry so that the same could be completed early.
However, without further reference to the Judge, the State Government issued a notification dated 10.7.1991, replacing him by a retired Chief Justice of another High Court.
This appointment was challenged before the High Court, which, by an interim order dated 30.7.1991 stayed the operation of the notification.
During the pendency of the writ petition, the new member tendered his resignation.
Consequently, the High Court dismissed the writ petition as infructuous on 5.9.1991.
Thereafter, the Chief Secretary to the Government sent a letter dated 12.9.1991 to the original appointee expressing the State Government 's inability to accept the terms and conditions of the Judge, and informing him of the appointment of retired Chief Justice of another High Court, who had since resigned.
Thereafter the State Government issued another notification dated 9.1.1992 appointing a retired Judge of another High Court as a single member of the Commission.
This was challenged before the High Court on the ground that during the continuance as the single member of the Commission of Inquiry of the original appointee, there was no power in the State Government to replace him, and there being no vacancy in the office, the power under Section 3(3) of the , which was available only to fill any vacancy, could not be invoked and there was no other source of power available to the State for the purpose and, therefore, the appointment first of the retired Chief Justice and then, on his refusal, of another retired Judge, being without any authority, was invalid.
The High Court allowed the writ petitions and quashed the notification dated 9.1.1992.
It held that there was no vacancy in the office of the single member of the Commission to empower the State Government to fill the vacancy under Section 3(3) of the .
It also held there was neither any valid reason or ground nor any power available in the State Government to replace the original member by another person as was purported to be done by first appointing one member and then another member, both of whom were also retired Judges .
In the appeals, by special leave, on behalf of the State Government, it was contended that aid of Section 21 of the was available to the State Government for exercising its powers under the 'to add, to amend or vary ' the notification issued initially appointing the sitting Judge as the sole member of the Commission which enabled the State Government to reconstitute the Commission by replacing that Judge with any other person in the circumstances of the case, though the power to rescind any notification was not available, since this was provided in Section 7 of the .
Reference was also made to Section 8 A of the to support the Contention that Government 's power to reconstitute the Commission even during the availability of the person so appointed even though it was submitted that Section 8 A was not the source of power for reconstitution of the Commission.
It was also contended that the Government 's power to extend the time specified in the initial notification for Completing the work of the Commission was not to be found in any express provision in the .
but was exercised by amendment of the initial notification only under Section 21 of the .
and that though there was no express provision in the empowering the Government to replace or substitute the sole member of a Commission with another person during the continuance of the Commission.
this was implicit in the power to appoint a Commission and designate its personnel under Sub sections (1) and (2) of Section 3 of the read the power to amend or Vary any notification available under Section 21 of the .
It Was submitted on behalf of the petitioner in the Public Interest Petition that Sections 14 and 16 of the were also available to support the notifications under challenge issued by the State Government.
On behalf of respondent No.1 it was submitted that the scheme of the did not permit invoking Section 21 of the except for enlargement of the period for completion of the inquiry by amendment of the notification only to that extent since the only situations in which reconstitution of the Commissions could be made were provided in the itself, that Section 8 A of the was enacted for an entirely different purpose namely to ensure continuity of the Commission 's work and had nothing to do with its reconstitutions that the scheme of the enactment showed that the appropriate Government could not interfere provide expressly in the statute for the Government 's power to fill any vacancy after the initial constitution After its insertion the scheme of the enactment excludes the power of reconstitution of the Commission in a manner not expressly provided therein.
In view of sub section (3), it is not permissible to construe sub sections (1) and (2) of Section 3 in any other manner.
If the scheme of the enactment gave such wide power to reconstitute a Commission after its initial constitution and permitted replacement or substitution of the existing member of a Commission with another person sans sub section (3) of Section 3 the power to fill any vacancy was not required to be provided separately and expressly.
It is also significant that in the amendment so made the power is limited only to filling any vacancy without conferring any power to reconstitute the Commission by replacement or substitution of the existing member which indicates that no such power of replacement or substitution of the existing member was contemplated in the scheme of the Act or intended to be conferred on the Government even after the amendment.
[298 H: 299 A C; 300 A] 2 7.
Section 8 A was simultaneously inserted by amendment to provide that the procedure does not require interruption of the inquiry by reason of change in the constitution of the Commission due to filling any vacancy or decrease in the number of members.
The expression 'or by any other reason ' in sub section (2) of Section 8 A cannot be widened to include the reason of reconstitution of the Commission by replacement or substitution of the existing member since that power is not available to the Government in the scheme of the Act and, therefore.
this expression in Section 8 A(2) cannot be read as conferring any additional power or giving any such indication.
The expression or by any other reason following `vacancy having been filled ' in Section 8 A(2) must therefore.
mean any other reason such as decrease in the number of members when the initial number is more than one and the vacancy remains unfilled.
It cannot mean substitution of the existing member with another person, since no such power exists.
Section 8 A(2) is not the source of an additional power, but merely an indication of the power to reconstitute the Commission.
The indication is of the power of reconstitution being available only in the manner indicated.
The only situation in which the Government can rescind the notification issued under Section 3 constituting the Commission is laid down in Section 7 the Act, which provides that the Commission would cease to exist when the appropriate Government by notification with the working of the Commission after its constitution except in the manner expressly provided in the Act and Section 7 was a clear indication that interference with the functioning of the Commission was not permissible in any other manner, and, therefore, Section 21 of the was not available to support the Government 's action in the instant case.
Dismissing the appeal, this court, HELD: 1.
The power under Section 3(3) of the Commissions of the Inquiry Act, 1952, was not available to the State Government in the facts of the instant case to appoint any other person replacing the original member as the sole member of the Commission of Inquiry.
The power under sub sections (1) of (2) of Section 3 read with Section 21 of the or even Section 14 or Section 16 thereof was also not available for the purpose.
Accordingly, the notifications dated 10.7.1991 and 9.1.1992 issued by the State Government appointing the retired Chief justice and another retired Judge were both invalid.
The high Court was, therefore, right in quashing the notifications dated 10.7.1991 and 9.1.1992.
The appellant state should, in view of the retirement of the original member as a judge of the High Court in the meanwhile, take necessary action to finalise his terms and conditions in accordance with the guidelines issued by the Government of India in this behalf.
Such action should be taken promptly to avoid any undue delay in completion of the commission 's task.
[304 C F] 2.1.
The power of the Government to appoint a Commission of Inquiry and name the person or persons constituting it is in sub section (1) of Section 3.
It is not as if sub section (1) deals with the mere appointment of the Commission of Inquiry without clothing it with its personnel and the power to appoint the member/members thereof is to be found only in sub section (20 That apart, there is nothing in any of these provisions to suggest that the Government has the power to reconstitute the commission after its appointment by replacing the existing sole member with another person.
Sub Section (3) of Section 3, inserted by the Amendment Act of 1971, deals expressly with the Government 's power to fill any vacancy which may have arisen since the constitution of the Commission.
The question of replacement of a member appointed initially is beyond its scope.
The insertion of sub section (3) became necessary to declares that 'the continued existence of ' the Commission is unnecessary '.
The scheme of the enactment is that the appropriate Government should have no control over the Commission after its constitution under Section 3 of the Act except for the purpose of filling any vacancy which may have arisen in the office of a member of the Commission apart from winding up the Commission by issuance of a notification under section 7 of the Act if the continued existence of the Commission is considered unnecessary.
The vacancy in the office of a member of the Commission may arise for several reasons, including resignation by the member, when the Government power to fill the vacancy under Section 3(3) of the Act can be exercised.
[300 A E & G] 2.4.
The context as well as the scheme of the clearly indicate that Section 21 of the General clauses Act 1897 cannot be invoked to enlarge the Government 'section power to reconstitute the Commission constituted under Section 3 of the Act in a manner other that that expressly provided in the .
There being no express power given by the Commissions of inquiry Act to the appropriate Government to reconstitute the Commission of Inquiry constituted under Section 3 of the Act by replacement or substitution of its sole member and the existence of any such power being negatived by clear implication, no such power can be exercised by the appropriate Government.
[302 C F] 2.5.
Section 21 of the can be invoked only if, and to the extent.
if any the context and the scheme of the so permits.
The general power in Section 21 of the is 'to add, to amend vary or rescind any notifications ' etc.
In the context of reconstitution of the Commission the power to fill any vacancy in the office of a manner of the Commission is expressly provided in sub section (3) of Section 3 of the Similarly the power to discontinue the existence of the Commission when it becomes unnecessary can be exercised by issue of a notification in accordance with Section 7 of the Act which results in rescinding the notification issued under Section 3 constituting the Commission.
Thus the power to rescind any notification conferred generally in Section 21 of the is Clearly inapplicable in the scheme of the Commissions of inquiry Act which expressly provides for the exercise of his power in relation to Commission constituted under Section 3 of the Act.
The only other material general powers in Section 21 of the are the power to 'amend ' or vary any notification.
The extent to which the constitution of the Commission can be amended or varied by filling any vacancy in the office of a member as provided in the is also obviously excluded from the purview of Section 21 of the which cannot be invoked for this purpose.
In a case like the instant one where the scheme of the does provide for amendment and variation of the notification issued under Section 3 for the purpose of reconstitution of the Commission in the manner indicated even that power to amend or vary any notification by virtue of Section 21 of the must be taken as excluded by clear implication in the sphere of reconstitution of the Commission.
Moreover, the power to amend or vary cannot include the power to replace or substitute the existing Composition of the Commission with an entirely new composition.
The aid of Section 21 of the for enlargement of time does not conflict with the context or scheme of the Commissions of Inquiry Act.[301 A E] 2.6.
The rule of Construction embodied in Section 21 of the cannot apply to the provisions of the relating to reconstitution of a Commission constituted there under since the Subject matter.
context and effect of such provisions are inconsistent with such application.
Moreover.
this construction best harmonises with the subject of the enactment and the object of the legislation.
Restoring public Confidence by constituting a Commission of Inquiry to investigate into a 'definite matter of public importance ' is the purpose of such an exercise.
It is therefore, the prime need that the Commission functions as an independent agency free from any govern mental control after its constitution.
It follows that after appointment the tenure of members of the commission should not be dependent on the will of the Government to secure their independence.
A body not so independent is not likely to enjoy the requisite public confidence and may not attract men of quality and self respect.
In such a situation the object of the enactment would be frustrated.
[302 H. 303 A C] Minerva Mills Ltd. v, There Workers, ; distinguished.
The State of Bihar vs D. N. Ganguly.; , , relied on.
|
tition No. 90 of 1981 etc.
etc, (Under Article 32 of the Constitution of India).
Dr. Devi Prasad Pal, Dinesh Vyas, P.H. Parekh, B.N. Aggarwal, A.S. Rao, Ravinder Narain, section Ganesh, A.K. Verma, Amrita Mitra, Ms. Priya Hingorani, section Sukumaran, Ms. Amrita Mitra, Ms. S.Bagga, Krishan Kumar, Bhaskar Pradhan, Ms. Poonam Madan, Ms. Gauri Advani, section Pathak, B. Lal, B.P. Aggarwal, Ms. Geetanjali Mohan, P.K. Mukherjee and S.C. Patel for the Petitioners.
S.C. Manchanda, B.B. Ahuja, Manoj Arora, section Rajappa and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
The seeds of the present controversy were sown as early as in 1946.
It is unfortunate that this matter should be coming up before this Court for its consideration nearly five decades later, though it must be pointed out that the issue in its present form is the outcome of an amendment made by the Finance (No.2) Act, 1980 (hereinafter referred to as 'the 1980 Act ') to the Income Tax Act, 1961* (hereinafter referred to as 'the 1961 Act ').
It is also a curious co incidence that the 1980 Act effected two amendments in the 1961 Act with retrospective effect and the validity of both these provisions have been challenged before the courts.
The first was the controversy with regard to the retrospective amendment of s.80 J which was settled by this Court by its decision in Lohia Machines Limited vs Union of India, It is the second amendment to the provisions contained in section 35(2) of the 1961 Act that has given rise to the present controversy between the parties.
The question is really one of interpretation of two important provisions relating to the computation of business income for purposes of income tax.
We may start with the provisions of the Indian lncome Tax Act, 1922 (hereinafter referred to as the '1922 Act ').
The computation of business income for purposes of income tax was done in accordance with the provisions of section 10 of the said Act.
In the process of making such computation, the Act provided for two important deductions (among others), in respect of the capital assets employed in the business.
The first was the deduction under clause (vi) of Section 10(2) of an allowance in respect of the depreciation of building, machinery, plant or furniture being the property of the assessee and used for the purposes of the business, at a prescribed percentage of the written down value of such assets.
This allowance is calculated, in respect of the year of acquisition of the property, at a percentage of its actual cost to the assessee and in subsequent years at a graduated scale on the basis of the actual cost less the depreciation allowances granted in the preceding years.
In strict principle, this is an allowance of capital nature but it is now well settled that the allowance of depreciation has to be taken into account in order to ascertain the true profits of a business and, therefore, an assessee is permitted to deduct, in the computation of the business income year after year, the prescribed percentage of the value of the assets used for the purposes of business.
The second allowance was not there in the 1922 Act originally and was introduced by the Income tax (Amendment) Act, 1946.
The introduction was of certain allowances in respect of expenditure on.
"scientific research related to the business", an expression which was defined in a fairly comprehensive manner by the statute.
Three types of allowances were permitted in respect of this category of expenditure of which we are here concerned with only one.
This provision was contained in clause (xiv) of S.10(2) which permitted a deduction. "in respect of any expenditure of a capital nature on scientific research related to the business, an allowance for each of the Five consecutive previous year.
beginning with the year in which the expenditure was incurred, or where the expenditure was incurred prior to the commencement of the business, for each of the five consecutive previous years beginning with the year in which the business was commenced, equal 2to one fifth of such expenditure: Provided that no allowance shall be made for any expenditure incurred more than three years before the commencement of the business: A Provided further that XXX XXX XXX (d) where a deduction is allowed for any previous year under this clause in respect of expenditure represented wholly or partly by any asset, no deduction shall be allowed under clause (vi) or clause (vii) for the same previous year in respect of that asset; (e) where an asset is used in the business after it ceases to be used for scientific research related to that business, and a claim for an allowance under clause (vi) or clause (vii) is made in respect of that asset, the actual cost to the assessee of the asset shall be treated as reduced by the amount of any deductions allowed under this clause;" A cursory and conjoint reading of section 10(2) (vi) and section 10(2) (xiv) suggests that where an assessee incurs expenditure of a capital nature on scientific research related to the business and the expenditure results in the acquisition of an asset, the assessee can claim, under clause (vi), a deduction of the specified percentage of the written down value of the asset and under clause (xiv) he can ask for a deduction, in five consecutive years, of the expenditure he has incurred on the acquisition of the asset.
For this purpose, we are assuming that an asset used for scientific research related to the business is also ipso facto an asset used for the purpose of business.
There has been some debate before us as to whether this is always so but we need not enter into that controversy for the purposes of the present case.
It will at once be seen that, if these two provisions are applied simultaneously, it would result in granting an assessee a double allowance in respect of the same expenditure one of the entire amount over a period of 5 years and the other a percentage of the expenditure over a number .
consecutive years at a graded scale as already mentioned.
The question at once leaps to the mind as to whether it could have been the intention of the legislature to permit both these deductions simultaneously to an assessee.
The provisions of clauses (d) and (e) of the proviso to S.10(2) (xiv) contain a clue to answer this question.
More about it later.
We next turn to the provisions of 1961 Act.
The topic of depreciation is dealt with by section 32.
Section 32(1) (ii) provides for depreciation.
As under the 1922 Act, it is allowed at a percentage of the written down value of certain capital assets employed in the bussiness.
The topic of scientific research expenditure is dealt with by section 35.
Section 35(1) provides for the deduction of four types of expenditure on scientific research and what we are concerned with is the deduction provided under section 35(1) (iv), which is to the following effect: (iv) in respect of any expenditure of a capital nature on scientific research related to the business carried on by the assessee, such deduction as may be admissible under the provisions of sub section (2).
" Sub section (2) provides that, for the purposes of clause (iv)of sub section (1), one fifth of the capital expenditure incurred in any previous year shall be deducted for that previous year; and the balance of the expenditure shall be deducted in equal instalments in each of the four immediately succeeding previous years.
There is an explanation which is not relevant for our present purposes.
Reading S.35(2) further, it provides in clauses (iv) and (v) as follows: "(iv) where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under clauses (i), (ii) and (iii) of sub section (1) of section 32 for the same previous year in respect of that asset; (v) where the asset mentioned in clause (ii) is used in the business after it ceases to be used for scientific research related to that business, depreciation shall be admissible under clauses (i), (ii) and (iii) of sub section(1) of section 32.
" Reference must also be made to Explanation 1 to section 43(1) in this context.
It read as follows at the relevant time: "Explanation: Where an asset is used in business after it ceases to be used for scientific research related to that business and a deduction has to be made under clause (i), clause (ii) or clause (iii) of sub section (I) or sub section (1A) of section 32 in respect of that asset, the actual cost of the asset to the assessee, as reduced by the amount of any deduction allowed under clause (iv) of sub section (1) of section 35 or under any corresponding provision of the Indian Income tax Act, 1922 (11 of 1922).
" From the above it will be seen that the provisions of Section 32(1) (ii) and Section 35(2) (i) (iv) and (v) read with Explanation 1 to s.43(1) virtually repeat the provisions contained in Section 10(2) (vi) and 10(2)(xiv) of the 1922 Act, so that the question earlier posed still loomed in the background of 1961 Act.
In 1968 there was an amendment in the provisions of Section 35(2).
The sub section was amended to read as follows: "(2) For the purposes of clause (iv) of sub section (1), (i) in a case where such capital expenditure is incurred before the 1st day of April, 1967, one fifth of the capital expenditure incurred in any previous year shall be deducted for that previous year; and the balance of the expenditure shall be deducted in equal instalments for each of the four immediately succeeding previous years; (i a) in a case where such capital expenditure is incurred after the 31st day of March, 1967, the whole of such capital expenditure incurred in any previous year shall be deducted for that previous year.
" The effect of this amendment was only to provided that the entire amount of capital expenditure incurred in relation to scientific research was allowed as a deduction in one year instead of being spread over a period of five years as was the position earlier.
This amendment does not touch the controversy in issue before us and it has no solution to offer to our present difficulty.
The provisions of Section 10(2) (vi) and (xiv) of the old Act had been administered between 1946 and 1962 and the provisions of Section 32 and 35 of the 1961 Act have been administered since 1962.
The question whether an assessee can simultaneously claim an allowance or deduction in respect of the same expenditure once under Section 32 and again in Section 35 must have cropped up in some cases and does appear that such a double claim was put forward in some cases.
The contention on behalf of the assessees was that the allowances in respect of depreciation on the one hand and in respect of capital expenditure on scientific research on the other are two totally different and independent heads of allowances.
one is a notional allowance to provide for the wear and tear of a capital asset employed in the business as the years roll by; the other is an allowance for actual expenditure of a capital nature granted, on the eve of our country 's independence, in order to give fillip to new industrial innovations and the development of indigenous know how and techniques by proper planning on research and development by various business houses.
It is therefore suggested that there is nothing absurd in construing the statutes act as providing cumulatively for both types of deductions in respect of the same capital asset.
The only limitations on this right are the two placed by the statute itself.
The first limitation, contained in clause (d) of the proviso to Section 10(2) (xiv) and s.35(2) (iv) is that both the deductions cannot be claimed "for the same previous year" in respect of the same capital asset.
The second limitation is found in clause (e) of the proviso to Section 10(2) (xiv) and s.35(2) (v) which say that if a capital asset used for scientific research ceases to be so used but is thereafter brought into a business for use therein, the actual cost for purposes of granting depreciation in respect of the asset thereafter should be taken as the amount of its original cost reduced by the amount of deductions allowed under Section 10(2) (xiv) or s.35(2).
In other words, the contention of the assessee was and is that both the types of allowances are permissible under the statute except to the extent limited by clauses (d) and (e) of the proviso to Section 10(2) (xiv) of the 1922 Act and reproduced in clauses (iv) and (v) of Section 35(2) of the 1961 Act.
Before us it is claimed on behalf of the assessee that this interpretation of the statutory provisions is very clear, patent and unambiguous.
It is alleged that despite this, some Income tax Officers started disallowing the claim of depreciation in respect of such capital assets even in previous years during which no deduction was claimed or allowed under Section 10(2) (xiv) or Section 35(2), contrary to the clear language of clause (d) of s.10(2) (xiv) and s.35(2) (iv).
These Of orders were reversed on appeal either by the Appellate Commissioner or by the Tribunal.
It was suggested that these decisions were almost unanimously in favour of the assessee but the department persisted in pursuing the matter upto the stage of the High Court.
Only one reference on this topic came up before the High Courts and is reflected in the decision of the Karnataka High Court, reported as CIT vs Indian Telephone Industries Ltd., This was a reference of the year 1977 made at the instance of the Commissioner of Income Tax and the Commissioner of Income Tax lost this reference.
The High (Sourt re affirmed the position contended for by the assessee as the one and only possible interpretation of the statutory provisions.
It is, therefore, contended that there was, and could have been, no doubt that an assessee was entitled to claim depreciation allowance in respect of such assets in respect of previous years other than those in which an allowance had been allowed under the other head.
We shall revert later to this aspect of the matter.
At this stage, the Finance (No.2) Act, 1980 intervened.
It amended section 35(2) (iv) to read as follows: "(iv) where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under clauses (i), (ii) and (iii) of sub section (1) of section 32 for the same or any other previous year in respect of that asset.
" (Emphasis added) The Finance Act made this amendment retrospective w.e.f. 1.4.62, that is, the date of the commencement of the 1961 Act.
This amendment is undoubtedly far reaching in its effect.
It will result in completion of the pending assessments of several years on the footing of the new provision.
It will also involve re opening or rectification of completed assessments of earlier years, to the extent permissible under the provisions of sections 148 and 154, in cases where assessees had been granted "double allowance" accepting their contention at the time of the original assessments.
The effect will be not for one assessment year but for a number of assessment years in succession.
Painting a very grim picture of the consequences of giving full retrospective effect to the amendment, the assessees say that it will impose unexpected and impossible burden on them over the years.
jeopardise their solvency and lay them open to action by creditor and financial institutions.
Such an onerous burden, it is said.
is unreasonable and oppressive and the provision imposing such burden violates the fundamental rights of the assessees under Articles 14 and 19(1) (g) of the Constitution of India.
It is on this plea that, even though assessments and appeals are pending in several of these cases, the petitioners chose to approach this Court by way of writ petitions under Article 32 of the Constitution.
These are mostly writ petitions of the year 1981 and are now coming up for hearing after a period of 10 years.
Learned counsel for the assessees do not contest the competence of the legislature to enact the impugned provision, nor do they dispute the right of the legislature to give retrospective effect to statutory provisions.
The contention only is that retrospective provisions may be permissible even in taxing statutes in certain special circumstances such as in the case of provisions clarifying the impact of a statute, provisions curing defective legislations in the light of the judicial decisions and the like.
They, however, say that if the legislature chooses to impose a totally new burden, which was not at all in contemplation earlier and proceeds to give full retrospective effect thereto, such an attempt should be struck down as unreasonable and discriminatory.
The principal questions, therefore, for our consideration are: 1) Were the earlier statutory provisions capable of only one interpretation, namely, that placed by the assessees or was there any ambiguity in relation thereto ? (2) If there was some doubt or ambiguity about the earlier legislation, and the 1980 Act clarified the position by a retrospective amendment, would it offend the provisions of the Constitution ? (3) If, on the other hand, the earlier provision was very clear and capable of only one interpretation, as placed by the assessee, was the legislature within its rights in amending the provision retrospectively w.e.f. 1.4.62 and thus imposing an unreasonable tax burden on the assessees? Taking up the first of the three questions, it has to be considered from two angles, one factual and the other, legal.
An attempt was made on behalf of the petitioners to project an image as if the interpretation sought to be placed by the department on pre 1980 provisions to disallow depreciation on such assets was so far fetched that it never received the approval of the higher appellate authorities.
It was suggested that the appeals by assessees against the disallowance invariably succeeded and it was the Department that had to move the High Court on reference, the first of which references came up before the Karnataka High Court in C.l.
T. vs Indian Telephone Industries (1980) 126 I.T.R. 548 and was answered against the Department.
On the basis of such allegations the petitioners attempted to make out that the Department 's interpretation was patently untenable and that the 1980 amendment is not in the nature of a statutory clarification of an ambiguity but a totally new and fresh imposition sought to be unjustifiably given retrospective effect.
But, as Shri B.B. Ahuja has pointed out on the basis of the averments of the petitioner in one of the cases, viz., W.P.1153/81, the impression sought to be created by the petitioners does not accord with the correct facts.
The position in the case is available only as it stood at the time when the writ petition and the counter affidavit were filed and subsequent developments are not known.
Nevertheless, the picture that emerges is this.
In that case, the Income tax Officer (I.T.O.) is said to have allowed depreciation on assets used for scientific research, for the assessment year 1969 70, though this is denied by the department.
The claim was perhaps disallowed by the I.T.O. for the assessment year 1970 71, but it was allowed by the Allahabad Bench of the Income tax Appellate Tribunal (I.T.A.T.) by its order dated 30.8.76.
For the assessment year 1971 72, the I.T.O. disallowed the depreciation.
The Appellate Assistant Commissioner (A.A.C.) allowed it.
The department appealed to the Delhi Bench of the I.T.A.T. which accepted the department 's plea by its order dated 13.8.79 placing reliance on the decision of a Special Bench of the I.T.A.T.
It has been stated that the assessee filed an application for reference to the High Court which was pending when the writ petition was filed.
For the assessment years 1972 73 to 1974 75, the assessments are pending as a stay order had been obtained for reasons which are not known.
For the assessment years 1975 76 and 1976 77, the assessee claimed depreciation on a number of items of scientific research assets.
The I.T.O. "allowed" the claims subject to the rider that "there is no provision to give deduction of more than 100% of the expenditure by way of depreciation".
The assessee appealed to Commissioner of Income tax (Appeals) who disallowed the claim.
For 1977 78, the l.
T.O. disallowed the claim and the C.l.T. dismissed the assessee 's appeals.
For assessment years 1978 79 to 1980 81, the assessments are stated to be pending.
The above facts are sufficient to show that, atleast after 1.4.1968, there is no information before us as to the position between 1.4.1946 and 31.3.1968 the Department has been putting forward its objections on the issue and that the same was the subject matter of controversy at various appellate stages, some decided in favour of, and some against, the assessee.
A Special Bench of the l.
T.A.T. had indeed decided the issue against the assessee.
In this background, it is not correct to say that the position was crystal clear and that, save for a few ITOs who took a biassed view, the authorities were all agreed that the Department 's stand was untenable.
Some of the reported decisions also show that there was a live controversy and that references have been made to the High Court both at the instances or the assessees [see Alkali & Chemical Corporation of India Ltd. vs C.l.T. , and C.I.T. vs Indian Explosives Ltd., , as well as at the instance of the Revenue [see, C.I.T. vs International Instruments P. Ltd., ; C.I.T. vs Mahindra Sintered Products Ltd. and Warner Hindustan Ltd. vs CIT, The petitioner 's contention that, under the pre amended provisions, depreciation on such assets was recognised allround as clearly allowable is therefore rejected.
We have dealt with this aspect only to meet an aspect that was urged.
What is really important is the true and correct interpretation of those provisions, not what someone thought of it then and to this aspect we shall now turn.
4 The second aspect of the First of the three questions posed earlier for our consideration is the legal or interpretational aspect of the provisions as they stood prior to the 1980 Amendment.
Under the provisions of the statute as they stood earlier, could the assessees have claimed continued grant of depreciation after the expiry of five previous years before the 1968 amendment and after the expiry or the first year after the 1968 amendment, even though the entire cost of the capital asset in question had been allowed to be written off completely against the business profits of those five previous years or one previous year as the case may be? We think the answer to this question must emphatically be in the negative.
In our view, it is impossible to conceive of the legislature having envisaged a double deduction in respect of the same expenditure, even though it is true that the two heads of deduction do not completely overlap and there is some difference in the rationale of the two deductions under consideration.
On behalf of the assessees reliance is placed on the following circumstances to support a contention that the statute did not intend one deduction to preclude the other : (i) lt is pointed out that s.10(2) (xiv) of the 1922 Act, was inserted in 1946 consequent on the insertion of a corresponding provision in the United Kingdom.
That provision, viz. s.20(4) of the U.K. Finance Act, 1944 read thus : (4) Where a deduction is allowed for any year under this or the last preceding section in respect of expenditure represented wholly or partly by any assets, no deduction shall be allowed under any provisions of the Income tax Act other than this part of this Act in respect of wear and tear, obsolescence, depreciation or exceptional depreciation of these assets for any year of assessment during any part of which they are used by the person carrying on the trade for scientific research related to the trade. " (emphasis supplied) The Indian provision, it is said, has made a deliberate departure from the said provision and limited the bar of depreciation only to those previous years during which a deduction is allowed under S.10(2) (xiv); (ii) When the Income tax Bill, 1961 was under the consideration of the Law Commission, the provisions of S.10(2) (vi) and (xiv) were carefully reviewed.
But changes were made and the provisions of the new Act in this regard were drafted in pari materia with those of the old Act ; (iii) The language used in clause (d) of the proviso to S.10(2) (xiv) and S.35(2) (iv) again is significantly different from the language used in various other provisions of the Act which, in like contexts of possible double allowances, emphatically rule out deductions in respect of the same expense or exemptions in respect of the same income under two different provisions for the same or even any other assessment year : See, for example, Sections 20(2) 35B(2), 35C(2), 35CC(4), 35CCA(3), 35CCB(3), 35D(b), 35E(8), 80GGA(4), 80HH(9A), 80HHA(7) and 80HHB(S); and (iv) When the relevant provisions say that depreciation shall not be allowed in certain previous years, it permits a disallowance only in those previous years and means, by necessary implication, that it shall be allowed in other years, if otherwise eligible on the language of the provision for depreciation.
There is an apparent plausibility about these arguments, particularly in the context of the alleged departure in the language used by S.10(2)(xiv) from that employed in S.20 of the U.K. Finance Act, 1944.
We may, however, point out that the last few underlined words of the English statute show that there is really no difference between the English and Indian Acts; the former also in terms prohibits depreciation only so long as the assets are used for scientific research.
In our opinion, the other provisions of the Act to which reference has been made some of which were inserted after the present controversy started are not helpful and we have to construe the real scope of the provisions with which we are concerned.
We think that all misconception will vanish and all the provisions will fall into place, if we hear in mind a fundamental, through unwritten, axiom that no legislature could have at all intended a double deduction in regard to the same business outgoing, and if it is intended it will be clearly expressed.
In other words, in the absence of clear statutory indication to the contrary, the statute should not be read so as to permit an assessee two deductions both under S.10(2) (vi) and S.10(2) (xiv) under the 1922 Act or under S.32(1)(ii) and 35(2)(iv) of the 1922 Act qua the same expenditure.
Is then the use of the words "in respect of the same previous year" in clause (d) of the proviso to S.10(2) (xiv) of the 1922 Act and section 35(2) (iv) of the 1961 Act a contra indication which permits a disallowance of depreciation only in the previous years in which the other allowance is actually allowed.
We think the answer is an emphatic `no ' and that the purpose of the words above referred to is totally different.
If, as contended for by the assessees, there can be no objection in principle to allowances being made under both the provisions as their nature and purpose are different, then the interdict disallowing a double deduction will be meaningless even in respect of the previous years for which deduction is allowed under S.10(2) (xiv) /S.35 in respect of the same asset.
If that were the correct principle, The assessee should logically be entitled to deduction by way of depreciation for all previous years including those for which allowance have been granted under the provision relating to scientific research.
The statute does not permit this.
The restriction imposed would, therefore, be illogical and unjustified on the basis suggested by the assessees.
On the other hand, if we accept the principle we have outlined earlier viz. that, there is a basic legislative scheme, unspoken but clearly underlying the Act, that two allowances cannot be, and are not intended to be, granted in respect of the same asset or expenditure, one will easily see the necessity for the limitation imposed by the quoted words.
For, in this view, where the capital asset is one of the nature specified, the assessee can get only one of the two allowances in question but not both.
Then the question would arise and might create a difficulty : in that event, which not the two allowance should the assessee be granted that which the assessee chooses or that which the assessing officer might prefer? It is necessary for the statute to define this and this is what has been done by the rider in clause (d) of the proviso to S.10 (2) (xiv)/S.35(2) (iv).
It mandates that the assessee should, in such a case, be granted the special allowance for scientific research and not the routine and annual one for depreciation.
Clause (d) of the proviso to S.10(2) (xiv) and S.30(2) (iv) thus fall into place as an appropriate and necessary provision.
The provision contained in clause (e) of the proviso to S.10(2) (xiv) of the 1922 Act, re enacted in Explanation, to S.43 (1) of the 1961 Act, also reinforces this line of approach.
It provides that the extent of capital expenditure written off under the second of the above headings (whether it be ]00% under the post 1968 provision or 20%, 40%, 60%, 80% or 100% under the pre 1968 provision) has to be pro tanto deducted in ascertaining the actual cost for purposes of depreciation.
This provision militates, in our view, against the petitioners, contention that the allowances under the two provisions are by nature unconnected with, and independent of, each other.
Its effect is this.
Suppose a person uses an asset for scientific research for sometime and then brings it into his business for other use later, he would be thereafter entitled to depreciation thereon only on the actual cost less deduction allowed under S.10 (2) (xiv)/S.35.
However, if the asset continues to be used in scientific research related to the business, he would be entitled to get depreciation on its full cost after the first few previous years during which allowance is granted under those provisions.
This seems to be anomalous but Shri Ganesh says that there is no anomaly because this is a provision intended to act as a disincentive to persons who purport to purchase assets for scientific research but withdraw it from such use soon after.
Granted that this is so, still the deduction of the allowances given on scientific research assets for computing depreciation is consistent only with the principle stated by us that they are deductions basically of the same nature intended to enable the assessee to write off certain items of capital expenditure against his business profits.
We may add that the report of the Chocksi Committee, on the basis of which the 1980 amendment was effected only echoed the same view when it said in para 3.29 of its report : "3.29 Our attention has also been drawn to certain anomalous situations in the matter of allowance of depreciation.
In certain cases where a full deduction has been allowed in relation to a capital asset under other sections (as for example, section 35 which permits a deduction in respect of capital expenditure for scientific research), the taxpayers have contended that such deduction is independent of the allowance by way of depreciation.
In our view, the intention of the legislature is not to allow a double deduction (of 200%) in respect of the same asset, once under section 35 and, again, by way of depreciation under section 32.
If and to the extent that there is any anomaly or contrary view possible on a construction of section 35, we recommend that the law should be clarified to provide that no depreciation under section 32 shall be allowable in respect of capital expenditure for scientific research qualifying for deduction under section 35.
" For the reasons discussed above, we are of the view that, even before the 1980 amendment, the Act did not permit a deduction for depreciation in respect of the cost of a capital asset acquired for purposes of scientific research to the extent such cost has been written off under S.10(2) (xiv)/35 (1) & (2).
Prior to 1968, such assets qualified for an allowance of one fifth of the cost of the asset in five previous years starting with that of its acquisition and during these years the assessee could not get any depreciation in relation thereto.
In respect of assets acquired in previous year relevant to assessment year 1968 69 and thereafter, their cost was written off in the previous year of acquisition and no depreciation could be allowed in that year.
This is clear from the statute.
Equally, it is not envisaged, and indeed, it would be meaningless to say, that depreciation could be allowed on them thereafter with a further absurdity that it could be allowed starting with the original cost of the asset despite its user for scientific research and the allowances made under the 'scientific research ' clause.
In our view, there was no difficulty at all in the interpretation of the provisions.
The mere fact that a baseless claim was raised by some over enthusiastic assessees who sought a double allowance or that such claim may perhaps have been accepted by some authorities is not sufficient to attribute any ambiguity or doubt as to the true scope of the provisions as they stood earlier.
We are, for the reasons discussed above, unable to approve of the cryptic view expressed by the Karnataka High Court in C.I.T. vs Indian Telephone Industries Ltd., or the view taken by the Bombay High Court in C.I.T. vs Hico Products, In view of the answer given by us to the first question posed by us, there is no need to answer the second and third questions since, even without the amendment, the assessees cannot claim the depreciation allowance in question.
The second question can arise only if it is assumed that there was an ambiguity or doubt as to interpretation that was retrospectively clarified by the legislature.
But it is common ground before us that, even on this hypothesis, the validity of the amendment cannot be challenged.
This is indeed beyond all doubt: See Rai Ramkrishna vs State of Bihar, ; ; Asst Commissioner of Urban Land Tax vs Buckingham & Carnatic Co. Ltd., ; ; Krishnamurthi & Co. vs State of Madras, ; ; Hira Lal Rattan Lal vs Sales Tax Officer and Another, (1973) 31 S.T.C. 178 and Shiv Dutt Rai Fateh Chand vs Union of India, Even the Bombay decision inC.l.
T. vs Hico Products, on which the assessees heavily rely, concedes, in our opinion rightly, this position.
The assessees may have some possible case only if the earlier statutory provisions can be said to have been unambiguously in favour of the assessee and the 1980 amendment had radically altered the provisions to cast a new and substantial burden on the assessee with retrospective effect.
It is this third alternative, reflected by the third question posed by us, that was success fully urged before the High Court by the assessees.
But we are unable to accept this argument or conclusion.
In our view, the first question has to be answered by saying that the pre 1980 provisions were capable of only one interpretation but that was as urged on behalf of the Revenue.
The 1980 amendment has effected no change at all in the provision except to set out more clearly and categorically what the provision said even earlier.
In this view, the second and third questions earlier posed do not arise.
For the reasons discussed above, these Writ Petitions are dismissed.
We, however, make no order as to costs.
B.P JEEVAN REDDY, J.
I agree with my learned brother Ran ganathan, J. that these writ petitions should fall.
Having regard to the nature and significance of the question raised herein, however, I felt impelled to say a few words.
The challenge in this batch of writ petitions is to the retrospective operation given to the amended clause (iv) of sub section (2) of Section 35 of Income Tax Act, 1961, by the Finance (No.2) Act, 1980.
The said Finance Act added the words "or any other" in the said clause and gave it retrospective effect from April 1, 1962.
As amended, clause (iv) reads as follows: "(iv) where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under clause (ii) or sub section (1) of section 32 for the same or any other previous year in respect of that asset.
" Learned Counsel for the petitioners assessees contended that the retrospective effect given to the said amendment has the effect of taking away the rights vested in the assessees by the unamended provisions, making them liable to pay huge amounts by way of tax.
Such payment, if enforced, has the effect of debilitating the assessees, industries beyond recall.
It is submitted that the retrospectivity given to the said amendment is violative of the petitioners fundamental rights guaranteed by Articles 19(1) (g) and 14 besides the guarantee in Article 300A.
In the year 1946, clause (xiv) among other clauses was introduced in sub section (2) of Section 10 of the Indian Income tax Act, 1922.
It provided, for the first time, that even expenditure of a capital nature laid out on scientific research related to the business of the assessee shall be allowed to be deducted.
The deduction was hundred per cent spread over a period of five consecutive previous years commencing from the previous year on which the expenditure was incurred.
Sub clause (d) of clause (xiv) provided at the same time that "where a deduction is allowed for any previous year under this clause in respect of expenditure represented wholly or partly by any asset, no deduction shall be allowed under clause(vi) or clause (vii) for the same previous year in respect of that asset.
" The effect of sub clause (d) was that if an assessee claimed and was allowed a deduction in respect of expenditure of a capital nature on scientific research, and where such expenditure took the shape of an asset, which in the normal course would be entitled to deduction on account of depreciation under clauses (vi) and (vii) of Section 10(2) no depreciation would be allowed in respect of that asset in those respective previous years.
In other words, during the period of five previous years the assessee was allowed the deduction under clause (xiv) of sub section (2) of section 10, claim for depreciation under clauses (vi) an/or (vii) of the same sub section was excluded.
In the Income tax Act, 1961, a similar provision was made in section 35.
Clause (iv) of sub section (1) of section 35 provided for deduction of expenditure of a capital nature incurred on scientific research related to the business carried on by the assessee.
Sub section (2) of Section 35 set out the manner in which and the terms subject to which the deduction was to be allowed.
As enacted in 1961, sub section (2) provided, as was done by clause (xiv) of Section 10(2) of the 1922 Act that the said deduction shall be allowed in equal measure in five consecutive previous years, commencing from the previous year in which the expenditure was incurred.
In the year 1967, however, sub section (2) was amended, providing for full deduction of the expenditure in the very previous year in which such expenditure was incurred.
Clause (iv) of sub section (2), however, remained unchanged.
Clause (iv) declares that where a deduction is allowed for any previous year under the said section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under clauses (i), (ii) and (iii) of sub section (I) or under sub section (1A) of section 32 for the same previous year in respect of that asset.
Thus, the position obtaining under the 1922 Act and the previous Act is the same, with the difference that if such expenditure is incurred after April 1, 1967, hundred per cent deduction was granted in the very previous year in which the asset (representing the capital expenditure of the nature mentioned in clause (iv) of sub section (1) of Section 35) is acquired.
The Revenue says that the deduction provided by Section 35(1) (iv) is in the alternative to the deduction provided by clauses (i), (ii) and (iii) of sub section (1) and sub section (1A) of Section 32.
If one is availed of, the other is not available, not only during the year or years in which the deduction under Section 35(1) (iv) is availed of, but permanently.
The reason, according to them, is obvious: if both are allowed to be availed of, it amounts to grant of 200% deduction viz., 100% under Section 35 (1) (iv) and another 100% under sub sections (1) and (1A) of Section 32.
This is totally outside the contemplation of the Act, they say.
On the other hand, the case of the asssessees is that the bar created by clause (iv) of sub section (2) applies only to that previous year or those previous years during which the said expenditure is allowed as a deduction.
That is the express language of the clause.
The bar does not extend beyond the year or years in which the deduction under Section 35(1) (iv) is availed.
There is no reason more so in a taxing enactment to extend the said bar beyond the limit prescribed by the statute.
They say, if the intention of the Parliament was to bar the claim of depreciation in respect of such asset for all time to come, nothing was easier than to say so in clear words, as was done by sub section (4), of section 20 of U.K. Finance Act, 1944.
It is pointed out that clause (xiv) of sub section (2) of section 10 was introduced in the Indian Income tax Act within two years of the introduction of a similar provision in the English Act, evidently inspired by the Amendment in the English Act.
But while incorporating the said provision, a conscious, departure was made by the Indian Legislature, say the assessees.
Having regard to the scant investment in scientific research in India, it is submitted, the legislature must have thought it necessary to provide an additional inducement over and above the deduction on account of depreciation.
Considerations of equity have no place in the interpretation of a taxing enactments, they say further.
I find it difficult to agree with the reasoning of the assessees.
Acceding to it would amount to placing an unreasonable interpretation upon the relevant provisions and to negating the intention of Parliament.
I find it difficult to agree that the Indian Legislature as also the Parliament made a conscious departure from the English Amendment with the idea of providing an additional benefit to induce the Indian assessees to invest more in scientific research.
I find the argument rather convoluted.
If the intention of the Legislature/Parliament was to provide more than 100% deduction, they would have said so, as they have done in cases where they provided for what is called weighted deduction '.
(For example, See Section 35(B) of 1961 Act).
A double deduction cannot be a matter of inference, it must be provided for in clear and express language.
regard having to its unusual nature and its serious impact on the Revenues of the State.
Now, what does clause (iv) of Section 35(2) say? It says that during the years or the year in which the assessee avails of the deduction under Section 35(1 ) (iv) he shall not avail of the deduction on account of depreciation provided by clauses (i), (ii) and (iii) of sub section (1) and sub section (1A) of Section 32.
What could be the underlying reason? It is obviously to ensure that the assessee doesn 't get double deduction.
Take a case where the asset was acquired prior to April 1,1957.
The deduction under Section 35(1) (iv) would be allowed in five consecutive years.
If during the very five previous years, depreciation under the aforementioned provisions is also allowed, the assessee would obtain, at the end of five years, a double depreciation i.e., 100% under Section 35 and almost 100% under Section 32.
(It may be noted that in many cases, the rate of depreciation under Section 32 is 20% or even higher).
If such a course was barred by clause (iv) during the initial five years, would it be reasonable to say that same thing can be achieved by claiming the deduction after the expiry of five years? If both the deductions are in the alternative, as indicated by clause (iv), they must be understood as being in the alternative and not consecutive.
It would be a rather curious thing to say (in the case of an asset acquired prior to April 1, 1967) that Parliament barred claim for depreciation under Section 32 even in the first year when only 20% of the cost of the asset is allowed as deduction under Section 35(1) (iv), it barred it in the second, third and fourth years, when the deduction has reached 40, 60 and 80 per cent, but permitted it be claimed after the fifth year, by which year the entire 100% cost was allowed as a deduction.
No express provision was necessary to say what is so obvious.
The position after April 1, 1967 is no different.
That the aforesaid view is the correct one is indicated by Explanation (1) to clause (1) of section 43 [the corresponding provision in the 1922 Act being sub clause (e) of clause (xiv) of Section 10(2)].
Clause (1) of section 43 defines the expression `actual cost '.
Explanation (1) appended , to the definition says "Where an asset is used in the business after it ceases to be used for scientific research related to that business and a deduction has to be made under clause (ii) of sub section (1) of section 32 in respect of that asset, the actual cost of the asset to the assessee shall be the actual cost to the assessee as reduced by the amount of any deduction allowed under clause (iv) of sub section (1) of section 35 or under any corresponding provision of the Indian Income tax Act, 1922 (11 of 1922).
" Now what does this mean? Take a case where the asset of a like nature acquired prior to April 1, 1967 is diverted to other purposes after the expiry of two previous years; the `actual cost ' of the asset to the assessee in such a case would be 60% of the original cost.
And if it is diverted after five years, it would be nil which means that the assessee cannot claim any depreciation on it at all.
Counsel for the assessee explains this provision to say that it was meant to prevent diversion of such an asset from scientific research to assessee 's business purposes.
The explanation does not stand scrutiny.
The fallacy in the explanation can be demonstrated by taking the very same illustration, where the asset is acquired prior to April 1, 1967.
Suppose, such an asset is diverted after first two previous years, its `actual cost ' to the assessee would be 60% of the original cost, which alone would qualify for deduction under Section 32(1) and (1A).
The remaining 40% would not.
This 40% goes without earning any depreciation.
Why is it so, if the assessees are right in saying what they do.
According to their reasoning, this 40% too should qualify for depreciation.
The fallacy in their argument would become clearer, if the diversion is at the end of the fifth year.
That the Parliament never intended to provide for a double deduction is also the opinion of the Direct Tax Law Committee.
In its interim report, (December, 1977) the Committee (popularly known as 'Choksi Committee ') had this to say in para 3.29 of its report: "3.29.
Our attention has also been drawn to certain anomalous situations in the matter of allowance of depreciation.
In certain cases where a full deduction has been allowed in relation to a capital asset under other sections (as for example, section 35 which permits a deduction in respect of capital expenditure for scientific research), the tax payers have contended that such deduction is independent of the allowance by way of depreciation.
In our view, the intention of the legislature is not to allow a double deduction (of 20%) in respect of the same asset, once under section 35 and, again, by way of depreciation under section 32.
If and to the extent that there is any anomaly or contrary view possible on a construction of section 35, we recommend that the law should be clarified to provide that no depreciation under section 32 shall be allowable in respect of capital expenditure for scientificresearch qualifying for deduction under section 35.
" lt is evidently on the basis of this recommendation that clause (iv) of sub section (2) of section 35 was amended to make express what was implicit in it.
The amendment introduced the words "or any other" in the said clause.
After amendment, clause (iv) of section 35 (2) reads as follows: "where a deduction is allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction shall be allowed under clause (ii) of sub section (1) of section 32 for the same or any other previous year in respect of that asset.
" In our opinion the said amendment is merely clarificatory in nature.
It makes explicit what was implicit in the provisions.
Question of its constitutionality, therefore, does not arise.
Though purporting to be retrospective, it does not take away any rights which had legally vested in the assessees.
The Bombay High Court has struck down the said amendment of clause (iv) in Commissioner of Income Tax vs Hico Products Pvt. Ltd., The approach of the Bombay High Court is at variance with ours.
It has practically accepted the line of reasoning put forward by the assessees which has not commended to us.
Among other reasons, the High Court was impressed by the difference in the language employed in Section 10(2)(xiv)(d) and the one employed in Section 20 (4) of the U.K.Finance Act, which reads as follows: "(4) Where a deduction is allowed for any year under this or the last preceding section in respect of expenditure represented wholly or partly by any assets, no deduction shall be allowed under any provisions of the Income tax Act other than this part of this Act in respect of wear and tear, absolescence, depreciation or exceptional depreciation of these assets for any year of assessment during any part of which they are used by the person carrying on the trade for scientific research related to the trade.
" It is apparent that the scheme and structure of the English provision is different than ours, as has been demonstrated by my learned brother G Ranganathan, J. So far as the arguments of taking away of vested rights is concerned, it is evident from the facts stated in the writ petition 1153/81 which was treated as representative of the facts and contentions in all the writ petitions and with reference to which facts were arguments addressed itself that none of the assessments relating to any of the assessment years concerned herein has become final.
They are pending at one or the other stage and in one or the other forum.
I need not dilate upon this aspect inasmuch as the impugned amendment merely makes explicit what was implicit in the unamended clause, as explained hereinabove.
In such a situation, the argument of any right vesting in the assessees is misplaced.
The writ petitions accordingly fail and are dismissed.
No costs.
N.P.V. Petitions dismissed.
| Section 32 (1) (ii) of the Income Tax Act, 1961 provided for depreciation, while computing business income for purpose of income tax.
It was allowed at a percentage of the written down value of certain capital assets employed in the business.
Section 35(1) provided for the deduction of four types of expenditure on scientific research and the deduction provided under 35 (1 ) (iv) was to the effect that in respect of any expenditure of a capital nature on scientific research related to the business carried on by the assessee, such deduction as may be admissible under the provisions of sub section (2).
Sub Section (2) provided that, for the purposes of clause (iv) of sub section (1), one fifth of the capital expenditure incurred in any previous year should be deducted for that previous year; and the balance of the expenditure should be deducted in equal instalments in each of the four immediately succeeding previous years.
It further provided in clauses (iv) and (v) that where a deduction was allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction should be allowed under clauses (i), (ii) and (iii) of sub section (1) of section 32 for the same previous year in respect of that asset; and where the asset mentioned in clause (ii) was used in the business after it ceased to be used for scientific research related to that business, depreciation should be admissible under clauses (i), (ii) and (iii) of sub section (1) of Section 32.
Explanation 1 to Section 43(1) also provided that where an asset was used in business after it ceased to be used for scientific research related to that business and a deduction had to be made under clause (i), clause (ii) or clause (iii) or sub section (1) or sub section (1A) of Section 32 in respect of that asset, the actual cost of the asset to the assessee, as reduced by the amount of any deduction allowed under clause (iv) of sub section (1) of Section 35.
The provisions of Section 32(1) (ii) and Section 35(2) (1) (iv) and (v) read with Explanation 1 to Section 43(1) virtually repeated the provisions contained in Section 10(2) (vi) and 10(2) (xiv) of the 1922 Act.
In 1968, there was an amendment in the provisions of Section 35(2).
The effect of the amendment was that the entire amount of capital expenditure incurred in relation to scientific research was allowed as a deduction in one year, instead of being spread over a period of five years as was the position earlier.
Thereafter, the Finance Act, 1980 made an amendment with retrospective effect from 1.4.1962, i.e. from the date of commencement of Act of 1961 which provided under clause (iv) of Section 35(2), that where a deduction was allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction should be allowed under clauses (i), (ii) and (iii) of sub section (1) of Section 32, for the same or any other previous year in respect of that asset.
In the Writ Petitions filed before this Court on behalf of the asses sees it was contended that the allowances in respect of depreciation on the one hand and of capital expenditure on scientific research on the other are two totally different and independent heads of allowances; one was a notional allowance to provide for the wear and tear of a capital asset employed in the business as the years rolled by; and the other was an allowance for actual expenditure of a capital nature granted to give fillip to new industrial innovations and development of indigenous know how and techniques by proper planning on research and development by various business houses; and therefore there was nothing wrong in construing the statute as providing cumulatively for both types of deductions in respect of the same capital asset; that both the types of allowances were permissible under the statute except to the extent limited by clauses (iv) and (v) of Section 35 of the Act/Clauses (d) and (e) of the proviso to Section 10(2) (xiv) of the 1922 Act; that this interpretation of the statutory provisions was very clear.
patent and unambiguous; that the retrospective amendment of the provision would impose unexpected and impossible burden on them over the years, jeopardise their solvency and lay them open to action by creditors and financial institutions and such an onerous burden was unreasonable and oppressive and the provision imposing such a burden violated the fundamental rights of the assessees under Articles 14 and 19(1) (g) of the Constitution that retrospective provisions may be permissible even in taxing statutes in certain special circumstances such as in the case of provisions clarifying the impact of a statute provision curing defective legislations in the light of the judicial decisions and the like but if the legislature chose to impose a totally new burden which was not at all in contemplation earlier and proceeded to give full retrospective effect thereto such an attempt should be struck down as unreasonable and discriminatory.
that the amendment was not in the nature of a statutory clarification of an ambiguity but a totally new and fresh imposition sought to be unjustifiably given retrospective effect and that the statute did not intend one deduction to preclude other.
On behalf of the Revenue it was contended that the deduction provided by Section 35 (1) (iv) was in the alternative to the deduction provided by clauses (i) (ii) and (iii) of sub section (1) and sub section (1A) of Section 32; if one was availed of the other was not available not only during the year or years in which the deduction under Section 35(1) (iv) was availed of but permanently; for the reason that if both were allowed to be availed of; it amounted to grant of 200% deduction viz., 100% under Section 35(1) (iv) and another 100% under sub sections (1) and (1A) of Section 32, and this was totally outside the contemplation of the Act.
Dismissing the writ petitions, this Court, HELD: Per Ranganathan J. (For himself and Ramaswami, J.) 1.1.
There is a fundamental, though unwritten, axiom that no legislature could have at all intended a double deduction in regard to the same business outgoing; if it is intended it will be clearly expressed.
In other words, in the absence of clear statutory indication to the contrary, the statute should not be read so as to permit an assessee two deductions both under Section 10(2) (vi) and section 10(2) (xiv) under the 1922 Act or under Section 32 (i) (ii) and 35(2) (iv) of the 1961 Act qua the same expenditure.
The use of the words "in respect of the same previous year" in clause (d) of the proviso to Section 10(2) (xiv) of the 1922 Act and Section 35 (2) (iv) of the 1961 Act is not a contra indication which permits a disallowance of depreciation only in the previous years in which the other allowance is actually allowed.
The purpose of the words above referred to is totally different.
That the two allowances cannot be and are not intended to be granted in respect of the same asset or expenditure, can be easily seen from the limitation imposed by these words.
Where the capital asset is one of the nature specified, the assessee can get only one of the two allowances in question but not both.
For determining which of the two allowances should be granted that which the assessee chooses or that which the assessing officer might prefer, it is necessary for the statute to define this and this is what has been done by the rider in clause (d) of the proviso to Section 10(2) (xiv) of the 1922 Act Section 35(2) (iv) of the 1961 Act.
It mandates that the asssessee should, in such a case, be granted the special allowance for scientific research and not the routine and annual one for depreciation.
Clause (d) of the proviso to Section 10(2) (xiv) of the 1922 Act and Section 30(2)(iv) of the 1961 Act thus fall into place as an appropriate and necessary provision.
The provision contained in clause (e) of the proviso to Section 10(2) (xiv) of the 1922 Act, re enacted in Explanation to Section 43(1) of the 1961 Act, also reinforces this line of approach.
Therefore, it is not correct to say that the allowances under the two provisions are by nature unconnected with, and indpendent of, each other.
[171 D H; 172 A E] 1.2.
Under the provisions of the statute as they stood earlier, the assessees could not have claimed continued grant of depreciation after the expiry of five previous years before the 1968 amendment and after the expiry of the first year after the 1968 amendment, even though the entire cost of the capital asset in question had been allowed to be written off completely against the business profits of those five previous years or one previous year as the case may be.
It is impossible to conceive of the legislature having envisaged a double deduction in respect of the same expenditure even though it is true that the two heads of deduction do not completely overlap and there is some difference in the rationale of the two deductions under consideration.
The last few words of the English statute, viz., "assets for any year of assessment during any part of which they were used by the person carrying on the trade for scientific research related to the trade" show that there is really no difference between the English and Indian Acts; the former also in terms prohibits depreciation only so long as the assets are used for scientific research.
[169 F H; 171 B, C] 1.3.
In the circumstances, it is clear that, even before the 1980 amendment, the Act did not permit a deduction for depreciation in respect of the cost of a capital asset acquired for purposes of scientific research to the extent such cost has been written off under Section 10(2) (xiv) of the 1922 Act/35(1) & (2) of the 1961 Act.
Prior to 1968, such assets qualified for an allowance of one fifth of the cost of the asset in five previous years starting with that of its acquisition and during these years the assessee could not get any depreciation in relation thereto.
In respect of assets acquired in previous year relevant to assessment year 1968 69 and thereafter, their cost was written off in the previous year of acquisition and no depreciation would be allowed in that year.
This is clear from the statute.
Equally, it is not envisaged, that depreciation could be allowed on them thereafter and also that it could be allowed starting with the original cost of the asset despite its user for scientific research and the allowances made under the 'scientific research ' clause.
There was no difficult at all in the interpretation of the provisions.
The mere fact that a baseless claim was raised by some over enthusiastic assessees who sought a double allowance or that such claim may perhaps have been accepted by some authorities is not sufficient to attribute any ambiguity or doubt as to the true scope of the provisions as they stood earlier.
[173 E H; 174 A] C.I.T. vs Indian Telephone Industries Ltd., and C.l.T. vs Hico Products, (1991) 187 I.T.R. 517, overruled.
Lohia Machines limited V. Union of India, S.C.; Alkali & Chemical Corporation of India Ltd, vs C.l.T., Cal.; C.l.
T vs Indian Explosive Ltd., Cal.; C.I.T vs International Instruments P. Ltd., Kar.
and Warner Hindustan Ltd. vs C.l.T., (1988) 171 I.T.R. 224 A.P., referred to.
The assessees may have some possible case only if the earlier statutory provisions can be said to have been unambiguously in favour of the assessee and the 1980 amendment had radically altered the provisions to cast a new and substantial burden on the assessee with retrospective effect but there is no ambiguity.
The 1980 amendment has effected no change at all in the provisions except to set out more clearly and categorically what the provision said even earlier.
Thus, even without the amendment, the assessees cannot claim the depreciation allowance in question.
Even if it is assumed that there was an ambiguity or doubt as to interpretation, that was retrospectively clarified by the legislature.
Therefore, the validity of the amendment cannot be challenged.
This is indeed beyond all doubt.
[174 C G] Rai Ramkrishna vs State of Bihar, [1964] 1 S.C.R. 897;Asst.
Commissioner of Urban Land Tax vs Buckingham & Carnatic Co. Ltd., ; ; Krishnamurthi & Co. vs State of Madras; , ; Hira Lal Rattan Lal vs Sales Tax Officer and Anr., (1973) 31 S.T.C. 178 and Shiv Dutt Rai Fateh Chand vs Union of India, (1984) 148 I.T.R. 644, referred to.
Per Jeevan, Reddy, J. (Concurring) 1.1.
A double deduction cannot be a matter of inference; it must be provided for in clear and express language, regard having to its serious impact on the revenues of the State.
If the Legislature/Parliament wanted to provide for more than 100% deduction they would have said so, as they done in cases where they have provided for what is called "weighted deduction", vide Section 35(B) of the Act of 1961.
It is not possible to agree that while introducing clause (xiv) in sub section (2) of Section 10 of the 1922 Act consequent on the introduction of Section 20(4) in the U.K. finance Act, 1944, the Indian Legislature as also the Parliament made a conscious departure from the English Amendment with the idea of providing an additional incentive over and above the deduction on account of depreciation, to induce the Indian assessees to invest more in scientific research.
The underlying reason in clause (iv) of Section 35(2) of Act of 1961 providing that during the years or year in which the assessee avails of the deduction under Section 35(1) (iv) he should not avail of the deduction on account of depreciation provided by clauses (i), (ii) and (iii) of sub section (1) and sub section (1A) of Section 32 is to ensure that the assessee does not get double deduction for example, where the asset was acquired prior to April 1, 1957, the deduction under Section 35(1) (iv) would be allowed in five consecutive years.
If during the very five previous years, depreciation under the aforementioned provisions is also allowed, the assessee would obtain, at the end of five years, a double depreciation i.e., 100% under Section 35 and almost 100% under Section 32.
(In many cases, the rate of depreciation under Section 32 is 20% or even higher).
If such a course was barred by clause (iv) during the initial five years, it would not be reasonable to say that same thing can be achieved by claiming the deduction after the expiry of five years.
If both the deductions are in the alternative, as indicated by clause (iv), they must be understood as being in the alternative and not consecutive.
It would be a rather curious thing to say (in the case of an asset acquired prior to April 1, 1967) that Parliament barred claim for depreciation under Section 32 even in the first year when only 20% of the cost of the asset is allowed as deduction under Section 35(1) (iv), it barred it in the second, third and fourth years, when the deduction had reached 40, 60 and 80 per cent but permitted it be claimed after the fifth year, by which year the entire 100% cost was allowed as a deduction.
No express provision was necessary to say what is so obvious.
The position after April 1.
1967 is no different.
That the aforesaid view is the correct one is indicated by Explanation (1) to clause (1) of Section 43 [the corresponding provision in the 1922 Act being sub clause (e) of clause (xiv) of Section 10(2) of 1922 Act].
[177 H; 178 A E] 13.
The amendment of Section 35(2) in 1980 is merely clarificatory in nature.
It makes explicit what was implicit in the provisions.
question of its constitutionality, therefore, does not arise.
Though purporting to be retrospective, it does not take away any rights which had legally vested in the assessees.
[180 B] Commissioner of Income Tax vs Hico Products Pvt. Ltd, , overruled.
None of the assessments relating to any of the assessment years in question has become final.
They are pending at one or the other stage and in one or the other forum.
Since the amendment under challenge merely makes explicit which was implicit in the unamended clause, there is no question of any right vesting in the assessee and its being taken away.
[180 H; 181 A]
|
Civil Appeal No. 4733 of 1992.
From the Judgment and Order dated 28.2.1992 of the Madhya Pradesh State Administrative Tribunal, Gwalior in Original Application No. 2932 of 1991.
Sakesh Kumar and S.K. Agnihotri for the Appellant.
Vivek Gambhir and S.K. Gambhir for the Respondent.
The Judgment of the Court was delivered by SHARMA, J.
1.
By the impugned order the Madhya Pradesh State Administrative Tribunal has allowed the claim of the respondent to continue in service up to the age of 60 years and has held that he cannot be retired at 58 only.
We have heard the learned counsel for the parties.
Special leave is granted.
The respondent was holding the post of Deputy Director when he was promoted as Joint Director, Social Welfare Department in 1989.
He completed the age of 58 years in January, 1991 when according to the decision of the appellant he had to retire.
According to the Rules the age of retirement in the department is 58 years excepting for teachers who are to continue in service till 60.
It is not disputed that the posts of Deputy Director and Joint Director are not teaching posts and the respondent cannot take advantage of the higher age of retirement on that account.
However, the respondent relies upon the Explanation to the Rule which is in the following terms : "Explanation: For purpose of this sub Rule "Teacher" means a Government Servant, by whatever designation called, appointed for the purpose of teaching in an educational institution run by the Government including technical or medical educational institution in accordance with the recruitment rules applicable in such appointment and shall also include the teacher who is appointed to an administrative post by promotion or otherwise and who has been engaged in teaching for not less than 20 years provided he holds a lien Collegiate/Technical/Medical Educational Service".
His case is that since initially he was appointed for the purpose of teaching in an educational institution run by the Government, he is entitled to continue in service upto the age of 60 although later he was holding a non teaching post.
At this stage it will be relevant to mention that the condition that a person claiming the benefit of the Explanation had to be engaged in a teaching post for not less than 20 years, has been struck down as ultra vires and this part of the Explanation, therefore, does not come in the way of the respondent.
On behalf of the appellant it has been contended that post of the Superintendent in a Deaf Mute and Blind School in which the respondent was initially appointed in 1965 was not a teaching post and he, therefore, cannot claim any benefit of this Explanation.
The result of the case is thus dependent upon the issue as to whether the post of Superintendent in Deaf Mute and Blind School is a teaching post or not.
The relevant document which has been referred to and relied upon by both sides is the advertisement No. 9/1965 issued by the Public Service Commission, Madhya Pradesh inviting applications for appointment to the posts of Superintendent Deaf Mute and Blind School.
The duties are mentioned in paragraph 3 of the advertisement to the following effect : "Duties (i) To undertake planning and organisation of the institution for education, vocational training, rehabilitation and recreation of children, (ii) To undertake case wise in respect of every child of the institution with a view to ascertaining the personality make up, aptitudes and interest, socio economic background and intelligence, (iii) To apply educational tests, prepare syllabus, organise specialised methods of education and vocational training of children and to organise examination, (iv) To take steps for the after care and rehabilitation of children, (v) To supervise the general maintenance of the children including the general health, recreation, discipline etc.
and to meet the special needs of the children, (vi) To supervise and control staff and undertake other administrative duties and (vii) Any other work that may be assigned to him by Government or his superior officers.
We have examined the provisions closely and are of the view that the duties were supervisory in nature and not teaching.
Accordingly, we hold that the Explanation referred to above does not come to the aid of the respondent and he was, therefore, rightly retired on 31.1.1992.
In the result the appeal is allowed, the impugned judgment is set aside and the Original Application filed by the respondent before the State Administrative Tribunal is dismissed.
The parties will bear their own costs.
We, however, make it clear that in case the respondent was paid for performing any duty after the dated of his retirement in pursuance of the impugned order he shall not be asked to refund the same.
Appeal allowed.
| The respondent in the appeal after due selection by the State Public Service Commission was appointed in 1965 as a Superintendent in a Deaf Mute and Blind School.
He was thereafter promoted and posted as Deputy Director, and in 1989 he was further promoted to the rank of Joint Director in the Social Welfare Department.
He completed the age of 58 years in January, 1991 when according to the decision of the appellant he had to retire.
According to the Rules FR 56, Sub Rule (1 a) the age of retirement in the department was 58 years excepting for teachers who were to continue in service till 60.
The respondent assailed the order of retirement before the State Administrative Tribunal relying upon the Explanation to the Rule which allowed his claim to continue in service upto the age of 60 years and held that he cannot be retired at 58 years.
In the State 's appeal to this Court, it was contended that the post of Superintendent in Deaf Mute and Blind School to which the respondent was initially appointed in 1965 was not a `teaching post ' and he could not therefore claim the benefit of the Explanation to the Rule.
Allowing the appeal, this Court, HELD :1.
The parties to the appeal have referred to and relied upon the advertisement No. 9/1965 issued by the State Public Service Commission inviting applications for appointment to the posts of Superintendent Deaf Mute and Blind School.
Paragraph 3 thereof mentions the duties attached to the post, and when examined closely, indicate that they were supervisory in nature and not teaching.
The Explanation to the Rule therefore does not come to the aid of the respondent and he was therefore rightly retired on 31.1.1992.
[354 G; 355 D] 2.
The Original Application filed by the respondent before the State Administrative Tribunal is therefore dismissed.
In case the respondent was paid for performing any duty after the date of his retirement, he shall not be asked to refund the same.
[355 E, F]
|
ition (c) Nos.
655 69 of 1983.
(Under Article 32 of the Constitution of India).
WITH W.P. (C) 8131 33/82, 8125 30/82, 8349 8368/52, 8146 8166/82, 9610 9630/82, 3756 87/83, 3698 3755/83, 947 960/83, 250/86, C.A. Nos.
4099 4103/82, 10753 57/83, 10758 60/83, 10761/83, W.P. (C) No. 12834/85, C.A. Nos.
1280 83/92, 4737/91, 4302/91, 3410/91, 3481/91, 2850/91, 3171/91, 2866/91, 3905 12/91, 4202 05/91, 70/92, SLP(C) No. 1045/89, T.C. (C) No. 220/88, W.P. (C) No. 175/92.
G. Ramaswamy, Attorney General, G.L. Sanghi, B.K. Mehta, Santosh Hegde., R.R. Aggarwal, Anil B. Divan, H.N. Salve, K. Parasaran, Ms. Suman Bose, Dr. Debi Pal, A.B. Rohtagi, R.N. Sachthey, A.C. Gulati, B.B. Sawhney, Mrs. Janaki Ramachandran, section Ganesh, Ravinder Narain, S.Sukuraman, D.K. Sinha, J.R. Das, J. Gupta, Ashok K. Srivastava, H.S. Munjral, section Walia, G. Bansal, D.P. Mukherjee, R. Mohan, Mukul Mudgal, A. Subba Rao, Ms. Lata Krishnamurti, M.N. Shroff, D. Dave, Ms. Deepa Dixit, K.J. John, A.T.M. Sampath, P. Sen, G.S. Chatterjee, Ashok Mathur, M. Haravu, V.J. Francis, V. Subramaniam, P.S. Seetharaman, Ms. Indu Malhotra, A.S. Bhasme, R.B. Misra Dr. B.S. Chauhan, Ajay K. Aggarwal, Ms. Radha Rangaswamy, Anil Sachthey, Badri Nath Sharma, T.V.S.N. Chari, B. Kanta Rao and Ms. Suruchi Aggarwal for appearing parties.
The Judgments of the Court were delivered by RANGANATHAN, J. Taking a cue from the decision of this Court in Goodyear India Ltd. vs State of Haryana ; , to which I was a party, a contention has been raised, in these appeals and writ petitions, that corresponding provisions of the Gujarat Sales Tax Act, the U.P. Sales Tax Act and the Andhra Pradesh General Sales Tax Act, are ultra vires the powers of the State Legislature insofar as they seek to levy a purchase tax in certain circumstances.
My learned brother, Jeevan Reddy, J., has discussed the provisions and contentions elaborately and exhaustively in his judgment.
It is unnecessary for me to set out over again the statutory provisions considered in Goodyear or those which are challenged in these petitions and appeals or the details of the decision in Goodyear as these have been discussed in great detail in the judgment of my learned brother.
I however, think that I owe it to myself to add a separate judgment as I was a party to Goodyear and explain my views on the provisions presently under challenge in the light of what has already been stated by me in Goodyear.
So far as the U.P. Sales Tax Act is concerned, I do not think that the impugned provision of the said Act (viz. S.3AAAA, as inserted in 1992 with retrospective effect from 1.4.1974) bears any comparison with the provisions that were considered in Goodyear.
S.3AAAA is a very simple provision.
According to its marginal note, its effect is the imposition of a liability to purchase tax on certain transactions.
This liability is attracted in respect of goods, which are liable to tax at the point of sale to the consumer.
In other words, the goods in question as such have run through their gamut of sales in the State.
There will be no more sales in the State of the goods in that form, which can be taxed by the State, whether intra State or inter State, or in the course of export.
Such goods are then made liable to tax in the hands of a purchaser dealer cum consumer either because he purchases them from a registered dealer by whom tax is not payable or because he purchases them from a person other than a registered dealer i.e. a person who is not accessible to the revenue, whose sales cannot be easily verified or from whom tax may not be easily recovered.
To put it differently, since the tax is at the point of sale to the consumer, the Legislature, in order to ensure that goods do not escape tax in the State altogether, make the purchaser liable in respect of the last sale in the State of the goods in question, if otherwise the sale of the goods have not borne tax earlier in the State.
This, on the face of it, is a provision which seems to be perfectly within the legislative competence of the State Legislature.
The argument urged on behalf of the assessees, however, is that no person can be said to be the "consumer" of the goods in the State unless he consumes the goods himself or utilises the goods (where they are in the nature of raw material) for the manufacture or production of other goods.
It is urged, therefore, that as no sale can be postulated to be a sale to the consumer unless and until one of the above events happen, the real taxable event is not the purchase of the goods but their consumption, manufacture or production in the State, or their despatch, otherwise than by way of a sale outside the State, whether in the same form or in a manufactured condition.
It is therefore said that, in substance, the statutory provision is no different from the one considered by us in Goodyear and that the ratio of Goodyear will apply here equally.
So far as the Andhra Pradesh provision is concerned, the argument is the same, with an added advantage to the assessees that the section brings out more emphatically their point of view.
Under section 6 A(i), purchase of goods from a registered dealer is subjected to tax because, though the sale or purchase of that item of goods is generally liable to tax, no tax became payable by the registered dealer on the sale because of the circumstances set out in section 5 or 6.
This corresponds to section 3AAAA(a) of the U.P. Act.
As against this, clause (ii) of section 6 A deals with purchase of goods liable to tax from a person other than a registered dealer and imposes a liability to pay tax where the goods purchased are consumed by the purchaser either in the manufacture of other goods for sale or otherwise and the goods are disposed of otherwise than by way of sale or despatched outside the State otherwise than in the course of inter State trade or commerce.
In other words, the real taxable event for the charge under section 6 A(ii), it is said, is not the purchase of goods but the consumption, manufacture or consignment of the same or other goods outside the State.
If that be so, it is said, the imposition is ultra vires the State Legislature on the principle of the decision in Goodyear.
So far as the State of Gujarat is concerned, the provisions of section l5B, inserted by a retrospective amendment of 1990, are somewhat different.
Cutting out certain words not relevant in the present context, it provides that where a dealer, being liable to pay tax under the Act, purchases any taxable goods and uses them in the manufacture of taxable goods, a purchase tax will be levied on the turnover of such purchases.
Rule 42 E, which was also framed w.e.f. 1.5.90, provides that, where the assessee is a registered dealer and the goods manufactured by him have been sold in the State of Gujarat, he will be entitled to relief in respect of the purchase tax levied under section l5B.
Here again, it is argued, the provision is tainted because it refers to manufacture of the purchased goods and the rule ensures that no purchase tax is levied if the manufactured goods are sold in the State itself; in other words, the levy comes in only if they are consigned outside the State, attracting Goodyear.
It will be seen at once that the three provisions under consideration vary from one another.
S.3AAAA of the U.P. Act does not make the tax conditional on the use or consumption of raw materials purchased or the manner of dealing with the goods manufactured out of such purchases of raw materials.
Section 15B of the Gujarat Act is slightly different.
It talks of the use of the goods purchased in the manufacture of other taxable goods but it does not make any reference to the consumption of the goods otherwise or their despatch or consignment.
The Andhra Pradesh Act is more elaborate and deals with various situations in relation to the purchased goods.
2Of these, I am of opinion that the provisions of the U.P. and Gujarat Acts are clearly beyond challenge on the grounds put forward by the petitioners.
The section in the U.P. Act is a very direct and simple provision to the effect that a tax will be levied on purchases made within the State in certain circumstances.
The ambit of Entry 54 in the State List in the Constitution of India must be interpreted in the widest possible manner.
The State has full powers to levy a tax with reference to sales or purchases inside the State and to a certain extent even sales made in the course of inter State trade or commerce.
It certainly comprehends a power to tax the last sale in the State of certain goods.
I have explained earlier the reason why the incidence of tax in such sales is thrown under the Act on the consumer.
The tax is nothing but a tax on purchase, pure and simple, well within the scope of the State 's Legislative power.
The attempt, on behalf of the petitioners, to undertake an analysis of what will eventually happen to the purchased goods where the purchaser is the consumer and, on the basis thereof, to suggest that the legislature really intends to tax consumption, production or consignment is no doubt ingenious but farfetched, artificial and unrealistic.
It is true that one has to look at not merely the form but the substance of the statute and examine what exactly it is that the State purports to levy a tax in respect of but one should not permit one 's imagination to read a purpose or words into the statute which are not there.
The Gujarat provision is more careful but makes a mention of the purchased goods being used for manufacture.
But, as pointed out by Mukharji J. in Goodyear, these are only words descriptive of a class of goods the purchase of which is sought to be brought to tax.
Here again, the intention of the legislature is to tax, at purchase point, a class of goods viz. goods purchased by a manufacturer.
It has no concern, unlike the A.P. or Haryana Acts, with what he does with the manufactured goods.
Presumably the idea is that the manufacturer is able to profit by adding value to the purchased raw material by utilising the infrastructure, fillips or facilities provided in the State to encourage setting up of industries therein and so can afford to pay tax on the purchased raw materials.
The concession provided by rule 42E is an independent provision relieving him and the public consuming the manufactured goods of additional burden where such goods are sold inside the State and get taxed on the added value.
In my opinion, there is considerable force in the substance of the contention of these States that these provisions only impose a tax on purchases.
The marginal title to the provisions indicates that their direct purpose is to levy a tax on purchases effected in the State in certain circumstances.
The tax is couched as a tax on all goods (in U.P.) and on raw or processing materials and consumable stores (in the State of Gujarat).
It is designated as a purchase tax.
It is levied on the turnover of such purchases.
There is no reference in the U.P. statute to any condition for imposition of the tax except that it should be a sale to the consumer and in the State of Gujarat that it should be a purchase by a manufacturer.
It is very difficult to read into these provisions any ulterior motive on the part of the States to Levy a tax on use, consumption or consignment in the guise of a purchase tax.
The language of these two provisions is wholly different from that used in the Haryana and Bombay Acts.
As I have stated in my judgment in Goodyear, even in the context of those Acts, it may be equally plausible to consider the provision either as a purchase tax or a tax consignment.
There is no such ambiguity in the language used in these provisioins.
I have no doubt that, so far as these provisions are concerned, on the face of these acts, the levy is only of a purchase tax.
Such a levy is clearly within the domain of the State Legislature.
The Andhra Pradesh Act, however, is different in its arrangement.
The provisions of section 6 A of this Act are more or less analogous to the provisions of the Haryana Act considered in Goodyear.
The question, therefore, arises as to whether the decision in Goodyear should be applied in the context of the Andhra Pradesh Act.
On behalf of the State of Andhra Pradesh and indeed the other two States also it has been contended that Goodyear needs reconsideration.
Our attention has been drawn to one angle of approach to the statutory provisions in question which had perhaps escaped our notice in the Goodyear case.
It was pointed out that the sum and substance of these provisions is that no sale or purchase of any goods should go without being taxed atleast once in the State.
Primarily the tax is levied on sales.
Where a registered dealer sells his goods he will be liable to tax normally in respect of the taxable goods except where his turnover does not reach up to the minimum prescribed under the Sales Tax Act.
Sometimes, he may not pay any tax or may pay a concessional rate of tax on his sales because of certain declarations or certificates he may receive that the goods will be used inside the State.
Again, where goods are purchased from a person other than a registered dealer, the tax at the sales point may escape actual taxation for many reasons: such person may not be a dealer at all or, being an unregistered dealer, the State may not be able to ascertain his whereabouts and ensure that he is taxed or that the tax is collected.
In cases where no sales tax is paid at the point of sale, it becomes necessary for the State Legislature to provide that the tax will be met by the purchaser.
Invariably in such cases the legislations attach levy of tax to the last purchase made in the State, of a particular item of goods.
Of course, the legislation could have simply said that the last purchase in the State will attract tax unless the tax is payable or has been paid at one of the earlier stages of sale and could not have been objected to.
But that type of legislative wording might lead to difficult questions as to the definition of the expression "last purchase".
That is why the section imposing purchase tax is worded in the manner in which it has been worded in the Andhra and Haryana Acts.
As pointed out by the learned counsel for the assessees in the U.P. cases, a person can be said to be the last purchaser of certain goods only when he consumes those goods himself or, in case they are raw materials/stores and the like, unless he uses them in the manufacture of other goods for sale.
From this category have to be excluded cases where the manufactured goods are either sold in the State or sold in the course of inter State trade or commerce because, in those two instances, the State will be in a position to collect the tax in respect of the sale of the manufactured goods the sale price of which will also include the price of raw materials on which a priori the State could have only got a lesser amount of tax and to tax both would escalate the price and affect the consumer.
Also excluded are cases where the manufactured goods are exported abroad to earn foreign currency.
If these situations are borne in mind, one would realise that the language used in the various clauses and phrases used in these legislations is only to levy a tax on the last purchase in the State and not with a view to levy a tax either on the use or consumption of raw materials or on the manufacture or production of manufactured goods or on the despatch of the goods manufactured from the State otherwise than by way of sale.
In the Haryana case also the statute mentioned these several alternatives but a consideration of section 9(1) (b) of the Haryana Act as well as of the corresponding clause of the Bombay Act were posed in isolation before us and emphasis placed on consignment being a sine qua non of the levy.
This larger concept, namely, that these various alternatives are not set out in the section with a view to fasten the charge of tax at the point of use, consumption, manufacture, production and consignment or despatch but in an attempt to make clear that what is sought to be levied is a tax on raw materials on the occasion of their last purchase inside the State had not been projected before, or considered by us.
I am inclined now to think that this is an approach that basically alters the parameters and removes the provision from the area of vulnerability.
It is true that it is difficult to define a last purchase except with reference to the mode of the use of the purchased goods subsequent to that purchase and in that sense the levy of tax can crystallise only at a point of time when the goods have been utilised in a particular way but will it be correct to say that the power of the State to levy a tax on sales or purchases cannot include a right or power to tax goods at the point of their first sale in the State or their last purchase in the State? The mere fact that the purchase cannot be characterised as a last purchase except by reference to the subsequent utilisation of those goods cannot mean that the taxable event is not the purchase but something else.
What we are really concerned with in deciding the question of constitutional validity of the levy of a sales tax is to pose the question "Is the tax levied one with reference to the sale or purchase of goods ?" The ambit of the power to levy a tax in respect of sale of goods is very wide and will cover any tax which has a nexus with the sale or purchase of goods including a last purchase in the State.
This I think is a more appropriate test to be applied in these cases rather than the test of "taxable event" l which is somewhat ambiguous in the context.
I am not inclined to agree that a tax on the sale or purchase of goods will cease to be so merely because the determination of its character as a last purchase would depend upon certain subsequent events which may be spread over a subsequent period of time.
In this view of the matter I am inclined to agree with my learned brother Jeevan Reddy, J. that the levy under the Andhra Pradesh Act is also within the legislative competence of the State.
I am quite conscious that the conclusion I have expressed here as to the vires of the provision impugned is contrary to the conclusion I reached in Goodyear on somewhat analogous provisions.
I need not, for the purposes of the present cases, express any final conclusion as to whether the conclusion in Goodyear was rightly reached in the context of the provisions of the statutes there considered or would need a second look and fresh consideration in the context of what has been said here.
But, I should not, I think, hesitate to accept the point of view now presented to us which appeals to me as more realistic, appropriate and preferable, particularly when I see that the view one way or the other would affect the validity of a large number of similar legislations all over India, merely because it may not be consistent with the view I took in Goodyear.
Consistency, for the mere sake of it, is no virtue.
If precedent is needed to justify my change of mind, I may quote Bhagwati J. (as he then was) in Distributors (Baroda) P. Ltd. vs Union of India, ; S.C.: "We have given our most anxious consideration to this question, particularly since one of us, namely, P.N. Bhagwati, J. was a party to the decision in Cloth Traders ' case.
But having regard to the various considerations to which we shall advert in detail when we examine the arguments advanced on behalf of the parties, we are compelled to reach the conclusion that Cloth Traders ' case must be regarded as wrongly decided.
The view taken in that case in regard to the construction of section 80M must be held to be erroneous and it must be corrected.
To perpetuate an error is no heroism.
To rectify it is the compulsion of the judicial conscience.
In this, we derive comfort and strength from the wise and inspiring words of Justice Bronson in Pierce vs Delameter (A.M.Y. at page 18): "a judge ought to be wise enough to know that he is fallible and, therefore, ever ready to learn: great and honest enough to discard all mere pride of opinion and follows truth wherever it may lead: and courageous enough to acknowledge his errors".
For the reasons above mentioned, I agree with my learned brother and hold that the impunged provisions under all the three enactments are intra vires the powers of the concerned State Legislature.
B.P. JEEVAN REDDY, J. Validity of provisions of several States Sales Tax enactments imposing purchase tax fall for our consideration in this group of appeals and writ petitions.
Initially the matters arising from Andhra Pradesh (writ petitions 655 669/83 Hotel Balaji and Ors.
vs State of Andhra Pradesh and Civil Appeal No. 10753 57/83 Hindustan Milk Food Manufacturers Limited vs State of Andhra Pradesh) came up for hearing.
During the course of hearing, counsel for the petitioners/appellants relied upon the decision of this court in Goodyear India Ltd vs State of Haryana (1990) 76 S.T.C. 71 whereas the counsel for the State of Andhra Pradesh challenged the correctness of the said decision and pleaded for re consideration of the said judgment.
It was then brought to our notice that a large number of matters coming from different States raising inter alia the question relating to the correctness or the ratio Or Goodyear were also posted before us.
Indeed it was brought to our notice that a bench of three Judges comprising M.N. Venkatachaliah, A.M. Ahmadi, JJ.
and one of us (B.P. Jeevan Reddy, J.) had directed two matters namely State of Punjab vs Industrial Cables India Ltd., C.A. No. 2990 (N.T.) of 1991 and the State of Punjab vs Hindustan Lever Ltd., C.A.480/91 raising a similar question to be posted before a Bench of three Judges.
Those matters are also before us.
It is in this manner that a large number of appeals and writ petitions arising from several States came to be posted before us for hearing.
During the course of hearing, however, we found that on account of restriction of time it would not be possible for this Bench to hear all the matters.
Accordingly, we indicated to the counsel that we shall confine our attention only to three State enactments namely, Gujarat.
Uttar Pradesh and Andhra Pradesh.
Counsel appearing in these matters have been heard fully.
This judgment, therefore, deals only with the validity of Section 15B of the Gujarat Sales Tax Act, Section 3 AAAA of Uttar Pradesh Sales Tax Act and Section 6 A of the Andhra Pradesh Sales Tax Act.
We shall first take up Section 15B of the Gujarat Sales Tax Act.
PART 11 (GUJARAT) Though several appeals and writ petitions from this State are placed before us, it is sufficient to refer to the facts in Civil Appeal No.3410 (N.T.) of 1992 as representative of the facts in all the matters.
This appeal is preferred by the writ petitioner against the judgment of a Division Bench of the High (Court of Gujarat upholding the constitutional validity of Section 15B of the Gujarat Sales Tax Act, 1969 as substituted by the Gujarat Sales Tax (Amendment) Act 6 of 1990.
The Gujarat Sales Tax Act, 1969 (being Act No. 1 of 1970) came into effect on and from May 6,1970, replacing the Bombay Sales Tax Act, which was in force in the State of Gujarat till then.
Section 15 of the Act levied purchase tax on purchases made by a dealer from a person who is not a registered dealer.
Section 15A was introduced by amendment Act 7 of 1983.
It provided for levy of concessional rate of tax in respect of purchase of raw material made by Recognised dealers (who are necessarily manufacturers), provided the goods (raw material) purchased by them fell in Schedule II or III (other than prohibited goods).
Section 15B was introduced by Amendment Act Or 1986.
It provided for levy of an additional purchase tax on raw material purchased by a manufacturing dealer in case he used the said raw material for the manufacture of other goods which he despatched to his own place of business or to his agent 's place of business situated outside the State but within India.
By an Amendment Act made in 1987, the Section was substituted.
There was, however, no substantial change in the Section.
Following upon the decision of this court in Goodyear, a batch of writ petitions was filed in the Gujarat High Court challenging the validity of Section 15B on the ground that in truth and effect it levied a consignment tax and, hence was outside the competence of the State Legislature.
While the said writ petitions were pending, Section 15B was substituted by an Ordinance being Ordinance No.3 of 1990 issued on 20.4.1990.
Subsequently the Gujarat Sales Tax Amendment Act 6 of 1990 was enacted in terms of and replacing the Ordinance.
The substituted Section 15(B) was given retrospective effect on and from April 1, 1986, the date on which Section 15(B) first came into force.
In view of the said Amendment Act, the batch of writ petitions challenging Section 15(B), as it stood prior to its substitution by the 1990 Amendment Act, were dismissed as having become infructuous.
A fresh batch of writ petitions followed questioning the validity of the substituted Section 15(B), again on the ground that it continued to be, in essence, a consignment tax.
The contention was that Section 15(B) must be read along with Rule 42(E) of the Gujarat Sales Tax, Rules (inserted by Notification dated 1.5.90) and if so read, the position is the same as was obtaining prior to 1990 Amendment.
Yet another ground urged was that the levy imposed by the new provision is really in the nature of an excise duty, and thus beyond the competence of the State legislature.
The assessees placed strong reliance upon the decision of the Division Bench of the Bombay High Court in Hindustan Lever Ltd vs State of Maharashtra, 79 S.T.C. 255 where, the petitioners say, construing a similar provision in the Bombay Sales Tax Act it was held that the levy created by the said provision is in the nature of an excise duty.
Disagreeing with the Bombay judgment, the High Court dismissed the writ petitions.
Counsel for the appellant/assessee urged that Section 15B (as substituted in 1990) is no different from the earlier provision.
The basic scheme of the earlier provision is now split into two provisions namely, substituted Section 15B and Rule 42E, which Rule was inserted into the Rules simultaneously.
This is a clear instance of colourable legislation and ought not to be countenanced by this court.
The High Court was in error in justifying the same on the theory that just as it is open to an assesses to reduce the tax burden by resorting to legitimate tax planning, similarly it is open to a legislature to make an appropriate enactment to remain outside the mischief pointed out by the court.
It is submitted that as rightly held by the Bombay High Court construing a similar provision, the levy created by the substituted Section 15B is really upon the manufacture of goods and, therefore, not a tax referable to Entry 54 of List II of the Seventh Schedule to the Constitution.
On the other hand, it is argued by F Sri B.K. Mehta, learned counsel appearing for the State of Gujarat that the Legislative competence of the Gujarat Legislature to enact Section 15B ought to be determined on its own language and not with reference to a Rule made by the Government of Gujarat as the delegate of the legislature.
He submitted that on its own language, Section 15B levies a pure and simple purchase tax on raw material purchased by a manufacturer.
It is unconcerned with what happens to the manufactured goods.
For the purpose of Section 15B, it is immaterial whether the manufactured goods are sold inside the State or despatched to a place outside the State of Gujarat or are dealt with or disposed of otherwise.
The principle of Goodyear has absolutely no application to this provision.
Counsel also submitted that when the tax is upon the purchase price of the raw material and is relatable to the act of purchase, it cannot he held to be an excise duty which is levied on the act of manufacture and is levied with reference to the value of such manufactured goods.
For a proper appreciation of the contentions arising herein it would be appropriate to notice a few relevant provisions of the Act.
Clause (16) in Section 2 defines the expression 'manufacture ' in the following words: "manufacture" with all its grammatical variations and cognate expressions, means producing, making, extracting, collecting, altering, ornamenting, finishing or otherwise processing, treating, or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed.
" Clauses 35 and 36 define the expressions "turn over of purchases" and "turn over of sales".
It would be enough to notice the definition of the expression "turn over of purchases".
It reads: "turn over of purchases ' means the aggregate of the amounts of purchase price paid and payable by a dealer in respect of any purchase of goods made by him during a given period, after deducting the amount of purchase price, if any, refunded to the dealer by the seller in respect of any goods purchased from the seller and returned to him within the prescribed period.
" Section 3 is a charging section.
Section 15 which levied purchase tax on purchase of certain goods from a person who is not a registered dealer read as follows at the relevant time: 15 Purchase tax payable on certain purchases of goods.
Where a dealer who is liable to pay tax under this Act purchases any goods specified in Schedule II or III from a person who is not a Registered dealer, then, unless the goods so purchased are resold by the dealer.
there shall be levied, subject to the provisions of section 9.
(i) in the case of goods specified in Schedule 11.
a purchase tax on the turnover of such purchase at the rate set out against them in that Schedule, and (ii) in the case of goods specified in Schedule III, a purchase tax on the turnover of such purchase at a rate equivalent to the rate of sales tax act out against them in that Schedule.
" The said Section has, however, been substituted by Gujarat Amendment Act 9 of 1992 with effect from 1.4.1992, but since the Amendment is not a retrospective one, it is unnecessary to notice the amended provision.
Section 15A provides for a concessional rate of tax in the case of purchases of raw material by a recognised dealer provided the goods purchased are those specified in Schedule II or III (other than the prohibited goods) and he issues a certificate contemplated by Section 13(1)(B).
Prior to the Amendment Act 9 of 1992, Section 15(A) read as follows: "15A. Purchase tax payable on purchases of goods by certain dealers where (i) a recognised dealer purchases any goods specified in Schedule II or III other than prohibited goods, under a certificate given by him under clause (B) of sub section (I) of section 13, or (ii) a commission agent holding permit purchases any goods specified in Schedule II or III other than prohibited goods on behalf of his principal who is recognised under a certificate given by him under clause (C) of sub section (1) of section 13, there shall be levied a purchase tax on the turnover of such purchase at the rate of two paise in the rupee.
" 8 Since the Amendment of this provision in 1992 is also not retrospective, it is unnecessary to notice the same.
We may now set out Section 15B both as it obtained prior to Amendment Act 6 of 1990 and as substituted thereby.
Prior to Amendment it read thus: "Where any dealer liable to pay tax under this Act uses any goods other than declared goods purchased by him or through commission agent as raw or processing materials or consumable stores (irrespective of whether such goods are prohibited goods or not) in the manufacture of taxable goods and despatches any of the goods so manufactured to his own place to business or to his agents place of business situate outside the State hut within India such dealer will be liable to pay, in addition to any tax paid or payable under other provisions of this Act, a purchase tax at the rate of four paise in the rupee on the purchase price of such raw or processing materials or consumable stores used in the goods so manufactured and despatched and accordingly he shall include the purchase price thereof in his turnover of purchases in his declaration or return under section 40 which he is to furnish next thereafter.
Provided that where the raw materials so used is bullion or specie, the purchase tax payable on such bullion or specie under this section shall not exceed the aggregate of the rates of sales tax and the general sales tax payable on bullion or specie.
" After it is substituted in 1990 with retrospective effect from 1.4.1986, this Section reads thus "Where a dealer who being liable to pay tax under this Act purchases either directly or through a commission agent any taxable goods (not being declared goods) and uses them as raw or processing materials or consumable stores, in the manufacture of taxable goods, then there shall he levied in addition to any tax levied under the other provisions of this Act, a purchase tax at the rate of (a) two paise in a rupee on the turnover of such purchases made during the period commencing on the 1st April, 1986 and ending on the 5th August, 1988; and (b) four paise in rupee on the turnover of such purchases made at any time after the 5th August, 1988, provided that where the raw materials purchased for use in the manufacture of goods are bullion or specie, the rate of purchase tax on the turnover of purchases of such raw materials shall not exceed the aggregate of the rates of sales tax and general sales tax leviable on bullion or specie under Entry I in Schedule III.
" Inasmuch as strong reliance is placed by the assessee/appellants upon Rule 42E inserted by G.S.R. 1090 (64) T.H. dated 1.5.1990, it would he appropriate to read the said Rule here: "42 E. Drawback, set off or refund of purchased Tax under section 15B: 42 E.
In assessing the purchase tax levied under section 15B and payable by a dealer (hereinafter referred to as "the assessee") the Commissioner shall subject to conditions of rule 47 in so far as they apply, and further conditions specified below, grant him a draw back, set off or as the case may be refund of the whole of the purchase tax paid in respect of purchase of goods effect on and from the 1st April, 1986 used by him, as raw materials, processing materials, or consumable stores, in the manufacture of taxable goods.
" Conditions: (1) the assessee is a registered dealer, (2) the goods purchased are taxable goods other than declared goods, (3) the said goods have been used by the assessee within the State as raw materials or processing materials or consumable stores in the manufacture of taxable goods, (4) the goods so manufactured have been sold by the assessee in the State of Gujarat.
" In view of the retrospective amendment of Section 15B, it may not be necessary to refer to Section 15B as it obtained prior to the 1990 amendment except to point out that in material particulars, it was similar to Section 13AA of Bombay Sales Tax Act, which was considered in Goodyear and held to he outside the legislative competence of the State legislature.
The correctness of the ratio in Goodyear has been discussed by us in Part V. Section 15 makes the purchaser liable to pay the tax provided thereunder in case he purchases the goods mentioned in Schedule II and III from a person who is not a registered dealer.
If, however, the goods so purchased are resold by him, he is not liable to pay the said tax.
Section 15A applies only to Recognised dealers.
A recognised dealer is defined in section 32 in short, it means a dealer who is a manufacturer and whose turnover of sales or purchases exceeds the specified limit.
If the recognised dealer purchases goods specified in Schedule II or III (other than prohibited goods) and issues a certificate contempleted by Section 13 (1)(B), he is entitled to pay purchase tax on a concessional rate.
Then comes Section 15B which provides for levy of an additional purchase tax.
An analysis of the Section yields the following ingredients: (i) where a dealer who being liable to pay tax under Act; (ii) purchases either directly or through a commission agent; (iii) any taxable goods not being declared goods and (iv) uses them as raw or processing materials or as consumable stores in the manufacture of taxable goods (v) then there shall be levied in addition to any tax levied under other provisions of the Act, a purchase tax at the rates specified.
It is thus clear that section 15B does not speak of nor does it refer in any manner to the movement sale or disposal of manufactured goods.
According to this section, it is immaterial whether the manufactured goods are sold within the State or dealt with in some other manner.
It is equally immaterial whether the manufacturer consigns them to his own depots or the depots of his agents outside the State.
Therefore, the ratio of Goodyear keeping aside its correctness for the time being has absolutely no application.
The Haryana and Bombay provisions considered in the said decision spoke of the manufactured goods being disposed of within the State otherwise than by way of sale or despatched out of State otherwise than in the course of inter State trade or commerce or in the course of export within the meaning of Section 5(1) of the .
Similarly the Bombay provision spoke of the manufactured goods being sent to the depots of the manufacturer or his agents outside the State of Maharashtra.
It was these features which weighed with this court in characterising the tax as one in the nature of a consignment tax (This aspect has been dealt with in Since the said feature is absent in the impugned provision, we hold, agreeing with the High Court, that the tax imposed by Section 15B cannot be characterised as a consignment tax.
The main contention or the appellants, however, is that Section 15B should not be read in isolation but in conjunction with Rule 42E which was introduced in the Rules simultaneously with the amendment of Section 15(B) and which Rule indeed supplements Section 15B.
They say that if both the provisions are read together, the effect and consequence is the same as that of Section 15B as it obtained prior to 1990 amendment, which means the tax is really upon the consignment of manufactured goods.
We shall first notice what Rule 42E provides.
It says that, in assessing the purchase tax levied under Section 15B, the assessee shall be granted a drawback, set off or as the case may be, refund of the whole of the purchase tax paid in respect of purchase of goods effected on or after 1.4.1986 and which goods have been used by him as raw material, processing material or as consumable stores in the manufacture or taxable goods subject however to the conditions prescribed in the said Rule and further subject to the conditions specified in Rule 47 in so far as they are applicable.
The four conditions specified in the Rule 42E are: (1) the assessee is a registered dealer, (2) the goods purchased are taxable goods other than declared goods, (3) the said goods have been used by the assessee within the State as raw materials or processing materials or consumable stores in the manufacture of taxable goods, (4) the goods so manufactured have been sold by the assessee in the State of Gujarat.
Condition No. 4, emphasised by the assessees says that the benefit of set off/drawback/refund shall be available only if the manufactured goods are sold within the State of Gujarat.
According to them it means that, where the manufactured goods are consigned by the manufacturer to his own depots or to his agents, depots outside the State of Gujarat, the benefit of drawback etc.
will not be available, which means that purchase tax shall be levied upon the purchase of raw material.
This, say the appellants, is precisely what the old Section 15 B provided for.
According to them, the present Section 15B read with Rule 42E is nothing but a re incarnation of Section 15B as it stood prior to 1990 Amendment Act and falls squarely within the ratio of Goodyear This argument raises in turn the question: how far is it permissible to refer to the Rules made under an Act while judging the legislative competence of a legislature to enact a particular provision? The necessity and significance of the delegated legislation is well accepted and needs no elaboration at our hands.
Even so, it is well to remind ourselves that Rules represent subordinate legislation.
They cannot travel beyond the purview of the Act.
Where the Act says that Rules on being made shall be deemed "as if enacted in this Act", the position may be different.
(It is not necessary to express any definite opinion on this aspect for the purpose of this case).
But where the Act does not say so, the Rules do not become part of the Act.
Sri Mehta relies upon the following statement of law in Halsbury 's Laws of England (3rd Edn.) Vol. 36 at page 40]: "Where a statute provides that subordinate legislation made under it is to have effect as if enacted in the statute such legislation may be referred to for the purpose of construing a provision in the statute itself.
Where a statute does not contain such a provision, and does not confer any power to modify the application of the statute by subordinate legislation, it is clear that subordinate legislation made under the statute cannot after or vary the meaning of the statute itself where it is unambiguous, and it is doubtful whether such legislation can be referred to for the purpose of construing an expression in the statute, even if the meaning of the expression is ambiguous." He says that this statement of law has been referred to with approval by Hegde, J. in his opinion in J.K Steel Ltd. v Union of India A.I.R. 1970 S.C. 1173.
Though the opinion of Hegde, J. is a dissenting one, he submits, the majority has not held to the contrary on this aspect.
He also relies upon the English decisions referred to in the opinion of Hegde, J. and points out that no decision of this court has expressed any opinion on the subject, a fact noted by Hegde, J. He commends the view taken by Hegde, J. for our acceptance.
Sri Mehta points out further that Section 86 which confers the Rule making power upon the Government does not say that the Rules when made shall be treated as if enacted in the Act.
Being a rule made by the Government, he says, Rule 42E can be deleted, amended or modified at any time.
In such a situation, the legislative competence of a legislature to enact a particular provision in the Act cannot be made to depend upon the Rule or Rules, as the case may be, obtaining at a given point of time, he submits.
We are inclined to agree with the learned counsel.
His submission appears to represent the correct principle in matters where the legislative competence of a legislature to enact a particular provision arises.
If so, the very foundation of the appellants ' arguments collapses.
Even if we agree with the appellants and read Rule 42E along with Section 15(B), they cannot succeed.
Rule 14E provides for set off etc.
in case the manufactured goods are sold within the State of Gujarat.
It no doubt means that set off etc.
is not available if the manufactured goods are disposed of otherwise than by way of sale or are consigned to manufacturer 's own depots (or to the depots of his agents) outside the State of Gujarat.
What in effect the State says is this: "Raw material when purchased is taxable but I won 't tax the raw material if you sell the goods manufactured out of such raw material within the State because I derive larger revenue there; I do not want to tax both the raw material and the manufactured goods, in the interest of trade and public.
But if you dispose of the manufactured goods in some other manner, I will tax the purchase of raw material because there is no reason why I should forego the purchase tax due on raw material, when I am not getting any revenue from your method of disposal or despatch of manufactured products.
" There is nothing objectionable in the State saying so.
It can indeed rely on the principle of the decision of this court in Godrej & Boyce Mfg. Co. vs Commissioner of Sales Tax, reported in (1992) 4 J.T. S.C. 317.
It is difficult to see how can it be said that by reading Rule 42E into Section 15B, the levy becomes a consignment tax.
In any event, the ratio of Goodyear cannot be accepted as good law for the reasons mentioned in part V.
We are equally not satisfied with the argument that the Gujarat legislature has resorted to a device, a stratagem to circumvent the decision or this court or that it is an instance of fraud on power what is sometimes referred to as `colourable legislation '.
That a legislature is empowered to amend a provision to remove the defect pointed out by a court is well accepted.
So far as the Gujarat Act is concerned, it was never the subject matter of an adverse decision either by this court or the Gujarat High Court.
Writ Petitions were no doubt pending challenging the validity of Section 15B as it then stood.
It was perfectly open to the Legislature to act to set its house in order to obviate a possible adverse verdict applying the ratio of Goodyear.
The question is whether the provision now enacted, with retrospective effect, is beyond the legislative competence of Gujarat Legislature? It not, no further question arises.
So far as the retrospectivity given to Section 15B by the 1990 Amendment Act is concerned, it is hardly open to doubt in the light of several decisions of this court commencing from Ramakrishna vs State of Bihar, ; This is not even a case where the old provision was struck down by a court.
The period or retrospectivity covers only the period during which Section 15B has been in force.
The levy was already there.
In any event, in view of our conclusion that Goodyear does not represent the correct position in law, this aspect has really no relevance.
It is then contended that the levy is really in the nature of excise duty or use tax inasmuch as it attaches not on purchase of goods but on their use in manufacture of other goods.
This argument in our opinion misses the true nature of tax.
It is an additional tax on the purchase of raw material used in manufacture of other goods.
A certain concession is given to manufacturers (recognised dealers) in purchase of certain types of raw material (Section 15A); an additional purchase tax is levied under Section 15B; and in certain situations, this tax is refunded or set off, as the case may be under Rule 42 E.
All these provisions are intended to encourage industry and to derive revenue at the same time.
Counsel for the assessees placed strong reliance upon the word "then" occurring in the section and its placement.
He emphasised that the tax is payable only when the dealer (1) purchases the goods and (2) uses them in the manufacture of other goods.
It is not possible to agree.
Heading of Section 15B is "Purchase tax on raw or processing materials or consumable stores used in manufacture of goods in certain cases.
" The Section, read as a whole, is applicable only to those goods which are used in the manufacture of other goods.
The levy is upon the purchase price of raw material and not upon the value of the manufactured products.
Entry 54 of List II must receive a liberal construction, being a legislative entry.
The Legislature cannot be confined to only one form of levy.
So long as the levy retains the basic character of a tax on sale, the legislature can levy it in such mode or in such manner as it thinks appropriate.
As affirmed by Mukharji, J. in Goodyear, the well established principles in such matters is "that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act.
" The legislature must he presumed to know its limitations and acted within those limits.
Transgression must be clearly established, and is not lo be lightly assumed.
For the very same reasons, the argument that it is a use tax also fails.
In essence, the provision is akin to the one considered by this court in Andhra Sugars Ltd. & Anr.
vs The State of Andhra Pradesh & Anr., 21 S.T.C. 212.
For the above reasons, the appeals and writ petitions are dismissed with no order as to costs.
PART III (UTTAR PRADESH) These Civil Appeals and Writ Petition are filed by the Tribeni Tissues Limited, Varanasi, Uttar Pradesh.
The Appeals are preferred against the Judgment of a learned Single Judge of Allahabad High Court allowing Sales Tax Revisions No.325, 327 and 328 of 1989 preferred by the Commissioner of Sales tax, Uttar Pradesh against the orders of the Sales tax Appellate Tribunal.
The assessment years concerned are 1978 79 to 1981 82.
The appellant is a dealer registered under the U.P. Sales tax Act, having an office at Varanasi.
It has a paper mill at Calcutta.
The appellant purchases sun hemp, raw jute, old hemp rope cuttings, Old Jute rope cuttings and jute cuttings etc.
at Varanasi and sends them to the paper mill at Calcutta for being used as raw material.
These purchases are made by the appellant from farmers, `kabadis ' and other persons who are not registered dealers.
The turnover relating to such purchases was subjected to purchase tax under section 3 AAAA by the assessing authorities which the appellant objected to.
The Tribunal, by a majority of 2:1 held in favour of the appellant against which the Commissioner preferred revisions before the High Court.
Section 3AAAA read as follows at the relevant time.
"3 AAAA.
Liability to purchase tax on certain transactions Where any goods liable to tax at the point of sale to the consumer are sold to a dealer but in view of any provision of this Act no sales tax is payable by the seller and the purchasing dealer does not resell such goods within the State or in the course of inter State trade or commerce, in the same form and condition in which he had purchased them the purchasing dealer shall subject to the provisions of Section 3, be liable to pay tax on such purchases at the rate at which tax is leviable on sale of such goods to the consumer within the State; Provided that if it is proved to the satisfaction of the assessing authority that the goods so purchased had already been subjected to tax or may be subjected to tax under Section 3 AAA, no tax under this section shall be payable.
" The section subjected the purchase of "goods liable to tax at the point of sale to the consumer" to purchase tax payable by the purchasing dealer, in a case where the selling dealer was not liable to pay the sales tax on such sale.
Purchase tax was payable at the same rate as the sales tax.
If, however, the purchasing dealer resold such goods within the State or in the course of inter State trade or commerce, he was not liable to pay the purchase tax.
The expression "goods liable to tax at the point of the sale to the consumer" is explained in Section 3 AAA.
Section 3A prescribes the rates of tax.
As it stood at the relevant time, sub sections (1) and (2) prescribed different rates for different goods.
Sub section (2A) which alone is relevant herein, read as follows: "3A (2A): The turnover in respect of goods other than those referred to in sub sections (1) and (2) shall be liable to tax at the point of sale by the manufacturer or importer at the rate of seven per cent, provided that the State Government may from time to time by notification in the Gazette modify the rate or point or tax on the turnover in respect of any such goods with effect from such date as may be notified in that behalf, so however.
that the rate does not exceed seven per cent.
(The goods concerned herein, according to both the parties, fall within sub section (2A) of Section 3A).
The State Government issued a notification dated 30.5.1975 in terms of and as contemplated by the proviso to sub section (2A) of Section 3 A declaring that with effect from June 1, 1975, the turnover in respect of goods specified in column 2 of the Schedule to the notification shall be liable to tax at the point of sale and at the rate specified respectively in columns (3) and (4) thereof.
The Schedule, in so far as relevant may be set out: "SCHEDULE `M ' stands for sale by manufacturer in Uttar Pradesh.
`I ' stands for sale by the Importer in Uttar Pradesh.
Description of goods Point at which Rate of tax No. tax shall be levied (Items No.1 to 14 omitted as unnecessary.
Old, discarded, unservice able or obsolete machinery, stores or vehicles including waste products except cinder, coal ash and such items as are included in any other notification issued under the Act.
(Item Nos. 16) to 25 omitted as sale to consumer 5 per cent unnecessary.) 26.
Jute and Hemp Goods M or I 4 per cent The controversy before the High Court was a limited one.
It was: "whether the said goods will fall under the entry at SI.
No. 15 of the notification dated 30th May, 1975 as contended by the learned standing counsel (for the State of Uttar Pradesh) or under SI.
No. 26 as Jute and Hemp goods under the notification dated 1st October, 1975 as urged on behalf of the assessee." (Quoted from the judgment of the High Court.) The learned Judge held that the goods fall under item No.15 and accordingly allowed the revisions filed by the Commissioner.
The correctness of the Judgment of the High Court is questioned in these Civil Appeals.
While the Civil Appeals were pending in this Court, a Division Bench of the Allahabad High Court held in C.M.W.P.No.168 of 1983 and batch (decided on 3rd April, 1991) that Section 3 AAAA was ultra vires the legislative competence of the legislature of Uttar Pradesh and, therefore, void.
The Division Bench followed and applied the ratio of Goodyear and held that under the said provision the taxable event is not the purchase of the goods by the purchasing dealer but the subsequent event namely use of said goods in the manufacture of other goods and their despatch without effecting a sale within the State of Uttar Pradesh to a place outside the Uttar Pradesh.
To get over the said decision and to remove the defect pointed out therein, the Governor of Uttar Pradesh issued an Ordinance being Ordinance No. 45 of 1991 on 12th December, 1991 substituting Section 3 AAAA in its entirety with effect from April 1, 1974.
The said Ordinance has since been replaced by U.P. Sales tax (Amendment) Act 8 of 1992.
Section 3 AAAA as substituted by the aforesaid Amending Act reads thus: "3 AAAA.
Liability to purchase tax on certain transactions.
(1) Except as provided in sub section (2) and subject to the provision of Section 3, every dealer, who purchases any goods liable to tax at the point of sale to consumer (a) from any registered dealer in circumstances in which no tax is payable by such registered dealer, shall be liable to pay tax on the purchase price of such goods at the same rate at which, but for such circumstances, tax would have been payable on the sale of such goods; (b) from any person other than a registered dealer, whether or not tax is payable by such person, shall be liable to pay tax on the purchase price of such goods at the same rate at which tax is payable on the sale of such goods.
(2) Exemption shall be granted in the tax payable under sub section (1) to the extent of the amount or tax, (a) to which the goods purchased from a registered dealer have already been subjected or may be subjected under any provision of this Act or the ; (b) already paid in respect of the goods purchased from any person other than a registered dealer; (c) on the sale of goods liable to be exempted under Section 4 A; (d) to which the sale of dressed hides and skins (or tanned leather) and ginned cotton obtained from raw hides and skins and raw cotton so purchased or rice obtained from paddy so purchased during the period commencing on September 2, 1976 and ending with April 30, 1977, are liable under any provision of this Act or the .
" Writ Petition No. 175 of 1992 is preferred questioning the constitutional validity of the said provision.
We shall first deal with Civil Appeals.
According to the statement of facts contained in the Judgment of the High Court, the appellant purchased "sun hemp, raw jute, old hemp rope cuttings, old jute rope cuttings and jute cuttings etc.
" Item No. 26 of the notification dated October 1, 1975 speaks of "jute and hemp goods".
The appellant inter alia purchased "sunhemp" and "raw jute".
Certainly they do not fall under item 26 of the Schedule.
Coming to "old hemp rope cuttings, old jute rope cuttings and jute cuttings" they fall, by their very nature more properly under item 15 because admittedly they are discarded, worn out, and waste material.
It would he rather odd to call them "jute the hemp goods" in the presence of item (15).
The High Court was, therefore, justified in holding that the goods purchased by the appellant are properly relatable to item 15 and not to item 26 of the notification.
The learned counsel for the appellant urged that item 15 is confined only to old, discarded, unserviceable and obsolete "stores" which in the context means "stores" maintained by a factory or industry.
Having regard to the language of item 15, he submitted.
it does not take in old discarded material coming from other sources We see no warrant for this restricted reading of item 15.
Be that as it may, once the said goods do not fall under item 26, as held by us, they must fall under item 15, since it is not suggested that there is any other item which takes in these goods.
The (Civil Appeals accordingly fail and are dismissed.
No costs.
Writ Petition No. 175 of 1992.
In view of the fact that Section 3 AAAA has been substituted by the 1992 Amendment Act with retrospective effect from April 1, 1974, it is not really necessary for us to deal at any length with the Section as it stood prior to the said amendment or with the correctness of the judgment of the Division Bench of the Allahabad High Court declaring the same as beyond the legislative competence of the U.P. Legislature.
Suffice it to say that the decision of the Division Bench closely follows and applies the ratio of Goodyear which according to us does not represent the correct position in law as explained in Part V. Coming to Section 3 AAAA as it now stands, an analysis of the Section yields the following ingredients: A. (i) A dealer who purchases any goods liable to tax at the point of sale to the consumer, (ii) from any registered dealer in circumstances in which no tax is payable by such registered dealer, (iii) the purchasing dealer shall he liable to pay tax on the purchase price of such goods at the same rate at which the tax would have been payable on the sale of such goods.
B. (i) A dealer who purchases any goods liable to tax at the Joint of sale to consumer, (ii) from any person other than a registered dealer, whether or not such person is liable to pay the tax on such sale, (iii) the purchasing dealer shall be liable to pay tax on the purchase price of such goods at the same rate at which tax is payable on the sale of such goods.
The purchasing dealer is, however, entitled to be exempted from the tax payable under the above two heads to the extent of the amount of tax mentioned in clauses (a), (b), (c) and (d) of sub section (2).
Clause (a) speaks of the tax paid or payable under any of the provision of U.P. Act or C.S.T. Act.
Clause (b) speaks of the tax already paid, if any, in respect of goods purchased from any person other than a registered dealer.
Clause (c) refers to sale of goods entitled to exemption under section 4A and clause (d) refers to sale of dressed hides and skins.
In short, the scheme of the section is this: (I) if a dealer purchases the goods liable to tax at the point of sale to the consumer from any registered dealer who is not liable to pay tax on such sale, the purchasing dealer shall pay such tax.
If, however, the purchasing dealer establishes that the goods purchased by him have already been subjected to or may be subjected to tax under the U.P. Act or , he will get an exemption to that extent.
(2) If the said goods are purchased from a person other than a registered dealer the purchasing dealer shall pay the tax payable on sale of such goods.
If, however, he proves that tax payable has been paid, either wholly or partly, by the seller, the tax payable by the purchasing dealer shall be exempted to that extent.
(3) Similar exemption will be available to the purchasing dealer in case he establishes any of the facts mentioned in clauses (c) and (d) of sub section (2).
The central idea is that no transaction of sale (of goods taxable at the point of sale to consumer) should go untaxed.
Either the seller pays the tax or the purchaser pays.
It is for achieving this central purpose that Section 3 AAAA has been enacted providing for several situations.
It would be immediately evident that section that Section 3 AAAA does not speak of and does not refer in any manner to the user of the goods purchased.
It is immaterial whether the goods purchased are used in the manufacture of other goods or dealt with otherwise.
Much less does it speak of the manner in which the goods manufactured out of such purchased goods, if any, are dealt with.
The exemptions provided in sub section (2) are equally un related to the above aspects.
Sub section (1) is clear and simple.
The tax becomes payable by the purchasing dealer in the two situations contemplated by clauses (a) and (b) of the said sub section.
If he can establish any of the facts mentioned in clauses (a) to (d) of sub section (2), he gets an appropriate exemption.
Otherwise not.
We are, therefore, unable to see any room for contending that the tax imposed by the said section is in the nature of consignment tax or a use or consumption tax.
Simply because the petitioner chooses to take the goods purchased by him out of the State, in the same form and condition or otherwise, for being used as raw material in his factory at Calcutta, makes no difference to the levy.
The validity of the levy cannot depend upon what a particular dealer or person chooses to do with the goods.
It was argued for the petitioner that sub section (2) of Section 3 AAAA places a heavy and uncalled for burden upon the purchasing dealer; that it is not practicable for the purchaser to establish that the selling person (other than the registered dealer) has paid the tax or not.
It is submitted that the petitioner purchases his goods from hundreds of persons who are not registered dealers and it cannot reasonably be expected of the petitioner to gather the particulars of or from all such persons.
We are unable to appreciate this contention.
A person other than a registered dealer is not amenable to the discipline of the Act.
He cannot indeed collect any tax [Section 8(A) (2) and, therefore, will not, justified in presuming.
If, however, in any case it is proved that such person has paid the tax, the purchasing dealer will get an exemption to that extent.
It a benefit is claimed by the purchasing dealer, it is for him to prove the fact which enables him to claim the benefit.
That burden cannot be passed on to any one else.
So far as registered dealers are concerned, all that the purchasing dealer need prove is that the said goods have already been or may be subjected to tax under State Act or .
On this score, we see no difficulty for the purchasing dealer.
From the bill given by the selling dealer, the purchasing dealer can prove the payment.
Or he can simply prove, as a matter of law that the said goods are liable to be taxed under any other provision of the Act or under the .
We are equally unable to see any vagueness in the provision nor is it established that any such vagueness is operating to the prejudice of the petitioner.
In this view of the matter, it is unnecessary, strictly speaking, to consider whether the present Section 3 AAAA is in effect and substance the same as the one obtaining prior to 1992 Amendment Act.
For the sake of completeness, however, we may mention that under Section 3 AAAA (before it was substituted in 19920 tax was payable by the purchasing dealer where he purchased goods liable to tax was payable by the purchasing dealer where he purchased goods liable to tax at the point of sale to the consumer in circumstances where no tax is payable by the seller, provided he did not resell the said goods, in the same form and condition, within the State or in the course of inter State, trade or commerce.
The section was understood by the Division Bench in the following manner: " 23.
That brings us to the vital question as to which are the circumstances in which sale of the goods purchased within the State or in the course of inter State trade and commerce in the same form and condition in which the dealer purchased the goods, may be rendered impossible.
To our mind, keeping in view the usual course of business, the normal possibilities seem to be these: 1. use and consumption of the goods purchased by the purchasing dealer in the manufacture of some other taxable goods within the State; 2. despatch of the manufactured goods, without sale, outside the State otherwise than in the course of inter State trade and commerce; 3. despatch of the goods out of the territory of India pursuant to a contract of sale, i.e. despatch in the course of an export sale; 24.
These then are the activities or transactions that constitute the taxable events on the happening of which the tax would be immediately attracted, that is to say, the tax in question becomes exigible at these points.
Once these points are reached the possibility of the sale of goods purchased within State or in the course of inter State trade and commerce in the same form and condition, shall stand excluded.
The fourth and the last condition envisaged by Section 3 AAAA set out hereinabove necessary for attracting the levy would also stand fulfilled.
It is only on the happening of these events that the taxing authority can reach the conclusion that the purchasing dealer has be come liable under Section 3 AAAA.
" With respect we find ourselves unable to agree with the above understanding of the section.
All that the section provided was: (i) where the goods liable to tax at the point of sale to the consumer are sold to a dealer (ii) in circumstances in which no sales tax is payable by the seller and (iii) the purchasing dealer does not re sell the said purchased goods within the State or in the course of inter State trade or commerce (iv) the purchasing dealer shall be liable to pay the tax which would have been payable by the seller.
(v) If however, it was proved that the said goods have already suffered tax under Section 3 AA, no purchase tax was payable under Section 3 AAAA.
It is obvious that the section did not speak or the purchased goods being used in the manufacture of other goods nor of the manner of disposal or despatch of such manufactured goods.
The only two conditions stipulated (which conditions are not to he found in the present Section 3 AAAA) were that if the purchased goods are sold within the State or sold in the course of inter State trade or commerce, the tax , under it is not payable.
This is for the simple reason that in both those contingencies, the State would get the revenue (in one case under the State Sales Tax Act and in the other case, under the ).
The policy of the legislature is not to tax the same goods twice over.
The fact that in a given case, the purchased goods are consigned by the purchaser to his own depots or agents outside the State makes no difference to the nature and character of the tax.
By doing so, he cannot escape even one time tax upon the goods purchased, which is the policy of the Legislature.
The tax was directed towards ensuring levy of tax atleast on one transaction of sale of the goods and not towards taxing the consignment of goods purchased or the products manufactured out of them.
The difficulty has really arisen because of the attempt to look to the provisions of Section 3 AAAA through the prism of Goodyear.
There is a substantial and qualitative difference between the language employed in Section 9 of Haryana Act and Section 13 AA of Bombay Act and in Section 3 AAAA of U.P. Act (as it stood prior to 1992 Amendment Act) or for that matter as it stands now.
These basic differences cannot be ignored.
Constitutionality of Section 3 AAAA ought to be judged on its own language and so judged, the Section, both before and after the 1992 Amendment, represents a perfectly valid piece of legislation.
It is relatable to and fully warranted by Entry 54 of List II of the Seventh Schedule to the Constitution.
PART IV (ANDHRA PRADESH) Writ Petitions No. 655 669 of 1983 are filed by Hotel Balaji and 14 other hotels/restaurants for issuance of a writ, order or direction directing the respondents viz., State of Andhra Pradesh and its Sales Tax Authorities not to levy and collect purchase tax on milk @ 4% under Section 6 A as also the surcharge tax @ 10% of the tax.
According to the petitioners such a levy violates Article 14 as also the fundamental right guaranteed to them by sub clause (g) of clause (1) of Article 19 of the Constitution.
Civil Appeal Nos.
10753 57 of 1983 are directed against the judgment and order of a Division Bench of the Andhra Pradesh High Court upholding the validity of Section 6 A of the Andhra Pradesh General Sales Tax Act.
The case of the petitioners in the writ petitions is this: They purchase the milk required by them both from registered dealers as well as persons other than registered dealers.
The authorities are collecting purchase tax @ 4% under Section 6 A from the petitioners which is illegal in view of the fact that the sale of fresh milk is exempted from tax by a notification issued by the Government of Andhra Pradesh under Section 9 of the Act being G.O.Ms.
No.1091 dated 10.6.1957.
Because of the said exemption notification not only the seller is exempted but also the purchaser.
In some cases, the petitioners purchased milk from registered dealers like Andhra Pradesh Dairy Development Corporation which is exempted from sales tax by virtue of a notification issued under Section 9.
In such cases, the tax is sought to be levied upon the petitioners which is equally illegal.
The milk purchased by the petitioners is being consumed in preparing and serving to consuming public tea, coffee and other eatables.
The tax levied under Section 6 A is really not upon the purchase but upon the use and consumption.
G.O.Ms.
No.1091 dated 10.6.1957 as originally issued read as follows: "In exercise of the power conferred by sub section (1) of Section 9 of the Andhra Pradesh General Sales Tax Act 1957 (Andhra Pradesh Act 6 of 57), the Governor of Andhra Pradesh hereby exempts from the tax payable under the said Act the sales of following goods: (1) and (2) omitted as unnecessary; (3) fresh milk, curd and butter milk." By G.O,Ms. No. 60 (Revenue) dated 10.1.1961, item (3) was substituted as follows: "fresh milk, curd and butter milk sold by dealers exclusively dealing in them." By G.O.Ms.
No. 1786 dated 20.11.1962, the words "and their byeproducts realised by utilisation of surpluses thereof were added at the end of the entry.
By yet another amendment, the word "bye products" was substituted by the word "products".
Thus, at the relevant time item 3 of the said notification read as follows: "fresh milk,.curd and butter milk sold by dealers exclusively dealing in them and their products realised by utilisation of surpluses thereof.
" It is also brought to our notice that by G.O.Ms.
No. 669 dated 26.5.1975, the Government of Andhra Pradesh exempted the sale of pasturised milk by the Andhra Pradesh Dairy Development Corporation from the levy of tax payable under the said Act with effect from the 1st day of May, 1975.
In the Civil Appeals the appellant is Hindustan Milk Food Manufacturers Ltd. They purchased milk mainly from persons other than registered dealers which they utilised in manufacture of various products.
Its products are sold not only within the State of Andhra Pradesh but also in other States of the country.
It has an office at Dhawaleshwaram in East Godavari Distt.
of Andhra Pradesh.
It is registered as a dealer under the Act.
In the course of their assessment proceedings for the assessment year 1979 80 (among other assessment years) the appellant contended that the milk having been exempted by virtue of a notification issued under Section 9 is not taxable and that levy of purchase tax is incompetent.
They questioned the constitutionality of Section 6 A.
The Assessing authority overruled the said objections and levied the purchase tax on the turnover of milk purchased by the appellant.
The matter was brought to the High Court which, as stated above.
negatived the challenge to the constitutionality of the provision .
So far as the exemption notification in G.O.Ms.
No. 1091 dated 10.6.1957 is concerned, it must be noticed that what was exempted there under was the tax payable on the "sale of fresh milk sold by dealers exclusively dealing in them.
So far as agriculturists are concerned, they are not dealers at all by virtue of Explanation II to the definition of "dealer" H contained in clause (e) of Section 2.
The notification has, therefore, no application to sale of milk by them.
Since the purchase by Hindustan Milk Food is almost wholly from such agriculturists, it cannot take advantage of the said notification.
If, however, any milk is purchased by the appellant or the writ petitioners from dealers exclusively dealing in milk, they would be liable to pay the purchase tax only in cases where the selling dealer is not liable to pay the tax either because of an exemption notification or otherwise.
A contention was urged before us that the milk was not at all taxable under the Act.
It was submitted that milk is not mentioned in any of the Schedules I to VI appended to the Act.
This argument in our opinion proceeds upon a mis apprehension of the scope and scheme of Section 5, as we shall presently demonstrate.
Fresh milk was taxable as general goods under Section 5(1) of the Act before it was amended by Amendment Act 4 of 1989.
After the coming into force of the said Amendment Act, it falls under Schedule VII, (which was introduced simultaneously with the said Amendment Act) and which takes in all goods other than those specified in first to sixth Schedules.
Milk was subject to multi point tax prior to the said Amendment Act whereas after the said amendment if has become taxable only at single point namely, point of first sale in the State.
If fresh milk was not at all taxable under the Act, there was no necessity to issue notifications exempting its sale in certain situations.
Section 6 A was inserted by Andhra Pradesh General Sales Tax .
(Amendment) Act, 49 of 1976 with effect from September 1, 1976.
As originally enacted, the section read as follows: "6 A: Levy of tax on turnover relating to purchase of certain goods: Every dealer, who in the course of business (i) Purchases any goods (the sale or purchase of which is liable to tax under this Act) from a registered dealer in circumstances in which no tax is payable under Section 5 or under Section 6, as the case may be, or (ii) purchases any goods (the sale or purchase of which is IV liable to tax under this Act) from a person other than a registered dealer, and (a) either consumes such goods in the manufacture of other goods for sale or otherwise, or (b) disposes of such goods in any manner other than by way of sale in the State, or (c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter State trade or commerce, shall pay tax on the turnover relating to purchase aforesaid at the same rate which but for the existence of the aforementioned circumstances, tile tax would have been leviable on such goods under Section 5 or 6".
The Section has been amended in some particulars by the Amendment Act 18 of 1985 but these amendments do not make a difference to nature or character of the tax.
Be that as it may , we may as well set the section as it stands now, in view of the fact that the validity of the section as such is questioned before us.
It reads: "6 A. Levy of tax on turnover relating to purchase of certain goods: Every dealer, who in the course of business: (i) purchases any goods (the sale or purchase of which is liable to tax under this Act) from a registered dealer in circumstances in which no tax is payable under section 5 or under Section 6, as the case may be, or (ii) purchases any goods (the sale or purchase of which is liable to tax under this Act) from a person other than a registered dealer, and (a) consumes such goods in the manufacture of other goods for sale or consumes them otherwise, or (b) discloses of such goods in any manner other than by way of sale in the state, or (c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter State trade or commerce, shall pay tax on the turnover relating to purchase aforesaid at the same rate at which but for the existence of the aforementioned circumstances, the tax would have been leviable on such goods under Section 5 or Section 5 A or Section 6: Provided that in respect Or declared goods such rate together with the rate of additional tax specified in Section 5 A shall not exceed four percent of the purchase price of such goods." An analysis of the Section yields the following ingredients: "A. (i) a dealer who in the course of business purchases any goods liable to tax under the Act, (ii) from a registered dealer in circumstances in which no tax is payable by such selling dealer under Section 5 or 6 and (iii) consumes such goods in the manufacture of other goods for sale or consumes them otherwise or, (iv) disposes of such goods in any manner other than by way of sale in the State or, (v) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter State trade or commerce, (vi) such purchasing dealer shall pay the tax at the same rate at which it would have been payable by the selling dealer.
B.(i) A dealer who in the course of his business purchases any goods which are taxable under the Act (ii) from a person other than a registered dealer and, (iii) consumes such goods in the manufacture of other goods for sale or consumes them otherwise or, (iv) disposes of such goods in any manner other than by way of sale in the State or, (v) despatches them to a place outside the Stale except as a direct result of sale or purchase in the course of inter State trade or commerce, (vi) such purchasing dealer shall pay the tax at the same rate at which it would have been payable by the selling dealer.
" The proviso which governs both the above situations provides that in case of declared goods the total tax shall not exceed 4% of the purchase price of such goods.
Broadly speaking, the effect is Tax payable at sale point becomes the tax payable on the purchase point, in certain circumstances.
Because, the seller is not or cannot be taxed for certain reasons, the purchasing dealer is being taxed.
Two examples, each illustrating one of the two situations envisaged by the Section may be given: (a) Andhra Pradesh Dairy Development Corporation, a registered dealer, is exempted from paying the tax on sale of pasturised milk.
The purchaser of pasturised milk from the Corporation is taxed provided he satisfies one of the conditions specified in clauses (i) to (iii) mentioned in the Section, thereby becoming the last purchaser in the State of such milk.
(b) Fresh milk is taxable at sale point.
But when it is sold by a farmer/agriculturist raising cattle on lands held by him, he cannot be taxed because he is not a dealer.
The purchaser is taxed in such cases provided he satisfies one of the conditions specified in clauses (i) to (iii) in the Section, thereby becoming the last purchaser in the State of such milk.
It would, therefore, be clear that the real object of the clauses (i) to (iii) in the Section is not to levy a consumption tax, use tax or consignment tax but only to point out that thereby the purchasing dealer converts himself into the last purchaser in the state of such goods.
The goods cease to exist or case to be available in the State for sale or purchase attracting tax.
In these circumstances, the purchasing dealer of such goods is taxed, if the seller is not or cannot be taxed.
In this connection, observations of P.S. Poti, J. in Malabar Fruit Products Co.v.
S.T.O., 30 S.T.(J. 537, which have been expressly approved by this court in State of Tamil Nadu vs Kanda Swami, 36 S.T.C. 191 = discussed in detail in part V may be referred to.
It is not necessary to set out the said discussion here over again.
In the circumstances, we are unable to see how the tax imposed by Section 6 A be described either as use tax, consumption tax or consignment tax.
Since we are of the opinion, as explained in Part V, that Goodyear does not interpret Section 9 of Haryana Act and Section 13AA of Bombay Act correctly, its reasoning cannot be brought in here to contend that clause (c) of Section 6 A imposes a consignment tax.
It is a purchase tax perfectly warranted by Entry 54 of List II of the Seventh Schedule to the Constitution.
Reference to a few more provisions of the Act would be appropriate at this stage to complete the picture.
The expression "dealer" has been defined in clause (e) of Section 2.
It is not necessary to notice the entire definition except Explanation II which says that a grower of agricultural or horticultural produce cannot be deemed to be a dealer if he sells his produce.
Explanation reads as follows: "Explanation II: Where a grower of agricultural or hor ticultural produce sells such producer grown by himself on any land in which he has an interest whether as owner, usufructuary mortgage, tenant or otherwise, in a form different from the one in which it was produced after subjecting it to any physical, chemical or any process other than mere cleaning, grading or sorting he shall be deemed to be a dealer for the purpose of this Act.
" Section 5 is the charging section.
Prior to the Amendment Act 4 of 1989, Section 5 had four sub sections.
The first sub section made all sales/purchases by dealers within the State of Andhra Pradesh subject to tax.
It, however, the goods sold were those mentioned in Schedule I they were taxable at a single point, viz., at the point of sale and at the rate prescribed in the said Schedule.
Similarly, if the goods fell in the Second Schedule they too were taxable only at one point namely, the point of purchase at the rate prescribed.
[Sub section (2)1 Schedule III comprises of declared goods while Schedule IV sets out goods which are totally exempted Income tax under Section 8 of the Act.
Schedule V deals with jaggery and Schedule VI with 2liquors.
In other words, goods which did not fall in any of the Schedules I to VI fell under sub section (I) and were taxed as general goods.
In this sense, fresh milk which is not mentioned in any of the Schedules i to VI was chargeable as general goods under sub section (I) of Section 5.
By Amendment Act 4 of 1989 the entire scheme of Section 5 has been changed.
The present section says that the goods mentioned in Schedules I to VII shall be taxed at the point and at the rate specified therein.
Schedule VII which has been inserted by the very same Amendment Act is in the nature of a residuary Schedule, the good which do not fall in any of the Schedules I to VI fall under Schedule VII.
Even such goods have also been made taxable only at one point and at the rate specified.
After the coming into force of the said Amendment Act of 1989, fresh milk would fall under Schedule VII and taxable as such.
It is, therefore wrong to say that sale of milk was or is not taxable under the Act.
Section 9 empowers the Government to exempt either the sale of certain goods or sates by certain persons either wholly or partly.
Section reads as follows: "9.
Power of State Government to notify exemptions and reductions of tax (or interest): (1) The State Government may, by notification in the Andhra Pradesh Gazette, make an exemption, or reduction in rate, in respect of any tax or interest payable under the Act (i) on the sale or purchase of any specified class of goods, at all points or at any specified point or points in series of sales or purchases by successive dealers; or (ii) by any specified class of persons, in regard to the whole or any part of their turnover.
(2) Any exemption from tax or interest or reduction in the rate of tax notified under sub section (I) (a) may extend to the whole of the State or to any specified area or areas therein; (b) may he subject to such restrictions and conditions as may be specified in the notification, including conditions as to licences and licence fees.
" It may be noticed that while exempting the sale or purchase of any specified class of goods the Government is empowered to specify whether the exemption operates at all points or any specified point or points in the scries of sales or purchases of successive dealers.
Several notifications have been issued by the Government from time to time exempting certain dealers or exempting certain goods at the point of sale or purchase, as the case may be.
G.O.Ms.
No.1091 is one of them.
We have already noticed the rather qualified terms in which the exemption is couched.
It is not a general exemption but a qualified one.
In the light of the specific scheme of Section 9 and the language of G.O.Ms.
No.1091, the exemption at the point of sale by a particular category of persons cannot be construed as operating to exempt the purchase tax under Section 6 A as well, much less in all cases.
For the above reasons, appeals and writ petitions are dismissed with no order as to costs.
PART V (DOES GOODYEAR REQUlRE RE CONSIDERATION?) As mentioned earlier, counsel for all the assessees in these matters strongly rely on the decision of this Court in Goodyear which invalidated a purchase tax levied by the Haryana and Maharashtra Sales Tax Acts.
We may, therefore, notice this decision in some detail.
What precisely is the ratio of Goodyear? Provisions relating to purchase tax in Haryana Sales Tax Act and Bombay Sales Tax Act fall for consideration in this case.
Section 9 of the Haryana Act, before it was amended by Haryana General Sales (Amendment and Validation) Act, 1983, read as follows: 9, Where a dealer liable to pay tax under this Act purchases goods other than those specified in Schedule B from any source in the State and (a) uses them in the State in the manufacture of, (i) goods specified In Schedule B or (ii) any other goods and disposes of the manufactured goods in any manner otherwise than by way of sale whether within the State or in the course of inter State trade or commerce or within the meaning of sub section (l) of Section 5 of the , in the course of export out of the territory of India.
(b) exports them, in the circumstances in which no tax is payable under any other provisions of this Act, there shall be levied, of subject to the provisions of Section 17, a tax on the purchase of such goods at such rate as may be notified under Section 15.
" A notification dated 19th July, 1974 was issued by the Government of Haryana under the said provision read with Section 15(1) of the Act in purported implementation of the said provision.
Validity of Section 9 as well as of the notification was challenged in a batch of writ petitions filed in the High Court of Punjab and Haryana.
The High Court upheld the challenge holding that "whereas the said provision (Section 9) provided only for the levy of a purchase tax on the disposal of manufactured goods, the notification by making a mere despatch of goods to the dealers them selves taxable in essence, legislates and imposes a substantive tax which it obviously cannot." Goodyear India Ltd. vs State of Haryana (1990) 76 S.T.C. 71.
After it was amended by the aforesaid amendment Act, sub sections (] ) and (2) of Section 9 read as follows: "9. Liability to pay purchase tax, (1) Where a dealer liable to pay tax under this Act, (a) purchases goods, other than those specified in Schedule B, from any source in the State and uses them in the State in the manufacture of goods specified in Schedule B; or (b) purchases goods, other than those specified in Schedule B, from any source in the State and uses than in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of sub section (1) of Section 5 of B the ; or (c) purchases goods, other than those specified in Schedule B, from any source in the State and exports them, in the circumstances in which no tax is payable under any other provision of the Act, there shall be levied, subject to the provisions of Section 17 a tax on the purchases of such goods at such rate as may be notified under Section 15.
(2) Notwithstanding anything contained in this Act or the rules made thereunder, if the goods leviable to tax under this section are exported in the same condition in which they wore purchased, the tax shall be levied, charged and paid at the station of despatch or at any other station before the goods leave the State and the tax so levied, charged and paid shall be provisional and the same shall be adjustable towards the tax due from the dealer on such purchase as a result of assessment or re assessment made in accordance with the provisions of this Act and the rules made there under on the production of proof regarding the payment thereof in the State." Again a batch of writ petitions was filed questioning the validity of the amended provision which challenge too was upheld by the High Court in its decision in Bata India Ltd. vs State of Haryana, 54 S.T.C. 226.
The main ground upon which the High Court allowed the writ petitions was that mere despatch of goods to a place outside the State in any manner other than by way of sale in the course of inter State trade or commerce is synonymous with or is in any case included within the ambit of consignment of goods to the person making it or to any other person in the course of inter state trade or commerce as specified in Article 269(l)(iv) and Entry 92(B) of List l of the Seventh Schedule to the Constitution and thus beyond the competence of the State legislature.
According to the High Court, the taxable event was not the purchase of goods nor the use of such goods in manufacture of end products but the despatch of goods.
Doubting the view taken in Bata India, one of the learned Judges of the Punjab and Haryana High Court, Punchhi, J. (as he then was) referred the matter to a Bull Bench which took a different view in Desraj Pushp Kumar Gulati vs State of Punjab, 58 S.T.C.393.
The Full Bench was of the view that according to Section 9 (amended) the taxing event is the act of purchase of goods which are used in the manufacture of end products and not the act of despatch or consignment as held in Bata India.
The correctness of all the three decisions aforesaid was questioned in appeals filed before this Court.
The appeals were heard by a Bench comprising Sabyasachi Mukharji, J. (as he then was) and one of us (S.Ranganathan, J.).
Mukharji, J., in his separate judgment, set out the test for determining the taxable event in the following words: "It is well settled that the main test for determining the taxable event is that on the happening of which the charge is affixed.
The realisation often is postponed to further date.
The quantification of the levy and the recovery of tax are also postponed in some cases Taxable event is that which on its occurrence creates or attracts the liability to tax." Then the learned Judge proceeded to analyse Section 9 (amended) and concluded as follows: "Analysing the section it appears to us that conditions specified, before the event of despatch outside the State as mentioned in Section 9(1)(b) namely, (i) purchase of goods in the State and (ii) using them for the manufacture of any other goods in the State, are only descriptive of the goods liable to tax under Section 9(1)(b) in the event of despatch outside the State.
If the goods do not answer both the descriptions cumulatively, even though these are despatched outside the State of Haryana, the purchase of those goods would not be tax under Section (I)(b) The liability to pay tax in this section does not accrue on purchasing the goods simplicitor, but only when these are despatched or consigned out of the State of Haryana.
In all these cases, it is necessary to find out the true nature of the tax.
Analysing the Section, if one looks to the purchase tax under Section 9, one gets the conclusion that the Section itself does not provide for imposition of the purchase tax on the transaction of purchase of the taxable goods but when further the said taxable goods are used up and turned into independent taxable goods, losing its original identity, and thereafter when the manufactured goods are despatched outside the State of Haryana and only then tax is levied and liability to pay tax is created "According , the learned judge held , the is in the nature of a consignment tax which the Parliament alone could impose and not the State legislature.
The correctness of the said view is questioned by the learned counsel for the State of Andhra Pradesh and other counsel for the State Governments.
The question for our consideration is whether the learned Judge was not right in holding that the taxable event under the section Is not the purchase goods used in the manufacture of end products but the despatch of manufactured goods to out state destinations.
The other provision considered in the said decision is the one contained in Section 13AA of the Bombay Sales Tax Act.
The said provision which was introduced into the Act by the Maharashtra Act (28 of 82) read as follows at the relevant time: "13AA.
Purchase tax payable on goods in Schedule C, Part I when manufactured goods are transferred to outside branches.
Where a dealer, who is liable to pay tax under this Act, purchases any goods specified in Part I of Schedule C, directly or through Commission agent, from a person who is or is not a Registered dealer and uses such goods in the manufacture of taxable goods and despatches the goods, so manufactured, to his own place of business or to his agent 's place of business situated outside the State within Indian then such dealer shall be liable to pay, in addition to the sales tax paid or payable, or as the case may be, the purchase tax levied or leviable under the other provisions of this Act in respect of purchases of such goods, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture, and accordingly the dealer shall include purchase price of such goods in his turnover of purchases in his return under Section 32, which he is to furnish next thereafter.
The validity of the said provision was challenged inter alia by Hindustan Lever Limited which was negatived by the Bombay High Court in its decision reported in 72 S.T.C. 69.
The High Court was of the opinion that the additional purchase tax leviable under the said provision is on the purchase value of V.N.E.Oil used in the manufacture of goods transferred outside the State and not on the value of the manufactured goods so transferred.
It held further that the goods taxed under Section 13AA are consumed in the State as raw material in the process of manufacturing other commodities and therefore tax imposed thereon cannot be said to hinder the free flow of trade within the meaning of Article 301 of the Constitution.
The question again was which is the taxable event according to Section 13AA.
Mukharji, J. on an analysis of the section held that the taxable event is the despatch of manufactured goods outside the State which means that the levy is beyond the competence of the State legislature.
The attack based upon Article 301 of the Constitution was, however, repelled.
Though agreeing with the conclusion arrived at by Mukharji, J., Ranganathan, J. made a few pertinent observations in his separate opinion.
The learned Judge opined that both Section 9 of the Haryana Act and Section 13AA of the Bombay Sales Tax Act "purport only to levy a purchase tax" and further that "the tax, however, becomes exigible not on the occasion or event of purchase but only later.
It materialises only if the purchaser (a) utilises the goods purchased in the manufacture of taxable goods and (b) despatches the goods so manufactured (otherwise than by way of sale) to a place of business situated outside the State.
The legislature, however, is careful to impose the tax only on the price at which the raw materials are purchased and not on the value of the manufactured goods consigned outside the State.
The State describes the tax as one levied on the purchase of a class of goods viz., those purchased in the State and utilised as raw material in the manufacture of goods which are consigned outside the State otherwise than by way of sale.
" The learned Judge opined: "to me it appeared as plausible to describe the levy as a tax on purchase of goods inside the State (which attaches itself only in certain eventualities) as to describe it as a tax on goods consigned outside the state but limited to the value of raw material purchase inside the State and utilised therein." The learned Judge stated that he had "considerable doubts" as to the taxable event but that on further reflection he was inclined to agree with H S.Mukharji, J. that the tax though described as a purchase tax actually became effective with reference to a totally different class of goods and that too only on the happening of an event which is unrelated to the Act of purchase and therefore, in truth and essence, it was a consignment tax.
The crucial question, therefore, is what is the basis of taxation in either of the above provisions? In other words, the question is whether levy of tax is on the purchase of goods or upon the consignment of the manufactured goods? Let us first deal with Section 9 of the Haryana Act (as amended in 1983).
Properly analysed, the following are the ingredients of the Section: (i) a dealer liable to pay tax under the Act purchases goods (other than those specified in Schedule B) from any source in the State and (ii) uses them in the State in the manufacture of any other goods and (iii) either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of a inter State trade or commerce or in the course of export outside the territory of India within the meaning of sub section (1) of Section 5 of the (Central Sales Tax Act, 1956.
If all the above three ingredients are satisfied, the dealer becomes liable to pay tax on the purchase of such goods at such rate, as may be notified under Section 15.
Now, what does the above analysis signify? The section applies only in those cases where (a) the goods are purchased (for convenience sake, I may refer to them as raw material) by a dealer liable to pay tax under the Act in the State.
(b) the goods so purchased cease to exist as such goods for the reason they are consumed in the manufacture of different commodities and (e) such manufactured commodities are either disposed of within the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of an inter State sale or export sale.
It is evident that if such manufactured goods are not sold within the State of Haryana, but yet disposed of within the State, no tax is payable on such disposition; similarly, where manufactured goods are despatched out of State as a result of an inter State sale or export sale, no tax is payable on such sale.
Similarly again where such manufactured goods are taken out of State to manufacturers own depots or to the depots of his agents, no tax is payable on such removal.
Goodyear takes only the last eventuality and holds that the taxable event is the removal of goods from the State and since such removal is to dealers own depots/agents outside the State, it is consignment, which cannot be taxed by the State legislature.
With the greatest respect at our command, we beg to disagree.
The levy created by the said provision is a levy on the purchase of raw material purchased within the State which is consumed in the manufacture of other goods within the State.
If, however, the manufactured goods are sold within the State, no purchase tax is collected on the raw material, evidently because the State gets larger revenue by taxing the sale of such goods.
(The value of manufactured goods is hound to be higher than the value of the raw material).
The State legislature does not wish to in the interest of trade and general public tax both the raw material and the finished (manufactured) product.
This is a well known policy in the field of taxation.
But where the manufactured goods are not sold within the State but are yet disposed of or where the manufactured goods are sent outside the State (otherwise than by way of inter State sale or export sale) the tax has to be paid on the purchase value of the raw material.
The reason is simple: if the manufactured goods are disposed of otherwise than by sale within the State or are sent out of State (i.e., consigned to dealers own depots or agents), the State does not get any revenue because no sale of manufactured goods has taken place within Haryana.
In such a situation, the State says, it would retain the levy and collect it since there is no reason for waiving the purchase tax in these two situations.
Now coming to inter State sale and export sale, it may be noticed that in the case of inter State sale, the State of Haryana does get the tax revenue may not be to the full extent.
Though the Central Sales Tax is levied and collected by the Government of India, Article 269 of the Constitution provides for making over the tax collected to the States in accordance with certain principles.
Where, of course, the sale is an export sale within the meaning of Section 5(1) of the (export sales) the State may not get any revenue but larger national interest is served thereby.
It is for these reasons that tax on the purchase of raw material is waived in these two situations.
Thus, there is a very sound and consistent policy underlying the provision.
The object is to tax the purchase of goods by a manufacturer whose existence as such goods is put an end to by him by using them in the manufacture of different goods in certain circumstances.
The tax is levied upon the purchase price of raw material, not upon the sale price or consignment value of manufactured goods.
Would it be right to say that the levy is upon consignment of manufactured goods in such a case? True it is that the levy materialises only when the purchased goods (raw material) is consumed in the manufacture of different goods and those goods are disposed of within the State otherwise than by way act sale or are consigned to the manufacturing dealer 's dopots/agents outside the State of Haryana.
But does that change the nature and character of the levy? Does such postponement if one can call it as such convert what is avowedly a purchase tax what is on raw material (levied on the purchase price of such raw material) to a consignment tax on the manufactured goods? We think not.
Saying otherwise would defeat the very object and purpose of Section 9 and amount to its nullification in effect.
The most that can perhaps be said is that it is plausible (as pointed out by Ranganathan, J. in his separate opinion) to characterise the said tax both as purchase tax as well as consignment tax.
But where two interpretations are possible, one which sustains the constitutionality and/or effectuates its purpose and intendment and the other which effectively nullifies the provision, the former must be preferred, according to all known canons of interpretation.
This is also the view expressly approved by Mukharji, J. in his opinion, as pointed out hereinbefore.
In para 71 of his opinion, the learned Judge states: `it is well settled that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act.
Commissioner of Wealth Tax, Bihar and Orissa vs Kirpa Shankar Daya Shankar Vorah at page 768 and Income Tax Commissioners for City of London vs Gibbs ' (1942) 10 ITR Suppl.
121 at page 132 (H.L.)".
(emphasis supplied) However, we would presently show that merely because the levy attaches on the happening or non happening of a subsequent event, the nature and character of the levy does not change.
In several enactments.
for instance, tax is levied at the last sale point or last purchase point, as the case may be.
How does one determine the last purchase point in the State '? Only when one knows that no purchase took place within the State thereafter.
But that can only be known later.
If there is a subsequent purchase within the State, the purchase in question ceases to be the last purchase.
As pointed out pertinently by P.S.Poti, J. (as he then was) in Malabar Fruit Products Company and Ors.
vs The Sales Tax Officer and Ors, (1972) 30 S.T.C. 537, applying the logic of the dealers, it would not be possible to tax any goods at the last purchase point in the State, inasmuch as the last purchase point in regard to any goods could be determined only when the goods are sold later and not when the goods are purchased.
In the said decision.
the learned Judge was dealing with the validity and construction of Section 5 A of Kerala General Sales Tax Act, 1963, sub section (l) whereof read as follows: "5A. Levy of purchase tax (1) Every dealer who in the course of his business purchases from a registered dealer or from any other person any goods.
the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under Section 5, and either (a) consumes such goods in the manufacture of other goods for sale or otherwise; or (b) disposes of such goods in any manner other than by way of sale in the State; or (c) despatches them to any place outside the State except as a direct result of sale or purchase in the course of inter State trade or commerce, shall whatever be the quantum of the turnover relating to such purchase for that year at the rates mentioned in Section 5.
" One of the arguments urged against the validity of the said provision was that inasmuch as the tax is levied depending upon the mode in which the goods purchased are consumed, disposed of or despatched, the tax is really one in the nature of consumption tax or use tax, but not sales tax.
This argument was answered by the learned Judge in the following words: According to me, this contention is based on a misconception of the scope of taxation on the sale of goods.
It is true that sales tax is a tax imposed on the occasion of the sale of goods.
But it has no reference to the point of time at which the sale or purchase takes place.
It refers to the connection with the event of purchase or sale and not the point of time at which such purchase or sale takes place.
To read it otherwise would render any retrospective in position of sales tax invalid as in every such case the tax would not be one which arises on the occasion of sale.
By the same logic, it would not he possible to tax any goods at the last purchase point in the State, for the last purchase point in regard to any goods could be determined only when the goods arc sold later and not when the goods are purchased.
On the same reasoning as urged by counsel, one should say in such a case that since the goods are taxed only when the goods are sold outside the State or are despatched for such sale outside the State and so the last purchases are taxed not on the "occasion" of the purchases and, consequently, it is beyond the competence of the Legislature.
That certainly cannot be and the Supreme Court has held in the decision in State of Madras vs Narayanaswami Naidu, (1968) 21 S.T.C.1 (S.C.), that the goods are taxable in such cases in the financial year when they become the last purchases.
" C: The decision of Poti, J. was affirmed by a Division Bench of Kerala High Court in Yusuf Shabeer and Ors.
vs State of Kerala and Ors.
, (1973) 32 S.T.C. 359.
Both these decisions were expressly referred to and approved by a three Judge Bench of this Court in State of Tamil Nadu vs Kandaswami and Ors., (1975) 36 S.T.C. page 191.
Kandaswami was concerned with the construction of Section 7 A of the Tamil Nadu General Sales Tax Act which too a levied purchase tax and is couched in language similar to Section 5 A of the Kerala Act.
While dealing with the scheme of Section 7 A, this court quoted with approval certain passages from the judgment of Poti, J. including the following sentence: "If the goods are not available in the State for subsequent taxation by reason of one or other of the circumstances mentioned in clauses (a), (b) and (c) of Section 5 A(1) ofthe Act then the purchaser is sought to be made liable under Section 5 A.
This statement accords with our understanding of the scheme of Section 9 of Haryana Act as set out hereinabove.
To repeat, the scheme of Section 9 of Haryana Act is to levy the tax on purchase of raw material and not to forego it where the goods manufactured out of them are disposed of (or despatched, as the case may be) in a manner not yielding any revenue to the State nor serving the interests of nation and its economy, as explained hereinbefore.
The purchased goods are put an end to by their consumption in manufacture of other goods and yet the manufactured goods are dealt with in a manner as to deprive the State of any revenue; in such cases, there is no reason why the State should forego its tax revenue on purchase of raw material.
Another observation in Kandaswami relevant for the present purpose may also be noticed: "It may be remembered that Section 7 A is at once a charging as well as a remedial provision.
Its main object is to plug leakage and prevent evasion of tax.
In interpreting such a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book, should he eschewed.
If more than one construction is possible that which preserves its workability and efficacy is to be preferred to the one which would render it otiose or sterile.
The view taken by the High Court is repugnant to this cardinal canon of interpretation.
" In the light of the above scheme of Section 9, it would not be right, in our respectful opinion, to say that the tax is not upon the purchase of raw material but on the consignment of the manufactured goods.
It is well settled that taxing power can be utilised to encourage commerce and industry.
It can also be used to serve the interests of economy and promote social and economic planning.
Section 9 of Haryana Act and Section 13AA of Bombay Act are intended to encourage the industry and at the same time derive revenue.
It is also not right to concentrate only on one situation viz., consignment of goods to manufacturer 's own depots (or to the depots of his agents) outside the Side.
Disposal of goods within the State without effecting a sale also stands on the same footing, an instance of which may be captive consumption of manufactured products in the manufacture of yet other products.
Once the scheme and policy of the provision is appreciated, there is no room, in our respectful opinion, for saying that the tax is on the consignment of manufactured goods.
We may in this connection refer to the decision of a Constitution Bench of this Court in Andhra Sugars vs State of Andhra Pradesh, 21 S.T.C, 212, relating to the validity of Section 21 of the A.P. Sugarcane Regulation of Supply and Purchase Act, 1961.
Sub section (1) of Section 21 read as follows: "21.
(1) The Government may, by notification, levy a tax at such rate not exceeding five rupees per metric tonne as may be prescribed on the purchase of cane required for use, consumption or sale in a factory.
" One of the arguments urged against the validity of the levy was that since the levy is not on every purchase of sugarcane but only "on the purchase of cane required for use, consumption or sale in a factory" the tax is not really a purchase tax referable to Entry 54 of List II of the VIIth Schedule to the Constitution but a use tax, a tax of a different character altogether not falling under Entry 54.
It was also argued that since the tax is levied at the stage of entry of cane into the factory for being used and consumed in the manufacture of sugar, it is in the nature of an entry tax but since the factory was not a "local area" within the meaning of Entry 52 of List II, the levy was incompetent.
Both the arguments were rejected in the following words: "Under that entry, the State Legislature is not bound to levy a tax on all purchase of cane.
It may levy a tax on purchases of cane required for "use, consumption or sale in a factory.
The Legislature is competent to tax and also to exempt from payment of tax sales or purchases of goods required for specific purposes.
Other instances of special treatment of goods required for particular purpose may he given.
Section 6 and Schedule I, item 23 of the Bombay Sales Tax Act, 1946, levy tax on fabrics and articles for personal wear.
Section 2(j)(a)(ii) of the C.P. and Berar Sales Tax Act, 1947, exempts sales of goods intended for use by a registered dealer as raw materials tor the manufacture of goods.
Mr. Chatterjee submitted that the tax levied under Section 21 was a use tax and referred to Mcleod vs Dilworth and Co. ; ; , and C.G. Naidu and Co. vs The State of Madras, A.I.R. 1953 Mad.
116, 127 128; 3 STC 405.
He argued that the State Legislature could not levy a use tax which was essentially different from a purchase tax.
The assumption of counsel that Section 21 levies a use tax is not well founded.
The taxable event under Section 21 is the purchase of goods and not the use or enjoyment of what is purchased.
The constitutional implication of a use tax in American law is entirely irrelevent.". . "To appreciate another argument of Mr. Chatterjee, it is necessary to refer to a few Acts.
It appears that paragraph 21 of the Bill published in the Gazette on March 3, 1960 preliminary to the passing of Act No. 43 of 1961 provided for a levy of a cess on the entry of cane into the premises of a factory for use, consumption or sale therein.
On December 13, 1960, this court in Diamond Sugar Mills Ltd., and Another vs The State of Uttar Pardesh and Another, ; , struck down a similar provision in the U.P. Sugarcane Cess Act, 1956, on the ground that the State Legislature was not competent to enact it under Entry 52, List II, as the premises of a factory was not a local area within the meaning of the entry.
Having regard to this decision, paragraph 21 of the Bill was amended and Section 21 in its present form was passed by the State Legislature.
The Act was published in the Gazette on December 30, 1961.
Mr. Chatterjee submitted that in this context the levy under Section 21 was really a levy on the entry of goods into a factory for consumption, use or said therein.
We are unable to accept this contention.
As the proposed tax on the entry of goods into a factory was unconstitutional, paragraph 21 of the original Bill was amended and Section 21 in its present form was enacted.
The tax under Section 21 is essentially a tax on purchase of goods The taxable event is the purchase of cane for use, consumption or sale in a factory and not the entry of cane into a factory.
As the tax is not on the entry of the cane into a factory, it is not payable on cane cultivated by the factory and entering the factory premises.
" For the above reasons, we find it difficult to agree with the reasoning of Mukharji, J, in Goodyear.
It is also not possible to agree with the learned Judge when he says that "the two conditions specified, before the event of despatch outside the State as mentioned in Section 9(1)(b), namely (i) purchase of goods in the State and (ii) using them for the manufacture of any other goods in the State are only descriptive of the goods liable to tax under Section 9(1)(h) in the event to despatch outside the State".
When the tax is levied on the purchase of raw material on the purchase price and not on the manufacture of goods or on the consignment value (such a concept is unknown to Haryana Act) or sale price of the manufactured goods the above construction, in our respectful opinion, runs against the very grain of the provision and has the effect of nullifying the very provision.
By placing the said interpretation, Section 9 has been rendered nugatory; except for the two minor areas pointed out in Murli Manohar and Company vs State of Haryana; , , the Section which has its parallels in all the State enactments has practically become redundant.
This was the main reason we undertook to reconsider the said decision which course we would not have ordinarily agreed to adopt.
In our respectful opinion, the tax purports to be and is in truth a purchase tax levied on the purchase price of raw material purchased by a manufacturer.
In certain situations (the three situations mentioned above viz, sale of manufactured goods within the State, inter State sale and export sale of manufactured goods) it is waived.
In other cases, it is not.
It is argued for the assessees that apart from Goodyear a Bench of three Judges of this Court has independently approved and affirmed the correctness of the ratio and reasoning in Goodyear.
Reference is to Mukerian Papers Ltd. vs State of Punjab; , The case arose under the Punjab General Sales Tax Act and the provision which fell for interpretation was Section 4B.
It levied purchase tax on the raw material used in the manufacture of goods which in turn are sold outside the State otherwise than by way of sale in the course of inter State trade or commerce or in the course of export out of the territory of India.
The argument for the assessee/appellant was "that the main question of law involved in this case is concluded by the decision of this court in Goodyear India Ltd. vs State of Haryana which was an appeal arising from the High Court 's decision in the case of the same assessee. ".
It was this contention which was examined by the Bench.
Section 4B of the Punjab Act was analysed and it was found that it is in material particulars, similar to Section 9 of the Haryana Act even though the language was not identical.
Ahmadi, J. speaking for the Bench observed: "therefore, even though the language of Section 4B of the Act is not identical with the relevant part of Section 9(1) of the Haryana Act, it is in substance similar in certain respects, particularly in respect of the point of time when the liability to pay tax arises.
Under that provision, as here, the liability to pay purchase tax on the raw material purchased in the State which was consumed in the manufacture of any other taxable goods arose only on the despatch of the goods outside the State.
We are, therefore, of the opinion that the ratio of the said decision of this Court in Goodyear India Ltd. applies on all fours to the main question at issue in this case." When the counsel for the revenue sought to argue that the decision of this court in Kandaswami takes a different view the Bench did not permit the same to be urged in the view of the fact that the correctness of the judgment in Goodyear was not canvassed before them.
The Bench said "the decision in Kandaswami though in the context of an analogous provision was distinguished by this court in Goodyear India Ltd. on the ground that it did not touch the core of the question at issue in the latter case.
This aspect of the matter is elaborately dealt with in paragraphs 31 to 34 at page 796 of the report.
We need not dilate on this any more since the correctness of the judgment in Goodyear India Ltd. is not canvassed before us.
" It is, thus, clear that the main argument for the Bench was that the ratio of Goodyear governs the said case and it was so found.
It is equally clear that the correctness of the decision in Goodyear was not questioned before the Bench and that is why the Bench took care to specifically advert to and record the said circumstance.
So far as the decision in Murli Manohar & Co. vs State of Haryana ; is concerned, it arose under Haryana Sales Tax Act and explains the meaning of export sale referred to in Section 9(1)(h) of the Act.
There is no discussion in this decision about the point at issue before us.
The same is the position under Section 13AA of the Bombay Sales Tax Act.
The said provision, properly analysed, yields the following ingredients: (i) where a dealer who is liable to pay tax under this Act purchases any goods specified in Part I of Schedule (C) either directly or through commission agent, from a person who is or is not a registered dealer and (ii) uses such goods in the manufacture of taxable goods and (iii) despatches the goods so manufactured to his own place of business or to his agent 's place or business situated outside the State within India.
(iv) such dealer shall pay, in addition to the sales tax/purchase tax paid or payable or levied or leviable, as the case may be, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture.
Here again it may be noticed that the tax levied is a purchase tax on the purchase of raw material and not upon the consignment of the manufactured goods The object of this provision too is the same as of the Haryana provision The levy is waived where the manufactured goods are sold within the State, or sold in the course of inter State trade or commerce or sold in the course of export.
It is retained and collected where the goods are taken out of Maharashtra State by way of consignment, in which event the State sees no reason not to retain and collect the levy on purchase of raw material The provisions is substantially similar to Section 9 of Haryana Act.
Whatever we have said with respect to the Haryana provision applies equally to this provision.
It is not necessary to repeat the same here.
Before parting with this matter, it is necessary to clarify: it was brought to our notice that both the Haryana and Bombay provisions have since been substituted with retrospective effect.
We have not referred to those provisions in this part for the reason that we are concerned only with the reasoning in Goodyear.
For the reasons mentioned above, we uphold the constitutional validity of the impugned provisions.
The appeals, writ petitions, S.L.Ps and T.C. accordingly fail and are dismissed No order as to costs G.N. Petitions dismissed.
| The constitutional validity of S.15B of Gujarat Sales Tax Act, S.3 AAAA of Uttar Pradesh Sales Tax Act and S.6A of the Andhra Pradesh General Sales Tax Act was challenged in the present Appeals, Writ Petitions SLPs and Transferred case.
S.15 B of the Gujarat Sales Tax Act, 1969 was introduced by Amendment Act, 1986.
It provided for levy of additional purchase tax on raw materials purchased by a manufacturing dealer in case he used the said raw material for the manufacture of other goods which he despatched to his own place of business or to his agent 's place of business outside the State but within India.
By the Amendment Act, 1987, the section was substituted.
Writ Petitions were filed before the High Court challenging the validity of unamended S.15 B on the ground that it levied a consignment tax and hence was outside the competence of State Legislature.
During the pendency of the writ petitions, S.15 B was substituted by an Ordinance.
Subsequently the Gujarat Sales Tax Amendment Act 6 of 1990 was enacted in terms of and replacing the Ordinance.
S.15 B was given retrospective effect from 1.4.1986, the date on which it first came into force.
In view of the said Amendment Act, the Writ Petitions came to be dismissed as infructuous.
A fresh batch of Writ Petitions were filed challenging the validity of substituted S.15 B on the ground that it continued to be a consignment tax.
The High Court having dismissed the Writ Petitions, the matter has come up before this Court.
Section 3 AAAA of the U.P. Sales Tax subjected the purchase Of "goods liable to tax at the point of sale to the consumer" to purchase tax payable by the purchasing dealer, in a case where the selling dealer was not liable to pay the sales tax on such sale.
Purchase tax was payable at the same rate as the sales tax.
If, however, the purchasing dealer resold such goods within the State or in the course of inter State trade or commerce, he was not liable to pay the purchase tax.
While the Civil Appeals were pending in this Court as regards the validity of S.3 AAAA, the High Court, while deciding some Writ Petitions, applied the ratio in Good Year and held that section was ultra vires the legislative competence of the State Legislature.
It held that under the said provision the taxable event was not the purchase of the goods by the purchasing dealer but the subsequent event namely use of the said goods in the manufacture of other goods and their despatch without effecting a sale within the State of U.P. to a place outside U.P.
To overcome this decision an Ordinance was issued which was later replaced by the U.P. Sales Tax (Amendment) Act, 1992, the constitutional validity of which has been challenged before this Court.
In the A.P. Sales Tax Act Section 6 A was inserted by the Andhra Pradesh General Sales Tax (Amendment) Act of 1976 with effect from 1.9.76.
The effect was that tax payable at sale point became tax payable on purchase point in certain circumstances.
Writ Petitions were filed before the High Court challenging the validity of S.6 A.
It was contended that the notification issued under S.9 of the Act exempted from tax certain goods which were sought to be taxed under S.6 A and that S.6 A was in fact a consumption or consignment tax and hence void.
Unable to succeed before the High Court, the assessees challenged the vires of the said section before this Court.
Apart from challenging the constitutional validity of the above said provisions of the three State Sales Tax Acts, the correctness of Good Year India Ltd vs State of Haryana, ; which invalidated certain purchase tax levied by the Haryana and Maharashtra Sales Tax Acts, was also questioned by the Revenue before this Court.
Dismissing the matters.
this Court, HELD: (By the Court): S.15B of the Gujarat Sales Tax, 1969, S.3AAAA of Uttar Pradesh Sales Tax Act, 1948 and S.6 A of the Andhra Pradesh General Sales Tax Act, 1957 are intra vires the powers of the respective State Legislatures and hence valid.
[249 D] Per B.P Jeevan Reddy, J: (for himself and V. Ramaswami, J.) 1.
The necessity and significance of the delegated legislation is well accepted and needs no elaboration.
They cannot travel beyond the purview of the Act.
Where the Act says that Rules on being made be deemed "as if enacted in this Act", the position may be different.
But where the Act does not say so, the Rules do not become part of the Act.
[212 B, Cl Halsbury 's Laws of England (3rd.
Edn.) Vol.
36, referred to.
Entry 54 of List 11 of Seventh Schedule to the Constitution must receive a liberal construction, it being a legislative entry.
The Legislature cannot be confined to only one form of levy.
So long as the levy retains the basic character of a tax on sale, the Legislature can levy it in such mode or in such manner as it thinks appropriate, the well established principles in such matters being that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act.
The Legislature must be presumed to know its limitations and act within those limits.
Transgression must be clearly established, and is not to be lightly assumed.
[214 H; 215 A, B] 3.
A person other than a registered dealer is not amenable to the discipline of the Sales Tax Act.
He cannot indeed collect any tax and, therefore, will not make over or pay any tax.
This the legislature is justified in presuming.
If, however, in any case it is proved that such person has paid the tax, the purchasing dealer will get an exemption to that extent.
If a benefit is claimed by the purchasing dealer, it is for him to prove the fact which enables him to claim the benefit.
That burden cannot be passed on to any one else.
[222 C, D] 4.
So far as registered dealers are concerned, all that the purchasing dealer need to prove is that the said goods have already been or may be subjected to tax under State Act or Central Sales Tax Act.
On this score, there is no difficulty for the purchasing dealer.
From the bill given by the selling dealer, the purchasing dealers can prove the payment.
Or he can simply prove, as a matter of law that the said goods are liable to be taxed under any other provision of the Act or under the Central Sales Tax Act.
[222 E, F] GUJARAT SALES TAX ACT/RULES: 5.1.
S.15 B of the Gujarat Sales Tax Act read as a whole, is applicable only to those goods which are used in the manufacture of other goods.
The levy is upon the purchase price of raw material an not upon the value of the manufactured products.
[214 G, H] 5.2.
Rule 14E of Gujarat Sales Tax Rules along with S.15B of the Gujarat Sales Tax Act provide for set off etc., in case the manufactured goods are sold within the State of Gujarat.
It no doubt means that set off etc.
is not available if the manufactured goods are disposed of otherwise than by way of sale or are consigned to manufacturer 's own depots or to the depots or his agents outside the State of Gujarat.
There is nothing objectionable in the State doing so.
It cannot be said that by reading Rule 42 E into S.15 B, the levy becomes a consignment tax.
[213 E F] Godrej & Boyce Mfg. Co. vs Commissioner of Sales Tax, (1992) 4 J.T.(S.C.) 317 and Andhra Sugars Ltd. & Anr.
v The State of Andhra Pradesh and Anr., 21 S.T.C. 212, relied on.
Goodyear India Ltd. vs State of Haryana, ; , dissented from.
Ramkrishna vs State of Bihar, A.l.
R. 1963 S.C.1667, referred to.
U.P. SALES TAX ACT: 6.1.
All that section 3 AAAA of the U.P. Sales Tax Act prior to its substitution in 1992 provided was; (i) where the goods liable to tax at the point of sale to the consumer are sold to a dealer (ii) in circumstances in which no sales tax is payable by the sellers and (iii) the purchasing dealer does not re sell the said purchased goods within the State or in the course of inter state trade or commerce (iv) the purchasing dealer shall be liable to pay the tax which would have been payable by the seller.
(v) If, however, it was proved that the said goods have already suffered tax under section 3 AAAA, no purchase tax was payable under section 3 AAAA.
It is obvious that the section did not speak of the purchased goods being used in the manufacture of other goods nor of the manner of disposal or despatch of such manufactured goods.
The only two conditions stipulated (which conditions are not to be found in the present Section 3 AAAA) were that if the purchased goods are sold within the State or sold in the course of inter state trade or commerce, the tax under it is not payable.
This is for the simple reason that in both the contingencies, the State would get the revenue (in one case under the State Sales Tax Act and in the other case, under the Central Sales Tax Act).
The policy of the legislature is not to tax the same goods twice over.
The fact that in a given case, the purchased goods are consigned by the purchaser to his own depots or agents outside the State makes no difference to the nature and character of the tax.
By doing so, he cannot escape even one time tax upon the goods purchased, which is the policy of the Legislature.
The tax was directed towards ensuring levy of tax at least on one transaction of sale of the goods and not towards taxing the consignment of goods purchased or the products manufactured out of them.
[223 G H; 224 A D] 6.2.
There is no vagueness in the provision viz. sub sec.(2) of S.3 AAAA of U.P. Sales Tax Act nor can it be said that it placed heavy and uncalled for burden upon the purchasing dealer or that it is not practicable for the purchaser to establish that the seller (other than the registered dealer) has paid the tax or not.
[222 B] 6.3.
The difficulty has really arisen because of the attempt to look to the provisions of Section 3 AAAA through the prism of Goodyear.
There is a substantial and qualitative difference between the language employed in Section 9 of Haryana Act and Section 13 AA of Bombay Act on the one hand and in Section 3 AAAA of U.P. Act on the other (as it stood prior to 1992 Amendment Act or for that matter as it stands now).
These basic differences cannot be ignored.
[1224 E] Constitutionality of Section 3 AAAA of the U.P. Sales Tax Act ought to be judged on its own language and so judged, the Section, both before and after the 1992 Amendment, represents a perfectly valid piece of legislation.
It is relatable to and fully warranted by Entry 54 of List 11 of the Seventh Schedule to the Constitution.
[224 F] Goodyear India Ltd vs State of Haryana, ; , dissented from.
ANDHRA PRADESH GENERAL SALES TAX ACT/RULES: 7.1.
The real object of clauses (i) to (iii) in Section 6 A of the A.P. Sales Tax Act is not to levy a consumption tax, use tax or consignment tax but only to point out that thereby the purchasing dealer converts himself into the last purchaser in the state of such goods.
The goods cease to exist or cease to be available in the State for sale or purchase attracting tax.
In these circumstances, the purchasing dealer of such goods is taxed, if the seller is not or cannot be taxed.
The tax imposed by S.6 A cannot be described either as use tax, consumption tax or consignment tax.
It is a purchase tax perfectly warranted by Entry 54 of List ll of the Seventh Schedule to the Constitution.
[230 G & 231 B] 7.2.
While exempting the sale or purchase of any specified class of goods the Government is empowered to specify whether the exemption operates at all points or any specified points in the series of sales or purchase of successive dealers.
Several notifications have been issued the Government from time to time exempting certain dealers or exempting certain goods at the point of sale or purchase, as the case may be.
G.O.Ms.
1091 is one of them.
The exemption is couched in qualified form.
Thus, it is not a general exemption but a qualified one.
In the light of the specific scheme of Section 9 of the A.P. Sales Tax Act and the language of G.O.Ms No. 1091, the exemption at the point of sale by a particular category of persons cannot be construed as operating to exempt the purchase tax under Section 6 A of the Act, as well, much less in all cases.
[233 B, C] 7.3.
Fresh milk was taxable as general goods under Section 5(l) of the Andhra Pradesh Sales Tax Act before it was amended by Amendment Act 4 of 1989.
After the coming into force of the said Amendment Act, it falls under Schedule VII, (which was introduced simultaneously with the said Amendment Act) aud which takes in all goods other than those specified in first to sixth Schedules.
Milk was subject to multi point tax prior to the said Amendment Act whereas after the said amendment it has become taxable only at single point namely, point of first sale in the State.
If fresh milk was not at all taxable under the Act, there was no necessity to issue notifications exempting its sale in certain situations.[227 C D] Goodyear India Ltd. vs State of Haryana ; , dissented from.
RATIO OF GOODYEAR RECONSIDERATION OF: 8.1.
The ingredients of Section 9 of Haryana Sales Tax Act are: (i) a dealer liable to pay tax under the Act purchases goods (other than those specified in Schedule B) from any source in the State and (ii) uses them in the State in the manufacture of any other goods and (iii) either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured to a place outside the State in any manner otherwise than by way of sale in the course of an inter state trade or commerce or in the course of export outside the territory of India within the meaning of sub section (1) of Section 5 of the .
If all the above three ingredients are satisfied the dealer becomes liable to pay tax on the purchase of such goods at such rate, as may be notified under Section 15.
It applies only in those cases where (a) the goods are purchased (referred to as material) by a dealer liable to pay tax under the Act in the State, (b) the goods so purchased cease to exist as such goods for the reason they are consumed in the manufacture of different commodities and (c) such manufactured commodities are either disposed of within the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of an inter State sale or export sale.
It is evident that if such manufactured goods are not sold within the State of Haryana, but yet disposed of within the State no tax is payable on such disposition; similarly where manufactured goods are despatched out of State as a result of an inter State sale or export sale no tax is payable on such sale.
Similarly against where such manufactured goods are taken out of State to manufacturers own depots or to the depots of his agents no tax is payable on such removal.
Goodyear takes only the last eventuality and holds that the taxable event is the removal of goods from the State and since such removal is to dealers own depots/agents outside the State it is consignment which cannot be taxed by the State Legislature.
This is not correct.
The levy created by the said provision is a levy on the purchase of raw material purchased within the State which is consumed in the manufacture of other goods within the State.
If however the manufactured goods are sold within the State no purchase tax is collected on the raw material evidently because the State gets larger revenue by taxing the sale of such goods.
(The value of manufactured goods is bound to be higher than the value of the raw material).
The State Legislature does not wish to in the interest of trade and general public tax both the raw material and the finished (manufactured) product.
This is a well known policy in the field of taxation.
But where the manufactured goods are not sold within the State but are yet disposed of or where the manufactured goods are sent outside the State (otherwise than by way of inter State sale or export sale) the tax has to be paid on the purchase value of the raw material.
The reason is simple: if the manufactured goods are disposed of otherwise than by sale within the State or are sent out of State (i.e. consigned to dealers own depots or agents) the State does not get any revenue because no sale of manufactured goods has taken place within Haryana.
In such a situation the State would retain the levy and collect it since there is no reason for waiving the purchase tax in these two situations.
[239 B D; 240 A D] 8.2.
In the case of inter State sale the State of Haryana does get the tax revenue may not be to the full extent.
Though the Central Sales Tax is levied and collected by the Government of India Article 269 of the Constitution provides for making over the tax collected to the State in accordance with certain principles.
Where of course the sale is an export sale within the meaning of Section 5 (1) of the (export sales) the State may not get any revenue but larger national interest is served thereby.
It is for these reasons that tax on the purchase of raw material is waived in these two situations.
Thus, there is a very sound and consistent policy underlying the provision.
The object is to tax the purchase of goods by a manufacturer whose existence as such goods is put and end to by him by using them in the manufacture of different goods in certain circumstances.
The tax is levied upon the purchase price of raw material, not upon the sale price or consignment value of manufactured goods.
Levy materialises only when the purchased goods (raw material) is consumed in the manufacture of different goods and those goods are disposed of within the State otherwise than by way of sale or are consigned to the manufacturing dealers ' depots/agents outside the State of Haryana.
Such postponement does not convert what is avowedly a purchase tax on raw material (levied on the purchase price of such raw material) to a consignment tax on the manufactured goods.
Saying otherwise would defeat the very object and purpose of Section 9 and amount to its nullification in effect.
The most that can perhaps be said is that it is plausible to characterise the said tax both as purchase tax as well as consignment tax.
But where two interpretations are possible, one which sustains the consititutionality and/or effectuates its purpose and intendment and the other which effectively nullifies the provisions, the former must be preferred, according to all known canons of interpretation.
[240 E H; 241 A C] 8.3.
In several enactments tax is levied at the last sale point or last purchase point, as the case may be.
The last purchase point in the State can be determined only when one knows that no purchase took place within the State thereafter.
But that can only be known later.
If there is a subsequent purchase within the State, the purchase in question ceases to be the last purchase.
Applying the logic of the dealers, it would not be possible to tax any goods at the last purchase point in the State, inasmuch as the last purchase point in regard to any goods could be determined only when the goods are sold later and not when the goods are purchased.
[241 F G] 8.4.
The scheme of Section 9 of Haryana Sales Tax Act is to levy the tax on purchase of raw material and not to forego it where the goods manufactured out of them are disposed of (or despatched, as the case may be) in a manner not yielding any revenue to the State nor serving the interests of the nation and its economy.
The purchased goods are put an end to by their consumption in manufacture of other goods and yet the manufactured goods are dealt with in a manner as to deprive the State of any revenue; in such cases, there is no reason why the State should forego its tax revenue on purchase of raw material.
It would not be right to say that the tax is not upon the purchase of raw material but on the consignment of the manufactured goods.
It is well settled that taxing power can be utilised to encourage commerce and industry.
It can also be used to serve the interests of economy and promote social and economic planning.
It is also not right to concentrate only on one situation viz., consignment of goods to manufacturer 's own depots (or to the depots of his agents) outside the State.
Disposal of goods within the State without effecting a sale also stands on the same footing, an instance of which may be captive consumption of manufactured products in the manufacture of yet other products.
Once the scheme and policy of the provision is appreciated, there is no room for saying that the tax is on the consignment of manufactured goods.[243 G H; 244 A F] 8.5.
When the tax is levied on the purchase of raw material, on the purchase price and not on the manufacture of goods or on the consignment value (such a concept is unknown to Haryana Act) or sale price of the manufactured goods the construction placed in Goodyear runs against the very grain of the provision and has the effect of nullifying the very provision.
By placing the said interpretation, Section 9 has been rendered nugatory.
The tax purports to be and is in truth a purchase tax levied on the purchase price of raw material purchased by a manufacturer.
[247 A C] 8.6.S. 13AA of the Bombay Sales Tax Act is substantially similar to Section 9 of Haryana Sales Tax Act.
Whatever is said with respect to the Haryana provision applies equally to this provision.
[249 D] Andhra Sugars Ltd. & Anr.
vs The State of Andhra Pradesh & Anr., 21 S.T.C. 212 and State of Tamil Nadu vs Kandaswami, 36 S.T.C. 191, relied on.
Goodyear India Ltd. vs State of Haryana, ; , dissented from.
Mukerian Papers Ltd. vs State of Punjab, ; , Explained.
Murli Manohar and Company vs State of Haryana [199]1 1 S.C.C. 377, distinguished.
Malabar Fruit Products Co. vs S.T.O., 30 S.T.C. 537, approved.
Hindustan Lever Ltd. vs State of Maharashtra, 79 S.T.C. 255; J.K Steel Ltd. vs Union of India, A.l.
R. 1970 S.C. 1173; Bata India Ltd. vs State of Haryana, 54 S.T.C. 226; Desraj Pushp Kumar Gulati vs State of Punjab, 58 S.T.C. 393; Commissioner of Wealth Tax, Bihar and Orissa vs Kirpa Shankar Daya Shankar Vorah, ; Yusuf Shabeer and Ors.
vs State of Kerala and Ors.
, (1973) 32 S.T.C. 359 and Income Tax Commissioners for City of London vs Gibbs, (1942) 10 ITR Suppl.
121 (H.L.), referred to.
Per Ranganathan, J. (Concurring): 1.
The provisions of the U.P. and Gujarat Sales Tax Acts are clearly beyond challenge.
The section in the U.P. Act is a very direct and simple provision to the effect that a tax will be levied on purchases made within the State in certain circumstances.
The ambit of Entry 54 in the State List in the Constitution of India must be interpreted in the widest possible manner.
The State has full powers to levy a tax with reference to sales or purchases inside the State and to a certain extent even sales made in the course of inter State trade or commerce.
It certainly comprehends a power to tax the last sale in the State of certain goods.
The tax is nothing but a tax on purchase, pure and simple, well within the scope of the State 's Legislative power.
It is true that one has to look at not merely the form but the substance of the statute and examine what exactly is the purport behind the levy, but should not permit one 's imagination to read a purpose or words into the statute which are not there.
1198 C G] 2.
The Gujarat provision is more careful but makes a mention of the purchased goods being used for manufacture.
But, these are only words descriptive of a class of goods the purchase of which is sought to be brought to tax.
Here again, the intention of the legislature is to tax, at purchase point, a class of goods viz. goods purchased by a manufacturer.
It has no concern, with what the manufacturer does with the manufactured goods.
Presumably the idea is that the manufacturer is able to profit by adding value to the purchased raw material by utilising the infrastructure, fillips or facilities provided in the State to encourage setting up of industries therein and so can afford to pay tax on the purchased raw materials.
The concession provided by rule 42E of the Gujarat Sales Tax Rules is an independent provision relieving him and the public consuming the manufactured goods of additional burden where such goods are sold inside the State and get taxed on the added value.
[198 H; 199 A, B] 3.
The marginal title to the provisions under challenge indicates that their direct purpose is to levy a tax on purchases effected in the State in certain circumstances.
The tax is couched as a tax on all goods (in U.P.) and on raw or processing materials and consumable stores (in the State of Gujarat).
It is designated as a purchase tax.
It is levied on the turnover of such purchases.
There is no reference in the U.P. statute to any condition for imposition of the tax except that it should be a sale to the consumer and in the State of Gujarat that it should be a purchase by a manufacturer.
It is very difficult to read into these provisions any ulterior motive on the part of the States to levy a tax on use, consumption or consignment in the guise of a purchase tax.
The language of these two provisions is wholly different from that used in the Haryana and Bombay Acts.
Even in the context of those Acts, it may be equally plausible to consider the provisions either as a purchase tax or a tax on consignment.
There is no such ambiguity in the language used in these provisions, and the levy is only of a purchase tax.
Such a levy is clearly within the domain of the State Legislature.
[199 C F] 4.
A person can be said to be the last purchaser of certain goods only when he consumes those goods himself or, in case they are raw materials/stores and the like, unless he uses them in the manufacture of other goods for sale.
From this category have to be excluded cases where the manufactured goods are either sold in the State or sold in the course of inter State trade or commerce because, in those two instances, the State will be in a position to collect the tax in respect of the sale of the manufactured goods the sale price of which will also include the price of raw materials on which apriori the State could have only got a lesser amount of tax and to tax both would escalate the price and affect the consumer.
Also excluded are cases where the manufactured goods are exported abroad to earn foreign currency.
If these situations are borne in mind, one would realise that the language used in the various clauses and phrases used in these legislations is only to levy a tax on the last purchase in the State and not with a view to levy a tax either on the use or consumption of raw materials or on the manufacture or production of manufactured goods or on the despatch of the goods manufactured from the State otherwise than by way of sale.
In the Haryana case also the statute mentioned these several alternatives but a consideration of section 9(1)(b) of the Haryana Act as well as of the corresponding clause of the Bombay Act were posed in isolation and emphasis placed on consignment being a sine qua non of the levy.
This larger concept, namely, that these various alternatives are not set out in the section with a view to fasten the charge of tax at the point of use, consumption, manufacture, production and consignment or despatch but in an attempt to make clear that what is sought to be levied is a tax on raw materials on the occasion of their last purchase inside the State had not been projected or considered.
This approach would basically alter the parameters and remove the provision from the area of vulnerability.
[200 F H; 201 A D] 5.
It is difficult to define a last purchase except with reference to the mode of the use of the purchased goods subsequent to that purchase and in that sense the levy of tax can crystallise only at a point of time when the goods have been utilised in a particular way.
The mere fact that the purchase cannot be characterised as a last purchase except by reference to the subsequent utilisation of those goods cannot mean that the taxable event is not the purchase but something else.
The more appropriate test would be to see whether the ambit of the power to levy a tax in respect of sale of goods is very wide and will cover any tax which has a nexus with the sale or purchase of goods including a last purchase in the State.
In this view of the matter the levy under the A.P. Act is also within the legislative competence of the State. , B] 6.
The conclusion reached as to the vires of the provisions under challenge is contrary to the conclusion reached in Goodyear on somewhat analogous provisions.
No final conclusion is expressed as to whether the conclusion in Goodyear was rightly reached in the context of the provisions of the statutes considered there, or would need a second look and fresh consideration in the context of what has been said now.
There is no hesitation to accept the point of view now presented and which appeals to be more realistic, appropriate and preferable, particularly the view one way or the other would affect the validity of a large number of similar legislations all over India, merely because it may not be consistent with the view taken in Goodyear.
Consistency, for the mere sake of it, is no virtue.
[202 C, D] Distributors (Baroda) P. Ltd. vs Union of India, (1985 )155 I.T.R. 120 S.C., relied on.
Goodyear India Ltd. vs State of Haryana, ; , referred to.
|
Special Leave Petition (Civil) Nos.
16041 42/88.
From the Judgment and Order dated 27.7.1988 of the Karnataka High Court in W.P.
No 9173/86 and W.A.
No 2707/85.
WITH SLP (C) Nos. 12258, 12254, 12260/90 & 8608/91 R.N. Narasimhamurthy, S.S. Javali, S.N. Bhat and Ravi P. Wadhwani for the Petitioners.
M.S. Nesargi, R. Jagannath Goulay, M.K. Dua, M. Veerappa, K.H. Nobin Singh, S.K. Kulkarni and Surya Kant for the Respondents.
The following Order of the Court was delivered by K. JAYACHANDRA REDDY, J.
In all these special leave petitions the common question that arises for consideration is whether the provisions of the Karnataka Land Reforms Act, 1961 as amended in 1974 (`Act ' for short) cease to be applicable in all respects to the lands which came within the purview of the Urban Land (Ceiling and Regulation) Act, 1976 ( 'Ceiling Act ' for short).
The lands involved in these matters are covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan for the said City and they are included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act.
In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution to the effect that imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament Qby law.
The State Legislature thus divested itself of the legislative competence to enact law in respect of subject matter of the resolution.
On 1.4.74 the amended Karnataka Land Reforms Act was enacted and under the said Act the tenant of the land covered by the Act is entitled to the grant of occupancy rights after making an application under the Act.
This Act came into force with effect from 2.1.85.
But for the purpose of grant of occupancy rights 1.4.74 was the relevant date.
While so in the year 1975 the Governor of Karnataka passed the Urban Aggolmeration Ordinance whereunder all lands between the periphery of 8 K.Ms.
of the municipal limits of Hubli Dharwad were declared as urban agglomeration land.
In the year 1976 the Parliament passed the Ceiling Act for imposition of ceiling on urban properties and the Act was made applicable to Karnataka also in view of the resolution passed by the State Government referred to above.
The order of the Land Tribunal under the Act conferring occupancy rights on the tenants was challenged before the High Court contending that the lands involved in these cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the State Act were repugnant to the provisions of the Central Act namely the Ceiling Act.
The writ petition was dismissed by the High Court.
The owners preferred writ appeals and they were also dismissed by a common judgment in Writ Appeal Nos. 2707 and 2361/85 etc.
The Division Bench held that there is no conflict between the two enactment in certain respect i.e. atleast so far as the implementation of the provisions of Chapter III of the Act are concerned and that provisions of this Chapter of the Act do not cease to apply to the agricultural lands coming within the meaning of urban agglomeration in the Ceiling Act.
The judgment of the Division Bench is challenged in S.L.P.(Civil) No. 16041 42/88.
Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal.
The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court in Writ Appeal No.2707/85 and connected matters.
Several civil revisions petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court.
Some of the special leave petitions are filed against the order of the High Court in the said civil revision petitions.
Therefore all these special leave petitions can be disposed of by a common order.
It was urged before us that the resolution of the State Legislature passed under Article 252 of the Constitution shifted the topic covered by the resolution from List II of Schedule VII to the Constitution and vested the competence to make the law in respect of the said topic in the Parliament and that thereafter the State enactment ceased to have efficacy in respect of said topic.
Alternatively it was urged that, when in pursuance of the resolution the Parliament legislates in respect of the topic covered by the resolution, the Parliamentary law, repeals or supersedes any existing State legislation on the topic and therefore such law cannot be enforced thereafter.
We shall first extract some of the relevant provisions of the Constitution of India and the respective enactments.
Article 246 of the Constitution reads thus: "246.
Subject matter of laws made by Parliament and by the Legislatures of States (l) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List").
(2) xx xx xx (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List").
(4)xx xx xx " 2 Entry 18 in List II namely the State List of the VII Schedule to the Constitution is in the following terms: "18.
Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents, transfer and alienation of agricultural land; land improvement and agricultural loans; colonization.
" Article 252 of the Constitution reads thus: "252.
Power of Parliament to legislate for two or more States by consent and adoption of such legislation by any other State (1) If it appears to the Legislatures of two or more States to be desirable that any of the matters with respect to which Parliament has no power to make laws for the States except as provided in Articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the Legislatures of those States, it shall be lawful for Parliament to pass an Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State by which it is adopted afterwards by resolution passed in that behalf by the House or, where there are two Houses, by each of the Houses of the Legislature of that State.
(2) Any Act so passed by Parliament may be amended or repealed by an Act of Parliament passed or adopted in like manner but shall not, as respects any State to which it applics, be amended or repcaled by an Act of the Legislature of that State.
" Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250.
This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II i.e. with respect to which the Parliament has no power to make law for the State.
The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power.
The relevant portion of the resolution passed by the State Legislature under Article 252 reads thus: "Now, therefore, in pursuance of clause (1) of Article 252 of the Constitution, this Assembly hereby resolves that the imposition of a ceiling on urban immovable property and F acquisition of such property in excess of the ceiling and all matters connected therewith or ancillary and incidental thereto should be regulated in the State of Karnataka by Parliament by law.
" The resolution states that the imposition of ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit with a view to utilising such excess property for public purposes and all other matters connected therein or incidental thereto shall be regulated in this State by Parliament by law.
The basic question that arises is what is the actual content of the subject matter that was resolved to be entrusted to Parliament by the State Legislature under Article 252 of the Constitution.
From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling.
It is true that this subject matter is the topic that falls within Entry 18 of List 11 of Schedule VII to the Constitution and the said subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18.
Now by virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area.
The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban.
The subject matter carved out of Entry 18 under the resolutions passed by the various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property.
The learned counsel for the petitioners, however, urged that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on and holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they are fully covered by the Ceiling Act passed by the Parliament and the same supersedes the State enactment in respect of this land.
The learned counsel appearing for the respondents on the contrary submitted that "imposition of ceiling" is a distinct and separately identifiable subject and is the power carved out of Entry 18 and vested in the Parliament to legislate and that the power of the State to legislate in respect of the remaining part of the subject matter is unaffected and that when two distinct powers have come into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them has to be examined to see whether any one of them encroaches the field set apart as falling within the competence of the other body.
The learned counsel for the respondents, however, submitted that in any event the provisions of Chapter III of the Act have nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc.
to the tenants under Chapter 111 of the Act do not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property.
Now we shall refer to the provisions of the Urban Ceiling Act.
The Statement of Objects and Reasons under Preamble to the said Act would show that the primary object and the purpose is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the Marwaha and others.
; ; Miss Neelima Shangla vs State of Haryana and others; , , or Jitendra Kumar and others vs State of Punjab and others: If we have regard to the above enunciation that a candidate who finds a place in the select list as a candidate selected for appointment to a civil post, does not acquire an indefeasible right to be appointed in such posting the absence of any specific Rule entitling him for such appointment and he could be aggrieved by his non appointment only when the Administration does so either arbitrarily or for no bona fide reasons, it follows as a necessary concomitant that such candidate even if has a legitimate expectation of being appointed in such posts due to his name finding a place in the select list of candidates, cannot claim to have a right to be heard before such select list is cancelled for bona fide and valid reasons and not arbitrarily: In the instant case, when the Chandigarh Administration which received the complaints about the unfair and injudicious manner in which select list of candidates for appointment as conductors in CTU was prepared by the Selection Board constituted for the purpose, found those complaints to be well founded on an enquiry got made in that regard, we are unable to find that the Chandigarh Administration had acted either arbitrarily or without bona fide and valid reasons in cancelling such 0dubious select list.
Hence, the contentions of the learned counsel for the Respondents as to the sustainability of the Judgment of CAT under appeal on the ground of non affording of an opportunity of hearing to the Respondents (candidates in the select list) is a misconceived one and is consequently rejected.
In the result, we allow this appeal, set aside the Judgment under appeal, and reject the applications made by Respondents before CAT, Chandigarh.
However, in the facts and circumstances of this appeal, we make no order as to costs.
G.N. Appeal allowed.
FOOD CORPORATION OF INDIA V. KAMDHENU CATTLE FEED INDUSTRIES NOVEMBER 3, 1992 [J.S. VERMA, YOGESHWAR DAYAL AND N. VENKATACHALA, JJ.] Constitution of India, 1950: Article 14 Contractual transactions of State or its instrumentality Essential requisites Non arbitrariness, fairness in action and due consideration of legitimate expectation Ignoring the highest bid Negotiations for higher offer and acceptance thereof Validity of.
Administrative Law: Doctrine of legitimate expectation Forms part of non arbitrariness and Rule of Law To be determined in the larger public interest Open to judicial review.
The appellant Corporation invited tenders for sale of stocks of damaged food grains.
The respondent 's bid was the highest.
Since the appellant was not satisfied about the adequacy of the amount offered even in the highest tender, it invited all the tenders to participate in the negotiations, instead of accepting the highest tender.
During the course of negotiations, the respondent refused to revise the rates in its offer.
On the basis of the highest bid made during the negotiations, the appellant disposed of the stocks of damaged foodgrains, rejecting the highest tenders.
The respondent, whose tender was the highest, challenged the decision of the appellants by filing a Writ Petition before the High Court.
It was contended that the action of the appellant was arbitrary and hence violative of article 14 of the Constitution.
The High Court accepted the contention and allowed the Writ Petition.
Being aggrieved by the High Court 's decision the appellant Corporation preferred the present appeal.
It was contended on behalf of the appellant that there being no right in the person submitting the highest tender to claim acceptance thereof, and since all tenderers were given equal opportunity to participate in the negotiations and to revise the bid before acceptance, the action of the appellant was not arbitrary.
The Respondent contended that since no cogent reasons were indicated for rejecting all the tenders and for deciding to dispose of the stock by negotiating with the tenderers for procuring a higher price, such a decision was arbitrary.
Allowing the appeal, this Court, HELD: 1.1.
In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non arbitrariness is a significant facet.
There is no unfettered discretion in public law.
A public authority possesses powers only to use them for public good.
This imposes the duty to act fairly and to adopt a procedure which is `fairplay in action '.
Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions.
To satisfy this requirement of non arbitrariness in a State action, it is necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case.
The decision so made would be exposed to challenge on the ground of arbitrariness.
Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review.
[328 A D] 12.
The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non arbitrariness, a necessary concomitant of the rule of law.
Every legitimate expectation is a relevant factor requiring due consideration in a fair decision making process.
Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case.
Whenever the question arises, it is to be determined not according to the claimant 's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant.
A bona fide decision of the public authority reached in this manner would satisfy the requirement of non arbitrariness and withstand judicial scrutiny.
[328 E G] 2.1.
Even though the highest tenderer can claim no right to have his tender accepted, there being a power while inviting tenders to reject all the tenders, yet that power cannot be exercised arbitrarily and must depend for its validity on the existence of cogent reasons for such action.
The object of inviting tenders for disposal of a commodity is to procure the highest price while giving equal opportunity to all the intending bidders to compete.
Procuring the highest price for the commodity is undoubtedly in public interest since the amount so collected goes to the public fund.
Accordingly, inadequacy of the price offered in the highest tender would be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price.
Retaining the option to accept the highest tender, in case the negotiations do not yield a significantly higher offer would be fair to the tenderers besides protecting the public interest.
A procedure wherein resort is had to negotiations with the tenderers for obtaining a significantly higher bid during the period when the offers in the tenders remain open for acceptance and rejection of the tenders only in the event of a significant higher bid being obtained during negotiations would ordinarily satisfy this requirement.
This procedure involves giving due weight to the legitimate expectation of the highest bidder to have his tender accepted unless outbid by a higher offer, in which case acceptance of the highest offer within the time the offers remain open would be a reasonable exercise of power for public good.
[329 E H; 330 A] Shanti Vijay & Co. etc.
vs Princess Fatima Fouzia & Ors.
, [1980] I S.C.R. 459, relied on.
Council of Civil Service Unions and Others vs Minister for the Civil Service, , and In re Preston; , , referred to.
In the instant case, the respondent 's highest tender was super seded only by a significantly higher bid made during the negotiations with all tenderers giving them equal opportunity to compete by revising their bids.
The fact that it was a significantly higher bid obtained by adopting the right course is sufficient to demonstrate that the action of the appellant satisfied the requirement of non arbitrariness, and it was taken for the cogent reason of inadequacy of the price offered in the highest tender, which reason was evident to all tenderers invited to participate in the negotiations and to revise their bids.
The High Court was in error in taking the contrary view.
[330 D E] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4731 of 1992.
From the Judgment and Order dated 21.7.92 of the C.W.N. 7419 of 1992.
Y.P. Rao for the Appellant.
Ashok Sen, H.L. Aggarwal, and K.K. Gupta (NP) for the Respondent.
The Judgment of the Court was delivered by VERMA, J.
Leave granted.
The appeal by special leave under Article 136 of the Constitution is against the judgment and order dated 21.7.92 by which the Civil Writ Petition No. 7419 of 1992 has been allowed by the Punjab & Haryana High Court directing the appellant Food Corporation of India to allot to the respondent the necessary stocks of damaged rich for which the tenders had been invited by the appellant, since the respondent was the highest bidder.
The appellant invited tenders for sale of stocks of damaged foodgrains in accordance with the terms and conditions contained in the tender notice (Annexure `A ').
The tenders were required to be submitted upto 2.45 p.m. on 18.5.92; the tenders were to be opened on 18.5.92 at 3.00 p.m.; and offers were to remain open for acceptance upto and inclusive of 17.7.92.
The respondent submitted its tender for a stock of damaged rice within the time specified, but the respondent 's tender was conditional and the full amount of earnest money required by the terms was also not deposited.
It is, however, not necessary to mention the particulars of these two deficiencies in respondent 's tender since they appear to have been waived by the appellant and are not relied on before us to support the appellant 's action.
The respondent 's bid in the tender was admittedly the highest as found on opening, the tenders.
lt appears that the appellant was not satisfied about the adequacy of the amount offered in the highest tenders for purchase of the stocks of damaged foodgrains and, therefore.
instead of accepting any of the tenders submitted, the appellant invited all the tenderers to participate in the negotiation on 9.6.92.
The respondent refused to revise the rates offered in its tender.
It was Rs. 245 per quintal for certain lots of this stock;, while the highest offer made during the negotiations was Rs. 275.72 per quintal.
Similarly, as against the respondent 's offer of Rs. 201 per quintal in respect of some other lots, the highest offer made during the negotiation was Rs. 271.55 per quintal.
On this basis, the appellant was to receive an additional amount of Rs. 8 lakhs by accepting the highest offer made during the negotiations over the total amount offered by the respondent for the stock of damaged rice.
Overall, the appellant was offered an excess amount of Rs. 20 lakhs for the entire stock of damaged foodgrains in the highest offer made during the negotiations, inasmuch as against the total amount Rs.90 lakhs which the appellant would have received by acceptance of the highest tenders, the appellant was to receive the amount of Rs. 1 crore 10 lakhs by accepting the highest offers made during the negotiations in which all the tenderers, including the respondent, were given equal opportunity to participate.
The respondent filed the above Writ Petition in the High Court challenging the appellant 's refusal to accept the highest tender submitted by it for the stock of damaged rice claiming that the appellant having chosen to invite tenders, it could not thereafter dispose of the stocks of damaged foodgrains by subsequent negotiations rejecting the highest tenders on the ground that a higher bid was obtained by negotiations.
This action of the appellant, was alleged to be arbitrary and, therefore, in substance, violative of Article 14 of the Constitution.
The High Court by its impugned order accepted this contention of the respondent and allowed the Writ Petition.
Hence, this appeal.
It is not disputed that according to the terms and conditions on which the appellant had invited tenders, the appellant had reserved the right to reject all the tenders and, therefore, the highest tender was not bound to be accepted.
Learned counsel for the appellant submitted that there being no right in the person submitting the highest tender to claim acceptance of the tender, in a case like the present.
where all the tenderers including the respondent, were invited for negotiation and given equal opportunity to participate and to revise the bid before acceptance of the highest bid offered during negotiation which resulted in obtaining an additional amount of Rs. 8 lakhs for the stock relating to respondent 's tender and an overall gain of Rs. 20 lakhs in disposal of the entire stock of damaged foodgrains, the action of the appellant could not be termed arbitrary.
In reply, Shri A.K. Sen, learned counsel for the respondent contended that even though the appellant had the right to reject any tender, including the highest tender, and thereafter negotiate with all the tenderers to procure the highest price for the commodity, yet this right has to be exercised reasonably and not arbitrarily, otherwise, the credibility of the procedure of sale by inviting tenders would be lost.
Shri Sen submitted that the decision not to accept any tender and to negotiate thereafter for obtaining a higher price than that quoted in the highest bid, cannot be taken on the whim and caprice of the concerned authority and can be only for cogent reasons indicated while taking the decision, or else, the decision would be arbitrary.
On this basis, Shri Sen further submitted that in the present case, no cogent reasons were indicated for rejecting all the tenders and deciding to dispose of the commodity by negotiation with the tenderers for procuring a higher price.
He also added that the mere fact that a higher price was obtained by negotiation would not justify the decision if it was not taken in the manner permissible.
This was the only submission of Shri Sen to support the decision of the High Court.
In our view, Shri A.K. Sen is right in the first part of his submission.
However, in the present case, the respondent does not get any benefit therefrom.
The High Court 's decision is based on the only ground that once tenders have been invited and the highest bidder has come forward to comply with the conditions stipulated in the tender notice, it is not permissible to switch over to negotiation with all the tenderers and thereby reject the highest tender.
According to the High Court, such a procedure is not countenanced by the rule of law.
This is not the same, as the submission of Shri Sen which is limited to permissibility of such a course only on cogent grounds indicated while deciding to switch over to the procedure of negotiation after receiving the tenders to satisfy the requirement of non arbitrariness, a necessary concomitant of the rule of law.
The proposition enunciated by the High Court which forms the sole basis of its decision is too wide to be acceptable and has to be limited in the manner indicated hereafter.
In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non arbitrariness is a significant facet.
There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good.
This impose the duty to act fairly and to adopt a procedure which is `fairplay in action '.
Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions.
To satisfy this requirement of non arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely lo be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case.
The decision so made would be exposed to challenge on the ground of arbitrariness.
Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but providers for control of its exercise by judicial review.
The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a Legitimate expectation forms part of the principle of non arbitrariness, a necessary concomitant of the rule of law.
Every legitimate expectation is a relevant factor requiring due consideration a fair decision making process.
Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case.
Whenever the question arises, it is to be determined not according to the claimant 's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant.
A bona fide decision of the public authority reached in this manner would satisfy the requirement of non arbitrariness and withstand judicial scrutiny.
The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent.
In Council of Civil Service Unions and Others vs Minister for the Civil Service, the House of Lords indicated the extent to which the legitimate expectation interfaces with exercise of discretionary power.
The impugned action was upheld as reasonable, made on due consideration of all relevant factors including the legitimate expectation of the applicant, wherein the considerations of national security were found to outweigh that which otherwise would have been the reasonable expectation of the applicant.
Lord Scarman pointed out that `the controlling factor in determining whether the exercise of prerogative power is subject to judicial review is not its source but its subject matter '.
Again in In re preston ; it was stated by Lord Scarman that `the principle of fairness has an important place in the law of judicial review ' ant `unfairness in the purported exercise of a power can be such that it is an abuse of excess of power '.
These decisions of the House of Lords give a similar indication of the significance of the doctrine of legitimate expectation.
Shri A.K. Sen referred to Shanti Vijay & Co. etc.
vs Princess Fatima Fouzia & Ors.
etc., [1980] 1 S.C.R. 459, which holds that court should interfere where discretionary power is not exercised reasonably and in good faith.
From the above, it is clear that even though the highest tenderer can claim no right to have his tender accepted, there being a power while inviting tenders to reject all the tenders, yet the power to reject all the tenders cannot be exercised arbitrarily and must depend for its validity on the existence of cogent reasons for such action.
The object of inviting tenders for disposal of a commodity is to procure the highest price while giving equal opportunity to all the intending bidders to compete.
Procuring the highest price for the commodity is undoubtedly in public interest since the amount so collected goes to the public fund.
Accordingly, inadequacy of the price offered in the highest tender would be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price.
The inadequacy may be for several reasons known in the commercial field.
Inadequacy of the prince quoted in the highest tender would be a question of fact in each case.
Retaining the option to accept the highest tender, in case the negotiations do not yield a significantly higher offer would be fair to the tenderers besides protecting the public interest.
A procedure wherein resort is had to negotiations with the tenderers for obtaining a significantly higher bid during the period when the offers in the tenders remain open for acceptance and rejection of the tenders only in the event of a significant higher bid being obtained during negotiations would ordinarily satisfy this requirement.
This procedure involves giving due weight to the legitimate expectation of the highest bidder to have his tender accepted unless outbid by a higher offer, in which case acceptance of the highest offer within the time the offers remain open would be a reasonable exercise power for public good.
In the present case, the last date upto which the offer made in the tender was to remain open for acceptance was 17.7.92.
After opening the tenders on 18.5.92, the appellant decided to negotiate with all the tenderers on 9.6.92 when significantly higher amount, as indicated earlier, was offered above the amount quoted in the highest tender.
In such a situation, if the negotiations did not yield the desirable result of obtaining a significantly higher price, the appellant had the option to accept the highest tender before the last date, viz., 17.7.92 upto which the offer made therein was to remain open for acceptance.
In this manner, the respondent 's higher tender was superseded only by a significantly higher bid made during the negotiations with all tenderers giving them equal opportunity to compete by revising their bids.
The fact that it was a significantly higher bid obtained by adopting this course is sufficient in the facts of the present case to demonstrate that the action of the appellant satisfied the requirement of non arbitrariness, and it was taken for the cogent reason of inadequacy of the price offered in the highest tender, which reason was evident to all tenderers invited to participate in the negotiations and to revise their bids.
The High Court was in error in taking the contrary view.
Consequently, this appeal is allowed.
The impugned judgment of the High Court is set aside, resulting in dismissal of the respondent 's writ petition, No costs, G.N. Appeal allowed.
KRISHNA BHIMRAO DESHPANDE vs LAND TRIBUNAL, DHARWAD AND ORS.
NOVEMBER 3, 1992 [LALIT MOHAN SHARMA AND K. JAYACHANDRA REDDY, JJ.] Constitution of India, 1950: Article 252 read with Schedule VII, List n Entry 18 Legislation by Parliament Requirement Central Law on ceiling on urban immovable property in pursuance of Resolution of State Legislature State Laws on other matters relating to the subject matter of resolution Legality of.
Constitution of India, 1950: Article 252, Schedule VII, list II, Entry 18 Urban Land (Ceiling and Regulation) Act, 1976 and Karnataka Land Reforms Act as amended in 1974 Object and application of Whether any conflict between the Acts.
In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling is limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament by law.
On 1.4.74 the Karnataka Land Reforms (Amendment) Act was enacted and under the Act the tenant of the land covered by the Act was entitled to the grant of occupancy rights after making an application under the Act.
The Act came Into force with effect from 2.1.85.
But for the purpose of grant of occupancy rights, 1.4.74 was the relevant date.
In the year 1975 the Karnataka Urban Agglomeration Ordinance was passed, whereunder all lands between the periphery of 8 K.Ms.
of the municipal limits of Hubli Dharwad were declared as urban agglomeration land.
The Parliament passed the Urban Land (Ceiling and Regulation) Act, 1976 for imposition of ceiling on urban properties and the Ceiling Act was made applicable to Karnataka also in view of the resolution passed by the State Government.
The lands involved in the present cases were covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan and they were included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act.
The owners of the agglomeration lands challenged the order of the Land Tribunal under the Land Reforms Act conferring occupancy rights on the tenants before the High Court.
They contended that the lands involved in the cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the Ceiling Act.
The writ petitions were dismissed by the High Court.
The owner 's writ appeals were also dismissed by a common judgment by the Division Bench of the High Court.
The Division Bench held that there was no conflict between the two enactments.
The judgment of the Division Bench was challenged in S.L.P. (Civil) No. 16041 42/88.
Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal.
The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court.
Several Civil revision petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court.
Some of the special leave petitions were filed against the order of the High Court in the said civil revision petitions.
The petitioners land owners contended that when in pursuance of the resolution of the State Legislature passed under Article 252 of the Constitution the Parliament legislated in respect of the topic covered by the resolution.
The Parliamentary law repealed or superseded the existing State legislation on the topic and therefore such law could not be enforced thereafter; and that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on land holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they were fully covered by the Ceiling Act passed by the Parliament and the same superseded the State enactment in respect of such lands.
The respondents submitted that "imposition of ceiling" was a distinct and separately identifiable subject and the Parliament was empowered to legislate; that the power of the State to legislate in respect of the remaining part of the subject matter was unaffected; that when two distinct powers came into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them had to be examined to see whether any one of them encroached the field set apart as falling within the competence of the other body; that in any event the provisions of Chapter III of the Karnataka Land Reforms Act had nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc.
to the tenants under Chapter III of the Karnataka Land Reforms Act did not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property.
Dismissing the special leave petitions, this Court, HELD: 1.01.
Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250.
This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II, i.e. with respect to which the Parliament has no power to make law for the State.
The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power.
[339 C D] 1.02.
The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban.
The subject matter carved out of Entry 18 under the resolutions passed by The various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property." [340 B, C] 1.03.
From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling.
This subject matter is the topic that falls within Entry 18 of List II of Schedule VII to the Constitution and the subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18.
By virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area.
[339 G, H; 341 A] 2.01.
The primary object and the purpose of the Urban Land (Ceiling and Regulation) Act, 1976 is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the construction of buildings on such lands and for matters connected therewith.
[340 H; 341 A] 2.02.
The Karnataka Land Reforms Act as amended in 1974 is a welfare legislation.
The object of the Act was to have a uniform law in the State of Karnataka relating to agrarian reforms, conferment of ownership on tenants, ceiling on land holdings and for certain other matters contained therein.
[342 D] 2.03.
In respect of imposing ceiling on the land under urban agglomeration the provisions of the Ceiling Act alone are applicable and to that extent the provisions of Chapter IV of the Karnataka Land Reforms Act which also deal with the imposition of ceiling would not be applicable.
[344 C] 2.04.
The land in the instant case comes under the urban agglomeration the imposition of the ceiling should naturally be under the provisions of the Urban Ceiling Act and not under the Karnataka Land Reforms Act.
[344 B, C] 2.05.
Imposition of ceiling on urban land is a distinct and independent subject as compared to imposition of ceiling on owning or to hold agricultural land or any other kind of property which do not attract the Urban Ceiling Act.
These are two distinct powers and therefore the law making competence can be in two different legislative bodies.
Consequently it is difficult to hold that the provisions of Chapter III of the Karnataka Land Reforms Act are outside the legislative competence of the State Legislature.
[350 C, D] 2.06.
The one topic that is transferred in the resolution passed under Article 252 as distinct and separately identifiable and does not include the remaining topics under Entry 18 in respect of which the State alone has the power to legislate.
[351 D] 2.07.
The legislative power of the State has to be reconciled with that of the Parliament and that in their respective fields each is supreme.
Even assuming that the State enactment has same effect on the subject matter falling within the Parliament 's legislative competence that by itself will not render such law invalid or inoperative.
[350 G H] 2.08.
There is no conflict between the Ceiling Act and the State Act.
The imposition of ceiling on urban immovable property is an independent topic and cannot be construed as to nullify the other subject left in the domain of the State Legislature under Entry 18 inasmuch as imposition of ceiling is a distinct and separately identifiable subject and does not cover the other measures such as regulation of relationship of landlord and tenant in respect of which the State Legislature has competence to legislate.
[351 C D] 2.09.
There is a ceiling provision under Section 45(2) of the Karnataka Land Reforms Act providing for computation of the area in respect of which the tenant may be granted occupancy rights.
But it is clear that ceiling on the area in this context is only for the purpose of Section 45.
[351 F] 2.10.
Provisions in the Chapters II, III, V, VI to XI of the Karnataka Land Reforms Act deal with the conferment of occupancy rights on the respective tenants and they do not in any way conflict with the subject matter transferred to the Parliament by the resolution passed under Section 252.
[351 E,F] Thumati Venkaiah and others vs State of Andhra Pradesh and of others; , ; Union of India and others vs Valluri Basavaiah Chowdhary and others; , ; Calcutta Gas Company (Proprietory) Ltd. vs State of West Bengal and others, and Kannan Devan Hills Produce Company Ltd. vs The State of Kerala etc.; , referred to.
CIVIL APPELLATE JURISDICTION: Special Leave Petition (Civil) Nos.
16041 42/88.
From the Judgment and Order dated 27.7.1988 of the Karnataka High Court in W.P.
No 9173/86 and W.A.
No 2707/85.
WITH SLP (C) Nos. 12258, 12254, 12260/90 & 8608/91 R.N. Narasimhamurthy, S.S. Javali, S.N. Bhat and Ravi P. Wadhwani for the Petitioners.
M.S. Nesargi, R. Jagannath Goulay, M.K. Dua, M. Veerappa, K.H. Nobin Singh, S.K. Kulkarni and Surya Kant for the Respondents.
The following Order of the Court was delivered by K. JAYACHANDRA REDDY, J.
In all these special leave petitions the common question that arises for consideration is whether the provisions of the Karnataka Land Reforms Act, 1961 as amended in 1974 (`Act ' for short) cease to be applicable in all respects to the lands which came within the purview of the Urban Land (Ceiling and Regulation) Act, 1976 ( 'Ceiling Act ' for short).
The lands involved in these matters are covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan for the said City and they are included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act.
In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution to the effect that imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament Qby law.
The State Legislature thus divested itself of the legislative competence to enact law in respect of subject matter of the resolution.
On 1.4.74 the amended Karnataka Land Reforms Act was enacted and under the said Act the tenant of the land covered by the Act is entitled to the grant of occupancy rights after making an application under the Act.
This Act came into force with effect from 2.1.85.
But for the purpose of grant of occupancy rights 1.4.74 was the relevant date.
While so in the year 1975 the Governor of Karnataka passed the Urban Aggolmeration Ordinance whereunder all lands between the periphery of 8 K.Ms.
of the municipal limits of Hubli Dharwad were declared as urban agglomeration land.
In the year 1976 the Parliament passed the Ceiling Act for imposition of ceiling on urban properties and the Act was made applicable to Karnataka also in view of the resolution passed by the State Government referred to above.
The order of the Land Tribunal under the Act conferring occupancy rights on the tenants was challenged before the High Court contending that the lands involved in these cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the State Act were repugnant to the provisions of the Central Act namely the Ceiling Act.
The writ petition was dismissed by the High Court.
The owners preferred writ appeals and they were also dismissed by a common judgment in Writ Appeal Nos. 2707 and 2361/85 etc.
The Division Bench held that there is no conflict between the two enactment in certain respect i.e. atleast so far as the implementation of the provisions of Chapter III of the Act are concerned and that provisions of this Chapter of the Act do not cease to apply to the agricultural lands coming within the meaning of urban agglomeration in the Ceiling Act.
The judgment of the Division Bench is challenged in S.L.P.(Civil) No. 16041 42/88.
Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal.
The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court in Writ Appeal No.2707/85 and connected matters.
Several civil revisions petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court.
Some of the special leave petitions are filed against the order of the High Court in the said civil revision petitions.
Therefore all these special leave petitions can be disposed of by a common order.
It was urged before us that the resolution of the State Legislature passed under Article 252 of the Constitution shifted the topic covered by the resolution from List II of Schedule VII to the Constitution and vested the competence to make the law in respect of the said topic in the Parliament and that thereafter the State enactment ceased to have efficacy in respect of said topic.
Alternatively it was urged that, when in pursuance of the resolution the Parliament legislates in respect of the topic covered by the resolution, the Parliamentary law, repeals or supersedes any existing State legislation on the topic and therefore such law cannot be enforced thereafter.
We shall first extract some of the relevant provisions of the Constitution of India and the respective enactments.
Article 246 of the Constitution reads thus: "246.
Subject matter of laws made by Parliament and by the Legislatures of States (l) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List").
(2) xx xx xx (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List").
(4)xx xx xx " 2 Entry 18 in List II namely the State List of the VII Schedule to the Constitution is in the following terms: "18.
Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents, transfer and alienation of agricultural land; land improvement and agricultural loans; colonization.
" Article 252 of the Constitution reads thus: "252.
Power of Parliament to legislate for two or more States by consent and adoption of such legislation by any other State (1) If it appears to the Legislatures of two or more States to be desirable that any of the matters with respect to which Parliament has no power to make laws for the States except as provided in Articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the Legislatures of those States, it shall be lawful for Parliament to pass an Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State by which it is adopted afterwards by resolution passed in that behalf by the House or, where there are two Houses, by each of the Houses of the Legislature of that State.
(2) Any Act so passed by Parliament may be amended or repealed by an Act of Parliament passed or adopted in like manner but shall not, as respects any State to which it applics, be amended or repcaled by an Act of the Legislature of that State.
" Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250.
This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II i.e. with respect to which the Parliament has no power to make law for the State.
The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power.
The relevant portion of the resolution passed by the State Legislature under Article 252 reads thus: "Now, therefore, in pursuance of clause (1) of Article 252 of the Constitution, this Assembly hereby resolves that the imposition of a ceiling on urban immovable property and F acquisition of such property in excess of the ceiling and all matters connected therewith or ancillary and incidental thereto should be regulated in the State of Karnataka by Parliament by law.
" The resolution states that the imposition of ceiling on urban immovable property and the acquisition of such property in excess of the ceiling limit with a view to utilising such excess property for public purposes and all other matters connected therein or incidental thereto shall be regulated in this State by Parliament by law.
The basic question that arises is what is the actual content of the subject matter that was resolved to be entrusted to Parliament by the State Legislature under Article 252 of the Constitution.
From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling.
It is true that this subject matter is the topic that falls within Entry 18 of List 11 of Schedule VII to the Constitution and the said subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18.
Now by virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area.
The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban.
The subject matter carved out of Entry 18 under the resolutions passed by the various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property.
The learned counsel for the petitioners, however, urged that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on and holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they are fully covered by the Ceiling Act passed by the Parliament and the same supersedes the State enactment in respect of this land.
The learned counsel appearing for the respondents on the contrary submitted that "imposition of ceiling" is a distinct and separately identifiable subject and is the power carved out of Entry 18 and vested in the Parliament to legislate and that the power of the State to legislate in respect of the remaining part of the subject matter is unaffected and that when two distinct powers have come into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them has to be examined to see whether any one of them encroaches the field set apart as falling within the competence of the other body.
The learned counsel for the respondents, however, submitted that in any event the provisions of Chapter III of the Act have nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc.
to the tenants under Chapter 111 of the Act do not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property.
Now we shall refer to the provisions of the Urban Ceiling Act.
The Statement of Objects and Reasons under Preamble to the said Act would show that the primary object and the purpose is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the construction of buildings on such lands and for matters connected therewith.
Section 21(n) of the Urban Ceiling Act defines "urban agglomeration" and the material part of it reads thus: "(n) "urban agglomeration" (A) in relation to any State or Union territory specified in column (1) of Schedule 1, means (i) the urban agglomeration specified in the corresponding entry in column (2) thereof and includes the peripheral area specified in the corresponding entry in column (3) thereof; and xx xx xx" Section 2(o) defines "urban land" which reads thus: "(o) "urban land" means, (i) any land situated within the limits of an urban agglomeration and referred to as such in the master plan; or (ii) in a case where there is no master plan, or where the master plan does not refer to any land as urban land, any land within the limits of an urban agglomeration and situated in any area included within the local limits of a municipality (by whatever name called), a notified area committee, a town area committee, a city and town committee, a small town committee, a cantonment board or a panchayat, but does not include any such land which is mainly used for the purpose of agriculture.
Explanation For the purpose of this clause and clause (q) (A) xx xx xx (B) land shall not be deemed to be used mainly for the purpose of agriculture, if such land is not entered in the revenue or land records before the appointed day as for the purpose of agriculture; xx xx xx (C) notwithstanding anything contained in clause (B) of this Explanation, land shall not be deemed to be mainly used for the purpose of agriculture if the land has been specified in the master plan for a purpose other than agriculture;" For the purpose of the instant case it is enough to note that Hubli Dharwad is shown in the Schedule and there is also a master plan prepared for the area and the land in question also is undoubtedly within the urban agglomeration and therefore there is no doubt that in respect of imposition of ceiling on this area comes within the purview of the Urban Ceiling Act.
But the question is whether granting occupancy rights under Chapter III of the Act are in any manner affected.
The Karnataka Land Reforms Act as amended in 1974 is a welfare legislation.
The object of the Act was to have a uniform law in the State of Karnataka relating to agrarian reforms, conferment of ownership on tenants, ceiling on land holding and for certain other matters contained therein.
Section 34 of the Act defines "tenant" thus: "(34) "tenant" means an agriculturist who cultivates personally the land he holds on lease from a landlord and includes, (i) a person who is deemed to be a tenant under Section 4; (ii) a person who was protected from eviction from any land by the Karnataka Tenants (Temporary Protection from Eviction) Act, 1961; (iia) a person who cultivates personally any land on lease under a lease created contrary to the provisions of section 5 and before the date of commencement of the Amendment Act; (iii) a person who is a permanent tenant; and (iv) a person who is a protected tenant.
Explanation A person who takes up a contract to cut grass, or to gather the fruits or other produce of any land, shall not on that account only be deemed to be a tenant.
" The provisions of Chapter III of the Karnataka Land Reforms Act deal with conferment of ownership on tenants.
Section 45 occurring in this Chapter in particular deals with conferring of occupancy rights on the tenants subject to certain conditions.
The relevant portion of Section 45 reads as under: "45.
Tenants to be registered as occupants of land on certain conditions (1) Subject to the provisions of the succeeding sections of this Chapter, every person who was a permanent tenant, protected tenant or other tenant or where a tenant has lawfully sublet, such sub tenant shall with effect on and from the date of vesting be entitled to be registered as an occupant in respect of the lands of which he was a permanent tenant, protected tenant or other tenant or sub tenant before the date of vesting and which he has been cultivating personally.
(2) If a tenant or other person referred to in sub section (1) (i) holds land partly as owner and partly as tenant but the area of the land held by him as owner is equal to or exceeds a ceiling area he shall not be entitled to be registered as an occupant of the land held by him as a tenant before the date of vesting; (ii) does not hold and cultivate personally any land as an owner, but holds land as tenant, which he cultivates personally in excess of a ceiling area, he shall be entitled to be registered as an occupant to the extent of a ceiling area; (iii) holds and cultivates personally as an owner of any land the area of which is less than a ceiling area, he shall be entitled to be registered as an occupant to the extent of such area as will be sufficient to make up his holding to the extent of a ceiling area.
xx xx xx The provisions under Chapter III which exclusively deal with conferment of occupancy rights on tenants have nothing to do with the imposition of ceiling on holdings of agricultural land under the Act.
It is only Chapter IV of the said Act which deals with ceiling on land holdings.
Now that the land in the instant case comes under the urban agglomeration the imposition of the ceiling should naturally be under the provisions of the Urban Ceiling Act and not under the Karnataka Land Reforms Act.
The High Court, however, did not deal with this aspect.
Perhaps it is necessary for us to make it clear that in respect of imposing ceiling on the land under urban agglomeration the provisions of the Ceiling Act alone are applicable and to that extent the provisions of Chapter IV of the Act which also deal with the imposition of ceiling would not be applicable.
As a matter of fact in Thumati Venkaiah and Others vs State of Andhra Pradesh and Others, ; to which we will refer to at a later stage in detail on the main point, this Court observed thus: "It is no doubt true that if the Andhra Pradesh Act seeks to impose ceiling on land falling within an urban agglomeration, it would be outside the area of its legislative competence, since it cannot provide for imposition of ceiling on urban immovable property." However, the crucial question in the instant case with which we are concerned is whether the provisions of Chapter III of the Act also become inoperative by virtue of the resolution passed under Article 252 and particularly on the ground that it is a matter of imposition of ceiling on urban land or other matters connected therewith or ancillary and incidental thereto.
A plain reading of the above provisions in the background of the objects underlying these two enactments clearly shows that the two Acts operate in two different fields to a large extent.
This Court had an occasion to consider these aspects in a few cases.
In Union of India and others vs
Valluri Basavaiah Chowdhary and others; , this Court, in respect of effect of passing a resolution under Article 252 of the Constitution by the Andhra Pradesh Legislature, observed thus: "The effect of the passing of a resolution under clause (1) of Article 252 is that Parliament which has no power to legislate with respect to the matter which is the subject of the resolution, becomes entitled to legislate with respect to it.
On the other hand, the State Legislature ceases to have a power to make a law relating to that matter.
" It was further observed that: ".
It is not disputed that the subject matter of Entry 18, List II of the Seventh Schedule i.e. `land ' covers `land and buildings ' and would, therefore, necessarily include `vacant land '.
The expression `urban immovable property ' may mean, land and buildings or `buildings ' or `lands '.
It would take in lands of every description i.e., agricultural land, urban land or any other kind and it necessarily includes vacant land.
" With regards the concept of ceiling on urban immovable property and the object underlying in passing the resolution by the several State Governments under Article 252 it was further observed in the above judgment thus: ".
A Working Group was constituted under the Chairmanship of the Secretary, Ministry of Works, Housing and Urban Development.
The report of the Working Group shows that the proposal was to impose a ceiling on urban immovable property.
In the report the said Working Group defined `urban area ' to include the area within the territorial limits of municipalities or other local bodies and also the peripheral area outside the said limits.
Such inclusion of the peripheral limits in an urban area was accepted by the Government and a model bill prepared in pursuance thereof also contained such a definition.
A copy of each of the report of the Working Group and the Model Bill referred to was placed on the table of the Parliament on December 15, 1970 and March 22, 1972 respectively.
The said documents were forwarded to the State Government of Andhra Pradesh, besides other State Governments, for consideration by the State Legislatures before they passed a resolution authorising the Parliament to make a law in respect of urban immovable property.
Their intention was to include the lands within the territorial area of an urban area and also its peripheral areas.
The concept of ceiling on urban immovable property and the nature and content of urban agglomeration ultimately defined by Section 2(n) of the impugned Act was, therefore, fully, under stood by the State Governments.
" Some more observations in the above judgment read thus: "It is but axiomatic that once the legislatures of two or more States, by a resolution in terms of Article 252(1), abdicate or surrender the area, i.e. their power of legislation on a State subject, the Parliament is competent to make a law relating to the subject.
It would indeed be contrary to the terms of Article 252(1) to read the resolution passed by the State legislature subject to any restriction.
The resolution, contemplated under Article 252(1) is not hedged in with conditions.
In making such a law, the Parliament was not bound to exhaust the whole field of legislation.
It could make a law, like the present Act, with respect to ceiling on vacant land in an urban agglomeration, as a first step towards the eventual imposition of ceiling on immovable property of every other description.
" One other decision also arose from State of Andhra Pradesh.
In Thumati Venkaiah 's case Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act which is analgous to Karnataka Land Reforms Act was challenged on the ground that the subject matter of the said law was covered by the topic of the legislation transferred to Parliament by the resolution under Article 252 passed by the Andhra Pradesh Legislative Assembly and that provisions of the Ceiling Act alone covered that subject and therefore Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act was unenforceable.
In this context Supreme Court again reiterated the same in the said decision.
This Court proceeded to observe as under: "The effect of passing of resolutions by the Houses of Legislature of two or more States under this constitutional provision is that Parliament which has otherwise no power to legislate with respect to a matter, except as provided in Articles 249 and 250, becomes entitled to legislate with respect to such matter and the State legislatures passing the resolutions cease to have power to make law relating to that matter.
The resolutions operate as abdication or surrender of the powers of the State legislatures with respect to the matter which is the subject of the resolutions and such matter is placed entirely in the hands of Parliament and Parliament alone can then legislate with respect to it.
It is as if such matter is lifted out of list II and placed in List I of the Seventh Schedule to the Constitution.
" It was further observed that: "The result was that at the date when the Andhra Pradesh Act was enacted, Parliament alone was competent to legislate with respect to ceiling on urban immovable property and acquisition of such property in excess of the ceiling and all connected, ancillary or incidental matters, and the Andhra Pradesh Legislature stood denuded of its power to legislate on that subject.
" On the effect of ceiling this Court stated thus: "It will thus be seen that the Central Act imposes a ceiling on holding of land in urban agglomeration other than land which is mainly used for the purpose of agriculture and agriculture in this connection includes horticulture, but does not include raising of grass, dairy farming, poultry farming, breeding of live stock and such cultivation or the growing of such plants as may be prescribed by the Rules, and moreover, in order to fall within the exclusion, the land must be entered in the revenue or land record before the appointed day for the purpose of agriculture and must also not have been specified in the master plan for a purpose other than agriculture.
" Considering the contention that the whole of Andhra Pradesh Land Reforms Act was ultra vires this Court held thus: "The argument of the landholders was that the Andhra Pradesh Act sought to impose ceiling on land in the whole of Andhra Pradesh including land situate in urban agglomeration defined in Section 2(n) of the Central Act was an expansive concept and any area with an existing or future population of more than one lakh could be notified to be an urban agglomeration, the whole of the Andhra Pradesh Act was ultra vires and void as being outside the legislative competence of the Andhra Pradesh Legislature.
This argument, plausible though it may seem, is in our opinion, unsustainable.
It is not doubt true that if the Andhra Pradesh Act seeks to impose ceiling on land falling within an urban agglomeration, it would be outside the area of its legislative competence, since it cannot provide for imposition of ceiling on urban immovable property.
But the only urban agglomerations in the State of Andhra Pradesh recognised in the Central Act were those referred to in Section 2(n)(A)(i) and there can be no doubt that, so far as these urban agglomerations are concerned, it was not within the legislative competence of the Andhra Pradesh Legislature to provide for imposition of ceiling on land situate within these urban agglomerations.
It is, however, difficult to see how the Andhra Pradesh Act could be said to be outside the legislative competence of the Andhra Pradesh Legislature insofar as land situate in the other areas of the State of Andhra Pradesh is concerned.
We agree that any other area in the State of Andhra Pradesh with a population of more than one lakh could be notified as an urban agglomeration under Section 2(n) (A) (ii) of the Central Act, but until it is so notified it would not be an urban agglomeration and the Andhra Pradesh Legislature would have legislative competence to provide for imposition of ceiling on land situate within such area.
No sooner such area is notified to be an urban agglomeration, the Central Act would apply in relation to land situate within such area, but until that happens, the Andhra Pradesh Act would continue to be applicable to determine the ceiling on holding of land in such area.
It may be noted that the Andhra Pradesh Act came into force on January 1, 1975 and it was with reference to this date that the surplus holding of land in excess of the ceiling area was required to be determined and if there was any surplus, it was to be surrendered to the State Government.
It is therefore clear that in an area other than that comprised in the urban agglomerations referred to in Section 2(n)(A)(i), land held by a person in excess of the ceiling area would be liable to be determined as on January 1, 1975 under the Andhra Pradesh Act and only land within the ceiling area would be allowed to remain with him.
It is only in respect of land remaining with a person, whether an individual or a family unit, after the operation of the Andhra Pradesh Act, the Central Act would apply, if and when the area in question is notified to be an urban agglomeration under Section 2(n)(A)(ii) of the Central Act.
We fail to see how it can at all be contended that merely because an area may possibly in the future be notified as an urban agglomeration under Section 2(n)(A)(ii) of the Central Act, the Andhra Pradesh Legislature would cease to have competence to legislate with respect to ceiling on land situate in such area, even though it was not an urban agglomeration at the date of enactment of the Andhra Pradesh Act.
Undoubtedly, when an area is notified as an urban agglomeration under Section 2(n)(A)(ii), the Central Act would apply to land situate in such area and the Andhra Pradesh Act would cease to have application, but by that time the Andhra Pradesh Act would have already operated to determine the ceiling on holding of land falling within the definition of Section 3(j) and situate within such area.
It is therefore not possible to uphold the contention of the landholders that the Andhra Pradesh Act is ultra vires and void as being outside the Legislative competence of the Andhra Pradesh Legislature.
" The above observations throw a flood of light on the question involved before us.
It can be seen that entire power to legislate in respect of several matters falling under the wide scope of Entry 18 List II is not transferred.
The power transferred is only in respect of imposition of ceiling on urban immovable property.
There can be several topics in respect of the subject matters of regulatory legislations governing the lands or other immovable properties.
The imposition of ceiling on owning property is one such topic and there can be laws regulating ceiling on owing the property, relationship of lessor and lessee, payment of rent, manner of granting the lease, conferment of ownership on the lessee etc.
It is the concept of a welfare State which is the underlying object in such welfare legislations.
When viewed from that angle it is axiomatic that imposition of ceiling on urban land is a distinct and independent subject as compared to imposition of ceiling on owning or holding agricultural land or any other kind of property which do not attract the Urhan Ceiling Act.
Likewise it cannot be said that the pith and substance of the law governing the conferment of ownership of land on the tenant is a law regulating the imposition of ceiling on land holding.
Equally it cannot be said that the pith and substance of the law imposing the ceiling on land holding covers the subject of conferring ownership of land on the tenant.
These are two distinct powers and therefore the law making competence can be in two different legislative bodies.
Consequently it is difficult to hold that the provisions of Chapter III of the Karnataka Land Reforms Act are outside the legislative competence of the State Legislature.
In Calcutta Gas Company (Proprietory) Ltd. vs State of West Bengal and others, this Court observed as under: "The entries in the three Lists are only legislative heads or fields of legislation; they demarcate the area over which the appropriate Legislatures can operate.
It is also well settled that widest amplitude should be given to the language of the entries.
But some of the entries in the different Lists 1 or in the same Lists may overlap and sometimes may also appear to be in direct conflict with each other.
It is then the duty of this Court to reconcile the entries and bring about harmony between them.
" It is well settled that the legislative power of the State has to be reconciled with that of the Parliament and that in their respective fields each is supreme.
Even assuming that the State enactment has same effect on the subject matter falling within the Parliament 's legislative competence, that by itself will not render such law invalid or inoperative.
In Kannan Devan Hills Produce Company Ltd. vs The State of Kerala etc.
; , this Court held as under: "It seems to us clear that the State has legislative competence to legislate on Entry 18, List II and Entry 42 List III.
This power cannot be denied on the ground that it has some effect on an industry controlled under Entry 52 List 1.
Effect is not the same thing as subject matter.
If a State Act, otherwise valid, has effect on a matter in List I it does not cease to be a legislation with respect to an entry in List II or List III.
" However, in the instant case, we are clearly of the view that there is no conflict.
The imposition of ceiling on urban immovable property is an independent topic and cannot be construed as to nullify the other subject left in the domain of the State Legislature under Entry 18 inasmuch as imposition of ceiling is a distinct and separately identifiable subject and does not cover the other measures such as regulation of relationship of landlord and tenant in respect of which the State Legislature has competence to legislate.
Thus the one topic that is transferred in the resolution passed under Article 252 is distinct and separately identifiable and does not include the remaining topics under Entry 18 in respect of which the State alone has the power to legislate.
An examination of the various provisions of the State Act makes this aspect clear.
The object underlying the Act is to make a uniform law in the State of Karnataka relating to agrarian relations, conferment of ownership on tenants, ceiling on land holdings etc.
Chapter II of the Act contains general provisions regarding tenancy, deemed tenancy, regulation of relationship between landlord and tenant etc.
Sections 44 to 62 of Chapter III provide for vesting of tenanted lands in the State Government with effect from 1.3.74 and conferment of occupancy rights on the tenants.
Chapter V controls the eligibility to purchase or possess agricultural lands.
Chapters VI to XI have many other provisions regarding agrarian reforms.
We, however, find a ceiling provision under Section 45(2) providing for computation of the area in respect of which the tenant may be granted occupancy rights.
But it is clear that ceiling on the area in this context is only for the purpose of Section 45.
These are all topics regarding the conferment of occupancy rights on the respective tenants and they do not in any way conflict with the subject matter transferred to the Parliament by the resolution passed under Section 252.
Consequently these Special Leave Petitions are dismissed.
Petitions dismissed.
| In the year 1972 the Karnataka Legislature passed a resolution under Article 252 of the Constitution imposing a ceiling on urban immovable property and the acquisition of such property in excess of the ceiling is limit for public purposes and all the matters connected therewith shall be regulated in the State by Parliament by law.
On 1.4.74 the Karnataka Land Reforms (Amendment) Act was enacted and under the Act the tenant of the land covered by the Act was entitled to the grant of occupancy rights after making an application under the Act.
The Act came Into force with effect from 2.1.85.
But for the purpose of grant of occupancy rights, 1.4.74 was the relevant date.
In the year 1975 the Karnataka Urban Agglomeration Ordinance was passed, whereunder all lands between the periphery of 8 K.Ms.
of the municipal limits of Hubli Dharwad were declared as urban agglomeration land.
The Parliament passed the Urban Land (Ceiling and Regulation) Act, 1976 for imposition of ceiling on urban properties and the Ceiling Act was made applicable to Karnataka also in view of the resolution passed by the State Government.
The lands involved in the present cases were covered by the development plan by the Belgaum City Town Planning authority as per the Master Plan and they were included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling Act.
The owners of the agglomeration lands challenged the order of the Land Tribunal under the Land Reforms Act conferring occupancy rights on the tenants before the High Court.
They contended that the lands involved in the cases were within the purview of the Ceiling Act and therefore the provisions of the Land Reforms Act had no application to such lands on the ground that the provisions of the Ceiling Act.
The writ petitions were dismissed by the High Court.
The owner 's writ appeals were also dismissed by a common judgment by the Division Bench of the High Court.
The Division Bench held that there was no conflict between the two enactments.
The judgment of the Division Bench was challenged in S.L.P. (Civil) No. 16041 42/88.
Many of the similar writ petitions that were pending before the High Court were transferred to the Land Reforms Appellate Tribunal.
The Appellate Tribunal dismissed the petitions by a common order following the judgment of the Division Bench of the High Court.
Several Civil revision petitions filed by the land owners against the order of the Appellate Tribunal were dismissed by the High Court.
Some of the special leave petitions were filed against the order of the High Court in the said civil revision petitions.
The petitioners land owners contended that when in pursuance of the resolution of the State Legislature passed under Article 252 of the Constitution the Parliament legislated in respect of the topic covered by the resolution.
The Parliamentary law repealed or superseded the existing State legislation on the topic and therefore such law could not be enforced thereafter; and that vesting of tenanted land in the State and conferment of occupancy rights under the provisions of the State Act directly fall under the subject of imposing ceiling on land holding and other matters incidental or ancillary to the main topic of imposing ceiling and therefore they were fully covered by the Ceiling Act passed by the Parliament and the same superseded the State enactment in respect of such lands.
The respondents submitted that "imposition of ceiling" was a distinct and separately identifiable subject and the Parliament was empowered to legislate; that the power of the State to legislate in respect of the remaining part of the subject matter was unaffected; that when two distinct powers came into existence, vesting law making competence in the State and Parliament, the pith and substance of the laws made by each of them had to be examined to see whether any one of them encroached the field set apart as falling within the competence of the other body; that in any event the provisions of Chapter III of the Karnataka Land Reforms Act had nothing to do with the imposition of ceiling on the urban land and that conferring of occupancy rights etc.
to the tenants under Chapter III of the Karnataka Land Reforms Act did not come under the category of "the matters connected therewith or ancillary or incidental to the imposition of ceiling" on urban immovable property.
Dismissing the special leave petitions, this Court, HELD: 1.01.
Article 252 empowers the Parliament to legislate for two or more States on any of the matters with respect of which the Parliament has no power to make law except as provided under Articles 249 and 250.
This power to legislate is vested in the Parliament only if two or more State Legislatures think it desirable to have a law enacted by Parliament on such matters in List II, i.e. with respect to which the Parliament has no power to make law for the State.
The passing of the resolutions by the State Legislatures is a condition precedent for vesting the Parliament with such power.
[339 C D] 1.02.
The scope of Entry 18 is very wide and the land mentioned therein may be agricultural or non agricultural and may be rural or urban.
The subject matter carved out of Entry 18 under the resolutions passed by The various State Legislatures related to only "urban immovable property" and by virtue of the resolution the law that can be enacted by the Parliament should be a law "imposing a ceiling on such urban immovable property." [340 B, C] 1.03.
From the resolution it is clear that the subject matter that was resolved to be entrusted to the Parliament was the one imposing a ceiling on urban immovable property and acquisition of such property in excess of the ceiling.
This subject matter is the topic that falls within Entry 18 of List II of Schedule VII to the Constitution and the subject matter of Entry 18 has been originally kept apart for the State Legislature to make law and Parliament had no competence in respect of those matters falling under the wide scope of Entry 18.
By virtue of this resolution a part of the area falling under Entry 18 is transferred to the domain of Parliament to make law relating to the matters within the transferred area.
[339 G, H; 341 A] 2.01.
The primary object and the purpose of the Urban Land (Ceiling and Regulation) Act, 1976 is to provide for the imposition of ceiling on vacant land in urban agglomeration and for acquisition of such lands in excess of the ceiling limit and to regulate the construction of buildings on such lands and for matters connected therewith.
[340 H; 341 A] 2.02.
The Karnataka Land Reforms Act as amended in 1974 is a welfare legislation.
The object of the Act was to have a uniform law in the State of Karnataka relating to agrarian reforms, conferment of ownership on tenants, ceiling on land holdings and for certain other matters contained therein.
[342 D] 2.03.
In respect of imposing ceiling on the land under urban agglomeration the provisions of the Ceiling Act alone are applicable and to that extent the provisions of Chapter IV of the Karnataka Land Reforms Act which also deal with the imposition of ceiling would not be applicable.
[344 C] 2.04.
The land in the instant case comes under the urban agglomeration the imposition of the ceiling should naturally be under the provisions of the Urban Ceiling Act and not under the Karnataka Land Reforms Act.
[344 B, C] 2.05.
Imposition of ceiling on urban land is a distinct and independent subject as compared to imposition of ceiling on owning or to hold agricultural land or any other kind of property which do not attract the Urban Ceiling Act.
These are two distinct powers and therefore the law making competence can be in two different legislative bodies.
Consequently it is difficult to hold that the provisions of Chapter III of the Karnataka Land Reforms Act are outside the legislative competence of the State Legislature.
[350 C, D] 2.06.
The one topic that is transferred in the resolution passed under Article 252 as distinct and separately identifiable and does not include the remaining topics under Entry 18 in respect of which the State alone has the power to legislate.
[351 D] 2.07.
The legislative power of the State has to be reconciled with that of the Parliament and that in their respective fields each is supreme.
Even assuming that the State enactment has same effect on the subject matter falling within the Parliament 's legislative competence that by itself will not render such law invalid or inoperative.
[350 G H] 2.08.
There is no conflict between the Ceiling Act and the State Act.
The imposition of ceiling on urban immovable property is an independent topic and cannot be construed as to nullify the other subject left in the domain of the State Legislature under Entry 18 inasmuch as imposition of ceiling is a distinct and separately identifiable subject and does not cover the other measures such as regulation of relationship of landlord and tenant in respect of which the State Legislature has competence to legislate.
[351 C D] 2.09.
There is a ceiling provision under Section 45(2) of the Karnataka Land Reforms Act providing for computation of the area in respect of which the tenant may be granted occupancy rights.
But it is clear that ceiling on the area in this context is only for the purpose of Section 45.
[351 F] 2.10.
Provisions in the Chapters II, III, V, VI to XI of the Karnataka Land Reforms Act deal with the conferment of occupancy rights on the respective tenants and they do not in any way conflict with the subject matter transferred to the Parliament by the resolution passed under Section 252.
[351 E,F] Thumati Venkaiah and others vs State of Andhra Pradesh and of others; , ; Union of India and others vs Valluri Basavaiah Chowdhary and others; , ; Calcutta Gas Company (Proprietory) Ltd. vs State of West Bengal and others, and Kannan Devan Hills Produce Company Ltd. vs The State of Kerala etc.; , referred to.
|
Civil Appeal Nos. 4799 4800 of 1992.
From the Judgments dated 4.3.1992 and 8.4.1992 in Madras High Court in W.P. No. 246/92 and W.A. No. 349 of 1992.
G. Ramaswamy Attorney General, K. Sankaran, A. Rangananthan and A.V. Rangam for the Appellants.
M.K. Ramamurthi, M.A. Krishnmoorthy, M.A. Chinnaswamy, H. Subramaniam and Ms. C. Ramamurthi for the Respondents.
Rajendra Sachhar, Ambrish Kumar and M.D. Pandey for the Inter vener.
The Order of the Court was delivered: Intervention application is allowed.
Leave granted.
Civil Appeal No. 4799 of 1992.
The controversy in this case is in a narrow compass.
The appellant Bank issued Staff Circular No. 42 containing an understanding reached with the Bank staff union laying down the policy for promotion of clerks to the post of Head Clerks.
Clause 1(d) of the said circular states as follows: Employees who decline to accept Head Clerk 's post at a Branch Office outside their place of service, i.e., outside their city, will again be offered the appointment only when a vacancy arises at any one of the offices within that city, provided that at the material time there is no other senior employees at that office who had earlier declined a posting outside his Branch, as a Head Clerk in which case the senior most employee will first be offered the appointment.
Also, if an employee declines to accept the post of a Head Clerk at an office within the same city, his case for appointment as Head Clerk will be considered only when a vacancy arises at his office, in the order of his seniority.
His case cannot be considered for a vacancy at any of the other offices in the city.
It will be apparent from the above provision of the said clause that those employees who decline to accept the Head Clerk 's post at a branch office which is outside the city in which they work will have a further option.
Such employees would be offered the post of Head Clerk again but only when a vacancy arises at any one of the Bank 's offices within that city.
This is of course subject to the condition that at the material time, there is no other senior employee who had similarly declined the post outside his branch office, in which case, the senior most would have the first choice.
The further provision of this rule and with which we are concerned in the present case is as follows.
If an employee declines to accept the post of Head Clerk at an office within the same city his case for appointment as Head Clerk would be considered only when a vacancy arises at his office.
This is also subject to the condition that there is no senior employee similarly situated at the material time.
If the third and the final offer for the post of Head Clerk is declined, there is a permanent debarment of the promotion.
One more thing necessary to be stated before we come to the facts of the present case is that the appellant Bank has a local Head Office at Madras.
In 1972, it was split into two the local Head Office and Madras Main Branch.
In 1976 77, there was a further splitting up of the local Head Office and the Main Branch and ultimately in 1979, the Madras Local Head Office was divided into following six offices as part of the same Head Office: "(i) Local Head Office (ii) Madras Main Branch (iii) Overseas Branch (iv) Regional Office, which is called Zonal Office (v) The Commercial Branch (vi) Siruthozhil Branch" 4.
There is no dispute that as far as the Clerks and the Head Clerks in all the six parts of the same local Head Office are concerned, a common seniority list is maintained.
The effect of the aforesaid arrangements for the purposes of the clause 1(d) is that "the employees" in the said clause means the employees in all the said six parts of the local Head Office.
In other words, if a vacancy for a Head Clerk occurred at any of the said six offices, it was considered to be a vacancy in one office, viz.
,the local Head Office of which the other five offices were only parts.
It appears that respondent Parthasarathy was working as a clerk in the Madras Regional Office (now called Zonal Office) which is, as will be clear from above, a part of the Local Head Office itself.
On 21st August, 1973, he was offered the post of Head Clerk at Deva Kottain which is outside Madras city.
This offer was declined by him.
On 1st July, 1980, he was offered the post of Head Clerk in the Sowkarpet branch office in the same city which was less than 2 kms, from his Regional office where he was working.
He declined the said offer too.
He was then entitled to be considered for posting as Head Clerk only in his office which meant in any of the six parts of the local Head Office, that being the third and the final offer that could be made to him.
The third offer was made to him for the post of Head Clerk at the Overseas branch, and that being part of the same local Head Office, he was bound to accept it.
However, he declined the third and the final offer also, and issued a lawyer 's notice to the Bank contending that the Overseas branch was different from the Regional office where he was working and, therefore, the offer given to him was contrary to the said clause 1(d).
The allegations made in the notice were of course denied by the bank.
On 6th September, 1983, one A. Nizamuddin who was working as Head Clerk in the Regional office passed away and that post became vacant.
On 24th September, 1983, the respondent filed a writ petition before the High Court for quashing the third and the final offer made to him on 4th August 1983, and for a direction for posting him in the Regional office where the vacancy had occurred.
The High Court took the view that the third offer made was not for the post of the Head Clerk in the same office where the respondent was working and, therefore, his refusal to accept the post did not exhaust the third option and he was entitled to the vacancy created by Nizamuddin 's death in the Regional office where the respondent was working.
We are afraid this interpretation is incorrect in view of the position explained above with regard to the local Head Office which was split into six different offices which together constituted one unit.
The respondent, when he was offered the third option in the Overseas branch, was offered the post in the same office where he was working, the Regional office being as much a part of the Head Office as the Overseas branch.
By refusing to accept the said third and the final offer, the respondent had clearly exhausted all his three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
We, however, do not interfere with the appointment of the respondent to the post of Head Clerk in the Regional office in the facts and circumstances of the case which show that a fortuitous appointment had arisen within almost a month of his refusal to accept the offer.
This, however, will not be treated as a precedent nor does it affect the interpretation that we have placed on the clause 1(d) as above.
Civil Appeal No. 4800 of 1992 In this case also, the respondent Sampath was working as a Clerk in Madras Regional Office.
The first offer of the post of Head Clerk was made to him on 6th August, 1973 at Mudukulathur branch which is in Madras city.
This was declined by him.
On 12th May, 1980, he was given the second offer for the post of Head Clerk at Air Force Station branch, Tambaram which was in Madras city.
The third and final offer was made to him on 4th August, 1983 to the post of Head Clerk in the Stationery department of the Madras Local Head Office.
There is no dispute that Stationery department of the Local Head Offfice and the Regional Office form part of one unit, viz., Madras Local Head Office.
The respondent declined this offer as well, and on 23rd January, 1984 filed a writ petition in the High Court for quashing the third offer and for posting him in his office, viz., Regional Office as the Head Clerk.
The learned Single Judge of the High Court quashed the order making the third offer and allowed the petition following the earlier decision in Parthasarathy 's case with which we have dealt with earlier.
The Division Bench of the High Court also confirmed the order.
For the reasons we have given in C.A.No. 4799 of 1992, we are unable to accept the interpretation given by the High Court on clause 1(d) of Staff Circular No. 42.
However, if in the present case, the respondent has already been accommodated in the post of Head Clerk in the Regional Office itself, we do not intend to interfere with the same.
It is nonetheless made clear that it is the interpretation that we have placed on the said clause that will prevail and not the interpretation placed by the High Court.
With these observations, the appeals are allowed only to the extent that the interpretation placed by the appellant Bank on clause l(d) of the Staff Circular No. 42 is correct and the decision of the High Court on the point is incorrect.
There will be no order as to costs.
| The appellant Bank issued Circular No. 42 containing an understanding reached with the Staff union laying down the policy for promotion of clerks to the post of Head Clerks.
As per clause 1(d) of the Circular the employees who decline to accept Head Clerk s post at a branch office outside the city in which they work, will have a further option when a vacancy arises at any one of the Bank 's offices within that city.
However, this was subject to the condition that at the material time there was no other senior employee who had similarly declined the post outside his branch office, in which case the senior most would have the first choice.
It was further provided that if an employee declines to accept the post of Head Clerk at an office within the same city, his case would be considered only when a vacancy arises at his office.
This was also subject to the condition that there was no senior employee similarly situated at the material time.
If the third and final offer is declined, there would be a permanent debarment of promotion.
Since there were six offices at the Madras Local Head Office, a common seniority was maintained and all the six offices were considered as one office, viz. local Head Office of which the other five offices were only parts.
The Respondents declined their first, second and final offers, though indisputably the final offer was made to them for being posted in an office forming part of the local Head Office.
Both the Respondents moved the High Court by way of Writ Petitions and the High Court took the view that the final offer made was not in the same office and so they were entitled to be posted as Head Clerks in the same office.
Being aggrieved by the said two decisions of the High Court, the appellant Bank preferred the present appeals.
On the question of interpretation of clause 1(d) of the circular in question: Allowing the appeals, this Court, HELD :1.
The High Court 's interpretation of cl. 1(d) of the Circular that the third offer made was not in the office where the Respondents were working and therefore their refusal to accept the post did not exhaust the third option and they were entitled to be posted as Head Clerks in the Office where they were working is incorrect in view of the fact that the local Head Office was split into six different offices which together constituted one unit.
By refusing to accept the third and final offer, the Respondents had clearly exhausted all the three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
[366 E G] 2.
This Court does not intend to interfere with the appointment of the respondents to the post of Head Clerk in the Regional Office in the facts and circumstances of these matters which show that in one case a fortuitous appointment had arisen due to death of an employee within almost a month of the Respondent 's refusal to accept the offer, and in the other case, the Respondent has already been accommodated in the post of Head Clerk in the Regional Office itself.
However, this would not be treated as a precedent and this would not affect the interpretation of clause 1(d) of the Circular, placed by this Court.
[366 H; 367 A]
|
Civil Appeal No. 4650 of 1992.
From the Judgment and Order dated 18.2.1991 of the Patna High Court in C.W.J.C 6581 of 1990.
Ranjit Kumar for the Petitioners.
Ms. Sangeeta Aggarwal for the Respondent.
The Judgment of the Court was delivered by SHARMA, J.
1.
Heard the learned Counsel for the parties.
Special Leave is granted.
This appeal by the State of Bihar and its Officers is directed against the order of the High Court dated 18.2.91 passed on a Writ Petition claiming to have been filed as a Public Interest Litigation for certain reliefs to be made available to a doctor who was earlier in the State service and whose services had been terminated in 1987.
The beneficiary of the impugned judgment Dr. Ms. Sandhya Das was appointed as a Medical Officer in the Bihar State Health Services in 1961 and worked as such till 1971.
She left India for higher studies in 1971 after obtaining leave for a period of two years.
After the expiry of the leave period, she neither returned to India nor made any further application for extension of her leave.
Nothing was heard from her thereafter.
She was not the only one to do so.
A large number of doctors employed in the Bihar Health Services were acting in similar manner, causing considerable hardship to the public.
As this trend persisted, the State authorities could not ignore the problem and the relevant rules were examined, legal opinion was obtained and it was decided to take appropriate corrective measures.
The absentee doctors, presumably placed in more lucrative jobs, did not care to inform the department of their addresses, and personal service of notice on such doctors could not be effected.
In the circumstances, acting on the opinion of the Advocate General, general notice was published and press communique was issued in newspapers in India and abroad calling upon them to offer their explanations for remaining absent from service for more than five years (this period is mentioned in the Rules), within the time indicated.
Dr. Ms. Sandhya Das was also one of such doctors and was called upon to join her duty in India by such a communique issued in 1982 telling her that on her failing to do so, her services would be terminated in accordance with the Service Code.
Nothing was heard from her.
The matter of termination of services of such doctors was referred to Bihar Public Service Commission, and the Commission gave its concurrence in 1986.
Accordingly, the services of 320 doctors including that of Dr. Das was terminated in 1987.
This had the approval of the Bihar Cabinet.
The Writ Petition out of which the present appeal arises was filed in 1990 by one Ms. Kamlesh Jain as a Public Interest Litigation, stating that Dr. Das was unwell and was in need of financial help.
Some details as to how Dr. Das was taken ill and admitted in a hospital in Glasgow and then came back here for further treatment have been given.
She was, it is stated, staying with her brother for sometime on her return to India and eminent doctors of Bihar who were consulted could not get her substantial relief and ultimately she had to be admitted in the P.M.C.H. hospital of Bihar in Patna.
In this background the writ application was filed.
The High Court 's judgment under appeal is very perfunctory.
The entire Order reads thus : "18.2.91.
Learned G.P.I. hands over a cheque of Rs. 2000 drawn in the name of Dr. Sandhya Das, to Miss Kamlesh Jain, who had filed this writ application as public interest litigation on behalf of Dr. Sandhya Das.
This has been accepted by Miss Kamlesh Jain.
The Payment has been made in compliance with the order dated 18.1.91.
We dispose of this writ application with a direction to the respondents to pay the post retirement benefits to Dr. Sandhya Das within a period of three months from today.
We make it clear that this order will not be construed to mean that Dr. Sandhya Das accepts her date of retirement to be 21.7.1987.
If so advised, she may agitate the matter through a fresh writ application.
" We have not been able to discover as to how the writ petitioner became so interested in Dr. Das who was being taken care of in the P.M.C.H. hospital of Bihar and receiving attention of eminent doctors and who has atleast a brother with whom she was staying for sometime.
The learned Counsel for the writ petitioner, respondent before us, could not tell us about the other family members and relations of Dr. Das, or how and why in this background the writ petitioner Ms. Kamlesh Jain chose Dr. Das for showering her benevolence in preference over the far more needy old and sick persons who are, unfortunately, in large number in Bihar.
The impugned judgment also does not indicate any reason.
There is no doubt that the State should strive to promote the welfare of its people so that at least the bare necessities of life are met and the needy and the sick are properly looked after.
This can be done only by adopting a welfare scheme in the interest of the general public; and since the resources of the State are not unlimited, the State is not expected, in absence of relevant reasons, to choose an individual for special treatment at the cost of the others.
Ordinarily, therefore, it is desirable for the State authorities to take up the individual cases coming to their notice and do their best in accordance with the policy decision of general application.
This will ensure equal treatment to all of course in accordance with the individual needs.
Unless all relevant materials are placed by an applicant, it will be an onerous task for the Court to take upon itself to determine the extent of help a particular individual has to get.
The circumstance that a particular person is smart enough to approach the Court or is so fortunate to get somebody to do that on his or her behalf, cannot be a valid ground to divert the State funds to his or her advantage at the cost of corresponding disadvantage to others.
A judicial process should not be allowed to be used for the satisfaction of an individual 's whims, pious, though, they may apparently look.
Since we do not find any reason in the impugned order or in the writ petition which may justify the relief granted in the present case, we are of the view that the writ petition should have been dismissed.
The learned Counsel for the respondent made a grievance before us that the cheque for Rs. 2000 mentioned in the first paragraph of the High Court 's orders has been drawn in the name of Dr. Das whose fingers have become stiff and the money, therefore, could not be encashed.
It was suggested that a cheque may be directed to be drawn in the name of the writ petitioner Ms. Kamlesh Jain.
We do not see any reason for acceding to this prayer as it is not suggested that Dr. Das has no relation of her own, who can look after her needs.
For the reasons indicated above the appeal is allowed, the impugned judgment of the High Court is set aside and the writ petition (C.W.J.C. No. 6581/1990) filed in the High Court is dismissed.
There will be no order as to costs.
N P V Appeal allowed.
| A large number of doctors employed in the State Health Services of the appellant State were leaving India for higher studies, after obtaining leave for a couple of years, and thereafter, they were neither returning to India, nor were sending any further applications for extension of leave.
This was causing considerable hardship to the public.
As this trend persisted, the state authorities wanted to take appropriate corrective steps.
Since the absentee doctors had not informed the department of their addresses, personal service of notice on such doctors could not be effected.
A general notice was published and press communique was issued in newspapers in India and abroad calling upon them to offer their explanations for remaining absent from service for more than five years, within the specified time and indicating that on their failure to do so, the services of 320 doctors would be terminated with the concurrence of the State Public Service Commission and the approval of the State Cabinet.
Services of doctors were, accordingly, terminated.
The respondent filed a Public Interest Litigation before the High Court stating that the particular doctor was unwell and was in need of financial help.
The services of this doctor had also been terminated along with others.
The details as to how she was taken ill and admitted in a hospital outside the country and then brought back to India for further treatment in the State, were given.
The High Court directed the appellants to pay the post retirement benefits to the medical officer doctor concerned.
Earlier the High Court had also directed payment of Rs.2,000 to the respondent writ petitioner as relief to the doctor concerned.
Allowing the appeal of the State, this Court, HELD: 1.1.
It is not known how the respondent writ petitioner became so interested in the beneficiary, who was being taken care of in the hospital and receiving attention of eminent doctors, and who had atleast a brother with whom she was staying for sometime.
The respondent writ petitioner could not tell about the other family members and relations of the beneficiary or how and why in this background the respondent chose the beneficiary for showering her benevolence in preference over the far more needy old and sick persons who are, unfortunately, in large number in the appellant State.
The judgment under challenge also does not indicate any reason.
[360 B D] 1.2.
Since there is no reason at all in the order under challenge or in the writ petitioner which may justify the relief granted in the present case, the writ petition should have been dismissed.
[360 H; 361 A] 1.3.
There is also no reason to accede to the request made on behalf of the respondent that the cheque for Rs. 2000, mentioned in the first paragraph of the High Court 's orders, drawn in the name of the beneficiary, may be directed to be drawn in the name of the respondent writ petitioner for the beneficiary 's fingers had since become stiff and hence the cheque could not be encashed.
There is no suggestion to the effect that the beneficiary has no relation of her own, who can look after her needs.
[361 B] 2.
There is no doubt that the State should strive to promote the welfare of its people so that at least the bare necessities of life are met and the needy and the sick are properly looked after.
This can be done only by adopting a welfare scheme in the interest of the general public; and since the resources of the State are not unlimited, the State is not expected, in absence of relevant reasons, to choose an individual for special treatment at the cost of the others.
Ordinarily, therefore, it is desirable for the State authorities to take up the individual cases coming to their notice and do their best in accordance with the policy decision of general application.
This will ensure equal treatment to all of course in accordance with the individual needs.
Unless all relevant materials are placed by an applicant, it will be onerous task for the Court to take upon itself to determine the extent of help a particular individual has to get.
The circumstance that a particular person is smart enough to approach the Court or is so fortunate to get somebody to do that on his or her behalf, cannot be a valid ground to divert the State funds to his or her advantage at the cost to corresponding disadvantage to others.
A judicial process should not be allowed to be used for the satisfaction of an individual 's whims, pious, though, they may apparently look.
[360 E, F, G]
|
Civil Appeal No. 2213 of 1978.
From the Judgment and Order dated 31.1.1978 of the Delhi High Court in Civil Writ Petition No. 106 of 1978.
V.M. Tarkunde, S.B. Wad, Mrs. J.S. Wad and Mrs. Tamali Wad for the Appellants.
K.T.S. Tulsi, Solicitior General, T.C. Sharma and P. Parmeshwaran for the Respondents.
Kirpal Singh and M.A. Krishna Moorthy for the Intervener.
The Judgment of the Court was delivered by KASLIWAL, J.
This appeal by the Ramjas Foundation, a society duly registered under the Societies Registration Act, 1960 and five others who are the Secretary and trustees of the Ramjas Foundation is directed against the order of the Delhi High Court dated January 31, 1978 dismissing the civil Writ Petition No.106 of 1978 in limine.
On November 13, 1959, the Chief Commissioner Delhi issued a Notification under Section 4 of the Land Acquisition Act, 1894 (hereinafter referred to as 'the Act ') Land measuring 34070 acres was notified as land likely to be acquired by the Government at the public expense for a public purpose, namely, the planned development of Delhi.
The following land was excluded from the scope of the notification: (a) Government land and evacues land; (b) the land already notified, either under Section 6 of the Land Acquisition Act for any Government Scheme; (c) the land already notified either under Section 4 o. under Section 6 of the Land Acquisition Act, for House Building Cooperative Societies mentioned in annexure lII; (d) the land under graveyards, tombs, shrines and the land attached to religious institutions and Wakf property.
The aforesaid land measuring 34070 acres included land measuring about 872 bighas, 9 biswas situated in Chowkri Mubarikabad and measuring about 730 bighas situated in Chowkri Sadhurakhurd, belonging to the Ramjas Foundation.
The present appeal relates to the land situated in Chowkri Sadhurakhurd.
The Ramjas Foundation on December 11, 1959 filed objections under Section 5A of the Act for the entire land situated in Mubarikabad as well as Sadhurakhurd.
The Lt. Governor of Delhi subsequently issued notifications under Section 6 of the Act on 15.4.1968, 27.4.1968, 15.5.1968, 19.8.1968, 14.1.1969 and 18.1.1969.
The Lt. Governor also issued notices under Sections 9 and 10 of the Act on December 27, 1972 for Sadhurakhurd land.
As regards the land in Mubarikabad notification under Section 6 of the Act was issued on February 28, 1968.
Ramjas Foundation filed a writ petition in may, 1968 in the Delhi High Court challenging the action of the Government in acquiring their lands situated in Mubarikabad.
In the said writ petition Sachar, J. (as he then was) who heard the petition was of the view that the matter ought to be tried in a suit instead of writ proceedings.
He, therefore, by his order dated August 10, 1971 permitted the Ramjas Foundation to withdraw the petition with liberty to agitate the matter in a suit and as such the writ petition was dismissed as withdrawn.
The Ramjas Foundation then filed a suit in the Delhi High Court on November 8, 1971 for quashing the notifications issued under Sections 4 and 6 of the Act in respect of the land situated in Mubarikabad.
The suit was dismissed by Awadh Behari Rohtagi, J. of the Delhi High Court by order dated 21.3.1977 reported in AIR 1977 Delhi 261.
Learned Counsel for the appellants brought to our notice that Letters Patent Appeal before the Division Bench of the High Court is pending against the aforesaid Judgment of the Learned Single Judge.
So far as the land situated in Sadhurakhurd with which we are concerned in the present appeal a Writ Petition No. 213 of 1973 was filed in the High Court and the same was dismissed as withdrawn on 30th March, 1977.
Thereafter another Writ Petition No. 106 of 1978 was filed challenging the notifications issued under Sections 4, 6, 9 and 10 of the Act and the same was dismissed by the High Court by the impugned order dated January 31, 1978 in limine as already mentioned above.
We have heard Mr. Tarkunde, Learned Senior Advocate on behalf of the appellants and Mr. Tulsi, Learned Additional Solicitor General on behalf of the respondents.
Learned counsel for the appellants contended that the appellants had submitted their objections under Section 5A of the Act on 11.12.1959 but the same were rejected without affording any opportunity of personal hearing.
It was submitted that it was mandatory on the part of the respondents to have given an opportunity of personal hearing specially when the same was desired and a denial of such opportunity of personal hearing invalidates the notifications issued under Sections 6 and 9 of the Act.
Reliance in respect of the above contention is placed on Farid Ahmed Abdul Samad & Anr.
vs Municipal Corporation of the City of Ahmedabad & Anr., [19771 1 SCR 71.
It was also contended on behalf of the appellants that the notification issued under Section 4 of the Act itself excludes the land of wakf property.
It has thus been contended that so far as the land in question is concerned the same being also a wakf property as such ought to have been exempted under the notification itself.
It was submitted that Ramjas Foundation is an educational charitable society which is running several schools and post graduate college in Delhi and several educational institutions are being run on the alleged acquired land itself.
As an alternative argument it was submitted that in case this Hon 'ble Court takes the view that wakf property mentioned in the alleged notification does not include the educational and charitable institutions run by Hindus or non Muslims then such notification is void for violation of article 14 of the Constitution.
As regards the objection of the violation of the mandatory provisions of Section 5A of the Act in.
not affording an opportunity of personal hearing while deciding such objections, we granted an opportunity to the Learned Additional Solicitor General to place material after examining the original record.
We granted, this opportunity to the respondents on account of the reason that the writ petition had been dismissed by the High Court in limine without issuing notice to the respondents and as such the respondents had not been given any opportunity before the High Court to place any material to refute the allegations made by the appellants in this regard.
The Additional Solicitor General during the course of the hearing of the matter placed an order of the Land Acquisition Collector, Delhi dated 23.2.1968 which has been taken on record and for the purposes of identification has been marked as Annexure 'X '.
A copy of the said Annexure 'X ' was also given to the Learned counsel for the appellants.
A perusal of the aforesaid order dated 22.3.1968 clearly shows that the Ramjas Foundation Society was represented through Sh.
Ratan Lal Gupta, Advocate who was given a personal hearing.
From a perusal of the aforesaid document Annexure 'X ' dated 23.2.1968 it is clear that full opportunity of hearing through counsel was afforded to the Ramjas Foundation.
It has been further mentioned in this order that the Ramjas Foundation Society was also allowed to file fresh objections if so desired, but Sh.
Ratan Lal Gupta, Learned Advocate for the Petitioner society declined and stated that there was nothing more to add in the previous objection petition.
After bringing the said document Annexure 'X ' to the notice of the Learned counsel for the appellants, no satisfactory explanation or argument came forward on behalf of the appellants.
The conduct of the appellants in raising the plea that no opportunity of personal hearing was given to the appellants in respect of the objections filed under Section 5A of the Act was totally baseless and factually incorrect and such conduct is reprehensible.
lt is well settled that a person invoking an equitable extraordinary jurisdiction of the Court under article 226 of the Constitution is required to come with clean hands and should not conceal the material facts.
The objection regarding not affording an opportunity of personal hearing in respect of objections filed under Section 5A of the Act was one of the main planks of the grounds raised in the writ petition as well as in the Special Leave Petition filed before this Court and ought we know if such ground had not been taken this Court would have entertained this appeal or not.
The appellants have taken the advantage of obtaining the stay order also from this Court which is continuing for the last 14 years as the Special Leave Petition was filed in 1978 itself.
It may be further noted that a common objection petition under Section 5A of the Act in respect of both the lands situated in Mubarikabad as well as in Sadhurakhurd was filed on 11.12.1959 through Sh.
Ratan lal Gupta, Advocate.
The said objections were heard in the presence of Shri Ratan Lal Gupta, Advocate and disposed of by one common order Annexure 'X ' and we cannot believe an ipse dixit explanation made orally during the course of arguments on behalf of the appellants that they had no knowledge of any personal hearing being given to Shri Ratan Lal Gupta, Advocate.
It is also important to note that no such objection was taken in respect of land in Mubarikabad.
Another ground on which the present appeal has been contested is the ground of delay, laches and acquiescence in filing the writ petition challenging the acquisition proceedings.
As already mentioned above a common notification was issued under Section 4 of the Act for an area of 34070 acres of land needed for planned development of Delhi.
Between 1959 and 1961, about, six thousand objections were filed under Section 5A of the Act.
The objections were overruled.
On March 18, 1966, the declaration under Section 6 of the Act was published in respect of a portion of the area.
Thereafter, in 1970 notices were issued under Section 9(1) of the Act and some of the persons who had received such notices challenged the validity of acquisition proceedings by filing writ petitions before the High Court of Delhi.
The High Court negatived all the contentions raised in those cases and dismissed the writ petitions.
Thereafter appeals by grant of special leave against the judgment of the Delhi High Court as well as writ petitions filed directly under article 32 of the Constitution were heard and disposed of by this Court by a common Judgment reported in Aflatoon & Ors.
vs Lt. Governor Delhi & Ors., ; In the aforesaid case a Constitution Bench of this Court held that in the case of an acquisition of a large area of land comprising several plots belonging to different persons, the specification of the purpose can only be with regard to the acquisition of the whole area.
Unlike in the case of an acquisition of a small area, it might be practically difficult to specify the particular purpose for which each and every item of land comprised in the area is needed.
It was further held in the above case that about six thousand objections were filed under Section 5A by persons interested in the property.
Several writ petitions were also filed in 1966 and 1967 challenging the validity of the acquisition proceedings.
The Government had necessarily to wait for the disposal of the objections and petitions before proceeding further in the matter.
The High Court was of the view that there was no inordinate delay on the part of the Government in completing the acquisition proceedings.
The conclusion of the High Court was held to be correct.
It was also held in the above case that the writ petitions were liable to be dismissed on the grounds of laches and delay on the part of the petitioners.
In the above case this Court had found that the appellants of that case had not moved in the matter even after the declaration under Section 6 was published in 1966.
They approached the High Court with their writ petitions only in 1970 when the notices under Section 9 were issued to them.
This Court then observed as under: "There was apparently no reason why the writ petitions should have waited till 1972 to come to this Court for challenging the validity of the notification issued in 1959 on the ground that the particulars of the public purpose were not specified.
A valid notification under Section 4 is sine qua non for initiation of proceedings for acquisition of property.
To have sat on the fence and allowed the Government to complete the acquisition proceedings on the basis that the notification under Section 4 and the declaration under Section 6 were valid and then to attack the notification on grounds which were available to them at the time when tile notification was published would be putting a premium on dilatory tactics.
The writ petitions are liable to be dismissed on the ground of laches and delay on the part of the petitioners".
The delay and laches in the case before us are even worse than those in the above cited Aflatoon 's case.
The appellants had initially filed a writ petition No. 213/73 challenging the notification dated 13.11.1959 under Section 4 of the Act and notification dated 27.4.1968 under Section 6 of the Act with respect to 245 bighas and 1 biswas of land situated in the revenue estate of Sadhurakhurd and the notices dated 27.12.1972 under Sections 9 and 10 of the Act issued by the Land Acquisition Collector, Delhi with respect to Khasra No. 1040/353 (12 bighas and 8 biswas).
On 30.3.1977 Shri M.C. Gupta, Learned counsel for the Ramjas Foundation stated that he had instructions from his clients to state that they did not want to press the petition and wish to withdraw it.
The statement of Sh.
Gupta had been separately recorded.
The Court, in these circumstances permitted to withdraw the petition and dismissed the same as withdrawn.
lt is important to note that in the statement Sh.
M.C.Gupta, Learned counsel for the petitioners stated as under: "I may be permitted to withdraw this petition in view of the Judgment delivered by Hon.
Mr. Justice Awadh Behari in Suit 451 of 1971 decided on 21st March, 1977, between the parties, wherein the contentions urged were precisely the same as urged in this petition, my clients reserved the opportunity to file a fresh suit if so necessitated by the circumstances in future.
" It may be noted that the reference with regard to suit No. 451 of 1971 decided on 21st March, 1977 is in respect of the land of petitioners situated in Mubarikabad.
It is surprising that though the opportunity was sought for filing a fresh suit, the appellants again filed a writ petition No. 106 of 1978 in the High Court on 7.1.1978 which was ultimately dismissed by the High Court in limine on 31st January, 1978 by a Division Bench comprising of T.P.S. Chawla and Awadh Behari, JJ.
In this writ petition No. 106 of 1978 the appellants conveniently omitted to mention that the permission to withdraw the petition No. 213 of 1973 was granted on the statement of Sh.
M.C. Gupta that his clients reserved the liberty to file a fresh suit and not writ.
Thus no liberty was sought or given for filing a fresh writ petition.
In any case there were no fresh ground or circumstances available to the appellants to file a fresh writ petition No. 106 of 1978 on 7.1.1978 on identical grounds when the earlier writ petition No. 213 of 1973 had been dismissed as withdrawn on 30.3.1977.
Nothing had happened between 30.3.1977 and 7.1.1978 for giving a fresh cause of action to the appellants to file the writ petition No. 106 of 1978.
Awadh Behari, J. had dismissed the suit No. 451 of 1971 by order dated 21.3.1977 in regard to the lands in Mubarikabad and he was also one of the Judges of the Division Bench who passed the impugned order dated January 31, 1978 dismissing the writ petition in limine as he was fully aware of the entire background of this litigation.
The appellants are themselves responsible for creating confusion in initiating separate proceedings at different period of time in respect of the lands situated in Mubarikabad and Sadhurakhurd though challenge to the acquisition proceedings was on common grounds.
Learned counsel for the appellants was unable to satisfy in respect of such conduct of hide and seek on the part of the appellants.
In case, as sought to be explained by Mr. Tarkunde, Learned Senior Counsel for the appellants, the appellants were depending on the result of the civil suit filed in respect of the lands situated in Mubarikabad there was no justification for filing the writ petition No. 213 of 1973 in respect of the land situated in Sadhurakhurd as the suit was not decided in 1973 but was in fact dismissed on 21.3.1977.
We find no justification for filing the writ petition in respect of the land situated in Sadhurakhurd in 1973 and subsequently withdrawing the writ petition on 30th March, 1977 reserving the liberty to file a fresh suit but thereafter again filing the writ petition on 7.1.1978 instead of suit.
Independently, of all the circumstances mentioned above, we shall now consider the question of delay and laches in filing the writ petition No. 106 of 1978 and the earlier writ petition No. 213 of 1973 relating to lands in Sadhurakhurd.
Mr. Tarkunde, Learned Senior Counsel vehemently contended that there is no limitation prescribed for filing the writ petition and the question of delay and laches has to be examined independently in the facts and circumstances of each case.
He has argued that the appellants are continuing in possession uptil date and though challenge has been made to the validity of notifications issued under Section 4 in 1959, Section 6 in 1968 and 1969 and Section 9 and 10 in 19722, there is no delay, since no award has been passed so far and no loss has occasioned to the respondents due to lapse of time.
It has been submitted that there was no change of circumstances during the intervening period and the delay had been fully explained on the aforesaid grounds.
It has also been argued that notifications under Sections 9 and 10 were issued in 1972 and soon there after the appellants came forward with a writ petition No. 213 of 1973 challenging the notifications issued under Sections 4, 6, 9 and 10 of the Act.
We find no force at all in the above contentions.
It is an admitted fact that notification under Section 4 of the Act was issued as early as 1959 and all the notifications under Section 6 of the Act in relation to the land of the appellants in Sadhurakhurd were issued in 1968 and 1969.
The challenge to the acquisition proceedings was mainly based on the ground that in the notification dated 13.11.1959 issued under Section 4 of the Act the lands of wakf property were excluded and the lands of the appellants being also used for educational and charitable purposes the same were also liable to be excluded.
At a later stage a ground was also taken that if wakf property in the aforesaid notification under Section 4 of the Act meant only wakf properties of the Mohammedans, then such notification was discriminatory and violative under article 14 of the (Constitution as there was no reasonable ground to discriminate such properties of Hindus or non Muslims also meant for charitable purposes.
So far as the notifications under Section 6 of the Act are concerned the same were attacked on the ground that no opportunity of personal hearing was given to hear the objections filed under Section 5A of the Act.
Thus it is abundantly clear that the challenge was in respect of notifications under Sections 4 and 6 of the Act alone and though in the prayer clause relief had been sought to quash the notification under Sections 9 and 10 of the Act also which were issued in 1972 but no ground whatsoever has been pleaded in the writ petition nor raised before us as to how the notifications under Sections 9 and 10 had any concern for explaining the delay in respect of the challenge to notifications under Sections 4 and 6 of the Act.
It is worthwhile to note that according to the appellants own showing the notices under Sections 9 and 10 issued to the appellants in 1972 were in respect of the land being Khasra No. 1040/353 which related to 12 bighas and 8 biswas only.
The challenge on the other hand in the writ petition is in respect of notifications under Sections 4 and 6 covering the entire land measuring about 730 bighas situate in village Sadhurakhurd.
We find no justification at all in explaining the delay on the ground that no award has been passed nor the appellants have been dispossessed so far.
This cannot be an explanation for not challenging the notifications under Sections 4 and 6 of the 9Act and in the present case the appellants had themselves sought stay from this Court as early as 15.11.1978 for not making and declaring the award and not to dispossess the appellants.
Thus we find no justification at all for the delay in not challenging the notification issued under Section 4 on 13.11.1959 till 1973.
Even notifications under Section 6 of the Act were issued in 1968 and 1969 but not challenged till 1973.
As already mentioned above in Aflatoon 's case (supra) a Constitution Bench of this Court has clearly held that even after the declaration under Section 6 of the Act published in 1966, the appellants had approached with their writ petitions in 1970 when the notices under Section 9 were issued to them the writ petitions were liable to be dismissed on the grounds of laches and delay.
Mr. Tarkunde, learned senior counsel made strenuous effort to distinguish the aforesaid case on the ground that in the aforesaid case the Court was influenced with the fact that the petitioners had sat on the fence and allowed the Government to complete (emphasis added) the acquisition proceedings.
Much emphasis has been laid on the word 'to complete ' the acquisition proceedings.
We find no force in this submission as the facts narrated in the above case clearly shows that the petitioners in those cases had filed writ petitions in the High Court in 1970 and in the Supreme Court in 1972 after the issuance of notices under Sections 4, 6 and 9 of the Act.
The use of the word complete ' was not of much significance and the main reasoning of the case was that grounds to attack the notification under Sections 4 and 6 of the Act were available at the time of publication of such notifications.
In the facts and circumstances of the case before us the appellants were also sitting on the fence and did not take any steps of challenging the notification under Sections 4 and 6 of the Act till 1973 though the grounds now sought to be urged were available to the appellants as soon as such notifications were issued.
Thus viewing the matter from any angle we are clearly of the view that the writ petition was also liable to be dismissed on the ground of laches and delay on the part of the appellants apart from other grounds already dealt by us.
In the face of the aforesaid view taken by us, it is not necessary at all to go on other questions raised in the case.
We decline to express any opinion on any questions of law raised in the appeal.
In the result we dismiss this appeal with costs.
In view of the dismissal of the appeal itself all interim orders stand vacated automatically.
G.N. Appeal dismissed.
| Notification under Section 4 of the Land Acquisition Act, 1894 was issued in respect of certain lands including the lands belonging to the appellant foundation situated at two different places.
The appellant Foundation filed objections.
Subsequently notifications under Sections 6 and Notices under Sections 9 and 10 were also issued.
The appellant Foundation challenged the notifications in respect of the land situated at one of the two places, by way of a Writ Petition before the High Court and the same was dismissed as withdrawn with liberty to the petitioner to agitate the matter in a suit.
Thereupon, the appellant Foundation filed a suit and the same was dismissed by a Single Judge of the High Court.
The Letters Patent Appeal filed against that decision is pending.
In respect of the land situated at the other place, a Writ Petition was filed by the appellant before the High Court, which came to be dismissed as withdrawn.
Thereafter, another Writ Petition was filed by the appellant Foundation before the High Court challenging the notifications.
The High Court having dismissed the Writ Petition, the appellant Foundation preferred the present appeal.
On behalf of the appellants, it was contended that they filed their objections under Section 5A of the Act, but the same were rejected without affording any opportunity of personal hearing, and the denial of such opportunity invalidated the notifications; and that the land of the appellants being wakf property it ought to have been excluded on the basis of the notification under Section 4 of the Act.
Alternatively it was contended that the appellant has been running several educational institutions on the very land and that if the exemption for wakf property is not applicable to such educational and charitable institutions run by Hindus or non Muslims, then such a notification would be violative of Article 14 of the Constitution.
The Respondents contested the appeal on grounds of delay, laches and acquiescence in fling the Writ Petition challenging the acquisition proceedings.
It was also stated that the appellants were given opportunity of personal hearing.
Dismissing the appeal, this Court, HELD: 1.
The conduct of the appellants in raising the plea that no opportunity of personal hearing was given to the appellants in respect of the objections filed under Section 5A of the Land Acquisition Act, 1894 was totally baseless and factually incorrect and such conduct is reprehensible.
It is well settled that a person invoking an equitable extraordinary jurisdiction of the Court under article 226 of the Constitution is required to come with clean hands and should not conceal the material facts.
[431 F, G] Farid Ahmed Abdul Samad & Anr.
vs Municipal Corporation of the City of Ahmedabad & Anr., [1977] 1 SCR 71, referred to. 2.
The challenge to the acquisition proceedings was mainly based on the ground that in the notification dated 13.11.1959 issued under Section 4 of the Act the lands of wakf property were excluded and the lands of the appellants being also used for educational and charitable purposes the same were also liable to be excluded.
At a later stage a ground was also taken that if wakf property in the aforesaid notification under Section 4 of the Act meant only wakf properties of the Mohammedans, then such notification was discriminatory and violative under article 14 of the Constitution as there was no reasonable ground to discriminate such properties of Hindus or non Muslims meant for charitable purposes.
Thus the challenge was in respect of notifications under Sections 4 and 6 of the Act alone and though in the prayer clause relief has been sought to quash the notification under Sections 9 and 10 of the Act also which were issued in 1972, no ground whatsoever has been pleaded in the writ petition nor raised in the present appeal as to how the notifications under Sections 9 and 10 had any concern for explaining the delay in respect of the Challenge to notification under Sections 4 and 6 of the Act, Admittedly the notices under sections 9 and 10 issued appellants in 1972 were in respect of a portion of the land.
The challenge on the other Land in the writ petition is in respect of notifications under Sections 4 and 6 covering the entire land.
There is no justification at all in explaining the delay on the ground that no award has been passed nor the appellants have been dispossessed so far.
This cannot be an explanation for not challenging the notifications under Sections 4 and 6 of the Act and in the present case the appellants had themselves sought stay from this Court as early as 15.11.1978 for not making and declaring the award and not to dispossess the appellants.
Thus there is no justification at all for the delay in not challenging the notification issued under Section 4 on 13.11.1959 till 1973.
Even notifications under Section 6 of the Act were issued in 1968 and 1969 but not challenged till 1973.
[435 H; 436 A G] Aflatoon & Ors.
vs Lt. Governor Delhi & Ors., [2975] 1 SCR 802, relied on.
|
tition (C) No. 499 of 1991.
(Under Article 32 of the Constitution of India).
WITH Civil Appeal Nos.
4788 & 4794 of 1992.
C.S. Vaidyanathan, K. Lahiri, P.P.Rao, Vishwajeet Singh, R.B. Misra, 4 R.K. Khanna, Surya Kant, R. Singhvi, C.V.S. Rao, Ms. A. Subhashini, R.P. Singh, S.N. Terdol, A. Sharan, H.K. Puri, Ms. Abha Sharma and K.K. Lahiri for the appearing parties.
The Judgment of the Court was delivered by K. RAMASWAMY, J.
Special leave granted.
As the trio raised common questions of law, they are disposed of by a common judgment.
The 1st petitioner in the Writ Petition is an Association representing the officers of the State Civil Service of U.P. and petitioner Nos. 2 to 17 are its members.
some of them and Bihar State Officers are the appellants in the two appeals respectively.
On January 19, 1984, the association represented to the Govt.
of India requesing to remove wide disparity prevailing in different States of promotional avenues from the State Civil Services to All India Administrative Service.
The officers from Andhra Pradesh and Kerala, on completion of 8 to 9 years of service are becoming qualified for promotion to All India Administrative Service, while the officers from States like Uttar Pradesh and Bihar would get chance only after putting 24 to 27 years of service.
The Estimate Committee of Seventh Lok Sabha too in its 77th Report highlighted the injustice.
A committee of A senior Secretaries constituted by the Union Govt.
recommended, after due consideration, to evolve equitable principles of comparable seniority from different States for promotion to Indian Administrative Service.
Pursuant thereto the Central Govt.
proposed to amend the Indian Administrative Service (Regulation of Seniority) Rules, 1954, for short 'the Seniority Rules '.
In the meantime the Rules were repealed and replaced by I.A.S. (Regulation of Seniority) Rules, 1987 which came with effect from Nov. 6, 1987 for short 'New Seniority Rules '.
The first respondent issued (Circular letter dated September 9, 1986 to the State Govts.
indicating amendments for fixation of seniority of officers promoted from State Civil Services ' to I.A.S. to give weightage over and above 4 years in the assignment of year of allotment as per the existing relevant rules, namely, four years for the first 12 years State service with additional weightage of one year for every two to three years ' completed service subject to a maximum of five years.
After receiving suggestions or comments from State Governments, the Central India exercising the power under sub sec.
(1) of Sec. 3 of All India Service Act, 1951 for short, 'the Act ' amended the New Seniority Rules, 1987 which amendment was published in the Gazette of India on February 3, 1989 for short the 'First Amendment Rules '.
The proviso thereto was made limiting its operation prospectively from February 3, 1989.
Putting the proviso and its prospective operation in issue, the appellants from U.P. in Civil Appeal No. 4788 of 1992[S.L.P. (C) No. 13823 of 1991] filed Original Application No. 18 of 1989 in the Central Administrative Tribunal, Allahabad at Lucknow Circuit Bench, contending that they were promoted in 1980 onwards but by limiting its application to November 6, 1987, they were discriminated.
Bihar Officers questioned the Rule in O.A. No. 136 of 1989 before the C.A.T. at Patna.
Therein the appellants though found to be entitled to the total weightage of 9 years since their juniors were given 1983 as the year of allotment by operation of proviso to Rule 3(3)(ii) of the First Amendment Rules were given 1983 as the year of allotment.
Thereby they were denied 3 years weightage.
The Tribunal at Lucknow held that the prospective operation discriminated the Senior State Civil Service Officers but it refused to direct the Union Govt.
to amend the Rules with retrospective effect.
However, the Govt.
of India was requested to reconsider the matter to give retrospective operation to the First Amendment Rules.
The Tribunal at Patna upheld the rules and dismissed the application.
The Officers from Uttar Pradesh through their Association filed the Writ Petition under article 32 of the Constitution seeking writ of certiorari to quash the order dated December 12, 1990 made by the Ministry of Personnel, Public Grievance and Pension Department and for a mandamus to extend the benefits flowing from the First Amendment Rules to its members promoted prior to January 1988 and to the petitioners Nos. 2 to 17 in particular.
It is needless to state that the First Amendment Rules would operate with full effect from 1992, while the Promotee Officers promoted between 1988 to 1991 would reap partial benefit.
Rule 3 of the Seniority Rules, 1954 postulated assignment of the year allotment as per the Rules to every officer appointed to the Indian Administrative Service, be it a direct recruit or a Promotee officer.
The Promotee officer appointed in accordance with rule 9 of the IAS Recruitment Rules read with regulation 9 of IAS Promotion Regulations shall be allotted an year of allotment next below the junior most direct recruit officer recruited in accordance with rule 7 of the Recruitment Rules (Direct Recruitment Rules) and who officiated continuously in a senior post from a date earlier than the date of the commencement of such officiation by the Promotee officer.
Under the New Seniority Rules 1987, rule 3(1) postulates that every officer shall be assigned year of allotment in accordance with the provisions hereinafter contained in the rules.
The year of allotment of an officer in service at the commencement of the amended Seniority Rules shall be the same as per the rule 3(2) as has been assigned to him by the Central Govt.
in accordance with the orders and instructions in force immediately before the commencement of the New Seniority Rules.
Sub rule (3) of Rule 3 provides thus: "3(3) The year of allotment of an officer appointed to the Service after the commencement of these rules shall be as follows: 3(3)(i) the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held: Provided that if a direct recruit officer is permitted to join probationary training under rule 5(1) of the IAS (Probation) Rules, 1954, with direct recruit officers of a subsequent year of allotment, then he shall be assigned that subsequent year as the year of allotment.
3(ii) The year of allotment of a promotee officer shall be determined in the following manner]: (a) For the service rendered by him in the State Civil Service upto twelve years, in the rank not below that of a Deputy Collector or equivalent, he shall be given a weightage of four year towards fixation of the year of allotment; (b) He shall also be given a weightage of one year for every completed three years of service beyond the period of twelve years, referred to in sub clause (a), subject to a maximum weightage of five years.
In the calculation, fractions are to be ignored.
(c) The weightage mentioned in sub clause (b) shall be calculated with effect from the year in which the officer is appointed to the service: Provided that he shall not be assigned a year of allotment earlier than the year of allotment assigned to an officer senior, to him in that select list or appointed to the service on the basis of an earlier Select List.
3(3) (iii) The year of allotment of an officer appointed by selection shall be determined in the following manner: a) for the first 12 years of gazetted service, he shall be given a weightage of 4 years towards fixation of the year of allotment; (b) he shall also be given a weightage of one year for every completed 3 years of service beyond the period of 12 years, referred to in sub clause (a), subject to a maximum weightage of 5 years.
In this calculation, fractions are to be ignored; (c) the weightage mentioned in sub clause (b) shall be calculated with effect from the year in which the officer is A appointed to the service: Provided that he shall not become senior to another non State Civil Service Officer already appointed in the service.
Provided further that he shall not be allotted a year earlier than the year of allotment assigned to an officer already appointed to the service in accordance with sub rule (1) of rule 8 of the Recruitment Rules, whose length of class I continuous service in the State Civil Service in the State Civil Service is equal to or more than the length of Class I continuous service of the former in connection with the affairs of the State".
A plain and fair reading of the sub rules manifests the Central Govt 's intention that the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held.
If any such officer was permitted to join probationary training with direct recruit officers of a subsequent year of allotment then he shall be assigned that subsequent year as the year of allotment.
In determining the seniority of a promotee officer in assigning year of allotment, the service rendered in the State Civil Service upto 12 years as Dy.
Collector, or equivalent posts, weightage of 4 years shall be given.
In addition he/she shall also be given further benefit of one year weightage of every completed 3 years of service, beyond the period of 12 years, subject to a maximum weightage of 5 years.
In its calculations fractions are to be ignored.
the weightage shall be computed from the year of appointment of the officer to the service.
The offending proviso limits the operation of Rule 3(3)(ii)(a) and (b) that such an officer shall not be assigned an year of allotment earlier than the year of allotment assigned to the officers senior to him in that select list or appointed on the basis of an earlier select list.
Under rule 3(3) (iii) also, though not relevant for the purpose of the case but serves as an analogy, that the year of allotment of an officer appointed by selection shall also be given the year of allotment in the same manner as adumbrated in sub rule 3(3) (ii) and its effect also was circumscribed under the proviso that he shall not become senior to another non State Civil Service Officer already appointed to the service.
It is, therefore, clear that the New Seniority Rules were to be operative from November 6, 1987 and the First Amendment Rules from February 3, 1989 with the result that in assigning the year of A allotment, full weightage of 9 years ' eligible service was given to the promotee State Civil Service Officers.
However, the senior officer to him/her appointed from the State Civil Service earlier in the same select list or one above him in the previous select list shall remain senior to him.
Thereby the proviso averted the effect of pushing an officer who gained entry into IAS service by application of rule of weightage in 3(3)(ii) of the rules down in seniority.
It is settled law that ability, merit and suitability are the criteria to select an officer of the State Civil Service for inclusion in the select list for promotion under regulation 9 of the IAS Promotion Regulations, 1955 read with rule 9 of the IAS Recruitment Rules, 1954.
In that behalf no change was brought about.
A junior officer who thus superseded a senior State Civil Officer became entitled to carry his year of allotment and became senior to him in the cadre of l.
But for the proviso, the operation of Rule 3(3)(ii), the senior officer would have been saddled with the disability to be pushed down in seniority which would have nullified and frustrated the hard earned earlier promotion and consequential effect on seniority earned by dint of merit and ability.
Moreover, the entry into the service is from different streams and predominantly by direct recruitment and promotion.
The direct recruit gets his year of allotment from the succeeding year of his recruitment.
The direct recruit officers appointed earlier to 1988 also would be adversely effected in their seniority.
Under sec.
3(2) of the Act, every rule made by the Central Govt.
under sec.3(1) and every regulation made thereunder or in pursuance of any such rules, shall be laid, as soon as may be, after such or regulation is made, before each House of Parliament while in session.
Before the expiry of the session, if both Houses agree to make any modification to such rules or regulations or both Houses agree to make any modification to such rules or regulations or both Houses agree that such rules or regulations should not be made, the rule or regulation shall thereafter have effect, only in such modified form or be of no effect as the case may be.
SO, however, that any such modification or annulment shall be, without prejudice to the validity of anything previously done under that rule or the regulation.
Thereby the rules or regulations made in exercise of the power under sec.
3(1) of the Act regulating recruitment and the conditions of service for persons appointed to an All India Service are statutory in character.
No statute shall be construed so as to have retrospective operation unless its language is such as plainly to require such construction.
The Legislature, as its policy, give effect to the statute or statutory rule from a specified time or from the date of its publication in the State Gazette.
It is equally settled law that court would issue no mandamus to the legislature to make law much less retrospectively.
It is the settled cannons of construction that every word, phrase or sentence in the statute and all the provisions read together shall be given full force and effect and no provision shall be rendered surplusage or nugatory.
I is equally settled law that the mere fact that the result of a statue may be unjust, does not entitle the court to refuse to give effect to it.
However, if two reasonable interpretations are possible, the court would adopt that construction which is just, reasonable or sensible.
Courts cannot substitute the words or phrases or supply casus omissus.
The court could in an appropriate case iron out the creases to remove ambiguity to give full force and effect to the legislative intention.
But the intention must be gathered by putting up fair construction of all the provisions reading together.
This endeavour would be to avoid absurdity or unintended unjust results by applying the doctrine of purposive construction.
In Smt.
Hire Devi & Ors.
vs District Board, Shahjahanpur, , the constitution bench of this court interpreting sections 70 and 90 of the U.P. District Board Act, in particular, the expression. "orders of any authority whose sanction is necessary", held that " No doubt it is the duty of the court to try to harmonise various provisions of an Act passed by the Legislature.
But it is certainly not the duty of the court to stretch the words used by the Legislature to fill in gaps or omissions in the provisions of an Act".
In Nalinakhaya Bysck vs Shyam Suder haldar 7 Ors.[1953] SCR 533 at 545, this court held that it is not competent to any court to proceed upon the assumption that the Legislature 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 aid the Legislature 's defective phrasing of an act or add or amend or, by construction make up deficiencies which are left in the Act.
The approach adopted contra by the High Court was held illegal.
In Commissioner of Sales Tax, U.P. vs Auriya Chamber of Commerce, Allahabad; , at 438, this court held that in a developing country like ours any legal system may permit judges to play a creative role and innovate to ensure justice without doing violence to the norm as set by legislation.
But to invoke judicial activism to set at naught legislative judgment is subversive of the constitutional harmony and comity of in strumentalities.
Thus it is settled law that where the intention of statutory amendment is clear and expressive, words cannot be interpolated.
In the first place they are not, in the case, needed.
If they should be added, the statute would more than likely fail to carry out the legislative intent.
The words are the skin of the language which the Legislature intended to convey.
Where the meaning of the legislative intent is what the statute says to be so.
If the language is plain, clear and explicit, it must be given effect and the question of interpretation does not arise.
If found ambiguous or unintended, the court can at best iron out the creases.
Any wrong order or defective legislation cannot be righted merely because it is wrong.
At best the court can quash it, if it violates the fundamental rights or is ultra vires of the power or manifestly illegal vitiated by fundamental laws or gross miscarriage of justice.
It could thus be held that the legislature intended that the First Amendment Rules would operate prospectively from February 3, 1989, the date of their publication in the Gazette of India.
Its policy is explicit and unambiguous.
Rule 3(3) (ii) intended to remedy the imbalances while at the same time the proviso intended to operate prospectively to avert injustice to the officers recruited/promoted earlier than the officer promoted later to that date.
Whether the proviso is violative of article 14 and article 16(1) of the Constitution of India? Undoubtedly all the promotees form the state civil service constitute a class preceding or succeeding or succeeding the First Amendment Rules.
The purpose of temporary truce carved out by the proviso is self evident.
By dint of merit, ability and suitability a junior officer could seal a march over the senior officers in the state civil service and get entry into the Indian Administrative services earlier to the senior officers and thus becomes a member of the Indian Administrative services officer, who was superseded and subsequently became qualified for inclusion in the select list, after the New seniority Rules or the First Amendment Rules came into force, indisputably would be junior in I.A.S. cadre to his erstwhile junior officers in state civil services.
If he gets benefit of the free play of the First Amendment Rules, it would have the inevitable effect of depriving and he would be pushed down and would again become junior to him in senior officer, though had varied length of services, but because of late promotion to Indian Administrative service, would receive and forego proportionate weightage of past service for a short period till the rules fully become operational.
The first Amendment Rules doubtless provided the weightage to a maximum of 9 years and would track back the year of allotment anterior to the date of inclusion in the select list under the Recruitment Rules read with Promotion Regulations.
The proviso intended to protect the seniority of the officer promoted/appointed earlier than the appellants and its effect would be that till rule 3(3) (ii) fully becomes operational graded weightage was given to the promotees.
In other words it prevented to get seniority earlier to the date of his/her appointment to the Indian Administrative service.
Equally it intended not to let endless compulsive circumstances denied the benefits of full 9 years weightage to officers promoted during 1987 to 1992.
The discrimination, though is prevented unequals to become equals.
The contention of sri P.P Rao, therefore, that invidious discrimination was meted out to senior officers and that they are similarly circumstanced are devoid of force.
This Court by a Constitution Bench in the state of Jammu & Kashmir V. T. N. Khosa, ; at 463, held that the amended rules varying the conditions of service would operate in future and governs the future rights of the existing personnel.
The promoted state civil Service Officers who had already the year of allotment in I.A.S cadre are not discriminated.
But the benefit o f full weightage of 9 years was cut down and applied in varied degree to officers promoted during the transitional period to prevent unjust results and to mete out justice to the junior officers or officers promoted earlier and upto 1992.
It is equally settled law that in an affirmative action the court strike down a rule which offends the right to equality enshrined in articles 14 and 16(1) of the Constitution like the one arose in D.S. Nakara vs Union of India, ; and B. Prabhakar Rao vs state of A.P., [1985]2 suppl, SCR 379, this court extended parity in an affirmative action by reading the rule down without doing violence to the language or injustice to others.
The application of the First Amendment Rule has the inevitable and insiduous effect of doing injustice to the direct recruit/promotee officers or officers promoted earlier to Feb. 3 1989 and the proviso avoided such injustice to the date of promotion to I.A.S the rule to all the senior irrespective of the date of promotion to I.A.S. cadre would land in or lead to inequitous or unjust results which itself is unfair, arbitrary and unjust results which itself is unfair, arbitrary and unjust, offending article 14 of the Constitution.
To avoid such unconstitutional consequences the proviso to rule 3(3) (ii) of the First Amendment Rules was made.
The doctrine or kicking down or picking up, put forth in Union of India vs P.K. Roy, at 201 202, equally cannot be extended to the facts of the case.
But for the proviso the operation of rule 3(3) (ii) would be inconsistent with sec.
3(1A) of the Act.
Equally though the doctrine of reading down is a settled principle of law, its application to the facts of the case would lead to injustice to the officers promoted earlier to the appellants.
A writ of mandamus commanding the respondents to give full benefit of weightage of rule 3(3) (ii) and (b) of the First Amendment Rules would amount to direct the executive to disobey the proviso which is now held to be intra vires of the Constitution.
In the light of the above discussion no directions could be given to the central Govt.
to amend to Rules.
Therefore, we have no hesitation to hold that though Govt.
of India has power to amend the New Seniority Rules by First Amendment Rules prospectively giving weightage of total 9 years services to promotee officers of state Civil services in assigning a year of allotment, no direction or mandamus could be issued commanding the Central Govt.
To disobey the proviso or to apply the rules retrospectively to all the officers even to word out monetary benefits as contended by sri Vaidyanathan.
His further contention that the First Amendment Rules would be applied with effect form the date of the New seniority Rules or date of intimation of the proposed First Amendment Rules to the state Government for limited retrospectivity also cannot be acceded to for the same reasons.
In this context it is necessary to note that Sec.
3(1A) of the Act which provides: "3(1A) The power to make rules conferred by this section shall include the power to give retrospective effect from a date not earlier than the date of commencement of commencement of this Act, to the rules or any of them but no retrospective effect shall be given to any rule so as to prejudicially affect the interests of any person to whom such rule may be applicable.
" Its bare reading clearly indicates that the Rules made under the Act shall not be given retrospective effect so as to prejudicially affect the "interest of any person to whom such rules may be applicable".
The attempt of Sri Vidyanathan that this rule may be so read as applicable only to the promotee officers vis a vis the senior promotee officers cannot be accepted.
The Lucknow Bench of the C.A.T glossed over it by adopting strange construction that since the offending proviso to rule 3(3) (ii) of the First Amendment Rules would apply to promotee officers inter se , sub section (1) (a) of section 3 of the Act would not apply to the direct recruits, to say the least, is disparate construction.
There is a distinction between right and interest.
No one has vested right to promotion or seniority, but an officer has an interest to seniority , But an officer has an interest to seniority acquired by working out the rule.
Of course, it could be taken away only by operation of valid law.
Sub section (1A) of sec.
3 of the Act enjoins the authorities not to give retrospective effect to such a rule or regulation so as to avoid "Prejudicial affect to the interest" of any person to whom such rule may be applicable.
The operation of law may have the effect of postponing the future consideration of the claims or legitimate expectation of interest for promotion.
Take a case as an illustration.
Articles 14 16(1), 16(4) ,335 and 46 read with proviso to article 309 of the Constitution empowers the President or the Governor to make satutory rules of reservation, where there is no adequate representation to persons belonging to scheduled castes and scheduled Tribes in a service or posts in connection with the affairs of the Central Govt.
or the state Government.
By operation of rule of reservation appointments or promotions given to a Scheduled Caste or Scheduled Tribe officer, though prejudicially affect the interest of officers of general category on parity of merit, in the larger public interest by the operation of the rule of reservation discrimination in favour of scheduled castes and scheduled Tribes ins constitutionally permissible as class.
Therefore, the proviso to rule 3(3) (ii) of the Amendment Rules is consistent with section 3(1A) of the Act, and that therefore, it is not ultra vires of the power of the central Govt.
nor it offends articles 14 and 16(1) of the constitution.
Counsel for the appellants/petitioners are their contention that there is no vested right to seniority and is variable and defeasible by operation of law.
In A.K. Bhatnagar vs Union of India,[1991] 1 SCR 544 this court held that seniority is an incidence of services and when rules prescribe the method of computation, It is squarely governed by such rules.
This would be amplified by following hypothetical illustrations.
In a direct recruitment the seniority would be arranged in the order of merit and it starts from the date of joining the duty.
Suppose 'A ' to 'D ' were appointed on the same day and 'A ' was senior most among them.
But 'A ' did not pass the prescribed tests and for varied reasons 'A 's probation was confirmed after a long period.
In the meanwhile 'B ' to 'D ' were confirmed 'B ' to 'D ' thereby became senior to 'A ' though appointed in the same day and 'A ' was No. I among them.
Suppose probation was not declared mala fide resulting in delayed confirmation and 'A ' challenged it in a court of law issued by the court to confirm 'A ' challenged it in court of law and succeeded in proving mala fide action and consequential direction was issued by the court to confirm 'A ' from the date of his appointment.
Though 'B ' to 'D ' become seniors to 'A ' later confirmation and the consequential defeasance of acquired seniority.
An empolyee has an interest in the accrued seniority which by operation of law also is liable to be varied.
by 'A ' later confirmation and the consequential defeasance of acquired seniority.
An employee has an interest in the accrued seniority which by operation of law also is liable to be varied.
Suppose 'A ' to 'D ' were appointed on the same day by direct recruitment 'A ' and 'D ' are general candidates and 'B ' and 'C ' though far below in merit and yet were assigned 2nd and 3rd places as per roster and 'D ' lost seniority though secured at the competitive examination due to operation of roster system 'D ' became junior to 'B ' and 'C '.
BY operation of law 'D ' s legitimate interest was thereby defeated.
suppose in promotion posts also similar situation may emerge. 'A ' though senior most in the feeder cadre, due to pendency of charges, he was superseded by 'B ' to 'D ' and thereby they gained early entry into promoted posts and thereby was promoted.
Though 'B ' to 'D ' became initially seniors to 'A ' he was rested to his seniority in 'D ' became initially seniors to 'A ' he was restored to his seniority in promotion posts as well and 'B ' to 'D ' interest was defeated.
Suppose the promotion was on the basis of merit and ability 'D ' was found to be more meritorious and was promoted earlier to `A ' to `C ', `D ' thereby would become senior to `A ' to `C ' though he was junior most in the feeder service.
The right to seniority and interest thereby were varied by operation of law.
Suppose `B ' and `C ' also have the benefit of reservation in promotion as well and by its application they were promoted earlier to `A ' though the latter was more meritorious.
`A ' was later on promoted.
He cannot claim his seniority over `B ' and `C ' who scaled a march over `A ' and became senior to `A ' in promoted cadre or service.
The seniority of `A ' thereby was varied.
However, law itself may protect the legitimate interest in seniority while granting relief to persons similarly circumstanced like the one under sec.
3(1A) of the Act read with proviso to Rule 3(3)(ii) & (iii) of the First Amendment Rules.
It was neither void nor ultra vires offending articles 14 and 16(1) of the Constitution.
Admittedly, the draft of the First Amendment Rules, as circulated to the State Government did not contain the offending proviso.
It is stated in the counter affidavit filed on behalf of the Central Govt.
that some of the State Government had suggested to incorporate the proviso and after necessary consultation the proviso was added to the First Amendment Rule.
Section 3(1) of the Act provide thus: "3(1) Regulation of recruitment and conditions of services.
(1) The Central Govt.
may, after consultation with the Governments of the State concerned (including the State of Jammu and Kashmir), (and by notification in the Official Gazette) make rules for the regulation of recruitment, and the conditions of service of persons appointed to an All India Service.
" It is thereby clear that sec.
3(1) empowers the Central Govt.
to make any rule regulating the recruitment and the conditions of service of All India Service, which include amendment from time to time, but the rider it engrafted is that the power should be exercised "after consultation with the Governments of the State concerned".
It is already held that by operation of sub section (2) of section 3 of the Act, the rules or regulations are statutory in character.
The meaning of the word `consultation ' was considered in catena of case.
This Court in Union of India vs Sankalchand Himatlal Sheth & Anr.,[1977] 4 SCC 193, held that the word "consult" implies a conference of two or more persons or an impact of two or more minds in respect of a topics in order to enable them to evolve a correct or at least a satisfactory solution.
In order that the two minds may be able to confer and produce a mutual impact it is essential that each must have for its consideration full and identical facts which can at one contitute both the source and foundation of the final decision.
In that case the question related to the transfer of a High Court from one High Court to another.
In that context this court considered whether sounding of the Chief Justice of India without meaningful consultation would be proper discharge of the constitutional obligation by the President.
In that context the principle of law laid was that the respective view point of the Govt.
and the Chief Justice must be known to each other and both were to the discuss and examine the merits of the proposed transfer.
The meaning of the word "consultation" was evaluated in that backdrop.
This Court approved the dictum laid by K. Subba Rao.
J., as he then was, in R.Pushpam vs State of Madras, AIR 1953 Madras 392.
In State of U.P. vs Manmohan Lal Srivastava, ; at 542, the word "consultation" in article 320 of the Constitution of India was considered by a Constitution Bench.
It was held that the word "consultation" did not envisage mandatory character for consultation, but the Constitution makers allowed the discretion to the appointing authority to consult the Public Service Commission.
But the executive Govt.
cannot completely ignore the existence of the Public Service Commission or to pick up and choose cases in which it may or may not be consulted.
However, prior consultation was held to be not mandatory for removal of a Govt.
servant as the Central Govt.
has not been tied down by the advice of the U.P.S.C.
This court did not extend the rule of consultation to making the advice of the Commission on those matter binding on the Govt.
In the absence of a binding character, this Court held that non compliance of article 320(3)(c) would not have the effect of nullifying the final order passed by the Govt.
of removal of the Govt.
servant from service.
In U.R. Bhatt vs Union of India, AIR 1962 SC 1344, this Court held that the absence of consultation of the Public Service Commission or any irregularity in consultation under article 320 does not effect the ultimate decision taken by the authority under article 311 of the Constitution.
In Ram Gopal Chaturvedi vs State of Madhya Pradesh, ; , the same view was reiterated.
In N. Raghavendra Rao vs Dy.
Commissioner, South Kanara, Mangalore, ; , words "prior approval" of the Central Govt.
in construing the proviso to sec.
115(7) of S.R. Act of the words of varying the conditions of service the Constitution Bench held that "prior approval" would include general approval to the variation in the conditions of service with certain limits indicated by the Central Govt.
Same view was reiterated by another Constitution Bench in Mohd. Sujat Ali & Ors.
vs Union of India.
, ; at 469 471.
In Chandramouleshwar Prasad vs Patna High Court & Ors. ; at 674 & 675, construing the word "consultation" in article 233 of the Constitution, another Constitution Bench in the context of removal of a District Judge by the Governor on the recommedation of the High Court, held that "consultation" or "deliberation" is not complete or effective unless the parties thereto, i.e., the State Govt.
and High Court make their respective points of view known to each other and discuss and examine the relative merits of their views.
If the one party makes a proposal to the other who has a counter proposal in his mind which is not communicated to the proposer the direction to give effect to the counter proposal without anything more, cannot be said to have been issued after consultation.
In that case it was held that the absence of any consultation with the High Court rendered the order to removal dated October 17, 1968 passed by the State Govt.
illegal.
In Narain Sankaran Mooss vs State of Kerala & Anr., ; , the facts were that the State Govt.
, exercising the power under Sec. 4 (1) of the Electricity Supply Act, cancelled the licence of the appellant without consulting the Electricity Board.
The question was whether cancellation would be ultra vires of the power.
While examining that question, this court considered whether consultation was mandatory or directory, and held that the revocation of the licence trenches into the right to carry on business guarantee under article 19(1)(g) of the Constitution.
Therefore, when the Act prescribed prior consultation of the Electricity Board such condition was incorporated to prevent abuse to power and to ensure just exercise of the power.
Section 4 of the Electricity Supply Act enjoins, in public interest, to consult the Board before revocation of the licence.
Consultation provided an additional safeguard to the license and when revoking the licence the Govt.
act in two stages.
Before and after the explanation was received and when the Govt.
considered the explanation, it is mandatory that it should consult the Electricity Board and non consultation rendered the order as void.
Consultant of the Board, was therefore, held to be a condition precedent for making order of revocation.
In Naraindas Indurkhya vs State of M.P. & Ors., , M.P. Madhyamik Siksha Adhiniyam Act, 1973 provided that before prescribing the text books the Chairman of the Board was to be consulted.
Its infraction was considered and held that any attempted exercise of the power by the State Govt.
without complying with this condition would be null and void.
On the facts of the case, it was held that the notification issued by the State Govt.
without consultation of Chairman was invalid being in breach of mandatory requirement of the proviso to Sec.4 (1) of the Act.
In Hindustan Zinc Ltd. vs A.P Electricity Board & Ors., ; the revision of tariff was effected without consulting the Consultative Council.
This Court held that the revision of tariff was a question of policy under Sec 78A of the Indian Electricity Supply Act.
The failure of the Board to consult the Consultative Council whether rendered the revision of tariff invalid.
It was held that the consequence of non compliance of Sec.
16 was not provided and the nature of the function of the Consultative Council and force of its advice being at best only persuasive, it cannot be said that the revision of tariff, without seeking the advice of the Consultative Council, rendered the revision of tariff itself invalid.
On the other hand the Board after revision of the tariff has to place the revised tariff on the table of the House or Houses of the Stat Legislature and such statement is open to discussion therein, the Board is bound to take into consideration such modification, if made, or any comments made on such statement by the State Legislature.
Under those circumstance it was held that the non compliance of Sec 16(5) did not render the revision of tariff invalid.
In Rollo & Anr.
vs Minister of Town & Country Planning [1948] 1 All Eng.
Report of the Towns Act, 1946 envisages the Minister of Town & Country Planning after consultation with the local authorities, if satisfied that it is expedient in the national interest that any area of land should be developed as a new town by the Corporation established under the Act, he may make an order designating that area as a site of the proposal of the new town.
On October 7, 1946 press notice was issued giving the date of meeting of the representatives of the local authorities and the Minister explained in the meeting what he had in his mind in arriving at the boundaries of the area.
Objections were raised and public enquiry was held.
But actual explanation was not sought from any local authorities.
In those circumstance contention was raised that there was no consultation as adumbrated under Sec.
Repelling the contention, the House of Lords held that in the meeting the local authorities clearly were informed of the general nature of the proposal, the areas suggested, it size and what the Minister wished and intended to do.
Discussion was followed.
Minutes were prepared and press notice was issued stating what had happened.
In those circumstance it was held that there was consultation and the requirement was complied with.
The ratio of Morris, J. in Elecher & Ors.
vs Minister of Town & Country Planning, [1947] 2 All.
Reports 496, was approved.
The same view was reiterated in Sinfield & Ors.
vs London Transport Executive Law Report 1970 Chancery Divn.
In Derham & Anr.
vs Church Commissioners of England, 1954 Appeal Cases 245, the Judicial Committee was to consider the question of consultation with Church Commissioners of effecting the union of beneficers under Sec.
3(1) of the Pastoral Reorganisation Measure, 1949 which postulates of "consultation so far as is practicable".
Construing the language it was held that a meeting was held explaining the proposed scheme, the members of the Church though opposed the scheme, it was approved.
As such it was held that the action was valid and their was proper consultation.
In Port Louis Corporation vs Attorney General of Mauritius, 1965 Appeal Cases 1111, the local Govt.
of Mauritius was empowered under the Local Government Ordinance, 1962 by sec.
73 (1) to alter the boundries of any town, district or village, after consultation with the local authorities concerned.
The Governor and Council of Ministers in May 1963 had in their minds to alter the boundaries of Port Louis, so that the villages surrounding Port Louis Township would be embraced within and would enlarge the area of the town of Port Louis.
The Minister by a letter asked the views of the local authorities, enclosing the details of the proposed alternation and the map.
Majority Councillors had resigned on the ground that they has no mandate to express any views.
On subsequent nomination, those Councillors raised certain points and asked for information, which was duly complied with.
Further information was called for, but the Minister refused to extend time nor supplied information.
The Governor in Council has issued a proclamation extending the boundaries of Port Louis Action was initiated by the local authorities for declaration that the proclamation was ultra vires, null and void in so far as it related to the extended boundries of the town of Port Louis, contending that there had been no consultation as required by Sec.
73 (1) of the Ordinance.
The Judicial Committee construing the word "after consultation" in that setting held that the local authorities has received a clear proposal.
The failure to supply information by detailed answers to their questions would not render the proclamation as invalid.
Accordingly uphold the action as affirmed by the Supreme Court of Mauritius.
The ratio in Union of India & Ors.
vs Dr. section Krishna Murthy & Ors., ; , renders little assistance to the appellants.
In that case the question was the year of allotment under the Forest Service (Regulation of Seniority) Rules, 1968.
By fixation of the year of allotment it had retrospective effect from the dated when the promotee was brought into select list or the date of appointment whichever was later.
Under those circumstance it was held that retrospective operation of the rules did not prejudicely affect any vested right much less any fundamental rights of the officers recruited from the State service.
The result of the above discussion leads to the following conclusions: (1) Consultation is a process which requires meeting of minds between the parties involved to evolve a correct or at least satisfactory solution.
There should be meeting of mind between the proposer and the persons to be consulted on the subject of consultation.
There must be definite facts which constitute foundation and source for final decision.
The object of the consultation is to render consultation meaningful to serve the intended purpose.
Prior consultation in that behalf is mandatory.
(2) When the offending action effects fundamental rights or to effectuate built in insulation, as fair procedure, consultation is mandatory and non consultation renders the action ultra vires or invalid or void.
(3) When the opinion or advice binds the proposer, consultation is mandatory and its infraction renders the action or order illegal.
(4) When the opinion or advice or view does not bind the person or authority, any action or decision taken contrary to the advice is not illegal, nor becomes void.
(5) When the object of the consultation is only to apprise of the proposed action and when the opinion or advice is not binding on the authorities or person and is not bound to be accepted, the prior consultation is only directory.
The authority proposing to take action should make known the general scheme or outlines of the actions proposed to be taken, be put to notice of the authority or the persons to be consulted; have the views or objections, taken them into consideration, and thereafter, the authority or person would be entitled or has/have authority to pass appropriate orders or take decision thereon.
In such circumstance it amounts to an action "after consultation".
(6) No hard and fast rules could be laid, no useful purpose would be served by formulating words or definitions nor would it be appropriate to lay down the manner in which consultation must take place.
It is for the Court to determine in each case in the light of its facts and circumstances whether the action is "after consultation"; "was in fact consulted" or was it a "sufficient consultation".
(7) Where any action is legislative in character, the consultation envisages like one under Sec.
3(1) of the Act, that the Central Govt.
is to intimate to the State Governments concerned of the proposed action in general outline and on receiving the objections or suggestions, the Central Govt.
or Legislature is free to evolve its policy decision, make appropriate legislation with necessary additions or modification or omit the proposed one in draft bill or rules.
The revised draft bill or rules, amendments or additions in the altered or modified form need not again be communicated to all the concerned State Governments nor have prior fresh consultation Rules or Regulations being legislative in character, would tacitly receive the approval of the State Government through the people 's representative when laid on the floor of each House of Parliament.
The Act or the Rule made at the final shape is not rendered void or ultra vires or invalid for non consultation.
The proposal for amending the new Seniority Rules in the draft was only for inviting discussion and suggestions on the scope and ambit of the proposed law and the effect of the operation of the First Amendment Rules.
Keeping the operational effect in view the proposed amendment could be modified or deleted or altered.
The Central Govt.
is not bound to accept all or every proposal or counter proposal.
Consultation with the Ministry of Law would be sufficient.
Thereby the Central Govt.
is not precluded to revise the draft rules in the light of the consultation and advice.
The Central Govt.
had prior consultation with the State Governments concerned and the Law Department.
In the light of the above principle and applying them to the facts of this case we have no hesitation to hold that the general consultation has by the Central Govt.
with the State Govts.
and Union Territories was sufficient and it was not necessary to have prior consultation again to bring the proviso on statutes as part of the First Amendment Rules.
The contention of Sri Vaidyanathan that the proviso is rendered void for the absence of consultation of the State Govts.
is devoid of any force.
By operation of sub sec.
(2) of Sec. 3 the rules laid on the floor of each House of the Parliament.
There were no suggestions or alterations made by either House of Parliament.
Under the circumstance we have no hesitation to hold that the failure to consult all the State Governments or Union Territories on the proviso to rule 3(3)(ii) or (iii) of the First Amendment Rules does not render the proviso ultra vires, invalid or void.
Accordingly, we do not find any merit to issue the writ as prayed for in the writ petition.
The Writ Petition and Civil Appeal arising out of S.L.P. (C) No. 12469/90 are dismissed.
The appeal arising out of S.L.P. (C) No. 13823/91 is allowed and the order of the Central Administrative Tribunal, Allahabad Bench at Lucknow is set side.
But in the circumstance parties are directed to bear their own costs throughout.
WP (C) No. 499/91 dismissed.
C.A. No. 4794/92 dismissed.
C.A. No. 4788/92 allowed.
| On 19.1.1984, the Association [petitioner No. 1 in W.P. (C) No. 499 of 1991] requested the Union Government (Respondent) to remove the disparity prevailing in different states of promotional avenues from State Civil Services to All India Administrative Service.
A Committee of Senior Secretaries, constituted by the Union Government, recommended an equitable principle of comparable seniority from different States for promotion to the Indian Administrative Service.
The I.A.S. (Regulation of Seniority) Rules, 1987 came into force with effect from 6.11.1987, repealing the old Rules.
In a Circular dated 9.9.1986 issued by the respondent Union Government directed the State Governments to give weightage over and above four years the assignment of year of allotment as per the existing rules, namely, four years for the first 12 years State service with additional weightage one year for every two to the years completed service subject to a maximum of five years.
Union Government amended and published the New Seniority Rules, 1987, after considering the suggestions from the State Governments.
The First Amendment Rules was published in the Gazette of India on 32.1989 which was given prospective operation from 3.2.1989.
The appellants in C.I. No. 4794 of 1992 questioned Rule 3(3) (ii) proviso of the First Amendment Rules, in an application before the CAT.
at Patna.
They contended that though they were found to be entitled to the total weightage of 9 years since the juniors were given 1983 as the year of allotment by operation of proviso to Rule 3(3)(ii) of the First Amendment Rules, were given 1983 as the year of allotment and thereby the appellants were denied the 3 years weightage.
The Tribunal upheld the Rules and dismissed the application, against which appeal C.A. No. 4794 of 1992 was filed in this Court.
The appellants in C.A. No. 4788 of 1992, some members of the Association petitioner No. 1 of the W.P. (C) No. 499 of 1991 filed an application before the Central Administrative Tribunal at Lucknow contending that they were promoted in 1980 onwards, and they were discriminated in fixation of their seniority.
The Tribunal held that the prospective operation of the 1987 Rules discriminated the Senior State Civil Service Officers, but refused to direct the Union Government to amend the Rules but retrospective effect.
However, it requested the Government of India to reconsider the matter and to give retrospective operation to the First Amendment Rules.
This decision was questioned hl an appeal C.A. No. 4788 of 1992.
In WP(C)No. of 499 of 1991, Petitioner No. 1 An Association representing the officers of the U.P. State Civil Service and petitioners 2 17, its members filed the writ petition under Article 32 of the Constitution to quash the order of the respondent Union Government dated 12.12.1990, and for a direction to extend the benefit flowing from the First Amendment Rules to its members promoted prior to January 1988.
It was contended that the First Amendment Rules operated with effect from 1992, whereas the promotee Officers were promoted between 1988 to 1991 and that they would get only partial benefit.
As these cases raised common questions of law, they were heard together.
Dismissing WP(C)No.
499/1991 and CA No. 4794 of 1992, and allowing C.A No. 4788 of 1992, this Court, HELD: 1.01.
The entry into the service is from different streams and predominantly by direct recruitment and promotion.
The direct recruit gets his year of allotment from the succeeding year of his recruitment.
The direct recruit officers appointed earlier to 1988 also would be adversely affected in their seniority.
[403 D] 1.02.
Rule 3(31 manifests the Central Govt 's intention that the year of allotment of a direct recruit officer shall be the year following the year in which the competitive examination was held.
If any such officer was permitted to join probationary training with direct recruit officers of a subsequent year of allotment then he shall be assigned that subsequent year as the year of allotment.
[400 G H] 1.03.
In determining the seniority of a promotee officer in assigning year of allotment, the service rendered in the State Civil Service upto 12 years as Dy.
Collector, or equivalent posts, weightage of 4 years shall be given.
In addition he/she shall also be given, further benefit of one year weightage of every completed 3 years of service.
beyond the period of 12 years, subject to a maximum weightage of 5 years.
In its calculations fractions are to be ignored.
The weightage shall be computed from the year G of appointment of the officer to the service.
[402 E] 1.04.
The offending proviso limits the operation of Rule 3(3) (ii) (a) and (b) that such an officer shall not be assigned an year of allotment earlier than the year of allotment assigned to the officer senior to him in that select list or appointed on the basis of an earlier select list.
[1402 F] 105.
The proviso aims that the State Civil Service senior officer ' though had varied length of services, but because of late promotion to Indian Administrative Service, would receive and forego proportionate weightage of past service for a short period till the rules fully become operational.
[406 B] 1.06.
The first amendment rules doubtless provided the remedy to remove existing discriminatory results by giving graded weightage to a maximum of 9 years and would track back the year of allotment anterior to the date of inclusion in the select list under the Recruitment Rules read with Promotion Regulations.
[406 C] 1.07.
The Proviso intended to protect the seniority of the officers promoted/appointed earlier than the appellants and its effect would be that till rule 3 (3) (ii) fully becomes operational graded weightage was given to the promotees.
In other words it prevented to get seniority earlier to the date of his/her appointment to the Indian Administrative Service.
Equally it in tended not to let endless chain reaction occur to unsettle the settled interests in seniority.
These compulsive circumstances denied the benefits of full 9 years weightage to officers promoted during 1987 to 1992.
The discrimination, though is discernible, but inevitable to ensure just results.
In other words the proviso prevented unequals to become equals.
[406 D E] 1.08.
The new Seniority Rules were to be operative from November 6, 1987 and the First Amendment Rules from February 3, 1989 with the result that in assigning the year of allotment, full weightage of 9 years ' eligible service was given to the promotee State Civil Service Officers.
However, the senior officer to him/her appointed from the State Civil Service earlier in the same select list or one above him in the previous select list shall remain senior to him.
Thereby the proviso averted the effect of pushing an officer who gained entry into IAS service by application of rule of weightage in Rule 3(3) (ii) of the Rules down in seniority.
[402 H, 403 A B] 1.09.
By dint of merit, ability and suitability junior officer could steal a march over the senior officers in the State Civil Service and get entry into the Indian Administrative Service earlier to the senior officers and thus becomes a member of the Indian Administrative Service.
Thereby he becomes senior in service.
The senior State Civil Service officer, who was superseded and subsequently became qualified tor inclusion in the select list, after the new Seniority Rules or the First Amendment Rules came into force, indisputably would be junior in I.A.S. cadre to his erstwhile junior officers in State Civil Service.
If he gets the benefit of the free play of the First Amendment Rules, it would have the inevitable effect of depriving the promoted erstwhile junior officer of the benefit of early promotion and he would be pushed down and would again become junior to him in the Indian Administrative Service.
[405 G H; 406 A B] 1.10.
A junior officer who superseded a senior State Civil Officer became entitled to carry his year of allotment and became senior to him in the cadre of I.A.S. But for the proviso, the operation of Rule 3(3)(ii), the senior officer would have been saddled with the disability to be pushed down in seniority which would have nullified and frustrated the hard earned earlier promotion and consequential effect on seniority earned by dint of merit and ability.
[403 E] 2.01.
No statute shall be construed so as to have retrospective operation unless its language is such as plainly to require such a construction.
The legislature, as its policy, give effect to the statute or statutory rule from a specified time or from the date of its publication in the State Gazette.
1404 A] 2.02.
Court would issue no mandamus to the legislature to make law much less retrospectively.
It is the settled cannons of construction that every word, E phrase or sentence in the statute and all the provisions read together shall be given full force and effect and no provision shall be rendered surplusage or nugatory.
[404 B] 2.04.
The mere fact that the result of a statute may be unjust, does not entitle the court to refuse to give effect to it.
However, if two reasonable interpretations are possible, the Court would adopt that construction which is just, reasonable or sensible.
Courts cannot substitute the words or phrases or supply casus omissus.
The court could in an appropriate case iron out the creases to remove ambiguity to give full force and effect to the legislative intention.
But the intention must be gathered by putting up fair construction of all the provisions reading together.
This endeavour would be to avoid absurdity or unintended unjust results by applying the doctrine or purposive construction.
1404 C D] 2.05.
Where the intention of statutory amendment is clear and expressive, words cannot be interpolated.
In the first place they are not, in the ease, needed.
If they should be added, the statute would more than likely fail to carry out the legislative intent.
The words are the skin of the language which the legislature intended to convey.
[405 B] 2.06.
Where the meaning of the statute is clear and sensible, either with or without omitting the words or adding one, interpolation is improper, since the primary purpose of the legislative intent is what the statute says to be so.
If the language is plain, clear and explicit, it must be given effect and the question of interpretation does not arise.
[405 C] 2.07.
If found ambiguous or unintended, the court can at best iron out the creases.
Any wrong order or defective legislation cannot be righted merely because it is wrong.
At best the court can quash it, if it violates the fundamental rights or is ultra vires of the power or manifestly illegal vitiated by fundamental laws or gross miscarriage of justice.
[405 D] 2.08.
The Legislature intended that the First Amendment Rules would operate prospectively from February 3, 1989, the date of their publication in the Gazette of India.
Its policy is explicit and unambiguous, Rule 3(3)(ii) intended to remedy the imbalances while at the same time the proviso intended to operate prospectively to avert injustice to the officers recruited/promoted earlier than the officer promoted later to that date.
The proviso carved out an exception to ward off injustice to the officers that became members of I.A.S. earlier to those dates.
[405 E] Smt.
Hire Devi & Ors.
vs District Board, Shahjahanpur, ; Nalinakhaya Bysck vs Shyam Sunder Haldar & Ors., ; at 545 and Commissioner of Sales Tax, U.P. vs Auriya Chamber of Commerce, Allahabad, 119861 2 SCR 430 at 438, referred to. 3.01.
The application of the First Amendment Rules has the inevitable and insiduous effect of doing injustice to the direct recruit promotee officer or officers promoted earlier to Feb. 3, 1989 and the proviso avoided such unjust results.
Giving retrospective effect or directing to apply the rule to all the seniors irrespective of the date of promotion to I.A.S. cadre would land in or lead to inequitous or unjust results which itself is unfair, arbitrary and unjust.
offending article 14 of the Constitution.
To avoid such unconstitutional consequences the proviso to Rule 3(3)(ii) of the First Amendment Rules was made.
[407 C] 3.02.
But for the proviso the operation of Rule 3(3)(ii) would be inconsistent with Sec. 3(1A) of the Act.
Equally though the doctrine 'Reading down ' is a settled principle of law, its application to the facts of the case would lead to injustice to the officers promoted earlier to the appellants.
A writ of mandamus commanding the respondents to give full benefit of weightage of Rule 3(3)(ii)(a)&(b) of the First Amendment Rules would amount to direct the executive to disobey the proviso which is now held to be intra vires of the Constitutions.
[407 D] 3.03.
The proviso to Rule 3(3)(ii) of the First Amendment Rules is consistent with section 3(1A) of the Act and it is not ultra vires of the power the Central Govt.
nor it offends articles 14 and 16(1) of the Constitution.
[409 A] 3.04.
There is a distinction between right and interest.
No one has a vested right to promotion or seniority, but an officer has an interest to seniority acquired by working out the rule.
Of course, it could be taken away only by operation of valid law.
[408 E] 3.05.
Law itself may protect the legitimate interest in seniority while granting relief to persons similarly circumstanced like the one under sec.
3(1A) of the Act read with proviso to Rule 3(3) (ii) & (iii) of the First Amendment Rules.
It was neither void nor ultra vires offending articles 14 and 16(1) of the Constitution.
[410 C] State of Jammu & Kashmir vs T.N. Khosa, ; at 779; J. Kumar vs Union of India, ; at 463 and Union of India vs P.K Roy, 11968] 2 SCR 186 at 201 202, distinguished.
D.S. Nakara vs Union of India,.
; ; B. Prabhakar Rao vs State of A.P., [1985] 2 Supp.
SCR 379 and A.K Bhatnagar vs Union of India, [1991] 1 SCC 544, referred to.
Consultation is a process which requires meeting of minds between the parties involved in the process of consultation on the material facts and points involved to evolve a correct or at least satisfactory solution.
There should be meeting of minds between the proposer and the persons to be consulted on the subject of consultation.
There must be definite facts which constitute foundation and source for final decision.
[415 E] 4.02.
The object of the consultation is to render consultation meaningful to serve the intended purpose.
Prior consultation in that behalf is mandatory.
[415 E] 4.03.
When the offending action effects fundamental rights or to effectuate built in insulation, as fair procedure, consultation is mandatory and non consultation renders the action ultra vires or invalid or 4.04.
When the opinion or advice binds the proposer, consultation is mandatory and its infraction renders the action or order illegal.
1415 F] 4.05.
When the opinion or advice or view does not bind the person or authority, any action or decision taken contrary to the advice is not illegal, nor becomes void.
[415 G] 4.06.
When the object of the consultation is only to apprise of the proposed action and when the opinion or advice is not binding on the authorities or person and is not bound to be accepted, the prior consultation is only directory.
The authority proposing to take action should make known the general scheme or outlines of the actions proposed to be taken, be put to notice of the authority or the persons to be consulted, have the views or objections, taken them into consideration, and there after, the authority or person would be entitled or has/have authority to pass appropriate orders or take decision thereon.
In such circumstances it amounts to an action "after consultation".
[415 H, 416 A B] 4.07.
No hard and fast rule could be laid, no useful purpose would be served by formulating words or definitions nor would it be appropriate or lay down the manner in which consultation must take place.
It is for the Court to determine in each case in the light of its facts and cir cumstances whether the action is "after consultation", "was in fact consulted" or was it a "sufficient consultation".
[416 C] 4.08.
Where any action is legislative in character, the consultation envisages like one under Sec.
3 (1) of the Act, that the Central Govt.
is to intimate to the State Governments concerned of the proposed action in general outlines and on receiving the objections or suggestions, the Central Govt.
or Legislature is free to evolve its policy decision, make appropriate legislation with necessary additions or modification or omit the proposed one in draft bill or rules.
The revised draft bill or rules, amendments or additions in the altered or modified from need not again be communicated to all the concerned State Governments nor have prior fresh consultation.
Rules or Regulations being legislative in character, would tacitly receive the approval of the State Governments through the people 's representatives when laid on the floor of each House of Parliament.
The Act or the Rule made at the final shape is not rendered void or ultra vires or invalid for non consultation.
[416 D F] 4.09 The proposal for amending the new Seniority Rules in the draft was only for inviting discussion and suggestions on the scope and ambit of the proposed law and the effect of the operation of the First Amendment Rules.
Keeping the operational effect in view the proposed amendment could be modified or deleted or altered.
[416 G] 4.10 The Central Govt.
is not bound to accept all or every proposal or counter proposal.
Consultation with the Ministry of Law would be sufficient.
Thereby the Central Govt.
is not precluded to revise the draft rules in the light of the consultation and advice.
[416 H] 4.11 The general consultation had by the Central Govt.
with the State Govts.
and Union Territories was sufficient and it was not necessary to have prior consultation again to bring the proviso on statutes as part of the First Amendment Rules.
[417 B] 4.12 By operation of sub sec.
(2) of Sec. 3 the rules were laid on the floor of each House of the Parliament.
There were no suggestions or alterations made by either House of Parliaments.
Thus the First Amendment Rules stood approved by the Parliament.
[417 C] 4.13 The failure to consult all the State Governments or Union Territories on the proviso to Rule 3(3) (ii) or (iii) of the First Amendment Rules does not render the proviso ultra vires, invalid or void.
[417 D] Union of India vs Sankalchand Himatlal Sheth & Anr., ; ; R. Pushpam vs State of Madras, AIR 1953 Madras 392; State of U.P. vs Manmohan Lal Srivastava, ; at 542; U.R. Bhatt vs Union of India, AIR 1962 SC 1344; Ram Gopal Chaturvedi vs State of Madhya Pradesh, ; ; N. Raghavendra Rao vs Dy.
Commissioner, South Kanara, Mangalore, ; ; Mohd. Sujat Ali & Ors.
vs Union of India, ; at 469 471; Chandramouleshwar Prasad vs Patna High Court & Ors., ; at 674 675; Narain Sankaran Mooss vs State of Kerala & Anr, ; ; Naraindas Indurkhya vs State of M.P. & Ors., ; Hindustan Zinc Ltd. vs A.P. Electricity Board, Ors.; , ; Rollo & Anr.
vs Minister of Town & Country Planning, [1948] 1 All Eng.
Reports 13; Electher & Ors.
vs Minister of Town & Country Planning, [1947] 2 All.
Reports 496; Sinfield & Ors.
vs London Transport Executive, Law Reports 1970 Chancery Divn., Derham & Anr.
vs Church Commissioners for England, 1954 Appeal Cases 245 and Port Louis Corporation vs Attorney General of Mauritius, 1965 Appeal Cases 1111, referred to.
Union of India & Ors.
vs Dr. section Krishna Murthy & Ors.,[1989] 4 SCC 689, distinguished.
|
Civil Appeal No. 2736 of 1991.
From the Judgment and Order dated 5.10.1990 of the Central Administrative Tribunal, New Delhi in O.A. No. 1510 of 1990.
M.K. Ramamurthy, Raj Kumar Mehta and Ms. Mona Chakraborty for the Appellants.
R.K. Jain, Arun Jaitley, Mahesh Srivastava, Vishnu Mathur, A.K. Sikri and Ms. Madhu Sikri for the Respondents.
The Judgment of the Court was delivered by KASLIWAL, J.
The appellants who are Scientists working in various Institutes under Indian Council of Agricultural Research (in short 'ICAR ') throughout the country have filed this appeal against the order of the Central Administrative Tribunal, New Delhi dated 5.10.1990.
Some of the appellants had filed a Writ Petition No. 550 of 1990 before this Court under Article 32 of the Constitution challenging the notification issued by the ICAR dated 9.3.1989 and for other connected reliefs.
This Court disposed of the said Writ Petition by order dated 3.5.1990 in the following manner: "The main relief which the petitioners ask for in this writ petition is about revision of pay scale and other connected service benefits.
When we suggested to learned counsel that the matter should go before the Central Administrative Tribunal, he has indicated certain difficulties which are like the officers being spread over in different parts of the country and the difficulty in coordinating the cases for disposal, in case they are required to go before the Tribunal and the fact that there may be inordinate delay in disposal and in obtaining the relief.
We are of the view that the matter can be appropriately considered by the Tribunal for overcoming the difficulties indicated by Mr. Sanghi, we direct the Central Administrative Tribunal to treat the petition that is going to be filed at the Principal Bench at Delhi as the representative petition and dispose of the same within six months from the date it is filed.
This petition is allowed to be withdrawn." In pursuance to the above order dated 3.5.1990 some of the appellants filed an application No. 1510 of 1990 under Section 19 of the Administrative Tribunals Act before the Central Administrative Tribunal, Principal Bench, Delhi.
The Tribunal treated the aforesaid application as having been filed in representative capacity of S 2 and S 3 Officers of the ICAR, pursuant to the directions of the Supreme Court in its order dated 3.5.1990.
In order to appreciate the controversy, we shall state the facts in brief.
The Imperial Council of Agricultural Research, a Society established under the Societies Registration Act in the year 1929 was redesignated as the Indian Council of Agricultural Research after the advent of independence.
Till 1965, the ICAR was largely functioning as a coordinating agency and apex body for financing research project.
With effect from 1966, administrative control over the Indian Agricultural Research Institute (IARI) and other such Institutes was transferred to ICAR simultaneously placing the staff of such Institutes at the disposal of the ICAR.
A department of Agricultural Research and Education was set up in the Ministry of Agriculture and the said department came into existence on 15.12.1973.
The ICAR is fully financed by the Department of Agricultural Research and Education (DARE), Ministry of Agriculture and Cooperation, Government of India.
ICAR follows the rules of Government of India Mutatis Mutandis.
The ICAR has been held to be `State ' within the meaning Article 12 of the Constitution as per the judgement of this Court in the case of P.K. Iyer & Others vs Union of Indian & Others, reported in ; The ICAR started an Agricultural Research Service (in short 'ARS ') with effect from 1.10.1975 and the relevant grades and pay scales as on 31.12.1985 are given as under : "Grades Pay scales Scientist S Rs. 550 990 Scientist S 1 Rs. 700 1300 Scientist S 2 Rs. 1100 1600 Scientist S 3 Rs. 1500 2000" The Scientists of the ICAR who were earlier covered by the Third Pay Commission pay scales had been demanding parity in pay scales with the employees of the Agricultural Universities who were also financed by the ICAR.
After persistent demand, the ICAR agreed to revise the pay scales with effect from 1.1.1986 vide notification No.1 14/87 Per.
IV dated 9th March, 1989.
According to the appellants, the aforesaid notification though benefited some of the Scientists, but was denying the principle of 'Equal Pay for Equal Work ' in the case of the appellants and the like and the said notification had further placed persons much junior to many of the appellants in a higher scale of pay resulting in violation of the fun damental rights of the appellants guaranteed under Article 14 and 16 of the Constitution.
In order to appreciate the grievances of the appellants the pay scales as revised by the ICAR vide the impugned notification dated 9.3.1989 are given as under : "S.No.
Grade Existing New Revised pay pay scale designation scale 1.
Scientist S 2 Rs.1100 50 Scientist Rs. 3000 100 (with total ser 1600 (Senior 3500 125 5000 vice in the scale) ARS as on 31.12.1985 upto 8 years) 2.
Scientist S 2 Rs. 1100 50 Scientist Rs. 3700 125 (with total 1600 (Selection 4950 150 5700 service in the Grade) ARS as on 31.12.85 exceeding 8 years) 3.
Scientist S 3 Rs. 1500 60 Scientist Rs. 3700 125 (with total ser 1800 100 2000 (Selection 4950 150 5700 vice in the Grade) ARS as on 31.12.85 upto 16 years) 4.
Scientist S 3 Rs. 1500 50 Principal Rs. 4500 150 (with total 1800 100 2000 Scientist 5700 200 7300 service in the ARS or equivalent grades as on 31.12.85 exceeding 16 years) Certain clarifications were issued to the above notification vide letter No. 1 14/87 Per.
IV (Vol.
III) dated 31.3.1989, order No. 1 7/89 Per.
IV (Vol.
III) dated 14.6.1989, order No. 1 7/89 per.
IV dated 6.11.1989 (Vol. III) and order No. 1 7/89 Per.
IV dated 6.7.1990.
The case of the appellants is that according to the impugned notification dated 9.3.1989 together with subsequent clarifications, Scientists S 3 in pre revised scale of Rs. 1500 2000 having completed total service in the ARS as on 31.12.1985 exceeding 16 years had been placed in the scale of Rs. 4500 7300, whereas Scientists S 3 who were in the same pre revised scale of Rs. 1500 2000 but had put in total service in the ARS as on 31.12.1985 upto 16 years have been placed in the scale of Rs. 3700 5700.
Similarly, Scientists S 2 who were in the pre revised scale of Rs.1100 1600 and had completed total service of more than 8 years than in the ARS as on 31.12.1985 have been put in the scale of Rs. 3700 5700, but those having completed total service upto 8 years as on 31.12.1985 had been put in the scale of Rs. 3000 5000.
According to the appellants, by the impugned notification dated 9.3.1989, in the guise of revision of pay scales, altogether new grades/designations have also been created as under : "S Grade Existing designation New designation No. 1.
Scientist S 2 (with Scientist S 2 Scientist (Senior total service in Scale) ARS as on 31.12.1985 upto 8 years) 2.
Scientist S 2 (with Scientist S 2 Scientist (Selection total service in Grade) ARS as on 31.12.1985 exceeding 8 years) 3.
Scientist S 3 (with Scientist S 3 Scientist (Selection total service in Grade) ARS as on 31.12.1985 upto 16 years) 4.
Scientist S 3 (with Scientist S 3 Principal Scientist" total service in ARS or equivalent Grades as on 31.12.1985 exceeding 16 years) It has been further submitted by the appellants that in the ICAR there were two streams for career advancement of the Scientists.
The slower stream is the five yearly assessment and the faster one is the direct selection through advertisement to various posts at All India level.
In the direct selection, the existing Scientists can also compete with the other.
Scientists from non lCAR Institutions.
The requirements for assessment and direct selection are different as illustrated below by the appellants : "Suppose a Scientist with Ph. D qualification joins as S 1, it will take for him at least 11 years to become S 3 through assessment, whereas if he had only 7 years ' experience and good merit, he could be directly selected as S 3.
So, it takes 4 years less for a Scientist to become directly recruited S 3 as compared to his counterparts who got S 3 through assessment scheme.
This fact has been completely ignored by the ICAR while revising the pay scale in which the requirement of total length of service was kept same for Scientists of both the streams.
This is the reason why many of the Scientists who were selected directly as S 2/S 3, taking lesser time to attain higher grades, have been denied their due in the impugned revision of pay scales.
" It has been further submitted on behalf of the appellants that the criterion of eight years of qualifying service for getting the scale of Rs.3700 5700 and 16 years of qualifying service for getting the scale of Rs. 4500 7300 completely ignores the period of service put in the grade of S 2 or S 3 respectively.
This clearly shows the utter disregard for merit and competence of the Scientists working on these posts of S 2 or S 3.
The impugned notification is not only unreasonable and discriminatory, but has resulted in grave injustice to the Scientists directly selected as Scientists S 2 and S 3 by taking into consideration the total length of service in the ARS as the only criterion thereby giving a complete go bye to merit and competence.
It has been further submitted that before the issuance of the impugned notification Scientists S 2 who had put in upto 8 years service and those who had put in exceeding 8 years service had the same designation namely, Scientist S 2 and were performing the same nature of work and duties.
After the impugned notification, they have been reclassified in two categories, namely Scientist (Senior Scale) and Scientist (Selection Grade), and have been put in different pay scales, though their nature of work and duties still continue to remain the same.
It has been similarly pointed out that prior to the issuance of the impugned notification Scientists S 3 who had put in upto 16 years of service and those having put in more than 16 years had the same designation of Scientist S 3 and their nature of work and duties were also the same.
Now, by virtue of the impugned notification Scientists S 3 have been reclassified into two categories, namely, Scientist (Selection Grade) and Principal Scientist and have been given different scales of pay, though their nature of work and duties still continue to remain the same.
It has thus been submitted that as a result of the impugned notification juniors and less meritorious Scientists and who were also drawing lesser basic pay as on 31.12.1985 than the appellants have been placed in higher pay scales causing great resentment amongst a large number of Scientists including the appellants.
The appellants have further illustrated the injustice and arbirtrainess in the application of the impugned notification in the following manner : "ILLUSTRATION I DATE OF Scale Scale APPOINTMENT Class II Scien Scien Scien as as on (Gaze tist tist tist on 1.1.1986 tted) S 1 S 2 S 3 31.12.85 as per the impugned Notification Scientist A 30.4.65 9.10.
1.7.76 1.1.85 Rs. Rs.
Dr. G.C. 74 1500 4500 Sharma 2000 7300 Scientist B 1.7.76 24.3.79 6.12.79 Rs. Rs. Dr. Sheo 5700 It would thus be seen that although Scientist B got the S 3 grade much before Scientist A and both were in the same scale as on 31.12.1985, by the impugned notification Scientist A has been given the higher scale of Rs 4500 7300 with effect from 1.1.1986 whereas Scientist B has been put in the lower scale of Rs. 3700 5700.
ILLUSTRATION II DATE OF APPOINTMENT Scale Scale Scientist S 1 1 Scientist 1 S 2 as on as per 31.12.85 impugned Notification Scientist A 1.9.76 1.7.1985 Rs. Rs. Ms. Pratibha 1100 3700 Shukla 1600 5700 Scientist B 22.7.78 Rs.
Rs. Shri B.S. (joined 1100 3000 Modi directly as S 2) 1600 5000 The above illustration would show that while Scientist B got the S 2 grade much earlier than Scientist A and both were in the same scale as on 31.12.1985, by the impugned notification Scientist A has been placed in the higher scale of Rs. 3700 5700 w.e.f.
1.1.1986 and Scientist B has been given lower scale of Rs 3000 5000.
" On the other hand, it has been contended on behalf of the respondents.
that on persistent demand of the appellants and other Scientists for giving them better pay scales than those recommended by the Fourth Pay Commission, the Government introduced University Grants Commission (in short 'UGC ') pay package for them.
The designations of Scientists on various grounds have been suitably amended so as to conform to their respective level of responsibility.
In the UGC revised scales, there is no single/uniform revised scale for servicing S 2 and S 3 Scientists.
However there is provision for specific placement of Scientists S 2 and S 3 in the UGC scales by virtue of their length of service as on 31.12.1985.
Thus, as per the scheme concurred in by the Ministry of Finance, Scientist S 2 having less than 8 years of service as on 31.12.1985 have been placed in the revised scale of Rs. 3000 5000, whereas those having more than 8 years Of prescribed service as on 31.12.1985 have been placed in the scale of Rs. 3700 5700.
Similarly, in case of S 3 Scientists, the period of service as on 31.12.1985 has been taken as 16 years and as such those having more than 16 years of service as on 31.12.1985 have been put in the scale of Rs. 4500 7300 and those upto 16 years have been placed in the scale of Rs. 3700 5700.
Thus, prescribing the aforesaid pay scales on the pattern of UGC as per the demand of the Scientists themselves, the above fixation of pay scales is perfectly valid and proper.
It has been further submitted that injustice done to some of the incumbents in introducing a new scheme cannot be a reason for setting aside the whole scheme.
It has been further submitted that they have formulated model recruitment rules on the pattern of UGC.
Some difficulties have been experienced while prescribing the experience of 3, 5, 6 years as Principal Scientists for recruitment to the higher posts.
Efforts are being made to devise means by which the affected Scientists may be able to take their chance for appointment to higher management positions.
We have considered the arguments advanced by learned counsel for both the parties and have thoroughly perused the record.
It is no doubt correct that while introducing a new scheme of pay scales and fixing new grades of posts, some of the incumbents may have to put to less advantageous position than others, but at the same time the granting of new pay scales cannot be allowed to act arbitrarily and cannot create a situation in which the juniors may become senior of vice versa.
Admittedly, the Scientists working in the ICAR had made a grievance for the revision of their pay scales and the Government being satisfied with their grievances had appointed various expert Committees such as, M.V. Rao Committee, N.G.P. Rao Committee, Menon Committee and G.V.R. Rao Committee for improvement of service conditions of the Scientists working in the ICAR.
Government had notified a set of pay scales for the Universities in 1988 known as 'UGC Scales.
M.V. Rao Committee which was set up by the Government to go into the pay scales of ARS Scientists had recommended the application of the UGC Scales to the ARS Scientists.
So far as the recommendations of the aforementioned expert Committees are concerned, learned counsel for the appellants pointed out that none of the recommendations made by such Committees laid down any criteria of 8 years or 16 years of service for giving higher pay scales in the case of incumbents holding the same S 2 or S 3 grade in the ICAR.
The respondents in their counter affidavit have admitted that S 1, S 2 and S 3 are equivalent to that of Lecturer, Reader and Professor respectively.
Dr. M.V.Rao Committee after considering the facts that the ICAR has the role of UGC in agricultural education recommended that the ICAR being an apex organisation in the country for agricultural education, research and extension should have the pay scales at least at par with the State Agricultural Universities.
Dr. M.V. Rao Committee 's recommendations were accepted by the Central Government and a policy decision was taken on 13.10.1988 to the effect that UGC package may be extended to ICAR Scientists engaged in teaching, research and extension.
It may be further noted that prior to the impugned notification dated 9.3.1989, there were four grades of Scientists namely, Scientist S, S 1, S 2 and S 3 apart from other higher grades with which we are not presently concerned.
So far as the lowest grade of Scientist is concerned which has been named as Experimental Scientist in the impugned notification is a dying cadre.
Now, so far as 8 Scientist S 1 is concerned, he has been given the revised pay scale of Rs.2200 4000 and there is no controversy about it.
The controversy is about Scientists S 2 and S 3.
All Scientists S 2 were in the same pay scale of Rs. 1100 1600 prior to the introduction of the revised pay scales by the impugned notification dated 9.3.1989.
By the impugned notification, post of Scientist S 2 has been bifurcated in two grades as Scientist (Senior Scale) in the pay scale of Rs. 3000 5000 and Scientist (Selection Grade) in the pay scale of Rs. 3700 5700.
Similarly, in the case of Scientist S 3 which had a common pay scale of Rs. 1500 2000 has now been bifurcated as Scientist (Selection Grade) in the pay scale of Rs. 3700 5700 and Principal Scientist in the pay scale of Rs. 4500 7300.
The basis for giving higher pay scales has been taken as period of total service in ARS as 8 years in the case of Scientist S 2 and 16 years in the case of Scientist S 3.
It would have been correct in case the recruitment to such posts of S 2 and S 3 had been made purely on the basis of seniority and length of service in ARS.
But the admitted position is that such posts of Scientists S 2 and S 3 were also filled by direct recruitment from public as well as by merit cum seniority from amongst the members of the Agricultural Research Service.
Thus, the anomalous situation created is amply illustrated by the examples of Dr. G.C. Sharma and Dr. Sheo Raj in the case of S 3 and the case of Ms. Pratibha Shukla and Shri B.S. Modi in the case of Scientist S 2.
Dr. Sheo Raj came to be appointed as a Scientist S 3 on 6.12.1979 while Dr. G.C. Sharma came to be appointed as Scientist S 3 as late as on 1.1.1985.
Admittedly, on 31.12.1985 both were in the scale of Rs. 1500 2000.
Now, on the basis of the impugned notification Dr. G.C. Sharma gets the pay scale of Rs. 4500 7300 as Principal Scientist while Dr. Sheo Raj is fixed in the pay scale of Rs. 3700 5700 as Scientist (Selection Grade).
Similar is the case of Shri B.S. Modi and Ms. Pratibha Shukla in S 2.
Shri Arun Jaitley Leaned senior counsel appearing for the ICAR which tried hard but in vain to justify such disparity which is totally arbitrary and unreasonable.
It does not stand to reason that Dr. Sheo Raj having been appointed as Scientist S 3 on merit as back as on 6.12.1979 is fixed in the new pay scale of Rs. 3700 5700 while Dr. G.C. Sharma who became Scientist S 3 as late as on 1.1.1985 is fixed in the pay scale of Rs. 4500 7300.
Similarly, in the case of the incumbents on the post of Scientist S 2 Shri N.S. Modi having appointed by direct recruitment on 22.7.1975 has been fixed in the new pay scale of Rs. 3000 5000 as Scientist (Senior Scale) while Ms. Pratibha Shukla who came to be appointed as Scieutist S 2 on 1.7.1985 has been fixed in the revised pay scale of Rs. 2700 5700 as Scientist (Selection Grade).
In our view, the appellants are justified in their submission that they were also entitled to the higher pay scale on the post of Scientist S 2 as well as S 3 specially when they were recruited on these posts much earlier to those who have now become entitled to higher pay scales under the impugned notification.
They are also right in their submission that it also mars their future chances of promotion on the higher posts.
The following observations made by the Tribunal itself shows the justification of the demand made by the appellants : "The respondents have admitted in their counter affidavit that certain anomalies have been created by the new scheme and that they are trying to rectify the same.
They have issued orders allowing directly recruited S 2 and S 3 Scientists certain wetihtage for a period of service rendered by them for placement in the higher scale as on 1.1.1986.
They have also stated that they are devising means by which the affected Scientists may be able to take their chance for appointment to higher management positions . . . . .
In the instant case, by applying the principle of length of service in the ARS irrespective of the grades in which the officers were hitherto working a large number of erstwhile seniors will be rendered juniors and they will now be entitled to only lower pay scales than their erstwhile juniors.
This would also adversely affect their eligibility for promotion from 1.1.1986.
In case they were eligible to be considered for promotion to the next higher grade under the old dispensation, it will be unjust and inequitable to render them ineligible for such promotion against the existing vacancies proposed to be filled up.
It is, however, for the respondents to devise suitable steps, including grant of one time relaxation and/or appropriate weightage to the applicants and those similarly situated, so as to make them eligible to appear before the Selection Board for the various posts already advertised.
" It may be noted that the Tribunal itself had found force and justification in the grievances made by the appellants and had granted 6 month 's time to the respondents to take appropriate action.
We had also granted opportunities to the respondents to come with a scheme granting appropriate relief to the appellants in the facts and circumstances of the case, but till the matter was finally heard by us, the respondents were unable to come out with any concrete proposal or scheme redressing the grievances of the appellants.
The appellants are Scientists who are rendering great service to the nation and we find no justification as to why the appellants or any other Scientists in ICAR placed in similar position like the appellants should be deprived the benefit of the revised pay scales on the higher post of S 2 or S 3, in case they were appointed by direct recruitment or by selection on merit cum seniority on the post of Scientist S 2 or S 3 prior to those who have now become entitled to higher pay scale under the impugned notification dated 9.3.1989.
We, therefore, allow this appeal and direct the respondents to issue appropriate orders so that any of the appellants or the like working as Scientist S 2 or S 3 on or before 31.12.1985 earlier to anyone of the Scientists getting benefit of the revised pay scales under the impugned notification dated 9.3.1989 also get a similar benefit of revised pay scale of Rs.4500 7300 in the case of S 3 and pay scale of Rs.3700 5700 in the case of S 2.
Such revised pay scales shall be given from 1.1.]986 as given to S 2 and S 3 Scientists under the impugned notification.
The respondents are directed to take suitable action in this regard and to pay the entire amount within six months from the date of this order.
In the facts and circumstances of the case, we pass no order as to costs.
N.V.K. Appeal allowed.
| The Imperial Council of Agricultural Research, a Society established under the Societies Registration Act in the year 1929 was redesignated as the Indian Council of Agricultural Research after the advent of Independence.
Till 1965, the ICAR was largely functioning as a coordinating agency and apex body for financing research projects, but with effect from 1966 the administrative control over the Indian Agriculture Research Institute (IARI) and other such Institutes were transferred to ICAR, simultaneously placing the staff of such Institutes at the disposal of the ICAR A department of Agricultural Research and Education was set up in the Ministry of Agriculture and the said department came into existence on 15.12.1973.
The ICAR was fully financed by the Department of Agricultural Research and Education of the Government of India.
ICAR started an Agricultural Research Service with effect from 1.10.1975, and the relevant grades and pay scales as on 31.12.1985 were: Grade of Scientist S in pay scale Rs. 550 900, Scientist S I in Rs. 700 1300, Scientist S 2 in Rs. 1100 1600, and Scientist S 3 in Rs. 1500 2000.
The Scientists of the ICAR who were earlier covered by the Third Pay Commission pay scales had been demanding parity in pay scales with the employees of the Agricultural Universities who were also financed by the ICAR After persistent demand, the ICAR agreed to revise the pay scales with effect from 1.1.1986 by notification dated 9th March, 1989.
This notification benefited some of the Scientists, but was denying the principles of 'Equal Pay for Equal Work ' in the case of the appellants and the like, and the said notification had further placed persons much junior to many of the appellants in a higher scale of pay, resulting in violation of the fundamental rights of the appellants guaranteed under Articles 14 and 16 of the Constitution.
Some of the appellants in this appeal had earlier filed a Writ Petition before this Court under Article 32 challenging the aforesaid notification and for other connected reliefs, which was disposed of on 3rd May, 1990, directing the appellants to approach the Central Administrative Tribunal, and a further declaration was made that the Tribunal shall treat the petition as a Representative Petition.
Certain clarifications were issued by the ICAR by its letter dated 31st March, 1989 and by orders dated 14th June, 1989, 6.11.1989 and 6.7.1989.
These orders not only revised the pay scales but also gave new designations to the various posts held by the appellants.
Existing Grade Existing New Revised Pay scale designation pay scale 1.
Scientist,S 2 Rs.1100 50 1600 Scientist Rs. 3000 100 with service (Senior 3500 125 5000 upto eight scale) years.
Scientist,S 2 Rs.1100 50 Scientist Rs. 3700 125 with service 1600 (Selection 4950 150 5700 exceeding grade) eight years 3.
Scientist,S 3 Rs.1500 60 Scientist Rs. 3700 125 with service 1800 100 2000 (Selection 4950 150.5700.
upto 16 years Grade) 4.
Scientist,S 3 Rs.1500 50 Principal Rs. 4500 l50 with service 1800 100 2000 Scientist 5700 200 7300 exceeding 16 years The appellants filed an application under Section 19 of the Administrative Tribunal 's Act before the Principal Bench of the Central Administrative Tribunal, Delhi and contended that according to the notification dated 9.3.1989 together with the subsequent clarifications, juniors and less meritorious Scientists and who were drawing lesser basic pay as on 31.12.1985 than the appellants had been placed in higher pay scales causing great resentment amongst a large number of Scientists including the appellants.
Not being successful before the Tribunal, the appellants appealed to this Court and contended that Scientists S 3 in pre revised scale of Rs. 1500 2000 having completed total service in the ARS as on 31.12.1985 exceeding 16 years had been placed in the scale of Rs. 4500 7300, whereas Scientists S 3 who were in the same pre revised scale of Rs. 1500 2000 but had put in total service in the ARS as on 31.12.1985 upto 16 years have been placed in the scale of Rs. 3700 5700.
Similarly, Scientists S 2 who were in the pre revised scale of Rs. 1100 1600 and had completed total service of more than 8 years in the ARS as on 31.12.1985 had been put in the scale of Rs. 3700 5700, but those having completed total service upto 8 years as on 31.12.1985 had been put in the scale of Rs. 3000 5000.
It was further submitted by the appellant that in the ICAR there were two streams for career advancement of the Scientists.
The slower stream is the five yearly assessment, and the faster one is the direct selection through advertisement to various posts at All India level, and that in the direct selection, the existing Scientists can also compete with the other Scientists from non lCAR Institutions, that the criterion of eight years of qualifying service for getting the scale of Rs. 3700 5700, and 16 years of qualifying service for getting the scale of Rs. 4500 7300 completed ignores the period of service put in the grades of S 2 or S 3 respectively, and that this clearly shows the utter disregard for merit and competence of the Scientists working on these posts of S 2 or S 3.
It was also submitted that the impugned notification was not only unreasonable and discriminatory, but had resulted in grave injustice to the Scientists directly selected as Scientists S 2 and S 3 by taking into consideration the total length of service in the ARS as the only criterion thereby giving a complete go bye to merit and competence.
The respondents opposed the appeal by contending that on persistent demand of the appellants and other scientists for giving them better pay scales than those recommended by the Fourth Pay Commission, the Government introduced University Grant Commission pay package for them.
The designations of Scientists on various grounds had been suitably amended so as to conform to their respective level of responsibility.
Scientist S 2 having less than 8 years of service as on 31.12.1985 were placed in the revised scale of Rs. 3000 5000, whereas those having more than 8 years of prescribed service as on 31.12.1985 were placed in the scale of Rs. 3700 5700.
It was further contended that efforts were being made to devise means by which the affected Scientists may be able to take their chance for appointment to higher management positions.
Allowing the appeal, this Court, HELD :1.
While introducing a new scheme of pay scales and fixing new grades of posts, some of the incumbents may have to be put to less advantageous position than others, but at the same time the granting Of new pay scales cannot be allowed to act arbitrarily and cannot create a situation in which the juniors may become senior or vice versa.
[450 B] 2.
The appellants are justified in their submission that they were also entitled to the higher pay scale on the post of Scientists S 2 as well as S 3 specially when they were recruited on those posts much earlier to those who have now become entitled to higher pay scales under the impugned notification.
They are also right in their submission that it also mars their future chances of promotion on the higher posts.
[452 A B] 3.
The appellants are Scientists who are rendering great service to the nation and no justification is found as to why the appellants or any other Scientists in ICAR placed in similar position like the appellants should be deprived the benefit of the revised pay scales on the higher post of S 2 or S 3, in case they were appointed by direct recruitment or by selection on merit cum seniority on the post of Scientists S 2 or S 3 prior to those who have now become entitled to higher pay scale under the impugned notification dated 93.1989.
[453 B C] 4.
The Tribunal itself had found force and justification in grievances made by the appellants and had granted six months time to the respondents to take appropriate action.
Opportunities were granted to the respondents to come with a scheme granting appropriate relief to the appellants, but they were unable to come out with any concrete proposal or scheme redressing the grievances of the appellants.
[452 H; 453 Al 5.
The respondents to issue appropriate orders so that any of the appellants or the like working as Scientist S 2 or S 3 on or before 31.12.1985 earlier to anyone of the Scientists getting benefit of the revised pay scales under the impugned notification dated 9.3.1989 also get a similar benefit of revised pay scale of Rs. 4500 7300 in the case of S 3 and pay scale of Rs. 3700 5700 in the case of S 2.
Such revised pay scales shall a be given from 1.1.1986 as given to S 2 and S 3 Scientists under the impugned notification.
Suitable action in this regard to be taken and the entire amount to be paid within six months.
[453 D E] P.K Iyer & Ors.
vs Union of India & Ors.
, ; , referred to.
|
Civil Appeal No. 4090 of 1991.
From the Order dated 7.2.1991 of the Central Administrative Tribunal, Bangalore in Original Application No. 11 of 1991.
K.K. Venugopal, B.R.L. Iyengar, E.C. Vidyasagar, D.N. Nanjunda Reddy, L.R. Singh and Shahid Rizvi for the Appellant.
G. Ramaswamy, Attorney General, P.P. Muthanna (for the State of Karnataka), Subramanian, M. Verrappa, Kh.
Nobin Singh and section Walia for the Respondents.
The Judgment of the Court was delivered by G.N. RAY, J.
This appeal is directed against the decision of the Central Administrative Tribunal, Bangalore, dated February 7, 1991 passed in Original Application No. 11 of 1991.
The appellant, Shri M. Sankaranarayanan, made an application before the Central Administrative Tribunal, Bangalore, for quashing the order dated January 4, 1991 transferring and posting him as Secretary High Power Committee for development of Hyderabad, Karnataka area, Bangalore (hereinafter referred to as High Power Committee) as contained in Annexure A 4 to the application made before the Central Administrative Tribunal, and for a direction to allow the applicant, Shri Sankaranarayanan, to continue as the (Chief Secretary, Government of Karnataka.
The aforesaid order of transferring and posting the appellant as Secretary, High Power Committee was challenged mainly on two grounds, namely, that such order was not passed bona fide for the exigencies of the administration but the same was passed mala fide by the Chief Minister of Karnataka who became displeased with the appellant on account of his unfavourable attitude and resistance to some of the proposals of the Chief Minister in the matter of posting of senior officers of the State to different key posts.
It was also contended that his transfer order is vitiated because of the non compliance of the procedural formalities for a valid transfer of the appellant to the said post of Secretary, High Power Committee inasmuch as there was no declaration under Rule 9 (1) of IAS (Pay) Rules, 1954 that the post of Secretary, High Power Committee, was equivalent to the post of Chief Secretary and in the absence of such declaration the transfer of the appellant from the post of Chief Secretary to the Secretary, High Power Committee, was illegal and void.
To appreciate the relevant contentions made by the appellant and the respondents before the Central Administrative Tribunal and also before this Court at the hearing of the appeal, the backdrop of the events resulting in the impugned order of transfer and posting of the appellant and consequential challenge of such order by the appellant, requires to be indicated in short.
The appellant, Shri Sankaranarayanan, was appointed to the Indian Administrative Service (Karnataka Cadre) in 1957 and on May 5,1990 he was holding the post of Additional Chief Secretary to the Government of Karnataka.
By Notification dated May 5, 1990, he was appointed as Chief Secretary to the Karnataka Government until further orders.
In the State of Karnataka, there was originally one post of Chief Secretary to the Government.
By an Order dated October 17, 1980, and ex cadre post of Additional Chief Secretary was created with a declaration under Rule 9(1) of IAS (Pay) Rules that the status and responsibilities of the said post were equivalent to the cadre post of Chief Secretary.
The post of Additional Chief Secretary was thereafter en cadred by Notification dated January A(), 1987 with the same pay as of the post of Chief Secretary.
The post of Secretary, High Power Committee, was created by the State Government of Karnataka in 1989 with the designation Chairman, Hyderabad, Karnataka Development Board by order dated September 27, 1989.
The said post was declared equivalent to the status and responsibilities to the cadre post of Additional Chief Secretary under Rule 9 of IAS (Pay) Rules.
The posts of Chief Secretary, Secretary, High Power Committee and Additional Chief Secretary carry equal pay.
On January 3, 1991, the Cabinet Government of Karnataka took a decision to the effect that a change of the Chief Secretary should be effected.
Pursuant to such cabinet decision, the Chief Minister, on January 4, 1991, had taken the following three decisions and passed consequential orders namely (i) declaring that the post of Secretary, High Power Committee, was equivalent in status and responsibilities to the post of Chief Secretary of the Government, (ii) transferring the appellant, Shri Sankaranarayanan, to the post of Secretary, High Power Committee with immediate effect and (iii) appointing the 4th respondent, Shri N.K. Prabhakar Rao, who was holding the post of Chief Secretary to the Government.
It may be noted in this connection that Shri Prabhakar Rao is senior to Shri Sankaranarayanan as a member of the Indian Administrative Service.
The Notification giving effect to the above orders of transfer was issued on January 4, 1991 but the authenticated Government order declaring the equivalent of two posts under Rule 9 of IAS (Pay) Rules, was issued on the next day, namely, January 5, 1991.
The appellant, Shri Sankaranarayanan, contended in his application before the Central Administrative Tribunal that the appellant was in the office of Chief Secretary when Shri Veerendra Patil was the Chief Minister of Karnataka.
There was an intensive anti corruption drive against the senior bureaucrats including the 4th respondent through the instrumentality of Lok Ayukta.
One such Officer was Shri J. Alexender, IAS, who was suspended while he was holding the post of the Chairman and Managing Director of the Mangalore Chemicals and Fertilisers Ltd. but when Shri Alexender obtained a stay order from the Central Administrative Tribunal, the appellant, in the best interest of administration suggested that Shri Alexender should not be given the post of Secretary of the Department of Industry and Commerce but he should be given a posting in a Less sensitive post hut such suggestion of the appellant was not accepted by the third respondent, namely, the present Chief Minister of Government of Karnataka, Shri section Bangarappa.
Similarly, when a proposal to replace Shri Sangameswar, IAS, from the post of Managing Director of the Mysore Sales International Ltd. and post one Shri Madhu in Place of Shri Sangameswar came up for consideration, the appellant pointed out to the Chief Minister about the propriety in making such a change particularly when Shri Sangameswar was keen in defending the cases filed against the Government in the Supreme Court and his other actions were also appreciated by his superiors and Shri Madhu had indicated his reluctance to accept the post in his letter to the Government in view of the fact some of his relatives happened to be excise contractors.
But the third respondent did not like his suggestion and directed the posting of Shri Madhu as Managing Director, Mysore Sales International Ltd. The third respondent also did not like to pass orders on the files containing the irregularities committed by the fourth respondent while holding high offices in the State during the period between 1983 and 1989.
These files contained 41st report of the Public Undertaking Committee recommending enquiry into tile imprudent decisions taken by the 4th respondent as Chairman and Managing Director of the New Government Electric Factory, Bangalore.
Accordingly, at the instance of the then Minister of Industries and Commerce an enquiry had been undertaken through Lok Ayukta.
The Report submitted after the enquiry indicated prima facie case against the 4th respondent warranting further departmental actions.
The former Chief Minister made enquiries about these matters and the appellant also furnished further necessary information to the then Chief Minister who referred the matter to the Personnel Department of Administrative Reforms.
The Secretary, Department of Personnel and Administrative Reforms suggested for initiation of departmental action against the fourth respondent.
The fourth respondent made a suggestion to the Government seeking permission for voluntary retirement.
But after the Ministry headed by the then Chief Minister, Shri Veerendra Patil, was dismissed and the President 's rule was imposed in the State, the fourth respondent withdrew his letter seeking voluntary retirement.
The appellant put up all the files before the third respondent for appropriate orders in view of the fact that the previous Chief Minister did not take any final decision regarding the proposal to initiate disciplinary action against the fourth respondent.
But the third respondent keep the files without passing any orders.
It was contended by the appellant that since the appellant was not prepared to lies and to compromise with the desires of the Chief Minister, the Chief Minister, namely, the respondent No. 3, became displeased with him and opposed some of his suggestions relating to the posting of senior bureaucratic officers.
The appellant has contended that he was sought to be transferred with undue haste from the post of Chief Secretary to the post of Secretary, High Power Committee, although such post was inferior to the post of Chief Secretary and no declaration under Rule 9 (1) of IAS (Pay) Rules for the equivalence of the said post had been made.
The respondents, namely, the State of Karnataka and the Chief Minister of Karnataka and also the said respondent No. 4 denied the allegations relating to the malice of facts and contended that the allegations relating to the malice of facts were mischievous, malicious, scandalous and vexatious and such allegations were deliberately made to malign the respondents.
The respondents also contended that the post of Secretary, High Power Committee, was equivalent to the post of Additional Chief Secretary and such declaration had been made long back and the post of Additional Chief Secretary and the post of Chief Secretary were also equivalent and inter changeable.
In any event, before giving effect to the order of transfer of the appellant, further declaration was made by the Chief Minister that the post of Secretary, High Power Committee was equivalent to the post of Chief Secretary so that in any event the appellant had no occasion to feel stifled.
Accordingly, there was no occasion to contend that the declaration, required as under Rule 9 (1) of IAS (Pay) Rules, had not been made and the order of transfer was accordingly vitiated for non compliance with the statutory rules.
The Central Administrative Tribunal, after considering the facts and circumstances of the case and hearing the submissions made on behalf of the respective parties, inter alia came to the finding that the freedom to choose a person as the Chief Secretary to the liking of the Chief Minister and the Cabinet on whom there is absolute confidence, is undisputed prerogative and such decision becomes unassailable when it is made in bona fide manner following the statutory formalities applicable to such selection and appointment.
Referring to the decision of this Court made in the case of E.P. Royappa vs State of Tamil Nadu, ; and referring to various observations made in the said decision at length, the Central Administrative Tribunal came to the finding that the appellant had no subsisting right to remain as Chief Secretary and it was the prerogative of the Chief Minister and the Cabinet to take a decision to appoint a person to the post of Chief A Secretary in place of the appellant to whom the Cabinet and the Chief Minister had confidence.
It was held by the Central Administrative Tribunal that the appellant had failed to establish that he had been transferred with the ulterior motive of placing the appellant in a lower post and thereby permanently preventing him from continuing in the position and status of Chief Secretary.
The Administrative Tribunal inter alia held that it is an admitted position that there was a difference of opinion between the appellant and the Chief Minister and such difference had been developing ever since the new Chief Minister had assumed Office.
The Tribunal had also noted that the appellant was also not promoted and posted as Chief Secretary permanently but he was appointed to the post of Chief Secretary until further orders and he continued in that capacity only for eight months without being regularised or confirmed in that post.
The Central Administrative Tribunal also held that there had been only casual collateral challenge by the appellant against the appointment of fourth respondent as the Chief Secretary raising some allegations which could at best be grouped in the category of vague and indefinite allegations.
The Central Administrative Tribunal held inter alia that the applicant had not laid down any firm foundation to hold that the appointment of the 4th respondent as Chief Secretary was bad and unsustainable.
It has been held by the Central Administrative Tribunal that the fourth respondent had already assumed the office of the Chief Secretary and except in making some vague allegations, his appointment as Chief Secretary was not challenged on the score of violation of rules governing the matter.
As such, the Central Administrative Tribunal held that there was no occasion to go into the legality of the posting of fourth respondent as the Chief Secretary of the State.
So far as the other contention made by the appellant, namely, that the transfer order is vitiated in view of the fact that the appellant was sought to be reverted to a lower post in violation of the procedure in Rule 9 (l) of IAS (Pay) Rules and Rule 4 of IAS (Cadre) Rules in concerned, it has been contended by the appellant that a Notification issued on January 5, 1991 declaring the post of Secretary, High Power Committee, as equivalent to the post of Chief Secretary, was of no consequence and could not cure the initial defect inasmuch as prior to such Notification issued on January 5, 1991 declaring equivalence of the said posts, the impugned order of transfer was sought to be effected and the respondent No. 4 was allowed to join the post of Chief Secretary pursuant to the order of transfer of the appellant.
The Central Administrative Tribunal referred to four documents being Annexures 7, 8, 9 & 10 to the application made by the appellant and also the affidavits filed by the parties and accepted the contention of the respondents that the post of the Secretary was declared equivalent to the post of Additional Chief Secretary and the post of Additional Chief Secretary was also declared equivalent to the post of (Chief Secretary, and such declarations had been made ever since 1980 and the appellant was fully aware of the said position.
The Central Administrative Tribunal also accepted the contention of the respondents that in order to avoid any embarrassment and complication, the State Government had also made a declaration on January 4, 1991 prior to the transfer of the appellant that the post of the Secretary, High Power Committee, was equivalent to the post of Chief Secretary but the formal authenticated order declaring the said equivalence was issued next day i.e. January 5, 1991.
There was no delay in issuing the declaration and even assuming that there was a delay of one day in making the formal declaration of equivalence, such delay had not nullified and invalidated the decision of the Government.
Referring to the various decisions of this Court including the decision made in the case of Babulal vs M/s Hazari Lal Kishori Lal and others, [19821 2 SCC p.525, the Central Administrative Tribunal indicated that a deviation from the strict procedure prescribed by law would not vitiate an action taken by the Government or public authority in the interest of public unless it could be shown that such an act had resulted in gross injustice to the affected party.
The Central Administrative Tribunal held that the appellant could not establish that impugned order had caused any serious injury to him.
The Central Administrative Tribunal further held that the appellant had submitted that because of the delay in issuing the declaration strictly in accordance with the Rule 9(1) of IAS (Pay) Rules, the appellant was in dark as to the nature and duties of the post of Secretary, High Power Committee, to which he had been transferred under the impugned order.
The Central Administrative Tribunal held that the form and procedure in Rule 9(1) of IAS (Pay) Rules do not make it obligatory to approach the issue in a judicial or quasi judicial manner and the violation, if any, of Rule 9(1) was only a mere technicality and it did not cause any legal injury or injustice to the appellant.
Such violation, even if any, was not so serious that it required a judicial scrutiny by the Central Administrative Tribunal in the facts and circumstances of the case.
The Central Administrative Tribunal also held that after going through the files leading to the declaration under Rule 9(1) since placed before the Tribunal, the Tribunal was satisfied that the Government had considered the question in detail and sufficiently in advance and had taken a decision to issue the declaration of equivalence on January 4, 1991 and it was a valid decision satisfying the requirement of Rule 9 (1) of IAS (Pay) Rules, 1954.
Referring to the allegations of mala fides, the Central Administrative Tribunal came to the finding that the facts were narrated in paragraphs (1) to (w) of paragraph 6 of the application of the appellant.
The Tribunal categorically came to the finding that there was no firm foundation to find on facts that the impugned order was vitiated by any mala fide.
In that view of the matter, the Central Administrative Tribunal dismissed the application made by the appellant.
As aforesaid, the said decision is under challenge in this appeal.
Mr. Venugopal the learned counsel for the appellant has strenuously contended that declaration of equivalence under Rule 9 (1) of IAS (Pay) Rules, 1954 is an essential statutory requirement and without such declaration of equivalence no member in the cadre of IAS can be transferred to a non cadre post.
He has contended that the declaration of equivalence of the posts of Chief Secretary and Additional Chief Secretary made in 1980 has been highlighted beyond proportion before the Central Administrative Tribunal by the respondents and the Administrative Tribunal was also influenced because of such declaration of equivalence made in 1980.
But such declaration of equivalence is of no consequence and the legal requirement of declaration of equivalence was still there and noncompliance with the requirement of declaration of equivalence has rendered the impugned order of transfer illegal and void.
Mr. Venugopal has contended that previously there was only one post of Chief Secretary in the administrative hierarchy in the State of Karnataka.
It was felt necessary that a post of Additional Chief Secretary should be created and the recommendation to that effect was made when the post of Additional Chief Secretary was not encadred.
A declaration of equivalence was also made by the State Government so that a cadre officer belonging to the Indian Administrative Service may be transferred to the non cadred post of Additional Chief Secretary but later on, the post of Additional Chief Secretary was encadred on the basis of triennial review.
After such encadrement of the post of Additional Chief Secretary, the declaration of equivalence which was made earlier lost its force.
Mr. Venugopal has submitted that the question of equivalence comes in when one post is outside the cadre post of Indian Administrative Service.
Mr. Venugopal has contended that equivalence is referable only to an ex cadre post and ex hypothesi dedaration of equivalence cannot come inter se posts within the cadre.
Accordingly, all the previous exercises made in declaration of equivalence when the post of Additional Chief Secretary was not a cadre post are of little consequence.
Mr. Venugopal has also contended that the posts of Additional Chief Secretary and Chief Secretary are not equivalent in reality.
The post of Chief Secretary is the highest post in the administrative set up in the State.
Mr. Venugopal has referred to the Office Memorandum dated September 2, 1988 at page No. 127 of Volume Il A of the Paper Book of this appeal, for the purpose of showing that the post of Chief Secretary is superior post because Additional Chief Secretary is to report to the Chief Secretary.
He also made reference to the Karnataka Government (Transfer of Business) Rules, 1977 and contended that reference to various provisions of the Rules would indicate that the post of Chief Secretary is the highest post and the reports of different Secretaries including Additional Chief Secretary are required to be routed through Chief Secretary but no Report of the Chief Secretary is ever required to be routed through Additional Chief Secretary or any other Officer.
He has submitted that a mere dedaration that the post of Additional Chief Secretary is equivalent to the post of Chief Secretary will not make both the said posts equivalent.
Mr. Venugopal has also contended that as a matter of fact, the respondents felt difficulty in transferring the appellant lo the post of Secretary, High Power Committee, because the said post was declared equivalent to the post of Additional Chief Secretary and not to the post of Chief Secretary.
Precisely for the said reason, after the impugned order of transfer, an attempt was made to publish a declaration on January 5, 1991 to the effect that the post of Chief Secretary is equivalent to the post of Secretary, High Power Committee.
Mr. Venugopal has contended that the post of Secretary, High Power Committee, cannot be equivalent to the post of Chief Secretary of the State which is highest post and in any event the post facto declaration of equivalence on January 5, 1991 cannot cure the initial defect of not declaring equivalence of the post in question prior to the order of transfer made on January 4, 1991.
Mr. Venugopal has submitted that the appellant may not have an absolute right to remain in the post of Chief Secretary and for good administrative reasons the Cabinet and the Chief Minister may have a prerogative to select a person of their confidence to the post of Chief Secretary but the appellant having been appointed as Chief Secretary can only be removed from the said post for good administrative reasons but not for any oblique purpose.
The appellant could have been transferred from the post of Chief Secretary to a suitable post which was equivalent to the post of Chief Secretary only in accordance with law and a declaration of equivalence under Rule 9 (1) of IAS (Pay) Rules was an essential sine qua non for transferring an incumbent holding the post of chief Secretary to any other ex cadre post.
Mr. Venugopal has contended that declaration of equivalence of a cadre post with a non cadre post is a statutory requirement under Rule 9(1) of IAS (Pay) Rules.
Such statutory requirement must be strictly complied with.
So long the declaration of equivalence made by the competent authority is not published in accordance with the procedure under Rule 9(1), no equivalence takes place and in the absence of equivalence, no cadre officer can be posted to a non cadre post.
Admittedly, the impugned order of transfer of the appellant was made on January 4, 1991 and the respondent No. 4 purported to assume the office of the Chief Secretary on January 4, 1991.
But the declaration of equivalence was made on 5.1.1991 i.e. after the impugned order of transfer.
Hence, the impugned order of transfer of the appellant is illegal on the face of it and subsequent declaration of equivalence cannot cure the invalidity of the order of transfer.
On this score alone the impugned order is liable to be quashed.
Mr. Venugopal has further contended that the Central Administrative Tribunal failed to appreciate that in reality the posts of Chief Secretary and Additional Chief Secretary were not inter changeable and declaration of equivalence made earlier had lost its force after the encadrement of the post of Additional Chief Secretary.
Mr. Venugopal has also submitted that it is not always possible and practicable to precisely establish mala fide in fact but the Court should draw reasonable inference from the pleadings whether there was any foundation of mala fide action.
Mr. Venugopal has contended that the appellant has given instances how he gradually incurred displeasure of the present Chief Minister when his suggestions for posting senior bureaucratic officers of the State G in key and sensitive positions, contrary to the desire of the Chief Minister, were not liked by the Chief Minister.
Mr. Venugopal has contended that the respondent No. 4 was found prima facie guilty of various administrative lapses of serious nature over the years.
During the regime of the previous Chief Minister of the State, Shri Veerendra Patil, enquiries had been conducted at a high level and recommendations were made for initiating departmental proceedings.
Unfortunately, before any formal order could be passed by the then Chief Minister, Shri Veerendra Patil, the Ministry was dissolved and the President 's rule was imposed.
Thereafter, the present Chief Minister came to head the Cabinet of the State.
The appellant as a Chief Secretary of the State was duty bound to place all the relevant files for appropriate directions of the Chief Minister so far as the respondent No. 4 is concerned.
When the appellant placed all the relevant files, it was only reasonably expected that the present Chief Minister would pass formal orders for initiating departmental proceedings against the respondent No. 4 but for inexplicable reasons, the present Chief Minister held back the files without passing any order.
Even in the matter of posting of Shri Alexander, Sri Sangmeswar and Sri Madhu, the appellant indicated cogent reasons relating to the posting; desired by the Chief Minister and normally reasonings indicated by the appellant were not expected to be over ruled by the Chief Minister in the interest of purity in administration.
But, unfortunately, such suggestions had been overruled by the Chief Minister.
Mr. Venugopal has contended that in the backdrop of the events disclosed in various subparagraphs, namely, paragraphs 6(1) to 6(q) of the petition made before the Tribunal it should have come to the finding that a case of malice in fact had been established prima facie and the respondents were under an obligation to dispel the reasonable inferences to be drawn by the Tribunal about the existence of malice in facts.
Unfortunately, the Tribunal has not considered the question in the proper perspective.
Mr. Venugopal has submitted that since the posting of respondent No. 4 as Chief Secretary was not directly challenged by the appellant and infraction of any statutory provisions could not be established by the appellant so far as the posting of respondent No. 4 is concerned, the Tribunal has proceeded on the footing that such posting, therefore, is not required to be interfered with and consequently the challenge to the transfer and posting of the appellant cannot also be sustained.
Mr. Venugopal has contended that such approach, to say the least, is unsatisfactory and requires a re thinking.
Mr. Venugopal has contended that when the former Chief Secretary went on leave prior to his retirement, the appellant 's case was considered and in view of his excellent track record over the past 33 years as a member of the Indian Administrative Service in the Karnataka cadre, the appellant was found to be most suitable candidate to hold the post of Chief Secretary and he was made the Chief Secretary.
Simply because the appellant was appointed as the Chief Secretary until further orders, such appointment and posting do not necessarily mean that he was holding the said post only as a stop gap measure.
Mr. Venugopal has contended that it is nobody 's case that the Government of Karnataka did not intend to appoint and post the appellant as Chief Secretary of the State and such posting was made only by way of a stop gap measure until suitable person could be selected and later on the respondent No. 4 was posted as Chief Secretary on appropriate consideration of the cases of all the eligible officers of the State.
Mr. Venugopal has contended that the order of transfer of the appellant and also the order of posting of respondent No. 4 had taken place simultaneously in undue haste even without making declaration of equivalence.
It only indicates that there had not been any bona fide and proper exercise to find out the most suitable person for the post of Chief Secretary in the normal way.
He has submitted that although no specific pleading was made by the appellant before the Tribunal that in order to find a berth for the respondent No. 4, the appellant was moved out against the interest of the administration and the respondent No. 4 was appointed as Chief Secretary of the State, there is sufficient material to indicate that the Chief Minister was bent upon to move out the appellant from the post of Chief Secretary who had always resisted improper suggestions of the Chief Minister in the better interest of the administration and to give effect to such improper decision not on the score of administrative exigencies or for public interest, the impugned order of transfer was made.
On the face of the adverse materials on record and the recommendations made by the appropriate Committee to initiate disciplinary proceedings against the respondent No. 4, there could not have been any administrative exigency to place the respondent No. 4 incharge of the highest Administrative office in the State.
Mr. Venugopal has submitted that mala fide in fact needs to be considered from the totality of the facts and circumstances by drawing reasonable inferences.
There cannot be a straight jacket formula to which every case of malice of fact can fit in.
Mr. Attorney General appearing with the Advocate General of the State of Karnataka for the respondents Nos. 1 and 3, namely, the State of Karnataka and the Chief Minister of Karnataka, has submitted that the post of Chairman, Karnataka Hyderabad Development Board was created on September 1, 1989 and the respondent No. 4 who was holding a very high and responsible office at the relevant time.
The respondent No. 4 is a very senior member of the Indian Administrative Service in the Karnataka cadre and admittedly senior to the appellant as a member of the Indian Administrative Service.
The said respondent No. 4 was appointed to the post of Chairman, Karnataka Hyderabad Development Board.
The said post was declared as equivalent to the post of Additional Chief Secretary on September 27,1989 when the said post was created.
Later on, on October 11, 1989, the said post of Chairman was re designated as Secretary, High Power Committee and ex officio Additional Chief Secretary to the Government of Karnataka.
Mr. Attorney General has contended that simply because adverse comments were made on the functioning of the respondent No. 4 when he was holding the post of Chairman of some other organisation or the Secretary, High Power Committee, there was no compelling necessity of by passing a very senior officer in the Indian Administrative Service cadre in the State.
Since the Cabinet and the Chief Minister had taken a decision to relieve the appellant from the post of Chief Secretary, there had been a necessity to find out a competent senior officer in the Indian Administrative Service Cadre in the State.
As no departmental proceedings had been pending against him, the Cabinet and the Chief Minister had taken a decision that Mr. Rao, respondent No. 4, being the senior most person in the Indian Administrative Service cadre in the State, having a long experience in different administrative set up and conversant with the problems of the State should be posted as Chief Secretary.
Such decision is not ex facie perverse and unjustified.
He has contended that even if it is assumed that instead of respondent No. 4, some other officer would have been selected for the post of Chief Secretary, such selection being a prerogative of the Cabinet and the Chief Minister, the appellant cannot question the correctness and propriety of the same.
The Central Administrative Tribunal is justified in its finding that there has not been any direct challenge to the appointment of the respondent No. 4 to the post of Chief Secretary and the appellant could not establish that any statutory rule has been violated in giving appointment to the respondent No.4 to the post of Chief Secretary.
Mr. Attorney General has also contended that the law is well settled after the decision of this Court in E.P. Royappa (supra) that it is the prerogative of the State Cabinet and the Chief Minister to select a person of their confidence to man the key post G of Chief Secretary in the State.
The only exercise which is required to be made by Court of law or a Tribunal is to find out whether in removing the holder of the post of Chief Secretary, any mala fide action has been taken.
The Tribunal, according to the learned Attorney General, is justified in holding that except making some vague allegations, no firm foundation has been laid by the appellant to warrant a finding that the impugned order of transfer Or the appellant is actuated by a malice in fact or malice in law.
A Mr. Attorney General has submitted that the Tribunal has indicated that the Chief Secretary had not been pulling on well with the Chief Minister of the State, and there had been differences of opinion on a number of matters from before.
If on such account, the Government and the Chief Minister felt that a man of their confidence should be posted as the Chief Secretary of the State so that there was a good rapport between the Chief Secretary and the Chief Minister and the Cabinet, no exception can be made and such decision being squarely within the prerogative of the Chief Minister and the Cabinet as indicated by this Court in no uncertain terms in Royappa 's decision, the Central Administrative Tribunal was justified in declining to interfere against the impugned orders.
Mr. Attorney General has contended that allegations of mala fide action on the part of the Chief Minister or the Cabinet must be substantiated by cogent materials and not by vague insinuations.
In the pleadings, the appellant has only indicated several instances showing how he assessed the facts in giving suggestions in the matter of posting of different top bureaucratic officers including respondent No. 4 and how his suggestions had not been ultimately accepted by the Chief Minister.
Such facts by no stretch of imagination establish a case of mala fide action of the State Government in transferring the appellant from the post of Chief Secretary.
Mr. Attorney General has contended that in order to overcome the decision of the Tribunal, on the pleadings made before the Tribunals, the appellant has attempted to introduce a new case in paragraph 20 of the special leave petition by setting up the appointment of respondent No. 4 as both proof and result of the 4 Chief Minister 's mala fides.
To make it a triable issue, ground 'k ' has been taken in the special leave petition.
But introduction of a new case for the first time before this Court by way of embellishment cannot be permitted.
He has contended that the said new case is far from truth and is an after thought deserving outright rejection.
Mr. Attorney General has also contended that by virtue of holding a particular administrative position, an incumbent of the post may have the privilege to have the reports of other senior bureaucratic officers routed through him under the prevalent rules of business.
Such facts alone do not establish that such post is superior to other post.
If there has been a declaration of equivalence under Rule 9(1) of IAS (Pay) Rules, the post must be held to be equivalent irrespective of the fact that because of the rules of business one of the two equivalent posts enjoys some advantage or privilege.
Mr. Attorney General has contended that the declaration in 1980 was made under Rule 9(1) of IAS (Pay) Rules to the effect that the post of Additional Chief Secretary which was then an ex cadre post was equivalent to the post of Chief Secretary.
Although, subsequently the post of Additional Chief Secretary was encadred, the declaration of equivalence has not lost its force as sought to be contended by Mr. Venugopal.
Mr. Attorney General has contended that even assuming that after the encadrement there was no further scope of declaring equivalence, the fact remains that there had been appreciation and understanding of the State Government about the importance of the two posts and factual assessment of equivalence of the two posts.
He has contended that in any event, such question has become academic in the instant case because pursuant to the Cabinet decision, an exercise was made on January 4, 1991 to declare the post of Secretary, High Power Committee, as equivalent to the post of Chief Secretary itself so that there may not be any occasion for the appellant to feel stifled.
Such decision had taken place prior to the impugned order of transfer but the publication could not be made on the same day, namely, January 4, 1991 but such publication of equivalence under Rule 9 (1) was made on the very next day, namely, on January 5, 1991.
Mr. Attorney General has contended that publication on the next day docs not invalidate the factum of declaration made on January 4, 1991.
Such publication being a requirement of statute has been complied with and the publication has been made in order to give effect to the decision of declaring equivalence already taken.
Mr. Attorney General has contended that it has been specifically stated by the Chief Minister in his affidavit in opposition that declaration of equivalence was made on January 4, 1991 prior to the impugned order.
Mr. Attorney General, has also submitted that even if it is assumed that the publication of declaration of equivalence was made on January 5, 1991 but the impugned order of transfer was made on January 4, 1991, and by that process there has been violation of Rule 9(1) of IAS (Pay) Rules, such violation is a mere technical violation for which no interference by this Court is called for.
He has submitted that Central Administrative Tribunal was justified in coming to the finding that no real injury was caused to the appellant for such technical violation, even if any, and as such no interference was called for by the Tribunal against the impugned order of transfer.
Mr. Attorney General has contended that interference under Article 136 of the Constitution is not a matter of course.
Such interference is required to be made if it conforms both to equity and law.
In the facts and circumstances of the case, the appellant has not been able to make out any case for such interference within the discretionary remedy of this Court and the appeal should, therefore, be dismissed.
Mr. Attorney General has also submitted that the appellant is guilty of suppression of material facts.
After the impugned order of transfer, in view of some statements made by the appellant to the Press against Chief Minister, a decision was taken to initiate disciplinary proceeding against the appellant and he was placed under suspension.
Such suspension was challenged by the appellant before the Central Administrative Tribunal, Bangalore, in Application No. 78 of 1991 and an interim order of stay of the order of suspension was passed in the said proceeding, but subsequent to the filing of the instant special leave petition before this Court, the interim order of stay was vacated by the Administrative Tribunal.
In the aforesaid facts, the factum of suspension was required to be disclosed by the appellant.
Mr. Attorney General has contended that for suppression of material facts, this Court should refuse to interfere in this appeal and should dismiss the same.
He has also contended that in view of order of suspension, the appellant, in any event, cannot be permitted to hold or continue to hold the post of Chief Secretary.
After considering the respective contentions of the learned counsels appearing for the parties, it appears to us that the appellant has not been able to lay any firm foundation warranting a finding that the impugned order Of transfer was passed mala fide and/or for an oblique purpose in order to punish the appellant and/or to humiliate him.
The pleadings of the appellant before the Central Administrative Tribunal only indicate that some of his suggestions in the matter of posting of senior bureaucratic officers of the State had not been accepted by the present Chief Minister of the State.
Such facts alone do not constitute any foundation for a finding that because the appellant was not agreeable to oblige the Chief Minister by accepting all his suggestions and putting up notes to that effect, he had incurred the displeasure of the Chief Minister and the impugned orders had been passed not on administrative exigencies but only to malign the appellant and to humiliate him.
It may not always be possible to demonstrate malice in fact with full and G elaborate particulars and it may be permissible in an appropriate case to draw reasonable inference of mala fide from the facts pleaded and established.
But such inference must be based on factual matrix and such factual matrix cannot remain in the realm of insinuation, surmise or conjecture.
In the instance case, we are unable to find that there are sufficient materials from which a reasonable inference of malice in fact for passing the impugned order of transfer can be drawn.
It is an admitted position that the Chief Secretary and the Chief Minister had differences of opinion on a number of sensitive matters.
If on that score, the Cabinet and the Chief Minister had taken a decision to relieve the appellant from the post of Chief Secretary and post a very senior officer of their confidence to the post of Chief Secretary, it cannot be held that such decision is per se illegal or beyond the administrative authority.
The position in this regard has been well explained in Royappa 's case by this Court.
So far as the other contention of the appellant, namely, invalidity of the impugned order of transfer for want of declaration of equivalence under Rule 9(1) of IAS (Pay) Rules is concerned, it may be indicated that there had already been a declaration when the re designated post of Secretary, High Power Committee, was established that the said post was equivalent to the post of Additional Chief Secretary.
It is the positive stand of the State Government that the posts of Chief Secretary and the Additional Chief Secretary are equivalent.
But in the instant case, it is also not necessary to decide the question in detail as to whether in reality both the said posts are not equivalent as sought to be contended by Mr. Venugopal.
It appears to us that prior to the impugned orders, a decision to declare the post of Secretary, High Power Committee, equivalent to the post of Chief Secretary of the State had been taken.
Since the impugned order of transfer was implemented with immediate effect, the formal publication could not be made on the very same day but was made on January 5, 1991, namely, on the very next day.
It appears from the records that the decision to declare equivalence was taken prior to the impugned order of transfer and the formal publication by way of statutory requirement was made in order to give effect to the decision to declare equivalence already taken.
In such circumstances, we do not think that the formal declaration made on January S, 1991 invalidates the impugned order of transfer.
The Tribunal is justified in holding that infraction, even if any, in making publication formally on January S, 1991, is only a technical violation for which no interference is called for.
In the result, we do not find any reason to interfere with the impugned decision of the Central Administrative Tribunal and the appeal, therefore, fails and is dismissed but without any order as to costs.
| The appellant was appointed to the Indian Administrative Service (KARNATAKA Cadre) in 1957, and on May 5, 1990 he was holding the post of Additional Chief Secretary to the Government of KARNATAKA, and by a Notification dated May 5, 1990 was appointed a Chief Secretary to the KARNATAKA Government until further orders.
In the State of KARNATAKA there was originally one post of Chief Secretary to the Government.
An ex cadre post of Additional Chief Secretary was created with a declaration under Rule 9(1) of IAS (Pay) Rules that the status and responsibilities of the said post were equivalent to the cadre post of Chief Secretary, and this post was thereafter encadred by Notification dated January 30, 1987 with the same pay as of the post of Chief Secretary.
The post of Secretary, High Power Committee, was created by the State Government of Karnataka in 1989 with the designation Chairman, Hyderabad, Karnataka Development Board by order dated September 27, 1989, and was declared equivalent to the status and responsibilities to the cadre post of Additional Chief Secretary under Rule 9 of IAS (Pay) Rules.
The posts of Chief Secretary, Secretary, High Power Committee and Additional Chief Secretary thus carried equal pay.
On January 3, 1991, the Cabinet Government of Karnataka took a decision to the effect that a change of the Chief Secretary should be effected, and pursuant thereto, the Chief Minister on January 4,1991 took the following three decisions, and passed consequential orders viz; (i) declaring that the post of Secretary, High Power Committee, was equivalent in status and responsibilities to the post of Chief Secretary to the Government, (ii) transferring the appellant, to the post of Secretary, High Power Committee with immediate effect, and (iii) appointing the 4th respondent, who was senior to the appellant to the post of Chief Secretary to the Government.
The Notification giving effect to the above orders of transfer was issued on January 4, 1991 but the authenticated Government order declaring the equivalent of the two posts under Rule 9 of lAS (Pay) Rules, was issued on the next day, viz; January 5, 1991.
The appellant made an application before the Central Administrative Tribunal, Bangalore for quashing the order dated January 4, 1991 transferring and posting him as Secretary, High Power Committee for Development of Hyderabad, Karnataka area, Bangalore, and for a direction to allow him to continue as the Chief Secretary.
The order was challenged mainly on two grounds: (1) that such order was not passed bona fide for the exigencies of the administration but the same was passed mala fide by the Chief Minister of Karnataka who became displeased with the appellant on account of his unfavourable attitude and resistance to some of the proposals of the Chief Minister in the matter of posting of senior officers of the State to different posts, and (2) that the transfer order was vitiated because of non compliance of the procedural formalities for a valid transfer of the appellant as there was no declaration under Rule 9(1) of IAS (Pay) Rules, 1954 that the post of Secretary, High Power Committee was equivalent to the post of Chief Secretary.
The respondents viz; State of Karnataka, the Chief Minister as also respondent No. 4 denied the allegations relating to the malice of facts and contended that they were mischievous, malicious, scandalous and vexatious and such allegations were deliberately made to malign the respondents, and contended that the post of Secretary, High Power Committee, was equivalent to the post of Additional Chief Secretary and such declaration had been made long back, and the post of Additional Chief Secretary and the post of Chief Secretary were also equivalent and interchangeable, and that the appellant can have no grievance against the said orders of transfer, and that there is also no occasion to contend that the declaration, required as under Rule 9(1) of IAS (Pay) Rules had not been made.
The Central Administrative Tribunal after considering the facts and circumstances came to the finding that the freedom to choose a person as the Chief Secretary to the liking of the Chief Minister and the Cabinet on whom there is absolute confidence, is undisputed prerogative, and such decision becomes unassailable when it is made in bona fide manner following the statutory formalities applicable to such selection and appointment, and that the appellant had no subsisting right to remain as Chief Secretary and it was the prerogative of the Chief Minister and the Cabinet to take a decision to appoint a person to the post of Chief Secretary.
The Tribunal also held that the appellant had failed to establish that he had been transferred with the ulterior motive of placing him in a lower post and thereby permanently preventing him from continuing in the position and status of Chief Secretary.
The application was accordingly dismissed.
Aggrieved by the aforesaid order of dismissal the appellant appealed to this Court by Special leave and contended that the declaration of equivalence under Rule 9(1) of IAS (Pay) Rules, 1954 is an essential statutory requirement and without such declaration of equivalence no member in the cadre of IAS can be transferred to a non cadre post, and after encadrement of the post of Additional Chief Secretary the declaration of equivalence which was made earlier lost its force, and that equivalence is referable only to an ex cadre post and ex hypothesi declaration of equivalence cannot come in inter se posts within the cadre.
It was also submitted that the order of transfer of the appellant and also the order of posting of respondent No. 4 had taken place simultaneously in undue haste even without making a declaration of equivalence and this only indicates that there had not been any bona fide and proper exercise to find out the most suitable person for the post of Chief Secretary in the normal way.
The Attorney General appearing with the Advocate General of the State of Karnataka for respondent Nos. 1 and 3, namely, the State of Karnataka and the Chief Minister of Karnataka, opposed the appeal and submitted that the post of Chairman, Karnataka Hyderabad Development Board was created on September 1, 1989 and respondent No. 4 was holding a very high and responsible office at the relevant time, and senior to the appellant as a member of the Indian Administrative Service, and that since the Cabinet and the Chief Minister had taken a decision to relieve the appellant from the post of Chief Secretary, there had been a necessity to find out a competent senior officer in the Indian Administrative Service Cadre in the State, that as no departmental proceedings had been pending against him the Cabinet and the Chief Minister had taken a decision to appoint Respondent No. 4 being the seniormost person in the Indian Administrative Service cadre in the State, having a long experience in different administrative set up and conversant with the problems of the State as Chief Secretary, and such decision is not ex facie perverse and unjustified.
Dismissing the appeal, this Court, HELD: 1.
The appellant has not been able to lay any firm foundation warranting a finding that the impugned order of transfer was passed mala fide and/or an oblique purpose in order to punish the appellant and/or to humiliate him.
[387 E] In the instant case, the pleadings of the appellant before the Central Administrative Tribunal only indicate that some of his suggestions in the matter of posting of senior bureaucratic officers of the State had not been accepted by the present Chief Minister of the State.
Such facts alone do not constitute any foundation for a finding that because the appellant was not agreeable to oblige the Chief Minister, he had incurred the displeasure of the Chief Minister and the impugned orders had been passed not on administrative exigencies but only to malign the appellant and to humiliate him.[387 F] 2.
It is an admitted position that the Chief Secretary and the Chief Minister had differences of opinion on a number of sensitive matters.
If on that score, the Cabinet and the Chief Minister had taken a decision to relieve the appellant from the post of Chief Secretary and post a very senior officer of their confidence to the post of Chief Secretary, it cannot be held that such decision is per se illegal or beyond the administrative authority.
[388 B] 3.
It may not always be possible to demonstrate malice in fact with full and elaborate particulars and it may be permissible in an appropriate case to draw reasonable inference of mala fide from the facts pleaded and established.
But such inference must be based on factual matrix and such factual matrix cannot remain in the realm of insinuation, surmise or conjecture.
[387 G] 4.
So far invalidity of the impugned order of transfer for want of declaration or equivalence under Rule 9(1) of IAS (Pay) Rules is concerned, it is indicated that here had already been a declaration when the re designated post of Secretary, High Power Committee, was established that the said post was equivalent to the post of Additional Chief Secretary.
It is the positive stand of the State Government that the post of Chief Secretary and the Additional Chief Secretary are equivalent.
[388 C D] 5.
Prior to the impugned orders, a decision to declare the post of Secretary, High Power Committee equivalent to the post of Chief Secretary of the State had been taken.
Since the impugned order of transfer was implemented with immediate effect, the formal publication could not be made on the very same day but was made on January 5,1991, viz., on the very next day.
In such circumstances the formal declaration made on January 5,1991 does not invalidate the impugned order of transfer.
[388 E Fl E.P. Royappa vs State of Tamil Nadu, AIR 1974 S.C. 555, relied on.
|
ion would meet the re quirement and at the end of such period the scheme is ex pected to become effectively operative.
The Tamil Nadu Board may undertake the supervision from January 1992, and it is directed that the State Government and the said Board to coordinate the implementation.
The Secretary of the Tamil Nadu Board who would be mainly in charge of the field job shall be paid by the State Government a sum of Rs.1,500 per month from January 1992, as an allowance to meet out of pocket expenses for the period he does the work as Secretary of the Board.
[362 G, H, 363 A] & ORIGINAL JURISDICTION: Writ Petition (Civil) No. 1262 of 1987 WITH Writ Petition (Civil) No. 13064 of 1983.
(Under Article 32 of the Constitution of India).
Har Dev Singh and R.K. Agnihotri for the Petitioners.
Raju Ramachandran, R.Mohan, Ms Shanta Vasudeva, P.K.Manohar, K.Swamy, Ms.
A.Subhashini and R.C.Kohli for the respondents.
360 The Judgment of the Court was delivered by RANGANATH MISRA, CJ.
A letter petition received from the District Beedi Worker 's Union, Tirunelveli in the State of Tamil Nadu was treated as an application under Article 32 of the Constitution and notice was ordered intially to three factories referred to in the said letter and later to other beedi manufacturing units within the State.
In the letter, complaint was made about manipulation of records regarding employees, non payment of appropriate dues for work taken, failure to implement the provisions of the labour laws, prevalence of contract labour system etc.
There is a connected petition also relating to the same subject matter with different ancillary reliefs covering employment of child labour and the non implementation of the Beedi and Cigar Workers (Conditions of Employment) Act, 1956.
We have considered it appropriate to deal with both the applications together.
This Court by an Order dated 24th October, 1989 appointed a social organisation by name 'Society for Community Organisa tion Trust (SOCCO) ganisation for making appropriate investigation and circuated the State to the court.
After the Report was received an were given time to file their respones Tamil Nadu and the manu facturers were given time to file their response by way of affidavits.
This Court then directed that a scheme should be formulated for for consideration of the Court.
This court made an Order on 24th July, 1991 to the following effect.
"We gather from the submissions made at the bar that in the meantime some exercise has been undertaken for the purpose of finalising the Scheme.
Initially the state of Tamil Nadu has taken the lead but later Union of India has also go interested and meeting on a bigger ,scale for the purpose of finalising the Scheme is being arranged.
The attorney General is present in Court today.
We have also suggested to him that he may par ticipate in the proceedings to help the schem to be finalised as quickly as possible.
" Then came two Schemes, one by the petitioners and the other by the State of r Thamil Nadu.
By order dated October 8, 1991, the Court directedon the basis of consent of counsel that at a conference the terms should be settled for one Scheme to be adopted by the Court.
On 10 th October, 1991, on the representation of the parties, the Court made the following Order: "Pursuant to our earlier direction, the em ployers, employees and the State Government through their representatives met 361 and have sorted out, some of the differences.
Matters which are agreed to by all.
and as pects which are not agred to by the employers have been seperately shown.
A copy of this may be served on counsel for the Union of India present in the court today and he is given three weeks ' time to indicate the responses.
The appropriate Ministry of the Government of india to respond to the relevant aspects.
" Pursuant to this Order, the Under Secretary in the Minis try of Labour of the Union Government has filed an affidavit which we have examined.
The objection which have.
been especially refered to in the affidavit of the Central Government do not really surive after the matter is heard inasmuch as these are questions with which the union Government in not concerned and Under the constitutional scheme they relate to the power of the State Government.
w,e would like ' to dispose of these petitions with the following directions taken from the scheme as formulated by the petitioners and the State Government, 1.
The Beedi and Cigar Workers (Conditions of Employment) Rules 1969 should be strictly implemented ,and once that is done the evil of not furnishing the books to the home workers would be eradicated.
An establishment of the Regional Provident Fund Commissioner with full 'equipment for the purpopose of implementation of the Statute should be located within the area and the Regional Provident Fund commissioner should have directionS to enforce the Act in all aspects.
This establishment should start functioning within three months from now.
The labour laws as also the Beedi and Cigar Workers (Conditions of Employment) Act should be strictly enforced so that the workers get their legitimate dues and the conditions of employment improve.
Tobacco manufacturing has indeed health hazards.
Child labour in this grade should theirfore be prohibited as far as possible and employment of child labour should be stopped either immediately or in a phased manner to be decided by the State GovernmeAts Out within a perioed not exceeding three years from now.
The provisions of Child Labour Abolition Act, 1986 should be strictly imple mented.
362 5.
Contract labour system, it is alleged, is indispensable this trade.
The Union Government is directed look into this aspect of the matter and take its final decision one way or the other within six months from now.
Beedi trade is a flourishmg one.
Exploi tation of labour is rampant in this trade.
A governmental labour establishment should be located in the area with full complement to answer the requirements of the matter.
Since beedi manufacturing process is carried more outside the factory than within, the system of maintaining the registers as a regulating practice has become necessary.
Great care should, therefore, be taken to ensure the maintenance of the register system as the bulk of the employees outside the factories can be regulated only through the record maintained in the registers.
The and the which contain beneficial provisions should be implemented in the true spirit and since they are legislations of the Central Government, the machinery of the Central Government should be made operational in the area.
Grievance has been made that the pass books are not maintained in the names of actual workers.
This should be ensured.
The Welfare Fund should be properly administered after and in the case of death of a workman appropriate assistance should be extended out of the Fund quickly.
In view of the health hazard involved in the manufacturing process, every worker in cluding children, if employed, should be insured for a minimum amount of Rs.50,000 and the premium should be paid by the employer and the incidence should not be passed on to the workman.
We are of the view that the implementation of the scheme within the state in an effective manner would require to be supervised by an independent external agency.
The Tamil Nadu State Legal Aid & Advice Board can be entrusted with this responsibility.
A three year period of such supervision, in our opinion, would meet the requirement and at the end of such period the scheme is expected to become effectively operative.
We, therefore, require the Tamil Nadu Board to undertake the super. 363 vision from January, 1992 and we direct the Tamil Nadu Government and the said Board to coordinate the implementa tion.
The Secretary of the Tamil Nadu Board Mr. Raja, who would be mainly in charge of the field job shall be paid a sum of Rs. 1,500 (fifteen) per month from January 1992, as an allowance to meet out of pocket expenses by the State Government for the period he does the work as Secretary of the Board.
We dispose of these cases with the directions indicated above and hope and trust that the authorities as also the employers and the employees would try to implement the directions in true spirit.
Liberty to apply.
G.N. Petitions disposed of.
| These petitions relate to child employment, prevalence of contract labour system and the non implementation of .
This Court considered the petitions and appointed a Trust viz., Society for Community Organisation Trust for conducting appropriate investigation and to submit a report.
The Trust submitted its report, which was then circulated to the Respondent State Government and the beedi manufacturers.
On the direction of this Court for formulating a scheme, two Schemes cameto be formulated, one by the State Govern ment and the other by the petitioners.
This Court directed that the terms should be settled for one Scheme to be accept ed by the Court, and given time to the Union of India to respond to the same.
Union of India filed certain objec tions.
Rejecting the objections and disposing of the petitions, this Court, 358 HELD: 1.1 The Beedi and Cigar Workers (Condition of Employment) Rules, 1968 should be strictly implemented and once that is done the evil of not furnishing the books to the home workers would be eradicated.
[361 D, E] 2.
An establishment of the Regional Provident Fund Commissioner with full equipment for the purpose of imple mentation of the Statute should be located within the area and the Regional provident Fund Commissioner should have directions to enforce the Act in all aspects.
This estab lishment should start functioning within three months from now.
[361 E, F] 3.
The labour laws as also the should be strictly enforced so that the workers get their legitimate dues and the conditions of employment improve.
[361 F G] 4.
Tobacco manufacturing has indeed health hazards.
Child labour in this trade should therefore be prohibited as far as possible and employment of child labour should be stopped either immediately or in a phased manner to be decided by the State Government but within a period not exceeding three years from now.
The provisions of Child Labour Abolition Act, 1986 should be strictly implemented.
[361 G, 11] 5.
The Union Government is directed to look into the aspect whether contract labour system is indispensable in this trade and take its final decision one way or the other within six months from now.
[362 A] 6.
Beedi trade is a flourishing one and exploitation of labour is rampant in this trade.
A governmental labour establishment should he located in the area with full com plement to answer the requiretenants of the matter.
[362 F] 7.
Sincc Beedi manufacturing process is carried more out side the factory than within, the system of maintaining the registers as a regulating practice has become necessary.
Great care should, there fore be taken to ensure the maintenance of the register system as the bulk of the employees outside the factories can be regulated through the record maintained in the registers.
[362 C] 8.
The and the Beedi 359 Workers Welfare Fund Act, 1976 which contain beneficial provision should be implemented in the true spirit and since they are legislations of the Central Government, the machin ery of the Central Government should be made operational in the area.
[362 D] 9.
It should be ensured that pass hooks are maintained in the names of actual workers.
[362 E] 10.
The Welfare Fund should be properly administered and in the case of death of workman appropriate assistance should be extended out of the Fund quickly.
[362 E, F] 11.
In view of the health hazard involved in the manu facturing process, every worker including children, if employed should be insured for a minimum amount of Rs.50,000 and the premium should be paid by the employer and the incidence should not be passed on to the workman.
[362 F] 12.
The implementation of the scheme within the State in an effective manner would require to be supervised by an independent external agency.
The Tamil Nadu State Legal Aid
|
Civil Appeal No. 8244 of 1983.
From the Judgment and Order dated 22.7.1980 of the Kerala High Court in Second Appeal No. 171 of 1976.
E.M.S. Anam of the Appellants N. Sudhakaran for the Respondents.
The Judgment of the Court was delivered by R.M. SAHAI, J.
Whether a junior member of the Tarwad, in Kerala, who redeems the mortgage and is in possession for more than 50 years is a `mortgagee holding the land comprised in a mortgage ' so as to acquire rights of tenant of tenant under Section 4(A) of the Kerala Land Reforms Act, is the legal issue that arises for consideration in this appeal, by successors of other members of the Tarwad who suit for partition was dismissed in second appeal by the High Court.
In the year 1045 (1870) a mortgage was executed by the Karnavan (akin to Manager) of the Tarwad, (somewhat like a joint family).
Two junior members, of the Tarwad, paid the amount in the year 1061 (1886), got the property released, obtained possession and they or their descendants continued in possession as such.
In 1967 a suit for partition was filed by sucessors, of other member of the Tarwad, in whose favour equity of redemption, of the land in suit, was transferred in a family partition in 1962.
The suit was resisted amongst others on acquisition of right of tenant under Section 4(1)(a) of the Land Reforms Act.
Since there was no dispute on basic facts, namely, redemption of mortgage by two junior members and their continuance in possession for more than fifty years on the date Section 4(1)(a) was added to the Land Reforms Act the rights of parties were decided, more, as a matter of law.
According to the trial court and first appellate court the junior members, as a result of getting the property released, were holder of special right under Marumakkathayam Law.
They could not be held to be mortgagee, therefore, they did not acquire any right under the Land Reforms Act.
But the High Court held otherwise, mainly because in 1962 when the Tarwad was partitioned the property was treated as under mortgage since equity of redemption for the same was given to the plaintiff appellant.
It was found that, even, in the plaint it was averred that in consequence of release the mortgagee right vested in the predecessor of defendants who were junior members of the Tarwad.
The High Court, therefore, held that the defendants being assignee of mortgage in possession for fifty years, on the date the Land Reforms Act was amended and Section 4(1)(a) was added by Act XXXV of 1969, were entitled to rights as tenants.
The High Court, thus, accepted the claim of defendants because the member of the Tarwad treated the mortgage to be continuing on the date the suit was filed.
This, apart, it was held that junior member of the Tarwad paying off the debt of Tarwad becomes a mortgagee of the excess share in his own right.
But this enunciation, of law, was not accepted, as correct by a division bench of the Kerala High Court itself in Raghavan Nair vs Anandavally Amma, The question, therefore, is if a junior member of the Tarwad who redeems the properly, and gets release, is holder of special right only or he steps into the shoes of mortgagee.
Nature of right of a junior member in the Tarwad, a family corporation, in which every member male or female possesses equal right has been explained by this Court in Kochuni vs States of Madras & Kerala, ; at 1099, thus: " The incidents of a tarwad are so well settled that it is not necessary to consider the case law, but it would be enough if the relevant passages from the book "Malabar and Aliyasanthana Law" by Sundara Aiyar are cited.
The learned author says at p.7 thus: "The joint family in a Marumakkathayam Nayar tarwad consists of a mother and her male and female children, and the children of those female children, and so on.
The issue of the male children do not belong to their tarwad but to the tarwad of their consorts.
The property belonging to the tarwad is the property of all the males and females that compose it.
Its affairs are administered by one of those persons, usually the eldest male, called the karnavan.
The individual members are not entitled to enforce partition, but a partition may be effected by common consent.
The rights of the junior members are stated to be (1) if males, to succeed to management in their turn, (2) to be maintained at the family house, (3) to object to an improper alienation or administration of the family property, (4) to see that the property is duly conserved, (5) to bar an adoption, and (6) to get a share at any partition that may take place.
These are what may be called effective rights.
Otherwise everyone is a proprietor and has equal rights.
" One of the rights according to this decision which vests in the junior member is to see that the property is duly conserved.
Such a right, obviously, includes a right to redeem the property by paying the debts outstanding against the Tarwad.
It is an incidence of co ownership or co proprietorship which flows from the nature of Tarwad.
But whether the person who thus conserves the property steps into shoes of mortgagee and holds the same rights and interests or he is a surety holding the property on behalf of the Tarwad subject to right of contribution has to be decided on general principles of mortgage as the customary law of Tarwad does not throw any light on it.
Mortgage has been defined in Section 58 of the as transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced.
The definition brings out clearly the nature of mortgage.
It was understood and followed in same sense, even, before the Act came into force.
In Gopal vs Parsotam 1883 5 All. 121.
137 F.B. it was observed : "Mortgage as understood in this country cannot be defined better than by the definition adopted by the Legislature in section 58 of the (IV of 1882).
That definition has not in any way altered the law, but, on the contrary, has only formulated in clear language the notions of mortgage as understood by all the writers of text books on Indian mortgages.
Every word of the definition is borne out by the decisions of lndian Courts of Justice.
" It was not different where customary law prevailed.
Even in customary Marumakkathayam Law, governing section of people inhabiting the West Coast, the law of mortgage was understood in no different sense.
Since the transfer in a mortgage is, only, of interest and not of the entire right and title, as takes place in sale, the mortgagor and the mortgagee can transfer or assign their interest.
A mortgagor may assign or transfer the equity of redemption or may even create second mortgage.
Similarly a mortgagee may assign his interest or create another mortgage.
What happens when a mortgagee assigns his interest in favour of another person? Since an assignor can pass interest that he has, the assignee becomes holder of the same interest that a mortgagee has.
In other words, he steps into the shoes of the mortgagee.
Can the same be said where a co mortgagor or anyone on behalf of mortgagor authorised under law, pays the amount and brings to an end the interest the mortgagee had? Mortgage is creation of an interest in the property for payment of debt.
Once the mortgage debt is discharged by a person beneficially interested in equity of redemption the mortgage comes to an end by operation of law.
Consequently the relationship of mortgagor and mortgagee cannot subsist.
What then is the status of a person paying off debt to secure the property either with consent of others or on own volition? In law he becomes the owner, entitled to hold and possess the property.
But in equity the right is to hold the property till he is reimbursed.
In other words, he may hold the property in surety or he may bring the claim for contribution.
In Ganeshi Lal vs Joti Pershad, ; , it was held; ".
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. " Similarly the co mortgagor whose share has been got redeemed is entitled, in equity, to get possession over his share of property on payment of the amount of his share.
In Valliamma Champaka Pillay vs Sivathanu Pillay & Ors., [1980] I SCR 354 the principle was explained thus: "From what has been said above it was clear that where the is not in force and a mortgage with possession is made by two persons, one of whom only redeems discharging the whole of the common mortgage debt, he will, in equity, have two distinct rights: Firstly, to be subrogated to the rights of the mortgagee discharged, vis a vis the non redeeming co mortgagor, including the right to get into possession of the latters portion or share of the hypotheca.
Secondly, to recover contribution towards the excess paid by him on the security of that portion or share of the hypotheca, which belonged not to him but to the other co mortgagor.
It follows that where one co mortgagor gets the right to contribution against the other co mortgagor by paying off the entire mortgage debt, a co related right also accrues to the latter to redeem his share of the property and get its possession on payment of his share of the liability to the former.
This corresponding right of the ' non redeeming ' co mortgagor, to pay his share of the liability and get possession of his property from the redeeming co mortgagor, subsists as long as the latter 's right to contribution subsists " But these rights in equity, either in favour of the person 2who discharges the debt or the person whose debt has been discharged, do not result in resumption of relationship of mortgagor and mortgagee.
Even under subrogation, a legal concept, meaning substitution, applied, on English Law principle, even earlier, inserted now as Section 92 in since 1929, the rights that are created in favour of a co mortgagor as a result of discharge of debt are 'so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems '.
What is the meaning of expression 'right as mortgagee '? Does a person who, in equity, gets subrogated becomes mortgagee? Or his rights are confined to foreclosure or sale? A plain reading of the section does not warrant a construction that the substitutee becomes a mortgagee.
The expression is, 'right as the mortgagee ' and not right of mortgagee.
The legislative purpose was statutory recognition of the equitable right to hold the property till the co mortgagor was reimbursed.
And not to create relationship of mortgagor and mortgagee.
The section confers certain rights on co mortgagor and provides for the manner of its exercise as well.
The rights are of redemption, foreclosure and sale.
And the manner of exercise is as mortgagee.
The word, 'as ' according to Black 's Legal Dictionary means, 'in the manner prescribed '.
Thus a co mortgagor in possession, of excess share redeemed by him, can enforce his claim against non redeeming mortgagor by exercising rights of foreclosure or sale as is exercised by mortgagee under section 67 of the .
But that does not make him mortgagee.
Therefore, a co mortgagor or a Junior member of the Tarwad who continued in possession over the excess share, got redeemed by him, could not be deemed to be mortgagee so as to acquire right under Section 4A(1)(a) of the Kerala Land Reforms Act.
Legal position explained above does not alter either because during partition equity of redemption in respect of property redeemed by junior members was transferred or because in the plaint it was claimed that mortgage subsisted.
None of these actions could effect the operation of law.
In the result this appeal succeeds and is allowed.
The judgment and order of the High Court is set aside and the order of the trial court decreeing the suit for partition is restored.
Parties shall bear their own costs.
N.P.V. Appeals allowed.
STATE bank of india and anr.
vs V. PARTHASARATHY ETC.
NOVEMBER 9, 1992 [KULDIP SINGH AND P.B. SAWANT, JJ.] Civil Services: State Bank of India Promotion to the post of Head Clerk Circular No. 42 Clause Three options Outside the city within city and within the same office Debarment on refusal of third and final offer Local Head Office and five other offfices to be considered as one Unit Final offer made in one such office Whether valid and debars the optees permanently on refusal to accept.
The appellant Bank issued Circular No. 42 containing an understanding reached with the Staff union laying down the policy for promotion of clerks to the post of Head Clerks.
As per clause 1(d) of the Circular the employees who decline to accept Head Clerk s post at a branch office outside the city in which they work, will have a further option when a vacancy arises at any one of the Bank 's offices within that city.
However, this was subject to the condition that at the material time there was no other senior employee who had similarly declined the post outside his branch office, in which case the senior most would have the first choice.
It was further provided that if an employee declines to accept the post of Head Clerk at an office within the same city, his case would be considered only when a vacancy arises at his office.
This was also subject to the condition that there was no senior employee similarly situated at the material time.
If the third and final offer is declined, there would be a permanent debarment of promotion.
Since there were six offices at the Madras Local Head Office, a common seniority was maintained and all the six offices were considered as one office, viz. local Head Office of which the other five offices were only parts.
The Respondents declined their first, second and final offers, though indisputably the final offer was made to them for being posted in an office forming part of the local Head Office.
Both the Respondents moved the High Court by way of Writ Petitions and the High Court took the view that the final offer made was not in the same office and so they were entitled to be posted as Head Clerks in the same office.
Being aggrieved by the said two decisions of the High Court, the appellant Bank preferred the present appeals.
On the question of interpretation of clause 1(d) of the circular in question: Allowing the appeals, this Court, HELD :1.
The High Court 's interpretation of cl. 1(d) of the Circular that the third offer made was not in the office where the Respondents were working and therefore their refusal to accept the post did not exhaust the third option and they were entitled to be posted as Head Clerks in the Office where they were working is incorrect in view of the fact that the local Head Office was split into six different offices which together constituted one unit.
By refusing to accept the third and final offer, the Respondents had clearly exhausted all the three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
[366 E G] 2.
This Court does not intend to interfere with the appointment of the respondents to the post of Head Clerk in the Regional Office in the facts and circumstances of these matters which show that in one case a fortuitous appointment had arisen due to death of an employee within almost a month of the Respondent 's refusal to accept the offer, and in the other case, the Respondent has already been accommodated in the post of Head Clerk in the Regional Office itself.
However, this would not be treated as a precedent and this would not affect the interpretation of clause 1(d) of the Circular, placed by this Court.
[366 H; 367 A] CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
4799 4800 of 1992.
From the Judgments dated 4.3.1992 and 8.4.1992 in Madras High Court in W.P. No. 246/92 and W.A. No. 349 of 1992.
G. Ramaswamy Attorney General, K. Sankaran, A. Rangananthan and A.V. Rangam for the Appellants.
M.K. Ramamurthi, M.A. Krishnmoorthy, M.A. Chinnaswamy, H. Subramaniam and Ms. C. Ramamurthi for the Respondents.
Rajendra Sachhar, Ambrish Kumar and M.D. Pandey for the Inter vener.
The Order of the Court was delivered: Intervention application is allowed.
Leave granted.
Civil Appeal No. 4799 of 1992.
The controversy in this case is in a narrow compass.
The appellant Bank issued Staff Circular No. 42 containing an understanding reached with the Bank staff union laying down the policy for promotion of clerks to the post of Head Clerks.
Clause 1(d) of the said circular states as follows: Employees who decline to accept Head Clerk 's post at a Branch Office outside their place of service, i.e., outside their city, will again be offered the appointment only when a vacancy arises at any one of the offices within that city, provided that at the material time there is no other senior employees at that office who had earlier declined a posting outside his Branch, as a Head Clerk in which case the senior most employee will first be offered the appointment.
Also, if an employee declines to accept the post of a Head Clerk at an office within the same city, his case for appointment as Head Clerk will be considered only when a vacancy arises at his office, in the order of his seniority.
His case cannot be considered for a vacancy at any of the other offices in the city.
It will be apparent from the above provision of the said clause that those employees who decline to accept the Head Clerk 's post at a branch office which is outside the city in which they work will have a further option.
Such employees would be offered the post of Head Clerk again but only when a vacancy arises at any one of the Bank 's offices within that city.
This is of course subject to the condition that at the material time, there is no other senior employee who had similarly declined the post outside his branch office, in which case, the senior most would have the first choice.
The further provision of this rule and with which we are concerned in the present case is as follows.
If an employee declines to accept the post of Head Clerk at an office within the same city his case for appointment as Head Clerk would be considered only when a vacancy arises at his office.
This is also subject to the condition that there is no senior employee similarly situated at the material time.
If the third and the final offer for the post of Head Clerk is declined, there is a permanent debarment of the promotion.
One more thing necessary to be stated before we come to the facts of the present case is that the appellant Bank has a local Head Office at Madras.
In 1972, it was split into two the local Head Office and Madras Main Branch.
In 1976 77, there was a further splitting up of the local Head Office and the Main Branch and ultimately in 1979, the Madras Local Head Office was divided into following six offices as part of the same Head Office: "(i) Local Head Office (ii) Madras Main Branch (iii) Overseas Branch (iv) Regional Office, which is called Zonal Office (v) The Commercial Branch (vi) Siruthozhil Branch" 4.
There is no dispute that as far as the Clerks and the Head Clerks in all the six parts of the same local Head Office are concerned, a common seniority list is maintained.
The effect of the aforesaid arrangements for the purposes of the clause 1(d) is that "the employees" in the said clause means the employees in all the said six parts of the local Head Office.
In other words, if a vacancy for a Head Clerk occurred at any of the said six offices, it was considered to be a vacancy in one office, viz.
,the local Head Office of which the other five offices were only parts.
It appears that respondent Parthasarathy was working as a clerk in the Madras Regional Office (now called Zonal Office) which is, as will be clear from above, a part of the Local Head Office itself.
On 21st August, 1973, he was offered the post of Head Clerk at Deva Kottain which is outside Madras city.
This offer was declined by him.
On 1st July, 1980, he was offered the post of Head Clerk in the Sowkarpet branch office in the same city which was less than 2 kms, from his Regional office where he was working.
He declined the said offer too.
He was then entitled to be considered for posting as Head Clerk only in his office which meant in any of the six parts of the local Head Office, that being the third and the final offer that could be made to him.
The third offer was made to him for the post of Head Clerk at the Overseas branch, and that being part of the same local Head Office, he was bound to accept it.
However, he declined the third and the final offer also, and issued a lawyer 's notice to the Bank contending that the Overseas branch was different from the Regional office where he was working and, therefore, the offer given to him was contrary to the said clause 1(d).
The allegations made in the notice were of course denied by the bank.
On 6th September, 1983, one A. Nizamuddin who was working as Head Clerk in the Regional office passed away and that post became vacant.
On 24th September, 1983, the respondent filed a writ petition before the High Court for quashing the third and the final offer made to him on 4th August 1983, and for a direction for posting him in the Regional office where the vacancy had occurred.
The High Court took the view that the third offer made was not for the post of the Head Clerk in the same office where the respondent was working and, therefore, his refusal to accept the post did not exhaust the third option and he was entitled to the vacancy created by Nizamuddin 's death in the Regional office where the respondent was working.
We are afraid this interpretation is incorrect in view of the position explained above with regard to the local Head Office which was split into six different offices which together constituted one unit.
The respondent, when he was offered the third option in the Overseas branch, was offered the post in the same office where he was working, the Regional office being as much a part of the Head Office as the Overseas branch.
By refusing to accept the said third and the final offer, the respondent had clearly exhausted all his three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
We, however, do not interfere with the appointment of the respondent to the post of Head Clerk in the Regional office in the facts and circumstances of the case which show that a fortuitous appointment had arisen within almost a month of his refusal to accept the offer.
This, however, will not be treated as a precedent nor does it affect the interpretation that we have placed on the clause 1(d) as above.
Civil Appeal No. 4800 of 1992 In this case also, the respondent Sampath was working as a Clerk in Madras Regional Office.
The first offer of the post of Head Clerk was made to him on 6th August, 1973 at Mudukulathur branch which is in Madras city.
This was declined by him.
On 12th May, 1980, he was given the second offer for the post of Head Clerk at Air Force Station branch, Tambaram which was in Madras city.
The third and final offer was made to him on 4th August, 1983 to the post of Head Clerk in the Stationery department of the Madras Local Head Office.
There is no dispute that Stationery department of the Local Head Offfice and the Regional Office form part of one unit, viz., Madras Local Head Office.
The respondent declined this offer as well, and on 23rd January, 1984 filed a writ petition in the High Court for quashing the third offer and for posting him in his office, viz., Regional Office as the Head Clerk.
The learned Single Judge of the High Court quashed the order making the third offer and allowed the petition following the earlier decision in Parthasarathy 's case with which we have dealt with earlier.
The Division Bench of the High Court also confirmed the order.
For the reasons we have given in C.A.No. 4799 of 1992, we are unable to accept the interpretation given by the High Court on clause 1(d) of Staff Circular No. 42.
However, if in the present case, the respondent has already been accommodated in the post of Head Clerk in the Regional Office itself, we do not intend to interfere with the same.
It is nonetheless made clear that it is the interpretation that we have placed on the said clause that will prevail and not the interpretation placed by the High Court.
With these observations, the appeals are allowed only to the extent that the interpretation placed by the appellant Bank on clause l(d) of the Staff Circular No. 42 is correct and the decision of the High Court on the point is incorrect.
There will be no order as to costs.
| Two junior member of a Tarwad (somewhat like a joint family) redeemed a mortgage executed in 1870 by the Karnavan (akin to Manager) of the Tarwad.
They paid the amount in 1886, got the property released, obtained possession and they or their descendants continued in possession as such.
In 1967 a suit for partition was filed by sucessors, of other members of the Tarwad, in whose favour equity of redemption, of the suit land was transferred in a family partition in 1962.
The suit was resisted amongst others on acquisition of right of tenant under section 4A(1)(a) of the Kerala Land Reforms Act, 1964.
The trial court and first appellate court held that the junior members, as a result of getting the property released, were holders of special right under Marumakkathayam Law and they could not be held to be mortgages and, therefore, they did not acquire any right under the Land Reform Act.
The High Court, however, held that the junior member being assignee of mortgage in possession for fifty years, on the date the Kerala Land Reform Act, 1964, was amended and Section 4(1)(a) was added by Amendment Act of 1969, were entitled to rights as tenants, and thus, accepted the claim of junior members, because the members of the Tarwad treated the mortgage to be continuing on the date the suit was filed.
It also held that a junior member of the Tarwad, paying off the debt of Tarwad, became a mortgagee of the excess share in his own right.
Allowing the appeals of the sucessors of other members of Tarwad, this Court, HELD: 1.
A co mortgagor or a junior member of the Tarwad who continued in possession over the excess share, got redeemed by him, could not be deemed to be mortgagee so as to acquire right under Section 4A(1)(a) of the Kerala Land Reform Act, 1964.
This position does not alter either because during partition equity of redemption in respect of property redeemed by junior members was transferred or because in the plaint it was claimed that mortgages subsisted.
None of these actions could affect the operation of law.
[425 D E] 2.1 Mortgage is creation of an interest in the property for payment of debt.
Once the mortgage debt is discharged by a person beneficially interested in equity of redemption, the mortgage comes to an end by operation of law.
Consequently, the relationship of mortgagor and mortgagee cannot subsist.
[423 E, F] 2.2 In law, the status of a person paying off debt to secure the property either with consent of others or on own volition is that the becomes the owner, entitle to hold and possess the property.
But, in equity the right is to hold the property till he is reimbursed.
In other words, the may hold the property in surety or he may bring the claim for contribution.
Similarly, the co mortgagor whose share has been got redeemed is entitled, in equity, to get possession over his share of property on payment of the amount of his share.
But these rights in equity, either in favour of the person who discharge the debt or the person whose debt has been discharged, do not result in resumption of relationship of mortgagor and mortgagee.
[423 F, G; 424 B] 2.3 A plain reading of Section 92 of the does not warrant a construction that the substitutee become a mortgagee.
The expression is `right as the mortgagee ' and not right of mortgagee.
The legislative purpose was statutory recognition of the equitable right to hold the property till the co mortgagor was reimbursed.
And not to create relationship of mortgagor and mortgagee.
The section confers certain rights on co mortgagor and provides for the manner of its exercise as well.
The rights are of redemption, foreclosure and sale.
And the manner of exercise is as mortgagee.
The word, `as ' means, `in the manner prescribed '.
[425 B C] 2.4 A co mortgagor in possession of excess share redeemed by him can thus enforce his claim against non redeeming mortgagor by exercising rights or foreclosure or sale as is exercised by mortgagee under section 67 of the .
But that does not make him mortgagee.
[426 C D] Raghavan Nair vs Anandavally Amma, , approved.
Kochuni vs State of Madras Kerala, A.I.R. 1960 S.C. 1080; Ganeshi Lal vs Joti Pershad, ; and Valliamma Champaka Pillay vs Sivathanu Pillay & Ors.
, ; , referred to .
|
minal Appeal No. 667 of 1980.
From the Judgment and Order dated 31.7.1980 of the Allahabad High Court in Crl.
Appln.
No. 5296 of 1979.
M.V. Goswami for the Appellants.
Vishnu Mathur, A.S. Pundir and R.C. Verma for the Respondents.
The Judgment of the Court was delivered by SAWANT, J.
The admitted facts in the present case are as follows.
The suit property consists of house No. 336 of village Khonda, District Mathura.
The dispute with regard to the possession of the property arose between the appellants and the respondent Ramshri.
She filed an application under Section 145 of Criminal Procedure Code [Code] before the Sub Divisional Magistrate, Sadabad in which she claimed ownership of the suit property.
On 31st May, 1976, the learned Magistrate passed a preliminary order under Section 145 of the Code and thereafter on 22nd April, 1977 made an order of attachment under Section 146 directing that the attachment would continue till the competent civil court determined the rights of the parties with regard to the said property.
Against this order, a Revision being Cr.
Revision No. 27/1977 was filed by the appellants before the Sessions Judge who by his interim order dated 23rd April, 1977 stayed operation of the learned Magistrate 's order.
However, before the interim stay order could be communicated, the attachment had already been effected.
The learned Sessions Judge, therefore, again, by another interim dated 26th April, 1977 directed the police to restore the possession the property to the appellants from whom allegedly the possession of the property was taken.
The possession was restored to the appellants on 28th April, 1977.
The said Revision application was dismissed on 18th August, 1977.
Though, on account of the dismissal of the Revision, the order of attachment passed by the Magistrate revived, the learned Magistrate passed a fresh order dated 31st January, 1978 under Section 146 attaching the property in dispute.
Against the said order, once more a revision being Cr.
19/1978 was preferred by the appellants to the 5 Sessions Judge who on 2nd February, 1978 passed an order staying the fresh order of attachment passed by the Magistrate.
Thereafter, the appellants filed a suit for permanent injunction against the 1st Respondent and her husband, and in that claimed an interim injunction against them.
The trial court dismissed the application for interim injunction.
Against the order of dismissal, the appellant filed an appeal to the District Court, and the appellate court by its order dated 18th May, 1978, allowed the appeal and issued an interim injunction against 1st respondent and her husband.
Thereafter Cr.
Revision No. 19/1978 preferred by the appellant before the Sessions Judge was dismissed on 15th June, 1978 also on the ground that the civil suit was preferred by the Appellant.
Again, although the order of attachment stood revived and the order of interim injunction by the Civil Court still continued, the Magistrate on 25th July, 1978 passed another order attaching the property.
Against this third order of attachment passed by the Magistrate, a revision was filed by the Appellants before the Sessions Judge and the Sessions Judge by his order dated 26th July, 1978 stayed the order of attachment issued on 25th July, 1978, upto 10th August, 1978.
On 26th July, 1978, the appellant filed an application before the Magistrate for withdrawal of attachment on the ground that there was no apprehension of a breach of the peace.
On this application, on 17th October 1978, the Magistrate ordered withdrawal of attachment.
Against this order, the 1st Respondent filed revision being Cr.
180/78 before the Sessions Judge who dismissed the same on 14th May, 1979.
Respondent No. 1 thereafter, preferred an application under Section 482 of the Code before the High Court for quashing the order withdrawing the attachment and directing the attachment to continue.
The High Court by the impugned order took the view that it was not open to the learned Magistrate to withdraw the attachment till the competent Court had decided the matter finally and restored the attachment.
On these facts, two questions arise in this appeal viz. whether the High Court could entertain the second revision application in exercise of its inherent powers under Section 482 of the Code and whether the interpretation placed by the High Court on the provisions of Sections 145 and 146 of the Code is correct.
There is no doubt that the learned Magistrate had committed an error in passing the subsequent orders of attachment when the first attachment was never finally vacated and had revived the moment the revision application filed against it was dismissed by the learned Sessions Judge.
It appears that none of the parties including the Sessions Judge realised this error on the part of the Magistrate.
The learned Sessions Judge had also committed a patent mistake in entertaining revision application against the fresh orders of attachment and granting interim stays when he had dismissed revision application against the order of attachment earlier.
Let that be as it is.
The question that falls for our consideration now is whether the High Court could have utilised the powers under Section 482 of the Code and entertained a second revision application at the instance of the 1st respondent.
Admittedly the 1st respondent had preferred a Criminal Application being Cr.
180/78 to the Sessions Court against the order passed by the Magistrate on 17th October, 1978 withdrawing the attachment.
The Sessions Judge had dismissed the said application on 14th May, 1979.
Section 397 (3) bars a second revision application by the same party.
It is now well settled that the inherent powers under Section 482 of the Code cannot be utilised for exercising powers which are expressly barred by the Code.
Hence the High Court had clearly erred in entertaining the second revision at the instance of 1st respondent.
On this short ground itself, the impugned order of the High Court can be set aside.
However, since the High Court has also proceeded to interpret the provisions of Sections 145 and 146 of the Code, it has become necessary to set things right on that score as well.
We are afraid that the High Court has erred in holding that the order passed by the Sub Divisional Magistrate on 17th October, 1978 [17.9.78 (sic.)] withdrawing attachment, was without jurisdiction.
The provisions of Section 146 of the Code are clear in this respect.
The Section reads as follows: "146.
Power to attach subject of dispute and to appoint receiver.
(1) If the Magistrate at any time after making the order under sub section (1) of Section 145 considers the case to be one of emergency, or if he decides that none of the parties was then in such possession as is referred to in Section 145, or if he is unable to satisfy himself as to which of them was then in such 7 possession of the subject of dispute, he may attach the subject of dispute until a competent Court has determined the rights of the parties thereto with regard to the person entitled to the possession thereof: Provided that such Magistrate may withdraw the attachment at any time if he is satisfied that there is no longer any likelihood of breach of the peace with regard to the subject of dispute.
(2) When the Magistrate attaches the subject of dispute, he may, if no receiver in relation to such subject of dispute has been appointed by any Civil Court, make such arrangements as he considers proper for looking after the property or if he thinks fit, appoint a receiver thereof, who shall have, subject to the control of the Magistrate, all the powers of a receiver appointed under the Code of Civil Procedure, 1908 (5 of 1908): Provided that in the event of a receiver being subsequently appointed in relation to the subject of dispute by any Civil Court, the Magistrate [a] shall order the receiver appointed by him to hand over the possession of the subject of dispute to the receiver appointed by the Civil Court and shall thereafter discharge the receiver appointed by him: [b] may make such other incidental or consequential orders as may be just.
" It is obvious from sub section (1) of Section 146, that the Magistrate is given power to attach the subject of dispute "until the competent Court has determined the rights of the parties thereto with regard to the person entitled to the possession there or.
The determination by a competent Court of the rights of the parties spoken of there has not necessarily to be a final determination.
The determination may be even tentative at the interim stage when the competent Court passes an order of interim injunction or appoints a receiver in respect of the subject matter of the dispute pending the final decision in the suit.
The moment the competent Court does so, even at the interim stage, the order of attachment passed by the Magistrate has to come to an end.
Otherwise, there will be inconsistency 8 between the order passed by the civil court and the order of attachment passed by the Magistrate.
The proviso to sub section (1) of Section 146 itself takes cognizance of such a situation when it states that "Magistrate may withdraw the attachment at any time if he is satisfied that there is no longer any likelihood of any breach of peace with regard to the subject of dispute '.
When a civil Court passes an order of injunction or receiver, it is the civil Court which is seized of the matter and any breach of its order can be punished by it according to law.
Hence on the passing of the interlocutory order by the civil Court, it can legitimately be said that there is no longer any likelihood of the breach of the peace with regard to the subject of dispute.
The fact that the Magistrate can withdraw the order of attachment passed by him even during the pendency of the dispute in the civil Court is made further clear by the provisions of sub section (2) of Section 146.
When the civil Court appoints a receiver, the order of attachment passed by the Magistrate necessarily gives way to the order of the Civil Court appointing the receiver.
It is only when the civil Court does not appoint the receiver that the Magistrate may make arrangements for looking after the property or even appoint a receiver himself However, even when such a receiver is appointed and the civil Court subsequently appoints a receiver of its own, the Magistrate has to order the receiver appointed by him to hand over the possession of the subject in dispute to the receiver appointed by the civil Court and discharge the receiver appointed by him.
He has also to pass such other incidental or consequential orders as he thinks just.
Such order may include an order of withdrawal of the attachment in view of the seizure of the matter by the civil Court and the consequent want of apprehension of breach of the peace.
It is, therefore, not correct to say as held by the High Court that the property continues to remain under attachment of the Magisterial order till the rights of the parties are decided finally by the competent Court of law.
That appears to be the purport of the High Court 's order since in the present case the appellate civil Court has already passed an order of injunction against the 1st Respondent and her husband by virtue of which the possession continues to be with the appellants.
In this view of the matter, the Magistrate had not erred in withdrawing the attachment by his order dated 17th October, 1978.
For both these reasons, the appeal is allowed and the impugned order of the High Court is set aside.
It is necessary to add that the suit as filed by the Appellants is only for a permanent injunction.
The appellants must amend the plaint for claiming also the declaration of their title to the property in question.
N.P.V. Apppeal allowed.
| There was a dispute between the appellants and the first respondent, regarding the possession of a house.
On an application filed by the respondent under Section 145 of Criminal Procedure Code, 1973, before the Sub Divisional Magistrate, claiming ownership of the suit property, the Magistrate passed a preliminary order under Section 145 of the Code, and thereafter, made an order of attachment under Section 146 directing that the attachment would continue till the competent civil court determined the rights of the parties.
On a revision riled by the appellants, the Sessions Judge granted an interim stay of Magistrate 's order.
Subsequently, the Revision application was dismissed.
Ile Magistrate passed a fresh attachment order under Section 146.
Once more in revision the Sessions Judge passed an order staying the fresh order of attachment.
Thereafter, the appellants riled a suit for permanent injuction and also an interim injunction.
The trial court dismissed the application for interim injunction.
On appeal, the District Court issued an interim injunction against 1st respondent and her husband.
Subsequently, the 2 Criminal Revision preferred by the appellant was dismissed by the Sessions Judge also on the ground that the civil suit was preferred by the appellant.
Once again, the Magistrate passed another order attaching the property but this third order of attachment was stayed by the Sessions Judge for a period of 15 days.
Thereafter, on an application by the appellants for withdrawal of attachment on the ground that there was no apprehension of a breach of the peace, the Magistrate order withdrawal of attachment.
The Revision filed by the 1st respondent against the Magistrate 's order was dismissed by the Sessions Judge.
On an application under Section 482 of the Code filed by Respondent No.1 for quashing the order withdrawing the attachment and for directing the attachment to continue, the High Court held that it was not open to the Magistrate to withdraw the attachment till the competent court had decided the matter finally and restored the attachment.
Hence the appeal.
Allowing the appeal, this Court HELD : 1.1.
The determination by a competent court of the rights of the parties spoken in Section 146(1) of the Criminal Procedure Code, 1973, has not necessarily to be a final determination.
The determination may be even tentative at the interim stage when the competent court passes an order of interim injunction or appoints a receiver in respect of the subject matter of the dispute pending the final decision in the suit.
The moment the competent court does so, even at the interim stage, the order of attachment passed by the Magistrate has to come to an end.
Otherwise, there will be inconsistency between the order passed by the civil court and the order of attachment passed by the Magistrate.
The proviso to sub section (1) of Section 146 itself takes cognizance of such a situation.
When a civil court passes an order of injunction of receiver, it is the civil court which is seized of the matter and any breach of its order can be punished by it according to law.
Hence, on the passing of the interlocutory order by the civil court, there is no longer any likelihood of the breach of the peace with regard to the subject of dispute.
Under Section 146(2) the Magistrate can withdraw the order of attachment passed by him even during the pendency of the dispute in the civil court.
When the civil court appoints a receiver, the order of attachment passed by the Magistrate, necessarily 3 gives way to the order of the civil court appointing the receiver.
It is only when the civil court does not appoint the receiver that the Magistrate may make arrangements for looking after the property or even appoint a receiver himself However, even when such a receiver is appointed and the civil court subsequently appoints a receiver of its own, the Magistrate has to order the receiver appointed by him to hand over the possession of the subject in dispute to the receiver appointed by the civil court and discharge the receiver appointed by him.
He has also to pass such other incidental or consequential orders as he thinks just.
Such order may include an order of withdrawal of the attachment, in view of the seizure of the matter by the civil court and the consequent want of apprehension of breach of the peace.
It is, therefore, not correct to say that the property continues to remain under attachment of the Magisterial order till the rights of the parties are decided finally by the competent court of law.
[7G H, 8A C, D F] 1,2.
In tic present case, the Appellate Civil Court has already passed an order of injunction against the 1st respondent and her husband by virtue of which the possession continues to be with the appellants.
Therefore, the Magistrate had not erred in withdrawing the attachment.
The High Court has erred in holding that the order passed by the Sub Divisional Magistrate withdrawing attachment was without jurisdiction.
[8G H, 6E] 2.1.
Section 397 (3) bars a second revision application by the same party.
It is now well settled that the inherent powers under Section 482 of the Code cannot be utilised for exercising powers which are expressly barred by the Code.
[6D] 2.2.
In the instant case, admittedly, the 1st respondent had preferred a Criminal Application to the Sessions Court against the order passed by the Magistrate, withdrawing the attachment.
The Sessions Judge had dismissed the said application.
Hence, the High Court had clearly erred in entertaining the second revision at the instance of 1st respondent.
[6C,E] 3.
The Magistrate had committed an error in passing the subsequent orders of attachment when the first attachment was never finally vacated and had revived the moment the revision application flied against It was dismissed by the Sessions Judge.
None of the parties, including the Sessions Judge, realised this error on the part of the Magistrate.
The Sessions Judge had also committed a patent mistake in entertaining 4 revision application against the fresh orders of attachment and granting interim stays when he had dismissed revision application against the order of attachment earlier.
[6A B]
|
iminal Appeal No. 32 of 1982.
From the Judgment and Order dated 1.10.1981 of the Delhi High Court in Criminal Misc.
(Main) No. 304 of 1980.
S.L. Chowdhary and Pradeep Misra for the Appellant.
Rakesh K. Khanna and R.P. Singh for the Respondent.
The following order of the Court is delivered: Even though the dispute between the parties came to this Court from an initial order passed under Section 145 of the Code of Criminal Procedure, this Court realising that the dispute was between close relatives in respect of their interests in certain properties which were also the subject matter in a Civil Suit No. 434/78 (Remand) of the Court of Sub Judge, First Class, Delhi, advised the parties to have the same resolved through an Arbitrator.
On the parties agreeing, this Court passed an order on September 5, 1986 recording the agreement to refer the dispute to arbitration and appointed Mr. Justice V.D. Misra, retired Chief Justice of the High Court of Himachal Pradesh, as the Sole Arbitrator.
The parties had agreed to deposit a sum of Rs. 3,000 each with the Arbitrator to meet with his expenses and remuneration subject to further directions that may be made in that behalf.
It was further directed that the learned Arbitrator will render a speaking award within four months.
In view of the said agreement, the appeal was allowed and the High Court 's impugned order was set aside.
It appears that thereafter one of the parties, namely, Jagdish Chander Bhatia, did not deposit the expenses with the Arbitrator and raised objection in regard to the arbitration proceedings on the plea that the property in dispute was proposed to be resumed by the Union of India.
In the meantime, it appears that the sole Arbitrator passed away and in his place Mr. Justice M.S. Gujral retired Chief Justice of the High Court of Sikkim, was appointed the Sole Arbitrator.
This Court did not approve of the conduct of Jagdish Chander Bhatia in not depositing the amount and 'in trying to avoid adjudication of the dispute through arbitration.
After this 54 order was passed on October 12, 1990 by which a further sum of Rs. 8,000 was directed to be deposited with the Arbitrator, subject to the Arbitrator deciding who should bear the cost, the newly appointed Arbitrator entered upon the reference and submitted his award on November 14, 1991.
This concluding part of his Award reads as under: "House No. 17 would entirely belong to Lachhman Das Bhatia whereas House No.18 would be jointly owned by Lachhman Das and Jagdish Chander.
Lachhman Das would have 76.50% share whereas Jagdish Chander would have 23.50% share in House No.18.
As House No.17 has entirely been given to Lachhman Das Bhatia in all fairness, Jagdish Chander Bhatia should give vacant possession of House No.17 to Lachhman Das Bhatia.
" The parties were directed to bear their own costs of the arbitration proceedings except that Jagdish Chander Bhatia had to pay Rs. 4,000 to Lachhman Das Bhatia as his share of the Arbitrator 's fees which he had initially failed to deposit.
Against this award, Jagdish Chander Bhatia (hereinafter called 'the objector ') has filed objections under Section 30 of the which provision reads as under: "An award shall not be set aside except on one or more of the following grounds, namely (a) that an arbitrator or umpire has misconducted himself or the proceedings; (b) that an award has been made after the issue of an order by the Court superseding the arbitration proceedings have become invalid under Section 35; (c) that an award has been improperly procured or is otherwise invalid.
" It was conceded by the learned counsel for the Objector that clause (b) would not be attracted.
His main submission was that the Arbitrator had misconducted himself, in that, he did not take into consideration several documents which were placed on record before him which support the Objector 's case and hence the Award was invalid.
He, therefore, partly relied on clauses (a) and (c) for setting aside the Award.
55 The documents to which the learned counsel for the objector invited our attention, are to be found in Vol.2 of the paper book placed before us.
These documents are 31 in number and they mainly relate to the rights and interests of the parties in properties situate in that part which now belongs to the Dominion of Pakistan.
Since they were refugees they had made certain claims under the law governing rehabilitation of displaced persons in respect of the properties left behind by them.
These documents show that the claim was sanctioned in the name of Punnu Ram Lachhman Das in respect of the properties left behind by the family.
On the strength of that claim, House No.18 was purchased in the said name.
The Arbitrator, however, came to the conclusion, as is evident from the discussion from paragraph 26 and onwards of the Award, that the property in question was purchased for Rs. 12,850 from the funds contributed by Punnu Ram and Lachhman Das, the former paying Rs. 9,233 and the latter Rs. 3,617.
This is the conclusion reached by the Arbitrator as is evident from paragraph 37 of the Award.
The share of the Objector was held to be 1/7th in the share of Punnu Ram, since deceased.
It was on this finding recorded by the Arbitrator that he passed the ultimate order extracted above.
The arbitrator has made a speaking award setting out his reasons for the conclusions reached by him.
He has thus complied with the direction of this Court given earlier.
On a perusal of the award, it becomes clear that the Arbitrator did not go into the rights and interests of the parties including the HUF in the properties left behind in the Dominion of Pakistan.
That was, in our opinion, not necessary because the fact that the claim was sanctioned in the name to the Punnu Ram Lachhman Das was never in dispute.
The short question, which the Arbitrator was required to consider, was as regards the title of the properties which were the subject matter of the reference which included the property purchased for Rs. 12,850 on the strength of that claim.
In dealing with that question the Arbitrator came to the conclusion that Punnu Ram and Lachhman Das had contributed the entire consideration of Rs. 12,850 and hence they were the owners of the property and on the death of Punnu Ram inheritance opened insofar as his share in the property was concerned and the Arbitrator came to the conclusion that the Objector was entitled to 1/7th out of the share of the deceased.
Since the contribution made for payment of the price was not equal, the Arbitrator allotted a larger share to Punnu Ram and consequently the Objector has got a share on the basis thereof.
Practically, all the documents included in Vol.2 relate to the interest of the 56 parties and their HUF in the properties left behind in the Dominion of Pakistan.
The learned counsel for the Objector then tried to take us into the rights and interests of the parties in those properties, but we declined to go into the same as we thought that the Arbitrator was right that he was called upon to decide the interest of the parties in Houses Nos. 17 and 18 alone which were the subject matter of the reference.
We are, therefore, of the opinion that the Arbitrator had not misconducted himself by refusing to enumerate those documents in Vol.2 in his award because he was bound by the scope of the reference which was limited to Houses Nos. 17 and 18 and not the properties left behind in the Dominion of Pakistan by the parties.
For this reason, we are of the opinion that there is no infirmity on the face of the award which would entitle us to exercise jurisdiction under Section 30 of the .
This Court pointed out in Food Corporation of India vs Joginderpal Mohinderpal & Anr., [1989] 2 SCC 347 that an award of an Arbitrator can only be interfered with or set aside or modified within the four comers of the procedure provided by the statute.
The Court must find out whether the Arbitrator has misconducted himself or there was any infirmity in the procedure, such as, the Arbitrator having travelled beyond the terms of the reference or there being an error apparent on the face of the award.
It is not misconduct on the part of an Arbitrator to come to an erroneous conclusion on a disputed issue.
In case of error apparent on the face of the award, the award can be set aside only if there is any proposition of law on which the award is based which is in conflict with law.
It must be demonstrated to the Court that the reasons given by the Arbitrator are so palpably erroneous in law that they have resulted in the Arbitrator taking a view which cannot be sustained in law.
To put it differently the Court does not sit in appeal and does not re assess the evidence.
Even if the Court feels that had it been left to it, it would have assessed the evidence differently that would not be a valid ground for setting aside the award.
In Hind Builders vs Union of India, [1990] 3 SCC 338, this Court pointed out that where on an interpretation of any contract or document, two views are possible and the Arbitrator accepts one view while the other view is more appealing it would not be open to the Court to interfere with the Award.
We, therefore, in the facts and circumstances of this case, see so reason to interfere with the award of the Arbitrator.
The Suit No. 434/78 pending in the Court of the Sub Judge, Delhi 57 was disposed of by that Court, and an appeal, being Civil Appeal No. 211 of 1979 (Jagdish Chander Bhatia vs Lachhman Das Bhatia) preferred on April 23, 1979 against that decree, is pending in the Court of the District Judge, Delhi.
We transfer that appeal to our file and make the Arbitrator 's award the rule of the Court.
The decree of the trial court is set aside and a decree in terms of the award will be drawn up in the appeal proceedings arising out of Suit No. 434/78.
We, however, do not make any order as to costs in the present proceedings.
N.P.V. Appeal disposed of.
| The dispute between the appellant and the respondent in respect of their Interests In certain properties, was referred to arbitration by this Court and a retired Chief Justice of a High Court was appointed as the sole Arbitrator with direction to make a speaking award, and the Arbitrator submitted his Award.
Against this award the appellant objector filed objections under Section 30 of the , contending that the Arbitrator had misconducted himself in that he did not take into consideration several documents which were placed on record before him to support the objector 's case and, hence, the award was invalid under clauses (a) and (c) of Section 30.
Disposing of the Appeal, this Court HELD : 1.1.
There is no infirmity on the face of the award which would entitle this Court to exercise jurisdiction under Section 30 of the .
The Arbitrator has made a speaking award setting out his reasons for the conclusions reached by him and has thus complied with the direction of this Court given earlier.
[56D, 55E] 12.
The documents in question mainly relate to the rights and interests of the parties In the properties situate in that part which now belongs to the Dominion of Pakistan.
Since they were refugees they had made certain claims under the law governing rehabilitation of displaced persons in respect of the properties left behind by them.
The claim was sanctioned in the joint same of the objector 's predecessor in Interest and the respondent in respect of the properties left behind by the family.
On the strength of that 52 claim, one of the houses was purchased in the said name.
The Arbitrator, however, came to the conclusion, that the property in question was purchased from the funds contributed by the objector 's predecessor in interest and the respondent.
The share of the objector was held to be 1/7th in the share of the predecessor in interest, since deceased.
Since the contribution made for payment of the price was not equal, the Arbitrator allotted a larger share to objector 's predecessor in interest and consequently, the objector has got a share on the basis thereof, when inheritance opened on the death of the predecessor in interest.
[55B D.H, 56A] 1.3.
It is clear from the award that the Arbitrator did not go into the rights and interests of the parties including the HUF in the properties left behind in the Dominion of Pakistan.
That was not necessary because the fact that the claim was sanctioned in the joint name of the Objector 's predecessor in interest and the respondent was never in dispute.
The short question, which the Arbitrator was required to consider, was as regards the title of the properties, which were the subject matter of the reference, which included a house purchased on the strength of that claim.
It is not necessary for the Court to go into the question of the rights and interests of the parties in the properties left behind in the Dominion of Pakistan since the Arbitrator was right that he was called upon to decide the interest of the parties in respect of two houses alone, which were the subject matter of the reference.
Therefore, the Arbitrator had not misconducted himself by refusing to enumerate all those documents in question in his award because he was bound by the scope of the reference which was limited to the two houses and not the properties left behind in the Dominion of Pakistan by the parties.
[55F, 56B C] 2.
In order to interfere with an award, the Court must rind out whether the Arbitrator has misconducted himself or there was any infirmity in the procedure, such as, the Arbitrator having travelled beyond the terms of the reference or there being an error apparent on the face of the award.
It is not misconduct on the part of an Arbitrator to come to an erroneous conclusion on a disputed issue.
The Court does not sit in appeal and does not reassess the evidence.
Even if the Court feels that had it been left to it, it would have assessed the evidence differently that would not be a valid ground for setting aside the award.
[56E, G] 3.
Therefore, in the facts and circumstances of the case, there is no reason to interfere with the award, which is made the rule of the 53 Court.
[56H, 57A B] Food Corporation of India vs
Joginder pal Mohinderpal & Anr., [1989]2 S.C.C. 347 and Hind Builders vs Union of India, [1990] 3 S.C.C. 338, relied on.
|
iminal Appeal No. 24 of 1993.
From the Judgment and Order dated 6.8.1991 of the Patna High Court in Criminal Rev. No. 307 of 1991.
Uday Sinha and M.P. Jha for the Appellants.
B.B. Singh Adv.
for the Respondent.
The Judgment of the Court was delivered by AHMADI, J.
Special leave granted.
Whether a Court of Session to which a case is committed for trial by a Magistrate can, without itself recording evidence, summon a person not named in the Police Report presented under Section 173 of the Code of Criminal Procedure, 1973 ( 'The Code ' for short) to stand trial along with those already named therein, in exercise of power conferred by Section 319 of the Code? This neat question of law arises in the backdrop of the following allegations.
On the evening of 27th February, 1990 Umakant Thakur, younger brother of the informant, was attacked by twenty persons including the present two appellants with sticks, etc.
A First Information Report was lodged at about 9.30 p.m. on the same day in which all the twenty persons were named as the assailants.
The injured Umakant Thakur died in the Patna Hospital on the next day.
In the course of investigation statements of the informant as well as others came to be recorded and a charge sheet dated 10th June, 1990 was forwarded to the Court of the learned Magistrate on 17th June, 1990 wherein eighteen persons other than the two appellants were shown as the offenders.
The names of the present two appellants were not included in the said report as in the opinion of the investigating officer their involvement in the commission of the crime was not established.
A final report to that effect was submitted on 4th September, 1990 to the Chief Judicial Magistrate on which no orders were passed.
The concerned Magistrate committed the eighteen persons named in the report to the Court of Session, Dharbanga, under Section 209 of the Code to stand trial.
When the matter came up before the learned Sessions Judge, Dharbanga, an application was presented under Section 319 of the Code praying that the material on record annexed to the report under Section 173 of the Code 37 revealed the involvement of the two appellants also and hence they should be summoned and arraigned before the Court as accused persons along with the eighteen already named in the charge sheet.
Thereupon a show cause notice was issued to the present two appellants in response whereto they contended that though they were not present at the place of occurrence, they were falsely named in the First Information Report and the investigating officer had rightly omitted their names from the charge sheet filed in Court.
The learned Sessions Judge rejected.
the plea put forth by the appellants and exercised the discretion vested in him under Section 319 of the Code by impleading the appellants as co accused along with the eighteen others.
Indisputably this was done before any evidence was recorded i.e. before the commencement of the actual trial.
The appellants thereupon filed a Criminal Revision Application before the High Court of Patna assailing the order passed by the learned Sessions Judge taking cognizance against them.
The High Court after hearing counsel for the parties dismissed the Revision Application relying on the ratio of the Full Bench decision of that Court in S.K Laytfur Rahman & Ors.
vs The State, [(1985) PLJR 640 = (1985)] Criminal Law Journal 12381.
It is against this order passed by the learned Single Judge of the High Court that the appellants have moved this Court by special leave under Article 136 of the Constitution of India.
The learned counsel for the appellants contended that unless evidence was recorded during the course of trial.
The Sessions Judge had no jurisdiction under Section 319 of the Code to take cognizance and implead the appellants as co accused solely on the basis of the material collected in the course of investigation and appended to the report forwarded under Section 173 of the Code in view of the clear mandate of Section 193 of the Code.
The question which arises for consideration in the backdrop of the aforestated facts is whether the learned Sessions Judge was justified in law in invoking Section 319 of the Code at the stage at which the proceedings were pending before him solely on the basis of the documents including statements recorded under Section 161 of the Code during investigation without commencing trial and recording evidence therein? Section 319 corresponds to Section 351 of the repealed Code of Criminal Procedure, 1898 (hereinafter called 'the old Code ').
That Section must be read in juxtaposition with Section 319 of the Code.
Before we do so it is necessary to state that Section 319 of the Code as it presently stands is the recast version of Section 351 of the old Code based on the recommendations 38 made by the Law Commission in its 41st Report as under: "It happens sometimes, though not very often, that a Magistrate hearing a case against certain accused finds from the evidence that some person, other than the accused before him, is also concerned.
in that very offence or in a connected offence.
It is only proper that the Magistrate should "have the power to call and join him in the proceedings '.
Section 351 provides for such a situation, but only if that person happens to be attending the Court.
He can then be detained and proceeded against.
There is no express provision in section 351 for summoning such a person if he is not present in Court.
Such a provision would made section 351 fairly comprehensive, and we think it proper to expressly provide for that situation.
(para 24.80) About the true position under the existing law, there has been difference of opinion, and we think it should be made clear.
It seems to us that the main purpose of this particular provision is, that the whole case against all known suspects should be proceeded with expeditiously, and convenience requires that cognizance against the newly added accused should be taken in the same manner as against the other accused.
We, therefore, propose to recast section 351 making it comprehensive and providing that there will be no difference in the mode of taking cognizance if a new person is added as an accused during the proceedings." (para 24.81) It will be seen from the above paragraphs that the Law Commission suggested that section 351 should be recast with a view to (i) empowering the court to summon a person not present in court to stand trial along with the named accused and (ii) enabling the court to take cognizance against the newly added accused by making it explicit that there will be no difference in the mode of taking cognizance against the added accused.
Pursuant to the said recommendations made by the Law Commission Section 351 of the old Code was replaced by Section 319 in the present Code.
We may now read the two provisions in juxtaposition "Old Code Section 351 (1) Any person attending a Criminal Court, 39 although not under arrest or upon a summons, may be detained by such Court for the purpose of inquiry into or trial of any offence of which such Court can take cognizance and which, from the evidence, may appear to have been committed, and may be proceeded against as though he had been arrested or summoned.
(2) When the detention takes place in the course of an inquiry under Chapter XVIII or after a trial has been begun, the proceedings in respect of such person shall be commenced afresh, and the witnesses re heard.
New Code Section 319 (1) Where, in the course of any inquiry into or trial of an offence, it appears from the evidence that any person not being the accused has committed any offence for which such person should be tried together with the accused, the Court may proceed against such person for the offence which he appears to have committed.
(2) Where such person is not attending the Court, he may be arrested or summoned, as the circumstances of the case may require, for the purpose aforesaid.
(3) Any person attending the Court, although not under arrest, or upon a summons, may be detained by such Court for the purpose of the inquiry into, or trial of, the offence which he appears to have committed.
(4) Where the Court proceeds against any person under subsection (1), then (a) the proceedings in respect of such Person shall be commenced afresh and the witnesses re heard; (b) subject to the provisions of Cl.(a), the case may proceed as if such person had been an accused person when the Court took cognizance of the offence upon which the inquiry or trial was commenced.
" 40 Section 351 of the old Code empowered detention of any person attending a Criminal Court, although not under arrest or upon a summon, for the purpose of inquiry into or trial of any offence of which such Court could take cognizance, if it appeared from the evidence so recorded that he may have committed an offence along with others.
Sub section (2) of section 319 came to be inserted in response to the Law Commission 's recommendation in paragraph 24.80 of its report to enlarge the Court 's power to arrest or summon any person who appears to be involved in the commission of the crime along with others but who is not present in court.
Next, it is significant to note that the words 'of which such Court can take cognizance ' have been omitted by the Legislature.
Instead the newly added sub section 4(b) expressly states that the case against the added accused may proceed as if such person had been an accused person when the court took cognizance of the offence.
This takes care of the Law Commission 's recommendation found in paragraph 24.81 extracted earlier.
It is, therefore, manifest that Section 319 of the Code is an improved version of Section 351 of the old Code; the changes having been introduced therein on the suggestion of the Law Commission to make it comprehensive so that even persons not attending the Court can be arrested or summoned as the circumstances of the case may require and by deleting the words 'of which such Court can take cognizance ' and by adding clause (b) it is clarified that the impleadment of a new person as an accused in the pending proceedings will not make any difference insofar as taking of cognizance is concerned.
In other words it is made clear that cognizance against the added person would be deemed to have been taken as originally against the other co accused.
It is thus clear that the difficulty in regard to taking of cognizance which would have been experienced by the Court has been done away with.
The section comes into operation at the post cognizance stage when it appears to the court from the evidence recorded at the trial that any person other than those named as offenders appears to have com mitted any offence in relation to the incident for which the co accused are on trial.
But counsel for the appellants contended that section 319 being a self contained provision, the power thereunder can be exercised strictly in terms of the section which permits the exercise of power only if 'it appears from the evidence ' in the course of the inquiry or trial of an offence, that any person, besides the accused already put up for trial, has committed any offence arising from the incident in question.
Counsel submitted that the 41 power cannot be exercised before 'evidence ' is led as the involvement of the person must appear from the evidence tendered at the trial because it is at that stage that the court must apply its mind about the complicity of the person not arraigned before it in the commission of the crime.
He, therefore, submitted that in the present case since the trial had not commenced and the prosecution had not led any evidence, the stage for the exercise of the power had not reached.
In order to appreciate the contention urged before us, it is necessary to notice a few provisions.
Section 190 of the Code sets out the different ways in which a Magistrate can take cognizance of an offence, that is to say, take notice of an allegation disclosing commission of a crime with a view to setting the law in motion to bring the offender to book.
Under this provision cognizance can be taken in three ways enumerated in clauses (a), (b) & (c) of the offence alleged to have been committed.
The object is to ensure the safety of a citizen against the vagaries of the police by giving him the right to approach the Magistrate directly if the police does not take action or he has reason to believe that no such action will be taken by the police.
Even though the expression 'take cognizance ' is not defined, it is well settled by a catena of decisions of this Court that when the Magistrate takes notice of the accusations and applies his mind to the allegations made in the complaint or police report or information and on being satisfied that the allegations, if proved, would constitute an offence decides to initiate judicial proceedings against the alleged offender he is said to have taken cognizance of the offence.
It is essential to bear in mind the fact that cognizance is in regard to the offence and not the offender.
Mere application of mind does not amount to taking cognizance unless the magistrate does so for proceeding under Section 200/204 of the Code /See Jamuna Singh & Ors.
vs Bhadai Sah, ; at 40 41.
It is, therefore, obvious that if on receipt of a complaint under Section 154 of the Code in regard to a cognizable offence, an offence is registered and the concerned Police Officer embarks on an investigation and ultimately submits a police report under Section 173 of the Code, the Magistrate may take cognizance and if the offence is exclusively triable by a Court of Sessions, he must follow the procedure set out in Section 209.
That section provides that when in a case instituted on a police report, as defined in section 2(r), or otherwise, the accused appears or is brought before the Magistrate and it appears to the Magistrate that the offence is triable 42 exclusively by the Court of Session, he shall commit the case to the Court of Session and remand the accused to custody.
Section 193 of the Old Code and as it presently stands have a bearing and may be extracted at this stage: "Old Code Section 193 Cognizance of offences by Courts of Session (1) Except as othewise expressly provided by this Code or by any other law for the time being in force, no Court of Session shall take cognizance of any offence as a Court of original jurisdiction unless the accused has been committed to it by a Magistrate duly empowered in that behalf.
New Code Section 193 Cognizance of offences by Court of Sessions Except as otherwise expressly provided by this Code or by any other law for the time being in force, no Court of Session shall take cognizance of any offence as a Court of original jurisdiction unless the case has been committed to it by a Magistrate under this Code.
" It may immediately be noticed that under the old provision a Court of Session could not take cognizance of an offence as a Court of original jurisdiction unless the accused was committed to it whereas under the recast section as it presently stands the expression the accused has been replaced by the words the case.
As has been pointed out earlier.
Under section 190 cognizance has to be taken for the offence and not the offender: so also under section 193 the emphasis now is to the committal of the case and no more on the offender.
So also section 209 speaks of committing the case to the Court of Session.
On a conjoint reading of these provisions it becomes clear that while under the Old Code in view of the language of section 193 unless an accused was committed to the Court of Session the said court not take cognizance of an offence as a court of original jurisdiction; now under section 193 as it presently stands once the case is committed the restriction disappears.
More of it later but first the case law.
Section 193 of the Old Code placed an embargo on the Court of Session from taking cognizance of any offence as a Court of original jurisdiction unless the accused was committed to it by a Magistrate or there 43 was express provision in the Code or any other law to the contrary.
In the context of the said provision this Court in P.C Gulati vs L.R. Kapur, [1966] I SCR 560 at p.568 observed as under; "When a case is committed to the Court of Session, the Court of Session has first to determine whether the commitment of the case is proper.
If it be of opinion that the commitment is bad on a point of law, it has to refer the case to the High Court which is competent to quash the proceeding under section 215 of the Code.
It is only, when the Sessions Court considers the commitment to be good in law that it proceeds with the trial of the case.
It is in this context that the Sessions Court has to I take cognizance of the offence as a Court or original jurisdiction and it is such a cognizance which is referred to in section 193 of the Code.
" In Joginder Singh vs State of Punjab, ; = ; the facts were that a criminal case was registered against Joginder Singh and four others on the allegation that they had committed house tresspass and had caused injuries to two persons.
During the investigation the police found Joginder Singh and Ram Singh (the appellants in the case) to be innocent and submitted a charge sheet against the remaining three persons only.
The learned Magistrate who held a preliminary inquiry committed the three accused to the Court of Session whereupon the Additional Sessions Judge, Ludhiana, framed charges against them.
At the trial evidence of two witnesses came to be recorded during the course of which the complicity of the two appellants came to light.
Thereupon, at the instance of the informant the Public Prosecutor moved an application for summoning and trying the two appellants along with the three accused who were already arraigned before the court.
The application was opposed principally on the ground that the Sessions Judge had no jurisdiction or power to summon the two appellants and direct them to stand their trial along with the three persons already named in the police report.
This objection was negatived and the learned Additional Sessions Judge passed G an order, presumably under section 319 of the Code, directing the attendance of the two appellants and further directing that they stand trial together with the three accused arraigned before the court.
The High Court dismissed the Revision Application whereupon the appellants approached this Court by special leave.
The real question centered round the 44 scope and ambit of section 319 of the Code.
This Court after considering the relevant provisions of the Old Code in juxtaposition with similar provisions in the New Code observed as under : "It will thus appear clear that under Section 193 read with Section 209 of the Code when a case is committed to the Court of Session in respect of an offence the Court of Session takes cognizance of the offence and not of the accused and once the Sessions Court is properly seized of the case as a result of the committal order against some accused the power under Section 319(1) can come into play and such Court can add any person, not an accused before it, as an accused and direct him to be tried along with the other accused for the offence which such added accused appears to have committed from the evidence recorded at the trial. ' This view came to be reiterated in a recent decision of this Court in Sohan Lal & Ors.
vs State of Rajasthan, ; That was a case in which a First Information Report was lodged against the appellants.
On completion of the investigation the police forwarded a charge sheet under section 173 of the Code.
The Judicial Magistrate after taking cognizance ordered discharge of appellants 4 and 5 and directed that the remaining 3 appellants be charged only under section 427 IPC and not under Sections 147, 323, 325 and 336 in respect whereof the charge sheet was forwarded.
The Additional Public Prosecutor, therefore, submitted an application signed by one of the victims praying that on the basis of the entire evidence a prima facie case was made out under sections 147, 325 and 336, IPC and requested that the charge be amended and the accused persons be charged accordingly.
After recording the plea of the accused the prosecution led evidence and examined witnesses.
The learned Magistrate after hearing the Additional Public Prosecutor and counsel for the defence and after discussing the evidence took cognizance of the other offences against the appellants.
The Revision Application preferred to the High Court was dismissed.
This Court after considering the relevant provisions of the Code concluded as under : "Section 319 empowers the court to proceed against persons not being the accused appearing to be guilty of offence.
Sub sections (1) and (2) of this section provide for a situation when 45 a court hearing a case against certain accused person finds from A the evidence that some person or persons, other than the accused before it, is or are also connected in this very offence or any connected offence; and it empowers the court to proceed against such person or persons for the offence which he or they appears or appear to have committed and issue process for the purpose.
It provides that the cognizance against newly added accused is deemed to have been taken in the same manner in which cognizance was first taken of the offence against the earlier accused.
It naturally deals with a matter arising from the course of the proceeding already initiated.
The scope of the section is wide enough to include cases instituted on private complaint. ' The learned counsel for the appellants submitted that once a Court of Session takes cognizance in the limited sense explained in Gulati 's case, the power to summon or arrest a person not named in the police report can be exercised under Section 319 of the Code only if the condition precedent, namely, the commencement of the trial and recording of evidence, is satisfied.
This, he contends, is manifest from the last mentioned two cases in which the power was exercised only after the condition precedent was satisfied and the complicity of a person not shown as an offender in the police report surfaced from the evidence recorded in the course of the trial.
That prima facie appears to be so but it must at the same time be remembered that in both the cases the Court was not called upon to consider whether a Court of Session to which a case is committed for trial under Section 209 of the Code can, while taking cognizance, summon a person to stand trial along with others even though he is not shown as an offender in the police report if the court on a perusal of the case papers prima facie finds his complicity in the commission of the crime and the omission of his name as an offender by the investigating officer not proper.
On a plain reading of sub section (1) of Section 319 there can be no doubt that it must appear from the evidence tendered in the course of any inquiry or trial that any person not being the accused has committed any offence for which he could be tried together with the accused.
This power, it seems clear to us, can be exercised only if it so appears from the evidence at the trial and not otherwise.
Therefore, this sub section contemplates 46 existence of some evidence appearing in the course of trial wherefrom the Court can prima facie conclude that the person not arraigned before it is also involved in the commission of the crime for which he can be tried with those already named by the police.
Even a person who has earlier been discharged would fall within the sweep of the power conferred by Section 319 of the Code.
Therefore, stricto sensu, Section 319 of the Code cannot be invoked in a case like the present one where no evidence has been led at a trial wherefrom it can be said that the appellants appear to have been involved in the commission of the crime along with those already sent up for trial by the prosecution.
But then it must be conceded that Section 319 covers the postcognizance stage where in the course of an inquiry or trial the involvement or complicity of a person or persons not named by the investigating agency has surfaced which necessitates the exercise of the discretionary power conferred by the said provision.
Section 319 can be invoked both by the Court having original jurisdiction as well as the Court to which the case has been committed or transferred for trial.
The sweep of Section 319 is, therefore, limited, in that, it is an enabling provision which can be invoked only if evidence surfaces in the course of an inquiry or a trial disclosing the complicity of a person or persons other than the person or persons already arraigned before it.
If this is the true scope and ambit of Section 319 of the Code, the question is whether there is any other provision in the Code which would entitle the Court to pass a similar order in similar circumstances.
The search for such a provision would be justified only on the premiss that Section 319 is not exhaustive of all post cognizance stituations.
Now as pointed out earlier Section 319 deals with only one situation, namely, the complicity coming to light from the evidence taken and recorded in the course of an inquiry or trial.
This may happen not merely in cases where despite the name of a person figuring in the course of investigation the investigating agency does not send him up for trial but even in cases where the complicity of such a person comes to light for the first time in the course of evidence recorded at the inquiry or trial.
Once the purport of Section 319 is so understood it is obvious that the scope of its operation or the area of its play would also be limited to cases where after cognizance the involvement of any person or persons in the commission of the crime comes to light in the course of evidence recorded at the Inquiry or trial.
Thus the Section does not apply to all situations and cannot be interpreted to be repository of all power for summoning such person or 47 persons to stand trial along with others arraigned before the Court.
The question then is whether dehors Section 319 the Code, can similar power be traced to any other provision in the Code or can such power be implied from the scheme of the Code? We have already pointed out earlier the two alternative modes in which the Criminal Law can be set in motion: by the filing of information with the police under Section 154 of the Code or upon receipt of a complaint or information by a Magistrate.
The former would lead to investigation by the police and may culminate in a police report under Section 173 of the Code on the basis whereof cognizance may be taken by the Magistrate under Section 190(1)(b) of the Code.
In the latter case, the Magistrate may either order investigation by the police under Section 156(3) of the Code or himself hold an inquiry under Section 202 before taking cognizance of the offence under Section 190(1)(a) or (c), as the case may be, read with Section 204 of the Code.
Once the Magistrate takes cognizance of the offence he may proceed to try the offender (except where the case is transferred under Section 191) or commit him for trial under Section 209 of the Code if the offence is triable exclusively by a Court of Session.
As pointed out earlier cognizance is taken of the offence and not the offender.
This Court in Raghubans Dubey vs State of Bihar, ; = ; stated that once cognizance of an offence is taken it becomes the Court 's duty 'to find out who the offenders really are ' and if the Court finds 'that apart from the persons sent up by the police some other person are involved, it is his duty to proceed against those persons ' by summoning them because 'the summoning of the additional accused is part of the proceeding initiated by his taking cognizance of an offence '.
Even after the present Code came into force, the legal position has not undergone a change; on the contrary the ratio of Dubey 's case was affirmed in Hariram Satpathy vs Tikaram Agarwala ; = ; Thus far there is no difficulty.
We have now reached the crucial point in our journey.
After cognizance is taken under section 190(1) of the Code, in warrant cases the Court is required to frame a charge containing particulars as to the time and place of the alleged offence and the person (if any) against whom, or the thing (if any) in respect of which, it was committed.
But before framing the charge section 227 of the Code provides that if, upon a consideration of the record of the case and the documents submitted therewith, the 48 Sessions Judge considers that there is not sufficient ground for proceeding against the accused, he shalt for reasons to be recorded, discharge the accused.
It is only when the Judge is of opinion that there is ground for presuming that the accused has committed an offence that he will proceed to frame a charge and record the plea of the accused (vide, section 228).
It becomes immediately clear that for the limited purpose of deciding whether or not to frame a charge against the accused, the judge would be required to examine the record of the case and the documents submitted therewith, which would comprise the police report, the statements of witnesses recorded under section 161 of the Code, the seizure memoranda, etc., etc.
If, on application of mind for this limited purpose, the Judge finds that besides the accused arraigned before the him the complicity or involvement of others in the commission of the crime prima facie surfaces from the material placed before him, what course of action should he adopt? The learned counsel for the State, therefore, argued that even if two views are possible, this being a matter of procedure not likely to cause prejudice to the person or persons proposed to be summoned, the court should accept the view which would advance the cause of justice, namely, to bring the real offender to book.
If such an approach is not adopted, the matter will slip into the hands of the investigation officer who may or may not send up for trial an offender even if prima facie evidence exists, which may in a given situation cause avoidable difficulties to the trial court.
Take for example a case where two persons A and B attach and kill X and it is found from the material placed before the Judge that the fatal blow was given by A whereas the blow inflicted by B had fallen on a non vital part of the body of x.
If A is not challenge by the police, the Judge may find it difficult to charge B for the murder of X with the aid of section 34, IPC.
If he cannot summon A, how does he frame the charge against B? In such a case he may have to wait till evidence is laid at the trial to enable him to invoke section 319 of the Code.
Then he would have to commence the proceedings afresh in respect of the added accused and recall the witnesses.
This, submitted counsel for the State, would result in avoidable waste of public time.
He, therefore, submitted that this Court should place a construction which would advance the cause of justice rather than stiffle it.
We have already indicated earlier from the ratio of this Court 's decisions in the cases of Raghubans Dubey and Hariram that once the court 49 takes cognizance of the offence (not the offender) it becomes the court 's duty to find out the real offenders and if it comes to the conclusion that besides the persons put up for trial by the police some others are also involved in the commission of the crime, it is the court 's duty to summon them to stand trial along with those already named, since summoning them would only be a part of the process of taking cognizance.
We have also pointed out the difference in the language of section 193 of the two Codes; under the old Code the Court of Session was precluded from taking cognizance of any offence as a Court of original jurisdiction unless the accused was committed to it whereas under the present Code the embargo is diluted by the replacement of the words the accused by the words the case.
Thus, on a plain reading of section 193 as it presently stands once the case is committed to the Court of Session by a magistrate under the Code, the restriction placed on the power of the Court of Session to take cognizance of an offence as a court of original jurisdiction gets lifted.
On the magistrate committing the case under section 209 to the Court of Session the bar of section 193 is lifted thereby investing the Court of Session complete and unfettered jurisdiction of the Court of original jurisdiction to take cognizance of the offence which would include the Summoning of the person or persons whose complicity in the commission of the crime can prima pacic be gathered from the material available on record.
The Full Bench of the High Court of Patna rightly appreciated the shift in section 193 of the Code from that under the old Code in the case of S.K Lutfur Rahman (supra) as under : "Therefore, what the law under section 193 seeks to visualise and provide for now is that the whole of the incident constituting the offence is to be taken cognizance of by the Court of Session on commitment and not that every individual offender must be so committed or that in case it is not so done then the Court of Session would be powerless to proceed against persons regarding whom it may be fully convinced at the very threshold of the trial that they are prima facie guilty of the crime as well.
*** *** *** *** Once the case has been committed, the bar of section 193 is removed or, to put it in other words, the condition therefore 50 stands satisfied vesting the Court of Session with the fullest jurisdiction to summon and individual accused of the crime.
" We are in respectful agreement with the distinction brought out between the old section 193 and the provision as it now stands.
For the reasons stated above while as are in agreement with the submission of the learned counsel for the appellants that the stage for tile exercise of power under section 319 of the Code had not reached, inasmuch as, the trial had not commenced and evidence was not led, since the Court of Session had the power under section 193 of the Code to summon the appellants as their involvement in the commission of the crime prima facie appeared from the record of the case, we see no reason to interfere with the impugned order as it is well settled that once under it is found that the power exists the exercise of power under a wrong provision will not render the order illegal or invalid.
We, therefore, dismiss this appeal.
V.P.R. Appeal dismissed.
| On the evening of 27th February, 1990, informant 's younger brother was attacked by twenty persons including the present two appellants with sticks, etc.
First Information Report was lodged at about 9.30 pm.
on the same day in which all the twenty persons were named as the assailants.
The injured died in the hospital on the next day.
In course of investigation statements of the informant and others were recorded and a charge sheet was forwarded to the Court of the Magistrate wherein eighteen persons, were shown as the offenders.
The names of the present two appellants were not included In the report, as In the opinion of the investigating officer their involvement in the commission of the crime was not established.
The eighteen persons named in the report were committed to the Court of Session under Section 209 of the Code of Criminal Procedure to stand trial.
When the matter came up before the Sessions Judge, an application was presented under Section 319 of the Code praying to implead the appellants also as accused persons.
To the show cause notice issued to the appellants, they submitted that though they were not present at the place of occurrence, they falsely named in the First Information Report and the investigating officer had rightly omitted their names from the charge sheet filed in Court 32 The Sessions Judge rejected the plea of the appellants and impleaded them as co accused along with the eighteen others.
This was done before the commencement of the actual trial.
The appellants ' revision flied before the High Court was dismissed.
The appellants moved this Court by special leave under Article 136 of the Constitution of India, against the High Court 's order contending that unless evidence was recorded during the course of trial, the Sessions Judge had no jurisdiction under Section 319 of the Code of Criminal Procedure to take cognizance and implead the appellants as co accused solely on the basis of the material collected in the course of investigation and appended to the report forwarded under Section 173 of the Code in view of the clear mandate of Section 193 of the Code; that since the trial had not commenced and the prosecution had not led any evidence, the stage for the exercise of the power had not reached.
Dismissing the appeal, this Court HELD : 1.01.
On a plain reading of sub section (1) of Section 319 there can be no doubt that it must appear from the evidence tendered in the course of any Inquiry or trial that any person not being the accused has committed any offence for which he could be tried together with the accused.
This power, can be exercised only if it so appears from the evidence at the trial and not otherwise.
Therefore, the sub section contemplates existence of some evidence appearing in the course of trial wherefrom the Court can prima facie conclude that the person not arraigned before It Is also involved in the commission of the crime for which he can be tried with those already named by the police.
Even a person who has earlier been discharged would fall within the sweep of the power conferred by Section 319 of the Code.
Therefore, stricto sensu Section 319 of the Code cannot be invoked in a case where.
no evidence has been led at a trial wherefrom It can be said that the appellants appear to have been involved In the commission of the crime along with these already sent up for trial by the prosecution.
Section 319 covers the post congnizance stage where in the course of an inquiry or trial the involvement or complicity of a person or 33 persons not named by the investigating agency has surfaced which necessitates the exercise of the discretionary power conferred by the said provision. 1.05.
Section 319 can be invoked both by the Court having original jurisdiction as well as the Court to which the case has been committed or transferred for trial.
The sweep of Section 319 is, therefore, limited in that, it is an enabling provision which can be invoked only if evidence surfaces in the course of an inquiry or a trial disclosing the complicity of a person or persons other than the person or persons already arraigned before it 1.06.
Section 319 deals with only one situation, namely, the complicity coming to light from the evidence taken and recorded In the course of an Inquiry or trial.
This may happen not merely In cases where despite the name of a person figuring in the course of investigation the investigatIng agency does not send him up for trial but even in cases where the complicity of such a person comes to light for the first time in the course of evidence recorded at the inquiry or trial.
The scope of Its operation or the area of its play would also be limited to cases where after cognizance the involvement of any person or persons in the commission of the crime comes to light in the course of evidence recorded at the Inquiry or trial.
Thus the Section does not apply to all situations and cannot be Interpreted to be the repository of all power for summoning such person or persons to stand trial along with others arraigned before the Court 1.08.
Once the case is committed to the Court of Session by a magistrate under the Code, the restriction placed on the power of the Court of Session to take cognizance of an offence as a court of original jurisdiction gets lifted.
On the magistrate committing the case under Section 209 to the Court of Session the bar of section 193 is lifted thereby investing the Court of Session complete and unfettered jurisdiction of the court of original jurisdiction to take cognizance of the offence which would include the summoning of the person or persons whose complicity in the commission of the crime can prima facie by gathered from the material available on record.
The stage for the exercise of power under section 319 of the Code had not reached, inasmuch as, the trial had not commenced and 34 evidence was not led.
The Court of Session bad, however, the power under Section 193 of the Code to summon the appellants as their involvement in the commission of the crime prima facie appeared from the record of the case.
Once It is found that the power exists the exercise of power under a wrong provision will not render the order illegal or invalid.
Joginder Singh vs State of Punjab, ; and Sohan Lal & Ors.
vs State of Rajasthan; ; referred to.
2.01.The two alternative modes In which the Criminal Law cm be set in motion are: by the filing of information with the police under Section 154 of the Code or upon receipt of a complaint or information by a Magistrate.
The former would lead to investigation by the police and may culminate In a police report under Section 173 of the Code on the basis whereof cognizance may be taken by the Magistrate under Section 190(1)(b) of the Code.
In the latter case, the Magistrate may either order investigation by the police under Section 156(3) of the Code or himself hold an inquiry under Section 202 before taking cognizance of the offence under Section 190(1) (a) or (c), as the case may be, mad with Section 204 of the Code.
Once the Magistrate takes cognizance of the offence he may proceed to try the offender (except where the case is transferred under section 191 or commit him for trial under Section 209 of the Code if the offence Is triable exclusively by a Court of Session.
Once cognizance of an offence is taken It becomes the Courts duty to find out who the offenders really am and if the Court finds that apart from the persons sent up by the police some other persons am involved, It Is his duty to proceed against those persons by summoning then because 'the summoning of the additional accused Is part of the proceeding initiated by his taking cognizance of an offence,.
2.03.After cognizance is taken under Section 190(1) of the Code, in warrant cases the Court is required to frame a charge containing particulars as to the time and place of the alleged offence and the person (if any) against whom, or the thing (if any) in respect of which, it was committed.
But before framing the charge section 227 of the Code provides that if, upon a consideration of the record of the case and the documents submitted therewith, the Sessions Judge considers that them 35 is not sufficient ground for proceeding against the accused, he shall, for reasons to be recorded, discharge the accused.
It Is only when the Judge is of opinion that there is ground for presuming that the accused was committed an offence that he will proceed to frame a charge and record the plea of the accused (vide, section 228).
R becomes Immediately clear that for the limited purpose of deciding whether or not to frame a charge against the accused, the judge would be required to examine the record of the case and the documents submitted therewith, which would comprise the police report, the statements of witnesses recorded under Section 161 of the Code, the seizure memoranda, etc.
etc. 2.05.
Once the court takes cognizance of the offence (not the offender) it becomes the court 's duty to rind out the real offenders and if it comes to the conclusion that besides the persons put up for trial by the police some others are also Involved in the commission of the crime, it is the court 's duty to summon them to stand trial along with those already named, since summoning them would only be a part of the process of taking cognizance.
Even though the expression 'take cognizance ' is not defined, it is well settled that when the Magistrate takes notice of the accusations and applies his mind to the allegations made In the complaint or police report or information and on being satisfied that the allegations, if proved, would constitute an offence decides to initiate judicial proceedings against the alleged offender he Is said to have taken cognizance of the offence.
It is essential to bear in mind the fact that cognizance is in regard to the offence and not the offender.
Mere application of mind does not amount to taking cognizance unless the magistrate does so for proceeding under Section 200/204 of the Code.
Jamuna Singh & Ors.
vs Bhadai Sak ; at 4041; Raghubans Dubey vs State of Bihar ; and Hariram Satpathy vs Tikaram Agarwala, ; AIR 1978 SC 1S68, referred to.
S.K Latfur Rahman & Ors.
vs The State, (1985) PLJR 640 (1985) Criminal Law Journal 1238, approved.
|
(Civil) No. 3 of 1983.
(Under Article 32 of the Constitution of India).
WITH W.P. Nos.
4OO 402, 425, 492, 2493 2495, 2526 2528 of 1983 and 1256 of 1987.
Soli J. Sorabjee, Ravinder Narain, DA.
Dave and P.H. Parekh, for the Petitioners.
A.K. Ganguli, T.V.S.N. Chari Ms. Radha Rangaswamy and P. Parmeshwaran for the Respondents.
The Judgment of the Court was delivered by YOGESHWAR DAYAL J.
This order will dispose of the aforesaid writ petitions under Article 32 of the Constitution of India.
All these cases come under Item 18.1 and/or 18 III and/or 18E of the Tariff contained in the schedule attached to the Central Excise and Salt Act 1944 (hereinafter referred to as 'the Act ').
For facility of reference we are giving the facts of the case of Civil Writ Petition No. 3 of 1983.
144 This Writ Petition is stated to be covered by the decision of this Court in J.K Cotton Spinning and Weaving Mills Ltd. & another vs Union of India and others; , and the surviving prayer in the writ petition is to declare that the duty of excise in respect of Tariff Item Nos. 18 (A) (a), 18 (III) (ii) and 18E is to be levied and collected on the weight of the unsized yarn and not on the basis of the weight of the sized yarn".
Before we deal with the objections of the learned counsel for the respondents, it would be useful to examine the points which were involved in the aforesaid case of J.K Cotton Mills.
The appellants in the said case had a composite mill wherein it manufactured fabrics of different types.
In order to manufacture the said fabrics, yarn was obtained at an intermediate stage.
The yarn so obtained was further processed in an integrated process in the said composite mill for weaving the same into fabrics.
The appellants did not dispute that the different kinds of fabrics which were manufactured in the miff were liable to payment of excise duty on their removal from the factory.
They also did not dispute their liability in respect of yarn which was also removed from the factory.
It was the contention of the appellants therein that no duty of excise could be levied and collected in respect of yam which was obtained at an intermediate stage and, thereafter subjected to an integrated process for the manufacture of different fabrics.
On a writ petition, by those appellants, the Delhi High Court by its judgment dated 16th October, 1980 held that yarn obtained and further processed within the factory for the manufacture of fabrics could not be subjected to duty of excise.
It was the case of the appellants that in spite of the said decision of the Delhi High Court, the Central Board of Excise had wrongly issued a circular dated 24th September, 1980 purporting to interpret Rules 9 and 49 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules ') and directing the subordinate excise authorities to levy and collect duty of excise in accordance therewith.
In the said circular, the Board had directed the subordinate excise authorities that use of goods in manufacture of another commodity even within the place/premises that have been specified in this behalf by the Central Excise Officers in terms of the powers conferred under Rule 9 of the Rules, will attract duty".
As the said circular was being implemented to the prejudice of the appellants, they filed the writ petition before the Delhi High Court, inter alia, challenging the validity of the said circular.
During the pendency of the writ petition in the Delhi High Court, the 145 Central Government by Notification No. 20/82 C.E. dated 20th February, 1982 amended Rules 9 and 49 of the Rules.
Section 51 of the Finance Act provides that the amendments in Rules 9 and 49 of the Rules shall be deemed to have, and to have always had the effect on and from the date on which the Rules came into force i.e. 28th February, 1944.
After the said amendments of the Rules with retrospective effect, the appellants amended the Writ petition and challenged the constitutional validity of Section 51 of the Finance Act, 1982 and of the amendments to Rules 9 and 49 of the Rules.
The High Court came to the conclusion that section 51 of the Finance Act, 1982 and Rules 9 and 49 of the Rules, as amended, were valid.
It was further held that the retrospective effect given by Section 51 of the Finance Act, 1982 will be subject to the provisions of Sections 11A and 11B of the Act.
It was further held that the yam which is produced at an intermediate stage in the mill of the appellants therein and subjected to the integrated process of weaving the same into fabrics, will be liable to payment of excise duty in view of the amended provisions of Rules 9 and 49 of the Rules.
But the sized yam which is actually put into the integrated process will not again be subjected to payment of excise duty for, the unsized yarn, which is sized for the purpose, does not change the nature of the commodity as yarn.
The Writ Petition was accordingly allowed in part, as stated aforesaid, and it was this decision which came up in appeal before this Court.
This Court agreed with the Delhi High Court and upheld the vires of Rules 9 and 49 of the Rules as well as Section 51 of the Finance Act, 1982.
This Court also agreed with the High Court that the retrospective effect given by section 51 of the Finance Act, 1982 will be subject to the Provisions of Sections 11A and 11B of the Act.
This Court also agreed with the view of the High Court that the yarn which is produced at an intermediate stage in the mill of the appellants and subjected to integrated process of weaving the same into fabrics, would be liable to payment of excise duty in view of the amended provisions of the Rules, But, this Court further agreed with the High Court, the sized yarn which is actually put into the integrated process will not again be subjected to payment of excise duty for, the unsized yarn, which is sized for the purpose does not change the nature of the commodity as yarn.
This Court observed at pages 720 and 721 of the report as under: "In the instant case, the appellants are liable to pay excise duty on the yarn which is obtained at an intermediate stage and, thereafter, further processed in an integrated process for weav 146 ing the same into fabrics.
Although it has been alleged that the yam is obtained at an intermediate stage of an integrated process of manufacture of fabrics, it appears to be not so.
After the yarn is produced it is sized and, thereafter, subjected to a process of weaving the same into fabrics.
Be that as it may, as we have held that the commodity which is obtained at an intermediate stage of an integrated process of manufacture of another commodity, is liable to the payment of excise duty, the yarn that is produced by the appellants is also liable to payment of excise duty.
In our view, the High Court by the impugned judgment has rightly held that the appellants are not liable to pay any excise duty on the yarn after it is sized for the purpose of weaving the same into fabrics.
No distinction can be made between unsized yarn and sized yarn, for the unsized yarn when converted into sized yarn does not lose its character as yarn.
" The petitioner herein on the other hand approached the Gujarat High Court and the Gujarat High Court by its judgment dated 30th July, 1981 had, before the issuance of the impugned circular dated 24th May, 1982, taken the view that no duty can be levied on the weight of sizing material contained in yarn, falling under Tariff Item No. 18 111 or 18 E and directed that the duty levied should be refunded because the duty has been levied not on the basis of yam at the spindle stage, but on the weight of the sized yarn.
After the decision of the Gujarat High Court the Central Government had amended Rules 9 and 49 of the Rules and Section 51 of the Finance Act, 1982, had made them effective retrospectively.
The present writ petition filled in this Court had inter alia pleaded that the retrospective amendment of Rules 9 and 49 of the Rules as well as Section 51 of the Finance Act, 1982 be declared as ultra vires of the Constitution.
This Court upheld the validity of the Section as well as the retrospective applicability of the Rules but took the view that this would be subjected to the provisions of Sections 11A and 11B of the Act and at the same time declared that the appellants were not liable to pay excise duty on the yarn after it is sized for a purpose of weaving the same into fabrics.
It will be noticed that under items 18.1, 18.III and 18E the measure is "per kilogram".
At this stage items 18.1, 18.111 and 18E of the Tariff may be noticed 147 "18.
I. Man made fibres, other than mineral fibres : (i) Non cellulosic Eighty five rupees per kilogram (ii) Cellulosic Ten rupees per kilogram '18.III.
Cellulosic spun yarn: Yam, in which man made fibre of cellulosic origin predomi nates in weight and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power (i) not containing, any manmade fibres of non cellulosic origin.
six paise per count per kilogram (ii) containing man made fibres of non cellulosic origin.
Eighteen Rupees per kilogram.
Explanation 1: "Count" means the size of grey yarn (excluding any sizing material) expressed in English Count.
Eighteen Rupees per kilogram "18E.
Non cellulosic Spun Yam: Spun (discontinuous) yarn, in which man made fibres of noncellulosic origin, other than acrylic fibre, predominate in weight and, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power.
Twenty four rupees per kilogram.
148 Explanation : Explanation III under sub item III of item No. 18 shall, so far as may be, apply in relation to this item as it applies in relation to that item.
" It will be noticed from the aforesaid items that the measure for imposition of excise duty is by weight "per kilogram" in all the three items, namely 18.1, 18.111 and 18E. Therefore, the aforesaid decision in J.K. Couon Mills will be applicable to all types of cases under Items 18.1, 18.111 and 18E. After the decision of the Gujarat High Court, instead of granting the refund, the Superintendent of Central Excise, Range IV, Division V, Ahmedabad, issued impugned notices, collectively annexed as Annexures 'B ' and 'C ' to the present writ petition in pursuance of the directives dated 24th May, 1982 which are subject matter of challenge in the present writ petition.
On behalf of the respondents Mr. Ganguly learned counsel submitted that this Hon 'ble Court ought not to entertain the present writ petition under Article 32 of the Constitution.
He, however, could not dispute that the matter is directly covered by the decision of this Court in the aforesaid case of J.K Cotton Mills.
These petitions were admitted to hearing in view of the pendency of the aforesaid appeal in the case of J.K Cotton Mills and in view of the decision of the Delhi High Court which was appealed against in the aforesaid case of J.K Couon Mills.
Practically nine years have gone by now and the impugned show cause notices have been issued by virtue of the same directives which were subject matter of the aforesaid case of J.K.cotton Mills.
In view of this peculiar fact it would not be in the interest of justice if the parties are directed to contest the individual show cause notices issued by the respondents in view of the aforesaid directives.
In order to avoid multiplicity of proceedings involving time and expense, we quash the impugned notices in all the cases.
The result is that all the aforesaid writ petitions are accepted and the impugned show cause notices are quashed.
There will be no order as to costs.
G.N. Petitions allowed.
| The petitioners challenged before the High Court the levy of excise duty on the weight of the yarn sized for the purpose of weaving them into fabrics.
The High Court held that no duty could be levied on the weight of the sizing material contained in yarn, and directed that the duty should be refunded since it has been levied not on the basis of yarn at the spindle stage, but on the weight of the sized yarn.
After the said judgment, the Central Government by Notification dated 20.2.1982 amended Rules 9 and 49 of the and Section 51 of the Finance Act, 1982 with retrospective effect.
In accordance with the said Notification, Central Excise Department issued show cause notices to the petitioners.
The constitutional validity of these amendments are challenged by the petitioners in the present Writ Petitions filed before this Court.
On behalf of the petitioners, it was contended that their cases were covered by the decision of this Court in J.K. Cotton Spinning and Weaving Mills Ltd. & Anr.
vs Union of India and Ors., ; and that excise duty could be levied on the weight of the unsized yarn and not on the basis of the weight of the sized yarn.
Allowing the petitions, this Court HELD: 1.1.
The Vires of Rules 9 and 49 of the Central Excise Rules, 1944 as well as section 51 of the Finance Act, 1982 and the retrospective 143 application of the same has already been upheld by this Court.
[145E] 1.2.
The sized yam which is actually put into the integrated process will not again be subjected to payment of excise duty, for the unsized yam which is sized for the purpose, does not change the nature of commodity as yarn.
Thus excise duty cannot be levied on the weight of the yarn after the yarn is sized for the purpose of weaving the same into fabrics.
[145G] 13.
Practically nine years have gone by since the show cause notices were issued by virtue of the same directives which were subject matter of J.K Cotton Mills case.
In view of this peculiar fact it would not be in the interest of justice if the petitioners are directed to contest the individual show cause notices issued by the respondents.
In order to avoid multiplicity of proceedings involving time and expense, the show cause notices in all these cases are quashed.
[148F G] J.K Cotton Spinning and Weaving Mills Ltd & Anr.
vs Union of India & Ors.
, ; , applied.
|
Appeal No. 5434 of 1985.
From the Judgment and Order dated 11.8.1987 of the Punjab and Haryana High Court in Civil Revision No. 1048 of 1986, A.K Gupta for the Appellants.
Vikram Mahajan, Gopi Chand and K.K. Gupta for the Respondent.
The Judgment of the Court was delivered by VERMA, J.
The suit premises in Chandigarh was let out by the appellant to the respondent, Smt.
Satya Bhalla on 1.11.1974 on a monthly rent of Rs. 550 solely for residential purpose.
However, the respondent 's husband, a lawyer established his office in a part of the suit premises and started using the same for that purpose.
The appellant landlord filed a petition before the Rent Controller in February, 1983 seeking eviction of the respondent tenant on several grounds including the ground contained in section 13(2) (ii) (b) of the East Punjab Urban Rent Restriction Act, 1949 i.e. the use of the building for a purpose other than that for which it was leased.
The Rent Controller made an order of eviction of the respondent tenant on the ground of change of user contained in section 13(2)(ii) (b).
The tenant 's appeal was dismissed by the appellate authority which affirmed the order of eviction made by the Rent Controller.
A further revision to the High Court has been allowed by the learned single Judge and the order of eviction has been set aside.
The High Court has held that the building let out as a 'residential building became a 'scheduled building by use of a part thereof as lawyer 's office by the tenant 's husband; and therefore, the ground of eviction was not available.
The order of eviction made in the landlord 's favour was, therefore, set aside.
Hence this appeal by the landlord by special leave.
The learned counsel for the appellant contended that the ground of change of user contained in section 13(2) (ii) (b) is clearly made out from the facts and the High Court has erred in setting aside the order of eviction.
174 In reply Shri V.C. Mahajan, learned counsel for the respondent tenant, advanced several arguments.
He submitted that the landlord had waived the ground of change of user by acquiescence to use of a part of the premises as lawyer 's office.
His next submission is that the ground in section 13(3) (ii) (b) is not available unless the change of user is of substantial if not the entire building and, therefore, mere use of a small part of the residential building as lawyer 's office does not constitute such change, learned counsel also submitted that this is not a fit case for interference with the High Court 's order under Article 136 of the Constitution.
Having heard both sides, we are satisfied that this appeal has to be allowed.
The High Court 's interference in revision with the order of eviction made by the Rent Controller and affirmed by the appellate authority, was wholly unjustified.
There is no merit in Shri Mahajan 's argument of waiver or acquiescence by the landlord.
Before the Rent Controller the tenant had pleaded estoppel against the landlord, which after due consideration was rightly rejected by the Rent Controller.
That finding of the Rent Controller was not assailed by the tenant either before the appellate authority or in the High Court.
On merits also, this plea is untenable since no such conduct of the landlord is shown.
The argument is, therefore, rejected.
We also do not find any substance in the contention that interference under Article 136 is not warranted, in case it is found that the High Court set aside the order of eviction on a misconstruction of the law applicable in the present case.
The only question, therefore, is whether on the proved facts, no longer in controversy, the ground in section 13(2) (ii) (b) is made out.
The material provisions in the East Punjab Urban Rent Restrictions Act, 1949 with reference to which the contention of Shri Mahajan has to be considered, are the following "2.
Definitions. . . . (a) 'building ' means any building or part of a building let for any purpose whether being actually used for that purpose or not, including any land, godowns, outhouses, or furniture let therewith but does not include a room in a hotel, hostel or 175 boarding house; xxx xxx xxx (d) 'non residential building" means a building being used solely for the purpose of business or trade: Provided that residence in a building only for the purpose of guarding it shall not be deemed to convert a "non residential ' building ' to a 'residential building": xxx xxx xxx (g) 'residential building" means any building which is not a non residential building; (h) 'scheduled building" means a residential building which is being used by a person engaged in one or more of the professions specified in the Schedule to this act, partly for his business and partly for his residence; xxx xxx xxx 13.
Eviction of tenant (1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decree passed before or after the commencemen t of this Act or otherwise and whether before or after the termination of the tenancy, except in accordance with the provisions of this sec tion.
(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf.
If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (ii) that the tenant has after the commencement of this Act without the written consent of the landlord (a) transferred his right under the lease or sublet the entire building or rented land or any portion thereof; or 176 (b) used the building or rented land for a purpose other than that for which it was leased, or the Controller may make an order directing the tenant to put the landlord in possession of the building or rented land and if the Controller is not so satisfied he shall make an order rejecting the application: Provided that the Controller may give 'the tenant a reasonable time for putting the landlord in possession of the building or rented land and may extend such time so as not to exceed three months in the aggregate." Shri Mahajan contended that to constitute the ground under section 13(2) (ii) (b), the change in user should be in respect of at least a substantial part of the building if not the entire building.
The comparison of sub clause (b) with sub clause (a) shows that the omission of the word 'entire ' before the word 'building ' in sub clause (b) when the word 'entire ' has been used before the word 'building ' in sub clause (a) is deliberate.
For this reason, the change in user of the building required to constitute the ground under sub clause (b) need not be of the entire building, the word 'entire ' being deliberately omitted in sub clause (b).
Faced with this difficulty, Shri Mahajan submitted that the change of user should be of a substantial part of the building let out even though not of the entire building.
This argument also cannot be accepted in this context.
The definitions in section 2 of the Act show that even though a 'scheduled building ' continues to be a residential building as defined in section 2(g), a residential building of which even a part is used for a scheduled purpose, becomes and is called a 'scheduled building ' when user of the building is significant or the criterion.
Thus, where user of a building is of significance, a distinction is made in the Act between residential building which is not a scheduled building and that which is a scheduled building.
This is so in section 4 of the Act dealing with determination of fair rent wherein fixation of rent is made on the basis of user and for that purpose a 'scheduled building ' is treated differently from a residential building which is not a scheduled building.
Same is the position with regard to the ground of eviction contained in section 13(2) (ii) (b) wherein change in user of the building is alone significant for constituting the ground.
177 Accordingly, use of the building for a purpose other than that for which it was leased, without the written consent of the landlord is a ground of eviction.
The object clearly is that the parties must remain bound by the terms on which the building is let out, including the condition relating to its use for the purpose for which it was leased.
In other words, breach of the covenant regarding the kind of user of the building let out is the ground of eviction contained in section 13(2) (ii) (b).
It is clear that if the change in user of the building is of the kind that it makes the residential building let out for residential purpose alone change its character and become a 'scheduled building ' as defined in section 2(h) of the Act without the written consent of the landlord, the ground of eviction under section 13(2) (ii) (b) is made out.
This test is fully satisfied in the present case and the order of eviction was made by the Rent Controller and affirmed by the appellate authority on this basis. 'The High Court misconstrued the provisions to take the contrary view.
A Division Bench of the Punjab and Haryana High Court in Telu Ram vs Om Parkash Garg while dealing with section 13(i) (ii) (b) at the Act mentioned one of its conclusion in para 21 as under '(b) that if the result of the use of even a small portion of a building is such that the category of the premises is changed from residential, non residential and scheduled, and it becomes a category different from the one for which the same had been let, the clause would be attracted;" This is how this provision appears to have been understood at least eversince than and the people in the State have arranged their affairs on that basis.
Apart from the fact that this view commends to us as the correct view, the desirability of continuing the settled view is also a reason in its favour.
Shri Mahajan referred to the decision of this Court in Sant Ram vs Rajinder Lal and Ors., 1978(2) RCR 601.
That case is distinguishable.
In that decision the purpose of the lease was not spelt out precisely while letting out a small premises to a cobbler for his business where he sometimes stayed overnight after the day 's work while he went to his home on 178 holidays.
It was on these facts that the tenant staying overnight in the shop on some working days was not found to constitute the ground of change of user under section 13(2) (ii) (b) of the Act.
That decision does not assist the respondent tenant in this case.
Reference was also made to Dr. Sewa Singh vs Smt.
Ravinder Kaur and another, [1971] '3 SCC 981.
That judgment did not consider this question as it was not raised.
The ground therein was that the High Court was not justified in taking the view in revision for the first time that the user of a part of the premises for a particular purpose was casual.
No doubt, the user of a part of the residential building for the profession of a medical practitioner was involved and the definition of 'scheduled building ' in section 2(h) of the Act was referred, but this point was neither raised nor considered.
The decision in Dr. Sewa Singh cannot be treated as an authority for the view that change of user of a part of a residential building let out for use solely as a residence, for a scheduled purpose without the written consent of the landlord does not constitute the ground for eviction under section 13(2) (ii) (b) or that the ground of eviction based on personal need of the landlord contained in section 13(3) (i) (a) is not available to the landlord for that reason.
If the logical inference from Dr. Sewa Singh appears to be that, then, with respect, we are unable to agree with the same.
As a result of the above discussion, this appeal is allowed and the impugned order passed by the High Court is set aside resulting in restoration of the order of eviction made by the Rent Controller and affirmed by the appellate authority.
The respondent will also pay cost to the appellant.
Counsel 's fee Rs. 3,000.
V.P.R. Appeal allowed.
| The suit premises was let out by the appellant landlord to the respondent on a monthly rent of Rs. 550 solely for residential purpose.
In a part of the premises, the respondent 's husband, a lawyer established his office and started using the same for that purpose.
Teh appellant landlord riled a petition before the Rent Controller seeking eviction of the respondent tenant.
The Rent Controller made an order of eviction of the respondent tenant on the ground of change of user under section 13(2) (II) (b), of the East Punjab Urban Rent Restriction Act, 1940.
The tenant 's appeal was dismissed by the appellate authority, against which a revision to the High Court was preferred.
The Single Judge of the High Court allowed the revision and set aside the eviction order, holding that the building let out as a 'residential building became a 'scheduled building ' by use of a part thereof as lawyer 's office by the tenants husband; and therefore, the ground of eviction was not available.
Hence this appeal by the landlord by special leave, contending that the ground of change of user contained in section 13(2) (II) (b) was clearly made out from the facts and the High Court erred In setting aside the order of eviction.
172 The respondent tenant submitted that the landlord waived the ground of change of user by acquiescence to use of a part of the premises as lawyer 's office; that the ground in section 13(2)(ii)(b) was not available unless the change of user was of substantial, if not the entire building and, therefore, mere use of a small part of the residential building as lawyer 's office does not constitute such change.
Allowing the appeal of the landlord, this court, HELD : 1.01.
Use of the building for a purpose other than that for which it was leased, without the written consent of the landlord is a ground of eviction.
Ile object dearly is that the parties must remain bound by the terms on which the building is let out, including the condition relating to Its use for the purpose for which it was leased.
In other words, breach of the covenant regarding the kind of user of the building let out is the ground of eviction contained in section 13(2) (ii) (b) of the East Punjab Urban Rent Restriction Act.
[177A B] 1.02.
If the change in user of the building is of the kind that it makes the residential building let out for residential purpose alone change its character and become a 'scheduled building ' as defined in section 2(h) of the Act without the written consent of the landlord, the ground of eviction under section 13(2) (ii) (b) is made out.
[177C] 1.03.
This test is fully satisfied In the present case and the order of eviction was made by the Rent Controller and affirmed by the appellate authority on this basis.
The High Court misconstrued the provisions to take the contrary view.
[177D] Telu Ram vs Om Parkash Garg , approved.
Sant Ram vs Rajinder Lal and Ors., ; Dr. Sewa Singh vs Smt.
Ravinder Kaur and another, , distinguished.
Even though a 'scheduled building continues to be a residential building as defined in section 2(g), a residential building of which even a part is used for a scheduled purpose, becomes and is called a 'schedule building when user of the building is significant or the criterion.
[176F] 2.02 Where user of a building is of significance, a distinction is made In the Act between a residential building which is not a scheduled building and 173 that which is a scheduled building.
This is so in section 4 of the Act dealing with determination of fair rent wherein fixation of rent is made on the basis of user and for that purpose a 'scheduled building ' is treated differently from a residential building which is not a scheduled building.
[176G]
|
Appeal No. 131 of 1993.
From the Judgment and Order dated 17.12.1991 of the Himachal Pradesh High Court in Civil Revision No. 210 of 1990.
P.P. Rao and Ashok K. Mahajan for the Appellants.
D.D. Thakur, N.N. Bhat, E.C. Agrawala, A.V. Palli and Ms. Purnima Bhat for the Respondent.
The Judgment of the Court was delivered by YOGESHWAR DAYAL J.
Special leave granted.
With the consent of learned counsel for the parties, the appeal itself was heard.
The respondent is a tenant at the rate of Rs. 183.33 per month in the premises in dispute i.e. Shop No. 50, The Mall Shimla.
On 7th March, 1983, late Smt.
Dhani Devi, Predecessor in interest of appellant No. 2 and Shri Madan Mohan, appellant No.1, filed an application for eviction of the respondent on various grounds.
One of the grounds on which the eviction was claimed was non payment of rent.
It was stated in eviction petition that the respondent was in arrears of rent with effect from 1.3.1980 to 28.2.1983.
The Rent Controller on 29.7.1986 passed an order of eviction on the ground of non payment of arrears of rent.
The operative part of the said order is as under: "In the tight of my finding on issue No.1 above, the application is allowed on the ground of non payment of arrears of rent and the petition fails on other grounds.
However, the respondent shall not be evicted from the premises in question if he pays to the petitioner or deposit in this court a sum of Rs. 6,600, being arrears of rent from 1.3.1980 to 28.2.1983 @ 2,200 p.a. plus interest thereon @ 6% p.a.
amounting to Rs. 609.39, upto 28.2.1983and further interest on Rs. 6,600/ @ 6% p.a.
from 1.3.1983 till 28.8.1986 plus costs assessed at Rs. 100 within a period of 30 days from today. ' On 13.8.1986 the respondent deposited a sum of Rs. 8,500 in the court of the Rent Controller, Shimla.
According to the appellants, decree holders, the amount due inclusive of interest and costs upto 29.7.1986 was Rs. 8,661.29 and till the date of deposit it worked out to Rs. 8,677.79 if the 113 interest was to be calculated at the ordered rate till 13.8.1986.
According to the appellants the amount deposited was not in accordance with the order of the ejectment dated 29th July, 1986 and was short, and they filed the execution petition before the Rent Controller seeking possession of the suit premises.
On the execution petition being opposed, the Rent Controller framed the following two issues: "(a) Whether the tender made by the respondent of the rent amount is short as alleged? (b) Relief" By an order dated 18.5.1990 the Rent Controller while deciding issue No. 1 held that the tender made by the respondent was short to the tune of Rs. 161.29.
However, while deciding issue No.2, the Rent Controller allowed 15 days ' time from the date of the order for deposit of the said amount.
The appellants being aggrieved by the order of the Rent Controller dated 18.5.1990 filed revision petition in the High Court.
It was submitted on behalf of the appellants that the executing court had no jurisdiction to extend the time for making good the deficiency of.
161.29 inasmuch as since period of 30 days has been fixed by the Himachal Pradesh Urban Rent Control Act, 1987 (hereinafter referred to as 'the Act ') itself, the court could not either enlarge or abridge this period.
By the impugned judgment dated 17.12.1991, the High Court dismissed the revision petition.
The High Court while interpreting the words "amount due" occurring in the third proviso to Section 14(2) (i) of the Act held that these words referred to arrears of rent only and do not include interest and costs.
It will be noticed that neither of the parties had challenged the order 29.7.1986 by which the order of eviction was passed on the ground of non payment of rent against the respondent but the respondent had been given the liberty of avoiding eviction provided he deposited the amounts as stated in the order within the period of 30days from the date of the said order.
Before the High Court it was submitted on behalf of the appellants 114 that the executing court had no jurisdiction to extend the time to make good the deficiency in the amount as directed by the order dated 29.7.1986.
It was submitted on behalf of the appellants that since the period of 30 days had been fixed in the Act itself the court could not enlarge or abridge this period.
The High Court agreed with this submission but posed a question for itself, whether short fall of Rs. 161.29 which had been ordered to be deposited constitutes arrears of rent or interest and costs.
While following an earlier decision of the same High Court reported as Om Parkash vs Sarla Kumari & Ors., 1991 (1) Sim.
L.C. 45 interpreted the word "amount due" occurring in the third proviso to Section 14(2)(i) of the Act wherein it had been held that in order to save eviction the tenant is required to deposit only arrears of rent due at the time of filing application for eviction and not arrears of rent together with interest and costs within the statutory period of 30 days from the date of eviction order.
After answering the question the High Court took the view that the deficiency of Rs. 161.29 pertains to interest and costs.
So far as the arrears of rent which amountedto Rs. 6,600 for the period in question i.e. from 1.3.1980 to 28.3.1983 at the rate of Rs. 2,200 p.a. is concerned, it had been deposited within 30days.
In view of this finding the High Court was of the view that the respondent was not liable to be evicted.
High Court also held that the order of the executing court extending time to deposit Rs. 161.29 in pursuance of its order dated 29.7.1986 is of no consequence.
The relevant part of Section 14 of the Act may be noticed: '14.
Eviction of tenant (1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decre passed before or after the commencement of this Act or otherwise, whether before or after the termination of the tenancy, except in accordance with the provisions of this Act.
(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf.
If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (i) that the tenant has not paid or tendered the rent due from him in respect of the building or rented land within fifteen days 115 after the expiry of the time fixed in the agreement of tenancy with his landlord or in the absence of any such agreement by the last day of the month next following that for which the rent is payable: Provided that if the tenant on the first hearing of the application for ejectment after due service pays or tenders the arrears of rent and interest at the rate of 9 per cent per annum on such arrears together with the cost of application assessed by the Controller, the tenant shall be deemed to have duly paid or tendered the rent within time aforesaid: Provided further that if the arrears pertain to the period prior to the appointed day, the rate of interest shall be calculated at the rate of 6 per cent per annum: Provided further that the tenant against whom the Controller has made an order for eviction on the ground of non payment of rent due from him, shall not be evicted as a result of his order, if the tenant pays the amount due within a period of 30 days from the date of order; or (ii).
; or (iii) . ; or (iV).
; or (v). ; the Controller may make an order directing the tenant to put the landlord in possession of the building or rented land and if the Controller is not so satisfied he shall make an order rejecting the application:" A reading of the aforesaid relevant part of the Section shows that sub section (1) of Section 14 creates a ban against the eviction of a tenant except in accordance with the provisions of the Act.
The ban is liable to be lifted.
Sub section (2) of Section 14 provides the circumstances in which the ban is partially lifted.
It contemplates that where an eviction petition is filed, inter alia, on the ground of non payment of rent by the landlord, 116 the Controller has to be satisfied that the tenant has neither paid nor tendered the rent in the circumstances mentioned in clause (i) of sub section (2) of Section 14.
He has to arrive at this satisfaction after giving a reasonable opportunity of showing cause against it to the tenant.
But there may be cases where the tenant, on being given notice of such an application for eviction, may like to contest or not to contest the application.
The tenant is given the first chance to save himself from eviction as provided in the first proviso to clause (i) of sub section (2) of Section 14.
This first proviso contemplates that the tenant may on the first hearing of the application for ejectment pay or tender in court the rent and interest at the rate mentioned in the proviso on such arrears together with the cost of application assessed by the Controller and in that case, the tenant is deemed to have duly paid or tendered the rent within the time as contemplated by clause (i) of sub section (2) of Section 14.
Where the tenant does not avail of this opportunity of depositing as contemplated by the first proviso and waits for an ultimate decision of the application for eviction on the ground of non payment of rent, the Controller has to decide it and while deciding, the Controller has to find whether the ground contained in clause (i) of sub section (2) of Section 14 has been made out or not.
If the Controller finds that the ground as contemplated by clause (i) of sub section (2) of Section 14 is made out, he is required to pass an order of eviction on the ground of non payment of rent due from him.
A second opportunity to avoid eviction is provided by the third proviso to clause (i) of sub section (2) of Section 14.
But the second opportunity is provided after the order of eviction.
The benefit of avoiding eviction arises if the tenant pays the "amount due ' within the period of 30 days of the date of order.
The question is what is the meaning of the words 'amount due" occurring in the third proviso to clause (i) of sub section (2) of Section 14 of the Act.
It will be noticed that there is no provision in the Act for giving powers to the Controller to direct payment or deposit of 'Pendente lite" rent for each month during the pendency of the petition for eviction of the meant.
First Proviso to sub section (2) of section 14 shows that in order to show payment or valid tender as contemplated by clause (i) of sub section (2) of Section 14 by a tenant in default, he has to pay on the first date of hearing the arrears of rent alongwith interest and costs of the application 117 which are to be assessed by the Controller.
Surely where a tenant does not avail of the first opportunity and contests the eviction petition on the ground of non payment of arrears of rent and fails to show that he was not in default and court finds that the ground has been made out, an order of eviction has to follow.
Therefore, it does not stand to reason that such a tenant who contests a claim and fails to avoid order of eviction can still avoid it by merely paying the rent due till the date of the filing of the application for ejectment.
The third proviso to clause (i) of sub section (2) of Section 14 should also receive an interpretation which will safeguard the rights of both the landlord and tenant.
The "amount due" occurring in the third proviso in the context will mean the amount due on and upto the date of the order of eviction.
It will take into account not merely the arrears of rent which gave cause of action to file a petition for eviction but also include the rent which accumulated during the pendency of eviction peti tion as well.
If the tenant has been paying the rent during the pendency of the eviction petition to the landlord, the "amount due" will be only arrears which have not been paid.
The landlord, as per the scheme of the section, cannot be worse off vis a vis a tenant who was good enough to deposit in court the arrears of rent together with interest and costs on the first date of hearing.
If the interpretation given by the High Court is accepted the result would be that the tenant will be better off by avoiding to pay the arrears of rent with interest and costs on the first date of hearing and prefer suffering order of ejectment after contest and then merely offer the amount due as mentioned in the application for ejectment to avoid eviction.
This could not be the intention of the legislature.
In such cases it will be advisable if the Controller while passing the order of eviction on the ground specified in clause (i) of sub section (2) of Section 14 of the Act specifies the "amount due" till the date of the order and not merely leave it to the parties to contest it after passing of the order of eviction as to what was the amount due.
Surely the Rent Control Acts, no doubt, are measures to protect tenants from eviction except on certain specified grounds if found established.
the grounds are made out and subject to any further condition which may be provided in the Act, the tenants would suffer ejectment.
Again the protection given in the Acts is not to give licence for continuous litigation and bad blood.
118 Surely the legislature which made the Act could not have envisaged that after the parties finish off one round of litigation, the party should be relegated to another round of litigation for recovery of rent which accrued pendente lite.
Whatever protection Rent Acts give they do not give blanket protection for "non payment of rent".
This basic minimum has to be complied with by the tenants.
Rent Acts do not contemplate that if one takes a house on rent, he can continue to enjoy the same without payment of rent.
The order which the Controller passed was a composite order of eviction in the sense that if the tenant wanted to save himself from eviction, he had to comply with the order.
The order which was passed by the Controller cannot be said to be an order without jurisdiction.
It may be a right order; it may have been a wrong order.
It was not a nullity that the executing court will ignore it.
But at the stage when the execution application was filed, the rent Controller could not go behind its own order dated 29.7.1986.
If the Controller could not go behind its own order in execution proceedings, surely the High Court could not also go behind the order in revision against the order of Controller refusing execution.
It was not the appropriate stage for the High Court to examine what order ought to have been passed or to limit the efficacy of the order to its interpretation of the words "amount due" as mentioned in the third proviso to clause (i) of sub section (2) of Section 14.
The question which the High Court posed never arose.
Mr., Thakur, who appeared on behalf of the respondent submitted: (1)that sub section (2) of Section 14 gives discretion to the Controller to pass an order of eviction or not to pass an order of eviction even if the ground mentioned in clauses (i) to (v) of sub section (2) of Section 14 are made out; (2)that the order of eviction which was passed is not the final order in the sense that it is an interim order.
The final order is passed only after the expiry of 30 days if the tenant fails to avail of the second opportunity provided by the third proviso to clause (i) of sub section (2) of Section 14.
With due respect to learned counsel for the respondent we are not able to persuade ourselves to agree with either of his submissions.
It is true that sub section (2) uses the expression "the Controller may make an order 119 directing the tenant to put the landlord in possession of the building or rented land and if the Controller is not so satisfied he shall make an order rejecting the application".
It will be noticed that the Controller is required to dismiss the eviction application if he is not satisfied to the existence of any ground mentioned in clauses (i) to (v) of sub section (2) of Section 14 of the Act but where the Controller is satisfied with existence of any of the grounds mentioned in clauses (i) to (v) of sub section (2) of Section 14 the Controller has no discretion to decline to pass the order of eviction.
In the context in which the expression "may" is used it means "shall '.
Otherwise the section would read that "not only the Controller can reject an application when he is not satisfied with the ground but is also entitled to dismiss the application when he is so satisfied".
Such an intention cannot be attributed to the legislature particularly when the consequences of non satisfaction is expressly mentioned.
Even if the consequences of non satisfaction was not mentioned, we are of the view that the expression "may" occurring would still mean "shall" and all that would mean is that if the grounds are not made out, he will be bound to dismiss the application and if the grounds are made out, he is bound to pass the order of eviction.
If any other interpretation is given to the word "may" the section may itself become subject matter of challenge under Article 14 of the Constitution of India.
The Court shall avoid interpretation which make the provisions violative of the Constitution, if possible.
Coming to the second submission, as we have noticed earlier, subclause (i) of sub section (2) of Section 14 gives two opportunities to the tenant to avoid eviction.
The first opportunity to avoid eviction is if the tenant avails of the benefit of first proviso.
This opportunity is before the passing of the order of eviction.
The second opportunity is after the order of eviction.
The order, which is passed for eviction, is final in the sense as it is not an interim order.
If the tenant avails of the second opportunity as provided in the third proviso then the order of eviction becomes inexecutable and he saves himself from eviction.
Having found that the question posed and answered by the High Court was not relevant at the stage it was posed, namely during the execution proceedings and, therefore, the order is bad.
The validity of the order of the executing court dated 18th May, 1990 120 now needs to be considered.
The executing court, on consideration of the evidence recorded during the execution proceedings held that the judgment debtor, respondent, himself calculated the interest for the period 1.3.1983 to 28.2.1986 with the result that Rs. 161.29 ps. was deposited less by the judgment debtor and thought that it had power to extend the time for making up the deficiency and accordingly extended the time.
So far as the Himachal Pradesh High Court is concerned it has consistently taken the view that the executing court has no such power since the time is fixed by the statute.
R.S. Pathak, CJ.
(As His Lordship then was) in Shri Krishan Kumar vs Shri Gurbux Singh, while interpreting the third proviso to Section 14(2) (i) of the Act took the view thus: "It is apparent that the statute itself provides a period of 30 days from the date of the order for payment of rental arrears by the tenant.
On such payment, the statute declares, effect will not be given to the order of eviction.
The statute does not leave the determination of the period to the Rent Controller.
It is not open to the Rent Controller, when disposing of the petition for eviction, to make an order either abridging or enlarging the period of 30 days.
Indeed, the period having been determined by the statute itself, no order was necessary by the Rent Controller.
There being no power in the Rent Controller to vary the period mentioned in the statute, it is apparent that the order made by him in the execution proceedings is a nullity.
The Appellate Authority is right in the view taken by it." Mr. Thakur, learned counsel for the respondent, referred us to Shyamcharan Sharma vs Dharamdas, ; ; Miss Santosh Mehta vs Om Prakash and others; , ; Ram Murti vs Bhola Nath and another, and Ganesh Prasad Sah Kesari and another vs Lakshmi Narayan Guptta ; and submitted that this Court had, in spite of there being no express provisions to extend time taken the view that the Court has inherent powers to extended time for deposit of rent.
We are of the view that the reliance placed on these cases is wholly misplaced.
It may be noticed that the case of Shyamcharan Sharma (supra) related to the powers of the Court under Section 13(6) of the Madhya 121 Pradesh Accommodation Control Act, 1961.
This Act contemplated an eviction petition being filed under Section 12 and one of the grounds for eviction was for failure of the tenant to pay or tender within two months from the date of service of notice of demand of rent and Section 12 (3) thereof provided that the order of eviction will not be passed on this ground if the tenant makes the payment of deposit as required by Section 13.
Section 13(1) contemplated that when a suit has been instituted on any of the grounds against the tenant for his eviction, the tenant shall, within one month of the service of summons on him or within such further time as the court may, allow in this behalf, deposit in the court or pay to the landlord the arrears of rent and shall also continue to pay, month by month, the future rent as well.
Sub section (5) of Section 13 contemplated that if the deposit was made as contemplated by sub section (1) of Section 13 no order for recovery of possession should be made on the ground of default in the payment of rent.
Sub section (6) of Section 13 provide that if the tenant fails to pay any amount as required by Section 13 the court had the power to strike out the defence and proceed with the hearing of the suit.
While dealing with the powers under Section 13(6) of the said Act this Court took the view that the court had discretion to strike off the defence or not even if there is delay in depositing rent falling due after institution of suit for eviction.
The Court held : "In case of non deposit or non payment of rent by the tenant, Section 13(6) vests a discretion in the Court to order striking off the tenant 's defence against eviction; it neither clothes the landlord with an automatic right to an eviction decree nor visits the tenant with the penalty of such a decree being automatically passed.
If the court has the discretion to strike off or not to strike off the defence, it has further discretion to condone the default and extend the time for making the payment or deposit.
Such a discretion is a necessary implication of the discretion not to strike off the defence.
A different construction might lead to perversion of an object of the Act, namely 'adequate protection of the tenant '.
" An express provision for extending time for deposit or payment was not made in Section 13(1) because the consequences of non payment was proposed to be dealt with separately by Section 13(6) and the discretion to extend time is incidental to the discretion in the said section to strike 122 off or not to strike off the defence.
This view in Shyamcharan Sharma 's case (supra) was followed by this Court in Miss Santosh Mehta 's case (supra) and Ram Murti 's case (supra), which were the cases under the Delhi Rent Control Act, 1958, which also had the provisions similar to the Madhya Pradesh Accommodation Control Act, 1961 contemplating direction by the court to direct the tenant to pay the pendente lite rents which have become due and consequences for not complying with such directions.
Again the case of Genesh Prasad Sah Kesari (supra) related to the provisions for striking out the defence for failure of the tenant to deposit arrears of rent within 15 days of date of the courts 's order and this court again followed the decision in the case of Shyamcharan Sharma.
These cases have no application where the final orders were passed after satisfaction of the Controller for entitling the landlord to seek eviction on the grounds specified in the Act.
Mr. Thakur then submitted that this Court should not exercise its powers under Section 136 of the Constitution of India as the rent laws are meant for protection of the tenants.
Rent Control Acts are necessary social measures for protection of tenants.
The Rent Control Laws have tried to balance the equity.
Landlord is duty bound to satisfy the ground of eviction mentioned in various Rent Acts and if he does not satisfy, he cannot get the order of eviction merely because the Act restricts his rights.
There are certain Rent Acts which, even when a ground of eviction is satisfied, still confer powers on the Rent Controllers to consider the question of comparative hardship and it is only in those types of cases, if the Controller is satisfied, he can decline passing orders of eviction.
But if there is no such limitations, the Rent Controllers.
after the ground of eviction specified in the Act is made out, have no discretion to reject the application.
Once the order of eviction is passed, in the circumstances like the present, the executing court is duty bound to execute its orders.
No question of equity or hardship arises at that stage.
We are in complete agreement with the view expressed by R.S. Pathak, CJ (as His Lordship then was ) in the aforesaid case of Shri Krishan Kumar.
123 In the present case the tenant spared no efforts to harass the landlords.
After the order of eviction dated 29th July, 1986 the matter did not rest there.
The tenant again failed to pay the rent and the landlord was forced to file another eviction petition on the ground of non payment of rent for the period from 1.3.1983 to 30.11.1986 and it was only after the filing of the said eviction petition and in order to avoid eviction he deposited the rent.
The matter did not rest there even and it was only after the notice of the Special Leave Petition was issued in the present case that the tenant chose to pay the rent from 1.12.1986 after keeping it in arrears for practically six years.
In view of the aforesaid facts and circumstances of the case we set aside the impugned order of the High Court dated 17th May, 1991 and the order of the Rent Controller dated 18th May, 1990 and direct the Rent Controller, Shimla, to issue the warrants of possession for ejectment of the respondent from the premises in dispute and place the landlords/appellants in possession.
V.P.R. Appeal allowed.
| The respondent was a tenant at the rate of Rs. 183.33 per month In the suit premises.
The respondent was in arrears of rent with effect from 13.1980 to 28.2.1983.
On 7th March, 1983, predecessor in interest of appellant No.2 and appellant No.1, flied an application for eviction of the respondent on the ground of non payment of rent.
The Rent Controller on 29.7.1986 passed an order of eviction.
On 13.8.1986 the respondent deposited a sum of Rs. 9,500 In the court of the Rent Controller.
According to the appellant the account deposited was not In according with the order dated 29th July 1986.
They filed the execution petition before the Rent Controller seeking possession of the suit premises.
The Rent Controller framed two Issues: (a) whether the tender made by the respondent of the rent amount was short as alleged , (b) Relief.
108 The Rent Controller held that the tender made by the respondent was short of Rs. 161.29.
While deciding issue No. 2, the Rent Controller allowed 15 days ' time to deposit the said amount.
The appellants being aggrieved by the order of the Rent Controller riled a revision petition in the High Court.
Before the High Court the appellants submitted that the executing court had no jurisdiction to extend the time for making good the deficiency of Rs. 161.29 inasmuch as since period of 30 days was fixed by the Himachal Pradesh Urban Rent Control Act, 1987 itself, the court could not either enlarge or abridge this period.
The High Court dismissed the revision petition, holding that the respondent was not liable to be evicted and also held that the order of the executing court extending time to deposit Rs. 161.29 in pursuance of its order dated 29.7.1986 was of no consequence.
The landlord riled this appeal by special leave against the High Court 's judgment.
The respondent tenant submitted that sub section (2) of Section 14 gave discretion to the Controller to pass an order of eviction or not to pass an order of eviction, even if the ground mentioned in clauses (i) to (v) of Sub section (2) of Section 14 were made out; that the order of eviction which was passed was not the final order in the sense that it was an interim order and the final order was passed only after the expiry of 30 days if the tenant failed to avail of the second opportunity provided by the third proviso to clause (i) of sub section (2) of Section 14.
Allowing the appeal of the landlord, this Court HELD:1.01.
The Rent Control Acts are measures to protect tenants from eviction except on certain specified grounds if found established.
Once the grounds are made out and subject to any further condition which may be provided in the Act, the tenants would suffer ejectment.
Again the protection given in the Acts is not to give licence for continuous litigation and bad blood.
[117H] 1.02.The legislature which made the Act could not have envisaged that after the parties finish of one round of litigation, the party should be 109 relegated to another round of litigation for recovery of rent which accrued pendente lite.
Whatever protection Rent Acts give, they do not give blanket protection for "non payment of rent '.
This basic minimum has to be complied with by the tenants.
Rent Acts do not contemplate that if one takes a house on rent, he can continue to enjoy the same without payment of rent.
[118A B] 1.03.Rent Control Acts are necessary social measures for protection of tenants.
The Rent Control Laws have tried to balance the equity.
Landlord is duty bound to satisfy the ground of eviction mentioned in various Rent Acts and if he does not satisfy, he cannot get the order of eviction merely because the Act restricts his rights.
[122E] 1.04.There are certain Rent Acts which, even when a ground of eviction is satisfied, still confer powers on the Rent Controller to consider the question of comparative hardship and it is only in those types of cases, if the Controller is satisfied, he cap decline passing orders of eviction.
But if there is no such limitations, the Rent Controllers after the ground of eviction specified in the Act is made out, have no discretion to reject the application.
Once the order of eviction is passed the executing court is duty bound to execute its orders.
No question of equity or hardship arises at that stage.
[122F G] 2.01.There is no provision in the Act for giving powers to the Controller to direct payment or deposit of "pendente lite" rent for each month during the pendency of the petition for eviction of the tenant.
First Proviso to sub section (2) of Section 14 shows that in order to show payment or valid tender as contemplated by clause (i) of sub section (2) of Section 14 by a tenant in default, he has to pay on the first date of bearing the arrears of rent alongwith interest and costs of the application which are to be assessed by the Controller.
[116G H] 2.02.Sub clause (i) of sub section (2) of Section 14 gives two opportunities to the tenant to avoid eviction.
Ile first opportunity to avoid eviction is if the tenant avails of the benefit of first proviso.
This opportunity is before the passing of the order of eviction.
The second opportunity is after the order of eviction.
The order which is passed for eviction, is final in the sense as it is not an interim order.
If the tenant avails of the second opportunity as provided in the third proviso then the order of eviction becomes inexecutable and he saves himself from eviction.
[119G] 110 2.03.The Controller is required to dismiss the eviction application if he is not satisfied to the existence of any ground mentioned in clauses (i) to (v) of sub section (2) of Section 14 of the Act but where the Controller is satisfied with existence of any of the grounds mentioned in clauses (1) to (v) of sub section (2) of Section 14 the Controller has no discretion to decline to pass the order of eviction.
[119B] 2.04.The order which the Controller passed was a composite order of eviction in the sense that if the tenant wanted to save himself from eviction, he had to comply with the order.
The order which was passed by the Controller cannot be said to be an order without jurisdiction.
It may be a right order, it may have been a wrong order.
It was not a nullity that the executing court will ignore it.
But at the stage when the execution application was riled, the Rent Controller could not go behind its own order dated 29.7.1986.
[118C] 2.05.If the Controller could not go behind Its own order in execution proceedings, the High Court could not also go behind the order in revision against the order of Controller refusing execution.
It was not the appropriate stage for the High Court to examine what order ought to have been passed or to limit the efficacy of the order to its interpretation of the words "amount due" as mentioned in the third proviso to clause (i) of subsection (2) of Section 14.
[118D E] 2.06.The landlord, as per the scheme of the section, cannot be worse off vis a vis a tenant who was good enough to deposit in court the arrears of rent together with interest and costs on the first date of hearing.
[117D] 2.07.In the present case the tenant spared no efforts to harass the landlords.
After the order of eviction dated 29th July, 1986 the matter did not rest there.
The tenant again failed to pay the rent and the landlord was forced to file another eviction petition on the ground of non payment of rent for the period from 1.3.1983 to 30.11.1986 and it was only after the filing of the said eviction petition and in order to avoid eviction he deposited the rent.
It was only after the notice of the Special Leave Petition was issued, the tenant chose to pay the rent from 1.12.1986 after keeping it in arrears for practically six years.
[123A B] Om Parkash vs Sarla Kumari & Ors., 1991 (1) Sim.
L.C. 45, referred to.
111 Shri Krishnan Kumar vs Shri Gurbux Singh, , approved.
Shyamcharan Sharma vs Daramdas, ; ; Miss Santosh Mehta vs Om Prakash and others; , ; Ram Murti vs Bhola Nath and another, [1984] 3 SCC Ill and Ganesh Prasad Sah Kesari and another vs Lakshmi Naryan Gupta; , , distinguished.
3.01.The 'amount due" occurring in the third proviso in the context will mean the amount due on and upto the date of the order of eviction.
It will take into account not merely the arrears of rent which gave cause of action to file a petition for eviction but also include the rent which accumulated during the pendency of eviction petition as well.
If the tenant has been paying the rent during the pendency of the eviction petition to the landlord, the 'amount due" will be only arrears which have not been paid.
[117C D] 3.02.It will be advisable if the Controller while passing the order of eviction on the ground specified in clause (1) of sub section (2) of Section 14 of the Act specifies the 'amount due" till the date of the order and not merely leave it to the parties to contest it after passing of the order of eviction as to what was the amount due.
[117F] 3.03.In the context in which the expression "may ' is used it means .shall".
Otherwise the section would read that 'got only the Controller can reject an application when he is not satisfied with the ground but is also entitled to dismiss the application when he is so satisfied.
" Such an intention cannot be attributed to the legislature particularly when the consequences of non satisfaction is expressly mentioned.
Even if the consequences of non satisfaction was not mentioned, the expression .may ' occurring would still mean "shall" and all that would mean Is that if the grounds are not made out, he will be bound to dismiss the application and If the grounds are made out, he is bound to pass the order of eviction.
If any other interpretation Is given to the word "may" the section may itself become subject matter of challenge under Article 14 of the Constitution of India.
The Court shall avoid interpretation which make the provisions violative of the Constitution if possible.
[117C F] 112
|
Appeal No. 5086 of 1985.
From the Judgment and Order dated 31.1.1985 of the Punjab and Haryana High Court in Civil Revision No. 1847 of 1984.
A.B. Rohtagi, R.C. Mishra and Dr. Meera Aggarwal for the Appellant.
M.S. Gujaral and R.S. Sodhi for the Respondents.
The Judgment of the Court was delivered by ' VERMA, J.
The appellant, Gulraj Singh Grewal, took the suit premises situate in Ludhiana on monthly rent of Rs. 800 from respondent No. 1, Dr. Harbans Singh, in March 1980.
Respondent No. 2, Dr. Ravinder Singh, is son of respondent No. 1, Dr. Harbans Singh.
Both the respondents are medical practitioners.
The respondents filed a petition for eviction of the appellant tenant on three grounds, namely, personal need of the respondents under Section 13(3) (a) (i) (a), change of user under section 13(2) (ii) (b) and impairment of value and utility of the rented building under section 13(2) (iii) of the East Punjab Urban Rent Restriction Act, 1948.
The appellant contested the petition denying the existence of any of these grounds for eviction.
The Rent Controller dismissed the petition holding that none of the three grounds had been proved.
On appeal by the respondents, the appellate authority held that the personal need of respondent No. 2, Dr. Ravinder Singh, one of the landlords, was proved and the ground of change of user of the rented building by the appellant had also been proved.
The third ground relating to impairment of value and utility of the rented building was rejected.
The appellate authority further held that the building though let out for residential purpose was used by the appellant, a consultant engineer, partly for his profession on account of which it had become 153 a 'scheduled building ' as defined in Section 2(h) of the Act and, therefore, the ground for eviction based on personal need was not available for evicting the tenant from a 'scheduled building.
However, an order of eviction was made on the ground of change of user of the rented building.
The appellant then preferred a revision to the High Court which has been dismissed the findings and order of eviction made by the appellate authority.
Hence, this appeal by special leave.
The submissions of Shri Avadh Behari, learned counsel for the appellant are several.
The first contention is that there was no change of user by the appellant tenant to justify the order of eviction on that ground.
The second submission is that the finding on the question of personal need of the landlord is erroneous.
The last submission is that no order of eviction can be made on the ground of personal need contained in section 13(3) (a) (i) (a) in respect of a 'scheduled building ' since that ground is available for eviction only from a 'residential building ' as defined in section 2(g) of the Act, a 'scheduled building ' defined in section 2(h) of the Act being a different kind of building.
In reply, Shri M.S. Gujral, learned counsel for the respondents submitted that the order of eviction is justified and there is no ground to interfere in this appeal.
His submission is that a 'scheduled building ' defined in section 2(h) continues to be a 'residential building ' as defined in section 2(g), so that the ground for eviction based on personal need contained in section 13(3) (a) (i) (a) is available in the present case.
He also submitted that the finding of fact relating to personal need of the landlord is not open to challenge.
His submission in the alternative is that in case a 'scheduled building ' is not 'residential building ', then the ground of change of user is available since the building was let out for residential purpose and its user has been changed unilaterally by the tenant without the consent of the landlord.
The first question for our decision is: whether learned counsel for the appellant is right in contending that a 'scheduled building ' is not a "residential building ' for the purpose of the ground of eviction contained in section 13(3) (a) (i) (a) ? In case it is held that this ground for eviction of the tenant is available in the present case and the finding of fact on the question of personal need of the landlord is not open to challenge, the order of eviction can be sustained on this ground alone and it is unnecessary to decide the question relating to the ground of change of user contained in section 13(2) (ii) (b) of the Act.
We would, therefore, consider 154 this question first.
Admittedly, the appellant is a consultant engineer and the suit premises, a 'building as defined in section ' '(a) of the Act, was let out to him solely for residential purpose.
He has been using it as his residence while a part thereof is used by him as his professional office without the consent of the landlord.
It is on the basis of use of a part of the building as appellant 's office that the appellant claims it to be a 'scheduled building ' as defined in section 2(h) of the Act.
Apart from the question of change of user which is a separate ground for eviction, the question is whether the suit premises being treated as a 'scheduled building, the ground for eviction contained in section 13(3) (a) (i) (a) is not available, that ground being available only in respect of a 'residential building ' as defined in section 2(g) of the Act.
The contention of learned counsel for the appellant is that the word 'scheduled ' which occurred along with 'residential ' in section 13(3) (a) (i) of the Act having been omitted by the amendment made in the principal Act in 1956, the obvious legislative intent is to exclude a 'scheduled building ' from the scope of that provision with the result that the grounds for eviction contained in section 13(3) (a) (i), of which personal need of the landlord is one, are not available for eviction of a tenant from ,scheduled building ' thereunder after that amendment.
To buttress this argument, learned counsel referred to section 4 of the principal Act and Section 13A, inserted therein by an amendment made in 1985, wherein the expression 'scheduled building ' is expressly used in addition to the expression 'residential building ' and the separate definition of 'scheduled building ' in section 2(h) while defining 'residential building ' in section 2(g) in the principal Act from the very inception.
The question is whether this contention can be accepted.
Before dealing with the above question, it would be appropriate to dispose of the challenge made to the finding of fact of landlord 's personal need, on which this question arises.
The finding on this question of fact recorded by the appellate authority has been affirmed by the High Court.
Can this finding be reopended now? Learned counsel for the appellant submitted that the personal need found proved is only of respondent No. 2, son of respondent No. 1, who did not enter the witness box and, as stated in an affidavit filed in this 155 Court, even he is carrying on his profession at a place about 25 kms, away from Ludhiana.
In our opinion, this finding of fact is unassailable.
The High Court has clearly observed that no meaningful argument could be advanced on behalf of the appellant to challenge this finding of the appellate authority.
Respondent No. 1 who is the father of respondent No. 2, has supported and proved the need of respondent No. 2, who also is a landlord.
The fact that for want of suitable accommodation in the city of Ludhiana, respondent No. 2 is at present carrying on his profession at some distance from Ludhiana is not sufficient to negative the landlord 's need.
In these circumstances, the non examination of respondent No. 2 also, when respondent No. 1 has examined himself and proved the need of the landlord, is immaterial and, at best, a matter relating only to appreciation of evidence, on which ground this finding of fact cannot be reopened.
This is more so when no serious challenge to this finding was made in the High Court.
We must, therefore, proceed on the basis that the personal need of the landlord is proved to make out the ground of eviction contained in section 13(3)(a)(i)(a) of the Act in case that ground of eviction is applicable to the suit premises treating it as a 'scheduled building.
In order to fully appreciate the arguments of learned counsel for the appellant, the legislative history would be useful.
The Punjab Urban Rent Restriction Act, 1941 was enacted to restrict the increase of rents on certain premises situated within the limits of urban areas in the Punjab.
That Act was primarily to control the increase of rents and did not relate to eviction of tenants.
Then came the Punjab Urban Rent Restriction Act, 1947 which was enacted to restrict the increase of rent of certain premises situated within the limits of urban areas and the eviction of tenants therefrom.
Provision was made in Section 4 of the Act for determination of fair rent, for which purpose 'non residential building ', 'residential building ' and 'scheduled building ' were treated as three different categories prescribing different formula for each of these three categories.
For this reason, separate definition of each of them was given in section 2 containing the definitions.
However, for the purpose of eviction, in section 13 (3), a 'residential building or a 'scheduled building ' were clubbed together and treated similarly by providing the same grounds for eviction while a 'non. residential building ' or 'rented land ' were clubbed together and provided for separately.
The scheme of the Act clearly shows that a 'residential building ' and a 'scheduled building ' were treated as different categories only for the determination of fair rent but were treated alike while prescrib 156 ing the grounds for eviction of a tenant therefrom.
The definition of 'scheduled building ' in section 2(h) of that Act also took care to provide that a 'scheduled building ' means a residential building which was being used partly for a specified purpose.
In this manner, the definition of a 'scheduled building ' given in the Act was in consonance with the scheme of the Act treating it differently from a 'residential building ' for the purpose of determination of fair rent and similarly for eviction of the tenant.
Then came the East Punjab Urban Rent Restriction Act, 1948 which repealed the 1947 Act and replaced it.
The same scheme was retained in the 1949 Act which is the principal Act for our purpose.
It is the relevant provisions of this Act, as amended from time to time, which are material for deciding the point raised by the appellant.
The East Punjab Urban Rent Restriction Act, 1948 (East Punjab Act No. 111 of 1948) was amended by the Amendment Acts of 1956, 1957, 1966 and 1985 whereby section 13 of the principal Act was amended and in 1985 the new section 13A was inserted.
It is the amendments made in section 13 at the principal Act providing for eviction of tenants which are material for our purpose.
The material provisions of the Act, including the amendments made in section 13 from time to time are mentioned hereafter.
In the principal Act as originally enacted, the material provisions are as under : '2.
Definitions.
In this Act, unless there is anything repugnant in the subject o r context, (a) 'building ' means any building or part of a building let for any purpose whether being actually used for that purpose or not, including any land, godowns out houses or furniture let therewith, but does not include a room in a hotel, hostel or boarding house; xxx xxx xxx (d) 'non residential building means a building being used solely for the purpose of business or trade; xxx xxx xxx (g) "residential building" means any building which is not a 157 non residential building; (h) "scheduled building means a residential building which is being used by a person engaged in one or more of the professions specified in the Schedule to this Act, partly for his business and partly for his residence; xxx xxx xxx "4.
Determination of fair rent. (1) The Controller shall on application by the tenant or landlord of a building or rented land fix the fair rent for such building or rented land after holding such inquiry as the Controller thinks fit.
(2) In fixing the fair rent under this section, the Controller may first fix a basic rent taking into consideration xxx xxx xxx (3) In fixing the fair rent of a residential building the Controller may allow.
If the basic rent xxx xxx xxx (4) In fixing the fair rent of a scheduled building the Controller may allow, if the basic rent xxx xxx xxx (5) In fixing the fair rent of a non residential building or rented land the Controller may allow, if the basic rent xxx xxx xxx '11.
Conversion of a residential building into a nonresidential building No person shall convert a residential building into a non residential building except with the permission in writing of the Controller." "13.
Eviction of tenants.
(1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decree passed before or after the commencement 158 of this Act or otherwise and whether before or after the termination of the tenancy, except in accordance with the provisions of this section.
(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf.
If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (i). . . (ii)that the tenant has after the commencement of this Act without the written consent of the landlord (a). . . (b) used the building or rented land for a purpose other than that for which it was leased.
or (iii)that the tenant has committed such acts as are likely to impair materially the value or utility of the building or rented land, or the Controller may make an order directing the tenant to put the landlord in possession of the building or rented land and if the Controller is not so satisfied he shall make an order rejecting the application : Provided that the Controller may give the tenant a reasonable time for putting the landlord in possession of the building or rented land and may extend such time so as not to exceed three months in the aggregate.
(3) (a) A landlord may apply to the Controller for an order directing tenant to put the landlord in possession (i) in the case of a residential or a scheduled building if (a) he requires it for his own occupation; 159 (b) he is not occupying another residential or a scheduled building, as the case may be, in the urban area concerned; and (c) he has not vacated such a building without sufficient cause after the commencement of this Act in the said urban area: (ii) in the case of a non residential building or rented land, if (a) he requires it for his own use; (b) he is not occupying in the urban area concerned for the purpose of his business any other such building or rented land, as the case may be, and xxx xxx xxx "19.
Penalties.
(1) If any person contravenes any of the provisions of sub section (2) of section 9, sub section (1) of section 10, section 11 or section 18, he shall be punishable with fine which may extend to one thousand rupees. ' The East Punjab Urban Rent Restriction (Amendment) Act, 1956 (Punjab Act No. 29 of 1956) amended section 13 in the following manner: 2.
Amendment of section 13 of East Punjab Act III of 1949.
In clause (a) of sub section (3) of section 13 of the East Punjab Urban Rent Restriction Act, 1949, hereinafter referred to as the principal Act (i) (a) In sub clause (i), the words 'or a scheduled" shall be omitted.
(b) In sub paragraph (b), the words "or a scheduled" and the words "as the case may be" shall be omitted.
(ii) (a) In sub clause (ii) the words 'a non residential building or ' shall be omitted.
(b) In sub paragaph (b), the words "building or" and the words Was the case may be ' shall be omitted" 160 (c) In sub paragraph (c), the words 'a building or" shall be omitted.
(iii)For sub clause (iii), the following shall be substituted, namely: (iii)In the case of any building or rented land, if he requires it to carry out any building work at the instance of the Govern ment or local authority or any improvement Trust under some improvement of development scheme or if it has become unsafe or unfit for the human habitation. (iv) In sub clause (iv), for the words 'any building", where they first occur, the words 'any residential building shall be sub stituted.
(v) In the second proviso, for the words "a residential a scheduled or non residential building or rented land ', the words "a residential building or rented land" shall be substituted.
Section 13 was again amended by the Punjab Urban Rent Restriction ,Amendment) Act, 1957 (Punjab Act No. 21 of 1957) as under '2.
Amendment of section 13 of the East Punjab Act No. 111 of 1949.
After clause (c) of sub paragraph (i) of paragraph (a) of sub section (3) of section 13 of the East Punjab Urban Rent Restriction Act, 1949, the following shall be added, namely : "(d) it was let to the tenant for use as a residence by reason of his being in the service or employment of the landlord, and the tenant has ceased, whether before or after the commencement of this Act, to be in such service or employment: Provided that where the tenant is a workman who has been discharged or dismissed by the landlord from his service or employment in contravention of the provisions of the Industrial Disputes Ad, 1947, he shall not be liable to be evicted until the competent authority under that Act confirms the order of discharge or made against him by the landlord." 161 Thereafter, the East Punjab Urban Rent Restriction (Amendment) Act, 1966 (Punjab Act No. 6 of 1966) further amended section 13 of the principal Act as under "2.
Amendment of section 13 of punjab Act 3 of 1949.
In section 13 of the East Punjab Urban Rent Restriction Act, 1949, (i) in sub section (3), (a) after sub paragraph (i) of paragraph.(a), the following sub paragraph shall be inserted, namely : "(i a) In the case of a residential building, if the landlord is a member of the armed forces of the Union of India and requires it for the occupation of his family and if he produces a certificate of the prescribed authority, referred to in section 7 of the , that he is serving under special conditions within the meaning of section 3 of that Act.
Explanation.
For the purposes of this sub paragraph (1) the certificate of the prescribed authority shall be conclusive evidence that the landlord is serving under special conditions; and (2) "family ' means such relations of the landlord as ordinarily five with him and are dependent upon him;"; (c) in the first proviso in paragraph (a), for the words "shall not be entitled, the words 'shall not, except under sub paragraph (i a), be entitled ' shall be substituted; and (c) after paragraph (b), the following new paragraph shall be added, namely : '(c) where an application is made under sub paragraph (i a) of paragraph (a), it shall be disposed of, as far as may be, within a period of one month and if the claim of the landlord is accepted, the Controller shall make an order 162 directing the tenant to put the landlord in possession of the building on a date to be specified in the order and such date shall not be later than fifteen days from the date of the order."; and (2)In sub section (4), for the words 'does not himself occupy it or, if possession, the words 'does not himself occupy it or, if possession was obtained by him for his family in pursuance of an order under sub paragraph (i a) of paragraph (a) of sub section (3), his family does not occupy the residential building, or, if possession" shall be substituted." Then the East Punjab Urban Rent Restriction (Amendment) Act, 1985 (Punjab Act No. 2 of 1985) further amended section 13 and inserted new section 13A in the principal Act as under 'Amendment of section 13 of Punjab Act 3 of 1949.
In the principal Act, in section 13, after sub section (4), the following sub section shall be inserted, namely : '(4 A) Where a tenant is evicted from a residential or scheduled building in pursuance of an order made under section 13 A and the specified landlord or, as the case may be, the widow, widower, child, grandchild or widowed daughter in law of such specified landlord : (a) does not occupy it for a continuous period of three months from the date of such eviction; or (b) within a period of three years from the date of such eviction of the tenant, lets out the whole or any part of such building, from which the tenant was evicted, to any person other than the tenant; such evicted tenant may apply to the Controller, for an order directing that the possession of the building shall be restored to him and the Controller shall make an order accordingly. ' Insertion of new section 13 A in Punjab Act 3 of 1949.
In the principal Act, after section 13, the following section shall 163 be inserted, namely: Right to recover immediate possession of residential or scheduled building to accrue to certain persons.
"13 A.
Where a specified landlord at any time, within one year prior to or within one yea after the date of his retirement or after his retirement but within one year of the date of commencement of the East Punjab Urban Rent Restriction (Amendment) Act, 1985, whichever is later, applies to the Controller alongwith a certificate from the authority competent to remove him from service indicating the date of his retirement and his affidavit to the affect that he does not own and possess any other suitable accommodation in the local area in which he intends to reside to recover possession of his residential building or scheduled building, as the case may be, for his own occupation, there shall accrue, on and from the date of such application to such specified landlord, notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force or in any contract (whether expressed or implied), custom or usage to the contrary, a right to recover immediately the on of such residential building or scheduled building or any part or parts of such building if it is let out in part or parts : Provided that in case of death of the specified landlord, the widow or widower of such specified landlord and in the case of death of such widow or widower, a child or a grandchild or a widowed daughter in law who was dependent upon such specified landlord at the time of his death shall be entitled to make an application under this section to the Controller, (a)in the case of death of such specified landlord, before the commencement of the East Punjab Urban Rent Restriction (Amendment) Act, 1985 within one year of such commencement: (b)In this case of death of such specified landlord, after such commencement, but before the date of his retirement, within one yew of the date of his death; 164 (c)in the case of death of such specified landlord, after such commencement and the date of his retirement, within one year of the date of such retirement; and on the date of such application the right to recover the possession of the residential building or scheduled building, as the case may be, which belonged to such specified landlord at the time of his death shall accrue to the applicant: Provided further that nothing in this section shall be so construed a. , conferring a right on any person to recover possession of more than one residential or scheduled building inclusive of any part or parts thereof if it is let out in part or parts: Provided further that the controller may give the tenant a reasonable period for putting the specified landlord or, as the case may be, the widow, widower, child, grandchild or widowed daughter in law in possession of the residential building or scheduled building, as the case may be, and may extend such time so as not to exceed three months in the aggregate.
Explanation.
For the purpose of this section the expression "retirement" means termination of service of a specified landlord otherwise than by resignation." Further by this Amendment Act of 1985, special procedure for disposal of applications under section 13A was prescribed and some other ancillary amendments were also made.
The definitions in clauses (a), (d), (g) and (h) of Section 2 and the material part of section 4 quoted above remain the same in the principal Act as originally enacted even after these amendments, section 13, in so far as it is material for the present case, as it stands amended in the above manner now reads as under: "13.
Eviction of tenants (1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decree passed before or after the commencement of this Act or otherwise and whether before or after the termination of the tenancy, except in accordance with the 165 provisions of this section, or in pursuance of an order made under section 13 of the Punjab Urban Rent Restriction Act, 1947, as subsequently amended.
(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf.
If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (i). . . (ii) that the tenant has after the commencement of this Act without the written consent of the landlord (a). . . (b) used the building or rented land for a purpose other than that for which it was leased, or (iii) that the tenant has committed such acts as are likely to impair materially the value or utility of the building or rented land, or xxx XXK xxx (3) (a) A landlord may apply to the controller for an order directing the tenant to put the landlord in possession (i) in the case of a residential building if (a) he requires it for his own occupation; (b) he is not occupying an other residential building, in the urban area concerned; and xxx xxx xxx (i a) in the case of a residential building, if the landlord is a member of the armed forces of the Union of India and requires it for the occupation of his family and if he produces a certificate of the prescribed authority, referred to in section 7 of the , that he is serving under 166 special conditions within the meaning of section 3 of that Act.
XXK xxx xxx (ii) in the case of rented land, if (a) he requires it for his own use: (b) he is not occupying in the urban area concerned for the purpose of his business any other such rented land; and (c) he has not vacated such rented land without sufficient cause after the commencement of this Act, in the urban area concerned: xxx xxx xxx (iv) in the case of any residential building, if he requires it for use as an office, or consulting room by his son who intends to start practice as a lawyer or as a "registered practitioner" within the meaning of that expression as used in the Punjab Medical Registration Act, 1916, or for the residence of his son who is married, if (a) his son as aforesaid is not occupying in the urban area concerned any other building for use as office, consulting room or residence, as the case may be; and (b) his son as aforesaid has not vacated such a building without sufficient cause after the commencement of this Act, in the urban area concerned xxx xxx xxx The main argument of learned counsel for the appellant is that omission of the words "or a scheduled ' after the word 'residential ' in section 13(3) (a) (i) by the 1956 Amendment while using those words in addition to the word 'residential in section 13A, subsequently inserted in 1985, is a clear indication that the ground of eviction contained in section 13(3) (A) (i) (a) of _personal need of the landlord.is no longer available to landlords in general after the 1956 Amendment, awn though a more expeditious remedy on that ground has been provided by 13A from 167 1985 to the category of specified landlords alone.
The retention of the separate definition of 'scheduled building ' in section 2(h) and use of that expression elsewhere in the Act, including section 4 and section 13, is referred in support of this submission.
The question is whether this construction is proper.
In section 2 which contains the definitions, clause (a) defines 'building '.
Clause (d) then defines 'non residential building ' to mean a building being used solely for the purpose of business or trade.
Thus, to be a non residential building, it must be used solely for the purpose of business or trade.
Clause (g) defines 'residential building ' to mean any building which is not a non residential building.
These definitions make it clear that all buildings are divided into two categories : 'non residential ' and 'residential '.
Buildings used solely for the purpose of business or trade are 'non residential ' and the remaining buildings are all 'residential '.
Accordingly, no building to which the Act applies is outside the classification of 'non residential ' and 'residential '.
Then comes clause (h) which defines 'scheduled building ' to mean a residential building which is being used partly for a scheduled purpose.
The definition of 'scheduled building ' in clause (h) itself makes it clear that it is a residential building as defined in clause (g) with the qualification that such a residential building is one which is used partly for a specified purpose.
In other words, 'scheduled building ' as defined in clause (h) is merely a kind of 'residential building ' as defined in clause (g), its characteristic being its part user for a scheduled purpose.
The reason to defined 'scheduled building ' separately in clause (h) is also evident from some provisions of the Act itself.
The Act makes a distinction for the purpose of determination of fair rent between a residential building which is being used partly for a scheduled purpose and is, therefore, treated as a 'scheduled building ' and the remaining residential buildings which are not so used.
This is clear from the scheme of section 4 itself providing for determination of fair rent.
This is also clear from the fact that from the definition of 'building ' given in section 2(a), the only category excluded is a 'non residential building ' as defined in section 2(d) for the purpose of section 2(g) and not also 'scheduled building ' defined in section 2(h) and in section 2(h), a 'scheduled building" is defined to mean a residential building used partly for a scheduled purpose.
A separate definition of 'scheduled building ' in clause (h) while making it 168 clear therein that it means a residential building used partly for a specified purpose does not, therefore, indicate that a scheduled building ceases to be a residential building or is a category of building separate from a residential building for the purpose of eviction of tenants in the scheme of section 13 of the Act.
This is the only manner in which a harmonious construction can be made of these provisions.
The question now is of the effect of the 1956 Amendment which omitted the words 'or a scheduled ' in section 13(3) as indicated earlier.
The Statement of Objects and Reasons of the Amendment Act of 1956 clearly says that the provision allowing eviction on the ground of personal need has been misused by certain landlords and according to the Act applicable to Delhi the tenants of industrial and commercial premises cannot be ejected on the ground of personal need, while in the Punjab, such tenants can be evicted therefrom also on the ground of personal need.
To avoid hardship to such tenants, it was considered necessary that the tenants of non residential property in the Punjab should be placed at par with tenants of such property in Delhi.
Thus, the object of this enactment was to equate the Punjab tenants with Delhi tenants and exclude the ground of landlord 's personal need for eviction of tenants of non residential property.
To achieve this object deletion was made of the words other than 'residential ' from section 13(3) providing for eviction of tenants from buildings on the ground of landlord 's personal need.
Obviously, in view of the definition of 'scheduled building ' in section 2(h) being clear to indicate that 'scheduled building ' is a 'residential building, retention of the words ,or a scheduled ' after 'residential ' was considered superfluous while omitting the words 'non residential building ' in other parts of section 13(3) relating to the ground of personal need for eviction of the tenants from buildings.
Subsequently, in section 13A, when inserted by 1985 Amendment, the word 'scheduled ' was also used after 'residential ', may be, in view of the controversy like the present raised on the basis of the 1956 Amendment, to avoid any such controversy therein.
That does not, however, mean that section 13 which must be construed in the manner indicated by us should be read differently for that reason.
In fact, insertion of section 13A further reinforces the view we have taken.
There would be no occasion to provide an expeditious remedy for eviction of tenants of a category of 169 landlords and to also provide for a special summary procedure for them unless the remedy of eviction on the ground of personal need was already available generally to the landlords in section 13.
It is significant that section 13 was also amended by the 1985 Amendment by inserting sub section (4 A) therein as a result of insertion of the new section 13A in the principal Act.
Thus, the 1985 Amendment itself shows that section 13A is not a separate and distinct provision but has to be read along with section 13 of the principal Act forming a part of the general scheme contained in section 13 for eviction of tenants on the ground of personal need from buildings which are not non residential.
The construction we have made of section 13(3)(a)(i), as it stood after the 1956 Amendment, is the only construction which can be made to harmonise with the definitions in section 2 which continue to remain as originally enacted and the other provisions of the Act which have been referred.
The contention of learned counsel for the appellant on this point is, therefore, rejected.
The result of the above discussion is that the respondent landlord 's personal need being found proved, the ground of eviction contained in section 13(3) (a) (i) (a) is available and the order of eviction passed against the appellant can be sustained on this ground alone.
The construction made by the High Court of Section 13(3) (a) (i) that it does not apply to a scheduled building is, therefore, erroneous.
The only surviving question is the availability of the ground of change of user contained in section 13(2) (ii) (b) on which the order of eviction has been passed by the High Court.
In view of the above conclusion reached by us that the ground in section 13(3)(a)(i)(a) is made out, the consideration of this question in the present case appears unnecessary.
We have considered and decided that question in a connected matter Bishamber Das Kohli (Dead) by Lrs.
vs Smt.
Satya Bhalla.
However, a brief reference to the general principle may be apposite.
If the express terms of lease restrict the user solely for purpose of residence, then use of any part thereof for even a scheduled purpose without the written consent of the landlord may amount to use of the building for a purpose other than that for which it was leased.
That, however, is a question of fact in each case.
In that case while the ground of eviction in section 13(3)(a)(i)(a) would remain available to the landlord 170 for eviction of the tanant, in view of the express covenant against user of any part of the residential building even for a scheduled purpose.
It may make available also the ground of change of user under section 13(2) (ii) (b) of the Act.
In the present case, it is unnecessary to go into this further question since the order of eviction can be sustained on the ground contained in section 13(3)(a)(i)(a) alone as already indicated.
Consequently, the appeal is dismissed with costs.
Counsel 's fee Rs. 3,000.
U.R. Appeal dismissed.
| The appellant took the suit premises situate in Ludhiana on a monthly rent of Rs. 800 from respondent 1.
Both the respondents are medical practitioners.
The respondent riled a petition for eviction of the appellant tenant on three grounds: their personal need under Section 13(3)(a)(i)(a); change of user under Section 13(2)(ii)(b) and impairment of the value and utility of the rented building under Section 13(2) (iii) of the East Punjab Urban Rent Restriction Act 1948.
The Rent Controller dismissed the petition.
The appellate authority held that the personal need of the respondents and the ground of change of user was proved.
Since the building though let out to the tenant for a residential purpose was used partly for his profession and had become a 'scheduled building ' under Section 2(h), he could not be evicted on the ground of personal need.
The order of eviction was, however, made on the ground of change of user of the building.
Ile High Court on revision affirmed the finding and order of eviction made by the appellate authority.
150 In the Supreme Court, it was argued for the appellant that there was no change of user to justify the order of eviction on that ground and that the finding on the question of personal need was erroneous.
Relying on legislative intent evidenced in amendments to the Act, it was further contended that no order of eviction can be made on the ground of personal need contained in Section 13(3)(a)(i)(a) in respect of a 'scheduled building ' since that ground is available for eviction only from a residential building.
The omission of the words 'or a scheduled ' after the word 'residential ' in Section 13 (3) (a) (i) (a) in 1956 and their addition in Section 13A in 1985 were referred to advance the argument The respondents submitted that there was no ground to interfere with the order of eviction; that 'scheduled building ' In section 2(h) continues to be a 'residential building ' in section 2(g) and that personal need in section 13(3) (a) (i) (a) is available as a ground for eviction; and that the finding of fact relating to personal need of the landlord in not open to challenge.
In the alternative, if a "scheduled building ' is not a "residential building" then the ground of change of user, unilaterally was available.
Dismissing the appeal, this Court HELD: 1.
The finding of fact of personal need is unassailable.
That respondent 2 is carrying on his profession at some distance from Ludhiana is not sufficient to negative the landlords ' need.
[155B] Non examination of respondent 2 is immaterial when respondent 1 has examined himself and proved the need of the landlord; it Is at best a matter relating to appreciation of evidence, on which ground this finding of fact cannot be assailed particularly when it was not seriously challenged in the High Court.
(pp.6/7) [155C] 2.
All buildings are divided into two categories: "non residential" and "residential".
Building, * used for the purpose of business or trade are " non residential" and the remaining buildings are all 'residential '.
This is clear from the definitions in section 2(a), (d) and (g).
(pp.23/24) [167D] 3. 'Scheduled building as defined in section 2(h) is merely a kind of 'residential building, as defined in section 2(g), its characteristic being its part user for a scheduled purpose.
(p.24) [167E] 151 4. 'The Act makes a distinction between a residential building which is being partly used for a scheduled purpose, i.e. a scheduled building, for the purpose of determination of fair rent.
A separate definition of 'scheduled building ' in clause (h) while making it clear therein that it means a residential building used partly for a specific purpose does not, therefore indicate that a scheduled building ceases to be a residential building or is a category of building separate from a residential building for the purpose of eviction of tenants in the scheme of section 13 of the Act This is the only manner in which a harmonious construction can be made of these provisions.
(pp.24/25) [167H, 168A] 5.
The object of the 1956 amendment was to equate the Punjab tenants with the Delhi tenants and exclude the ground of landlord 's personal need for eviction of tenants of non residential property.
Obviously the definition of 'scheduled building ' in section 2(h) clearly indicating that scheduled building is residential building, the words 'or a Scheduled" after "residential" were considered superfluous.
The use of the word "scheduled" after "residential ' in section 13A inserted in 1985 may have been used to avoid any controversy like the present raised on the basis of the 1956 Amendment.
(p.26) [168D E] 6.
Section 13A which provides for an expeditious remedy is not a separate distinct provision but has to be read along with section 13 of the principal Act forming a part of the general scheme contained in section 13 for eviction of tenants on the ground of personal need from buildings which are not non residential.
(p.27) [168H] 7.
This construction of section 13(3) (a) (i) as it stood after the 1956 amendment, is the only construction which can be made to harmonise with the definitions in section 2.
(p.27) [169C] 8.
The question of change of user is not necessary to be considered.
However, the general principle is that if the express terms of lease restrict the user solely for purpose of residence, then use of any part thereof for even a scheduled purpose without the written consent of the landlord may amount to use of the building for a purpose other than that for which it was leased.
That, however, is a question of fact in each case.
In that case while the ground of eviction in section 13 (3) (a) (i) (a) would remain available to the landlord for eviction of the tenant, in view of the express 152 covenant against user of any part of the residential building even for a scheduled purpose, it may make available also the ground of change of user under section 13(2) (ii) (b) of the Act.
(pp.28/29) [169G 170A] Bishamber Dass Kohli (dead) by L.rs.
vs Smt.
Satya Bhalla, referred to.
|
rsity/Selection Committee must mention in its proceedings of selection the reasons for making relaxations, if any, in respect of each of the candidates in whose favour relaxation is made.
[197D] 189 (v) The minutes of the meetings of the Selection Committee should be preserved for a sufficiently long time, and if the selection process is challenged until the challenge is finally disposed of An adverse inference is liable to be drawn if the minutes are destroyed or a plea is taken that they are not available.
[197E F] & CIVIL APPELLATE JURISDICTION: Special Leave Petition (C) No. 6324 of 1992.
From the Judgment and Order dated 20.11.1991 of the Rajasthan High Court in D.B. Civil Spl.
Appeal No. 226 of 1991.
S.K. Jain for the Petitioner.
Manoj Swarup, Ms. Lallta Kohli (For M/s Manoj Swarup & Co.) and S.K. Bhattacharya for the Respondents.
The following Order of the Court was delivered: By this petition, the petitioner has challenged the appointment of six respondents from General Category as Assistant Professors (Lecturers) in the Department of History in the University of Rajasthan.
The University invited applications by its advertisement dated 12.10.1983 for appointment to 10 posts of Assistant Professors (Lecturers).
The last date for submitting applications was 14.11.1983.
Out of 112 ap plications received, the Scrutiny Committee of the University on 25.4.1984 recommended 106 candidates for being interviewed, the remaining six being found ineligible for the posts.
Out of the 106 candidates so recommended, only 65 candidates appeared for interview, out of which the Scrutiny Committee selected 8 candidates who are respondents 5 to 12 before us.
Out of the 8, two were earmarked for the reserved posts.
We are not concerned with the selection of the said two candidates under the reserved category.
The Scrutiny Committee also placed five other candidates including the present petitioner on the waiting list.
The minimum qualifications for appointment to the post of Assistant Professor (Lecturer) as laid down by Ordinance 149 B of the Handbook of the University of Rajasthan, Part II, Volume I are as follows: 190 "141 B The following shall be the minimum qualifications for University teachers in the Faculties of articles Fine Arts, Social Sciences, Commerce and Science : A. Minimum qualifications for Lecturers/Research Associates in the Faculties of Arts, Social Sciences, Science and Commerce : [Except in the subjects of English, Modern European Languages, Physical Education, Health Education & Sports Journalism and Home Science]; a. A Doctorate degree or research work of an equally high standard; and b. Good academic record with at least a second class (C in the seven point scale) Master 's degree in a relevant subject from an Indian University or an equivalent degree from a foreign University having regard to the need for developing interdisciplinary programmes, the degree in (a) and (b) above may be in relevant subjects.
Provided that if the Selection Committee is of the view that the research work of a candidate as evident either from his thesis or from his published work is of a very high standard, it may relax any of the qualifications prescribed in (b) above: Provided further that if a candidate possessing a Doctorate degree or equivalent research work is not available or is not considered suitable, a person possessing a good academic record (weightage being given to M.Phil. or equivalent degree or research work of quality) may be appointed provided he has done research work for at least two years or has practical experience in a research laboratory/organisation on the condition that he will have to obtain a Doctorate degree or give evidence of research of high standard within eight years of his appointment, failing which he will not be able to earn future increments until he fulfills these requirements.
" Although these were the qualifications required by the University Ordinance, the advertisement inviting applications stated the following 191 qualifications as necessary for being eligible to the posts : "ASSISTANT PROFESSORS (LECTURERS): (Except in the subject of Drawing & Painting and Dramatics, Education, Management studies and English).
(a) A Doctorate 's degree or research work of an equally high standard and (b) Good academic record with at least second class (C in the seven point scale) Master 's degree in a relevant subject from an Indian University or/equivalent degree from a foreign University.
Having regard to the need for developing interdisciplinary programmes, the degrees in (a) and (b) above, may be in relevant subjects: Provided that if the selection committee is of the view that the research work of a candidate as evident either from his thesis or from his published work is of very high standard, it may relax any of qualifications prescribed in (b) above. ' Provided further that if a candidate possessing a Doctor 's degree of equivalent research work is not available or is not considered suitable, a person possessing a good academic record, (weightage being given to M.Phil. or equivalent degree or research work of quality) may be appointed provided he has done research work for at least two years or has practical experience in a research laboratory/organisation on the condition that he will have to obtain a Doctor 's degree or give evidence of research of high standard within eight years of his appointment failing which he will not be able to earn future increment until he fulfils these requirements.
EXPLANATION For determining 'good academic record ' the following criteria shall be adopted : (i) A candidate, holding a Ph.D. degree should possess at least 192 a second class Master 's degree; or (ii) A candidate without a Ph.D. degree should possess a high second class Master 's degree and second class in the Bachelor 's degree; or (iii)a candidate not.
possessing Ph. D. degree but possessing second class Master 's degree should have obtained first class in the Bachelor 's degree.
Persons having secured marks more than the mid point of the prescribed minimum marks for passing an examination in the second division and the prescribed minimum marks for passing an examination in the first division by a university shall be deemed to have passed that examination in the high second class '.
It will be apparent that there was a divergence in the qualifications as per the University Ordinance (as quoted in the written submissions on behalf of respondent No. 5) and the qualifications as per the advertisement as stated in the rejoinder of the petitioner since in particular the Explana tion does not find place in the Ordinance.
The University itself has produced before us neither the Ordinance nor the advertisement issued.
In the absence of a copy of the relevant Ordinance, however, it is not possible to say as to whether the qualifications mentioned in the advertisement were at variance with those mentioned in the advertisement.
Be that as it may.
It will thus be obvious from the requirement of the aforesaid qualifications, that on the last date for submitting the applications, a candidate applying for the said posts should have had (a) doctorate Degree (in the relevant subject), or research work of an equally high standard (in the relevant subject), and (b) good academic record with at least a second class Master 's Degree (in the relevant subject).
However, if the Selection Committee was of the view that the research work of a candidate as evident either from his thesis or from his published work was of a very.
high standard, the Scrutiny Committee could relax the qualification that the candidate should have had at least a doctorate Degree or research work of an equally high standard and good academic record with at least a second class Master 's Degree.
Secondly, if the candidate possessing a doctorate degree or 193 equivalent research work was not available or even if available, was not suitable, the candidate possessing a good academic record (preferably M.Phil or equivalent Degree or research work of quality) could also be appointed provied he had done research work for at least two years or had practical experience in a research Laboratory/Organisation.
However, this relaxation could be given on the condition that the candidate would obtain a doctorate Degree or give evidence of research of high standard within eight years of his appointment.
If he did not satisfy the second requirement, all that he could be visited with was a handicap that he would not be able to earn future increments until he fulfilled the said requirement.
It is, therefore, obvious that a doctorate Degree was not a must and the lack of doctorate Degree could be made up by either of the qualifications laid down above.
None of the candidates except respondent No.10 who had applied and appeared for interview (including the petitioner) possessed the doctorate Degree by the last date of submitting the applications for the posts.
The six candidates from the general category whose appointment is challenged before us and who are respondents 5, 6, 7, 8, 10 and 11 before us had on the relevant date the following qualifications according to the Scrutiny Committee: S.I Name Respon Doctorate Published Good Good 2year No. dent No. Degree works of Record Record research high No. No. Standard 1.
Dr.(Miss) 11 No. No. Yes Yes No. santosh Sharma (Awarded on 4.1.85) 2.Shri Krishna 6 No. No. Yes Yes No. Gopal Sharma 3.
Dr.(Mrs.
) 10 Yes No. Yes Yes Yes Vibha Updhyaya 4.(Miss)Saroj 7 No. No. Yes Yes No. Sharma 5.Dr.
Shyam 5 No.
Yes Yes No. Yes Singh (Awarded Ratnawat on 14.12.84) 6.(Miss) 8 No. No. Yes Yes No. Pramila (Passed Sharma M.A in 1982) 194 It is apparent that respondent No. 5 had no doctorate Degree.
He had good academic record in M.A. but did not have good record in B.A.
He had published work of high standard and also two years ' research work to his credit.
Respondent No.6 had no doctorate Degree.
He had, however, good academic record both in M.A. and B.A.; but had neither any published work of high standard nor two years research experience, to his credit.
Respondent No.7 had no doctorate Degree.
She had, however, good academic record both in M.A. and R.A. She had not published work of high standard nor had she two years ' research work to her credit.
Respondent No. 8 had no doctorate Degree.
She had, however, good academic record both in MA.
and B.A. though she did not have to her credit published work of high standard nor two research work.
Respondent No.10 had doctorate Degree and also a good academic record both in M.A. and BA.
She had also experience of two years research work though there was no published work of high standard to her credit.
Respondent No.11 had no doctorate Degree.
She had, however, good academic record both in M.A. and B.A. She had no published work of high standard or two years ' research work to her credit.
It is on record that respondent Nos. 5 and 11 were awarded doctorate Degree on 14.12.1984 and 4.1.1985 respectively which is of course irrelevant since the qualifications had to be judged with reference to the last date for submitting the applications for the posts.
Thus except in the case of respondent No.10, the qualifications of the other selected candidates had to be relaxed by the scrutiny Committee.
However, there is no record of the minutes of the meetings of the Scrutiny Committee to show whether and in what manner the Scrutiny Committee had applied its mind and relaxed their qualifications.
The affidavit filed on behalf of the University shows that the minutes, if kept, were destroyed.
It was sought to be argued by Shri Manoj Swarup on behalf of the University that since at the time of the selection, respondent Nos. 5 and 11 had obtained their doctorate Degrees they could be said to have fulfilled the qualifications.
He also argued that since respondent Nos. 6 and 7 were registered for Ph.D. on 22.1.1982 and 26.5.1982 respectively, by the time of the selection they had put in research work connected with their thesis and in February 1985, viz., the date of selection, they had about 3 years ' experience in research work.
As regards respondent No. 8, she had good 195 acadamic record both in M.A. and BA.
and the Scrutiny Committee could under the Ordinance relax the qualifications as admittedly sufficient number of candidates with the doctorate Degree were not available.
He also urged in this connection that even the petitioner did not have the doctorate Degree.
He further submitted that it was open to the Scrutiny Committee to weigh the over all qualifications of the candidates and relax the required qualifications in favour of the deserving and suitable candidates which the Scrutiny Committee did or should be deemed to have done.
The Scrutiny Committee was a high power Committee and after interviewing 65 candidates, it had selected only 8 candidates and had placed them in the order of merit.
The Court should not, therefore, interfere with the said selection.
He further pointed out that the candidates had already been appointed in February 1985 and they have been working eversince till date.
Some of them are also due for promotion to the higher posts in the near future.
Their record of teaching so far has been excellent and unblemished.
Whatever may be the defects in the selections, this Court may not interfere with the said process of selection at this late stage.
5.The contention that the required qualifications of the candidates should be examined with reference to the date of selection and not with reference to the last date for making applications has only to be stated to be rejected.
The date of selection is invariably uncertain.
In the absence of knowledge of such date the candidates who apply for the posts would be unable to state whether they are qualified for the posts in question or not, if they are yet to acquire the qualifications.
Unless the advertisement mentions a fixed date with reference to which the qualifications are to be judged, whether the said date is of selection or otherwise, it would not be possible for the candidates who do not possess the requisite qualifications in praesenti even to make applications for the posts.
The uncertainty of the date may also lead to a contrary consequence, viz., even those candidates who do not have the qualifications in praesenti and are likely to acquire them at an uncertain future date, may apply for the posts thus swelling the number of applications.
But a still worse consequence may follow, in that it may leave open a scope for malpractices.
The date of selection may be so fixed or manipulated as to entertain some applicants and reject others, arbitrarily.
Hence, in the absence of a fixed date indicated in the advertisement/notification inviting applications with reference to which the requisite qualifications should be judged, the only certain date for the scrutiny of the qualifications will be the last date for making the applications.
We have, 196 therefore, no hesitation in holding that when the selection Committee in the present case, as argued by Shri Manoj Swarup, took into consideration the requisite qualifications as on the date of selection rather than on the last date of preferring applications, it acted with patent illegality, and on this ground itself the selections in question are liable to be quashed.
Reference in this connection may also be made to two recent decisions of this Court in A.P. Public Service Commission, Hyderabad & Anr.
vs B. Sarat Chandra & Ors., and The District Collector & Chairman, Vizianagaram (Social Welfare Residential School Society) Vidanagaran & Anr.
vs M. Tripura Sundari Devi, (1990) 4 SLR 237.
6.However, for the reasons which follow, we are not inclined to set aside the selections in spite of the said illegality.
The selected candidates have been working in the respective posts since February 1985.
We are now in January 1993.
Almost eight years have elapsed.
There is also no record before us to show as to how the Selection Committee had proceeded to weigh the respective merits of the candidates and to relax the minimum qualifications in favour of some in exercise of the discretionary powers vested in it under the University Ordinance.
If the considerations which weighed with the Committee in relaxing the requisite qualifications were valid, 'it would result in injustice to those who have been selected.
We, however, feel it necessary to emphasise and bring to the notice of the University that the illegal practices in the selection of candidates which have come to light and which seem to be followed usually at its end must stop forthwith.
it is for this purpose that we lay down the following guidelines for the future selection process: A. The University must note that the qualifications it advertises for the posts should not be at variance with those prescribed by its ordinance/Statutes.
B. The candidates selected must be qualified as on the last date for making applications for the posts in question, or on the date to be specifically mentioned in the advertisement/notification for the purpose.
The qualifications acquired by the candidates after the said date should not be taken into consideration, as that would be arbitrary and result in discrimination.
It must be remembered that when the advertisement/notification represents that the candidates must have the qualifications in ques 197 tion, with reference to the last date for making the applications or with reference to the specific date mentioned for the purpose, those who do not have such qualifications do not apply for the posts even though they are likely to acquire such qualifications and do acquire them after the said date.
In the circumstances, many who would otherwise be entitled to be considered and may even be better then those who apply, can have a legitimate grievance since they are left out of consideration.
When the University or its Selection Committee relaxes the minimum required qualifications, unless it is specifically stated in the advertisement/notification both that the qualifications will be relaxed and also the conditions on which they will be relaxed, the relaxation will be illegal.
D. The University/Selection Committee must mention in its proceedings of selection the reasons for making relaxations, if any, in respect of each of the candidates in whose favour relaxation is made.
The minutes of the meetings of the Selection Committee should be preserved for a sufficiently long time, and if the selection process is challenged until the challenge is finally disposed of.
An adverse inference is liable to be drawn if the minutes are destroyed or a plea is taken that they are not available.
7.Although, therefore, for reasons stated above, we deem it inadvisable to interfere in the selections made in the present case, we direct that the University and its Selection Committee should observe the above norms in all future selections.
The Special Leave Petition is dismissed subject to the above directions.
G.N. Petition dismissed.
| The Respondent University invited applications for appointment to 10 posts of Assistant Professors.
Out of 112 applications received, the Screening Committee recommended 106 candidates for being Interviewed and found the remaining 6 applicants ineligible.
However, only 65 candidates appeared for the interview.
6 candidates were selected from the general category , and 2 from the Reserved Category.
5 candidates Including the petitioner were placed on the waiting list.
As per the advertisement, a candidate should have a doctorate degree or research work of equally high standard, and good academic record with atleast a Second Class Master 's Degree.
The lack of doctorate degree could be made up by either research work of equally high standard or M.Phil with two years research work.
Except in the case of Respondent No.10, who had a doctorate degree as on the last date for submission of applications, the qualifications of other selected candidates had to be relaxed by the Scrutiny Committee.
The petitioner challenged the appointment of the six selected candidates from the general category, before the High Court, but was not successful.
Being aggrieved by the High Court 's judgment, the petitioner preferred the present Special Leave Petition.
On behalf of the Respondent University it was contended that since at the time of selection Respondent Nos. 5 and 4 had obtained their doctorate degrees they could be said to have fulfilled the qualifications; 187 that since respondent Nos. 6 and 7 were registered for Ph. D. in 1982, by the time of the selection they had put in research work connected with their thesis and on the date of selection, they had about 3 years ' experience in research work; that respondent No.8 had good academic record both in MA and B.A. and the Scrutiny Committee could under the Ordinance relax the qualifications as admittedly sufficient number of candidates with doctorate degrees were not available; and that even the petitioner did not have the doctorate degree; that the candidates had already been appointed in February 1985 and they have been working since then and some of them were also due for promotion to the higher posts in the near future; and that their record of teaching so far has been excellent and unblemished and so their selection need not be interfered with at this late stage.
Dismissing the Special Leave Petition and laying down the guidelines for future selection process, this Court, HELD : 1.
In the absence of a fixed date indicated in the advertisement/notification inviting applications with reference to which the requisite qualifications should be judged, the only certain date for the scrutiny of the qualifications will be the last date for making the applications.
Therefore, when the Selection Committee took into consideration the requisite qualifications as on the date of selection rather than on the last date for preferring applications, it acted with patent illegality, and on this ground itself the selections in question are liable to be quashed.
However, the selected candidates have been working in the respective posts since February 1985.
Almost eight years have elapsed. 'Mere is also no record to show as to how the Selection Committee had proceeded to weigh the respective merits of the candidates and to relax the minimum qualifications in favour of some candidates in exercise of the discretionary powers vested in it under the University Ordinance.
If the considerations which weighed with the Committee in relaxing the requisite qualifications were valid, it would result in injustice to those who have been selected.
For these reasons, this Court is not inclined to set aside the selections made by the Screening Committee.
[195H, 196A E] A.P. Public Service Commission, Hyderabad & Anr.
vs B. Sarat Chandra & Ors., and The District Collector Society) Vizianagaram & Anr.
vs M. Tripura Sundari Devi, (1990) 4 SLR 237, relied on.
188 2.
It is necessary to emphasise and bring to the notice of the Respondent University that the illegal practices in the selection of candidates which have come to light and which seem to be followed usually at its end must stop forthwith.
For this purpose the following guidelines are laid down for the future selection process: (i) The University must note that the qualifications it advertises for the posts should not be at variance with those prescribed by its Ordinance/Statutes.
[196F] (ii) The candidates selected must be qualified as on the last date for making applications for the posts in question or on the date to be specifically mentioned in the advertisement/notification for the purpose.
The qualifications acquired by the candidates after the said date should not be taken into consideration, as that would be arbitrary and result in discrimination.
It must be remembered that when the advertisement/notification represents that the candidates must have the qualifications in question, with reference to the last date for making the applications or with reference to the specific date mentioned for the purpose, those who do not have such qualifications do not apply for the posts even though they are likely to acquire such qualifications and do acquire them after the said date.
In the circumstances, many who would otherwise be entitled to be considered and may even be better than those who apply, can have a legitimate grievance since they are left our of consideration.
[196G,H, 197A B] (iii) When the University or its Selection Committee relaxes the minimum required qualifications, unless it is specifically stated in the advertisement/notification both that the qualifications will be relaxed and also the conditions on which they will be relaxed, the relaxation will be illegal.
|
l Appeal Nos.
89 91 of 1993.
From the Judgment and Order dated 30.9.1992 of the Delhi High Court in W.P. No. 1872 of 1992.
K Parsaran, Kapil Sibal, L.P. Agarwalla, N.P. Agarwalla, Anil Agarwalia, Gopal Subramanium, Fazal ul Quaidir, P.H. Parekh, Ms. Nina Gupta and Vineet Kumar for the Appellant.
K.K. Venugopal, P. Chidambaram, Anil P. Diwan, Harish N. Salve, Vijay Narain, P.P. Tripathi and P.P. Singh for the Respondents.
R.N. Keshwani for the Intervener.
The following Judgment of the Court was delivered by N.P. SINGH.
J. Leave granted.
Three appeals have been filed against the same judgment of the High Court by which the Writ Petition filed on behalf of the petitioners/respondents (hereinafter referred to as "the writ petitioners") was allowed.
The dispute relates to the publication of the telephone directories of Mahanagar Telephone Nigam Limited, a Government of India Undertaking (hereinafter referred to as "the MTNL").
A new concept of yellow pages in the telephone directories was introduced by the MTNL/Department of Telecommunications.
The yellow pages were to contain advertisements under different headings.
The contractor who was to be awarded the contract for printing such directories was to collect the revenue from the advertisements in the yellow pages as well as in white pages of the telephone directory.
The contractor was to print the directories and supply the same free of cost to the MTNL for its 88 subscribers and had to pay royalty to the MTNL in connection with printing of such directories.
Tenders for publication of the directories for Delhi and Bombay were invited.
Tender of the United India Periodicals Pvt.
Ltd. (hereinafter referred to as 'the UlP, the 2nd respondent to the Writ Petition and appellant in one of the appeals) was accepted and an agreement dated 14th March, 1987 was executed.
United Database (India) Pvt. Ltd. (hereinafter referred to as 'the UDI ', the 3rd respondent to the Writ Petition and appellant in one of the appeals) is a subsidiary of UIP.
Under the original agreement UIP was to publish directories every year for a period of five years from 1987 to 1991 for Delhi and Bombay separately and was to payan amount of Rs. 20.16 crores as royalty to the MTNL and to supply the MTNL directories free of cost with reference to the number of subscribers.
UIP also furnished a performance guarantee for a sum of Rs. one crore.
UIP was also to supply the same number of supplementary directories which were to be published six months after the publication of the annual issue.
The annual issue of the directory was to be published in November/December every year.
UIP was given the exclusive right for procurement of the advertisements in the yellow pages as well as strips, bold and extra entries in the white pages.
The rates of such advertisements were to be fixed by the UIP for each issue of the directory and such rates had to be printed for general information.
It was also stipulated that if UIP committed any default or breach of the terms and conditions of the agreement or failed in the due performance thereof within the time fixed (which was the essence of the contract), the MTNL shall be entitled to recover from the UIP by way of compensation or liquidated damages an amount calculated at the rate of Rs. one lakh for every day or part thereof for the delay beyond the stipulated date in respect of the item which was not completed or finished and delivered completely to the MTNL on the stipulated date as mentioned in the contract.
In view of clause 22 of the agreement, the MTNL without prejudice to other rights could by notice in writing determine the contract.
It is an admitted position that UIP defaulted and committed breach of the terms of the agreement inasmuch as directories for Delhi were published only for the years 1987 and 1988 and for Bombay only for the year 1987.
For the year 1987, Delhi issue was published after a delay of 89 seven months and that of Bombay after six months.
So far Delhi issue of the directory for the year 1988 is concerned, it was published only in August, 1990 after a delay of two years.
Under the agreement UIP was to publish directories every year for Delhi and Bombay separately during the period of contract from 1987 to 1991.
They were also required to publish supplementary directory each year for Delhi as well as Bombay.
But there was no publication of directories for Delhi for the years 1989, 1990 and 1991.
Similarly there was no publication of directories in respect of Bombay for the years 1988, 1989, 1990 and 1991.
On 26th September, 1991 a supplemental agreement was entered between UIP, UDI, MTNL and Sterling Computers Ltd. (hereinafter referred to as "Sterline" appellant in one of the appeals).
Sterling by this agreement was introduced to carry out the unexecuted portion of the agreement with UIP.
It may be mentioned that by this date the period of the original agreement dated 14th March, 1987 between the MTNL and the UIP had expired, still the supplemental agreement states that "subject to UIP/UDI and Sterling successfully completing the unexecuted job relating to printing of Bombay and Delhi telephone directories within the stipulated time frame and other stipulations in the agreement MTNL shall extend the original contract for three more issues each for Delhi and Bombay, i.e., seven main issues of Bombay and six main issues of Delhi of the said directories to be brought out hereafter".
The agreement further stipulated that all terms and conditions contained in the original agreement and the memorandum of understanding would be the integral part of the supplemental agreement and all obligations of UIP/UDI and rights and privileges and powers provided for MTNL thereunder and under the law shall be applicable and available to and binding on the parties to the supplemental agreement as if the same were the part of the supplemental agreement.
It was also said that if there was any inconsistency or contradictions vis a vis the original agreement, the memorandum of understanding read with supplemental agreement shall prevail and would have overriding effect.
By the supplemental agreement Sterling was to print and publish 13 main issues of Delhi and Bombay directories within a period of seven years including the year 1991 on payment of additional royalty of only Rs. 10 crores to the MTNL over and above the royalty stipulated in the original agreement by the UIP.
As mentioned above the original royalty which was payable under the agreement dated 14th March, 1987 was Rs. 20.16 crores for the period 1987 to 1991 but under the supplemental agreement Sterling 90 was given the contract to publish 13 main issues of the Delhi and Bombay directories upto 1997 and 1998, but for the extended period it had to pay royalty only for an amount of Rs. 10 crores.
It was left to the UIP/UDI to receive all revenue earnings on account (cast and future) from the advertisements and MTNL was to be only informed about the prices as fixed.
The Writ Petition aforesaid was filed questioning the validity and legality of the supplemental agreement on different grounds including on ground of mala fide.
According to the writ petitioners under the garb of a supplemental agreement a fresh contract was awarded to Sterling for a fresh period from 1991 to 1997 on fresh terms and conditions to publish the directories every year for Delhi and Bombay without inviting tenders or affording an opportunity to others, to submit tenders so that they may be also considered for award of the said contract.
It was asserted by the petitioners that in the process of entering into the supplemental agreement the MTNL, which is a public undertaking and a State within the meaning of Article 12 of the Constitution, has suffered a loss of more than Rs. 60 crores without any corresponding benefit accruing to the MTNL or to the public in general.
Before the High Court the stand of the MTNL was that the supplemental agreement was a result of a bonafide commercial decision free from any bris or malice.
The original contract for years 1987 to 1991 had been awarded to UIP after inviting tenders but UIP, having gone bankrupt, no money could have been realised from it.
The termination of original contract was no remedy although repeated contraventions and breaches had been committed by the UIP inasmuch as there was no publication of directory for Bombay for the years 1988, 1989, 1990 and 1991 and for Delhi for the years 1989, 1990 and 1991.
It was stated on behalf of the MTNL before the High Court that in order to salvage Rs. 20.16 crores which was payable to the MTNL under the original agreement dated 14th March, 1987 by the UIP and which had not been paid, a decision was taken by the MTNL to enter into a supplemental agreement and to allow the UIP/UDI/Sterling to publish the thirteen issues of directories, six main issues for Delhi and seven main issues for Bombay upto years 1997 98 apart from the supplementary directories.
The High Court came to the conclusion that supplemental agreement dated 26th September, 1991 cannot be held to be the extension of the 91 original agreement dated 14th March, 1987.
According to the High Court the supplemental agreement was tainted with malice the object being to provide unjust enrichment to UIP/UDI/Sterling.
The most interesting part of the controversy is that the MTNL having fully supported the supplemental agreement before the High Court has filed an affidavit before this Court saying that "MTNL has decided to accept the High Court judgment in so far as that the procedure for the grant of contract dated 26.9.1991 to the petitioner M/s Sterling Computers Ltd.
Was not in keeping with the requirement of Article 14 of the Constitution and is not filing any petition for Special Leave against the said judgment.
However, as far as aspersions are concerned, MTNL does not accept the same and the same are matters of investigation and enquiry by an independent Central Agency at present.
" It has been further stated that subsequent events have shown that the Sterling has collected Rs. 19.59 crores approximately for advertisements in yellow pages without delivering the goods.
They have also uncashed the letter of credit issued by the 'MTNL ' prematurely.
This collection is apart from the collection of Rs. 14 crores against the yellow pages advertisements made by UDI and UIP during the years 1987 1991.
It has been further stated that the Board of 'MTNL ' had in fact even decided to terminate the contract for lapse in the performance of the obligations under the 26th September, 1991 agreement but as the High Court has quashed the said supplemental agreement no further step was considered necessary.
Ultimately it has been said in the said affidavit that MTNL ' has started the process for inviting fresh public tenders and for that purpose advertisement has already been issued.
Mr. Venugopal, appearing for the writ petitioners before us, stated on behalf of the writ petitioners that they are prepared to pay to the 'MTNL ' an amount of Rs. 60 crores for the period 1991 to 1997/1998 the period covered by the supplemental agreement for which the UIP/UDI/ Sterling have undertaken to pay only Rs. 10 crores as royalty.
At times it is said that public authorities must have the same liberty as they have in framing the policies, even while entering into contracts because many contracts amount to implementation or projection of policies of the Government.
But it cannot be overlooked that unlike policies, contracts are legally binding commitments and they commit the authority which may be held to be a State within the meaning of Article 12 of the 92 Constitution in many cases for years.
That is why the Courts have impressed that even in contractual matters the public authority should not have unfettered discretion.
In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue.
But even in such matters they have to follow the norms recognised by Courts while dealing with public property.
It is not possible for Courts to question and adjudicate every decision taken by an authority, because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi judicial authority while awarding contracts.
Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms.
If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by justice Holmes, that Courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of "play in the joints" to the executive.
But in normal course some rules must exist to regulate the selection of persons for awarding contracts.
In such matters always a defence cannot be entertained that contract has been awarded without observing the well settled norms and rules prescribed, on basis of the doctrine of "executive necessity".
The norms and procedures prescribed by Government and indicated by Courts have to be more strictly followed while awarding contracts which have along with a commercial element a public purpose as in the present case.
The publication of directories by the MTNL is not just a commercial venture; the primary object is to provide service to the people.
The action or the procedure adopted by the authorities which can be held to be State within the meaning of Article 12 of the Constitution, while awarding contracts in respect of properties belonging to the State can be judged and tested in the light of Article 14 of the Constitution, is settled by the judgments of this court in the cases of Raman Dayaram Shetty vs The International Airport Authority of India, ; ; M/s. Kasturi 93 Lal Lakshmi Reddy vs The State of Jammu & kashmir; , ; Fertilizer Corporation Kamagar Union (Regd.) Sindri vs Union of India, ; ; Ram and Shyam Company vs State of Haryana; , ; Haji T.M. Hasan Rawther vs Kerala Financial Corporation, AIR 1988 SC 157; Mahabir Auto Stores vs Indian Oil Corporation, ; and Kumari Shrilekha Vidyarthi vs State of U.P., it has been said by this Court : "It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State: such an action would be both unreasonable and contrary to public interest.
The Government, therefore, cannot for example give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so." [M/s. Kasturi Lal Lakshmi Reddy vs The State of Jammu & Kashmir.] There is nothing paradoxical in imposing legal limits on such authorities by Courts even in contractual matters because the whole conception of unfettered discretion is inappropriate to a public authority, who is expected to exercise such powers only for public good.
According to the appellants, the supplemental agreement was entered into by the MTNL taking into consideration the circumstances then existing which had been examined at the highest level and as such a Court should not examine the discretion exercised by the public authority as a court of appeal because the decision to enter into supplemental agreement also involved a question of policy.
It was pointed out that the contract had been awarded in the year 1987 to UIP on an experimental basis on such terms and conditions on which in past directories had not ever been published.
The real experiment was as to how the directories could be published without incurring any cost by the MTNL.
The publisher being given the right not only to reimburse itself from the advertisements published in the yellow and white pages but was also to pay royalty to the MTNL.
It was further pointed out that from the resolutions of the MTNL.
It shall appear that the authorities 'were concerned that the experiment 94 aforesaid must succeed.
With that object in view, another opportunity was given to UIP/UDI/Sterling through the supplemental agreement to publish the directories for Delhi and Bombay.
That decision should not be examined by this Court like a court of appeal.
It is true that by way of judicial review the Court is not expected to act as a court of appeal while examining an administrative decision and to record a finding whether such decision could have been taken otherwise in the facts and circumstances of the case.
In the book Administrative Law, Prof. Wade has said: "The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the court must not usurp the discretion of the public authority which parliament appointed to take the decision.
Within the bounds of legal reasonableness is the area in which the deciding authority has genuinely free discretion.
If it passes those bounds, it acts ultra vires.
The court must therefore resist the temptation to draw the bounds too tightly, merely according to its own opinion.
It must strive to apply an objective standard which leaves to the deciding authority the full range of choices which legislature is presumed to have intended.
The decisions which are extravagant or capricious cannot be legitimate.
But if the decision is within the confines of reasonableness, it is no part of the court 's function to look further into its merits.
With the question whether a particular policy is wise or foolish the court is not concerned; it can only interfere if to pursue it is beyond the powers of the authority.
" But in the same book Prof. Wade has also said: "The powers of public authorities are therefore 'essentially different from those of private persons.
A man making his will may, subject to any rights of the dependents, dispose of his property just as he may wish.
He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power.
In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives.
This is unfettered discretion.
But a public 95 authority may do none of these things unless it acts reasonably and in good faith and upon lawful and relevant grounds of public interest.
There are many cases in which a public authority has been held to have acted from improper motives or upon irrelevant con siderations, or to have failed to take account.
of relevant considerations, so that its action is ultra vires and void.
" While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision making process".
In this connection reference may be made to the case of Chief Constable of the North Wales Police vs Evans, ; , where it was said that 'The purpose of judicial review ". is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorized or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court.
" By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the state.
Courts have inherent limitations on the scope of any such enquiry.
But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police vs Evans (supra), the Courts can certainly examine whether 'decision making process" was reasonable, rational not arbitrary and violative of Article 14 of the Constitution.
If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then Court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract.
But, once the procedure adopted by an authority for purpose of entering into a contract is held to be against the mandate of Article 14 of the Constitution, the Courts cannot ignore such action saying that the authorities concerned must have some latitude or liberty in contractual matters and any interference by court amounts to encroachment on the 96 exclusive right of the executive to take such decision.
In support of the stand that it was open to the MTNL to negotiate with the UIP/UDI/Sterling for purpose of publication of the directories for Delhi and Bombay without inviting tenders, reliance was placed on behalf of the appellants on the judgments of this Court in the cases of Kasturi Lal Lakshmi Reddy vs State of Jammu and Kashmir, ; ; State of Madhya Pradesh vs Nandlal Jaiswal, [1987] 1 SCR; Sachidanand Pandey vs State of West Bengal, ; and G.B. Mahajan vs Jalgaon Municipal Council, ; From the facts of the case of Kasturi Lal Lakshmi Reddy (Supra) it shall appear that every year the State used to auction the blazes in different forests.
Most of the contractors bidding at the auction had their factories outside Jammu & Kashmir.
A decision was taken that from the year 1979 80 onwards resin extracted from its forests should not be allowed to be exported outside the territories of the State and should be utilised only by industries set up within the State.
There were certain forests which were out of access on account of their distance from the roads and no contractor could be found for taking tapping contracts even on the basis of royalty.
The Chief Conservator of Forests and other Forest Officers at a meeting took a decision which was also confired at a subsequent meeting, between the Forest Minister, the Forest Secretary and the Chief Conservator of Forests, that the blazes for such inaccessible areas should be allotted to some private party.
In view of that decision the second respondent who had earlier addressed a letter to the State Government offering to set up a factory for manufacture of resin turpentine oil and other derivatives in the State and had sought for allotment of 10,000 metric tonnes of resin annu was sanctioned the allotment of 11.85 lacs blazes in the inaccessible areas for a period of 10 years on the terms and conditions set out in the order.
This was challenged in the aforesaid case.
This Court said that whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position and as such every activity of the Government which has a public element in it must be reasonable and not arbitrary.
However, the allotment of the contract in favour of the second respondent was upheld.
It was pointed out that the blazes were situated in inaccessible areas and in spite of the offers given no bidders were attracted and as such the State had no option but to allot the said contract on basis of the offer made by the second respondent.
97 The case of State of Madhya Pradesh vs Nandlal Jaiswal (supra) related to grant of liquor licences.
The procedure adopted for such grant were being challenged as being violative of Article 14 of the Constitution.
It was said by this Court: "But, while considering the applicability of Article 14 in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by the State Government for grant of licences for manufacture and sale of liquor.
The Court would, in view of the inherently pernicious nature of the cornmodify allow a large measure of latitude to the State Government in determining its policy of regulating, manufacture and sale of liquor would essentially be a matter of economic policy where the court would hesitate to intervene and strike down what the State Government has done, unless it appears to be plainly arbitrary, irrational or mala fide.
" But even in that case it was said: No one can claim as against the state the right to carry on trade or business in liquor and the State cannot be compelled to part with its exclusive right or privilege or manufacturing and selling liquor.
But when the State decides to grant such right or privilege to others the State cannot escape the rigour of Article 14.
It cannot act arbitrarily or at its sweet will.
It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor.
" The execution of the supplemental agreement cannot be considered at par with the grant of a liquor licence, which related to any economic policy.
So far the case of Sachidanand Pandey vs State of West Bengal (supra) is concerned, in a public interest litigation the grant of lease in favour of Taj Group of Hotels for establishment of a Five Star Hotel at Calcutta had been challenged.
It was said: "It is to be seen that in the present case no one has come forward alleging that he has been discriminated against and his 98 fundamental right to carry on business had been affected.
The very nature of the construction and establishment of a Five Star Hotel is indicative of a requirement of expertise and sound financial position on the part of those who might offer to construct and establish them.
The decision taken by the All India Tourism Council was an open decision well known to everyone in the hotel business.
Yet no one except the ITDC and the Taj Group of Hotels had come forward with any proposal.
We have it in the record that the Oberoi Group of Hotels already had a Five Star Hotel in Calcutta while the Welcome Group of Hotels were making their own private negotiations and arrangements for establishing a Five Star Hotel.
In the circumstances, particularly in the absence of any leading hoteliers coming forward, the Government of West Bengal was perfectly justified in entering into negotiation with the ITDC and the Taj Group of Hotels instead of inviting tenders.
" But at the same time it was said: "On a consideration of the relevant cases cited at the bar the following propositions may be taken as well established : Stateowned or public owned property is not to be dealt with at the absolute discretion of the executive.
Certain precepts and principles have to be observed.
Public interest is the paramount consideration.
One of the methods of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public action or by inviting tenders.
Though that is the ordinar y rule, it is not an invariable rule.
There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be rational and should not be suggestive of discrimination.
Appearance of public justice is as important as doing justice.
Nothing should be done which gives an appearance of bias, jobbery or nepotism.
" In the case of G.B. Mahajan vs Jalgaon Municipal Council, (supra), a piece of land had been received by the Town Municipal Council, Jalgaon, by way of gift.
Initially it had been put to the use Agricultural Produce 99 Market Committee, as a cotton and wholesale fruit and vegetable market.
in terms of the gift, in order to put the land in a better and more profitable use the Municipal Council contemplated a project comprising, inter alia, erection of a commercial complex They also persuaded for change in the terms of the deed of gift subject to condition that heirs should be given five shops free of cost in the commercial complex The scheme contemplated that a developer would execute the entire project at his own cost and would make allotments to the shopkeepers to whom the Municipal Council had given assurances of alternative accommodation at fixed rates.
The developer was also to provide the 17 floors of the administrative building free.
of cost to the municipality.
The choice of the respondent No. 6 as developer for the project aforesaid was questioned.
This Court arrived at the following conclusion: "In regard to the allegation that the project scheme was tailored to suit respondent 6 alone or that the project as put to tender did not admit of tenders on fixed comparable parameters, we find no merit.
Sri K.K. Singhvi submitted that the tender papers were prepared by reputed architects and the precise points on which comparative quotations were invited were specifically incorporated in the tender papers.
The point again is that no other tenderer expressed any grievance.
The tenders were such that the tenderer could identify the terms which form the basis of comparative evaluation.
The charge of arbitrariness cannot be upheld.
Tests to be applied in a given case may be influenced by the extent to which a decision is supported by a democratic unanimity` which evidences the decision granted, of course, the power. ' From the facts of the aforesaid case it shall appear that Municipal Council had invited competitive proposals as to the ways in which the potentiality of the land could commercially be exploited and had also competitive plans and designs and ultimately respondent No. 6 was entrusted with the execution of the said scheme.
The cases aforesaid on which reliance was placed on behalf of the appellants, have also reiterated that once the State decides to grant any right or privilege to others, then there is no escape from the rigour of Article 14; the executive does not have an absolute discretion, certain 100 precepts and principles have to be followed, the public interest being the paramount consideration.
It has also been pointed out that for securing the public interest one of the methods recognised is to invite tenders affording opportunity to submit offers for consideration in an objective manner.
However, there may be cases where in the special facts and circumstances and due to.
compelling reasons which must stand the test on Article 14 of the Constitution, departure of the aforesaid rule can be made.
This Court while upholding the contracts by negotiation in the cases referred to above has impressed as to how in the facts and circumstances of those cases the decisions taken by the State and the authorities concerned were reasonable, rational and in the public interest.
The decisions taken in those cases by the authorities concerned, on judicial scrutiny were held to be free from bias, discrimination and under the exigencies of the situation then existing to be just and proper.
On the basis of those judgments it cannot be urged that this court has left to the option of the authorities concerned whether to invite tenders or not according to their own discretion and to award contracts ignoring the procedures which are basic in nature, taking into account factors which are not only irrelevant but detrimental to the public interest.
From the statements made in the affidavit filed on behalf of the MTNL before that High Court and from the relevant minutes of the Board of the MTNL which were produced before the High Court during the course of the hearing and copies thereof have also been produced by one of the appellants before this Court, it appears that the Board in its 28th meeting held on 28.12.1990 considered the default made by UIP in not publishing the directories in terms of the agreement every year.
The Board took note of the fact that UIP had run into financial difficulties and cash flow problem.
The banks who had advanced loans to them have not yet received back the payments.
The paper mills were not willing to supply paper on credit.
The printing presses were also not prepared to print the directories without getting advance payments.
In this background the Board considered the three options (1) to invoke the penalty clause and print the Directory by the MTNL at the risk and cost of the UIP.
(ii) provide the necessary loan secured or unsecured to print the directories, (iii) to terminate the contract and award the work to some other contractor.
The matter was again considered in the 29th meeting of the Board held 101 on 29th March, 1991 where a note was put up saying that if the contract with the UIP was terminated and a decision was taken to go in for a fresh tender the following problems may arise (i) UIP/UDI may put legal obstacles in retendering, (ii) the response for printing and delivering the directories free of cost and also paying royalty may be poor from the parties, considering the failure of the present experiment and prohibitive increase in the cost of paper and printing, (iii) the concept of the yellow pages may suffer a big set back and may make it unattractive to the advertisers because of the loss of confidence.
The Board in its 29th meeting discussed the aforesaid agenda and took a decision that MTNL has no option but to grant loan to UIP/UDI to help them to print out the directories.
The Board also felt that grant of the loan to UIP/UDI was quite risky but the said distress measure had to be taken to avoid any stalemate and was in the large interest of the MTNL.
The matter was further discussed in the 31st meeting of the Board held on 6th August, 1991.
The agenda note for this meeting after stating the aforesaid circumstances said that UIP had approached MTNL once again with a package of proposals in supersession of their all requests/proposals made earlier, so that they may be bailed out of their financial problems and assuring uninterrupted supply of directories for the revised period of contract.
The note recorded that proposal had also been received from Sterling through UDI to print and publish the directories of the MTNL with their financial support.
A decision was taken in order to enable the MTNL to salvage the contract and get the job executed without further delay and to avoid consequent inconvenience to the customers, to negotiate on revised terms with UIP/UDI/Sterling.
There is no dispute that the Board in its 32nd meeting held on 19th August, 1991 approved the new terms and conditions, and took a decision that an extension of the contract be given to UIP/UDI and Sterling for printing the 13 issues of directories for Delhi and Bombay.
On basis of that decision the impugned supplemental agreement was executed on 26th September, 1991.
In the facts and the circumstances of the present case it has to be held that the MTNL has applied the "irrelevant considerations" doctrine while granting a fresh contract for a period of five years through the supplemental agreement dated 26th September, 1991, because it has failed to take into account considerations which were necessarily relevant i.e. 102 following the rule of inviting tenders while granting the contract for a further period of five years on fresh terms and conditions and has taken into account irrelevant considerations that (i) if the contract is terminated and a decision is taken for a fresh tender, the UIP/UDI may put legal obstacles in retendering, (ii) the response for printing free of cost and also paying the royalty may be poor (iii) the concept of the yellow pages may suffer a big set back and may make it unattractive to the advertisers because of the loss of confidence.
MTNL should have been conscious of the fact that admittedly the UIP/UDI had miserably failed in performing their part of the contract for a period of five years, inasmuch as they were required to publish between the period 1987 1991 one issue of the main directory every year for Delhi and Bombay apart from supplementary.
Instead of that they published for the year 1987 directories for Delhi and Bombay after a delay of seven months and six months respectively.
The Delhi issue of directory for the year 1988 was published only in August, 1990.
So far Bombay is concerned there was no publication for the years 1988, 1989, 1990 and 1991.
The MTNL also overlooked the fact that the period of contract had already expired and as such the MTNL was in error in treating the supplemental agreement as only an extension of the original agreement.
Learned counsel appearing for the appellants did not dispute and contest that by the supplemental agreement the period of contract which had expired in 1991 was extended upto 1997/1998 for printing the directories for Delhi and Bombay, and that the terms and conditions were different.
For the period 1991 1997 additional royalty which had been agreed to be paid by the UDI/UIP/Sterling was only Rs. 10 crores whereas for the period 1987 1991 it was Rs. 20.16 crores.
Philanthropy is no part of the management of an undertaking, while dealing with a contractor entrusted with the execution of a contract.
The supply of the directories to public in time, was a public service which was being affected by the liberal attitude of the MTNL and due to the condonation of delay on the part of the UIP/UDI.
There was no justification on the part of the MTNL to become benevolent by entering into the supplemental agreement with no apparent benefit to the MTNL, without inviting fresh tenders from intending persons to perform the same job for the next five years.
Public authorities are essentially different from those of private persons.
Even while taking decision in respect of commercial 103 transactions a public authority must be guided by relevant considerations and not by irrelevant ones.
If such decision is influenced by extraneous considerations which it ought not to have taken into account the ultimate decision is bound to be vitiated, even if it is established that such decision had been taken without bias.
The contract awarded for the publication of the directories had not only a commercial object but had a public element at the same time i.e. to supply the directories to lakhs of subscribers of telephones in Delhi and Bombay, every year within the stipulated time free of cost.
In such a situation MTNL could not exercise an unfettered discretion after the repeated breaches committed by UIP/UDI, by entering into a supplemental agreement with the sterling for a fresh period of more than five years on terms which were only beneficial to UIP/UDI/Sterling with corresponding no benefit to MTNL, which they have realised only after the High Court went into the matter in detail in its judgment under appeal.
The supplemental agreement is really a fresh agreement with fresh terms and conditions which has been entered by MTNL without inviting any tender for the same.
The supplemental agreement has been entered to benefit the parties who are admittedly defaulters by not publishing directories for Bombay for the years 1988, 1989, 1990 and 1991 and for Delhi for the years 1989, 1990 and 1991 although they had collected several crores of rupees for the advertisements for the directories to be published in the aforesaid years.
We fail to understand as to how a fresh contract for a period upto 1997/1998 was awarded to UIP/UDI/Sterling in the garb of an agreement for extension of the period of the original agreement taking into account irrelevant factors as already enumerated above.
If the supplemental agreement has been executed without following the procedures which are essential in view of the repeated pronouncements of this Court and taking into consideration irrelevant factors, then can it be said that "decision making process" before the supplemental agreement was entered into was consistent with the requirement of Article 14 of the Constitution? In such a situation there is no scope for argument that any interference by Court shall amount to an intervention like a court of appeal.
Once the process through which the supplemental agreement was executed is held to be against the mandate of Article 14 of the ' Constitution, the supplemental agreement shall be deemed to be avoid.
The appellants also took an objection to the maintainability of the 104 writ application, on the ground of delay and laches.
It was pointed out that supplemental agreement was entered into on 26th September, 1991 whereas the Writ Petition was filed before the High Court on 19th May, 1992, although during this period the petitioners had full knowledge about the supplemental agreement.
According to the petitioners, the supplemental agreement was kept as a guarded secret by the MTNL as well as UIP/UDI/Sterling and it is only in April 1992 the petitioners could know some details of the supplemental agreement.
In this connection our attention was drawn to an advertisement published on 27th September, 1991 saying that official Bombay directory was being released in December, 1991 and Delhi telephone directory in January, 1992.
That advertisement was given on behalf of the UDI only.
In the body of the advertisement it was mentioned that UDI and Sterling have made all necessary arrangements to ensure that every subscriber receives up to date directory in Delhi and Bombay in time.
It was urged on behalf of the writ petitioners that under the supplemental agreement it was the Sterling who had been given the right to publish the directories and as such in normal course the advertisement should have been given in the paper on behalf of the Sterling but only with an ulterior motive the advertisement was published on behalf of the UDI.
Our attention was also drawn to several communications addressed by the Department of Telecommunications, Madras, to the dif ferent authorities of the MTNL making enquiries as to whether the Sterling had been entrusted with the printing of directories for Delhi and Bombay, as tenders for printing and supply of main telephone directories with yellow pages on turnkey basis were under consideration at Madras.
The aforesaid queries were made in the month of December, 1991.
The office of the Chief General Manager, MTNL, on 2nd January replied to the Divisional Engineer, Madras Telephones, saying "perhaps, MTNL, Corporate Office have entrusted some job of printing of telephone directories to M/s Sterling Computers Ltd. In this connection, you are therefore requested to contact Chairman cum Managing Director, MTNL".
A letter dated 30.12.1991 was addressed by Sterling to the Divisional Engineer, Madras Telphones, in reply to the query whether they had been entrusted with the printing and supply of telephone directories, saying "Much as we would like to provide you a copy of the order of Mahanagar Telephone Nigam Ltd. we are unable to do so due to certain circumstances beyond our control.
" Reference was made to yet another communication dated 30.12.1991 addressed 105 by MTNL to Deputy General Manager, Madras Telephones, saying that so far the Sterling Computers were concerned "they have been allowed a sub contract by M/s UDI for printing the directories for Delhi and Bombay", without giving the details of any such contract.
It was pointed out on behalf of the the writ petitioners that an affidavit, was filed on behalf of the Sterling, before the Madras High Court in connection with another Writ Petition on 19.4.1992, in which the details of the supplement agreement were disclosed.
The Writ Petition in the Delhi High Court was filed on 19.5.1992.
Under the circumstances mentioned above it is difficult to reject the Writ Petition on the ground of delay and laches.
As already mentioned above, Mr. Venugopal, the learned counsel appearing for the writ petitioners, offered an amount of Rs. 60 crores on behalf of the writ petitioners as royalty to the MTNL for printing the directories for Delhi and Bombay for the period of the supplemental agreement, if the said job is entrusted to them on the same terms and conditions.
For that period the UIP/UDI/Sterling have offered only Rs. 10 crores as additional royalty.
This Court could have considered the desirability of directing the MTNL to consider the said offer of Rs. 60 crores on behalf of the writ petitioners by according to us, if any such direction is given and on basis of such direction the job of printing the directories for the period in question is given to the writ petitioners, the procedure so adopted shall suffer from the same vice.
The MTNL will enter into an agreement with the writ petitioners without inviting tenders and without offering opportunities to others who may be interested in the printing of the directories for Delhi and Bombay.
As such while affirming the judgement of the High Court, we direct that all steps should be taken by MTNL as early as possible for publishing the directories for Delhi and Bombay so that public in general should not suffer any more.
The appeals are accordingly dismissed but in the facts and circumstances of the case there shall be no order as to costs.
Before we part with the judgment we shall like to strike a note of caution.
It is a matter of common experience that whenever applications relating to awarding of contracts are entertained for judicial review of the administrative action, such applications remain pending for months and in some cases for years.
Because of the interim orders passed in such applications, the very execution of the contracts, are kept in abeyance.
The cost 106 of different projects keep on escalating with passage of time apart from the fact that the completion of the project itself is deferred.
This process not only affects the public exchequer but even the public in general who are deprived of availing the facilities under different projects.
As such it need not be impressed that while exercising the power of judicial review in connection with contractual obligations.
Courts should be conscious of the urgency of the disposal of such matters, otherwise the power which is to be exercised in the interest of the public and for public good in some cases becomes counter productive by causing injury to the public in general.
N.V.K. Appeals dismissed.
| The three appeals arose out of disputes relating to the publication of telephone directories of MTNL a Government of India Undertaking.
The MTNL introduced a new concept of "yellow pages ' in telephone directories, and these yellow pages were to contain advertisement under different headings.
The contractor who was to be awarded the contract for printing such directories was to collect the revenue from the advertisements in the yellow pages as well as in the white pages of the telephone directory, supply the same free of cost to the for its subscribers, and pay royalty to the MTNL in connection with printing of such directories.
Tenders for publication of the directories for Delhi and Bombay were invited.
Tender of UIP respondent No. 2 in the Writ Petition and appellant in one of the appeals (CA.No. 91 of 1993) was accepted, and an agreement dated 14th March, 1987 was executed.
UDI, respondent No. 3 to the Writ Petition and appellant in one of the other appeals (CA No. 90, of 1993) was a subsidiary of UIP.
Under the original agreement UIP was to publish directories every year for a period of five years from 1987 to 1991 for Delhi and Bombay separately, pay an amount of Rs. 20.16 crores as royalty to the MTNL, supply the directories free of cost to subscribers.
UIP also furnished a 82 ` performance guarantee for a sum of Rs. one crore, and was also to supply the same number of supplementary directories which were to be published six months after the publication of the annual issue, to be published in November/December every year.
UIP was given the exclusive right for procurement of the advertisements in the yellow pages as well as strips, bold the extra entries in the white pages, the rates to be fixed by the UIP for each issue of the directory, and such rates to be printed for general information.
It was stipulated that if UIP committed default or breach of the agreement or failed in the due performance thereof, the MTNL shall be entitled to recover from the UIP by way of compensation or liquidated damages and amount calculated at the rate of Rs. One lakh for every day or part thereof for the delay beyond the stipulated date.
The MTNL without prejudice to other rights could by notice in writing determine the contract.
UIP defaulted and committed breach of the agreement inasmuch as directories for Delhi were published only for the years 1987 and 1988 and for Bombay only for the year 1987.
For the year 1987, Delhi issue was published after a delay of seven months and Bombay issue after six months, and the Delhi issue of 1988 was published only in August, 1990, a delay of two years.
There was no publication of the directories for Delhi for the years 1989, 1990 and 1991, and in respect of Bombay for the years 1988, 1989, 1990 and 1991.
A supplemental agreement was entered on 26th September, 1991 between UIP, UDI, MTNL and Sterling Computers Limited appellant in one of the appeals (CA.
No. 89 of 1993).
Sterling by this agreement was introduced to carry out the unexecuted portion of the agreement with UIP.
By this supplemental agreement Sterling was to print and publish 13 main issues of Delhi and Bombay directories within a period of seven years including the year 1991 on payment of additional royalty of only Rs. 10 crores to the MTNL over and above the royalty stipulated in the original agreement by the UIP.
Under the agreement dated 14th March, 1987 the royalty which was payable was Rs. 20.16 crores for the period 1987 to 1991, but under the supplemental agreement Sterling was given the contract to publish 13 main issues of the Delhi and Bombay directories upto 1997 and 1998, but for the extended period it had to pay royalty only for an amount of Rs. 10 83 crores.
A Writ Petition was flied questioning the validity and legality of the supplemental agreement on different grounds including the ground of mala fide.
It was contended by the petitioners that under the grab of a supplemental agreement a fresh contract was awarded to Sterling for a fresh period from 1991 to 1997 on fresh terms and conditions to publish the directories every year for Delhi and Bombay without inviting tenders or affording an opportunity to others, to submit tenders so that they may be also considered for award of the said contract.
It was asserted by the petitioners that in the process of entering into the supplemental agree ment the MTNL, which is a public undertaking and a "State ' within the meaning of Article 12 of the constitution, had suffered a loss of more than Rs. 60 crores without any corresponding benefit accruing to the MTNL or to the public in general.
MTNL contested the writ petition, contending that the supplemental agreement was a result of a bona fide commercial decision free from any bias or malice, that the original contract for the years 1987 to 1991 had been awarded to UIP after inviting tenders, but UIP having gone bankrupt, no money could have been realised from it.
The termination of the original contract was no remedy although repeated contraventions and breaches had been committed by the UIP inasmuch as there was no publication of directory for Bombay for the years 1988, 1989, 1990 and 1991 and for Delhi for the years 1989, 1990 and 1991.
In order to salvage Rs. 20.16 crores which was payable to the MTNL under the original agreement dated 14th March, 1987 by the UIP and which had not been paid, a decision was taken by the MTNL to enter into a supplemental agreement and to allow the UIP/UNI/Sterling to publish the thirteen issues of directories, six main issues for Delhi and seven main issues for Bombay upto years 1997 98 apart from the supplementary directories.
The High Court allowed the writ petitions, and came to the conclusion that the supplemental agreement dated 26th September, 1991 cannot be held to be an extension of the original agreement dated 14th March, 1987, and that the supplemental agreement was tainted with malice the object being to provide unjust enrichment to UIP/UDI/Sterling.
In the appeals to this Court, it was contended on behalf of the 84 appellants that the supplemental agreement was entered into by the MTNL taking into consideration the circumstances then existing which had been examined at the highest level and as such a Court should not examine the discretion exercised by the public authority as a court of appeal because the decision to enter into the supplemental agreement also involved a question of policy, and it was pointed out that the contract had been awarded in the year 1987 to UIP on an experimental basis on such terms and conditions on which in past directories had not ever been published, and that the real experiment was as to how the directories ' could be published without incurring any cost by MTNL.
On behalf of the Writ Petitioners it was stated that they were prepared to pay to the MTNL an amount of Rs. 60 crores for the period 1991 to 1997/1998 the period covered by the supplemental agreement for which the UIP/(JDI/Sterling have undertaken to pay only Rs. 10 crores as royalty.
Dismissing the appeals, this court HELD:1.
Ile publication of directories by the MTNL is not just a commercial venture, the primary object is to provide service to the people.
[92F] 2.The norms and procedures prescribed by Government and indicated by Courts have to be more strictly followed while awarding contracts which have along with a commercial element a public purpose.
[92F] 3.The action or the procedure adopted by the authorities which can be held to be a 'State ' within the meaning of Article 12 of the Constitution, while awarding contracts in respect of properties belonging to the state can be judged and tested in the light of Article 14 of the Constitution.
Raman Davaram Shelly vs 7he International Airport Authority of India, ' ; ; M/s. Kasturi Lal Lakshmi Reddy vs The State of Jammu and Kashmir, ; ; Fertilizer Corporation Kamgar Union (Regd) Sindri vs Union of India, ; ; Ram and Shyam Company vs State of Haryana, ; ; Haji T.M. Hasan Rawther vs Kerala Financial Corporation, AIR 1988 SC 157; Mahabir Auto Stores vs Indian Oil Corporation, ; and Kumari Shrilekha Vidyarthi vs State of U.P., , referred to.
[92 H 93 A] 4.
Public authorities, at times It Is said must have the same liberty 85 as they have in framing the policies, even while entering into contracts because many contracts amount to implementation or projection of policies of the Government.
But it cannot be overlooked that unlike policies, contracts are legally binding commitments and they commit the authority which may be held to be a State within the meaning of Article 12 of the Constitution In many cases for years.
That is why the courts have impressed that even in contractual matters the public authority should not have unfettered discretion.
[91G H, 92A] 5.In contracts having commercial elements, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue But even in such matters they have to follow the norms recognised by courts while dealing with public property.
[92B] 6.Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purposes of taking a decision its to whom the contract is to be awarded and at what terms.
If the decisions have been taken in bone fide manner although not strictly following the norms laid down by the Courts, such decisions are upheld.
[92C] 7.Public authorities are essentially different from those of private persons.
Even while taking decision in respect of commercial transactions a publicauthority must be guided by relevant considerations and not by irrelevant ones.
If such decision is influenced by extraneous considerations which it ought not to have been taken into account the ultimate decision is bound to be vitiated, even if it is established that such decision had been taken without bias.
[102H, 103A] 8.While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the 'decision making process '.
By way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the state.
Courts have inherent limitations on the scope of any such enquiry.
But the Courts can certainly examine whether "decision making process ' was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.
[95C E F] 86 Chief Constable of the North Wales Police vs Evans, ; , referred to.
9.In the facts and the circumstances of the instant case, it has to be held that the MTNL has applied the "irrelevant considerations ' doctrine while granting a fresh contract for a period of five years through the supplemental agreement dated 26th September, 1991, because it had failed to take into account considerations which were necessarily relevant ie.
following the rule of inviting tenders while granting the contract for a further period of five years on fresh terms and conditions and had taken into account irrelevant considerations.
[101H, 102A] 10.Philanthropy is no part of the management of an undertaking, while dealing with a contractor entrusted with the execution of a contract. '[102F] 11.The supply of the directories to public in time, was a public service which was being affected by the liberal attitude of the MTNL and due to the condonation of delay on the part of the UIP/UDI.
There was no justification on the part of the MTNL to become benevolent by entering into the supplemental agreement with no apparent benefit to the without inviting fresh tenders from intending persons to perform the some job for the next five years.
[102G] 12.The supplemental agreement is really a fresh agreement with fresh terms and, conditions which has been entered by MTNL without inviting any tender for the same.
It has been entered to benefit the parties who are admittedly defaulters by not publishing directories for Bombay for the years 1988 1991, and for Delhi for the years 1989 1991 although they had collected several crores or Rupees for the advertisements for the directories to be published in the aforesaid years.
[103D E] 13.It is a matter of common experience that whenever applications relating to awarding of contracts are entertained for judicial review of the administrative action, such applications remain pending for months and in some cases for years.
Because of the interim orders passed in such applications, the very execution of the contracts, are kept in abeyance.
The cost of different projects keep on escalating with passage of time apart from the fact that the completion of the project itself Is deferred.
This process not only affects the public exchequer but even the public In general 87 who are deprived of availing the facilities under different projects.
As such, it need not be impressed that while exercising the power of judicial review in connection with contractual obligations, Courts should be conscious of the urgency of the disposal of such matters, otherwise the power which is to be exercised in the interest of the public and for public good in some cases become counter productive by causing injury to the public in general.
[106AB]
|
Appeal No. 572 & 591 of 1980.
From the Judgment and Order dated 7.11.79 of the Orissa High Court in Misc.
92 of 1979.
G.L. Sanghi, Harish N. Salve, section Khaitan and Darshan Singh for the Appellant in CA.
No. 572/80 and Respondent in CA.
No. 571/80.
B.M. Patnaik, R.K. Mehta and Ms. Mona Chakraborty for the Respondent in CA.
No. 572/80 and for the Appellant in CA.
No. 571/80.
The Judgment of the Court was delivered by BHARUCHA, J.
These are cross appeals and they can be disposed of by a common judgment.
The Industrial Development Corporation of Orissa Ltd. (IDCO)) is the appellant in Civil Appeal No. 571 of 1980 and Jajodia (Overseas) Private Ltd. (JOPL) is the appellant in Civil Appeal No. 572 of 1980.
232 IDCO and JOPL entered into an agreement whereunder IDCO agreed to supply to JOPL 5000 tons of M.S. Rounds for export on the terms and conditions mentioned therein.
The goods were not supplied.
By a letter dated 12th September, 1969, IDCO cancelled the agreement and intimated to JOPL that its offer, which had culminated in the agreement, should be treated as withdrawn.
There was some correspondence between the parties.
Thereafter the claim against IDCO for damages for breach of contract made by JOPL was referred to the Chief Secretary to the Government of Orissa, the arbitrator named in the agreement, for 'adjudication.
The Chief Secretary declined to act as arbitrator '.
Thereupon JOPL filed a suit under Section 20 of the , in the Calcutta High Court praying that the agreement be taken on file and the dispute between JOPL and IDCO be referred to an arbitrator to be nominated by the court.
That plaint was returned to JOPL to be presented before the proper court.
It was presented in the court of the Subordinate judge, Bhubaneswar.
On 4th April, 1973, the learned Subordinate Judge appointed Mr. B. Mohapatra, a retired Judge of the Patna High Court "to act as the arbitrator to give his award on the disputes between the parties as enumerated in their respective pleadings and the order of this court.
Reference he made to him requesting him to make the award by 30th June, 1974.
Copy of the plaint, written statement and the order of this court be sent to the arbitrator.
" The arbitrator entered upon the reference and, after hearing parties and considering the material placed upon the record before him, gave an award on 24th September, 1985.
In the Preamble to the award the arbitrator set out briefly some of the facts aforementioned.
The arbitrator stated that issues had been settled for adjudication and that the parties produced a large number of documents, examined witnesses and advanced elaborate arguments.
The arbitrator, having given careful consideration to all the written statements, documents and evidence and the arguments, set out the conclusions to which he had come upon the issues raised.
He concluded: " In the result, my award is that Jajodia Overseas Pvt. Ltd. is entitled to recover from the Industrial Development Corporation of Orissa Rs. 11,00,344 only (eleven lakhs three hundred forty four) with pendente lite interest at the rate of 6 per cent per annum from 28th April, 1974 to the date of award (24th September, 1975)".
233 The award was challenged by IDCO before the Subordinate Judge, Bhubaneshwar.
JOPL supported the award and prayed that it be made a rule of the court with future interest.
The learned Subordinate Judge dismissed IDCO 's petition and made the award a rule of the court ordering that JOPL was entitled to future interest at the rate of 6 per cent per annum.
The judgment and order, of the learned Subordinate Judge was impugned before the Orissa High Court.
The learned Single Judge who heard the appeal rejected all contentions raised on behalf of IDCO except one: be found that in answering three issues the arbitrator had arrived at inconsistent conclusions which had a bearing on the question whether or not damages should be awarded.
The inconsistency was not a trifling or inconsequential matter and, being apparent on the face of the award, the learned Judge held that the arbitrator had been guilty of legal misconduct so that the award was set aside.
The learned Judge directed that the records pertaining to the arbitration proceeding be sent back to the arbitrator, who was directed to give a fresh award, after giving an opportunity of hearning to both parties, keeping in view the findings and observations made in the judgment.
Against the judgment and order of the Orissa High Court, both JOPL and IDCO are in appeal.
JOPL contends that there is no inconsistency upon the face of the award which vitiates it.
On behalf of IDCO it is contended that the award is bad and that, in any event the High Court was in error in sending the matter back to the arbitrator for making a fresh award.
It was submitted by Mr. B.M. Patnaik, learned counsel for IDCO, that (i) No disputes which were referred to the Chief Secretary by JOPL and which were contained in the plaint and the written statement before the Subordinate Judge, Bhubaneshwar, and were referred by the said Subordinate Judge to the arbitrator were considered by the arbitrator because these documents were not mentioned in the award.
Consequently, the arbitrator had acted without jurisdiction.
(ii) That the award of damages was based on no evidence or material.
234 (iii) The answer by the arbitrator to issue No. 2, set out in the award, showed that the arbitrator had construed the agreement between the parties.
As such, the agreement was incorporated in the award and it was, therefore, open to the court to see if the arbitrator had in any wise misconstrued the agreement.
(iv) The arbitrator had referred to the statement of claim and the counter filed before him and had given findings.
As suck the statement of claim and the counter was incorporated in the award so that the whole matter was open before the court.
(v) The award was a speaking award inasmuch as the answers to the issues were the reasons for the award.
(vi)There were inconsistencies in the answers to the issues and the arbitrator had, therefore, misconducted the proceedings.
(vii)In any event, if at all the matter had to go back, it should not go back to the arbitrator but to the arbitral tribunal now constituted in the State of Orissa.
It is, we think, necessary, first, to clear some cobwebs.
A speaking or reasoned award is one which discusses or sets out the reasons which led the arbitrator to make the award.
Setting out the conclusions upon the question or issues that arise in the arbitration proceedings without discussing the reasons for coming to these conclusions does not make an award a reasoned or speaking award.
The arbitrator has in the award before us only answered the issues that were framed.
He has not discussed or set out the reasons for the answers.
The award is, therefore, not a speaking or reasoned award.
That the arbitrator merely referred to the pleadings filed before him does not mean that the pleadings are incorporated in the award.
As was aid in the context of a contract in a passage, quoted by this Court with approval in Allen Berry and Co. vs Union of India ; , from he judgment of Diplock, LJ.
in Ciacomo Costa Fu Andrea vs British Italian Co. Ltd., : "It seems to me, therefore, that, on the cases, there is none which compels us to hold that a mere reference to the contract in the award entitles us to look at the contract.
It may be that 235 in particular cases a specific reference to a particular clause of a contract may incorporate the contract, or that clause of it, in the award.
I think that we are driven back to first principles in this matter, namely, that an award can only be set aside for error which is on its face.
It is true that an award can incorporate another document so as to entitle one to read that document as part of the award and, by the reading them together, find an error on the face of the award." "9.
The question whether a contract or a clause of it is incorporated in the award is a question of construction of the award.
The test is, does the arbitrator come to a finding on the wording of the contract.
If he does, he can be said to have impliedly incorporated the contract or a clause in it whichever be the case.
But a mere general reference to the contract in the award is not to be held as incorporating it.
" The arbitrator merely referred to the fact that parties had "filed their statements" before him and that he had given "careful consideration to all the written statements, documents and evidence and the arguments".
This is not such a reference as can be said to incorporate the pleadings before him in the award.
Reference was made to issue No.2 and its answer and it was contended that the arbitrator had thereby made a specific reference to the agreement and it must, therefore, be held that the agreement was incorporated in the award.
Issue No. 2 and the answer to it read thus: "Issue Was the said agreement a commission agency or export agency agreement.
Answer The agreement was not a commission agency or export agreement.
" In the first place, the pleadings before the Subordinate Judge, Bhubaneshwar and the order of reference made by him are not placed by IDCO before us.
If it was IDCO 's case that no issue of law had specifically been referred to the arbitrator, it was its obligation so to show.
But we shall proceed on the basis that a specific question of law was not referred.
The submission on IDCO 's behalf was that the arbitrator misconstrued the 236 agreement and, therefore, the court was entitled to look into the agreement and determine whether the award was correct.
We do not think that this broad submission is correct.
It would appear that the arbitrator construed only such clause of the agreement as was relevant to decide whether the agreement was, as contended by IDCO, a commission or export agency agreement.
Such clause alone would be incorporated in the award and could be looked at by the court to determine whether the arbitrator misconstrued it.
We cannot accede to the submission that, by reason of the answer to issue No. 2, the entire agreement became incorporated in the award and that it was, therefore, open to the court to look into the entirety of the dispute in the arbitration proceedings and determine whether the award was correct.
Even assuming the incorporation of the agreement, an error apparent upon the face of the award had to be shown.
We may refer with advantage to this court 's judgment in Bungo Steel Furniture Pvt. Ltd. vs Union of India, ; The court quoted the well known passage from the judgment of Lord Dunedin in Champasey Bhara and Company vs Jivraj Balloo Spinning and Weaving Company Ltd., 50 I.A. 324, thus: "An error in law on the face of the award means, in their Lordships ' view, that you can find in the award or a document actually incorporated thereto, a:; for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.
It does not mean that in narrative a reference is made to a contention of one party, that opens the door to seeing first what that contention is, and then going to the contract on which the parties ' rights depend to see if that contention is sound.
" It went on to observe: 'An award may be set aside by the court on the ground of an error of law apparent on the face of the award but an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion.
" 237 It was argued on behalf of IDCO before the High Court that the pleadings before the Subordinate Judge, Bhubneshwar and the order of reference to the arbitrator made by him were not before the arbitrator and that, therefore, the arbitrator had acted without jurisdiction.
The High Court rejected that contention and made reference to the order of the Subordinate Judge, which we have quoted above, which showed that if directed that the copy of the pleadings and of itself should be sent by,.
the Court to the arbitrator.
Before us it was submitted that these pleadings and order had not been considered by the arbitrator, because he had not mentioned them in the award.
Issues were framed by the arbitrator, obviously in consultation with the parties and arising upon the pleadings.
There were several hearings.
It is, in these circumstances, inconceivable that the issues would not have reflected the referred dispute between the parties.
It is also significant that the pleadings before the Subordinate Judge, Bhubaneshwar, and the statement of claim and the counter filed before the arbitrator were not produced before us by IDCO so that we could determine whether the statement of claim filed by JOPL before the arbitrator raised claims different from those contained in the pleadings before the Subordinate Judge, Bhubaneshwar.
It was submitted that the award of damages was based on no evidence or material.
The submission was based on the finding that the originals of the foreign sale contracts entered into by JOPL in respect of the goods under the agreement had not been sent to IDCO.
That these original agreements had not been sent does not ipso facto lead to the conclusion that the arbitrator had no material before him upon which he could find that JOPL had suffered damage and assess the same in monetary terms.
This brings us to the question of the inconsistencies found by the High Court upon the face of the award.
The issues and the answers to which the High Court referred are issue Nos. 6, 7(b) and 9(a).
In our view, it is necessary to reproduce the issue nos.
6, 7, 9, and 10 and their answers in extenso.
"Issues 6.
Did the claimant fulfil their obligations under the terms and conditions of the agreement.
Answers JOPL fulfilled their obligations under the agreement in question.
38 7.(a) Did the respondent ac IDC accepted or affirmed or affirm the claimant 's the JOPL 's order for supply order for supply of 4000 ton of 4000 tonnes.
as mentioned nnes as mentioned in para 4 of the statement of the claim ? (b) Did the claimant send JOPL did not send the original the foreign sale contracts foreign sale contracts to originalnal foreign sale I.D.C. contractsto the respondent.
9.(a) Were the acts mentioned The agreement provided inpara 10 of the counter state for JOPL sending the orig ment covered by the agreement nal foreign sale contracts to the respondent at a certain stage.
Reference to para 10 of the counter statement IDC.
(b) Were the acts mentioned in The agreement provided para 11 of the counter state that JOPL would arrange ment covered by the agree for export license, (Refer ment.
ence to para 11 of the counter statement of IDC.
(c) Were the acts mentioned The agreement provided that in para 12 of the counter JOPL would procure orders statement covered by the for export of 5000 metric agreeement?(JOPL) tonnes of MS rounds within 3 months from the date of acceptance of the IDC 's offer and they would follow up th indents placed by the respondent(IDC) for supply of billets and arrange for export licences, letter of authorisation from the Iron the Iron and Steel Controller in time (Ref.
to para 12 of counter statement of IDC).
239 (d) Were the acts mentioned in The 'acts ' mentioned in para 13 of the counter state para 13 of the counter ment covered by the statement by IDC are cov agreement.
red by the previous three paragraphs(10, 11 and 12) of that statement and they have been already dealt/with under sub issues.
(a),(b) above.
If so, did the party concer The party concerned that ned perform such Acts? is the JOPL performed their part of the work as was necessary under the agreement at relevant stage.
Was the respondent jus IDC was not justified in tified in cancelling the cancelling the agreement".
agreement? It will be seen that the award says that the agreement provided for JOPL sending the original foreign sale contracts to the respondent at a certain stage.
" It also says that "JOPL fulfilled their obligations under the agreement in question" and that "JOPL performed their part of the work as was necessary under the Agreement at relevant Stage" On the other hand, it says that 'JOPL did not send the original foreign sale contracts to I.D.C. ' The award then finds that "IDC was not justified in cancelling the agreement".
(Emphasis supplied).
Reading these issues and answers together and harmoniously, it is apparent that the agreement provided that JOPL should send to IDCO the original foreign sale contracts at a certain point of time and that it is found that JOPL had not sent the original foreign sale contracts to IDCO.
It is also apparent that it is found that at the point of time at which IDCO purported to cancel the agreement, JOPL had performed all its obligations under the agreement.
The conclusion is, there fore, that upto that point of time JOPL had not been obliged to send the foreign sale contracts to IDCO.
So read, in our view, there are no inconsistencies upon the face of the award as can be characterised as errors that vitiate the award.
An award has to be read as a whole and harmoniously.
The grounds upon which an award can be set aside are limited.
The court 240 should be very circumspect about setting aside an award reached by an arbitrator for parties have agreed that the disputes that may arise or have arisen between them should be resolved not by a court of law but by arbitration.
Mr. Patnaik pointed out that the Orissa High Court had recognised that 'the malady of the racket of arbitration" affected its State of Orissa vs Gangaram ahapolia, and that this had been taken note of by this court in State of Orissa vs Dandasi Sahu ; The court said: "In our opinion, the evidence of such state of affairs should make this court scrutinise the award carefully in each particular case but that does not make the court declare that all high amounts of awards would be bad per se.
" We are in respectful agreement.
We do not, having bestowed due care upon the award and the arguments advanced to assail it, find the award to be bad in law.
Having regard to the view that we take, the question of setting aside the award and sending the arbitration proceedings back to the arbitrator or to the arbitral tribunal now created in the State of Orissa does not arise.
In the result, Civil Appeal No. 571 of 1980 (filed by IDCO) is dismissed.
Civil Appeal No. 572 of 1980 (filed by JOPL) is allowed and the judgment and order of the Subordinate Judge, Bhubaneshwar dated 9th March, 1979 is restored.
There shall be no order as to costs.
U.R. CA No. 571/80 dismissed.
No. 572/80 allowed.
| IDCO and JOPL entered Into an agreement whereunder IDCO agreed to supply to JOPL 5000 tens of MS rounds for export on terms and conditions mentioned therein.
The goods were not supplied.
By a letter dated September 12, 1969, IDCO cancelled the agreement and intimated to JOPL that its offer which had culminated in the agreement, should be treated as withdrawn.
Some correspondence followed.
Thereafter JOPL 's claim for damages against IDCO for breach of contract was referred to the Chief Secretary, who was named in the agreement, for arbitration.
He declined to act as arbitrator.
An arbitrator was thereafter appointed by the Subordinate Judge, Bhubaneswar under S.20 of the .
He gave his award on September 24, 1985.
In the award the arbitrator briefly stated the facts, the issues settled for adjudication and that the parties had produced a large number of documents, examined witnesses and advanced elaborate arguments.
Having carefully considered them, he set out the conclusions and awarded JOPL Rs. 11,00,344 with pendente lite interest @ 6%.
IDCO challenged the award before the Subordinate Judge, Bhubaneswar who dismissed the petition and made the award a rule of the Court In appeal before the Orissa High Court, the learned Judge rejected all contentions of IDCO except one namely that In answering three issues the arbitrator had arrived at Inconsistent conclusions apparent on the face of the award, which had a bearing on the question of awarding of damages.
He therefore directed that the records be sent back to the 229 230 arbitrator for making a fresh award.
Cross appeals were filed in the Supreme Court.
JOPL contended that there was no inconsistency on the face ' of the award which vitiated it.
For IDCO, it was contended that the award was bad in law, and in any event the High Court was in error in sending the matter back to the arbitrator for making a fresh award.
Dismissing the appeal of IODC, this Court, HELD: 1.
A speaking or reasoned award is one which discusses or sets out the reasons which led the arbitrator to make the award.
Setting out the conclusions upon the questions or issues that arise in arbitration proceedings without discussing the reasons for coming to these con clusions does not make an award a reasoned or speaking award.
The arbitrator has in the award only answered the issues that were framed.
He had not discussed or set out the reasons for the answers.
The award is, therefore, not a speaking or reasoned award.
[234E F] 2.
That the arbitrator merely referred to the pleadings does not mean that the pleadings are incorporated in the award.
[234F] Allen Berry and Co. vs Union of India, AIR 1971 SC 6% and Ciacomo Costa Fu Andrea vs British Italian Trading Co. Ltd, , followed.
In answering issue no.2, the arbitrator construed only such clause of the agreement as was relevant to decide the issue.
Such clause alone would be incorporated in the award and could be looked at by the court to determine if the arbitrator had misconstrued it.
(pp.9 10) [236B] 4.
Even assuming the incorporation of the agreement, an error apparent on the face of the award had to be shown.
(p.10) [236D] Bungo Steel Furniture Pvt. Ltd. vs Union of India, ; , relied on.
In the circumstances of the case, merely because the arbitrator had not mentioned the pleadings and order of reference does not mean that the issues framed did not reflect the referred disputes.
(pp.11 and 12) [237B] 231 6.
That the original foreign sale contracts had not been sent to IDCO does not ipso facto lead to the conclusion that the arbitrator had no material before him upon which he could find in monetary terms the damages suffered by JOPL.
[237E] 7.
In the facts of the case, there are no inconsistencies upon the face of the award as can be characterised as errors that vitiate the award.
An award has to be read as a whole and harmoniously.
The grounds upon which an award can be set aside are limited.
The court should be very circumspect about setting aside an award reached by an arbitrator for parties have agreed that the disputes that may arise or have arisen between them should be resolved not by a court of law but by arbitration.
[239H, 240A] 8.
Evidence of a "malady of the racket of arbitration ' should make the court scrutinies the award carefully in each case, but would not make the court declare all high amounts of awards would be bad per se.
(p.17) [240B C] State of Orissa vs Gangaram Chhapolia, and State of Orissa vs Dandasi Sahu, ;
|
Appeal No. 1854 of 1992.
From the Judgment and Order dated 18.12.1990 of the Kerala High Court in M.F.A. No. 800 of 1990.
M.L. Verma, V.J. Francis, V. Subramanian and Padmakumar for the Appellant.
P.S. Poti and R. Sasiprabhu for the Respondent.
The Judgment of the Court was delivered by MOHAN, J.
This appeal by special leave is directed against i.e. judgment of the High Court of Kerala in M.F.A. No. 800/90 dated 18.12.90.
The short facts leading to this appeal are as under: The respondent Hotel is situated in Kaloor, Cochin 17.
It is a commercial establishment.
In July, 1985 this establishment obtained a Bar licence whereupon a Bar was started.
After running the business for some time it was closed down with effect from 31.3.88.
The Insurance Inspectors of the appellant verified the records of the respondent establishment on 29.9.87, 9.10.87 and 19.10 87.
It was reported that the employment strength of the respondent establishment including Chembaka Restaurant and Mayuri Bar was more than 19 as on 17.7.85.
Therefore, it was treated as covered under the (hereinafter referred to as the Act) with effect from 11.7.85 provisionally.
The fact of coverage was intimated to the respondent by notice dated 21.3.88.
Since the final date of coverage could be decided only after verifying all the records pertaining to the date of functioning of the establishment, the respondent was requested to produce all the records such as attendance register, wage register, ledgers etc.
from the date of starting of the establishment.
The respondent was also called upon to start 222 compliance under the Act with effect from 11.7.85.
But there was no compliance.
Hence, a notice was issued in Form C 18 dated 26.3.88 along with a draft order for contribution amount of Rs. 49,399.75 which was assessed under section 45 A of the Act for the period 11.7.85 to 313.88.
Though the respondent was afforded an opportunity to appear before the officer, it was not availed of However, a letter dated 13.7.88 was received but the explanations were not acceptable to the appellant.
Subsequently, a detailed order dated 3.8.88 under section 45 A of the Act was passed calling upon the respondent to pay a contribution of Rs. 49,399.75 together with interest at 6 per cent, failing which it would be covered as an arrears of land revenue.
Again, reminder was sent on 22.9.88.
No reply was received.
Hence, in order to recover the contribution under section 45 A of the Act, a claim in Form 19 was sent to the District Collector, Ernakulam on 31.10.88 requesting to recover the contribution for the period from 11.7.85 to 31.3.88.
Challenging these proceedings the respondent filed an application under section 75 of the Act before the Employees ' Insurance Court, Alleppey.
Inter alia it was contended that the applicant (respondent in this appeal) at no time employed 20 or more persons during the relevant time.
The order was illegal because under section 45 A of the Act the respondent was entitled to a reasonable opportunity of being heard.
That was not afforded.
These contentions were refuted by the appellant.
It was incorrect to state that on no occasion the respondent employed 20 or more workmen since the inspection report dated 8.12.86 clearly established to the contrary.
The contention that no opportunity had been afforded before initiating the revenue recovery proceedings, was also denied in view of Form C 18 dated 23.6.88, show cause notice dated 3.8.88 and reminder dated 22.9.88.
By its order dated 6th June, 1990 the Employees ' Insurance Court, Alleppey came to the following conclusion: "In the result, I can only uphold the assessment made by the ESI Corporation.
But when the question of recovery is considered, certain other aspects cannot be ignored.
The adhoc assessment itself was made by the opposite party after the 223 closure of the entire establishment.
All the employees working in the establishment had left by that time after accepting the termination of their services.
In respect of those employees who had already left, the ESI Corporation is now trying to recover contribution.
Now the position emerges is that despite the collection of contribution it will be impossible to bring under coverage those employees, because, they are not at all available for coverage and for enjoying the benefits under the scheme.
Therefore, even if the proceedings initiated earlier were sus tainable, so long as the employees are not available for the purpose of coverage, there is no meaning in collecting contribution alone.
In these circumstances, I can only hold that the applicant had failed to comply with provisions of the ESI Act at the appropriate time.
Therefore, according to me, after the closing of the establishment such recovery steps are not justified but only the prosecution as contemplated under sec.
85 of the ESI Act is attracted.
Therefore, it is upto the ESI Corporation to decide whether any prosecution should be launched against the applicant for the contravention or noncompliance of the requirements of the ESI Act and Rules. ' Aggrieved by the same the appellant Corporation preferred an appeal in M.F.A. No. 800 of 1990.
A Division Bench of the Kerala High Court by its order dated 18th December, 1990 posed the question for determination as to whether the appellant could proceed against respondent for realisation of contribution under the ESI scheme, after the closure of establishment.
The High Court upheld the finding of Insurance Court that the respondent had failed to comply with the provisions of the Act at the appropriate time.
However, it proceeded to hold that the respondent establishment was closed on 31.3.88.
P3 notice calling upon the respondent to pay the contribution was only on 23.6.88.
Since the scheme was made after the closure of the establishment, the appellant was not justified in proceeding against the respondent.
In this view, it dismissed the appeal.
It is under these circumstances, the ESI Corporation has come up by way of special leave to appeal.
Mr; M.L. Verma, learned senior counsel for the appellant urges the 224 following: 1.
The closure of the respondent establishment was on 31.3.88 but the liability with reference to contribution arose earlier.
The demand is for the period 11.7.85 to 31.3.88.
So long as the establishment is covered by the provisions of the Act it is not open to the respondent to circumvent its liability by contending that before actual recovery proceedings it had closed down.
If the finding of the High Court is accepted it would be the easiest way to evade the provisions of the Act.
In R.M. Lakshmanamurthy vs The Employees ' State Insurance Corporation, Bangalore, This Court has held that it is a beneficial piece of social security legislation in the interest of labour.
Further, the provisions of the Act will have to be construed with that end in view in order to promote the scheme and avoid the mischief.
Under section 26 of the Act all contributions are paid into a common fund.
Such a fund will have to be administered for the purposes of the Act as indicated under section 28.
Therefore, the employer cannot contend that he did not collect the employees ' contribution and hence, he cannot be called upon to pay.
Thus the impugned judgment is wrong and is liable to be set aside.
Per contra, Mr. P. Surbramanian Poti, learned senior counsel for the respondent would argue that the contention of the respondent throughout was that at no time it engaged 20 or more employees.
Therefore, it was under the belief that the Act would not be applicable.
In that belief the employer did not recover from the employees any contribution.
Nor was the employer called upon during that relevant time to comply with the provisions of the Act.
It was entirely due to the fault of the Officers of the appellant, the respondent did not make the contribution.
In any event, the establishment had been closed down on 31.3.88.
It will be unjust to enforce the provisions of the Act and to seek to recover contribution after the closure, more so, when the employees have settled their claims and have gone away.
Certainly, such a situation is not con templated under the Act.
From this point of view the judgment of the High Court is right and does not call for any interference.
In order to appreciate the rival contentions, it would be useful to set 225 out the necessary legal background.
The is an act for certain benefits to employees in cases of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto.
Section 1(4) makes it applicable to all factories, in the first instance ' Under sub section (5) of the said section, the Government may, by a Notification, extend the provisions of the Act to any other establishment or class of establishment; industrial, commercial, agricultural or otherwise.
Admittedly, in this case, the hotel industry like that of the respondent has been notified under the Act.
Under section 26, a fund called Employees ' State Insurance Fund is created by all the contributions paid under this Act, the purposes, for which it may be expended, are cataloged under section 28.
Section 38 requires all employees in factories or establishments shall be insured.
Section 39 talks of contribution.
In respect of an employee it shall comprise of contribution payable by the employer (employer 's con tribution) and contribution payable by the employee.
It is this contribution which has to be paid to the Corporation.
Section 40 imposes the liability to pay contributions, in the first instance, on the principal employer.
After such contribution the employee 's contribution could be deducted from his wages.
Sub section (4) of section 40 is important.
That says as follows: "(4) Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted." (Emphasis supplied) Therefore, this sub section puts the matter beyond doubt that there is an entrustment.
In other words, the employer is a trustee.
Under section 44 there is an obligation on the employer to furnish returns and maintain registers.
The benefits available to the insured persons are stated in section 46: 1.
Sickness 2.
Maternity 3.
Disablement 226 4.
Injury 5.
Medical treatment for and attendance on insured persons.
Lastly, there is power to prosecute under section 85 which includes punishment for failure to pay contributions as well as for contravention of or non compliance with any of the requirements of the Act.
In the above legal background we may analyse the factual situation.
Two facts stare at us.
The liability to contribution of the respondent employer relates to a period between 11.7.85 to 31.3.88. 2.
The respondent establishment was closed on 31.3.88.
The contention of the respondent that at no time there were 20 or more employees in his establishment has to be rejected because at no point of time the respondent sought an adjudication on this aspect.
On the contrary, the inspections made by the officials of the appellant on 8.12.86, September 87 and October 87 state to the contrary.
Therefore, we have to proceed on the basis that the provisions of the Act are applicable to the respondent establishment, since (i) it is a notified industry, (ii) in the establishment more than 20 employees were working at the relevant time.
From the above provisions it is clear that from the date of his commencement of business, namely, 11.7.85, there was a liability to contribute.
It has already been seen under section 40 the primary liability is his, to pay, not only the employer 's contribution but also the employee 's contribution.
Therefore, he cannot be heard to contend that since he had not deducted the employee 's contribution on the wages of the employees, he could not be made liable for the same.
The object of making a deeming entrustment sub section (4) of section 40 will be altogether rendered nugatory if such a contention were to be accepted.
After all, when he makes employee 's contribution he is entitled to deduct from the wages.
Therefore, by force of the application of the statutory provisions, the liability to contribute, during this relevant period, namely, 11.7.85 to 31.3.88, arose.
There is no gain saying in that.
Hence, we reject the arguments of Mr. Subramanian Poti, learned senior counsel for the respondent.
From the above statutory provisions, it would be clear that from out 227 of the common fund maintained under section 26, the employees derive various benefits like sickness, maternity, disablement, injury, medical treatment for and attendance on insured persons.
Therefore, it is a beneficial piece of social security legislation.
As a matter of fact, this Court had occasion to consider the same in B.M. Lakshmanamurthy 's case (supra).
At page 370, paragraph 16 it was held : "The Act is thus a beneficial piece of social security legislation in the interest of labour in factories at the first instance and with power to extend to other establishments.
Provisions of the Act will have to be construed with that end in view to promote the scheme and avoid the mischief." Mr. M.L. Verma, learned senior counsel for the appellant is right in his submissions in this regard.
The Insurance Court as well as the High Court have correctly upheld the demand for contribution.
But it is rather strange to conclude that the demand could not be enforced against a closed business.
If this finding were to be accepted it would not promote the scheme and avoid the mischief.
On the contrary, it would perpetrate the mischief.
Any employer can easily avoid his statutory liability and deny the beneficial piece of social security legislation to the employees, by closing down the business before recovery.
That certainly is not the indentment of the Act.
To hold, as the High Court has done, would set at naught all these beneficial provisions.
It is equally fallacious to conclude that because the employees had gone away there is no liability to contribute.
It has to be carefully remembered that the liability to contribute arose from the date of commencement of the establishment and is a continuing liability till the closure.
The very object of establishing a common fund under section 26 for the benefit of all the employees will again be thwarted if such a construction is put.
We cannot also accept the finding of the High Court that because Ext.
P3 notice was issued on 23.6.88 after the closure of the respondent establishment on 31.3.88, the appellant was not justified in proceeding against the respondent.
The proceeding for the recovery is of the dues of contribution which arose prior to the closure on 31.3 88.
Therefore, it matters little when notice was issued, calling upon to pay the contribution.
228 In our considered view, such a notice is only a reminder to the employer to discharge his statutory obligation.
For all these reasons, we have little hesitation in setting aside the impugned judgment of the High Court which in turn upholds the order of Employees ' State Insurance Court.
The appellant will be entitled to proceed with the recovery proceedings in accordance with law.
Accordingly, the appeal will stand allowed with costs.
G.N. Appeal allowed.
| The Respondent Hotel which was also running a Bar for sometime, closed down its business after several years.
Th Inspectors of the appellant Corporation verified the records of the establishment and reported that at certain point of time the employment strength of the establishment including the bar was more than 19.
Therefore, the establishment was treated as covered provisionally under the Employees State Insurance (ESI) Act, 1948.
Since the final date of coverage could be decided only after verifying all the records, the Respondent was asked to produce them.
The Respondent did not avail the opportunity afforded to it Though the Respondent sent Its explanation, It was not acceptable to the appellant Corporation and so it passed a detailed order under S.45 A calling upon the Respondent to pay the contribution with interest at 6% failing which It would be recovered as arrears of land revenue.
Since this order and the reminder thereto, did not evoke any response from the Respondent, the appellant sent a claim in Form 19 to the District Collector requesting him to recover the said amount The Respondent challenged the proceedings by filling an application under S.75 of the Act before the ESI Court, which upheld the assessment made by the appellant Corporation, but stated that recovery steps were not justified after the closure of the establishment, and only prosecution as contemplated section 85 of the Act was attracted.
The appellant Corporation preferred an appeal against the said decision of ESI Court The High Court dismissed the appeal and held that since the scheme was made after the closure of the establishment, the 219 220 appellant was not justified in proceeding against the Respondent Being aggrieved by the judgment of the High Court, the appellant Corporation preferred the present appeal contending that so long as the establishment was covered by the provisions of the Act, the Respondent could not circumvent its liability by claiming that before actual recovery proceedings, it had closed down the establishment.
Allowing the appeal, this Court, HELD: 1.1.
Admittedly the hotel industry like that of the respondent has been notified by the Government thus extending the provisions of the to hotel industry.
Therefore, on the date of commencement of its business, namely, 11.7.85, there was a liability on the Respondent to contribute to the ESI fund.
Under section 40 the primary liability is on the employer to pay, not only his contribution but also the employees contribution.
As such the employer can not plead that since he had not deducted the employees ' contribution from their wages, he could not be made liable for the same.
After all when he makes employees ' contribution he is entitled to deduct from the wages.
Thus by force of the application of the statutory provisions, the liability to contribute during the relevant period, namely, 11.7.85 to 31.3.88, arose.
[226E G] 1.2.
The Insurance Court as well as the High Court have correctly upheld the demand for contribution.
But it is rather strange to conclude that the demand could not be enforced against a closed business.
If this finding were to be accepted it would not promote the scheme and avoid the mischief.
On the contrary, it would perpetrate the mischief.
Any employer can easily avoid his statutory liability and deny the beneficial piece of social security legislation to the employees, by closing down the business before recovery.
That certainly is not the indentment of the Act.
It is equally fallacious to conclude that because the employees had gone away there is no liability to contribute.
It has to be carefully remembered that the liability to contribute arose from the date of commencement of the establishment and is a continuing liability till the closure.
The very object of establishing a common fund under section 26 for the benefit of all the employees will again be thwarted if such a construction is put.
[227D F] R.M.
Lakshmanamurthy vs The Employees ' State Insurance Corporation, Bangalore, , relied on.
221 2.
The proceeding for the recovery is in respect of the dues of contribution which arose prior to the closure on 31.3.88.
Therefore, it matters little when notice was issued calling upon the establishment to pay the contribution.
Such a notice is only a reminder to the employer to discharge his statutory obligation.
The appellant corporation is thus entitled to proceed with the recovery proceedings in accordance with law.
[227H, 228A]
|
Appeal No. 313 of 1993.
From the Judgment and Order dated 9.10.1992 of the Karnataka High Court in Election Petition No. 8 of 1991.
P.N. Misra for the Appellants.
R.N. Narasimha Murthy, E.C. Vidyasagar and Gopal Singh for the Respondents.
The Judgement of the Court was delivered by B.P. JEEVAN REDDY, J. Heard the counsel for the parties.
Leave granted.
This appeal raises the question whether Section 5 of the is applicable to a recrimination notice given under Section 97 of the Representation of People Act, 1951.
The learned Single Judge of the, Karnataka High Court has held that it does not.
His ,view is questioned by the returned candidate (first respondent in the election petition) before us.
The first respondent in the Election Petition who shall hereinafter be referred to as "appellant ', was declared elected from Koppal parliamentary constituency during the general elections held for the 10th Lok Sabha.
He contested on the Congress (1) ticket.
The election petitioner, referred to hereinafter as "the first respondent" had also contested from the said constituency on the ticket of Janata Dal.
Having lost the election, the first respondent filed an election petition No. 8 of 1991 for a declaration that the election of the appellant from the said parliamentary constituency was void and for a further declaration that he himself has been duly elected therefrom.
Since the appellant and some other respondents to the election petition could not be served in the ordinary course, the High Court directed publication of notice in a Kannada Daily Newspaper.
It was so published on 4.11.1991 fixing the date of appearance of the respondents on 25.11.1991.
The appellant (first respondent in the election petition) ap peared before the High Court on 4.11.1991 and sought time for filing his written statement which he did on 6.11.1992.
Thereafter, on 21.1.1992 he submitted the recrimination notice under Section 97 of the Act.
By the said notice, the appellant expressed his intention to give evidence to prove that 316 the election of the first respondent would have been void if he had been . he returned candidate and a petition had been presented calling in question his election.
Along with the recrimination notice he filed an application under Section 5 of the requesting the High Court to condone the delay in filing the same for the reasons stated therein.
According to the proviso to Section 97(j) notice of such intention should have been given to the High Court "within 14 days from the date of commencement of trial".
Admittedly, the appellant gave notice under Section 97(1) beyond the period of 14 days and hence the application under Section 5.
For a proper appreciation of the question arising herein, it would be appropriate to notice the relevant provisions of the Representation of People Act besides Section 29(2) of the .
First the provisions of the Representation of People Act.
Section 97 reads as follows: "97.
Recrimination when seat claimed. (1) When in an election petition a declaration that any candidate other than the returned candidate has been duly elected is claimed, the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election: Provided that the returned candidate or such other party as aforesaid shall not be entitled to give such evidence unless he has, within fourteen days from the date of commencement of the trial, given notice to the High Court of Ins intention to do so and has also given the security and the further security referred to in sections 117 and 118 respectively.
(2)Every notice referred to in sub section (1) shall be accompanied by the statement and particulars required by section 83 in the case of an election petition and shall be signed and verified in like manner.
" Sub section (1) of Section 97 permits the returned candidate or any other party to give evidence (in an election petition seeking a declaration that any candidate other than the returned candidate has been duly elected) to 317 prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election.
Sub section (2) says that such a notice shall be accompanied by a statement and particulars required by Section 83 in the case of an election petition and shall also be signed and verified in the same manner.
Proviso to sub section (1) says that such a notice shall be given within fourteen days from the date of "commencement of trial" and the security and further security referred to in Sections 117 and 118 respectively is furnished.
The expression "commencement of trial" has been defined in Explanation to Sub section(4) of Section 86.
The Explanation reads: "For the purposes of this sub section and of Section 97, the trial of a petition shall be deemed to commence on the date fixed for the respondents to appear before the High Court and answer the claim or claims made in the petition." According to the said definition, the notice of the recrimination should have been given in this case within fourteen days of 4.11.91.
Admittedly, it was submitted beyond the said period.
Section 83 deals with "contents of petition".
According to sub section (1) an election petition (a) shall contain a concise statement of the material facts on which the petitioner relies; (b) shall set forth particulars of any corrupt practice that the petitioner alleges including as full a statement as possible of all the names of the parties alleged to have committed such corrupt practice and the date and place of the commission of each of such practice and (c) shall be signed by the petitioner and verified in the manner laid down in the Code of Civil Procedure, 1908 for the verification of pleadings.
The proviso to sub section (1) says that where a petitioner alleges any corrupt practice, the petition shall also be accompanied by an affidavit in the prescribed form in support of the allegation of such practice and particulars therein.
Sub section (2) says that any schedule or annexure to the petition shall also be signed by the petitioner and verified in the same manner as the petition.
Section 117 requires the election petitioner to deposit in the High Court, at the time of presenting an election petition, a sum of Rs. 2,000 as security for the costs of the petition in accordance with the rules of the High Court.
Section 118 says that no person shall be entitled to be joined as a respondent under Sub section (4) of Section 86 unless he has given such security for costs as the High Court may direct.
Section 86(1) declares that "the 318 High Court shall dismiss an election petition which does not comply with the provisions of section 81 or section 82 or section 117.
" There is no provision in the Representation of People Act, 1951 making all or any of the provisions of the applicable to the proceedings under the Act.
The appellant, however, relies upon Section 29(2) of the .
According to him by virtue of the said provision, all the provisions contained in Sections 4 to 24 (both inclusive) apply to the proceedings under the Act including the recrimination notice under Section 97.
Sub section(2) of Section 29, which alone is relied upon before us reads: "Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only insofar as, and to the extent to which, they are not expressly excluded by such special or local law." In H.N. Yadav vs L.N. Misra, ; , this court held that the words "expressly excluded ' occurring in Section 29(2) of the do not mean that there must necessarily be express reference in the special or local law to the specific provisions of the , the operation of which is sought to be excluded.
It was held that if on an examination of the relevant provisions of the Special Act, it is clear that the provisions of the are necessarily excluded then the benefits conferred by the cannot be called in aid to supplement the provisions of the Special Act.
That too was a case arising under the Representation of People Act and the question was whether Section 5 of the is applicable to the filing of the election petition.
The test to determine whether the provisions of the applied to proceedings under Representation of People Act by virtue of Section 29(2) was stated in the following words "The applicability of these provisions has, therefore, to be judged not from the terms of the but by the provisions of the Act relating to the fifing of election 319 petitions and their trial to ascertain whether it is a complete code in itself which does not admit of the application of any of the provisions of the mentioned in Section 29(2) of that Act." On an examination of the provisions of the Representation of People Act and the earlier decisions of the Court, it. was held that the Representation of People Act is a self contained code and accordingly, it was concluded that "the provisions of section 5 of the do not govern the filing of election petitions.
or their trial.
" This decision, in our view, practically concludes the question before us inasmuch as the Act equates a recrimination notice to an election petition.
The language of Section 97 makes the said fact abundantly clear.
The relevant words are: "the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election.
" The proviso to sub section (1) applies the provisions of Sections 117 and 118 to such a recrimination notice.
It may be noticed that for non compliance with the requirement of Section 117 an election petition is liable to be dismissed by virtue of sub section (1) of section 86.
Sub section (2) of Section 97 further says that the "notice referred to in sub section (1) shall be accompanied by the statement and particulars required by Section 83 in the case of an election petition and shall be signed and verified in like manner.
" We may also say that the proviso to sub section (1) of Section 97 which requires such a notice to be given to the High Court within fourteen days of the "date fixed for the respondents to appear before the High Court to answer the claim or claims" (reading the definition of "commencement of trial" into it) has also a particular meaning and object behind it.
The idea is that the recrimination notice, if any, should be filed at the earliest possible time so that both the election petition and the recrimination notice are tried at the same time.
The recrimination notice is thus comparable to an election petition.
If Section 5 does not apply to the filing of an election petition, it does not equally apply to the filing of the recrimination notice.
In view of the above position, we do not think it necessary to deal with the several decisions cited before us relating to the interpretation of Sub section (2) of Section 29 of the .
The counsel for the appellant brought to our notice a decision of this 320 Court holding that the provisions of the Section 12(2) of the Limitation Act, 1908 are applicable to an appeal under Section 116(A) of the Representation of People Act, 1951 viz., V.C Shukla vs Khubchand Baghel and Ors., [1964] 6 S.C.R.129.
It is also brought to our notice that certain High Courts have taken the view that both Section 5 and Section 12(2) of the Limitation Act are applicable to the proceedings under the Act.
Reference is to , 1968 Calcutta 69 and (1976) 89 Madras La. Weekly 32.
So far as the decision of this court in V.C Shukla is concerned, it is a decision dealing with the applicability of the provision in Section 12(2) of the Limitation Act to an appeal preferred under Section 116(A) and not with the filing of an election petition.
The said decision was considered and distinguished in H.N. Yadav on the above basis.
At page 42 of the S.C.R., the Division Bench which decided H.N. Yadav distinguished the decision in V.C. Shukla in the following words : "Vidyacharan Shukla 's case (supra) is one which dealt with an appeal under the Act while what we have to consider is whether the Limitation Act is at all applicable to elec tion petitions under the Act.
Thirdly, section 29(2) of the new Limitation Act does not now give scope for this controversy whether the two limbs of the old section are independent or integrated.
No doubt section 5 would now apply where section 29(2) is applicable to even applications and petitions, unless they are expressly excluded.
Even assuming that the Limitation Act applies to election petitions under the Act, what has to be seen is whether section 5 is excluded from application to such petitions.
" The Division Bench then proceeded to examine whether the applicability of Section 5 is excluded in the matter of filing of an election petition and came to the conclusion that it was so excluded.
This aspect has already been dealt with hereinabove.
So far as the decisions of the High Courts are concerned, we cannot agree with them in so far as the applicability of Section 5 to filing on election petition and/or recrimination notice is concerned in view of the decision of this Court in H.N. Yadav.
For the above reasons, the appeal fails and is accordingly dismissed with costs.
N.P.V. Appeal dismissed.
| The first respondent, a defeated candidate, riled an election petition before the High Court for a declaration that the election of the appellant was void and that he himself had been duly elected.
Since the notice could not be served on the appellant, and some other respondents in the ordinary course, it was published in a vernacular daily newspaper, as directed by the High Court, fixing the date of appearance of the respondents therein.
The appellant appeared before the High Court on the date of publication of the notice and sought time for filing the written.
statement and after doing so submitted a recrimination notice under Section 97 of the Representation of People Act, 1951.
Along with the recrimination notice he flied an application under Section 5 of the requesting the High Court to condone the delay in filing the same, since the appellant had given notice beyond the period of 14 days from the date of commencement of trial, prescribed under the proviso to Section 97(1).
The High Court held that Section 5 of the was not applicable to a recrimination notice.
Aggrieved, the appellant riled the appeal, by special leave, before this Court.
It was contended that by virtue of Section 29(2) of the , all the provisions contained in sections 4 to 24 (both inclusive) of the Act applied to the proceedings under the Representation of the People Act, 1951, including the recrimination notice under Section 97.
314 Dismissing the appeal, this Court, HELD : 1.1.
There is no provision in the Representation of People act 1951 making all or any of the provisions of the placable to the proceedings under the Act.
[318A] 1.2.
The Act equates a recrimination notice to an election petition.
The language of Section 97 makes the said fact abundantly clear.
It provides that returned candidates or any other party may give evidence to prove that the election of such candidate would have been void If he had been the returned candidate and a petition had been presented calling in question his election.
The proviso to sub section (1) applies the provisions of Sections 117 and 118 to such a recrimination notice.
For non compliance with the requirement of Section 117 an election petition is liable to be dismissed by virtue of sub section (1) of Section 86.
Sub section (2) of Section 97 further provides that the notice referred to in sub section (1) should be accompanied by the statement and particulars as required by Section 83 in the case of an election petition and should be signed and verified in like manner.
[319C E] 1.3.
The proviso to sub section (1) of Section 97 which requires such a notice to be given to the High Court within 14 days of the date fixed for the respondents to appear before the High Court to answer the claim or claims (reading the definition of 'commencement of trial ' into it) has also a particular meaning and object behind it.
The idea is that the recrimination notice, if any, should be filed at the earliest possible time so that both the election petition and the recrimination notice are tried at the same time.
[319F] The recrimination notice is thus comparable to an election petition.
If Section 5 of the does not apply to the filing of an election petition, it does not equally apply to the filing of the recrimination notice.
[319G] H.N Yadav vs L.N. Misra, ; , relied on.
Shukla vs Khubchand Baghel and Ors., [1964] 6 S.C.R. 129, distinguished.
Bhogilal Pandya vs Maharawal Laxman Singh, AIR , Bhakti Bh.
Mondal vs Hhagendra K Bandhopandhya, 1968 Calcutta 315 69, overruled.
|
Appeal Nos.
266 267 of 1993.
From the Judgment and Order dated 8.2.91 & 22.3.91 of the Central Administrative Tribunal Principal Bench, New Delhi in O.A. No. 2540/89 & M.P. No. 219 of 1991.
K.T.S. Tulsi, Additional Solicitor General B. Parthasarthy, P. Parmeshwaran and C.V.S. Rao for the Appellants.
Indu Malhotra for the Respondent.
The Judgment of the Court was delivered by MOHAN, J.
Leave granted.
The respondent, while working as Income Tax Officer, Muktsar during the year 1982 83 completed certain assessments.
A charge memorandum dated 2.5.1989 was served on him to the effect it was proposed to hold an inquiry against him under Rule 14 of the Central Civil Services (Classification, Central & Appeal) Rules, 1965.
A statement of article of charge framed against him was to the following effect : STATEMENT OF ARTICLE OF CHARGE FRAMED AGAINST, SHRI K.K. DHAWAN, A GROUP 'A ' NOW POSTED AS ASSISTANT COMMISSIONER OF INCOME TAX, BOMBAY.
Article I Shri K.K. Dhawan while functioning as I.T.O. "A" 300 Ward, Muktsar during 1982 1983 completed nine assessments in the case of : (1) M/s Chananna Automobiles, (2) N/s Gupta Cotton Industries, (3) M/s Ajay Cotton Industries, (4) M/s National Rice Mills, (5) M/s Tek Chand Buchram, (6) M/s Tilak Cotton Industries, (7) M/s Chandi Ram Behari Lal, (8) M/s Phuman Mal Chandi Ram and (9) M/s Modern Tractors in an irregular manner, in undue haste and apparently with a view to conferring undue favour upon the assessees concemed By his above acts Shri Dhawan failed to maintain absolute integrity and devotion to duty and exhibited a conduct unbecoming of a Govt.
servant, thereby violating provisions of Rules 3(1) (i), 3(1) (ii) and 3(1) (iii) of the CCS (Conduct) Rules, 1964.
This was accompanied by a statement of imputation of his misconduct or misbehaviour in support of the article of charge framed against him.
In each of the nine cases of the assesses above referred to, the details relating to misconduct or misbehaviour were furnished.
Therefore, it was charged that the respondent had violated the provisions of Rule 3(1)(i), 3(1)(ii) and 3(1)(iii) of the Central Civil Services (Conduct) Rules, 1964.
The necessary documents in support of these allegations were also enclosed.
Against the said memorandum dt.
2.5.1989, the respondent preferred an application O.A. No. 2540/89 before the Central Administrative Tribunal, New Delhi praying for a stay of the disciplinary proceedings and to consider his case for promotion on merits without resort to the sealed cover procedure.
301 By its order dt.
8.2.1991, Central Administrative Tribunal, Principal Bench, New Delhi directed the respondent Union of India to open the sealed cover immediately and implement the recommendations of the Departmental Promotion Committee in so far as it pertained to the petitioner and to promote him to the post of Deputy Commissioner of Income Tax if he was found fit for promotion within two weeks from the date of said order.
Thereafter, by a detailed judgment dated 22.3.1991, the Tribunal relying on S.L.P. (C) Nos.
2635 36/89 in Civil Appeal No. 4986 87/90, held that the action taken by the officer was quasi judicial and should not have formed the basis of disciplinary action.
Therefore, the application was allowed and the impugned memorandum dated 2.5.1989 was quashed.
The earlier order dated 8.2.1991 to open the sealed cover and implement the recommendations of Departmental Promotion Committee was made absolute.
Aggrieved by these two orders, the present special leave petitions have been preferred.
The teamed counsel for the appellant Shri K.T.S. Tulsi submits as under: (i) That in a case where disciplinary proceedings are pending against the respondent, the procedure of opening the sealed cover should not have been resorted to.
Otherwise, it would amount to putting a premium on misconduct.
(ii)The Tribunal failed to appreciate the ratio of the order in C.A. Nos.
4986 87/90.
In that case, the enquiry report showed that the charge framed against the officer had not been proved.
That is entirely different from holding that in a case of quasi judicial action taken by the Officer no disciplinary action could be taken.
The true purport of that observation is only to buttress the earlier finding that the charge had not been proved.
Therefore, reliance ought not to have been placed on this ruling which turned on the peculiar facts and circumstances of that case.
302 (iii)Though nine cases were cited in the charge memorandum, only one of the cases had been discussed.
(iv)Lastly, it is submitted that the respondent is charged for violation of Rule 3(1)(i), 3(1)(ii) and 3(1)(iii) of Central Civil Services (Conduct) Rules, 1964.
Therefore, if the conduct of the respondent could be brought within the scope of the Rules, immunity from the disciplinary action cannot be claimed.
In support of these submissions, reliance is placed on Union of India & Ors.
vs A.N. Saxena, ; In Civil Appeal No. 560 of 1991, the peculiar facts art different; in disregard to the instructions of the Central Board of Direct Taxes, refund of taxes was ordered.
Further, there was no allegation of corrupt motive or to oblige any person on account of extraneous considerations.
Therefore, that ruling is distinguishable.
The respondent would try to support the impugned order contending that the opening of the sealed cover was correctly ordered because on the date when the Departmental Promotion Committee met in March 1989, no charge sheet had been served on the respondent.
The charge memorandum dated 2.5.1989 came up to be served only on 5.5.1989.
Therefore, following the earlier procedure such a direction was given.
This is a case in which the respondent was exercising quasi judicial functions.
If the orders were wrong the remedy by way of an appeal or revision could have been resorted to.
Otherwise, if in every case of wrong order, disciplinary action is resorted to, it would jeopardize the exercise of judicial functions.
The immunity attached to the officer while exercising quasi judicial powers will be lost.
Rightly, therefore, the Tribunal relied on Civil Appeal Nos.
4986 87/90 where this Court took the view that no disciplinary action can be taken in respect of exercising quasi judicial functions.
To the same effect in Civil Appeal No. 560/91 the decision relied on by the appellant namely Union of India & Ors., ; (supra) has no application to the instant case.
The charge memorandum dated 2.5.1989 states as follows 303 MEMORANDUM "The President proposes to hold an inquiry against Shri K.K. Dhawan under Rule 14 of the Central Civil Services (Classification, Central and Appeal) Rules, 1965.
The substance of the imputations of misconduct or misbehaviour in respect of which the inquiry is proposed to be held is set out in the enclosed statement of article of charge.
" At this stage, we will refer to Rule 3(1)(i) , 3(1)(ii) and 3(1)(iii) of the Central Civil Services (Conduct) Rules, 1964 which are as under Rule 3 (1) : Every government servant shall at all time (i) maintain absolute integrity; (ii) maintain devotion to duty and (iii) do nothing which is unbecoming of a government servant.
The substance of the charge is the completion of nine assessments in an irregular manner, hastily with a view to confer undue favour upon the various assessees.
By such act, the respondent failed to maintain absolute integrity and devotion to duty and exhibited a conduct unbecoming of government servant.
Certainly, it cannot be contended that concerning the violation of these rules, no disciplinary action could be taken.
However, what is urged is that in so far as the respondent was exercising quasi judicial functions, he could not be subject to disciplinary action.
The order may be wrong.
In such a case, the remedy will be to take up the matter further in appeal or revision.
The question, therefore, arises whether an authority enjoys immunity from disciplinary proceedings with respect to matters decided by him in exercise of quasi judicial functions? In Govinda Menon vs Union of India, ; , it was contended that no disciplinary proceedings could be taken against appellant for acts or omissions with regard to his work as Commissioner under Madras Hindu Religious and Charitable Endowments Act, 1951.
Since the 304 orders made by him were quasi judicial in character, they should be challenged only as provided for under the Act.
It was further contended that having regard to scope of Rule 4 of All India Services (Discipline and Appeal) Rules, 1955, the act or omission of the Commissioner was such that appellant was not subject to the administrative control of the Government and therefore, the disciplinary proceedings were void.
Rejecting this contention, it was held as under : "It is not disputed that the appropriate Government has power to take disciplinary proceedings against the appellant and that he could be removed from service by an order of the Central Government, but it was contended that I.A.S. Officers are governed by statutory rules, that ,any act or omission ' referred to in Rule 4(1) relates only to an act or omission of an officer when serving under the Government, and that 'serving under the Government ' means subject to the administrative control of the Government and that disciplinary proceedings should be, therefore, on the basis of the relationship of master and servant.
It was argued that in exercising statutory powers the Commissioner was not subject to the administrative control of the Government and disciplinary proceedings cannot, therefore, be instituted against the appellant in respect of an act or omission committed by him in the course of his employment as Commissioner.
We are unable to accept the proposition contended for by the appellant as correct.
Rule 4(1) does not impose any limitation or qualification as to the nature of the act or omission in respect of which disciplinary proceedings can be instituted.
Rule 4(1) (b) merely says that the appropriate Government competent to institute disciplinary proceedings against a member of the Service would be the Government under whom such member was serving at the time of the commission of such act or omission.
It does not say that the act or omission must have been committed in the discharge of his duty or in the course of his employment as a Government servant.
It is, therefore, open to the Government to take disciplinary proceedings against the appellant in respect of his acts or omissions which cast 305 a reflection upon his reputation for integrity or good faith or devotion to duty as a member of the service.
It is not disputed that the appellant was, at the time of the alleged misconduct, employed as the First Member of the Board of Revenue and he was at the same time performing the duties of Commissioner under the Act in addition to his duties as the First Member of the Board of Revenue.
In our opinion, it is not necessary that a member of the Service should have committed the alleged act or omission in the course of discharge of his duties as a servant of the Government in order that it may form the subject matter of disciplinary proceedings.
In other words, if the act or omission is such as to reflect on the reputation of the officer for his integrity or good faith or devotion to duty, there is no reason why disciplinary proceedings should not be taken against him for that act or omission even though the act or omission relates to an activity in regard to which there is no actual master and servant relationship.
To put it differently, the test is not whether the act or omission was committed by the appellant in the course of the discharge of his duties as servant of the Government.
The test is whether the act or omission has some reasonable connection with nature and condition of his service or whether the act or omission has cast any reflection upon the reputation of the member of the Service for integrity or devotion to duty as a public servant.
We are of the opinion that even if the appellant was not subject to the administrative control of the Government when he was functioning as Commissioner under the Act and was not the servant of the Government subject to its orders at the relevant time, his act or omission as Commissioner could form the subject matter of disciplinary proceedings provided the act or omission would reflect upon his reputation for integrity or devotion to duty as a member of the service.
" In this context reference may be made to the following observations of Lopes, LJ.
in Pearce vs Foster, [1866] 17 OBD 536, p.542.
"If a servant conducts himself in a way inconsistent with the 306 faithful discharge of his duty in the service, it is misconduct which justifies immediate dismissal.
That misconduct, according to my view, need not be misconduct in the carrying on of the service of the business.
It is sufficient if it is conduct which is prejudicial or is likely to be prejudicial to the interests or to the reputation of the master, and the master will be justified, not only if he discovers it at the time, but also if he discovers it afterwards, in dismissing that servant." (emphasis supplied) Concerning, the exercise of quasi judicial powers the contention urged was to the following effect : "We next proceed to examine the contention of the appellant that the Commissioner was exercising a quasi judicial function in sanctioning the leases under the Act and his order, therefore, could not be questioned except in accordance with the provisions of the Act.
The proposition put forward was that quasi judicial orders, unless vacated under the provisions of the Act, are final and binding and cannot be questioned by the executive Government through disciplinary proceedings.
It was argued that an appeal is provided under S.29(4) of the Act against the order of the Commissioner granting sanction to a lease and that it is open to any party aggrieved to file such an appeal and question the legality or correctness of the order of the Commissioner and that the Government also may in revision under S.99 of the Act examine the correctness or legality of the order.
it was said that so long as these methods were not adopted the Government could not institute disciplinary proceedings and reexamining the legality of the order of the Commissioner granting sanction to the leases.
" That was rejected as under: 'The charge is, therefore, one of misconduct and recklessness disclosed by the utter disregard of the relevant provisions of S.29 and the Rules thereunder in sanctioning the leases.
On behalf of the respondents it was argued 307 both by Mr. Sarjoo Prasad and Mr. Bindra that the Commissioner was not discharging quasi judicial functions in sanctioning leases under S.29 of the Act, but we shall proceed on the assumption that the Commissioner was performing quasi judicial functions in granting leases under S.29 of the Act.
Even upon that assumption we are satisfied that the Government was entitled to institute disciplinary proceedings if there was prima facie material for showing recklessness or misconduct on the part of the appellant in the discharge of his official duty.
It is true if the provisions of S.29 of the Act or the Rules are disregarded the order of the Commissioner is illegal and such an order could be questioned in appeal under S.29 (4) or in revision under S.99 of the Act.
But in the present proceedings what is sought to be challenged is not the correctness or the legality of the decision of the Commissioner but the conduct of the appellant in the discharge of his duties as Commissioner.
The appellant was proceeded against because in the discharge of his functions, he acted in utter disregard of the provisions of the Act and the Rules.
It is the manner in which he discharged his functions that is brought up in these proceedings.
In other words, the charge and the allegations are to the effect that in exercising his powers as Commissioner the appellant acted in abuse of his power and it was in regard to such misconduct that he is being proceeded against.
It is manifest, therefore, that though the propriety and legality of the sanction to the leases may be questioned in appeal or revision under the Act, the Government is not precluded from taking disciplinary action if there is proof that the Commissioner had acted in gross recklessness in the discharge of his duties or that he failed to act honestly or in good faith or that he omitted to observe the prescribed conditions which are essential for the exercise of the statutory power.
We see no reason why the Government cannot do so for the purpose of showing that the Commissioner acted in utter disregard of the conditions prescribed for the exercise of his power or that he was 308 guilty of misconduct or gross negligence.
We are accordingly of the opinion that the appellant has been unable to make good his argument on this aspect of the case.
" The above case, therefore, is an authority for the proposition that disciplinary proceedings could be initiated against the government servant even with regard to exercise of quasi judicial powers provided : (i) The act or omission is such as to reflect on the reputation of the government servant for his integrity or good faith or devotion to duty, or (ii)there is prima facie material manifesting recklessness or misconduct in the discharge of the official duty, or (iii)the officer had failed to act honestly or in good faith or had omitted to observe the prescribed conditions which are essential for the exercise of statutory power.
We may also usefully refer to two English decisions.
Thayre vs The London, Brighton and South Coast Railway Company, states: "Dishonesty ' included dishonesty outside the service of the company as well as dishonesty towards the company." In Thompson vs British Berna Motor Lorries Limited 33 T.L.R. 187 at page 188, it has been held as under : "It was the duty of the servant to render proper, full and clear accounts to his principals, and it was the duty of a servant to render prompt obedience to the lawful orders of his master.
in this case the plaintiff had failed in both respects.
There was no question as to the plaintiff 's honesty, but he had been negligent.
" The Tribunal has chosen to rely on Civil Appeal Nos.
4986 87/90.
The order in that case clearly shows the ultimate conclusion was that the charge framed against the delinquent officer had not been established.
In support of that conclusion, it was observed as under 309 "We are also of the view that the action taken by the appellant was quasi judicial and should not have formed the basis of disciplinary action.
" We do not think where to buttress the ultimate conclusion, this observation was made, that could ever be construed as laying the law that in no case disciplinary action could be taken if it pertains to exercise of quasi judicial powers.
Then, we come to Civil Appeal No. 560/91 to which one of us (Mohan, J.) was a party.
The ruling in this case turned on the peculiar facts.
Nevertheless, what we have to carefully notice is the observation as under : "On a reading of the charges and the allegations in detail learned Additional Solicitor General has fairly stated that they do not disclose any culpability nor is there any allegation of taking any bribe or to trying to favour any party in making the orders granting relief in respect of which misconduct is alleged against the respondent.
" The above extract will clearly indicate that if there was any culpability or any allegation of taking bribe or trying to favour any party in exercise of quasi judicial functions, then disciplinary action could be taken.
We find our conclusion is supported by a following observations found in the said order at page 3: "In our view, the allegations are merely to the effect that the refunds were granted to unauthorized instructions of the Central Board of Direct Taxes.
There is no allegation, however, either express or implied that these actions were taken by the respondent actuated by any corrupt motive or to oblige any person on account of extraneous considerations.
In these circumstances, merely because such orders of refunds were made, even assuming that they were erroneous or wrong, no disciplinary action could be taken as the respondent was discharging quasi judicial function.
If any erroneous order had been passed by him correct remedy is by way of an appeal or revision to have such orders set aside.
" 310 In the case on hand, article of charge clearly mentions that the nine assessments covered by the article of charge were completed (i) in an irregular manner, (ii) in undue haste, and (iii) apparently with a view to confer undue favour upon the assessees concerned.
(Emphasis supplied) Therefore, the allegation of conferring undue favour is very much there unlike Civil Appeal No. 560/91.
If that be so, certainly disciplinary action is warranted.
This Court had occasion to examine the position.
In Union of India & Ors.
vs A.N. Saxena; , to which one of us (Mohan, J.) was a party, it was held as under : "It was urged before us by learned counsel for the respondent that as the respondents was performing judicial or quasi judicial functions in making the assessment orders in question even if his actions were wrong they could be corrected in an appeal or in revision and no disciplinary proceedings could be taken regarding such actions.
In our view, an argument that no disciplinary action can be taken in regard to actions taken or purported to be done in the course of judicial or quasi judicial proceedings is not correct.
It is true that when an officer is performing judicial or quasi judicial functions disciplinary proceedings regarding any of his actions in the course of such proceedings should be taken only after great caution and a close scrutiny of his actions and only if the circumstances so warrant.
The initiation of such proceedings, it is true, is likely to shake the confidence of the public in the officer concerned and also if lightly taken likely to undermine his independence.
Hence, the need for extreme care and caution before initiation of disciplinary proceedings against an officer performing judicial or quasi judicial functions in respect of his actions in the discharge or purported to discharge his functions.
But it is not as if such action cannot be taken at all.
Where the 311 actions of such an officer indicate culpability, namely a desire to oblige himself or unduly favour one of the parties or an improper motive there is no reason why disciplinary action should not be taken.
" This dictum fully supports the stand of the appellant.
There is a great reason and justice for holding in such cases that the disciplinary action could be taken.
It is one of the cardinal principles of administration of justice that it must be free from bias of any kind.
Certainly, therefore, the officer who exercises judicial or quasi judicial powers acts negligently or recklessly or in order to confer undue favour on a person is not acting as a Judge.
Accordingly, the contention of the respondent has to be rejected.
It is important to bear in mind that in the present case, we are not concerned with the correctness or legality of the decision of the respondent but the conduct of the respondent in discharge of his duties as an officer.
The legality of the orders with reference to the nine assessments may be questioned in appeal or revision under the Act.
But we have no doubt in our mind that the Government is not precluded from taking the disciplinary action for violation of the Conduct Rules.
Thus, we conclude that the disciplinary action can be taken in the following cases (i) Where the officer had acted in a manner as would reflect on his reputation for integrity or good faith or devotion to duty; (ii)if there is prima facie material to show recklessness or misconduct in the discharge of his duty; (iii)if he has acted in a manner which is unbecoming of a government servant; (iv)if he had acted negligently or that he omitted the prescribed conditions which are essential for the exercise of the statutory powers; (v) if he had acted in order to unduly favour a party , (vi) if he had been actuated by corrupt motive however, small the bribe may be because Lord Coke said long ago "though the bribe may be small, yet the fault is great.
" 312 The instances above catalogued are not exhaustive.
However, we may add that for a mere technical violation or merely because the order is wrong and the action not falling under the above enumerated instances, disciplinary action is not warranted.
Here, we may utter a word of caution.
Each case will depend upon the facts and no absolute rule can be postulated.
In view of the foregoing discussion, the appeals will stand allowed.
There will be no order as to costs.
We make it clear that it is open to the respondent to put forth all defenses open to him in the departmental inquiry which will be considered on its merit.
V.P.R. Appeals allowed.
| The respondent while working as Income Tax Officer completed certain assessments during the year 1982 83.
A charge memorandum, was served on him, proposing to hold an inquiry against him under Rule 14 of the Central Civil Services (Classification, Central Appeal) Rules, 1965.
A statement of article of charge was framed against the respondent.
The substance of the charge was the completion of nine assessments in an irregular manner, hastily with a view to confer undue favour upon the assessees, and by such act, he failed to maintain absolute integrity and devotion to duty and exhibited a conduct unbecoming of government servant.
The details relating to misconduct or misbehaviour of the respondent were furnished and he was charged for violating the provisions of Rules 3 (1) (i), 3 (1) (ii) and 3 (1) (iii) of the Central Civil Services (,Conduct) Rules, 1964.
In support of the allegations, he was also supplied with the necessary documents.
Against the memorandum, the respondent preferred an application before the Central Administrative Tribunal, praying for a stay of the disciplinary proceedings and to consider his case for promotion on merits without resort to the sealed cover procedure.
On 8.2.1991, the Tribunal directed the appellant Union of India to open the sealed cover and to implement the recommendations of the 297 Departmental Promotion Committee to promote the respondent to the post of Deputy Commissioner of Income Tax, if he was found fit for promotion within two weeks from the date of order.
Later on 223.1991, the Tribunal allowed the respondent 's application, holding that the action taken by the respondent officer was quasi judicial and should not have formed the basis of disciplinary action.
The Tribunal also made its earlier order dated 8.2.1991 absolute.
The Union of India preferred the present appeals by special leave against the orders of the Tribunal, contending that in a case where disciplinary proceedings were pending against the respondent, the procedure of opening the sealed cover should not have been resorted to.
Otherwise, it would amount to putting a premium on misconduct ; that the Tribunal failed to appreciate the ratio of the order in C.A. Nos.
4986 87/90; that as the respondent was charged for violation of Rules 3(1)(i), 3(1)(ii) and 3(1)(iii) of the Central Civil Services (Conduct) Rules, 1964; immunity from the disciplinary action could not be claimed.
The respondent contended that the opening of the sealed cover was correctly ordered because on the date when the Departmental Promotion Committee met in March 1989, no charge sheet was served on the respondent; that as the respondent was exercising quasi judicial functions, orders made by him if were wrong, the remedy by way of an appeal or revision could be resorted to; that if in every case of wrong order, disciplinary action was resorted to, it would jeopardize the exercise of judicial functions; and the immunity attached to the officer while exercising quasi judicial powers would be lost.
On the question, whether an authority enjoys immunity from disciplinary proceedings with respect to matters decided by him in exercise of quasi judicial functions; allowing the appeals, this Court, HELD : 1.01.
The disciplinary action can be taken in the following cases : (i) Where the Officer had acted in a manner as would reflect on his reputation for integrity or good faith or devotion to duty ; (ii) if there is prima facie material to show recklessness or misconduct in the discharge of his duty; (iii) if he has acted in a manner which is unbecoming of a govern 298 ment servant; [311E F] (iv) if he had acted negligently or that he omitted the prescribed conditions which are essential for the exercise of the statutory powers; (v) if he had acted in order to unduly favour a party, (vi) if he had been actuated by corrupt motive however, small the bribe may be.
[311G H] The instances above catalogued are not exhaustive.
For a mere technical violation or merely because the order is wrong and the action not falling under the above enumerated instances, disciplinary action is not warranted.
Each case will depend upon the facts and no absolute rule can be postulated.
[312A B] 1.02.
There is a great reason and justice for holding in such cases that the ' disciplinary action could be taken.
It is one of the cardinal principles of administration of justice that it must be free from bias of any kind.
[311B] 1.03.
The officer who exercises judicial or quasi judicial powers acts negligently or recklessly or in order to confer undue favour on a person is not acting as a judge.
[311C] 1.04.
In the present case, this Court Is not concerned with the correctness or legality of the decision of the respondent but the conduct of the respondent in discharge of his duties as an officer.
The legality of the orders with reference to the nine assessments may be questioned in appeal or revision under the Act.
[311D] 1.05.
In the case on hand, article of charge clearly mentions that the nine assessments covered by the article of charge were completed (i) in an irregular manner, (ii) in undue haste, and (iii) apparently with a view to confer unduefavour upon the assessees concerned.
[310A B] Therefore, the allegation of conferring undue favour is very much 299 there and certainly disciplinary action is warranted.
[310C] Govinda Menon vs Union of India, ; ; Thayre vs The London, Brighton and South Coast Railway Company, and Thompson vs British Berna Motor Lorries Limited, at page 188, referred to.
Union of India & Ors.
vs A.N. Saxena, ; , explained.
SLP (C) Nos.
2635 36/89 in CA No. 4986 87/90, distinguished
|
N: Criminal Appeal No. 715of 1981.
WITH Criminal Appeal No. 716 of 1981.
From the judgment and order dated 15.5.1981 of the Punjab and Haryana High Court in Criminal Appeal No. 419(DB) of 1980.
U.R. Lalit, A.N. Mulla, S.K. Sabharwal and O.K. Khullar for the Appellants.
I.S. Goyal for the Respondent.
The Judgment of the court was delivered by PUNCHHI, J.
These two appeals are directed against the judgment and order of May 15,1981 passed by a Division Bench of the Punjab and Haryana High Court in Criminal Appeal No. 419 DB of 1981.
589 The appellants are three in number .
They are Wazir Singh, his nephew Darbara Singh and share cropper(seeri)Dalip Singh.
These three, together with Mohin der Singh the brother of Wazir Singh ' and father of Darbara Singh, as also one Avtar Singh, Wazir Singh 's father in law 's brother, stood trial before the sessions Judge, Bhiwa ni for offences under sections 148, 302/149 and 323/149 I.P.C.for having caused the murder of Sadha Singh, paternal cousin of Wazir Singh and Mohinder Singh accused, as also to have caused simple hurts to Ranjit Singh, PW4 sister 's son of the deceased.
The learned Sessions Judge acquitted Avtar Singh taking the view that since the Investigating Officer could not recover the gun, the weapon of offence, from him in spite of interrogation, his name had been introduced by the prosecution in order to complete the alleged unlawful asembly,convenient and handy as it was because of relation ship with deceased.
Avtar Singh was attributed no part in the actual occurrence except exhortations.
The remaining four accused were convicted under sections 302/34 and 323/34 I.P.C. and were sentenced to life imprisonment and six months rigorous imprisonment respectively.
In appeal the High Court acquitted Mohinder Singh accused taking the view that though he was stated to have used his kirpan with force, the medical evidence did not corroborate this version because DR.
B.M. Kapur, PW 2, who performed the autopsy of the deceased, opined that the injuries which apparently were kirpan injuries could only be caused by the tip of the kirpan suggesting that much force had not been used.
The High Court then went on to agree with the opinion of Dr. Kapur to say that all the incised wounds on the deceased could have been caused by Kulhari exhibit
This Kulhari was suggested to have been used by Wazir Singh appellant towards commission of the crime.
On that premise the High Court let off Mohinder singh recording the opinion that his participa tion was doubtful.
For lack of coroboration of medical evidence the High Court also observed that it was quite probable that like Avtar Singh, acquitted co assused, Mohin der Singh accused too had been brought in as an accused.
As a result the three apellants remained convicted and sen tenced.
So they are here before us.
Criminal Appeal No.714 of 1981 was preferred by Ranjit Singh complainant against acquitted co accused Mohinder Singh but this appeal was dismissed by us on 8 4 1992 for non prosecution because learned counsel for that appellant stated that he had no instructions.
So Mohinder Singh re mained acquitted.
590 The occurrence took palce on November 10,1979 at 12.30 P.M. in the open fields of Village Kikral.
Deceased Sadha Singh was present in his fields taking out grass while deceased 's nephew Ranjit Singh P.W.4 was present ploughing the de ceased 's field.
close by in their own fields were Jagir Singh P.W.5 and Malkiat Singh P.W.6.
At that juncture Mohin der Singh acquitted co accused armed with a sword, Wazir Singh armed with a kulhari, Darbara Singh and Dalip Singh, armed with lathis each and Avtar Singh acquitted co accused armed with a gun came together towards the deceased and opened assault on him.
Wazir Singh apellant started and gave a kulhari blow on the head of the deceased whereas Mohinder Singh acquitted co accused gave injuries by kirpan.
Dalip Singh and Darbara Singh appellants inflicted lathi blows, Avtar Singh acquitted co accused raised exhortations.
When Ranjit Singh P.W. interfered he was given lathi blows by Dalip Singh and Darbara Singh, appellants.
Jagir Singh and Malkiat Singh P.Ws.
who saw the occurrence came running to the place and found Sadha Singh lying injured seriously.
Sadha Singh and Ranjit Singh victims were brought by Jagir Singh and Malkiat Singh P.Ws.
in injured condition to Rural Dispensary, Siwani which is at a distance of 5 kilometers from the place of occurrence.
Dr. Ram Krishan P.W.3 Incharge of the Dispensary, after examining and giving first aid to Sadha Singh advised him to be taken to Civil Hospital, Bhiwani as his condition was serious.
Ranjit Singh P.W. however was admited in the Rural Dispensary Siwani, Siwani police was informed about the arrival of both the them.
Sadha Singh was taken to Civil Hospital, Bhiwani, where he was found dead.
Dr. Gambhir P.W. 1 sent message to the police station informing the Bhiwani police about the arriv al of the dead body.
Sub Inspector Sadhu Sing P.W. 12 on the basis of message of Dr. Ram Kishan P.W. 3 went to Rural Dispensary, Siwani where he recorded the statement of Ranjit Singh P.W.4 at 4.15 p.m.
First Information Report on the basis of the said statement was recorded at the police station at 5.30p.m.
The special report reached the Magis trate at Bhiwani on 11 11 1979.
Now about the motive.
The grand father of sadha singh deceased had four sons, chanan Singh , Bishan Singh, Kishan Singh and Makhan Singh.
The eye witnesses Malkiat Singh and jagir Singh are the sons of Chanan Singh.
Sadha Singh de ceased was the son of Bishan Singh.
Mohinder Singh acquitted co accused and Wazir Singh appellant are sons of Kishan Singh.
Makhan Singh the fourth son was married to Harnam Kaur but had not made issue.
It appears that Makhan Singh on September 591 20,1975 executed an agreement to sell his lands in some proportions to the three families of his brothers, but Mohinder Singh acquitted co accused wanted to purchase all the land of Makhan Singh.
The agreement ultimately did not materialise.
Thereafter there is history of acrimony and illwill between the parties itching to obtain the land of Makhan Singh.
Besides Wazir Singh appellant got lodged FIR against Sadha Singh deceased in may, 1977 accusing him of an attack and of having stolen away his motor cycle.
such were the strained relations which provided the motive of the crime.
The post mortem of Sadha Singh deceased performed by Dr. B.M. Kapur P.W.2 revealed 13 injuries on his body.
the first one was an incised wound 2"x1/2" over the left side of the forehead, on dissection of which it was found to be a fracture of the frontal bone.
There was also extra dural haemotoma and fracture of the skull on the left side.
The other injuries were either incised wounds or blunt weapon injuries.
They were on non vital parts of the body.
There were, however, compound and diverse fractures of both bones of both the legs as well as that of both the arms.
The cause of death then opined by Dr. Kapur was, due to shock and haemorrhage on account of multiple injuries, which was sufficient to cause death in the ordinary course of nature.
At the trial however Dr. Kapur went on to add that injury No.1 could individully be sufficient in the ordinary course of nature to cause death.
He also opined that injuries other than injury NO.1 collectively were sufficient to cause death in the ordinary course of nature even if one were to exclude injury No.1.
Dr. Kapur further opined that all the incised wounds could be caused by kulhari P.1.
Dr. Ram Kishan P.W.3 on examination found Ranjit Singh having five injuries on his person which were simple in nature and were caused by a blunt weapon.
Four of them were contusions which were size able and one was an abrasion.
During the investigations the weapons of the offence were recovered by the investigating officer at the instance of recovery statements made by the accused persons respec tively.
The entire bundle of evidence was produced before the Court of sessions which led to the result above indicated.
Learned counsel for the appellants individually as well as collectively at the first instance pressed into service reasons for the acquittal of Avtar Singh and Mohinder Singh 592 co accused to contend that the prosecution case has been discredited by the courts below rendering it unacceptable.
Highlighting this aspect it was contended that the complain ant party apparently had spread their net wide and had dragged in Avtar Singh acquitted co accused just in order to lay charge of unlawful assembly and Mohinder Singh co accused to share the incised injuries, when those injuries could have been caused by one weapon like kulhari exhibit
On that basis it was asserted that P.W.s having told lies the entire prosecution case deserved throwing out.
Beside it was urged that the evidence regarding recovery of weapons did not inspire confidence.
These arguments even though attrac tive do not appeal to us.
There may be a tendency here and there to implicate a person in addition to actual assailants in a crime but substitution is rare and that cannot be the case here.
As is evident the parties are closely related.
The crime was committed in broad day light.
Ranjit Singh is a stamped witness.
There was no reason for the prosecution to falsely evolve a case against the appellants.
Now here there are two types of injuries on the deceased being in cised wounds and blunt weapon injuries totalling 13 in number.
This is suggestive of at least two assailants re spectively armed with suitable weapons.
to be responsible for these injuries.
But when these seven blunt weapon in juries of the deceased are added to five blunt weapon in juries of Ranjit Singh P.W. and the extensive damage caused seen, it becomes evident that there were more than one assailant inflicting blunt weapon injuries.
Thus there were three assailants as is evident from the result.
Besides shortly before the occurrence Ranjit Singh P.W. was plough ing the field and it is expected of a ploughman to be carry ing a stick.
The very fact that he did not claim to have used any goes to confirm that he was a victim of two assail ants who could use their blunt weapons against him as well as against the deceased.
The medical evidence is thus con sistent and corroborative in connecting all the three appel lants, that is, in Wazir Singh having used his kulhari and Dalip Singh and Darbara Singh having used their lathis in the commission of the crime.
On the eye witness account and the corroboration it receives from medical evidence, their guilt is established even if the evidence of recovery of weapons is kept aside.
We have thus no reason to question the ultimate result arrived at by the High Court though we have our doubts about the reasoning employed by it to acquit Mohinder Singh co accused.
The next point urged was with regard to nature of the offence committed by the appellants.
We notice that out of 13 injuries on the dead body of Sadha Singh, six were in cised wounds and the remaining were blunt 593 weapon injuries.
Amongst the incised wounds the first one above described was by itself sufficient in the ordinary course of nature to cause death of the deceased.
That injury was positively attributed to Wazir Singh appellant who opened the attack but the remaining five incised wounds were not positively attributed to Wazir Singh appellant alone.
It can safely be assumed that some may have fallen in his share to be inflicted and others to Mohinder Singh co accused who has since been acquitted.
Even though Dr. B.M. Kapur has stated that all the incised wounds could have been caused by kulhar p.1 but that by itself cannot go on to conclude that all the incised wounds were caused by Wazir Singh appellant.
Distinguishing the role assigned to Wazir Singh in this manner, we take the view that on the infliction of the first incised wound on the head of the deceased, which was suffi cient by itself in the ordinary course of nature to cause death, and death did ensue, Wazir Singh appellant has ren dered himself liable to be adjudged guilty under section 302 I.P.C. Dr. B.M. Kapur has further opined that leaving aside injury No.1, injuries nos.2 to 13 were collectively sufficient to cause death in the ordinary course of nature.
In this collection we have five incised wounds and seven blunt weapon injuries.
The blunt weapon injuries are frac tures of bones of both the arms and legs.
Even though some of those blunt weapon injuries are extensive and grievious in nature because of the fracture of bones of the left fore arm, right fore arm, elbow, left leg and right leg, these by themselves cannot in the facts and circumstances of this case, be said to have been inflicted by the assailants other than Wazir Singh appellant with the intention of causing death, or in ratification of the act of Wazir Singh appellant.
But since extensive damage had been done to the limbs of Sadha Singh, after the infliction of vital injury No.1, it can safely by inferred that despite the assailant 's choosing non vital parts of the body for inflicting those injuries, they must be attributed the knowledge that by their concerted act they were likely to cause death of the decease, for which act they could be punishable under sec tion 304 part II of the Indian Penal Code.
The act was done while sadha Singh was alive.
The outcome of injury No.1 may or may not have been perceived by assailants other than Wazir Singh but they were satisfied in choosing and inflict ing injuries on non vital parts of the body of Sadha Singh, Which injuries were breaking bones of his arms and legs.
We have leaned towards this view also for the reason that Darbara 594 Singh, due to his young age being in teens, may have acted under the influence of his paternal uncle Wazir Singh, appellant and though he shared the common intention of causing extensive injuries to deceased Sadha Singh and injuries to Ranjit Singh P.W. he may not have shared the common intention of causing the former 's death but can definitely be attributed the knowledge that by his concerted act Sadha Singh could die.
Similarly Dalip Singh, a share cropper of his employer, Wazir singh and Mohinder singh, perhaps had acted under the influence of his employers but cannot in these facts be said to be a co participant in intentionally causing the death of Sadha Singh.
He too must be attributed the knowledge that by his act in concert with others he was likely to cause to death of the deceased.
It is worth reminding that neither of the two accused Darbara Singh and Dalip Singh are attributed any injury on any vital part of the body of the deceased.
Thus on the above analysis Darbara Singh and Dalip Singh, appellants are held guilty for offence under section 304 IPC, read with Section 34 IPC.
Resultantly we alter the conviction of Wazir Singh appellant to a plain one under section 302 IPC and maintain his life sentence.
His conviction and sentence under section 323/34 is also sustained.
The convictions of Darbara Singh and Dalip Singh appellants are altered to one under section 304 IPC read with section 34 IPC for which sentence of seven years rigorous imprisonment is imposed on each of them.
The appeals stand disposed of accordingly.
G.N. Appeals disposed of.
| The appellants and two others were charged with and tried for offences under sections 148,302,149 and 323/149 IPC for causing the murder of one S and causing simple hurts to one R, both related to the accused.
The Trial Judge acquitted one of the five accused since no part of the actual occurrence except exhortations were attributed to him and convicted the other four accused under section 302/34 and 323/34 IPC, and sentenced them to life imprisonment and 6 months rigorous imprisonment respectively.
On appeal, the High Court acquitted one more accused on the ground that the medical evidence did not corroborate the claim that he used his kirpan with force as alleged by the prosecution.
The appeal preferred by the complainant against this acquittal,was dismissed by this Court.
The other three accused whose conviction and sentence were confirmed by the High Court, have preferred the present appeals.
It was contended on behalf of the appellants that the prosecution case has been discredited by the Courts render ing the same unacceptable resulting in the acquittal of two accused and for the same reasons, they also deserved acquit tal.
It was also contended that the evidence regarding recovery of weapons did not inspire confidence.
587 Disposing of the appeal, this court, HELD: 1.
There may be a tendency here and there to implicate a person in addition to actual assailants in a crime but substitution is rare and that cannot be the case here.
As is evident the parties are closely related.
The crime was committed in broad day light.
The witness is a stamped witness.
There was no reason for the prosecution to falsely evolve a case against the appellants.
The medical evidence is consistent and corroborative in connecting all the three appellants.
On the eye witness account and the corroboration it receives from medical evidence, their guilt is estab lished even if the evidence of recovery of weapon is kept aside.[592 C G] 2.
Out of 13 injuries on the dead body six were incised wounds and the remaining were blunt weapon injuries.
Amongst the incised wounds the first one was by itself sufficient in the ordinary course of nature to cause death of the de ceased.
That injury was positively attributed to the appel lant in the second case who opened the attack but the re maining five incised wounds were not positively attributed to him alone.
It can safely be assumed that some may have fallen to his share to be inflicted and others to the co accused who has since been acquitted.
Even though the Doctor has stated that all the incised wounds could have been caused by Kulhar P.1, that by itself cannot go to conclude that all the incised wounds were caused by the appellant in the second case.
Since he inflicted the first incised wound on the head of the deceased, which was sufficient by itself in the ordinary course to cause death, he has rendered himself liable to be adjudged guilty under section 302 IPC.
[592 H; 593 A_C] 3.
Since extensive damage had been done to the limbs of the deceased after the infliction of vital injury No.1, it can safely be inferred that despite the assailants ' choosing non vital parts of the body for inflicting those injuries, they must be attributed the knowledge that by their concert ed act they were likely to cause death of the deceased, for which act they could be punished under section 304 part II of the Indian penal Code.
The act was done while the de ceased was alive .
The outcome of injury No.1 may or may not have been perceived by the assailants except the appellant in the second case, but they were satisfied in choosing and inflicting injuries on non vital parts which injuries were caused by breaking the bones of his arms and legs.[593 F H] 4.
Due to his young age, being in teens, the appellant in the first case 588 may have acted under the influence of his paternal uncle, viz; the appellant in the second case.
Though he shared the common intention of causing extensive injuries to the de ceased and injuries to P.W.4 he may not have shared the common intention of causing death but can definitely be attributed the knowledge that by his concerted act the victim could die.
Similarly the share cropper had acted under the influence of his employers.but cannot be said to be a co participant in intentionally causing the death of the death of the deceased.
He too must be attributed the knowledge that by his act in concert with others he was others he was likely to cause the death of the deceased.
Also, no injury on any vital part of the body of the de ceased was attributed to either of these accused.
According ly, these appellants are held guilty of offence under sec tion 304 IPC, read with section 34 IPC, and not under section 302 IPC.[594 A D] 5.
The conviction of the appellant in second case is altered to a plain one under section 302 IPC and his life sentence is maintained.
His conviction and sentence under section 323/34 is also sustained.
The conviction of the other appellants are altered to one under section 304 IPC read with section 34 IPC for which a sentence of seven years rigorous imprisonment is imposed on each of them.[594 D,E]
|
Appeal Nos.
185 187 of 1993.
From the Judgment and Order dated 5.8.1991 of the Orissa Ad ministrative Tribunal, Bhubaneshwar in O.A. No. 679 of 1988.
246 B.A. Mohanty, A Mariarputham, Mrs. Aruna Mathur, Raju Rama chandran and A.K. Panda for the Appellants.
Shanti Bhushan, Prashant Bhushan, P.N. Misra, P. Gour, R.P. Wadhwani and C.N. Sreekumar for the Respondents.
The Judgment of the Court was delivered by MOHAN, J.
Leave granted in all the matters.
All these appeals can be dealt with under a common judgment since they are directed against the judgment and order dated August 5, 1991 passed by the Orissa Administrative Tribunal Bhubaneshwar in Original Application No. 679 of 1988.
Prakash Chandra Misra (Respondent 1 in all these appeals) was directly recruited to the Orissa State Forest Service Class 11 by the Orissa Public Service Commission in the year 1979.
After completion of training for two years at Forest Service College, Burnihat, Assam he was appointed as an Assistant Conservator of Forests.
He moved the Administrative Tribunal challenging the seniority of the Forest Rangers who were members of Orissa Subordinate Forest Service and were promoted as Assistant Conservator of Forests, between his recruitment and the joining of service after training.
According to first respondent, the promotees who were promoted in the years 1981 and 1982 ought to have been assigned a place below him as per recruitment rules.
The seniority of direct recruits vis a vis the promotees required to be decided on the basis of the Orissa Forest Service Class II Recruitment Rules, 1959.
It was further urged that he was recruited in the year 1979 through Public Service Commission.
He had to undergo training for two years and thereafter he was appointed in the year 1981.
Therefore, the short question was whether the respondent was to be assigned seniority from the year 1979 (the year of recruitment) or from the year 1981 (the year of appointment).
The Tribunal observed that Rule 9(a) of 1959 Rules read with Rule 6 would point out that the promotee officers were to be on probation for a period of two years like the direct recruits.
Such direct recruits were also sent for training to the Forest Training College.
The 1959 Rules used the word 'recruited ', the 1984 Rules used the word "appointed".
These words must be assigned proper meaning.
247 Inasmuch as the direct recruits were to be treated as seniors to promotees 'en bloc ' the first respondent must be treated as a recruit of 1979 and ought to be treated as senior to promotees.
The next question that came up for consideration was as to the application of quota rule.
On this, the Tribunal held that both in the 1959 Rules as well as in the 1984 Rules, the promotees and direct recruits will be in the proportion of 1/3rd and 2/3rd.
In the present case, 1959 Rules being applicable there was no doubt that promotees have substantially encroached upon the quota for direct recruits.
In view of that, promotions which have been made more than the quota prescribed in the rules have to be either adjusted against future vacancies in the promotion quota or reverted.
Such promotions beyond the prescribed quota are illegal.
In view of these findings, the Tribunal held that the first respondent was entitled to be treated (i) as a direct recruit of 1979 and (ii) he shall be confirmed and promoted on the basis of being direct recruit of 1979.
His seniority was to be fixed on the basis of being a direct recruit of 1979 within the 2/3rd quota for direct recruits.
These directions were to be implemented within six months from the date of the order.
On these terms, the petition of the first respondent came to be allowed.
Aggrieved by this judgment, SLP (C) No. 615 of 1992 has come to be preferred by Prafulla Kumar Swain, a promotee (Respondent No. 91 before the Orissa Administrative Tribunal).
SLP (Civil) No. 1604 of 1992 has come to be preferred by Bijay Kishore Mohanty and 10 others (respondents before the Orissa Administrative Tribunal).
The State has preferred SLP (C) No. 4186 of 1992.
Mr. Raiu Ramachandran, learned counsel for the appellant in SLP (C) No. 1604 of 1992 would submit that the first respondent was selected for undergoing superiod Forest Service Course at the Forest Service College, Burnihat, Assam in the year 1979.
Having regard to the terminology of the order wh ich says 'he was selected", it cannot be held that he could lay a claim to the post.
The Orissa Forest Service Class II Recruitment Rules, 1959 govern the case in question.
The Tribunal had gone wrong in its interpretation of the various 248 rules.
First of all, it is incorrect to hold that they are merely administrative instructions.
On the contrary, they are rules framed under proviso to Article 309 of the Constitution of India, as a result of which, they have statutory force.
Having held that both the direct recruits as well as the promotees undergo probation for a period of two years, properly speaking, the period of training for the direct recruits could not count as service.
That is precisely what is stated in clause (c) of Regulation 12.
If under the said Regulation the appointment to service is to commence only after the successful completion of training there is no justification whatever to conclude that the date of recruitment could be the relevant date for the purposes of reckoning the seniority.
Recruitment in the submission of the learned counsel would merely mean enlistment or selection.
That is why Regulation 13 says the "selected candidates".
Even Rules 9 has not been appreciated in its proper perspective.
As regards the ratio of 2/3rd and 1/3rd between direct recruits and promotees the relevant rule that is applicable is Rule 5(3).
That sub rule contains a provision: "Save as otherwise decided by Government".
If, therefore, it has been otherwise provided by the Government, this ratio of 2/3rd and 1/3rd does not apply.
In other words, there is overriding power vested in the Government.
Hence, the ratio is flexible and contemplates a departure whenever the Government otherwise decides.
Here again, the Tribunal has gone wrong.
In Direct Recruit Class II Engineering Officers ' Association and Ors.
vs State of Maharashtra and Ors.
, ; at page 938 this Court has taken the view that where the rules permit the authorities to relax the provisions relating to the quota, ordinarily a presumption should be raised that there was such relaxation when there is a deviation from the quota rule.
In any event, the placement of Respondents 42 to 94 as per Civil List corrected upto 1982 was published in the year 1985 by the State Government.
They are the promotees from amongst the various Rangers in Subordinate Service Class 11 as Assistant Conservator of Forests in 1980.
This was at a time when the first respondent was undergoing training at Burnihat, Assam.
If really, therefore, the gradation list was published as early as 1985, there is absolutely no justification for the first respondent to approach in the year 1988.
The judgment of the Tribunal has resulted in unsettling the settled matters.
For these reasons, it is prayed that the order of the Tribunal may be reversed.
Mr. A.K. Panda, learned counsel for the State adopts the arguments 249 of Mr. Raju Ramchandran, learned counsel for the appellant.
Mr. Shanti Bhushan, learned counsel appearing for the first respondent would submit that recruitment is different from appointment.
The definition of the service is contained under Rule 3(e) which states "service" means Orissa Forest Service Class 11.
The service consists of Officers of Class 11 who are designated as Assistant Conservator of Forests.
Rule 5(c) talks of recruitment to Class II.
In sub rule (a) a reference is made to Regulation.
What is contemplated hereunder is nothing more than the competitive examination prescribed under Regulation.
Therefore, Regulation 12 cannot be pressed into service.
When an officer is recruited to Class 11 Service it does not mean that only from the date of appointment his seniority is to be reckoned.
The very fact that his recruitment to the service is enough.
The argument of the other side that the period of training will have to be excluded merely because both the direct recruits as well as the promotees undergo probation is untenable.
The question is, whether the direct recruits who are definitely superior could be pushed lower down to the promotees.
In Service Law the direct recruits are always treated on a better footing than the promotees.
Even though the relevant years of recruitment and promotion of persons involved are essentially of the years 1979 to 1984, yet it is 1984 Rules which will govern.
Rule 24 of the 1984 Rules contains the repeal and saving clauses.
That says that all the officers who were appointed prior to the repeal shall be deemed to have been appointed under the provisions of 1984 Rules.
If that be so, the aforesaid Explanation to Rule 16 must apply.
Thus it is clear as on today the seniority by the 1984 Rules.
The same has clearly provided that the date of appointment of direct recruits for the purposes of seniority will be deemed to be 2 years prior to the date of appointment to a working post.
Since the normal period of training is 2 years this cannot but mean that the date of appointment of direct recruits for the purposes of seniority will be the date of selection.
If the seniority is not a vested right it is well open to the Government to alter the same by making a departure from 1959 and providing for the same in the amended 1984 Rules.
Learned counsel draws our attention to Indian Forest Service (Appointment by Promotion) Regulations of 1966.
In the said Regulations, Regulation 5 in its Explanation 11 states that in computing the period of 250 continuous service the period of training which an officer had undergone is to be included.
If that is the intention for Grade I Service, certainly a different intention cannot be spelt out under the 1959 Rules for Grade 11 Service.
This is also evident when the 1984 Rules are looked at.
There the rules clearly lay down in Rules 16 in its Explanation that the training period is not to be excluded.
When rules specifically prescribe the quota as 1/3rd the Government cannot wriggle out of the situation that a saving provision had been made which is factually not so in this case.
For this purpose, the Government has relied upon the proceedings held on 5.1.80 and 7.1.80.
The proceedings of Departmental Promotion Committee will not constitute the Government order.
All Government orders must be issued under the signature of the Minister according to the Rules of Business.
In the present case, no such order of the Minister regarding the alteration of quota is produced.
The statutory rules lay down a clear legislative policy with regard to fixation of quota so that the brightest talent be made available for the service.
As to what would be the consequence of violating a statutory rule has come to be laid down in Keshav Chandra Joshi and Ors.
vs Union of India, [1990] Supp. 2 SCR 573 at page 586.
That ratio squarely applies to the facts of the case.
The point relating to laches was never argued before the Tribunal.
Therefore, the appellant cannot be allowed to argue at this stage.
We will now proceed to set out the necessary factual background.
The Orissa Public Service Commission through an advertisement dated 8.10.64 invited applications from open market for admission of candidates to a competitive examination for selection to the posts of Orissa Forest Service Class II service.
18 candidates were selected.
They were sent for training at Indian Forest College, Dehradun during the year 1965 67.
Only on successful completion of the training they could be appointed to Class 11 Service.
One of the candidates who was successful in completion of training and who received the posting order 233/67 came forward with a writ petition before the Orissa High Court that he had been assigned in the list of gradation a rank junior to the promotees who were confirmed by Service Commission after the recruitment of the petitioner.
The scope of 1959 Rules came up for consideration and the High Court concluded that the recruitment to Class II Service was complete only after successful 251 completion of two years ' training in the Forest College.
Relief was granted on that basis.
That came up in appeal to this Court in Civil Appeal Nos.
2051 52 of 1974 State of Orissa vs Manoranjan Rath & Ors.
By an order dated 7th of January, 1988, finding that there was no ground to interfere with the judgment of the High Court, the appeals came to be dismissed.
While the matter stood thus one of the directly recruited officers (Prakash Chandra Misra, respondent No.1) filed a petition before the Tribunal challenging the seniority.
He contended that the promotees who were promoted in the year 1981 82 ought to have been assigned a place lower than him as per recruitment rules.
Two main contentions were: 1.
His services should be reckoned from the date of recruitment itself and not from the date of actual appointment.
Therefore, the exclusion of the period of two years ' training for the purposes of reckoning the seniority was illegal.
The promotees had been appointed in excess of the quota which the rules had prescribed.
There is no specific order of Government providing otherwise.
The Tribunal accepted these contentions and held that the petitioner before it being a direct recruit of the year 1979 must be treated as such and had to be confirmed and promoted on the basis of being a direct recruit of the year 1979.
This should be done within the 2/3rd quota for direct recruits.
Accordingly the petition was allowed.
It is under these circumstances, special leave petitions have come to be preferred.
Having regard to the arguments two points arise for our determination: (1) Whether the direct recruits are to be considered as recruited in the year in which they were selected by the Service Commission and sent for training into the Forest College or in the year in which they were actually appointed to a working post on completion of training? (2) Whether there was a quota fixed for promotees in the Orissa Forest Service during the relevant years.
Even at the outset, we may point out that the Tribunal has grossly erred in holding that the Orissa Service Class 11 Recruitment Rules of 1959 are mere administrative instructions.
On the contrary, these rules were framed under the proviso to Article 309 of the Constitution and they are 252 statutory in character.
Section 3(e) of 1959 Rules says 'Service" means the Orissa Forest Service Class II.
Rule 5 reads as under: "5.
(1) Recruitment to Class II service shall be made (a)by direct recruitment on the result of competitive examination as per Regulation I appended to this rule; (b)by promotion as per the Regulation 11 appended to this rule governing promotions to the Orissa Forest Service, Class II; (2)Government shall decide from time to time the number of vacancies in class II Service to be filled by direct recruitment and by promotion.
(3)Save as otherwise decided by Government, number of posts of the service filled up by promotion shall not exceed one third of the total number of such posts in the cadre.
" Rule 9 is as follows: "9(a) When officers are recruited by promotion and by direct recruitment during the same year the directly recruited members shall be considered senior to the promoted members irrespective of their dates of appointment.
(b)In case of promotion, seniority may be determined in accordance with the positions the promoted officers held in the recommendation of Public Service Commission made according to merit.
(c)In case of direct recruitment, seniority may be determined according to the achievements in the examination in the Forest College.
" Besides these rules there are also Regulations dealing with direct recruitment.
It may be stated that the Regulations prescribe the condition of eligibility (Regulation 1(2)), educational qualification (Regulation I(6)), written test by means of a competitive examination (Regulation 18(a)) and 253 a viva voice test.
The candidates are to be summoned for viva voice test on securing the minimum qualifying marks prescribed by the Commission.
Thereafter the Commission prepares a list of successful candidates provided they are found fit in the physical test as prescribed under Regula tion 1(5).
The fist of successful candidates is to be forwarded to the Government for approval.
Regulation 12 is important for our purposes.
Under that Regulation the finally selected candidates are required to undergo two years training.
During the period of pendency a consolidated monthly allowance of Rs. 150 as stipend is paid.
Under clause (b) of that Regulation he is required to execute a bond provided for in Appendix A. Regulation 12(c) in unmistakable terms says the period of training will not count as service under Government.
Such service will count only from the date of appointment to the service after successful completion of the course of training.
(Emphasis supplied).
We must give full meaning and effect to this Regulation.
At this stage, we will proceed to decide as to the meaning and effect of the words "recruitment" and "appointment".
The term "recruitment" connotes and clearly signifies enlistment, acceptance, selection or approval for appointment.
Certainly, this is not actual appointment or posting in service.
In contradistinction the word "appointment" means an actual act of posting a person to a particular office.
Recruitment is just an initial process.
That may lead to eventual appointment in the service.
But, that cannot tantamount to an appointment.
No doubt, Rule 5 talks of recruitment to Class II Service.
We consider these are two sources of recruitment.
Nowhere in the Recruitment Rules of 1959 it is specified that the services of a direct recruit under the Government shall be reckoned from the date of selection in the competitive examination.
On the contrary, Regulation 12(c) is very clear that the period of training is not to be reckoned as Government service.
It is admitted before us that after the successful completion of training when the appointment order is issued the direct recruits are put on probation.
Similar is in the case of the promotees.
Both of them undergo probation.
Therefore, in the light of these provisions it is not possible for us to accept the contention advanced on behalf of the direct recruits that their seniority must be reckoned from the date of their recruitment.
This is why Mr. Shanti Bhushan, learned counsel for the direct 254 recruits, respondents, would urge that 1984 Rules would govern.
Rule 16 in Explanation provides thus: "Explanation For the purpose of clause (a), the year of appointment of direct recruits shall be deemed to be the year arrived at after deducting two years from the date of successful completion of the training in the Forest College." He would urge that in view of Rule 24 all the appointments must be deemed to have been made under these Rules.
Rule 24 reads thus: "24.
All rules and orders corresponding to these rules and in force immediately before the commencement of these rules are hereby repealed: Provided that nothing in these rules shall be construed as affecting or invalidating the appointments already made or orders issued in accordance with the provisions of any rules or orders in force immediately before the commencement of these rules and that all such appointments and orders shall continue in force and shall, as far as may be, be deemed to have been made and issued under the appropriate provisions of these rules: Provided further that Government may, by order, direct that any of the provisions of these rules shall not apply to the Officers already appointed under the rules and orders in force immediately before the commencement of these rules or shall apply to them with such modifications as the Government may specify in that order. ' Therefore, according to him, the benefit of Explanation to Rule 16 quoted above must apply.
We find it impossible to accept this contention for the following reasons: 1.Since the appointments in question have been made under 1959 Rules, 1984 Rules will be inapplicable.
2.The 1984 Rules came into force only when they were published in the Official Gazette on December 21, 1984.
255 3.
Explanation under Rule 16 is a substantive provision.
Therefore, it cannot be retrospective.
As regards Rule 24, the proviso clearly states that the Rules cannot be construed as affecting or invalidating the appointments already made.
Therefore, if any right has been acquired or any privilege had accrued that would remain unaltered.
Therefore, these appointments which are governed by the 1959 Rules will continue notwithstanding the repeal.
Clauses (a) and (e) of Section 6 of the also point this position: 6.
Effect, of repeal: Where this Act, or any (Central Act) or Regulation made after the commencement of this Act, repeals any enactment hitherto made, or hereafter to be made, then, unless a different intention appears, the repeal shall not (a) revive anything not in force or existing at the time at which the repeal takes effect; or (b) (c) (d) (e) effect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid.
" Coming to the deeming clause, that creates a legal fiction; the Court is to ascertain for what purpose the fiction is created.
In Justice G.P. Singh Principles of Statutory Interpretation (Fourth Edition 1988) at page 208 it is stated thus: "As was observed by James, LJ. : 'When a statute enacts that something shall be deemed to have been done, which in fact and in truth was not done, the court is entitled and bound to ascertain for what purposes and between what person the statutory fiction is to be resorted to '. 'When a legal fiction is created ', stated S.R. Das, J. "for what purposes, one is led to 256 ask at once, is it so created?" Therefore, by the operation of deeming clause it only enables appointments made under 1959 Rules to be continued under 1984 Rules.
Certainly, by the repeal of 1959 Rules it cannot mean all those appointments cease.
Nor again, the substantive provision of Rule 16, as stated above.
Would govern.
Therefore, Rule 24 has no application.
Thus, we conclude that the seniority of direct recruits will have to be reckoned only from the date of appointment and not from the date of recruitment.
The gradation list which was impugned by the first respondent before the Tribunal was prepared in pursuance of the order of this Court read with the aforementioned judgment of the Orissa High Court and this is so stated in a letter dated 4th January, 1989 written by the Deputy Secretary to the Government of Orissa, Forest, Fisheries and Animal Husbandry Department, Bhubaneshwar to the Principal Chief Conservator of Forest, Orissa, Bhubaneshwar (Annexure II to the Special Leave Petition in S.L.P. (C) No. 1604 of 1992).
That this gradation list had been framed upon the aforesaid basis also does not appear to have been brought to the attention of the tribunal.
The gradation list has been in operation over several years.
We see no reason to unsettle the settled position.
In this behalf we draw support from the judgment of this Court in Direct Recruit Class II Engineering Officers ' Association vs State of Maharashtra and others.
; , We may also note that though the same question was before this Court a little before the petition was made by the first respondent before the Tribunal, no effort was made by the first respondent to intervene and place before this Court his point of view.
It is inconceivable that he would not have known that the same question was before this Court.
Turning to the quota rule the records reveal that the Government had clearly taken a decision to increase the number of posts to be filled up by promotion in excess of the 1/3rd of total posts in the cadre on administrative grounds connected with nationalisation of Kendu Leaf Trade in 1972 73 in the interest of public due to non availability of direct candidates trained in the Indian Forest College, Dehradun.
It is not correct to say that Government have decided that the quota of direct recruitment which will be encroached upon by the promotees will be released as and when direct recruits are available.
In fact, it was decided that the 4 direct 257 candidates who were by then under diploma course Training in forestry at Dehradun in the event of their coming out successful during 1974 from the training College may be appointed and in consequence, the junior most promotee officers whom were appointed on ad hoc basis as aforesaid pending concurrence of Orissa Public Service Commission will have to be reverted to make room for them.
No promotion to Orissa Forest Service Class 11 could be made on regular basis without obtaining concurrence of the Orissa Public Service Commission as per Clause 2(h) of Regulation 11 appended to the Orissa Forest Class II Recruitment Rules, 1959.
In view of the urgency to implement the Kendu Leaf Scheme in 1973, 39 Forest Rangers were appointed to Class 11 Forest Service on an 'ad hoc ' basis for a period of six months or till concurrence of the Commission is received for their final appointment.
The 39 Forest Ranger had already been promoted to Orissa Forest Service Class 11 on regular basis on the recommendation of the Orissa Public Service Commission.
In view of this, it is not correct to say in that the decision taken by Government for promoting excess promotees in the year 1972 was only to promote them on an ad hoc basis within that quota.
Hence, to contend that the promotees would obviously have to yield to direct recruits who came in subsequently within their quota and would consequently also not be eligible for seniority above direct recruits, is untenable.
We may also add that there were earlier proceedings in Transfer Application No.147 of 1986 before the Orissa Administrative Tribunal.
The decision was rendered on 3.7.87.
SLP (C) No. 1624 of 1.988 filed against the said decision was dismissed by this Court on 18.1.89.
There was also an application, OJ.C. No. 588 of 1972 before the Orissa High Court in Manoranjan Rath vs State of Orissa and others.
The decision was rendered on 10.6.74.
Against the said decision Civil Appeal Nos.
2051 52 of 1974 were preferred to this Court which were dismissed on 7.1.88.
The Tribunal in the above judgment had held on perusal of the departmental file that the Government had taken decision to increase the number of posts to be filled up by promotion on administrative grounds.
This was necessitated because of the nationalisation of Kendu Leaf Trade.
Action to fill up the posts by promotion of Forest Rangers in excess of 1/3rd of the total posts in the cadre was taken in pursuance of the decision of the Government.
Though the actual decision of the Government is not produced before us yet the proceedings of the meetings of the Departmental Committee held on 5.1.80 and 7.1.80 to select Forest Rangers suitable for promotion took note of 258 Rule 5(3) which contains the saving clause.
"Save as otherwise decided by Government, number of posts of the service filled up by promotion shall not exceed one third of the total number of such posts in the cadre.
" These proceedings speak volumes.
The proceedings were given effect to by promotions.
Such promotions in excess of the prescribed quota had to be made since no more directly recruited candidates were available during that year.
The Government did not want its work to be hampered by allowing the posts were to remain vacant.
While seeking the concurrence of Orissa Public Service Commission to the decision taken by the Departmental Committee held on 5.1.80 and 7.1.80, the proceedings of the Committee explain the circumstances under which the Government decision was taken.
From this point of view, we find the decision in Keshav Chandra Joshi 's case (supra) has no application here.
Therefore, the promotions given in excess of 1/3rd quota are valid.
There is no justification to push down the promotees in seniority.
The promotion in excess of the prescribed quota was necessitated by the exigencies and in the interest of the public.
It is supported by a conscious decision of the Government which is permissible under Rule 5(3).
Therefore, we reject the arguments advanced on behalf of the direct recruits in this regard.
A reference was made to the Indian Forest Service (Appointment by Promotion) Regulations, 1966, particularly Regulation 5.
It is also urged that from the post of Class 11, promotion is to be made to Class 1.
We are of the view that since the appointments in question are regulated under Orissa Forest Service Class II Recruitment Rules, the said Regulations of 1966 have no application.
Further, as pointed out above, the Orissa Rules were framed under proviso to Article 309 of the Constitution of India and have statutory and binding force.
Now comes the proverbial last straw on the camel 's back.
There have been laches on the part of the direct recruits in seeking the remedy.
When the list was published in 1985 nothing prevented them to approach earlier.
This is the point to be put against them.
That this position was known to the direct recruit (Prakash Chandra Mishra) is clear from paragraph 18 of his petition before the Tribunal.
It 259 reads thus.
Therefore, placement of Respondent Nos.
42 to 94 as per Civil List corrected upto 1982 published in the year 1985 by the State Government who are promotees from amongst the Forest Rangers in Subordinate Service to Class II Service as Assistant Conservator of Forests in the year 1980 when this applicant was undergoing training at Burnihat, Assam, is patently illegal and an act without jurisdiction by the State Government of Orissa. ' (Emphasis supplied) We do not want to unsettle settled matters which will lead to several complications.
In view of the foregoing discussion, we set aside the judgment of the Tribunal.
The appeals will stand allowed.
However, there shall be no order as to costs.
V.P.R. Appeals allowed.
| The Orissa Public Service Commission through an advertisement dated 8.10.64 Invited applications for admission of candidates to a competitive examination for selection to the posts of Orissa Forest Service Class II Service.
The 18 selected candidates were sent for training at the Indian Forest College during the year 1965 67.
One of the candidates, who successfully completed the training was appointed to Class 11 Service.
He filed a writ petition in the High Court, as he was assigned in the list of gradation a rank junior to the promotees, who were confirmed by Service Commission after his recruitment The High Court held that the recruitment to class II Service was complete only after successful completion of two years ' training in the Forest College.
The appeals by special leave flied against the High Courts 242 Judgment were dismissed by this Court.
In 1979, the respondent No. 1 (in all the present appeals) was directly recruited to the Orissa State Forest Service Class II by the State Commission.
He was appointed as an Assistant Conservator of Forests, after his completion of training for two years at the Forest Service College.
Respondent No. 1 moved the Administrative Tribunal challenging the seniority of the Forest Rangers, who were members of the Orissa Subordinate Forest Service and were promoted as Assistant Conservators of Forests, when the respondent was undergoing his training.
Respondent contended before the Tribunal that the seniority of direct recruits vis a vis the promotees required to be decided on the basis of the Orissa Forest Service Class II Recruitment Rules, 1959; that his services should be reckoned from the date of recruitment Itself and not from the date of actual appointment; that the exclusion of the period of two years ' training from the purposes of reckoning the seniority was illegal; and that the appointment of the promotees in excess of the quota prescribed by the Rules and in the absence of any specific order of Government providing otherwise was illegal.
Allowing the petition, the Tribunal held that the respondent No.1 (in the present appeals) was entitled to be treated as a direct recruit of 1979 and he be confirmed and promoted on being direct recruit of 1979 and his seniority to be fixed on the basis of being a direct recruit of 1979 within the 2/3rd quota for direct recruits.
The present appeals by special leave were preferred by the aggrieved parties against the judgment of the Tribunal.
The appellant in SLP (C) No. 1604 of 1992 submitted that the respondent No.1 was selected for undergoing superior Forest Service Course at the Forest Service College in 1979; that having regard to the terminology of the order which stated, "he was selected", it could not be held that he could lay a claim to the post; that the Tribunal had gone wrong in its interpretation of the rules that having held that both the direct recruits as well as the promotees were to undergo probation for a period of two years, the period of training for the direct recruit could not count as service; that the ratio of 2/3rd and 1/3rd between direct recruits 243 and promotees did not apply, if the Government provided otherwise; that the Civil List corrected upto 1982 was published in 1985; and that the judgment of the Tribunal resulted in unsettling the settled matters, hence same to be reversed.
The State adopted the arguments of the appellant in SLP (C) No. 1604/92.
The respondent No.1 submitted that recruitment was different from appointment; that when an officer was recruited to Class 11 Service if did not mean that only from the date of appointment his seniority was to be reckoned, that the argument that the period of training to be excluded merely because both the direct recruits as well as the promotees undergo probation was untenable; that when rules specifically prescribed the quota as 2/3rd and 1/3rd, the Government could not wriggle out of the situation that a saving provision was made which was factually not so in this case; that the point relating to laches which was never argued before the Tribunal, could not be raised before the Court.
Allowing the appeals, this court, HELD, 1.01.
The term 'recruitment "connotes and clearly signifies enlistment, acceptance, selection or approval for appointment Certainly, this Is not actual appointment or posting in service.
In contradistinction, the word 'appointment ' means an actual act of posting a person to a particular office.
[253E] 1.02.
Recruitment is just an initial process. 'Mat may lead to eventual appointment in service.
But, that cannot tantamount to an appointment.
No doubt, Rule 5 talks of recruitment to Class 11 Service.
[253E] 1.03.
Nowhere in the Recruitment Rules of 1959 it is specified that the services of a direct recruit under the Government shall be reckoned from the date of selection in the competitive examination.
On the contrary, Regulation 12(c) is very clear that the period of training is not to be reckoned as Government service.
[253F] 1.04.
Under Regulation 12 the finally selected candidates are required to undergo two years training.
During the period of pendency & consolidated monthly allowance of Rs. 150 as stipend is paid.
Under clause (b) of that Regulation he is required to execute a bond provided for 244 in Appendix A. Regulation 12 (c) in unmistakable terms says the period of training will not count as service under Government.
Such service will count only from the date of appointment to the service after successful completion of the course of training.
[253B C] 1.05.
After the successful completion of training when the appointment order Is issued the direct recruits are put on probation.
Similar Is in the case of the promotees.
Both of them undergo probation.
[253G] 1.06.
The seniority of direct recruits will have to be reckoned only from the date of appointment and not from the date of recruitment.
[253G] 2.01.
The Government had clearly taken a decision to increase the number of posts to be filled up by promotion in excess of the 1/3rd of total posts in the cadre on administrative grounds connected with nationalisation of Kendu Leaf Trade in 1972 73 in the interest of public due to non availability of direct candidates trained In the Indian Forest College, Dehradun.
[256G] 2.02.
It is not correct to say that Government have decided that the quota of direct recruitment which will be encroached upon by the promotees will be released as and when direct recruits are available.
[256H] 2.03.
Hence, to contend that the promotees would obviously have to yield to direct recruits who came in subsequently within their quota and would consequently also not be eligible for seniority above direct recruits, is untenable.
[257D] 2.04. ]Me promotions given in excess of 1/3rd quota are valid.
There is no justification to push down the promotees in seniority.
The promotion in excess of the prescribed quota was necessitated by the exigencies and in the intersest of the public.
It is supported by a conscious decision of the Government which is permissible under Rule 5(3).
[258D] Keshav Chandra Joshi and Ors.
vs Union of India, [1990] Supp. 2 SCR 573 at page 586, distinguished.
Direct Recruit Class II Engineering Officers Association and Ors.
vs State of Maharashtra and Ors.
, ; at page 938; SLP (C) No. 1624 of 1988 Disposed of on 18.01.89; CA.
2051 52 of 1974 Disposed of on 7.1.88, referred to.
245 3.01.
By the operation of deeming clause it only enables appointments made under 1959 Rules to be continued under 1984 Rules.
Certainly, by the repeal of 1959 Rules It cannot mean all those appointments cease.
Nor again, the substantive provision of Rule 16 would govern.
Therefore, Rule 24 has no application.
[256A B] 3.02.
Since the appointments in question have been made under 1959 Rules, 1984 Rules will be inapplicable.
The 1984 Rules, came into force only when they were published in the Official Gazette on December 21, 1984.
Explanation under Rule 16 is a substantive provision.
Therefore, it cannot be retrospective.
As regards Rule 24, the proviso clearly states that the Rules cannot be construed as affecting on invalidating the appointments already made.
Therefore, if any right has been acquired or any privilege had accrued that would remain unaltered.
Therefore, these appointments which are governed by the 1959 Rules will continue not withstanding the repeal.
[254H, 255A B] 3.03.
Since the appointments in question are regulated under Orissa Forest Service Class 11 Recruitment Rules, the Indian Forest Service (Appointment by Promotion) Regulations of 1966 have no application.
The Orissa Rules were framed under proviso to Article 309 of the Constitution of India and have statutory and binding force.
[258F] G.P. Singh: Principles of Statutory Interpretation Fourth Edition 1988, at page 208, referred to.
There have been laches on the part of the direct recruits in seeking the remedy.
When the list was published in 1985 nothing prevented them to approach earlier.
This is the point to be put against them.
[258G] 4.02.
The gradation list has been in operation over several years.
There is no reason to unsettle the settled position.
[256E] Direct Recruit Class II Engineering Officers ' Association vs State of Maharashtra and others; , , referred to.
|
Appeal No. 47 of 1979.
From the Judgment Order dated 20.1.77 of the Gujarat High Court in Second Appeal No. 90 of 1976.
Krishan Kumar for Vimal Chandra section Dave for the Appellants.
Ms. Meenaksh Arora for Anip Sachthey for the Respondent.
The Judgment of the Court was delivered by ANAND, J.
This appeal by special leave, is directed against the judgment of the Gujarat High Court dated 20th of January, 1977 in Second Appeal No. 90 of 1976.
The plaintiffs appellants are the farmers of the Village Morzar under Bhanwad Taluka of Jamnagar District.
Their lands are situated on the outskirts of the village.
Under the Vartu Dam Irrigation Scheme, the defendant State proposed to construct a Dam on river Vartu and prepared a sketch, indicating the passage of the canal from Vartu Dam and for that purpose, it proceeded to acquire land through which the canal was proposed to run.
The plaintiffs appellants apprehended serious damage to their lands by the passing of the canal through their lands and they filed a Regular Civil Suit in 1966 against the defendant State, seeking to restrain it from implementing the Irrigation Scheme, as proposed.
Suit was registered and defendants were summoned.
During the pendency of the suit, it appears that an agreement was arrived at between the parties and it was agreed that the canal from Vartu Dam would be run as per the line demarcated in red in the map appended to the deed of agreement Ex.45.
As a result of the said agreement the suit was unconditionally withdrawn by the plaintiffs on 24.11.1966.
Somewhere in 1972, the plaintiffs appellants discovered that the State Government was going back from the agreement and alignment of the canal was being undertaken contrary to the alignment reflected in the map appended to the agreement Ex.45.
They, therefore, filed a fresh suit for declaration to the effect that the agreement, dated 7.11.1966, entered into between them and the respondents through its Executive Engineer, Irrigation Department Jamnagar, was binding on the parties and that the parties were bound to act according to the terms of the said agreement and for an injunction, restraining the defendant State from going back on the agreement.
This suit of the plaintiffs appellants was contested and the following issues were framed 371 (1) Whether the suit agreement dated 7.11.1966 is not binding to the defendant ? (2) If it is binding whether the plaintiff prove that they have complied with the terms and conditions of this agreement? (3) Whether the suit as framed is not maintainable? (4) Whether the suit is bad for the mis joinder of the plaintiffs and the cause of action? (5) Whether the suit is not maintainable as the agreement dated 7.11.1966 has not been registered of because no compromise decree had been passed in terms of this agreement? (6) Whether the suit is not in time? (7) Whether the plaintiffs are entitled to the declaration sought? (8) Whether the plaintiffs are entitled to get the permanent injunction as prayed for by them? (9) What order? Issues 1 to 8 were decided in favour of the plaintiffs appellants and against the defendant State.
The Trial Court decreed the suit and declared that the suit agreement dated 7.11.1966 entered between the plaintiffs and the defendants through its executive engineer, was binding on the parties and that the parties were bound to act in accordance with the terms of the said compromise the defendant state was permanently restrained from going back from the agreement and act otherwise than as per the terms of the same.
The State of Gujarat preferred an appeal in the Court of District Judge Jamnagar against the judgment and decree of the Trial Court.
During the hearing, the parties confined their arguments to the following two points (1) Whether the agreement dated 7.11.66 is binding to the 372 State of Gujarat? (2) Whether the plaintiffs are entitled to the reliefs, granted to them by the trial court? The appellate court answered both the questions in the affirmative and by its order dated October 20, 1975 confirmed the judgment and decree of the trial court.
The appeal of the State of Gujarat was dismissed.
The State filed a Second Appeal in the High Court.
The High Court examined the agreement dated 7.11.1966, exhibit 45 which is in Gujarati and is described as Rojkam on the subject of the alignment of Vartu Canal.
The High Court noticed that the Rojkam refers to the filing of the suit in the Civil Court and the meeting between the Executive Engineer and the occupants of land and proceeded to recite that on the aforesaid subject there was discussion of the Executive Engineer with the occupants and thereafter both the sides have amicably settled(compromised) the dispute with regard to the alignment of the canal.
The Rojkam further records that both the sides have agreed to the alignment shown in rose colour in the map.
The Rojkam then records: "The Executive Engineer Mr. B.V. Nanavati having assured of getting necessary alterations as aforesaid made, they (i.e., the plaintiffs or the occupants) have shown willingness to withdraw unconditionally the suit filed in Civil Court.
" The Rojkam is signed by the Executive Engineer as also by the occupants.
Before the High Court, the main plea raised by the State was that the alleged compromise/agreement was not binding upon the State.
It was stated that the State does not admit any agreement made by the Executive Engineer either on behalf of the State or as a representative of the State and, therefore, the so called agreement did not bind the State Government.
It was asserted by the State that the Executive Engineer had no authority to agree on behalf of the State Government as he was not the representative of the Government.
Similar plea had been raised before the trial court and the lower appellate court but was rejected.
The High Court, however, accepted the plea of the State and found that the courts below had erred in ignoring the mandatory provisions of Article 299 of the Constitution of India which mandates that all contracts made in the exer 373 cise of the executive power of the Union or of a State shall be expressed to be made by the President or by the Governor of a State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall executed on behalf of the President or the Governor by such persons and in such a manner as he may direct or authorise.
The High Court found that for non compliance with the provisions of Article 299(1) of the Constitution of India which are mandatory in character, the agreement exhibit 45, was a null and void document.
The High Court then observed : "Apart from the question whether the Executive Engineer in the present case was directed or authorised to execute this agreement on behalf of the State Government, it is clear on the face of the document Ex.45 itself that the alleged agreement contained therein is not expressed to be made by the Governor.
This position is incontrovertible and even Mr. Shah for plaintiffs respondents was not able to show that the document Exh.45 contains an agreement expressed to be made by the Governor.
Really speaking, on a correct interpretation of this document Exh.45, it only contains basis of the compromise terms between the Executive Engineer and the occupants (who probably were plaintiffs of the earlier suit) as regards the change of alignment; and pursuant to which compromise the plaintiffs agreed to withdraw the suit.
The Governor or the State Government is nowhere in the picture if we go through this agreement.
Therefore, assuming that the document contains an agreement in reality it is an agreement not by the Governor or the state Government but by the Executive Engineer with the occupants who signed the same.
Such an agreement which is not in compliance with the provisions of Article 299 of the Constitution is void and unenforceable against the State.
If this is so, the suit filed by the respondents plaintiffs must fail.
" The High court negatived the contention raised on behalf of the plaintiffs appellants to the effect that under the statutory powers conferred by Section 18 of the Bombay Irrigation Act, 1879 (hereinafter called the Act), the Executive Engineer was competent to enter into compromise and 374 that the said compromise arrived at during the pendency of the earlier suit was binding on the Government.
The High Court said : "Then it was contended that in exercise of his powers under section 18 of the aforesaid Act, the Executive Engineer acts for the Government; and, therefore, the agreement in question is binding on the Government.
There is an inherent misconception underlying this contention.
While exercising statutory powers i.e. powers conferred by a statute an officer of the Government does not act for the Government.
He acts not because of any authority derived from the Government to exercise power conferred on him by the Statute.
This contention must also fail." As a consequence, the appeal filed by the State was allowed and the judgment and decree passed by the courts below were reversed and the suit filed by the plaintiffs appellants was dismissed with costs throughout.
Learned counsel for the appellants has assailed the judgment of the High Court and submitted that the agreement/compromise, Ex.45, had been validly entered into by the Executive Engineer with the appellants in view of the statutory powers vested in the Executive Engineer under Section 18 of the Act and reliance placed on Article 299 of the Constitution of India, in the facts and circumstances of this case, was wholly erroneous.
It was urged that by a Notification, dated 27th of September 1963, published in Part IV B of the Gujarat Government Gazette dated 31st of October, 1963, the Government of Gujarat had appointed all Executive Engineers and superintending Engineers in charge of canals in the State of Gujarat to be Canal Officers in respect of such canals and assigned to them all the powers and duties of the Canal Officers under the Act, and, therefore, the agreement/compromise entered into by the Executive Engineer on 7.11.1966 during the pendency of the suit of which he was doing "pervi" was a validly executed compromise which was binding on the parties and the respondent could not go back on it.
Having been made to withdraw their earlier suit on the basis of the agreement, dated 7.11.1966, it was not permissible for the respondent to now dispute the act done by its officers or agents within their powers under the statute.
In the facts and circumstances of this case, we find force in the submission of learned counsel for the appellants regarding the non ap 375 placability of Article 299 of the Constitution of India to invalidate the agreement/compromise dated 7.11.1966 arrived at during the pendency of the earlier suit filed by the appellants relying whereupon the appellants withdrew the earlier suit.
The agreement/compromise Ex.45, arrived at in the previous suit, could not have been equated with a contract between the State and the citizen.
Article 299 (1) which reads thus : "All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise.
" concerns itself with contracts and assurances of property and lays down how Government contracts, including assurances of property are to be made and executed.
Indeed, the provisions of Article 299 are mandatory in character and their non compliance would render a contract void but where the agreement is not referable to Article 299 and is not a contract, as contemplated by that Article, the agreement cannot be invalidated for not satisfying the essential requirements of Article 299 of the Constitution.
A compromise of the nature contained in the agreement dated 7.11.1966, arrived at during the pendency of a suit, is not a contract executed between the parties as envisaged by Article 299.
There is a marked distinction between contracts which are executed in exercise of the executive powers and agreements or orders made which are statutory in nature.
Article 299(1) applies to a contract made in exercise of the executive power of the Union or the State and it has no application to a case where a particular statutory authority, as distinguished from the Union or the State, enters into an agreement within his authorised capacity.
In State of Haryana & Ors.
vs Lal Chand & Ors., ; this Court considered a contract granting exclusive privilege of liquor vending, in exercise of the statutory powers referable to Punjab Excise Act, 1914 and Punjab Liquor Licence Rules, 1956, and held that the grant of the exclusive privilege gave rise to a contract of a statutory nature, distinguished from the one executed under Article 299(1) and, therefore, compliance with Article 299(1) was not required in such a case.
376 The question which immediately arises for our consideration is : Was the Executive Engineer competent to execute the agreement Ex.45? In this connection, it would be relevant to refer to some of the more relevant statutory provisions contained in the Act.
Section 3(6) provides as follows : (6) "Canal Officer" means any officer lawfully appointed or invested with powers under section 4; Section 17 reads thus; "Any persons desiring to construct a new water course, but being unable or unwilling to construct it under a private arrangement with the holder of the land required for the same, may apply in writing to any Canal Officer duly empowered to receive such applications, stating; (1) that he is ready to defray all the expense necessary for acquiring the land and constructing such water course; (2) that he desires the said Canal Officer in his behalf and his cost to do all things necessary for constructing such water course.
" Section 18 provides as follows "If the Canal Officer considers the construction of such water course expedient, he may call upon the applicant to deposit any part of the expense to such officer may con sider necessary, and upon such deposit being made, shall cause inquiry to be made into the most suitable alignment for the said water course, and shall mark out the land which, in his opinion, it will be necessary to occupy for the construction thereof, and shall forthwith publish a notification in every village through which the water ' course is proposed to be taken, that so much of such land as is situated within such 377 village has been so marked out, and shall send a copy of such notification to the Collector of every district in which such land is situated, for publication on such land.
The said notification shall also call upon any person who wishes to share in the ownership of such water course to make his application in that respect to the Canal Officer within thirty days of the publication of such notification.
If any such applicant appears, and his application is admitted, he shall be liable to pay his share in the construction of such water course, and in the cost of acquiring the land for the same, and shall be an owner of such water course when constructed.
" Powers of the canal officers are contained in Section 77 reads thus "(1) For the purpose of the inquiries under section 76 such Canal Officer may enter, by himself or any officer authorised by him for the purpose, upon any land adjacent to any such work, and may survey, demarcate and make a map of the same.
(2)Notwithstanding anything contained in section 76 where no sufficient evidence is forthcoming as to all or any of the matters specified in that section such Canal Officer shall, so far as may be, settle and record the aforesaid matters in such manner as he may deem fit.
" A perusal of the record reveal that it was the Executive Engineer who was doing "pervi" of the case in the suit filed.
in 1966.
The agreement (compromise) Ex.45 was entered into during the pendency of the said case.
As already noticed the Government of Gujarat had appointed all Executive Engineers and Superintending Engineers in charge of Canals in the State of Gujarat to be Canal Officers in respect of such canals and assigned to them all the powers and duties of the Canal Officers under the Act by virtue of the Notification dated 27th September, 1963.
Thus, it is manifest that the Executive Engineer, by virtue of the said Notification, had been lawfully appointed as Canal Officer within the meaning of Section 378 3(6) of the Act.
Section 18 of the Act vests the Canal Officer with the power to hold inquiry and direct the construction of suitable alignments for a water course and by Section 77 of the Act (supra) the Canal Officer is vested with the authority to survey, demarcate and make a map of the land which in his opinion is suitable for constructing an alignment for the water course.
Thus, under the statute,, read with the Notification dated 27th September 1963, the Canal Officer (Executive Engineer) was fully com petent to decide about the particular alignment of the water course and it fell within his jurisdiction to decide and settle about the suitable demarcation of the alignment of the water course of the canal from Vartu Dam.
He exercised that jurisdiction under the statute when he demarcated the water course in red, in the map attached to Ex.45, the agreement.
It is the content of the agreement and not its form which is relevant to trace the source of power behind it and when examined in the light of the statutory provisions noticed above, it is manifest that the document Ex.45 has been executed by the Executive Engineer by virtue of the statutory powers vested in him.
The circumstance that the agreement Ex.45 came into existence during the pendency of the suit and was executed by way of an agreement does not militate against the order of alignment as reflected therein being any less statutory in character.
As a matter of fact the Act itself envisages that the Canal Officer may alter and settle the alignment in consultation with the landholders through which the water course is to run.
In the agreement Ex.45, the Executive Engineer had agreed to alter the alignment of the water course in consultation with the petitioners who thereupon ,unconditionally ' withdrew the suit as it appears no grievance remained to be settled.
The altered alignment was, therefore, validly made by following the procedure envisaged by the Act.
The High Court fell in error in ignoring this aspect of the case.
It failed to appreciate the statutory powers of the Executive Engineer, vested in him under Sections 18 and 77 of the Act read with the notification of 27th September, 1.963 on the true import of agreement Ex.45.
Thus, in the facts and circumstances of the case we are satisfied that the agreement dated 7.11.1966, exhibit 45 was lawfully executed by the Executive Engineer in exercise of his statutory powers under the Act and the State was obliged to act according to the terms of the said agreement and could not give it a go bye without following the procedure under the Act to again alter the alignment.
It is nobody 's case that for making an alteration in the alignment, the requisite exercise was undertaken, as envisaged by the Act, in 1972, when the suit out of which 379 these proceedings have arisen was filed.
In view of the aforesaid discussion, the judgment and decree of the High Court deserves to be set aside and are hereby set aside.
The judgment and decree passed by the Trial Court as confirmed by the District Judge are restored though for different reasons, as detailed above.
The appeal is consequently allowed.
The parties, however, shall bear their own costs throughout.
Before parting with the judgment, we would also like to clarify certain position.
The dispute is almost three decades old.
Learned counsel for the parties were unable to state as to whether fresh alignments as envisaged by the red line in the map attached to Ex.45, agreement, had been made for the passing of the canal or not.
We would, therefore, like to clarify that if any fresh alignment for the water course is required to be made, different than the one originally proposed or the one contained in the said Map, the same may be made but only by following the procedure prescribed under the Act and this judgment shall not be construed as any bar therefore.
N.P.V. Appeal allowed.
| Under an Irrigation Scheme, the respondent State proposed to construct a dam on a river in the State and prepared a sketch, indicating the passage of the canal from the Dam and for that purpose, proceeded to acquire land through which the canal was proposed to run.
Apprehending that serious damage will be caused to their lands by the passing of the canal through their lands, the appellants farmers filed a suit against the respondent State, seeking to restrain it from implementing the Irrigation Scheme, as proposed.
During the pendency of the suit an agreement was arrived at between the parties to the effect that the canal from the Dam would be run as per the line demarcated in red in the map appended to the deed of agreement.
As a result, the suit was unconditionally withdrawn by the appellants, but subsequently, on discovering that the State Government was going back from the agreement and the alignment of the canal was being undertaken contrary to the alignment reflected in red in the map appended to the agreement, they filed a fresh suit for declaration to the effect that the agreement entered into between them and the respondents through its Executive Engineer, Irrigation Department, was binding on the 367 parties and that the parties were bound to act according to the terms of the said agreement and for an injunction, restraining the respondent State from going back on the agreement.
The trial court decreed the suit and permanently restrained the State from going back from the agreement and acting otherwise than as per the terms of the same.
The appeal preferred by the State was also dismissed by the District Judge.
The State riled a second appeal before the High Court contending that the alleged compromise/agreement was not binding upon the State, inasmuch as the Executive Engineer had no authority to agree on behalf of the State Government as he was not the representative of the Government.
The High Court held that the agreement was a null and void document for non compliance with the mandatory provisions of Article 299(1) of the Constitution.
It also rejected the appellants ' plea that under the statutory powers conferred by section 18 of the Bombay Irrigation Act, 1879 the Executive Engineer was competent to enter into a compromise and that the said compromise arrived at during the pendency of the earlier suit was binding on the Government.
In the appeal filed before this Court on behalf of the appellants farmers, it was submitted that reliance placed on Article 299 of the Constitution of India was wholly erroneous, that by a Notification, dated 27th of September 1963, published in Part IV B of the Government Gazette, the State Government had appointed all Executive Engineers and Superintending Engineers in charge of canals in the State to be Canal Officers in respect of such canals and assigned to them all the powers and duties of the Canal Officers under the Act and, therefore, the agreement/compromise entered into by the Executive Engineer during the pendency of the suit of which he was doing 'pervi ' was a validly executed compromise which was binding on the parties and respondent could not go back on it, and that after having made the appellants to withdraw their earlier suit on the basis of the agreement, it was not permissible for the respondent to dispute the act done by its officers or agents within their powers under the statute.
Allowing the appeal, this Court, HELD : 1.1.
The agreement/compromise arrived at in the previous 368 suit, could not have been equated with a contract between the State and the citizen.
Article 299(1) of the Constitution concerns itself with contracts and assurances of property and lays down how Government contracts, including assurances of property are to be made and executed.
The provisions of Article 2" are mandatory in character and their non compliance would render a contract void, but where the agreement is not referable to Article 299 and is not a contract, as contemplated by that Article, the agreement cannot be invalidated for not satisfying the essential requirements of Articles 299 of the Constitution.
[375B, D E] 1.3.
There is a marked distinction between contracts which are executed in exercise of the executive powers and agreements or orders made, which are statutory in nature.
Articles 299(1) applies to a contract made in exercise of the executive power of the Union or the State and it has no application to a case where a particular statutory authority as distinguished from the Union or the State, enters into an agreement within his authorised capacity.
[375F] State of Haryana and Ors.
vs Lal Chand and Ors., ; , relied on.
A compromise of the nature contained in the agreement arrived at during the pendency of a suit, in the instant case is not a contract executed between the parties as envisaged by Article 299.
[375E] 2.1 It is clear from the record that it was the Executive Engineer who was doing 'pervi ' of the case in the suit filed earlier.
The agreement in question was entered into during the pendency of the said case.
The State Government had appointed all Executive Engineers and Superintending Engineers in charge of canals in the State to be Canal Officers in respect of such canals and assigned to them all the powers and duties of the Canal Officers under the Act by virtue of the Notification dated 27th September, 1963.
Thus, it is manifest that the Executive Engineer, by virtue of the said Notification, had been lawfully appointed as Canal Officer within the meaning of Section 3(6) of the Bombay Irrigation Act, 1879.
[377F H, 378A] 2.2.
Section 18 of the Act vests the Canal Officers with the power to 369 hold Inquiry and direct the construction of suitable alignments for a water course and by Section 77 of the Act a Canal Officer Is vested with the authority to survey, demarcate and make a map of the land which, in his opinion, Is suitable for constructing an alignment for the water course.
[378A] 23.
Thus, under the statute, read with the notification dated 27th September, 1963, the Canal Officer (Executive Engineer) was fully competent to decide about the particular alignment of the water course and it fell within the jurisdiction of the Canal Officer to decide and settle about the suitable demarcation of the alignment of the water course of the canal from the Dam, in question and he exercised that jurisdiction under the statute when he demarcated the water course in red, in the map attached to the agreement.
It is the content of the agreement and not its form which is relevant to trace the source of power behind it and in the light of the statutory provisions, it Is manifest that the document has been executed by the Executive Engineer by virtue of the statutory powers vested In him.
The circumstance that the agreement came into existence during the pendency of the suit and was executed by way of an agreement does not militate against the order of alignment as reflected therein being any less statutory in character.
[378B D] 2.4.
The Act itself envisages that the Canal Officer may after and settle the alignment in consultation with the landholders through which the water course is to run.
In the agreement in question, the Executive Engineer had agreed to alter the alignment of the water course in consultation with the appellants who thereupon 'unconditionally ' withdrew the suit since no grievance remained to be settled.
The altered alignment was, therefore, validly made by following the procedure envisaged by the Act.
The High Court fell in error in ignoring the statutory powers of the Executive Engineer, vested in him under Sections 18 and 77 of the Act read with the notification or 27th September, 1963 on the true import of agreement.
[378E F] 2.5.
Under these circumstances, the agreement was lawfully executed by the Executive Engineer in exercise of his statutory powers under the Act and the State was obliged to act according to the terms of the said agreements and could not give it a go bye without following the procedure under the Act to again alter the alignment [378G] 370
|
(C) Nos.
1189798 of 1992 etc.
From the judgment and Order dated 28.8.1992 of the Delhi High Court in Civil Writ Petition Nos.
1152 & 1157 of 1992.
V.R. Reddy, Addl.
Solicitor General, Kapil Sibbal, P.P. Rao, Rama Jois, A. Temton, Dr. Shankar Ghosh, K.K Venugopal, Harish Salve, F.S. Nariman, A.N. Haksar, Shanti Bhushan, K.N. Bhat, T.R. Andhyarujina, C.V. Subba Rao, P.P. Singh, Mrs B. Sunita Rao, Sudhir Kulshreshtha, Rohit Tandon, Parijat Sinha, Ms Sunanda Roy, Ms. section Bhattacharya, B.D. Ahmed, Man Mohan Singh, Gopal Subramanium, D.N. Mishra, A.M. Dittia, P. K. Ganguli, Manoj K. Das, Amit Prabhat, Tripurary Roy, K.L. Mehta, section Ganesh, Pratap Venugopal, K.J. John, Pramod Dayal, Ajay K. Jain and D.N. Najjunda Reddy for the appearing parties.
The following Order of the Court was delivered by 116 K. JAYACHANDRA REDDY, J. All these Special Leave Petitions arise out of the common judgment of the High Court of Delhi in Civil Writ Petitions Nos. 1 152 and 1 157/92.
We heard these matters for considerable length of time.
Eminent counsel appearing on both sides advanced detailed arguments.
After the conclusion of the hearing it was represented that having regard to the constraint of time factor, namely that the contracts with the Railways entered into by the manufacturers who are parties, have to be completed very soon the judgment in these matters has to be delivered as early as possible or at least the conclusions have to be given soon.
We are conscious of the fact that it is likely to take considerable time to deliver a detailed judgment.
However having gone through the records carefully and after due consideration of the various arguments advanced, we have reached the conclusions given hereunder and we propose to deliver the detailed judgment at a later stage giving all the reasons in support of these conclusions.
We, however, think it necessary to state a few relevant facts and the issues involved in a concised form before we set out our conclusions.
Every year the Railway Board enters into contracts with the manufacturers for the supply of cast steel bogies which are used in turn for building the wagons.
Cast steel bogies come under a specialised item procured by the Railways from the established sources of proven ability.
There are 12 suppliers in the field who have been regularly supplying these items.
Two new firms Simplex and Beekay also entered the field.
Among them admittedly M/s H.D.C., Mukand and Bhartiya are bigger manufacturers having capacity to manufacture larger quantities.
On 25, 10.91 a limited tender notice for procurement of 19000 cast steel bogies was issued to the regular suppliers as well as the above two new entrants for the year namely from 1.4.1992 to 31.3.93.
The last date for submission of offers to the Ministry of Railways was 27.11.91 by 2.30 P.M. and the tenders were to be opened on the same day at 3 P.M.
It was also stated therein that the price was subject to the price variation clause and the base date for the purpose of escalation was 1.9.91 and that the Railway reserved the right to order additional quantity upto 30% of the ordered quantity during the currency of the contract on the same price and terms and conditions with suitable extensions in delivery period.
The offers were to remain open for a period of 90 days.
On that day the tenders were opened in the presence of all parties.
The price quoted by the three manufacturers 117 i.e M/s H.D.C., Mukand and Bharatiya was an identical price of Rs. 77,666 per bogie while other tenderers quoted between 83.000 and 84,500 per bogie.
After the tenders were opened and before the same could be finalised, the Government of India announced two major concessions namely reduction.
of custom duty on the import of steel scrap and dispensation of freight equalisation fund for steel.
The tenders were put up and and placed before the Tender Committee of the Railways which considered all the aspects.
The committee concluded that three of the tenderers namely M/s H.D.C., Mukand and Bharatiya who had quoted identical rates without any cushion for escalation between 1.7.91 and 1.9.91, have apparently formed acartel.
The Tender committee also noted that the rates quoted by them were the lowest.
Taking into consideration the reduction of Rs. 1500 as a result of the concessions in respect of the reduction of custody duty on the import of steel scrap and dispensation of the freight equalisation fund for steel, the Tender Committee concluded that the reasonable rate would be Rs.76,000per bogie.
On the question of distribution of quantities to the various manufacturers the Tender committee decided to follow the existing procedure.
The Tender Committee.
signed these recommendations on 4.2.92 but on the same day the Member (Mechanical) of the Committee received letters from M/s H.D.C. and Mukand.
M/s H.D.C. in its letter stated that in view of the concessions and also on the basis that per kg.
rate of casting per bogie could be reduced from Rs.37.50 to Rs.29 the cost of casting can also be reduced and therefore they would be in a position to supply the bogies at a lesser rate, in case a negotiation meeting is called.
M/s Mukand in its letter also offered to substantially reduce the prices and they would like to co operate with the Railways and the Government and bring down the prices as low as possible and asked for negotiations.
Though this was post tender correspondence, the Department felt that the offers made by M/s H.D.C. and Mukand could be considered.
The whole matter was examined by the Advisor (Finance) in the first instance and by an elaborate note he observed that the need for encouraging open competition to improve quality and bring down costs has been recommended by the Government and if it is intended to continue the existing policy of fixing a rate and distributing the order among all the manufacturers, then negotiations may not be useful as uniform prices offered to all manufacturers have to be sufficient even for the smaller and less economical units and that as any review of the 118 existing policy would take time, the present tender can be decided on the basis of the existing policy.
With this noting the file was immediately sent to the Member ( Mechanical), the nest higher authority.
He with some observation, however recommended the acceptance of the Tender Committee 's recommendations.
The file was then put up to Financial Commissioner, He noted that the Tender Committee was convinced that the three manufacturers who quoted identical price of Rs. 77,666 had formed a cartel.
He also considered the offers made by M/s H.D.C. and Mukand and observed that these three manufacturers who quoted a cartel price intended to get a larger order on the basis of such negotiated price which would eventually nullify the competition from the other manufacturers and lead to their industrial sickness and subsequently to monopolistic price situation.
lie, however, approved the Tender committee 's recommendations that a counter offer of Rs. 76,000 may be accepted but in the case of M/s H.D.C. a price lower by Rs. 1 1,000 may be offered as per their letter dated 4.2.92.
lie also recommended that the two manufacturers M/s. Cimmco and Texaco may the given orders to the extent of their capacity or quantity offered by them whichever is lower in view of the fact that they are wagon builders and the present formula regarding the distribution of quantities may he applied to all manufacturers except the three who have formed a cartel.
He also recommended some recoveries from these three manufacturers who are alleged to have formed a cartel on the basis of their letters wherein they have quoted prices which were much less than the updated price as on 1.9.91 of Rs. 79,305.
He also made certain other recommendations and finally concluded that the post tender letters may be ignored and that for short term gains the Department can not sacrifice long term healthy competition.
After these recommendations of the Financial commissioner the file was put up to the approving authority i.e. the Minister for Railways, who in general agreed with the recommendations of the Financial Advisor.
He also noted that these three manufacturers have formed a cartel.
He also noted that subsequent to the Financial commissioner 's note, besides M/s H.D.C. and Mukand has also offered to reduce the price by 10% or more vide their letter dated 19.2.92 if called for negotiations.
Taking these circumstances into consideration the Minister ordered that all these three firms may be offered a price lower by Rs. 1 1,000 with reference to the counter offer recommended by the Tender committee and the quantities also be suitably adjusted so that the cartel is broken.
The Minister also noted that as a result of this a saving of about Rs. 11 119 crores would be effected.
In his note, the Minister also ordered redistribution of the quantities.
Heal so ordered that3O% options should straightaway be exercised.
After the approving authority took these decisions,the file went to he Chairman Railway Board for implementing the decisions.
The noted that action will be taken as decided by the Minister but added that action will be taken as decided by the Minister but added that it results in dual pricing namely one to the three manufacturers and the higher one to the others and therefore the Minister may consider whether they could counter offer the lower price to all the manufacturers as that would result in saving much more.
The file was then again sent to and was considered by the financial Commissioner who noticed this endorsement made by the Chairman, Railway Board.
He however noted that so far all the other firms are concerned it is Rs.3305 less than the present contract price but it would not be equitable to offer the lower price put forward by the three manufacturers as it would make the other units enviable and that incidentally the price of ' Rs. 76,000 now proposed to be counteroffered to the other firms is also in line with the recommendation of the Tender committee.
The, however, noted that some of the units were sick units and owe a lot of money to the nationalised banks and it would therefore be in the national interest to accept dual pricing.
Therefore the file was again put up to the approving authority who agreed with the recommendations of the Financial Commissioner and the render Committee and directed that the same may be implemented.
In view of this final decision taken by the approving authority a telegram was issued to the three manufacturers giving them a counter offer of Rs. 65 000 per bogie.
The counter offer was also made to the other nine manufacturers at the rate of Rs. 76,000per bogie namely the price worked out by the Tender committee.
Soon after the receipt of this telegram dated 18.3.92 M/s H.D.C. and Mukand filed writ petitions in the Delhi High Court challenging the so called discriminatory counteroffer.
M/s Bhartiya also filed a similar petition in Calcutta High Court but the same was withdrawn but another writ petition was filed later in the Delhi High Court.
In the writ petitions filed by M/s H.D.C. and Mukand, the High Courts stayed the operation of the telegram dated 18.3.92 and issued notice to the Union of India and to the Executive Director and Director of the Railways (Stores) who figured as respondents in those writ petitions.
M/s H.D.C. and Mukand also wrote to the Minister of Railways in reply to the telegram that they were not prepared to accept the counter offer at the rate of Rs.65,000 and 120 instead they offered to supply the bogies at the rate of Rs 67,000) per bogie.
The Railways accepted this offer and intimated M/s H.D.C. and Mukand accordingly.
The High Court, in an interlocutory stage pending the writ petitions, passed an order on 2.4.92 directing the Ministry to accept the allocation of bogies recommended by the Tender committee and to pay a price at the rate of Rs. 67,000 only per bogie and that would be subject to the final decision of the writ petitions.
Being aggrieved by this order, the Railways filed a petition for special leave to appeal No. 5512/92 and this court while refusing to interfere at that interlocutory stage made the following observations on 28.4.92: "However, we may observe and so direct that during the pendency of the writ petition if any of the suppliers in terms of the package of distribution indicated by the High Court (including the petitioners in the High Court in the writ petition), seek an "on account" payment representing the difference between the sum of Rs. 67,000 indicated as price by the High Court and the sun of Rs 76,000 contemplated by the Railways; the order of the High Court shall not prohibit the Government making such on account payment to such suppliers on each wagon on the condition that the said on account payment of Rs. 9,000 per bogie should be covered by a bank guarantee for its prompt repayment together with interest at 20% per anum in the event the on account payment cannot be observed in the price structure that may ultimately come to be determined pursuant to the final decision in the writ petitions.
The special leave petitions are disposed of accordingly.
" Thereafter the High Court took up the writ petitions for final hearing and by the impugned judgment allowed the writ petitions filed by M/s H.D.C. and Mukand and directed that all the suppliers should make the supplies at the rate of Rs. 67,000 per bogie and also set aside the quantity allocation and directed that the same should be considered 121 afresh on a reasonable basis and pending such fresh consideration future supplies should he made on the basis of the recommendations ofthe Tender Committee.
In the course of the judgment, the High Court also made certain observation to the effect that the decision of the approving authority is arbitrary and that this Government has no justification to offer a higher price than the market price to any supplier to rehabilitate it.
It was further observed that the stand of the Railways that those three manufacturers formed a cartel is based on extraneous considerations.
The learned judges of the High Court also observed that they failed to understand as to why the Railways authorities could not initiate negotiations with those manufacturers who had offered to reduce their offer which could result in saving crores of rupees to the Railways.
Aggrieved by this judgment of the High Court the Union of India filed S.L.P. (civil) Nos. 1 1897 98/92.
Before the High Court in the two writ petitions filed by M/s H.D.C. and Mukand the other manufacturers figured is respondents Nos. 4 to 12 and M/s Bharatiya otherwise Known as Besco figured as respondent No. 13.
The other S.L.Ps. are filed by those nine manufacturers.
M/s Bharatiya, respondent No. 13, has not questioned the judgment of the High Court.
As mentioned above M/s Bharatiya filed a separate writ petition No. 1753/ 92 in the Delhi High Court after withdrawing an earlier writ petition filed in the Calcutta High Court.
The same also was disposed of in terms of the judgment in the, other two writ petitions Nos. 1 152 and 1157/92.
But they have not questioned the same.
Consequently M/s Bhartiya figures as a respondent before us in the SLP filed by the Union of India.
Before we proceed further.
we would like to briefly indicate the main submissions made on behalf of all the parties to the extent relevant and important for arriving at the necessary conclusions.
Learned counsel have advanced arguments on several other aspects which are incidental.
We propose to deal with them and give our findings in our detailed judgment at a later stage.
Mr. Kapil Sibal, learned counsel appearing for the Union of India submitted that the three big manufacturers i.e. M/s H.D.C. Mukand and Bhartiya formed a cartel and the same is evident from the fact that each one of them quoted an identical price which is a cartel price; and that the Government in the matters of economic policy for good and sufficient reasons and in the public interest can reject the lowest offer with a view not to allow any monopoly and to encourage competition among the recognised manufacturers and that the dual pricing adopted 122 by the Railways under the circumstances is not discriminatory.
In this context it is also submitted that the Railways had rightly taken into account the two concessions and found that the price at the rate of Rs. 67,000 per bogie was not reasonable and workable and it was only a cartel price and that Rs. 76,000 was the reasonable price and on that basis made acounter offer to other manufacturers except to these three big manufacturers.
The Railways had no option except to accept the offer of Rs. 67,000 by the three big manufacturers as they took firm stand that the price is reasonable and that they would be able to supply on that rate and thereby a binding contract came into force so far these three manufacturers are concerned.
Regarding the allocation of quantities the Railways have taken into consideration all the relevant factors namely that three of the nine manufacturers were BIER companies and the two others are also wagon builders having their entire business with Railways only and on that rational basis the quantities were allotted.
It is also his submission that since the three big manufacture originally offered a cartel price and ill of them later apparently offered Rs. 67,000/ , in unworkable price, the Railways felt that they attempted to destroy the competition.
Therefore they were not given larger share.
Learned counsel relied on several authorities particularly touching the scope and ambit of Article 14 and the power of the court under Article 226 of the constitution of India.
Mr. Sibal also strongly contended that the High Court grossly erred in making certain observations against the Railways namely that the stand of the Railways that those three manufacturers formed a cartel is based on extraneous considerations and somewhat similar observations in respect of the decision or the Railways on the question of price fixation.
The other counsel appearing for the nine smaller manufacturers in general supported these submissions and also highlighted certain aspects in their individual cases.
Shri K.K. Venugopal.
learned counsel appearing for the respondent namely M/s H.D.C. submitted that the award of the contract for supply of bogies was vitiated by malafides and that disproportionate allotment of quota of bogeis and dual pricing were based on malafides and extraneous considerations violating Article 14 of the Constitution.
tie further submitted that the reasons put forward on behalf of the Railways are disingenuous and bereft of rationale.
The supported the finding of the High Court that the price should he fixed at Rs. 67,000 123 for every manufacturer.
Shri Nariman, learned counsel appearing for M/s Mukand, another respondent submitted that the dual set of counter offers and allocation of disproportionate quantites are highly arbitrary and that the practice and policy of the past 10 years of placing orders on all manufacturers in respect of the quantities worked out on the basis of standard quantity formula at a uniform price, gave rise to legitimate expectations among all bogie manufacturers and irrational departure from the existing policy is arbitrary and unreasonable.
He further submitted that the making of law tender offers can not by itself be visited with punty consequences like dual pricing and reducing the allotment of legitimate quantities.
Shri Shanti Bhaushan, learned counsel appearing for M/s. Bhartiya submitted that the Tender Committee erred in treating M/s. Bhartiya also as a member of the cartel and that the allotment of quantities has been arbitrarily reduced.
He however made one special submission namely that M/s Bhartiya never made an offer of Rs. 67,000 and there is nothing in writing to that effect and that merely because of the statement of the counsel during the proceedings before the High Court, it should not be understood that they are, willing to supply at the, rate of Rs. 67,000 and that they should not be treated by treated differently from the other nine manufacturers.
Taking all the aspects into consideration and for the purpose of giving our conclusions it may broadly be stated that M/s H.D.C. and Mukand gave post tender offers at a low pride with the hope that they would get a larger quantity allotted.
M/s Bhartiya also fell in line with them though did not specifically put it in writing.
But during the course of the hearing of the writ proceedings, it was represented on behalf of M/s Bharatiya that they would be willing to supply at Rs. 67,000 if the court fixes that price.
This is noted by the High Court in its judgment.
The Railways authorities however concluded that in the beginning itself these three have formed a cartel and the price quoted by them was only a cartel price.
The note by the Financial Commissioner is somewhat elaborate on this aspect and the Minister for Railways, the competent authority agreed with him and also directed that the quantities be suitably adjusted so that the cartel is broken.
He also took into consideration the fact that some of the smaller units are sick and 124 therefore they should be given a larger quantity to enable them to rehabilitate.
The other recommendations of the authorities were also accepted.
However in giving any directions we must bear in mind that the contract period is going to end shortly and till now all the manufacturers have been manufacturing and supplying pursuant to the interim orders.
We may indicate at this stage that we shall discuss all these aspects later in detail in our judgment.
After due and careful consideration of all the aspects, our conclusions are as follows: (1) There is no enough material to conclude that M/s H.D.C., Mukand and Bhartiya formed a cartel.
Because of mere quoting identical tender offers by the said three manufacturers for which there is some basis, the conclusion that the said manufacturers had formed a cartel does not appear to be correct.
However since the offers of the said three tenders were identical and the price was somewhat lower, the Tender Committee entertained a suspicion that a cartel had been formed and the same got further strengthened by the post tender attitude of the said manufacturers which further resulted in entertaining the same suspicion by the other authorities in the hierarchy of the decision making body including the Minister of Railways.
Though there is no enough of material to establish formation of a cartel as is understood in the legal parlance but at the same time it cannot be contended that such an opinion entertained by the concerned authorities including the Minister was perse malicious or was actuated by any extraneous considerations.
After a careful examination of the entire record and facts and circumstances of the case we are of view that all the Railway authorities including the Minister acted in a bonafide manner in taking the stand that the three manufactures formed a cartel.
(2) The current contract price based on the updated price is Rs. 79,305 The three manufacturers offered at Rs. 77,6000. 'Faking into consideration the later concessions, the Tender Committee decided that the price of Rs. 76,000 is reasonable.
In the post tender correspondence M/s H.D.C. and Mukand offered to supply at a price of Rs. 67,000 per bogie, but no particulars as to how it would be reasonable, were given.
However they have come forward before us with some particulars.
M/s Bhartiya did not gave any such offering writing, but fell in line with them and did not choose to question the order of the High court fixing the price at Rs. 67,000 The Railways were of the view that 125 it is an unreasonable price an smaller manufacturers cannot supply at that price and consequently they will get extinguished resulting in a monopoly by the big manufacturers.
The High court has directed that supply should be at Rs. 67,000 by everyone.
Taking into consideration all these aspects we are of the view that the fixation of price at Rs. 67,000 per bogie straightaway without necessary and proper consideration and appraisal regarding the viability and other aspects by some experts, is not just and fair from many points of view.
A fresh consideration is called for, particularly from the point of view of safeguarding the interests of the public exchequer and giving_ necessary protection to the smaller manufacturers.
Consequently we set aside this direction of the High Court and direct the Tender Committee to reconsider the question of fixation of reasonable price.
The Tender committee shall consider the offer of Rs, 67,000 made by M/s H.D.C. and Mukand along with the data that would be given by them in support of that and the percentage of profits available to all the 3 manufacturers and other relevant aspects and then fix a reasonable price.
at which the manufacturer would be able to supply.
The Tender Committee shall within two weeks from today complete the process.
(3) At a belated post tender stage Railways authorities did not deem it fit to reconsider the question of fixation of price in the light of the post tender offers made by M/s H.D.C. and Mukand, as by then they were of the opinion that the three big manufacturers have formed a cartel and quoted a cartel price.
The stand by the Railways to adopt dual pricing under these circumstances is bonafide and not malafide.
However.
dual pricing on principle may not appear to be rational since the railways have been following certain formula in fixing the price which is made applicable to all the manufacturers, But under certain circumstances dual pricing may be reasonable.
In the instant case M/ s H.D.C. and Mukand came forward with firm offer of a price at Rs. 67,000 per bogie.
M/s Bharatiya also got committed to supply at the same price.
All the three of them did not even challenge the order of the High Court.
These three big manufacturers just be deemed to be in a position to supply at the rate of Rs. 67,000 and thus they form a distinct category.
The smaller manufacturers belong to a different category and if a different price is fixed for them it is not discriminatory.
126 (4) If the price that is to be fixed by the Tender Committee as directed by us happens to be more than Rs. 67.000 then that would be applicable to the smaller manufacturers only and not to M/s H.D.C., Mukand and Bhartiya who on their own commitment have to supply at the rate of Rs. 67,000.
(5) The price thus fixed by the Tender committee which applies only to the smaller manufacturers shall he deemed to be final and the respective contracts shall be deemed to be concluded so for the price is concerned.
(6) Now coming to the allotment of quota of bogies the Tender Committee made recommendations on the basis of the existing practice.
The Minister of Railways in his ultimate decision has made some variations taking into consideration tile recommendations of the Financial commissioner and other authorities.
The has however not accepted these recommendations fully.
In making these variations, the Minister accepting ultimately reduced the allotment of quota to the said three tenderers substantially by way of reprisal.
In view of our finding that the formation of an opinion that cartel was formed had no firm factual foundation; such a reduction of quota by way of reprisal can not be justified.
we are however, not inclined to accept the contention made on behalf of M/s H.D.C., Mukand and Bhartiya that no departure from the recommendations of the Tender committee is permissible in the absence of any established policy which was also known by the tenderers.
From the records it appears that in the past also there have been such variations.
In our view, the Minister of Railways as the final authority.
after considering various relevant factors, may he justified in taking a particular decision in the matter of allotment of quota but such decision must be taken on objective basis.
But, in this case.
it appears to us that all the smaller manufacturers deserving a favourable treatment in the matter of allotment of quota, have not been equally treated in the sense that one or, two of them got larger quantities.
Though this does not appear to be a serious departure, yet in these matters the Govt.
is expected to be just and fair to one and all.
We hope that in future the authorities would make a proper consideration of the relevant factors in respect of each tenderer in an objective manner in allotting the quantities.
127 (7) In view of the interim orders, during the pendency of writ petitions before the High Court, and until now all the manufacturers have been supplying as per the allotments by the Tender Committee.
The High Court in its judgment finally directed the Railways to reconsider the allocation on reasonable basis.
It is submitted on behalf of the smaller manufacturers that they have made necessary manufac turing arrangements on the basis of the final allotment.
On behalf of the M/s H.D.C., Mukand and Bhartiya, it is submitted that their legitimate quotas also are cut short and that they are entitled to larger quantities in view of the low price offered by them.
Having considered the contentions made by all the manufacturers direct that the there manufacturers M/s H.D.C., Mukand and Bhartiya should be allocated the quantities as per the recommendations of the Tender committee.
We, however.
do not want to disturb at this stage the quantities finally allotted by the competent authority to the small manufacturers as that would cause great hardship to them.
We leave it to the Railway authorities to make necessary adjustments next year in the matter of allocation of quantities to them taking, into consideration these allotments given to them this year.
To that extent we modify the order of the High Court.
(8) It will he open the Railways to exercise 30% option, if not already exercised.
(9) Taking all the circumstances and the time factor into consideration the time to complete the supply is extended upto 31.3.1993.
Accordingly these Special Leave petitions are disposed of.
There will he no order as to costs.
V. P. R. SL Ps disposed of.
| The Railway Board entered into contracts with 12 manufactur ers for the supply of cast steel bogies to be used for building the wagons, every year.
Among them H.D.C., Mukand and Bhartiya had capacity to manufacture larger quantities.
In 1991 two new firms Simplex and Beekay also entered the field.
For the year 1992 93, a tender notice for procurement of 1900 cast steel bogies was issued to the Regular suppliers as well as to Simplex and Beekay the new entrants.
The tender notice stated therein that the last date for submission of offers was 27.11.91 by 2.30 P.M. and the tenders to be opened at 3 P.M. on the same day; that the price was subject to the price variation clause and the base date for escalation purpose was 1.9.91; that the Railways reserved the right to order additional quantity upto 30 % of the quantity ordered during the currency of the contract on the same price and terms and conditions with suitable extensions in delivery period.
The price quoted by H.D.C., Mukand and Bhartiya firms was identical, i.e. Rs. 77.
666 per bogie.
Other tenderers price varied between Rs. 83.000 and Rs. 84, 500 per bogie.
The Government 's announcement of reduction of custom duty 109 on the import of steel scrap and dispensation of freight equalisation fund for steel came after the opening of the tenders and before the finalisation of the tenders.
The Tender Committee recommended that the three manufac turers who quoted an identical lowest rates without any cushion for escalation between 1.7.91 and 1.9.1991 formed a cartel; that the reasonable rate per bogie was to be Rs. 76,000 by taking into consideration of the two concessions announced by the Government; and that the existing procedure to be followed on the question of distribution of quantities to the tenderers.
On 4.2.92, the Committee signed the recommendations.
On the same date, the Member (Mechanical) of the Committee received letter from H.D.C. and Mukand, wherein the tenderers offered to substantially reduce the prices because of the concessions.
The Advisor (Finance) examined the matter and observed that if it was intended to continue the existing policy of fixing a rate and distributing the order among all the tenderers, then negotiations might not be useful; that review of the existing policy would take time; and that the present tender be decided on the basis of the existing policy.
The Member (Mechanical), the next higher authority recom mended the acceptance (if the Tender Committee 's recommendation.
The Finance Commissioner approving the recommendations of the committee, noted that the tenderers who quoted the identical rates had formed a cartel; that a counter offer of Rs. 76,000 be accepted but in the case of H.D.C., a price lower by Rs.1 1,000 to he offered as per their post tender letter dated 4.2.92; that the present formula regarding the distribution of quantities be applied to all tenderers except the three who formed a cartel; that some recoveries from the three tenderers he made on the basis of their letters wherein they quoted prices which were much less than the updated price on 1.9.91 of Rs.79.305; that the post tender letters be ignored and that for short term gains the Department could not sacrifice long term healthy compensation.
110 The Minister for Railways, the approving authority agreeing with the recommendations of the Finance Advisor, noted that the three tenderers had formed a cartel and they he offered a price lower by Rs. 1 1.000 with reference to the counter offer recommended by the Tender Committee and the quantities also be suitable adjusted to break the cartel and ordered for redistrib ution of the quantities exercising 30% option.
The Chairman, Railway Board, when received the file for implementation of the orders from the Minister, noted that action be taken as decided by the Minister, which had resulted in dual pricing, namely, one to the three tenderers and the higher one to the other tenderers and therefore, the Minister to consider whether they could counter offer the lower price to all the tenderers as that would result in saving much more.
When the matter was sent to the Finance Commissioner, he observed that as some of the units were sick units and owe a lot of money to the nationalised banks; it would be in the national interest to accept dual pricing.
Therefore, the rile was again put up to the approving authority.
He agreed with the recommendations of the Commissioner and the Tender Committee and directed for their implementation.
As per the final decision taken by the approving authority the three tenderers were issued a counter offer of Rs.65,000 per bogie by telegram and other tenderers were given a counter offer of Rs.76,000/ per bogie.
After the receipt of the telegram dated 18.3.92 H.D.C. and Mukand riled writ petitions in the Delhi High Court challenging the discriminatory counter offer.
Bhartiya had riled a writ petition in the Calcutta High Court.
It was withdrawn and another writ petition was riled later in the Delhi High Court.
In the writ petitions filed by H.D.C.and Mukand, the High Court issuing notice to the respondents,stayed the operation of the telegram dated 18.3.92.
111 In reply to the telegram, H.D.C. and Mukand also wrote to the Minister of Railways offering to supply the bogies at the rate of Rs.67.000 per bogie, which was accepted by the Railway.
Pending the writ petitions, the High Court passed an interlocutory order, directing the Railway to accept the allocation of bogies recommended by the Tender Committee at the rate of Rs.67.000 per bogie subjected to the final decision in the writ petitions.
The Railway 's petition for special leave to appeal filed against the interlocutor%, order of the High Court was dismissed.
Thereafter, the High Court allowed the writ petitions riled by H.D.C and Mukand and directed that all the tenderers should make the supplies at the rate of Rs. 67.000 per bogie and allocation of quantity to be considered afresh on a reasonable basis.
The Union of India filed appeal by special leave (S.L.P. (c) Nos. 11897 98/92) against the judgment of the High Court.
The other SLPs.
were riled by the affected tenderers who figured as respondents Nos. 4 to 12 in the writ petitions before the High Court.
The High Court disposed of Bharatiya 's writ petition in terms of the judgment in the other two writ petitions (W.P.Nos. 1152 and 1157/ 92) wherein they were shown as respondent No. 13).
As Bharatiya alias Besco did not question the judgment of the High Court, they were arrayed as respondent in the S.L.P. riled by the Union of India.
The Union of India submitted that the three big manufactures i.e. M/s H.D.C., Mukand and Bhartiya formed a cartel and the same was evident from the fact that each one of them quoted an identical price which was a cartel price '; that the Government in the matters of economic policy for good and sufficient reasons and in the public interest could reject the lowest offer with a view not to allow any monopoly and to encourage competition among the recognised manufacturers; that the dual pricing adopted by the Railways under the circumstances was not discriminatory; that the Railways had rightly taken into account the two concessions and found that the price at the rate of Rs.67,000 per bogie was not reasonable and, workable and it was only a cartel price and that Rs. 76,000 was the reasonable price 112 and on that basis made a counter offer to other manufacturers except to these three big manufacturers; that the Railways took into consideration all the relevant factors and on rational basis the quantities were allotted; and, therefore, they were not given larger share.
The nine smaller manufacturers in general supported the sub missions of the Union of India.
The respondent M/s H.D.C. supporting the finding of the High Court submitted that the award of the contract for supply of bogies was vitiated by mala fides and that disproportionate allotment of quota of bogies and.
dual pricing were based on malafides and estraneous considerations violating Article 14 of the Constitution; that the reasons put forward on behalf of the Railways were disingenuous and bereft of rationale.
M/s Mukand respondent submitted that the dual set of counter offers and allocation of disproportionate quantities were highly arbitrary and that the practice and police of the past 10 years of placing orders on all manufacturers in respect of the quantities worked out on the basis of standard quantity formula at a uniform price, gave rise to legitimate expectations among all bogie manufacturers and irrational departure from the existing policy was arbitrary and unreasonable; that the making of law tender offers could not by Itself be visited with punty consequences like dual pricing and reducing the allotment of legitimate quantities.
M/s. Bhartiya submitted that the Tender Committee erred In treating m/s Bhartiya also as a member of the cartel and that the allotment of quantities was arbitrarily reduced; that M/s Bhartiya never made an offer of Rs. 67,000 and there was nothing in writing to that effect and that merely because of the statement of the counsel during the proceedings before the High Court, it should not be understood that they were willing to supply at the rate of Rs. 67,000 and that they should not be treated differently from the other nine manufacturers.
Disposing of the Special Leave Petitions, this Court, 113 HELD: 1.1.
Since the offers of the three tenderers were identical and the price was somewhat lower, the Tender Committee entertained a suspicion that a cartel had been formed and the same got further strengthened by the post tender attitude of the said manufacturers which further resulted in entertaining the same suspicion by the other authorities in the hierarchy of decision making body including the Minister of Railways.
(124 D) 1.2.
All the Railway authorities including the Minister acted in a bonafide mannerin taking the stand that the three manufacturers formed a cartel.
(124F) 1.3.
There is no enough of material to conclude that M/S H.D.C., Mukand and Bhartiya formed a cartel.
Because of mere quoting identical tender offers by the Said three manufacturers for which there is some basis, the conclusion, that the "id manufacturers had formed a cartel does not appear to be correct.
(124 C) 1.4.
The current contract priced based on the updated price is Rs.79,505.
The three manufacturers offered at Rs. 77,600.
Taking into consideration the later concessions, the Tender Committee decided that the price of Rs. 76,000 is reasonable.
(124 F) 1.5.
The fixation of price at Rs. 67,000 per bogie straightaway without necessary and proper consideration and appraisal regarding the viability and other aspects by some experts, is not just and fair from many points of view.
A fresh consideration is called for, particularly from the point of view of safeguarding the interests of the public exchequer and giving necessary protection to the smaller manufacturers.
(125 B) 1.6.
The Tender committee is directed to reconsider the question of fixation of reasonable price.
The Tender Committee shall consider, the offer of Rs. 67,000 made by M/s H.D.C. and Mukand along with the data that would he given by them in support of that and the percentage of profits available to all the manufacturers and other relevant aspects and then fix a resonable price, at which the manufacturer would be able to supply.
(125 C) 114 1.7.
At a belated post tender stage the Railway authorities did not deem it fit to reconsider the question of fixation of price in the light of the post tender offers made by M/s H.D.C. and Mukand, as by then they were of the opinion that the three big manufacturers have formed a cartel and quoted a cartel price.
The stand by the Railways to adopt dual pricing under the circumstances is bona fide and not malafide.
However, dual pricing on principle may not appear to be rational since the Railways have been following certain formula in fixing the price which is made applicable to all the manufacturers.
But under certain circumstances dual pricing may be reasonable. (125 E F) 1.8.
M/s H.D.C. and Mukand came forward with firm offer of a price at Rs. 67,000 per bogie.
M/s Bhartiya also got committed to supply at the same price.
All the three of them did not even challenge the order of the High Court.
These three big manufacturers must be deemed to be in a position to supply at the rate of Rs.67,000 and thus they form a distinct category.
The smaller manufacturers belong to a different category and if a different price is fixed for them it is not discriminatory.
(125 F G) 1.9.
If the price that is to be fixed by the Tender Committee as directed by the Court happens to be more than Rs. 67,000 then that would he applicable to the smaller manufacturers only and not to M/s H.D.C., Mukand and Bhartiya who on their own commitment have to supply at the rate of Rs. 67,000.
(126 A) 1.10.
The price thus fixed by the Tender committee which applies only to the smaller manufacturers shall be deemed to be final and the respective contracts shall be deemed to he concluded so for the price is concerned.
(126 B) 1.11.
The formation of an opinion that a cartel was formed had no firm factual foundation; reduction of quota by way of reprisal can not be justified.
The Minister of Railways as the final authority, after considering various relevant factors, may be justified in taking a particular decision in the matter of allotment of quota but such decision must be taken on objective basis.
But, in this case, all the smaller manufacturers deserving a favourable treatment in the mat 115 ter of allotment of quota, have not been equally treated in the sense that one or two of them got larger quantities.
Though this does not appear to be a serious departure, yet in these matters the Govt.
is expected to be just and fair to one and all.
In future the authorities would make a proper consideration of the relevant factors in respect of each tenderer in an objective manner in allotting the quantities.
(126 E H) 1.12.
The three manufacturers M/s H.D.C., Mukand and Bhartiya should be allocated the quantities as per the recommendations of the Tender Committee.
However, this Court does not want to disturb at this stage the quantities finally allotted by the competent authority to the small manufacturers as that would cause great hardship to them.
(127 C) The Railway authorities was left to make necessary adjustments next year in the matter of allocation of quantities to them taking into consideration these allotments given to them this year.
It will be open to the Railways to exercise 30% option if not already exercised.
The time to complete the supply is extended upto 31.3.1993.
(127 D F)
|
mpt Petition No. 159 of 1992.
IN Special Leave Petition (C) No. 12709 of 1991.
From the Judgment and Order dated 26.4.1991 of the Calcutta High Court in Appeal No. 232 of 1990.
M.L. Verma, R. Mukhejee, J. Gupta and M.L. Chibber for the Petitioners.
Ranjan Dutta, Mrs. N. Dutta, Mrs. Mridula Ray and M.N. Shroff for the Respondents.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
In a suit for specific performance certain interlocutory orders were passed by a Single Judge of the Calcutta High Court.
On appeal a Division Bench of the said Court modified the said orders.
A number of special leave petitions were filed in this Court against the orders of the Division Bench.
Though the petitioners in these special leave petitions are different, the contesting respondents in all these cases are common, namely Russel Estate Corporation and its managing partner Sri Hari Narayan Bhan.
For the purpose of this petition, it is enough to mention that each of the petitioners in these S.L.Ps. is claiming to be entitled to allotment of one or more of the flats being constructed by the respondents at Calcutta.
Their complaint has been that ignoring the agreements in their favour, the 753 respondents have been allotting the constructed flats in favour of third parties thereby seeking to defeat their rights.
On 1.8.1991 a Bench of this Court comprising section Ranganathan, M. Fathima Beevi and N.D. Ojha, JJ. passed the following order in I.A. No.2 of 1991 after hearing the respondents.
"Counsel accepts notice.
in the meantime, till this Special Leave Petition is disposed of, respondents 1 & 2 should not make any further allotment of any other flats in the building in dispute, with effect from today.
Counsel for the petitioner contends that the allotment of the flat, originally allotted to him, to some other person violates an oral order of a Division Bench of the High Court.
It will be open to the petitioner to move the High Court for appropriate relief in this regard if so advised." This Contempt Petition is filed complaining that the respondents have allotted certain flats in favour of third parties in violation of the said order.
So far as the petitioners in this Contempt Petition (Major) Genl.
B.M. Bhattacharjee and Smt.
section Laha) are concerned, they claim to be interested in the flats on the 8th floor of the said building.
At any rate the complaint in this Contempt Petition pertains to the said two flats.
The petitioners say that the said flats have been allotted to the third parties in the month of January, 1992.
They rely upon the report of a group of investigators (National Bureau of Investigation) in support of the said plea.
Notice was issued to the respondents.
In their counter (filed by Shri Hari Narayan Bhan) it is stated that the two floors on the 8th floor (described as east and west flats) were allotted on 26th April, 1991 itself i.e., long prior to the order of this Court dated 1.8.1991.
It is denied that the allotment of said flats took place in the month of January, 1992.
The correctness of the Report of the National Bureau of Investigation is disputed.
It is, however, conceded that the possession of the said flats was handed over to the said third parties on 17th August, 1991 which is admittedly a date subsequent to the date on which this Court passed the aforesaid restraint order.
It is also not disputed by them that the registered sale deeds in respect of said flats in favour of the said third parties were 754 also executed in March, 1992.
The report of the Receiver (Smt.
Pratibha Bonnerjea, a retired Judge of the Calcutta High Court who was appointed as such by an order of this Court dated 7.1.1992) also supports the petitioners ' allegations.
The relevant portion of the Report reads as follows: "Present condition of these two flats in the floor.
The western apartment in the 8th floor is occupied by one Mr. & Mrs.
Kamal Thavrani, Ms. Thavrani said that they are in occupation of the flat from December, 1991.
Mr. K.K. Thavrani said that he had taken both the eastern and western apartments in the 8th floor.
He produced a copy of the agreement executed on 26.4.91 on a stamp paper purchased on 26.4.91 by M/s. Russel Estate Corporation.
The agreement relates to both the flats on the 8th floor for a total consideration of Rs. 13,40,000.
It is stated that the occupiers have taken possession in December, 1991.
Mr. Thavrani submits that the conveyance have been registered in March, 1992 but he is unable to produce the registered conveyance as the same is still lying with the Registrar.
We found eastern flat was not complete.
Wooden work was going on.
Photos Nos.
3 to 5 are attached to this effect.
" At the bearing of this Contempt Petition the respondents ' counsel took the stand that the delivery of possession on 17.8.1991 and the execution of the registered sale deed in March, 1992 do not constitute violation of the Order dated 1.8.1991.
His submission is that this Court merely restrained the allotment of flats.
Allotment, according to the learned Counsel, means entering into the agreement of sale.
Inasmuch as the agreement of sale with respect to the said two.
flats on the 8th floor was entered into long prior to the said Order of this Court, it is submitted, there is no disobedience to the order of this Court.
it is submitted that delivery of possession and the registration of the sale deed(s) is in pursuance of the aforesaid agreement of sale and not in pursuance of any agreement of We entered into on or after 1.8.1991.
The counsel further submitted that even on the date when the aforesaid order was passed on 1.8.1991, the second respondent had represented to this Court that agreement of sale in respect 755 of all the flats have already been entered into.
In this view, it is submitted, there has been no misrepresentation or suppression of relevant facts on their part.
We may mention that when we indicated our disagreement with the above stand during the course of hearing, the counsel for the respondents, Shri Dutta took time till 14th of January, 1993 to file a further affidavit/additional counter and/or documents in continuation of the counter already filed.
The second respondent has accordingly filed a further affidavit on 14.1.1993.
The counsel for the petitioners ' disputes the correctness, genuineness and validity of the agreement, allegedly entered into on 26.4.1991 in respect of said flats.
According to him, it is a fabricated document.
He points out that the stamp paper for the said agreement of sale was purchased by the Russel Estate Corporation and not by the purchaser of the flats.
It is also pointed out that the agreement is not a registered one and that it could have been fabricated at any time putting a back date.
It is not necessary for us to pronounce upon the disputed question whether the agreement dated 26.4.1991 relating to the said two flats on the 8th floor is true and genuine.
Assuming that the said agreement is true, we are yet of the opinion that the respondents have committed gross contempt of this Court by their brazen violation of the order dated 18 1991.
By the said order this Court directed the respondents 1 and 2 not to make "any further allotment of any other flats in the building in dispute with effect from today. ' Now what does the word "allotment" mean in the context.
In our opinion, the said word must be understood reasonably and having regard to the context.
The first respondent is not like a Government Department or Public Corporation where an allotment order or allotment letter is issued from the office in pursuance of which other steps are taken.
The first respondent is a proprietary concern, according to the petitioners, whereas according to the respondents it is a partnership concern.
In either event, there is no such thing as "allotment" in its case.
Even now, it is not their case that they have issued any orders or letters of allotment.
According to them, there was first an agreement of sale, then delivery of possession and finally a registered sale deed.
We are of the opinion that in the context and circumstances, the word "allotment" in the said order means making over of the flats.
In other words, it means delivery of possession 756 and registration of the sale deeds.
An agreement of sale, that too unregistered, has no significance in the context, difficult as it is to verify its truth and correctness.
This court could not be presumed to have interdicted such an uncertain thing.
It must be remember that even according to the respondents they had represented to this Court, at the time the said order was passed, that they have already entered into agreements of sale in respect of the flats and yet this Court chose to pass the said order.
In the circumstances, it cannot mean anything else than delivery of possession of flats and their sale.
It may also mean an agreement of sale but its meaning is certainly not confined to an agreement of sale.
To say so, as do the respondent, is to rob the order of any meaning or content.
Mr. Dutta, the learned counsel for the respondents contended that the second respondent understood the allotment in a particular manner and that the said misunderstanding, if any, was bona fide.
We are not prepared to agree.
Firstly, there could not have been any doubt in the mind of Respondent with respect to the meaning of the order.
Secondly, assuming that he had any doubt regarding its meaning, the least he could have done was to ask for a clarification of the said Order.
He could well have represented that he had already entered into an agreement of sale on 26.4.1991 in restpect of these flats and that he may be permitted to deliver possession and/or execute sale deeds in respect of said flats in favour of third parties.
He did nothing of the sort.
Having placed a highly restrictive and unwarranted interpretation upon the order of this Court, he went ahead and not only delivered possession of the flats to third parties subsequent to the said order but also registered sale deeds in their favour.
He thus rendered the said order nugatory.
It was not open to the respondents to place a convenient interpretation upon the order and proceed to act upon it, thereby totally nullifying the order of this Court.
In this context, we ought to refer to the conduct of the second respondent as disclosed from the order of this Court dated August 7, 1992 to which one of us (B.P. Jeevan Reddy, J.) was a party.
The first two paragraphs of the said order may be quoted in rull.
"In these special leave petitions notice was duly served on the respondents and the matters came up for hearing initially before a Bench of this Court comprising of Ranganathan J., Fathima Beevi J. and Ojha J. on 31.7.91 and 757 1.8.91when the parties were heard and certain interim orders were passed.
Thereafter it was listed before a Bench of this Court (of which Ranganathan J. and V. Ramaswami J. were members) on a number of occasions at which the respondents were represented and no objection was voiced against the hearing of the matters by the said Bench.
However, sometime later an attempt was made on behalf of the respondents to have these matters transferred from this Bench to some other Bench on the allegation that one of the Judges (Ranganathan J.) was biased against the respondents.
This request was made before a Bench presided over by the learned Chief Justice by the second respondent who appeared in person and made the request for the transfer of the case.
The prayer was rejected by the learned Chief Justice on 11.11.1991.
Thereafter the matter was again fisted before a Bench consisting of Ranganathan J., V. Ramaswami J. and Ojha J.
On different occasions without any demur from the parties.
It was then listed before a Bench comprising of Ramaswamy J., Yogeshwar Dayal J. and Mohan J. on 4.3.92.
This Bench directed the cases to be posted before a Bench of which Ranganathan J. is a member.
About this time, an application seems to have been presented to the Registrar that this case should be transferred to some other Bench.
However, the matters came up before us again some time last week when counsel for the respondents agreed that the matters may be listed this week.
The matters were fisted yesterday.
A person claiming to be the son of the second respondent made a request that the matter should not be heard by this Bench.
We rejected this request and made it clear to him that he should make arrangements for the conduct of the case.
The matters did not reach yesterday and when the matters came up today, a letter dated 6.8.92 written by the second respondent to his counsel revoking the counsel 's vakalatnama has been placed before us.
But the respondent No. 2 did not appear before us nor did he make other arrangements for the conduct of the case.
Sri Chatterjee, his advocate on 758 record, appeared but expressed his inability to conduct the case since his client had withdrawn the vakalatnama.
We understand that in one of the matters the respondents are represented by another counsel whose vakalatnama is also seen to have been revoked but she has not appeared or sought permission to withdraw from the case.
In these circumstances we have no other option but to proceed against the respondents ex parte.
We are unable to accede to the respondents request made on a previous occasion by the son of the second respondent for transfer of case to some other Bench.
The circumstances narrated above would show that the respondent has appeared before the Bench on several occasions without protest.
The request made for transfer, after the rejection of the earlier petition by the learned Chief Justice, is belated and is just an attempt by the second respondent to circumvent the order already passed by the Chief Justice rejecting a request for transfer and only because the Constitution of the Bench is not to his liking.
Such a request, we are clear, cannot be countenanced.
" It should be noticed that the said order dated August 7, 1992 was passed not only in the special leave petitions but also in this very Contempt Petition.
The attitude adopted by them before the Receiver (Smt.
Pratibha Bonnerjea retired Judge of Calcutta High Court, appointed by this Court as a Receiver in this case) also discloses the total disregard and disrespect the Respondents have towards the orders of this Court.
The Receiver says: "The next day, by a letter dated 22.8.92, Mr. H.N. Bhan informed me that he would not submit to the order dated 7.8.92 as the Bench was not properly constituted due to the fact that the Hon 'ble Mr. Justice V. Ramaswami was one of the judges and that an application would be moved for recalling the said order.
Thereafter, there was complete non cooperation by M/s. Russel Estate Corporation.
" The conduct of the second respondent as evidenced from the aforesaid material establishes beyond doubt that the second respondent 759 was trying to play with this Court and was consistently flouting its orders.
In the circumstances, the theory of bona fide belief, now put forward before us by his counsel, cannot be accepted.
We may at this stage deal with the further affidavit filed by the second respondent on 14.1.1993.
In para 3 of the affidavit the second respondent has stated that he has the highest regard for this Court, that he has all along complied with the orders passed by this Court and that he never intended to flout or defy the orders of the Court.
He stated further "if in spite of the aforesaid, any order of this Hon 'ble Court has been violated, the same has been so done through mistake, inadvertence and by a misunderstanding of the meaning and purport of that order and surely not intentionally and for which unconditionally apologise for self and on behalf of the Respondent firm and I beg to be excused." Then in paragraphs 4 to 12 he has "without waiving the aforesaid and fully relying thereupon" repeated the contentions which were urged by his counsel before us and which we have dealt with hereinbefore.
He stated that he understood this court 's order dated 1.8.1991 as prohibiting only the entering into of agreements of sale and not delivery of possession or registration of the sale deeds.
All the said contentions we have dealt with hereinbefore.
They need not be reiterated here.
So far as the apology contained in para 3 of the second respondent 's further affidavit is concerned, it may firstly be mentioned that it is not really an unconditional apology though it purports to say so.
While tendering unconditional apology in para 3, the second respondent has tried to defend his action in the subsequent paragraphs.
Secondly, even if we construe paragraph 3 as tendering an unconditional apology, we are not minced to accept the same having regard to the conduct of the respondent which we have adverted to hereinbefore with reference to the order of this court and the report of the Receiver.
Accordingly, we reject the apology tendered in para 3 of the further affidavit.
For the above reasons, we hold the second respondent guilty of Contempt of this Court.
Having regard to the facts and circumstances of this case, we impose a sentence of one month 's imprisonment in addition to a fine of Rs. 2,000 upon the second respondent.
The fine shall be paid into this Court within two weeks from today, in default thereof the second 760 respondent shall undergo a further imprisonment of two weeks.
The second respondent shall also pay the costs of the respondents in this Contempt case which are assessed at Rs. 5,000 within two weeks from today.
In case of failure, the Respondents are free to execute this order as a decree of Court and recover the same from the Respondents.
Mr. H.N. Bhan, who is present in the court, be taken into custody forthwith to undergo the sentence of imprisonment.
G.N. Petition allowed.
| The present Contempt Petition has been filed complaining that the Respondents had allotted certain flats in favour of third parties in violation of this Court 's order dated 1.8.91.
The Petitioners ' interest has been in respect of two flats on the 8th floor.
They claimed that the said flats had been allotted to third parties in January, 1992, long after this Court 's order dated 1.8.91.
It was also contended that the agreement to sell was a fabricated document.
The Respondents contended that the said flats were allotted on 26.4.91 itself, though possession of the flats was handed over on 17.8.1991, and sale deeds were executed and registered in March 1992.
It was further contended that inasmuch as the agreement for sale was entered into long before the orders of this Court were issued, there was no question of disobedience of the orders of this Court.
Finding the Respondent guilty of Contempt of Court, this Court, HELD : 1.1.
Even assuming that the agreement of sale dated 26.4.1991 is true, the respondents have committed gross contempt of this Court by their brazen violation of the order dated 1.8.1991.
By the said order this Court directed the respondents 1 and 2 not to make "any further allotment of any other flats in the building in dispute with effect 751 from today".
The word "allotment" must be understood reasonably and having regard to the context The first respondent is not like a Government Department or Public Corporation where an allotment order or allotment letter is issued from the office in pursuance of which other steps are taken.
There is no such thing as "allotment" in this case.
According to the Respondents there was first an agreement of sale, then delivery of possession and finally a registered sale deed.
In the context and circumstances of the case, the word "allotment in the said order means making over of the flats; it means delivery of possession and registration of the sale deeds.
An agreement of sale, that too unregistered, has no significance in the context, difficult as it is to verify its truth and correctness.
This court could not be presumed to have interdicted such an uncertain thing.
Admittedly the respondents had represented to this Court, at the time the said order was passed, that they have already entered into agreements of sale in respect of the flats and yet this Court chose to pass the said order.
In the circumstances, it cannot mean anything else than delivery of possession of flats and their sale.
It may also mean an agreement of sale but its meaning is certainly not confined to an agreement of sale.
To say so is to rob the order of any meaning or content.
There could not have been any doubt in the mind of the Second Respondent with respect to the meaning of the order.
In case of any doubt the least he could have done was to ask for a clarification of the said Order.
He could well have represented that be had already entered into an agreement of sale on 26.4.1991 in respect of these flats and that he may be permitted to deliver possession and/or execute sale deeds in respect of the said flats in favour of third parties.
He did nothing of the sort Having placed a highly restrictive and unwarranted interpretation upon the order of this Court, he went ahead and not only delivered possession of the flats to third parties subsequent to the said order but also registered sale deeds in their favour.
He thus rendered the said order nugaptory.
[755E H, 756A E] 1.2.The conduct of the second respondent as evidenced from the material on record establishes beyond doubt that he was trying to play with this Court and was consistently flouting its orders.
[758H, 759A] 2.
So far as the apology tendered by the second respondent is concerned it is not really an unconditional apology.
While tendering apology the second respondent has tried to defend his action.
Even if it is 752 considered as unconditional apology this Court is not inclined to accept the same having regard to the conduct of the respondent Accordingly, the apology tendered by Respondent No.2 is rejected.
[759E G] 3.
The second respondent is guilty of Contempt of this Court Having regard to the facts and circumstances of this case, a sentence of one month 's imprisonment in addition to a fine of Rs. 2,000 is imposed upon him.
The fine shall be paid into this Court within two weeks and in default thereof the second respondent shall undergo a further imprisonment of two weeks.
[760A B]
|
ition (Civil) Nos.
351/72 and 798 of 1992.
(Under Articte 32 of the Constitution of India).
G. Ramaswamy, Attorney General, Soli J. Sorabjee, H.N. Salve, G.L. Sanghi, Dr. V. Gaurishankar, D.D. Thakur, A.K. Ganguli, J.B. Dadachandji Mrs. A.K. Verma, Sunil Gupta, section Sukumaran, Manmohan, Mrs. section Pathak, section Rajappa, Ms. A. Subhashini, P. Parmeshwaran, C.V.S. Rao, R.F. Nariman, M.P. Vinod, R. Nagendra Naidu, N.N. Bhatt, C.N. Sreekumar, Pichai, D. Goburdhan, Santokh Singh, Ms. M. Karanjawala, Antip Sachthey and G. Prakash for the appearing Parties.
The Judgments of the Court were delivered by.
section RATNAVEL PANDIAN, J.
These two Writ Petitions call in question the constitutional validity of the Constitution (Twenty sixth Amendment) Act of 1971 inter alia, on the ground that it violates the basic structure and essential features of the Constitution of India and is, therefore, outside the scope and ambit of constituent powers of the Parliament to amend the Constitution as provided under Article 368 of the Constitution.
In addition, certain directions or suitable orders are sought for declaring that the petitioner continue to be the Rulers or the 'Successor Rulers ', as the case may be and directing the respondent Union of India to continue to recognise their personal rights, amenities and privileges as Rulers of their erstwhile States and also continue to pay privy purse to them in addition to their arrears of amounts.
For facilitating a proper understanding of the controversy that has led to the filing of these two Writ Petitions and the interlocutor Applications 1 to 3 of 1992 in Writ 490 Petition No. 351 of 1972, a synoptical resume of the case as adumbrated in Writ Petition No. 351/72 with the historical background may be stated : The petitioner, Shri Raghunathrao Raja was the Co Ruler of Indian State of Kurundwad Jr. which was prior to 15th August, 1947 a sovereign State in treaty relationship with, and under the suzerainty of the British Crown.
On the commencement of the Indian Independence Act, 1947, British Paramountcy lapsed and the Indian States became completely sovereign and independent.
They were free to accede to either of the two Dominions of India or Pakistan or to remain independent.
The petitioner 's co Ruler, on behalf of both, executed an instrument of accession under Section 5 of the Government of India Act, 1935, as adopted under the Indian Independence Act, 1947.
This instrument was accepted by the Governor General of India and the State thus became a part of the Dominion of India.
Likewise, Rulers of most of the other Indian States also executed similar instruments which were accepted by the Governor General.
By the said instrument, the petitioner accepted the matters specified in the schedule thereto as matters with respect to which the Dominion Legislature may make laws for the State and declared his intent that the Governor General of India, the dominion Legislature, the Federal Court and any other Dominion authority established for the purposes of the Dominion shall, subject to the terms of the instrument, exercise in relation to the Kurundwad State such functions as may be vested in them by the Government of India Act, 1935 as in force in the Dominion of India on the 15th August, 1947.
According to the petitioner, clause 7 of the Instrument provided that nothing therein shall be deemed to commit the Ruler in anyway to acceptance of any future Constitution of India or to fetter his discretion to enter into agreements with the Government of India under any such future Constitution.
Subsequently, a number of Rulers executed Agreements of Merger and transferred the administration of their States to the Dominion Government.
The Merger Agreement was in the form given in the 'White Paper on Indian States ' and it was executed on the 19th February, 1948.
Then the administration of the State of the petitioner was handed over on the 8th March, 1948.
The case of the petitioner is that under the Merger Agreement he was entitled to receive annually from the revenues of the State his privy 491 purse as specified in the Merger Agreement (as amended by an order of Government of India in 1956) free of taxes, besides reserving his personal rights, privileges and dignities.
Certain groups of States entered into covenants for the establishment of United States comprising the territories of the covenanting States and Talukas with a common executive, legislature and judiciary.
The covenants inter alia provided for the administration of United States by a Rajpramukh aided and advised by a Council of Ministers.
They also envisaged the establishment of a Constituent Assembly charged with the duty to frame Constitution for the United States within the framework of covenants and of the Constitution of India.
Each of the covenants was concurred in by the Government of India which guaranteed all its provisions including provisions relating to the privy purse, personal privileges etc.
However, it was later desired that the Constitution of the United States should also be framed by the Constituent Assembly of India and form part of the Constitution of India.
It was decided in consultation with the Government of the United States that the Constitution of India as framed by the Constituent Assembly of India should itself contain all the necessary provisions governing the constitutional structure of the United States as well as the provisions for the guarantee contained in the covenants and the Merger Agreements.
In pursuance of this decision the necessary provisions including part VII providing for the Government, legislature, judiciary, etc.
of the United States as well as certain separate articles governing other matters, for example, the privy purse and privileges of Rulers bringing them within the framework of the covenants were included in the Constitution of India.
Accordingly on 13th October, 1949 the Constituent Assembly of India adopted inter alia two Articles namely, Article 291 relating to payment of privy purse and Article 362 relating to personal rights and privileges of the Rulers.
Amendment relating to the United States and other States which had not merged were also adopted and these States were called Part 'B ' States.
The Rulers and Rajpramukhs of the States agreed to adopt the Constitution as drafted by the Constituent Assembly of India and issued proclamations directing that the Constitution to be adopted by the Constituent Assembly of India shall be the Constitution for the United States.
Supplementary covenants were also executed by the covenanting States which covenants were concurred in and guaranteed by Government of India.
Thereafter, the Constituent Assembly passed and adopted the Constitution.
According to the petitioner, it was only on the 493 was to terminate the privy purses and privileges of the former Indian Rulers and to terminate expressly the recognition already granted to them under those two deleted Articles.
According to the learned counsel appearing for the writ petitioners the withdrawal of the guarantees and assurances given under those articles and the abolition of the privy purse, personal rights, privileges and dignities is in violent breach of the power of Parliament acting as a constituent body under Article 368 of the Constitution inasmuch as it not only sought to amend the Constitution but also destroy the basic philosophy, personality, structure and feature of the Constitution.
Though it is not necessary to narrate in detail the historical events leading to the transfer of power and the integration of Indian States consequent upon the political and constitutional changes, yet a prefatory note of the past historical background may be stated so as to have a better understanding of the policy step taken for the integration of the States in terms of the consolidation of the country.
Though India is geographically one entity yet throughout its long and past chequered history it never achieved political homogeneity.
There were about 554 States (subject to a marginal variation as found in various Reports), out of which the States of Hyderabad and Mysore were left territorially untouched.
Two hundred and sixteen states were merged in the adjoining provinces in which they were situated, or to which they were contiguous.
Five were taken over individually as Chief Commissioners ' provinces under the direct control of the Government of India besides twenty one Punjab Hill States which comprised Himachal Pradesh.
Three hundred and ten were consolidated into six Unions, of which Vindhya Pradesh was subsequently converted into a Chief Commissioner 's province.
Thus, as a result of integration, in the place of 554 states, fourteen ad ministrative units had emerged.
This was a physical or geographical consolidation.
The next step was to fit all these units into a common administrative mould.
Administration in the erstwhile States was in varying stages of development and, with a few exceptions it was both personal and primitive.
Such states being Mysore, Baroda, Travancore and Cochin could stand comparison with their neighboring provinces and in some respects were ahead of them.
But there were smaller States where, owing mainly to the 449 slenderness of their resources, the rulers were not in a position to discharge even the elementary functions of government.
Between these two extremes, there were several States with administrative systems of varying degrees of efficiency.
In the past, the comparative Indian area covered by the States was 48 per cent of the total area of the Dominion of India, the relative population ratio of the States was 28 per cent of the total population of the Dominion of India.
All the above Indian states formed a separate part of India before their merger with the rest of India.
It is common knowledge that the aim of Government of India Act, 1935 was to associate the Indian states with the British India as equal partners in loose federation.
When India became independent by the Indian Independence Act of 1947, British paramountcy in respect of the Indian states lapsed.
Therefore, theoretically though the Rulers became independent in actual fact almost all the Rulers signed Instruments of Accession in August 1947 surrendering Defence, External Affairs and Communications.
The Rulers immediately after independence became divided into four classes.
All the agreements of merger and covenants provided for the fixation of the Rulers ' privy purse which was intended to ;cover all the expenses of the Rulers and their families including the expenses of their residences, marriages and other expenses etc.
Under the terms of the agreements and covenants entered into by the Rulers, privy purses were paid to the Rulers out of the revenues of the States concerned and payments had so far been made accordingly.
During the course of the discussion with the Indian States Finances Enquiry Committee, it was urged by most of the States that the liability for paying privy purses of Rulers should be taken over by the Centre.
Having regard to the various factors, it was decided that the payments should constitute a charge on the Central revenues.
The privy purses settlements, were, therefore in the nature of consideration for the surrender by the Rulers of all the ruling powers and also for the dissolution of the States as separate units.
it is stated that the total amount of the privy purse came to about Rs. 5.8 crores per annum and the quantum of privy purse each year was liable to reduction with every generation.
According to V.P. Menon, who was the Constitutional Advisor to the Governor General till 1947 and then the Secretary to the Ministry of States and closely connected with the 495 annexation of the princely states "the price paid as Privy Purses was not too high for integration and indeed it was insignificant when compared with what the Rulers had lost.
" He pointed out that "the cash balances were to the tune of Rs. 77 crores and that palaces in Delhi alone were worth several lakhs of rupees.
" It is appropriate to refer to the speech of Sardar Vallabhbhai Patel made on 12th October 1949 in the Constituent Assembly on the Draft constitution, on which reliance was placed by the writ petitioners.
The speech reads thus : "There was nothing to compel or induce the Rulers to merge the identity of their States.
Any use of force would have not only been against our professed principles but would have also caused serious repercussions.
If the Rulers had elected to stay out, they would have continued to draw the heavy civil lists which they were drawing before and in large number of cases they could have continued to enjoy unrestricted use of the State revenues.
The minimum which we could offer to them as quid pro quo for parting with their ruling powers was to guarantee to them privy purses and certain privileges on a reasonable and defined basis.
The privy purse settlements are, therefore, in the nature of consideration for the surrender by the Rulers of all their ruling powers and also for the dissolution of the States as separate units.
We would do well to remember that the British Government spent enormous amounts in respect of the Mahratta settlements alone.
We are ourselves honouring the commitments of the British Government in respect of the persons of those Rulers who helped them in consolidating their empire.
Need we cavil then at the small purposely use the world small price we have paid for the bloodless revolution which has affected the destinies of millions of our people.
justice to them; let us place ourselves in their position and then assess the value of their sacrifice.
The Rulers have now discharged their part of the obligations by transferring all ruling powers and by agreeing to the 496 integration of their States.
The main part of our obligation under these agreements, is to ensure that the guarantees given by us in respect of privy purse are fully implemented.
Our failure to do so would be a breach of faith and seriously prejudice the stabilization of the new order.
" The constitutional provisions of Articles 291 a, ,id 362 which are now deleted by Section 2 of the impugned Constitution (Twenty sixth) Amendment Act as they stood, read as follows "291 Privy purse sums of Rulers (1) Where under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of this Constitution, the payment of any sums, free of tax, has been guaranteed or assured by the Government of India to any Ruler of such State as privy purse (a) such sums shall be charged on, and paid out of, the consolidated Fund of India; and (b) the sums so paid to any Ruler shall be exempt from all taxes on income.
(2) Where the territories of any such Indian State as aforesaid are comprised within a State specified in Part A or Part B of the First Schedule, there shall be charged on, and paid out of, the Consolidated Fund of that State such contribution, if any, in respect of the payments made by the Government of India under clause (1) and for such period as may, subject to any agreement entered into in that behalf under clause (1) of Article 278, be determined by order of the President.
362 Rights and privileges of Rulers of India States In the exercise of the power of Parliament or of the Legislature of a State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such covenant or agreement as is referred to in clause 497 (1) of Article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State. ' Clause (22) of Article 366 was amended by Section 4 of the impugned Act of 1971.
We shall reproduce that clause as it stood then and the substituted clause (present) consequent upon the amendment.
Unmended Clause Ruler" in relation to an Indian State means the Prince, Chief or other person by whom any such covenant or agreement as is referred to in clause (1) of Article 291 was entered into and who for the time being is recognized by the President as the Ruler of the State, and includes any person who for the time being is recognized by the President as the successor of such Ruler.
" Substituted or amended clause "Ruler" means the Prince, Chief or other person who, at any time before the commencement of the Constitution (Twenty sixth Amendment) Act, 1971 was recognized by the President as the Ruler of an Indian State or any person who, at any time before such commencement, was recognized by the President as the successor of such Ruler. ' In this connection, the new Article 363 A which has been inserted by section 3 of the impugned Amendment Act which is also relevant for our purpose may be reproduced : 363 A Recognition granted to Rulers of Indian States to cease and privy purses to be abolished Notwithstanding anything in this Constitution or in any law for the time being in force (a) the Prince, Chief or other person who, at any time before the commencement or the Constitution (Twentysixth Amendment) Act, 1971 was recognized by the President as the Ruler of any Indian State or any persons who, at any time before such commencement, was recognized by the President as the successor of such ruler shall, on 498 and from such commencement, cease to be recognized as such Ruler or the Successor of such Ruler.
(b) on and from the commencement of the Constitution (Twenty sixth Amendment) Act, 1971 privy purse is abolished and all rights, liabilities and obligations in respect of privy purse are extinguished and accordingly the Rulers, or as the case may be, the successor of such Ruler, referred to in clause (a) or any other person shall not be paid any sum as privy purse.
The submissions advanced by Mr. Soli J. Sorabjee the learned senior counsel appearing on behalf of the writ petitioner in Writ Petition No. 351 of 1972 are thus.
Articles 291, 362 and 366(22) of the Constitution were integral part of the constitutional scheme and formed the important basic structure since the underlying purpose of these Articles was to facilitate stabilization of the new order and ensure organic unity of India.
These Articles guaranteed pledges to the Rulers based on elementary principles of justice and in order to preserve the sanctity of solemn agreements.
It was only by the incorporation of these Articles that the unity of India was achieved by getting all the Rulers within the fold of the Constitution, and that the deletion of these Articles has damaged and demolished the very basic structure of the Constitution.
The covenants entered into were in the nature of contracts which had been guaranteed constitutionally and affirmed by making the privy purse an expenditure charged under the Consolidated Fund of India and the use of the expressions 'guaranteed or assured by the Government of the Dominion of India to any Ruler" as embodied in Article 291 and the expression 'guaranteed and assurance given under such covenants or agreements as is referred to in clause (1) of Article 291. . . as comprised in Article 362 were a permanent feature of the Constitution reflecting the intention of the founding fathers of the Constitution and as such these two Articles should have been kept intact.
According to the learned counsel, the deletion of these Articles amounted to a gross breach of the principle of political justice enshrined in the preamble by ', depriving or taking away from the princes the privy purses which were given to them as consideration for surrendering all their sovereign rights and contributing to the unity and integrity of the country 499 and that the deletion of these Articles by the impugned Amendment Act, is arbitrary, unreasoable and violative of Article 14 of the Constitution.
Further it has been urged that the Rulers acceded to the Dominion of India and executed Instruments of Accession and Covenants in consideration of the pledges and promises enshrined in Articles 291 and 362 and that the impugned Amendment Act is beyond and outside the scope and ambit of, the constitutional power of the Parliament to amend the Constitution as provided under Article 368 of the Constitution.
Mr. Soli J. Sorabjee, the learned senior counsel in his additional written submissions has further urged that without the co operation of the Rulers, not only the territory of India, its population, the composition of the State Legislatures, the Lok Sabha and Rajya Sabha but also the Constitution that was adopted on 26th November, 1949 would have been basically different and that India i.e. Bharat would have been fundamentally different from the Bharat that came into being.
In Writ Petition No. 351 of 1972 in Ground Nos. 38, 39 and 40, it is contended that the Constitution (Twenty sixth Amendment) Act is unconstitution, null void and violative of Articles 14, 19(1)(g), 21, 31 (1) and (2) of the Constitution.
Mr. Harish Salve, the learned senior counsel contended that 291 and 362 when incorporated were intended to grant recognition to the solemn promises on the strength of which the former Rulers ageed to merge with the Indian Dominion and the guarantee of privy purses and certain privileges was as a just quid pro quo for surrendering their sovereignty and dissolving their States.
It has been stated that the constitutional guarantees and assurances promising continuance of privy purse as enshrined in the Agreements and Covenants were 'an integral part of the Constitutional Schemes ' and 'an important part of the Constitutional structure ' and they were to be fully honoured and not cast away on a false morass of public opinion or buried under acts of States, but the impugned Act, ex facie has abolished and destroyed those constitutional provisions of Articles 291 and 362 affirming the guarantees and assurances given to agreements.
To highlight the signature of those agreenents whereby the Rulers were persuaded to sign the instruments, the statement of Shri V.P. Menon who was Closely connected with the annexation of the princely states and the speech of Sardar Vallabhbhai 500 Patel made in the Constituent Assembly were cited.
It is further emphasized that Sardar Patel also made it clear that according to the vision and views of the Constitution makers, the guarantees of Privy Purse, privileges etc., were perfectly in keeping with the democratic ethos and principle of the Indian people.
Then the learned counsel stated that the views expressed in the Constituent Assembly were unanimously accepted and there was no dissent and that in fact the closing remarks in the debate of Dr. B. Pattabhai Sitaramayya were not only remarkably confirmatory of the permanence and indefeasibility of the aforesaid guarantees and assurances but also went a long way in determining that the said guarantees and assurances have come to stay as an integral and untouchable part of the basic structure of the Constitution.
Finally, it was said that there can be no basic structure of a Constitution divorced from the historical evolution of the precepts and principles on which the Constitution is founded.
Any effort to determine the basic structure of the Constitution without keeping a finger on the historical pulse of the Constitution may well lead to substantial injustice.
According to him, if the historical approach to the test of basic structure is kept in view, the guarantees and assurances of the privy purses, privileges, etc.
granted by the Constitution makers by incorporating Articles 291, 362 and 366 (22) in the Constitution framed by them would, without any doubt or dispute, emerge in their own rights 'as basic features ' of the Constitution which cannot be abrogated or annihilated by any Constitutional amendment.
What he fmally concluded is that the guarantees and assurances of the privy purses, privileges etc.
contained in the above three Articles were, in fact, the reflections of the aforesaid virtues of the Constitution makers which are the very virtues which characterized the personality of the Indian Constitution and that the Objects and Reasons of the impugned Amendment clearly establish the mala fides of the Amendment.
Mr. A.K. Ganguly, the learned senior counsel appearing in IA.
No. 3 of 1992 in W.P. No. 351 of 1972 pointed out that after the Articles 291, 362 and 366 (22) were adopted by the Constituent Assembly of India on 12th, 13th, 14th and 16th October of 1949, Maharaja of Mysore then issued a proclamation on 25th November 1949 to the effect that the Constituent Assembly of Mysore and Maharaja adopted the Constitution of India which would be as passed and adopted by the Constituent Assembly of India.
On 501 the following day, namely, 26th November, 1949, the Constituent Assembly adopted the Constitution of India.
Thereafter, on 23rd January, 1950, Maharaja of Mysore executed the Merger Agreement with the Government of India.
The learned counsel after giving a brief history of the Merger of the princely States, stated that the fact that the framers of the Constitution adroitly chose the words "guarantee or assured" unequivocally conveys the intention of the framers of the Constitution to continue the guarantee as per the covenants in their plain meaning.
Learned counsel submitted that the fact that the expression "guaranteed" occurring both in Article 32 and Article 291 besides in Article 362 ( 'guarantee ') clearly demonstrates the mind of the Constitution makers that they intended the said provisions of Articles 291 and 362 to be the basic and essential structure of the Constitution.
According to him, to preserve the sanctity of these rights, the framers of the Constitution chose to avoid voting in Parliament on the amount to be paid as privy purses and keeping that object in their view, they framed Articles 291(1) reading "Such sums shall be charged on and paid out of the Consolidated Fund of India and that the said payments would be exempted from all taxes on income".
When such was the sanctity attached to this guarantee, the impugned Amendment completely throwing away those guarantees and assurances to the wind is palpably arbitrary and destructive of the equality clause which is admittedly a basic feature of the Constitution.
1992 in Writ Petition No. 351 of 1972 adopted the arguments of the other counsel and contended that the erstwhile Rulers of the princely states formed a class apart in that there is a real and substantial distinction between them and the citizenry of India.
In this context, he referred to Section 87B of the Civil Procedure Code, 1908 which was introduced by way of Amendment after the Constitution came into force in the year 1951 and in order to protect the erstwhile Rulers from frivolous suits filed against them in free India after the Constitution came into force.
This, according to learned counsel was legislative recognition in addition to the constitutional guarantee contained in Articles 291 and 362 of the fact that the erstwhile Princes formed a class apart.
When such was the position, according to the learned counsel, the impugned Amendment which violates the basic structure of the Constitution is unconstitutional.
He cited certain decisions in support of his arguments that the Amendment Act is violative of the essential features contained in Articles 14 and 19(1)(f).
502 Mr. D.D. Thakur, the learned senior counsel appearing for the petitioner in Writ Petition No. 798/92 besides adopting the argument advanced in Writ Petition No. 351/72 added that these two Articles Were not at all amendable on the principle of prohibition, against impairment of the contract obligations, a principle recopised in Section 10, Article 1 of the Constitution of the United States of America.
The same principle is incorporated in the Indian Constitution in the shape of Articles 362 and 291.
According to the learned counsel, the impugned Amendment Act is an ugly epitome of immorality perpetrated by the Indian Parliament, that, too, in the exercise of its constituent powers and the said Amendment Act constitutes an unholy assault on the spirit which is impermissible and that the principle of justice, fairness and reasonableness are beyond the amending powers of the Parliament.
He further stated that the equality clause as interpreted by this Court in various decisions is the most important and indispensable feature of the Constitution and destruction thereof will amount to changing the basic structure of the Constitution, and that the authority of the Parliament to amend the Constitution under Article 368 could be exercised only if the Amendment in the Constitution is justifiable and necessitated because of the socioeconomic reasons broadly referred to in the directive principles of the State Policy and that any Amendment unrelated to any genuine compulsion amounts to an abuse of the power and is therefore a fraud on the exercise of power itself.
The learned Attorney General of India with regard to the above pre Constitutional agreements stated that the history of the developments leading to the merger agreements and the framing of the Constitution clearly show that it is really the union of the people of the native States with the people of the erstwhile.
British India and the Instruments of Accession were only the basic documents but not the individual agreements with the Rulers and therefore to attribute the agreements entered into by Rulers as a sacrifice by the Rulers is unfounded.
Secondly, the nature of the covenants is not that of a contract because a contract is enforceable at law while these covenants were made non justiciable by the Constitution vide Article 363.
According to him the covenants were political in nature and that no legal ingredients as the basis can be read into these agreements and that the guarantees and assurances embodied in Articles 291 and 362 were guarantees for the payment of privy purses.
He has urged that such a guarantee can always be revoked in public interest pursuant to fulfilling, a policy objective or the directive principles of the Constitution.
That being 503 so, the theory of sanctity of contract or unamendability of Articles 291 or 362 did not have any foundation.
He continues to state that the theory of political justice is also not tenable because political justice means the principle of political equality such as adult suffrage, democratic form of Government etc.
In this context, he drew the attention of this Court to a decision in Nawab Usmanali Khan vs Sagarmal, ; wherein Bachawat, J speaking for the Bench has held: ". . . the periodical payment of money by the Government to a Ruler of a former Indian State as privy purse on political considerations and under political sanctions and not under a right legally enforceable in any municipal court is strictly to a political pension within the meaning of section 60(1)(g) of the Code of Civil Procedure.
The use of the expression "privy purse" instead of the expression "pension" is due to historical reasons.
The privy purse satisfies all the essential characteristics of a political pension.
" Furhter it has been observed in the above case purse are not liable to attachment or sale in execution of the respondent 's decree.
" Before embarking upon a detailed discussion on the various facets of the contentions both factual and legal we shall deal with the precursive point with regard to the pre constitutional Instrument of Accession, the Merger Agreement and the covenants which guaranteed the payment of privy purse and the recognition of personal privileges etc.
and which ageements ultimately facilitated the integration of these States with the Dominion of India.
In 1947, India obtained independence and became a Dominion by reason of the Indian; Independence Act of 1947.
The suzerainty of the British Crown over the Indian States lapsed at the same time because of Section 7 of that Act.
Immediately after, all but few of the Indian States acceded to the new Dominion by executing Instruments of Accession.
The Instrument of Accession executed by the Rulers provided for the accession of the States to the Dominion of India on three subjects, namely, (1) 504 Defence, (2) External Affairs and (3) Communications, their contents being defined in List I of Schedule VII of the Government of India Act, 1935.
This accession did not imply any financial liability on the part of the acceding States.
This accession of the Indian States to the Dominion of India established a new organic relationship between the States and the Government, the significance of which was the foregoing of a constitutional link or relationship between the States and the Dominion of India.
The accession of the Indian States to the Dominion of India was the first phase of the process.
of fitting them into the constitutional structure of India.
The second phase involved a process of two fold integration, the consolidation of States into sizable administrative units, and their democratization.
Though high walls of political isolation had been raised and buttressed to prevent the infiltration of the urge for freedom and democracy into the Indian States, with the advent of independence, the popular urge in the States for attaining the same measure of freedom as was enjoyed by the people in the Provinces, gained momentum and unleashed strong movements for the transfer of power from the Rulers to the people.
On account of various factors working against the machinery for self sufficient and progressive democratic set up in the smaller states and the serious threat to law and order in those States, there was an integration of States though not in an uniform pattern in all cases.
Firstly, it followed the merger of States in the Provinces geographically contiguous to them.
Secondly, there was a conversion of States into Centrally administered areas and thirdly the integration of their territories to create new viable units known as Union of States.
Sardar Vallabhbhai Patel had a long discussion with the Rulers and took a very active role in the integration of the States.
As a result of the application of various merger and integration schemes, (1) 216 States had been merged into Provinces; (2) 61 States had been taken over as Centrally administered areas; and (3) 275 States had been integrated in the Union of States.
Thus, totally 552 States were affected by the integration schemes.
Reference may be made to (1) the Report of the Joint Select Committee on Indian Constitutional Reforms (1933 34), (2) the Report of the Expert Committee headed by Nalini Ranjan Sarkar, published in December 1947, (3) The Indian States ' Finances Enquiry Committee chaired by 505 Sir V.T. Krishnamachari appointed on 22nd October, 1948 the recommendations of which, on further discussions with the representatives of the States and Union of States led to the conclusion that the responsibility for payment of the privy purses fixed under various covenants and agreements should be taken over by the Government and (4) the Report of the Rau Committee appointed in November 1948 under the chairmanship of Sir B.N. Rau.
Reverting to the cases on hand, Shri Raghunathrao Ganpatrao, the petitioner in Writ Petition No. 351 of 1972 executed a merger agreement as per the form of merger on 19th February 1948 and handed over the administration of the State on 8th March, 1948.
The petitioner was entitled to receive annually from the revenues of the States his privy purse of Rs. 49,720 as specified in the Merger Agreement (as amended by an Order of Government of India in 1956) free of taxes besides his personal privileges, rights and the Dominion Government guaranteed the succession according to law and custom of the Gadi of the State and the Raja 's personal rights privileges and dignities.
Shri Jaya Chamaraja Wadiyar, father of the petitioner (Sri Srikanta Datta Narasimharaja Wadiyar) in Writ Petition No. 798 of 1992 executed an Instrument of Accession and entered into an Merger Agreement/Treaty on 23rd January, 1950.
Under the merger Agreement, the Maharaja of Mysore was entitled to receive annually for his privy purse the sum of Rs. 26,00,000 (Rupees twenty six lakhs) free of all taxes w.e.f.
1st April 1950.
Article (1) of the said Agreement contained a proviso that the sum of Rs. 26,00,000 was payable only to the then Maharaja of Mysore for his life time and not to his successor for whom a provision would be made subsequently by the Government of India.
Besides, the then Maharaja was entitled to the full ownership, use and enjoyment of all his private properties (as distinct from State properties) belonging to him on the date of the agree ment as specified under clause (1) of Article (2) of the Agreement.
We are not concerned about the particulars of the agreements executed by other Rulers of various States.
While, it was so, in 1950 when the Constitution was enforced, it conferred upon the Rulers the aforesaid guarantees and assurances to privy purse, privileges etc.
under Articles 291, 362 and 366(22) of the Constitution.
Accordingly, Rulers continued to enjoy the said benefits upto 1970.
506 On 14th May, 1970, the Constitution (Twenty fourth Amendment) Bill, 1970 for abolition of the above said privy purse, privileges etc.
conferred under Articles 291, 362 and 366 (22) was introduced in the Lok Sabha by the then Finance Minister, Shri Y.B. Chavan.
The Bill contained three caluses and a short statement of Objects and Reasons.
The statements reads thus : "The concept of rulership, with Privy Purses and Special Privileges unrelated to any current functions and social purposes, is incompatible with an egalitarian social order.
Government have, therefore, decided to terminate the Privy Purses and Privileges of the Rulers of former Indian States.
Hence this Bill.
" On 2nd September, 1979, the Bill was voted upon in the Lok Sabha.
But on 5th September, 1970, the Rajya Sabha rejected the same since the Bill failed in the Rajya Sabha to reach the requisite majority of not less than two third members present as required by Article 368 and voting.
Close on the heels of the said rejection, the President of India purporting to exercise his powers under clause (22) of Article 366 of the Constitution, signed an Order withdrawing recognition of all the Rulers in the country en masse.
A communication to this effect was sent to all the Rulers in India who have been previously recognised as Rulers.
This Presidential Order de recognising the Rulers was questioned in H.H. Maharajdhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors.
vs Union of India ; by filing Writ Petitions under Articles 32 of the Constitution challenging it as unconstitutional, ultra vires and void.
An eleven Judges Bench of this Court by its Judgment dated 15th December 1970 struck down the Presidential Order being illegal, ultra vires and inoperative on the ground that it had been made in violation of the powers of the President of India under Article 366(22) of the Constitution and declared that the writ petitioners would be entitled to all their pre existing rights and privileges including right to privy purses as if the impugned orders therein had not been passed.
Here, it may be noted that Mitter and Ray, JJ. gave their dissenting judgment.
Thereupon, the payment of privy purses to the Rulers was restored.
Subsequently, Parliament enacted a new Act entitled the Constitution (Twenty Fourth Amendment) Act, 1971 on receiving the ratification by the 507 Legislature of 11 States.
It received the assent of the President on 5th November, 1971.
By this amendment Act, clause (4) reading "Nothing in this article shall apply to any amendment of this Constitution made under Article 368" was inserted in Article 13 and Article 368 was renumbered as clause (2).
The marginal heading to that article was substituted namely "Power of Parliament to amend the Constitution and procedure therefor" in the place of 'Procedure for amendment of the Constitution.
Before re numbered clause (2), clause (1) was inserted.
In the re numbered clause (2) for the words "it shall be presented to the President for his assent upon such assent being to the Bill" the words "it shall be presented to the President who shall give his assent to the Bill and thereupon" was sub stituted.
After the re numbered clause (2), clause (3) was inserted, namely 'Nothing in article 13 shall apply to any amendment under this article.
" It may be recalled that Article 368 was firstly amended by Section 29 of the Constitution (Seventh Amendment) Act, 1956 by omitting the words and letters "specified in Part A and B of the First Schedule ' and thereafter by Section 3 of the Constitution (Twenty Fourth Amendment) Act, 1971.
Again by Section 55 of the Constitution (Forty second Amendment) Act, 1956, clauses (4) and (5) were inserted.
But this amendment has been held unconstitutional in Minerva Mills vs Union of India, ; , holding that Sections 55 of the Forty second Amendment Act inserting clauses (4) and (5) to Article 368 had transgressed the limits of the amending power of the Parliament which power in Kesavananda Bharati was held not to include the power of damaging the basic features of the Constitution or destroying its basic structure.
The Constitution (Twenty fifth Amendment) Act, 1971 by substituting a new clause to clause (2) of Article 31 and inserting clause (2B) after clause (2A) came into force.
By the same Amendment Act, Article 31C was inserted after Article 31B entitled "Saving of laws giving effect to certain directive principles".
It is significant to note that Article 31 was omitted by the Constitution (Fourty fourth Amendment) Act, 1978 w.e.f.
20th June, 1979.
The impugned Constitution (Twenty sixth) Amendment, 1971 was passed by the Parliament and it received the assent of the President on 28th December 1971.
By this Act, Articles 291, 362 were omitted and Article 363 A was inserted under the title "Recognition granted to Rulers 508 of India States to cease and privy purses to be abolished".
By the same Amendment Act, an amended new clause was substituted to the then existing clause (22).
We have already reproduced Articles 291, 362 and the past and present clause (22) of Article 366.
After the impugned Twenty sixth Amendment was brought into force w.e.
L 28th December, 1971, the present writ Petition No. 351 of 1972 was filed on 24th August, 1972 for declarations that the Twenty fourth, Twenty fifth and Twenty sixth Amendment Acts of 1971 are unconstitutional, invalid, ultra vires, null and void and that the petitioner continues to be entitled to the privy purse and to personal rights, privileges as a Ruler and for a Writ or order directing the respondent to continue to pay privy purse to the petitioner.
Another Writ Petition No. 352 of 1972 was filed by H.H. Nawab Mohanuned If tikhar Ali Khan of Malekotla seeking same relief as in Writ Petition No. 351 of 1972.
It may be noted when Writ Petition Nos. 351 and 352 challenging the Twenty fourth, Twenty fifth and Twenty sixth Amendment Acts were filed in this Court, Writ Petition No. 135 of 1970 entitled His Holiness Kesavananda Bharati Sripadagalvaru vs State of Kerala and Another was pending before this Court.
When both these Writ Petitions i.e., W.P. No. 351 and 352 of 1972 were listed together, on 28th August, 1972 this Court passed the following order : "Upon hearing for the parties, the Court directed issue of Rule Nisi and directed these petitions to be heard along with Writ petition No. 135 of 1970.
Respondents granted time till end of September 1972 to file counter affidavit to the writ petitions.
Notice of the writ petitions shall issue to the Advocates General of all States.
All the Writ Petitions to be heard on the 23rd October,1972.
Written arguments dispensed with.
" A thirteen Judges bench of this court in Kesavananda Bharati vs State of Kerala, [1973] 4 SCC 225 heard some writ petitions along with these two writ petitions and gave its conclusions thus: "The view by the majority in these writ petitions is as 509 follows: 1.
Golak Nath 's case is over ruled; 2. article 368 does not enable Parliament alter the basic structure of framework of the Constitution; 3.
The Constitution (Twenty fourth Amendment) Act, 1971 is valid; 4.
Section 2(a) and (b) of the Constitution (Twenty fifth Amendment) Act, 1971 is valid; 5.
The first part of Section 3 of the Constitution (Twenty fifth Amendment) Act, 1971 is valid.
The second part, namely, "and no law containing a declaration that it is for giving effect to such policy shall be called in question in any Court on the ground that it does not give effect to such policy ' is invalid.
The Constitution (Twenty ninth Amendment) Act, 1971 is valid.
The Constitution Bench will determine the validity of the Constitution (Twenty sixth Amendment) Act, 1971 in accordance with law.
The cases are remitted to the Constitution Bench for disposal in accordance with law.
There will be no order as to costs incurred up to this stage. ' In pursuance of the said Order, Writ Petition No. 351 of 1972 is now before this Constitution Bench for determination of the constitutional validity of the Twenty sixth Amendment Act in accordance with the law laid down in Kesavananda Bharati.
Since the constitutional validity of the same Twenty sixth Amendment Act is involved in Writ Petition No. 798 of 1992, it is also before this Bench along with Writ Petition No. 351 of 1972.
As regards the inbuilt separate mechanism for amending the Constitution, Dr. Amedkar said, "One can, therefore, safely say that the Indian 510 federation will not suffer from the faults of rigidity or legalism.
Its distinpishing feature is that it is a flexible consideration." Dr. Wheare in his modern Constitution has commended that it "strikes a good balance by protecting the rights of the State while leaving remainder of the Constitution easy to amend. ' Our constitution is amendable one.
In fact, tin now Seventy two amendments have been brought about, the first of which being in 1951 i.e. within 15 months of the working of the Constitution.
The first amendment was challenged in Shankari Prasad vs Union of Indua ; but the Supreme Court unanimously upheld the validity of the Amendment.
A brief note as regards the circumstances which necessitated the Twenty fourth Amendment being brought may be recapitulated.
The Constitution Bench of this Court in Sajjan Singh vs State of Rajasthan; , wherein the constitutional validity of the Constitution (Seventeenth Amendment) Act, 1964 was challenged, reiterated the views expressed in Shankari Prasad by a mojority of three Judges although two Judges gave their separate dissenting judgments.
one of the dissenting Judges, Hidayatullah, J stated that the "Constitution gives so many assurances in Part III that it would be difficult to think that they were the playthings of a special majority. ' The other dissenting Judge, Mudholker, J. took the view that the word 'law ' in Article 13 included a constitutional amendment under Article 368 and that, therefore, the Fundamental Rights part was unalterable.
In his view, Article 13 qualified the amending power found in Article 368 making the Fundamental Rights part of India 's Constitution unamendable.
The concerns of the two dissenting learned Judges came before an eleven Judges Bench of this Court in Golak Nath vs State of Punjab; , involving another round of attack on three Amendment Acts, namely, the first, fourth and seventeenth Amendment Acts.
This Court by a ratio of six to five held that the Parliament had no power "to amend any of the provisions of Part III. . so as to take away or abridge the fundamental rights enshrined in that Part.
The decision in Golak Nath was rendered in 1967, but one of the amendments it would invalidate dated am 1951, another from 1955 and another from 1964.
Therefore, this Court order to avoid any catastrophe that would have ensued in the social and economic relations, had the Court ruled that the amendments were void 511 ab initio, relied on American cases and adopted the doctrine of prospective overuling which was construed to enable the Court to reverse its prior decisions, to continue the validity of the three amendments in issue, and to declare that after judgment the Indian Parliament would have no power to amend or abridge any of the Fundamental Rights.
Therefore, intending to override the ruling in Golak Nath 's case, the (Twenty fourth Amendment) Act, 1971 was brought, as reflected from the Objects and Reasons of the Twenty fourth Amendment, which read thus Objects and Reasons In the Golak Nath case; , , the Supreme Court reversed, by a narrow majority, its own earlier decisions upholding the power of Parliament to amend all parts of the Constitution including Part III relating to fundamental rights.
The result of the judgment was that Parliament was considered to have no power to take away or curtain any of the fundamental rights even if became necessary to do so for the attainment of the objectives set out in the Preamble to the Constitution.
The Act, therefore, amends the Constitution to provide expressly the Parliament power to amend any part of the Constitution.
" Thereafter, the Twenty fifth Amendment Act was brought in 1971 which amended the Constitution to surmount the difficulties placed in the way of giving effect to the Directive Principles of State Policy by the interpretation of Article 31 of the Constitution in Rustom Cawasjee Cooper vs Union of India ; The said Act substituted clause (2) and inserted clause (2B) to Article 31 and added Article 31C.
These amendment acts, namely, twenty fourth and twenty fifth besides twentyninth Amendment Act and the continuing validity of the dictum laid down in Golak Nath 's case, were the subjects for decision in Kesavananda Bharati.
Though Writ Petition No. 351 of 1972 challenging the twentyfourth, twenty fifth and twenty sixth Amendment Act was also listed along with other writ petitions in Kesavananda Bharati the constitutional validity of the twenty sixth amendment was left over for determination by a Constitution Bench.
We shall now proceed to examine the constitutional validity of the ampuped Amendment Act.
512 The question whether Article 291 is a provision related to the Covenants and Agreements entered into between the Rulers of the States and Indian Domination and is that in reality and substance a provision on the subject matter of covenants and agreements were considered by Hidayatullah, CJ in his separate concurring judgment in Madhav Rao and they" are answered in the following terms "The Article when carefully analysed leads to these conclusions: The main and only purpose of the provision is to charge Privy Purses on the Consolidated Fund of India and make obligatory their payment free of taxes on in come.
It narrows the guarantee of the Dominion Government from freedom from all taxes to freedom only from taxes on income.
Earlier I had occasion to show that the Princes had guaranteed to themselves, their Privy Purses free of all taxes.
The Dominion Government had guaranteed or assured the same freedom.
The Constitution limits the freedom to taxes on income and creates a charge on the Consolidated Fund.
There were other guarantees as in the Merger Agreements of Bilaspur and Bhopal (quoted earlier) which are ignored by the Article.
The guarantee of the Dominion Government is thus continued in a modified form.
The reference to Covenants and Agreements is casual and subsidiary.
The immediate and dominant purpose of the provision is to ensure payment of Privy Purses, to charge them on the consolidated Fund and to make them free of taxes on income." (emphasis supplied) Shah, J speaking for the majority with reference to the covenants and eements made the following observation : "After the Constitution the obligation to pay the privy purse rested upon the Union of India, not because it was inherited from the Dominion of India; but because of the constitutional mandate under article 291.
The source of the obligation was in article 291, and not in the covenants and the agreements." (emphasis supplied) 513 So far as Article 362 is concerned, it has been held by majority of the Judges that the said Article is plainly a provision relating to covenants within the meaning of Article 363 and a claim to enforce the rights, privileges and dignities under the covenants therefore, are barred by the first limb of Article 363 and a claim to enforce the recognition of rights and privileges under Article 362 are barred under the second limb of Article 363 and that the jurisdiction of the Courts however, is not excluded where the relief claimed is founded on a statutory provision enacted to give effect to personal rights under Article 362.
The important question now that arises for our consideration is whether the twenty sixth amendment Act, which completely omitted Articles 291, 362 and inserted a new Article 363A and also substituted a new clause (22) in place of its original clause or Article 366, has destroyed, damaged and altered the basic structure of the Constitution.
The Constitution remains at the apex because it is the supreme Law.
The question is what is the power of the Parliament to amend the Constitution either by abridging or omitting any existing Article or adding any new Article or clause or substituting any new clause for its original clause.
To answer this most important question, some supplementary questions have to be examined, those being as to what is the parameter or the mode by which an amendment can be brought and what are limitations either express or implied on the amending power which inters in the Constitution itself including its Preamble.
Before, we proceed further, let us understand what is meant by an 'amendment '.
The word has latin origin 'emendere ' to amend means to correct.
Walter F. Murply in 'Constitutions, Constitutionalism and Democracy ' while explaining what 'amendment ' means has stated "Thus an amendment corrects errors of commission or omission, modifies the system without fundamentally changing its nature that is an amendment operates within the theoretical parameters of the existing Constitution.
" In our Constitution, the expression 'amendment of the Constitution ' is not defined.
However, Part XX which contains one Article viz. Article 368 provide a special procedure for amending certain provisions of the Constitution under the heading "Amending of the Constitution".
514 It is not necessary for us to deal with the different provisions of the Constitution and the procedures for amendment as laid down by the Constitution because the authority of the Parliament in bringing about the impugned amendment Act is not under challenge.
After the judgment of Madhav Rao Scindia the twenty sixth amendment was brought to overcome the effect of the judgment, The objects and reasons of the twenty sixth amendment makes the position clear, which read thus : "The concept of rulership, with privy purses and special privileges unrelated to any current functions and social purposes, was incompatible with an egalitarian social order.
Government, therefore, decided to terminate the privy purses and privileges of the Ruler of former Indian States.
It was necessary for this purpose, apart from amending the relevant provisions of the Constitution to insert a new article therein so as to terminate expressly the recognition already granted to such Rulers and to abolish privy purses and extinguish all rights, liabilities and obligations in respect of privy purses.
Hence this Act.
" We shall now deal with the dictum laid down in Kesavananda Bharati as regards the power vested in the Parliament and the limitations either express or implied or inherent therefor to amend the Constitution.
In Kesavananda Bharati, the Supreme Court upheld the validity of the twenty fourth Amendment.
Of the 13 Judges, Shelat, Hedge, Grover, Jagmohan Reddy and Mukherjea observed that the Twenty fourth Amendment did not more than clarify in express language that which was implicit in the unamended Article 368 and it did not and could not add to the power originally conferred thereunder.
Ray, J said that the Twenty fourth Amendment made explicit what the judgment in Shankari Prasad and the majority judgment in Sajjan Singh and the dissenting judgment in Golak Nath said, namely, that Parliament has the constituent power to amend the Constitution.
Sikri, CJ and Ray, Palekar, Khanna, Beg, Dwivedi, JJ who also held the twenty fourth Amendment valid, said that under Article 368 Parliament can now amend every article of the Constitution.
According to Khanna, J. the non obstante clause (1) has been in 515 serted in the article to emphasise the fact that the power exercised under that Article is constituent power, not subject to the other provisions of the Constitution and embraces within itself addition, variation and repeal of any provision of the Constitution.
Mathew, J. put it succinctly stating that the twenty fourth Amendment Act did not add anything to the content of Article 368 as it stood before the amendment, that it is declaratory in character except as regards the compulsory nature of the assent of the President to a Bill for amendment.
Dwivedi, J. has explicitly stated that except as regard the assent of the President to the Bill, everything else in the twenty fourth Amendment was already there in the unamended Article 368 and that this amendment is really declaratory in nature and removes doubts cast on the amending power by the majority judgment in Golak Nath.
Sikri, CJ.
elaborating the above theme has observed that the Twenty fourth Amendment, insofar as it transfers power to amend the Constitution from the residuary entry (Entry 97, List I) or from Article 248 of the Constitution to Article 368 is valid; in other words, Article 368 of the Constitution as now amended by the twenty fourth Amendment Act deals not only with the procedure for amendment but also confers express power on Parliament to amend the Constitution.
He has also further held that under Article 368, Parliament can now amend every article of the Constitu tion as long as the result is within the limits laid down.
Thus the Constitutional questions that arose in Kesavananda Bharati 's case were scrupulously and conscientiously examined in detail on varied and varying topics from different angles such as 'the basic elements of the Constitutional structure ', 'the basic structure of the Constitution ', 'the essential and non essential features of the Constitution ', 'the plenary power of amendment ' etc.
etc., and finally by majority it is laid down that the power of amendment is plenary and it includes within itself the power to add, alter or repeal the various Articles of the Constitution including those relating to fundamental rights, but the power to amend does not include the power to alter the basic structure or framework of the Constitution so as to change its identity.
In fact, there are inherent or implied limitations on the power of amendment under Article 368.
We shall now examine the various arguments made on behalf of the petitioners and the interveners grouping all those submissions under separate and distinct topics.
516 One of the points urged in common before us is that the framers of the Constitution in their wisdom had thought it fit to incorporate the words ,guaranteed ' or 'assured ' in Article 291 which by their very plain meaning convey the intention of the framers of the Constitution guaranteeing or promising that the erstwhile Rulers of the States would be entitled to receive their privy purses from the revenues of the Union and that it would be free from all taxes.
As we have indicated above there were multiple sequence of events in the historical evolution which necessitated the Indian Rulers to enter into various agreements and ultimately to agree for integration of their States with the Dominion of India by dissolving the separate indentity of their States and surrendering their sovereignty but reserving only their rights for privy purses and privileges.
Though India was geographically regarded as one entity it was divided in as many as about 554 segments big and small.
On 15th August 1947 the British paramountacy lapsed and India attained its independence.
The fact that a heavy price was paid to attain independence and freedom which are sanctified by the blood of many martyrs is unquestionable.
During the independence struggle there was popular urge in the Indian States for attaining the freedom which unleashed strong movements for merger and integration of the States with the Dominion of India.
The agreements entered into by the Rulers of the States with the Government of India were simple documents relating to the accession and the integration and the "assurances and guarantees" given under those documents were only for the fixation of the privy purses and the recognition of the privileges.
The guarantees and the assurances given under the Constitution were independent of those documents.
After the advent of the Constitution, the Rulers enjoyed their right to privy purses, private properties and privileges only by the force of the Constitution and in other respects they were only ordinary citizens of India like any other citizen, of course, this is an accident of history and with the concurrence of the Indian people in their Constituent Assembly.
Therefore, there cannot be any justification in saying that the guarantees and assurances given to the Rulers were sacrosanct and that Articles 291 and 362 reflected only the terms of the agreements and covenants.
In fact as soon as the Constitution came into force, the Memoranda of 517 Agreements executed and ratified by the States and Union of States were embodied in formal agreements under the relevant Articles of the Constitution and no obligation flowed from those agreements and covenants but only from the Constitutional provisions.
To say differently, after the introduction of Articles 291 and 362 in the Constitution, the agreements and covenants have no existence at all.
The reference to Covenants and Agreements was casual and subsidiary and the source of obligation flowed only from the Constitution.
Therefore, the contention urged on the use of the words 'guaranteed ' or 'assured ' is without any force and absolutely untenable.
The next vital issue is whether the impugned Amendment Act has damaged any basic structure or essential feature of the Constitution.
According to Mr. Soli J. Sorabjee, by the repeal of Articles 291 and 362 which were integral part of the constitutional scheme, the identity of the Constitution has been changed and its character has been fundamentally altered.
The total repeal of these Articles coupled with an express repudiation of the guarantees embodied therein has resulted in nullification of "a just quid pro quo" which were the essence of these guarantees.
He has urged that the underlying purpose of doing justice to the Rulers has been subverted and breach of faith has been sanctioned.
He based the above arguments on three decisions of this Court, namely, (1) Waman Rao and Others vs Union of India and Others, ; at 588 80; (2) Maharao Sahib Shri Bhim Singhji vs Union of India and Others, at 212; and (3) Madhav Rao vs Union, at 74 and 83.
There has been a common recurrent argument that the impugned Amendment Act is beyond the constituent power of the Parliament since it has damaged the basic structure and essential features of the Constitution.
Mr. D.D. Thakur in addition to the above has stated that one of the tests to determine whether the provision of the Constitution was intended to be permanent or could be deleted or amended is to see whether the Constitution makers had intended that to be permanent.
In support of his submission, he placed much reliance on the observation of Mudholkar, J in Sajjan Singh vs State of Rajasthan, ; at page 966 reading thus : 518 "Above all, it formulated a solemn and dignified preamble which appears to be an epitome of the basic features of the Constitution.
Can it not be said that these are indicate of the intention of the Constituent Assembly to give a permanency to the basic feature of the Constitution.
" This observation has been reiterated in a separate judgment of Hedge and Mukherjea, JJ in Kesavananda Bharati stating that it was Mudholkar, J who did foresee the importance of the question whether there is any implied limitation on the amending power under Article 368 of the Constitution.
On the basis of the above, he has urged that if the intention of the founding fathers regarding the permanence or imper manence of a provision of the Constitution is conclusive for determining whether a provision is basic or not, there is no difficulty in gathering the intention of the founding fathers from Article 362 itself He continues to state that the fact that 'assurances and guarantees ' had been insulated against every future constituent inroad or legislative incursion of Parliamentary control is further substantiated from the provisions of Article 291 of the Constitution.
Mr. A.K. Ganguly has adopted the above arguments and supple mented the same stating that the privileges of the Rulers of the State were made an integral part of the constitutional scheme and that thereby a class of citizens are for historical reasons accorded special privileges and that the recognition of the status, rights and privileges conferred on the Rulers were not on temporary basis and as such they are not liable to be varied or repudiated.
Mr. Nariman also emphasises the same.
Before adverting to the above contentions, we state in brief about the basic principle to be kept in view while amending a Constitution.
In our democratic system, the Constitution is the supreme law of the land and all organs of the Government executive, legislative and judiciary derive their powers and authority from the Constitution.
A distinctive feature of our Constitution is its amendability.
The Courts are entrusted with important constitutional responsibilities of upholding the supremacy of the Constitution.
An amendment 519 of a Constitution become ultra vires if the same contravenes or transgresses the limitations put on the amending power because there is no touchstone outside the Constitution by which the validity of the exercise of the said powers conferred by it can be tested.
In our Constitution, there are specific provisions for amending the Constitution.
The amendments had to be made only under and by the authority of the Constitution strictly following the modes prescribed, of course, subject to the limitations either inherent or implied.
The said power cannot be limited by any vague doctrine of repugnancy.
There are many outstanding interpretative decisions delineating the limitations so that the Constitutional fabric may not be impaired or damaged.
The amendment which is a change or alteration is only for the purpose of making the Constitution more perfect, effective and meaningful.
But at the same time, one should keep guard over the process of amending any provision of the Constitution so that it does not result in abrogation or destruction of its basic structure or loss of its original identity and character and render the Constitution unworkable.
The Court is not concerned with the wisdom behind or proprietary of the Constitutional amendment because these are the matters for those to consider who are vested with the authority to make the Constitutional amendment .
All that the Court is concerned with are (1) whether the procedure prescribed by Article 368 is strictly complied with '? and (2) whether the amendment has destroyed or damaged the basic structure or the essential features of the Constitution.
If an amendment transgresses its limits and impairs or alters the basic structure or essential features of the Constitution then the Court has power to undo that amendment.
The doctrine of basic structure was originated in Sajjan Singh and has been thereafter developed by this Court in a line of cases, namely (1) Kesavananda Bharati (supra), (2) Indira Gandhi Nehru, (3) Minerva Mills, (4) Waman Rao and (5) Sanjeev Coke Manufacturing Company vs Bharat Coaking Coal Ltd.; , Mr. Soli J. Sorabjee 'in support of his contention that Articles 291 and 362 and clause (22) of Article 366 were integral part of the constitutional scheme which otherwise would mean the 'essential part of the constitutional scheme ', referred to Webster New International Dictionary, 3rd Edition and Collins Concise English Dictionary, and has pointed out the lexical meaning say, that 'integral ' means 'essential ' and, therefore, 520 according to him, the total abolition of the provisions of the Constitution which are its integral parts otherwise essential parts has damaged the essential and basic features of the Constitution.
To draw strength for his submission, he relied upon certain observations made by Shah, J in his judgment in Madhav Rao observing, "By the provisions enacted in Articles 366(22), 291 and 362 of the Constitution the previliges of Rulers are made an integral part of the constitutional scheme" and 'An order merely "de recognising" a Ruler without providing for continuation of the institution of Rulership which is an integral part of the constitutional scheme is, therefore, plainly illegal." (emphasis supplied) The learned Attorney General has vehemently opposed the above submission stating that the expression "integral part of the scheme of the Constitution" used in Madhav Rao are not the same as the basic structure and that expression has to be read in the context of a challenge to the Ordinance which sought to render nuptory certain rights guaranteed in the Constitution, then existing.
It is further stated that the attack on the Twenty sixth Amendment based on the principles laid down.
in Madhav Rao is totally misconceived because only in order to overcome the effect of that judgment, the Twenty sixth Amendment was passed by the Parliament in exercise of its constituent powers.
According to the Attorney General, the observations in the said case were nullified by the Amendment and that judgment is no longer good law after the Amendment.
To test the Amendment on the basis of that judgment is impermissible and all the arguments based upon this case are, therefore, misconceived.
In this content, it becomes necessary to recall certain events which ultimately gave rise to Madhav Rao 's case.
After the commencement of the Constitution, in pursuance of Article 366(22), the Rulers were recognised and they had been enjoying the Privy purses, privileges, dignities etc.
on the basis of the relevant constitutional provisions.
Pursuant to the resolution passed by the AD India Congress committee in 1967, the Union of India introduced the Twenty fourth Amendment Bill in 1970 to implement the decision of the AR India Congress Committee favouring removal of privy purses, privileges etc.
But the Bill though passed in the Lok Sabha failed to secure the requisite majority in the Rajya Sabha and thereby it lapsed.
It was only thereafter, the President of India issued an Order in exercise of the powers vested in him under Article 366(22) derecognising the Rulers and stopping the privy 521 purses, privileges etc.
enjoyed by the rulers.
This Order passed by the President was the subject matter of challenge in Madhav Rao.
The Supreme Court struck down the Order of the President as invalid as in the view of the Court derecognition of the Rulers would not take away right to privy purses when Articles 291 and 362 were in the Constitution.
It was only in that context, the observations which have been relied upon by Mr. So;i J. Sorabjee, were made.
The Twenty sixth Amendment itself was passed by Parliament to overcome the effect of this judgment.
Now by this Amendment, Articles 291 and 362 are omitted, Article 363A is inserted and clause 22 of Article 366 is amended.
Therefore, one cannot be allowed to say that the above said omitted Articles and unamended clause were the essential part of the constitutional scheme.
So they have to be read only in the context of a challenge made to the Presidential Order which sought to render nugatory certain rights guaranteed in the Constitution which were then existing.
In any event, the constitutional bar of Article 362 denudes the jurisdiction of any Court in disputes arising from covenants and treaties executed by the Rulers.
The statement of Objects and Reasons of Twenty sixth Amendment clearly points out that the retention of the above Articles and continuation of the privileges and privy purses would be incompatible with the egalitarian society assured in the Constitution and, therefore, in order to remove the concept of rulership and terminate the recognition granted to Rulers and abolish the privy purses, this Amendment was brought on being felt necessary.
We are of the opinion that the observations of Shah, J in Madhav Rao that 'the privileges of Rulers are made an integral part of the constitutional scheme" and that "institution of Rulership is an integral part of the constitutional scheme ', must be read in their proper context.
That was a case, where by a Presidential order, the Rulers were deprived of their privy purses and other privileges while keeping Articles 291 and 362 intact in the Constitution.
Indeed, the said Presidential order was issued after the Government failed in its attempt to effect an amendment on those lines.
It is in that connection that the learned Judge made the above observations.
It is clear that the learned Judge used the words 'integral part ' in their ordinary connotation not in any lexicographical sense.
Ordinarily speaking, 'integral ' means "of a whole or necessary to the completeness of a whole ' and as "forming a whole ' (Concise Oxford Dictionary).
Our Constitution is not a disjointed document.
It incorporates a particular socio economic and political philosophy.
It is an integral whole.
Every provision 522 of it is an integral part of it even the provisions contained in Part XXI "Temporary, Transitional and Special Provisions".
One may ask which provision which concept or which 'institution ' in the Constitution is not an integral part of the Constitution? He will not find an answer.
To say that a particular provision or a particular 'institution ' or concept is an integral part of the Constitution is not to say that it is an essential feature of the Constitution.
Both are totally distinct and qualitatively different concepts.
The said argument is really born of an attempt to read a judgment as a statute.
One may tend to miss the true meaning of a decision by doing so.
We may say, the aforesaid observations of Shah, J constituted the sheet anchor of the petitioners ' argument relating to basic structure.
In the above premise, it is not permissible to test the Twenty sixth Amendment with reference to the observations made in Madhav Rao.
We shall now dispose of the contention raised in the grounds of the Writ Petition No. 351 of 1972 that the impugned Amendment is violative of Articles 14, 19(1)(f) and (g), 21, 31 (1) and (2) of the Constitution.
Evidently this contention has been raised in the year in 1972, that is long before the Constitution (Fortv fourth Amendment) Act of 1978 was passed w.e.f.
26th June 1979.
Writ Petition No. 798 of 1992 has been filed on October 15, 1992 in which the ground with reference to Articles 19(1)(f) and 31 are left out.
It is to be stated that Articles 19 (1) (f) and 31 are completely omitted by the Forty fourth Amendment.
By the deletion of these Articles by Forty fourth Amendment, the status of 'right to property ' from that of a fundamental right is reduced to a legal right under Article 300A which reads "No person shall be deprived of his property save by authority of law.
However, in order to allay the fears of the minorities in respect of that right guaranteed in the then Article 31, Article 30 (1A) has been inserted by the Forty fourth Amendment.
The right to property even as a fundamental right was not a part of the basic structure and even assuming that the right to privy purse is a property, it is a right capable of being extinguished by authority of law vide article 300A. Needless to emphasise, according to the rules laid down in Keshavananda Bharati that even the fundamental right can be amended or altered provided the basic structure of the Constitution in any way is not damaged.
Permanent retention of the privy purse and the privileges of rights 523 would be incompatible with the sovereign and republican form of Government.
Such a retention will also be incompatible with the egalitarian form of our Constitution.
That is the opinion of the Parliament which acted to repeal the aforesaid provisions in exercise of its constituent power.
The repudiation of the right to privy purse privileges, dignities etc.
by the deletion of Articles 291 and 362, insertion of Article 363A and amendment of clause 22 of Article 366 by which the recognition of the Rulers and payment of privy purse are withdrawn cannot be said to have offended Article 14 or 19 (g) and we do not Find any logic in such a submission.
No principle of justice, either economic, political or social is violated by the Twenty sixth Amendment.
Political justice relates to the principle of rights of the people, i.e. right to universal suffrage, right to democratic form of Government and right to participation in political affairs.
Economic justice is enshrined in Article 39 of the Constitution.
Social justice is enshrined in Article 38.
Both are in the Directive Principles of the Constitution.
None of these rights are abridged or modified.
by this Amendment.
We feel that this contention need not detain us any more and, therefore, we shall pass on to the next point in debate.
A serious argument has been advanced that the privy purse was a just quid pro quo to the Rulers of the Indian States for surrendering their sovereignty and rights over their territories and that move for integration began on a positive promising note but it soon de generated into a game of manoeuvre presumably as a deceptive plan or action.
This argument based on the ground of breaking of solemn pledges and breach of promise cannot stand much scrutiny.
To say that without voluntary accession, India i.e. Bharat would be fundamentally different from that Bharat that came into being prior to the accession is untenable muchness inconceivable.
We have already dealt with the necessity of the Rulers to accede for the integration of States with the Dominion of India in the earlier part of this judgment and, therefore, it is quite unnecessary to reiterate in this context, except saying that the integration could have been achieved even otherwise.
One should not lose sight of the fact that neither because of their antipathy towards the Rulers nor due to any xenophobia, did the Indian Government entertain the idea of the integration but because of the will of the people.
It was the people of the States who were basically instrumental in the integration of India.
It would be apposite to refer to the observation of Bose, J in Varinder singh & Ors vs State of U.P., ; at 435.
The said observation reads as follows 124 "Every vestige of sovereignty was abandoned by the dominion of India and by the States and surrendered to the peoples of the land who through their representatives in the Constituent Assembly hammered out for themselves a new Constitution in which all were citizens in a new order having but one tie, and owning but one allegiance : devotion, loyality, fidelity to the Sovereign Democratic Republic that is India.
" It is also worthwhile to take note of the historical process of states integration which is well set out in Chapter 18 under the heading Indian states in 'The Framing of Constitution A Study by B. Shiva Rao.
A persual of that chapter indicates that the attitude of the princes towards joining a united India was one of resistance, reluctance and high bargain, and it was the peoples of the States who forced them to accede to the new United India.
To say in other words, the States were free but not stable because of the stress and strain they underwent both from inside and outside.
Though the process of integration and democratisation called as unionization" in the words of Sardar Patel, was undertaken step by step at various stages, multiple forces, such as political, economic and geographic, more so the democratic movement within the States accelerated the process of integration.
Therefore, it is a misnomer to say that the Rulers made their.
sacrifices for which they were given just compensation and assured permanent payment of privy purses.
What was given to the Rulers was a political pension as rightly pointed out in Usman A1is case, on consideration of their past position.
Hence there is no question of breaking of solemn pledges or breach of promises etc.
given to the Rulers.
Therefore, the repudiation of the same cannot be said to have amounted to any breach of those guarantees and promises resulting in alteration of the basic structure of the Constitution.
Mr. D.D. Thakur has submitted that the Twenty sixth Amendment is an ugly epitome of immorality perpetrated by the Indian Parliament, that too in the exercise of its constituent powers and that the justice, fairness and reasonableness is the soul, spirit and the conscience of the Constitution of India as framed originally and that the impugned Amendment Act constitutes an unholy assault on that spirit which is impermissible and beyond the amending powers of the Parliament under Article 368 of the constitution.
According to him, the equality clause as interpreted by this 525 Court in (1) Maneka Gandhi vs Union of India, [1978] 2 SCR 621, (2) R.D. Shetty vs Intemational Airport Authority of India, ; , (3) Kasturi Lal Lakshmi Reddy vs State of Uttar Pradesh; , , (4) E.P. Royappa vs State of Tamil Nadu, ; , (5) Indira Gandhi 's case and (6) Minerva Mill 's case (supra) is the most important indispensable feature of the Constitution and destruction thereof will amout to changing the basic structure of the Constitution.
Mr. Harish Salve in addition to the above, urged that the basic structure test is to be applied on the touchstone of the Constitution as it stood while being delivered at the hands of the Constitution makers and that it would be contrary to the very principle of the basic structure to apply any personal notion or ideological predilections while determining the ' personality test ' of the original Constitution.
Further he states that the identity of the Constitution has been lost on account of the impugned Amendment.
As regards the submission that the amendment is an ugly epitome of immorality perpetrated by the Indian Parliament, it has been seriously opposed by the learned Attorney General that this argument based on immorality has only to be stated to be rejected and that it is an elementary principle of jurisprudence that a law cannot be interpreted on the basis of moral principles.
In this connection, reference may be made to the following passage in Dias 's Jurisprudence, Fifth Edition, at Page 355 and 356, It reads thus : "As a positivist, Prof. Hart excludes morality from the concept of law, for he says that positivists are concerned to promote 'clarity and honesty in the formulation of the theoretical and moral issues raised by the existence of particular laws which were morally iniquitous but were enacted in proper form, clear in meaning, and satisfied all the acknowledged criteria of validity of a system.
Their view was that, in thinking about such laws, both the theorist and the unfortunate official or private citizen who was called on to apply or obey them, could only be confused by an invitation to refuse the title of 'law ' or 'valid ' to them.
They thought that, to confront these problems, simpler, more candid resources were available, which would bring into focus far 526 better, every relevant intellectual and moral consideration: we should say, 'This is law , but it is too inquitous to be applied or obeyed. ' "it was pointed out at the beginning of this chapter that the principal.
call for a positivist concept of law is to identify laws precisely for the practical purposes of the present and that for the limited purpose, it is desirable to separate the 'is ' from the 'ought '.
To accomplish this no more would appear to be needed than simply those uses of the word 'law ' by courts; which is akin to Salmond 's definition alluded to above.
Professor Hart 's concept, however, is of 'legal system ', which is a continuing phenomenon.
. . . . . . . . When Professor Hart thinks in a continuum, as he does with society, he has to bring in morality , but in order to defend positivism he shifts ground and takes refuge in the present time frame, for only in this way can he justify the exclusion of morality for the purpose of identifying laws here and now.
There would thus appear to be a greater separation between his concept of law and his positivism than ever he alleges between law and morality.
For the limited purpose of identifying 'law his concept seeks to accomplish more than is necessary; for the purpose of portraying law in a continuum it does not go far enough.
Bentham in his Theory of Legislation, Chapter XII at page 60 said thus: "Morality in general is the art of directing the actions of men in such a way as to produce the greatest possible sum of good.
Legislation ought to have precisely the same object.
But although these two arts, or rather sciences, have the same end, they differ greatly in extent.
All actions, whether public or private, fall under the jurisdiction of morals.
It is a guide which leads the individual, as it were, by the hand through all the details 527 of his life, all his relations with his fellows.
Legislation cannot do this; and, if it could, it ought not to exercise a continual interference and dictation over the conduct of men.
Morality commands each individual to do all that is advantageous to the community, his own personal advantage included.
But there are many acts useful to the community which legislation ought not to command.
There are also many,injurious actions which it ought not to forbid, although morality does so.
In a word legislation has the same centre with morals, but it has not the same circumference.
" Reference may also be made to Krishna Kumar vs Union of India, ; The above passages remind us of the distinction between law and morality and the line of demarcation which separates morals from legislation.
The sum and substance of it is that a moral obligation cannot be converted into a legal obligation.
In the light of the above principle, the Attorney General is right in saying that Courts are seldom concerned with the morality which is the concern of the law makers.
According to him there is no unreasonableness, unfairness and dishonesty in bringing this amendment or in any way injuring the basic feature of the Constitution and this amendment has not caused any damage to the concept of reasonableness and non arbitrariness pervading the entire Constitution scheme.
On a deep consideration of the entire scheme and content of the Constitution, we do not see any force in the above submissions.
the present case, there is no question of change of identity on account of the Twenty sixth Amendment.
The removal of Articles 291 and 362 has not made any change in the personality of the Constitution either in its scheme nor in its basic features, nor in its basic form nor in its character.
The question of identity wilt arise only when there is a change in the form, character and content of the Constitution.
In fact, in the present case, the identity of the Constitution even on the tests proposed by the counsel of 528 the writ petitioners and interverners, remains the same and unchanged.
Mr. R.F. Nariman has contended that by removing the 'real and substantial ' distinction between the erstwhile Princes forming a class and the rest of the citizenary of India the Constitutional amendment has at one stroke violated the basic structure of the Constitution as reflected both in Articles 14 and 51 (c) and treated unequals as equals thereby giving a go by to a solemn treaty obligation which was sanctified as independent Constitutional guarantee.
He has drawn strength in support of his above argument from the decisions in Md. Usman & Ors.
vs State of Andhra Pradesh & Ors, [1971] Supp.
SCR 549 and Ramesh Prasad Singh vs State of Bihar & Others, ; After carefully going through the above decisions which relate to service matters, we are afraid that such an argument.
as one made by Mr. Nariman could be substantiated on the principles laid down in these two decisions that Article 14 will be violated if unequals are treated as equals.
In our considered opinion this argument is misconceived and has no relevance to the facts of the present case.
One of the objectives of the Preamble of our Constitution is 'fraternity assuring the dignity of the individual and the unity and integrity of the nation. ' It will be relevant to cite the explanation given by Dr. Ambedkar for the word 'fraternity ' explaining that 'fraternity means a sense of common brotherhood of all Indians. ' In a country like ours with so many disruptive forces of regionalism, communalism and linguism, it is necessary to emphasise and reemphasise that the unity and integrity of India can be preserved only by a spirit of brotherhood.
India has one common citizenship and every citizen should feel that he is Indian first irrespective of other basis.
In this view, any measure at bringing about equality should be welcome.
There is no legitimacy in the argument in favour of continuance of princely privileges.
Since we have held that abolition of privy purses is not violative of Article 14, it is unnecessary for us to deal with the cases, cited by Mr. Nariman, which according to him go to say that any law violating Article 14 is equally violative of the basic structure of the Constitution, inasmuch as Article 14 is held to be a basic postulate of the Constitution.
One of the arguments advanced by Mr. D. D. Thakur is that the Constitution should be read in the context of the pluralistic society of India where there are several distinct and differing interests brought together 529 and harmonised by the Constitution makers by assuring each Section, class and society, preservsation of certain political, cultural and social features specific to that class or section.
By way of example, reference to Article 370 which confers a special status for Jammu and Kashmir, is made.
He continues to state that likewise in the North Eastern States, the tribals were given autonomus powers for their District Councils coequal to what is conferred on the states and that for minorities, special provisions are made under Article 30.
Besides Articles 25 and 26 are meant to safeguard the minorities and religious denominations.
The persons to determine the injury will be those for whom these provisions were made and whose interests are prejudiced.
According to him, in such a circumstance the "assurances and guarantees given under Articles 291 and 3462 which are the magna karta assuring the rulers of their pre existing rights cannot in any way be destroyed.
We do not think that the aforesaid special provisions have any relevance herein.
As repeatedly pointed out supra, the only question is whether there is any change in the basic structure of the Constitution by deletion of Articles 291, 362 and by insertion of Article 363A and amendment of clause (22) of Article 366.
We have already answered this question ill the negative observing that the basic structure or the essential features of the Constitution is/are in no way changed or altered by the impugned Amendment Act.
We cannot make surmises on 'ifs ' and 'buts ' and arrive to any conclusion that Articles 291 and 362 should have been kept intact as special provisions made for minorities in the Constitution.
It is but a step in the historical evolution to achieve fraternity and unity of the nation transcending all the regional, linguistic, religious and other diversities which are the bed rock on which the constitutional fabric has been raised.
The distinction between the erstwhile Rulers and the citizenary of India has to be put an end to so as to have a common brotherhood.
On a careful consideration of the various aspects of both the writ petitions, we hold that the Constitution (Twenty sixth Amendment) Act of 1971 is valid in its entirety.
For all the aforementioned reasons, both the Writ Petitions as well as the connected 1.
As are dismissed.
No costs.
It has been brought to our notice that a number of writ petitions are pending before the Karnataka High Court touching the matter in question 530 raising various other questions.
Since we have now upheld the validity of the Twenty sixth Amendment Act, the High Court may proceed to dispose of all those pending writ petitions with reference to other issues, if any arising, in accordance with law and in the light of this judgment upholding the Constitutional validity of the impugned Amendment Act.
MOHAN.
J. I had the advantage of perusing the judgment of my learned Brother Ratnavel Pandian, J. Though I am in respectful agreement with him having regard to the importance of the constitutional issues involved in this case, I would like to add the following: It was on the 15th day of August, 1947 when India attained freedom.
Pandit Jawahar Lal Nehru said in memorable words: "When the world sleeps, India will awake to life and freedom.
A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends and when the soul of nation long suppressed, finds utterance.
" With the advent of freedom, India had to faee problems of highest magnitude.
Of the many problmes three were most pressing and urgent.
The earlier they were resolved, the better it was for the country.
The first of them was, to restore the communal harmony which had been impaired to great extend.
(ii) Princely States had to be integrated into the Indian Union.
(iii) There was necessity to frame a republican constitution which would vibrate the new ideas.
With the dawn of independence it was felt that in an independent India the existence of princely states was an anachronism in the body politic.
Neither the past history nor economic and administrative realities could justify the existence of a multitude of autonomous islands.
They had to be integrated with the rest of Indian Union to forge the unity of the country.
After the withdrawal of British Power the paramountcy lapsed to the princes.
They could decide either to join India or Pakistan or even to stay independent.
Sardar Vallabhbhai Patel the architect of Indian unity and the master builder of destiny of nationalist India brought the princely states into the Indian Union by means of judicious threats of force, appeals to patriotism, warnings of anarchy and diplomatic persuasion.
An invitation was extended to all the rulers of the State to work through the Councils of 531 Constituent Assembly for the common good of all.
This invitation was accepted on 19.5.1949.
On this the White Paper says at page 109: "As the States came closer to the Centre it became clear that the idea of separate Constitutions being framed for different constituent units of the Indian Union was a legacy from the Rulers ' polity which, could have no place in democratic set up.
The matter was, therefore, further discussed by the Ministry of States with the Premiers of Unions and States on May 19, 1949 and it was decided, with their concurrence, that the Constitution of the States should also be framed by the Constituent Assembly of India and should form part of the Constitution of India.
" It may not be correct to state that those who sat down together in the Constituent Assembly and those who sent their representatives there, sat as conqueror and conquered, as those who ceded and as those who absorbed, as sovereigns or their plenipotentiaries contracting alliances and entering into treaties as high contracting parties to an act of State.
They were not there as sovereign and subject, or as citizen and alien.
On the contrary, they were the sovereign peoples of India, free democratic equals, forgoing the pattern of a new life for the common weal moving with a spirit of all times.
When India became a Dominion every vestige of sovereignty was abandoned, equally so, by the States.
They all surrendered to the peoples of the land who through their representatives in the Constituent Assembly hammered out for themselves a new Constitution in which all were citizens, in a new order having but one tie, and owing but one allegiances devotion, loyalty, fidelity, to the Sovereign Democratic Republic that is India as was eloquently stated by Justice Bose in Virendra Singh and Others vs State of Uttar Pradesh ; at P. 454: " At one Stroke all other territorial allegiances were wiped out and the past was obliterated except where expressly preserved; at one moment of time the new order was born with its new allegiance springing from the same source for all, grounded on the same basis; the sovereign will of the 532 peoples of India with no class, no caste, no race, no creed, no distinction,. ." The will of the Union Government was clearly expresssed in its White Paper: At page 115 it is said: "With the inauguration of the new Constitution the merged States have lost all vestiges of existence as separate entities" and at page 130: "The new Constitution of India gives expression to the changed conception of Indian unity brought about if by. . the unionisation of states. . " and at page31: "Unlike the scheme of 1935 the new Constitution is not an aliance between democracies and dynasties but a real union of the Indian people built on the concept of the sovereignty of the people All the citizens of India, whether residing in States or Provinces, will enjoy the same fundamental rights and the same legal remedies to enforce them.
In the matter of their constitutional relationship with the Centre and in their internal set up, the States will be on a par with the Provinces.
The new Constitution therefore finally eradicates all artificial barriers which separated the States from Provinces and achieves for the first time the objective of a strong, United and democratic India built on the true foundations of a cooperative enterprise on the part of the peoples of the Provinces and the States alike.
" The princes were first stripped of their three virtal fucntions, defence, foreign affairs and communications.
They were then urged to transfer internal government to popular movements inside the respective states.
In recompense they were allowed to retain their titles, dignities and immunities and were given generous privy purses.
It was in this context 533 Articles 291 and 362 were brought into the Constitution.
Likewise, Article 366 (22) defined the "Ruler".
On 2nd September, 1970, a Bill (Twenty fourth Amendment Bill, 1970) was introduced omitting these articles.
Though it was passed in the Lok Sabha it could not obtain the requisite majority of two thirds of the members present in voting in the Rajya Sabha.
Therefore, the motion for introduction of the Bill was declared lost.
Immediately thereafter the President of India in exercise of his power under clause (22) of Article 366 of the Constitution signed an instrument withdrawing recognision of all the Rulers.
Thereupon, the order was challenged in this Court under Article 32 of the Constitution of India.
In H.H. Maharajadhiraja Madhav Roa Jiwaji Rao Scindia Bahadur & Ors.
vs Union of India; , it was held that the order of the President derecognising the Rulers was ultra vires and illegal.
(In the later part of this judgment the ratio of this ruling will be discussed in detail).
In order to render this ruling ineffective the Twenty Sixth Amendment to the Constitution was introduced.
The following tabulated statement will bring out the legal postition as is obtainable after Twenty Sixth Amendment.
Articles before 26th Amendment Where under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of this Constitution, the payment of any sums, free of tax, has been guaranteed or assured by the Government of the Dominion of India to any Ruler of such State as privy purse (a) such sums shall be charged on, and paid out of, the Consolidated '.
Fund of India, and (b) the sums so paid to any Ruler shall be exempt from all taxes on income.
Articles after 26th Amendment 291.
(Privy purse sums of Rulers) Rep. by the Constitution (Twenty sixth Amendment) Act, 1971, Section 2.
534 Article 362.
In exercise (if the power of Indian States).
Rep. by the Parliament or of the Legislature of a State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such covenant or agreeable as is referred in article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State.
362.(Rights and privileges of Rulers of Indian States.)Rep.
by the Constitution (Teenty Amendment) Act, 1971 Section 2.
363 A. Recognition granted to Rulers of Indian States to cease and privy purses to be abolished Now it that and any anything in this Constitution or in any law for the time being in force (a) the Prince, Chief or other person, who at any time before the commencement or the Constitution (Twenty sixth Amendment) Act, 1971, was recognised by the President as the Ruler of an Indian State or any person who, at any time before such commencement, was recognised by the President as the successor of such Ruler shall, on and from such commencement, cease to be recognised as such Ruler or the successor of such Ruler; (b) on and from the commencement of the Constitution (Twenty sixth Amendment ) Act, 1971, privy purse is abolished and all rights, liabilities and obligations in respect of privy purse are extinguished and accordingly the Ruler or, as the case may Article 362(22): "Ruler" In relation to an Indian State means the Prince, Chief or other person by whom any such covenant or agreement as is referred to in clause (1) of Article 291 was entered into and who for the time being is recognised by the President as the Ruler of the State, and includes any person who for the time being is recognised by the President as the successor of such Ruler.
535 be, the successor of such Ruler, referred to in clause ( a) or any other person shall not be paid and sum as privy purse.
"Rulers" means the Prince, Chief or other person who, at any time before the commencement of the Constitution (Twenty sixth Amendment) Act, 1971, was recognised by the President as the Ruler of an Indian State or any person who, at any time before such commencement, was recognised by the President as the successor of such Rulers.
The validity of this amendment was challenged which came up for consideration in His Holiness Keasavananda Bharati Sripadagalavaru vs State of Kerala, The Court after holding that the basic structure of the Constitution cannot be amended directed by its judgment dated 24th April, 1973 that the Constitution Bench will determine the validity of the Constitution (Twenty sixth Amendment) Act, 1971 in accordance with law and the cases are remitted to the Constitution Bench for disposal in accordance with law.
This is how the matter comes before us.
Mr. Soli J. Sorabjee, learned counsel for the petitioners relying on Madhav Rao 's case (supra) makes the following submissions.
Articles 291 and 362 embodied and guaranteed pledges to the Rulers.
They are based on elementary principles of Justice.
The underlying purpose of these articles was to facilitate stabilization of the new order and to ensure organic unity of India.
This Court in no unmistakable terms said that Articles 366(22), 291 and 362 are integral part of the constitutional scheme.
The institution of rulership is an integral part of the constitutional scheme.
This enunciation of law is by a Bench of 9 Judges and is binding.
536 Integral" means essential.
Such a provision, therefore, could constitute the basic feature of the Constitution.
Conseqently, the total abolition of these previsions of Constitution would necessarily damage its essential or basic feature.
Therefore, if the amendment damages the basic or an essential feature of the Constitution it would be beyond the constituent power of the Parliament as laid down in Waman Rao and others vs Union of India and others ; @ 588 89 as also in Mahtarao Sahib Shri Bhim Singhji vs Union of India & Ors., @ 212.
The correct approach is to examine in each case the place of the particular feature in the scheme of our Constitution, its object and purpose as was held in Indira Nehru Gandhi vs Raj Narain 's case, [1975] Suppl.
SC(, page 1 @ 252.
It was by the incorporation of Articles 291 and 362 that the Constitution makers were able to get the willing consent and cooperation of the Rulers to be brought within the fold of the Constitution as laid down by this Court in Madhav 's Rao case (supra).
Without the accession of the Rulers the Constitution would have been basically different.
Equally, the territory of India, its population, the composition of the State Legislature and Assemblies and the Lok Sabha and Rajya Sabha would be radically different.
The learned counsel seeks to emphasise the nature and the character of guarantees contained in Articles 291 and 362.
When they came to he incorporated it was nothing more than the statutory recognition to the solemn promises held out by Government of India.
In order to secure a truly democratic form of Government in the united independent India these solemn promises were meant to be honoured.
They were intended to incorporate a just quid pro quo for surrender by them of their authority and powers and dissolution of their States.
By repeal of these articles it has resulted in nullification of a just quid pro quo.
The underlying purpose of doing justice to the Rulers has been subverted.
Breach of faith has been sanctioned.
Consequently, the character and personality of the Constitution have been changed from one of honouring solemn promises and doing justice into one of breaking solemn pledges.
537 One of the tests of identifying the basic feature is, whether the identity of the Constitution has been changed.
As laid down in Kesavananda Bharati 's case (supra), the question to be addressed is, can it maintain its identity if something quite different is substituted? The personality of the Constitution must remain unchanged.
It is not necessary that the constitutional amendment which is violative of a basic or essential feature should have an instant or immediate effect on the basic structure.
It is enough if it damages the essential feature as laid down in Indira Nehru Gandhi 's case (supra).
The test to be applied, therefore, is whether the amendment contravenes or runs counter to an imperative role or postulate which is an integral part of the Constitution.
As a matter of fact in Bhim Singhji 's case (supra), it has been laid down that if a statutory provision Section 27 of the Urban Land (Ceiling & Regulation) Act, 1976 confers unfettered discretion and thereby violates Article 14 of the Constitution, it can also damage the basic structure of the constitution.
For all these reasons, it is submitted that the impugned amendment is bad in law.
Mr. D.D. Thakur, learned counsel for the petitioner supporting Mr, Soli J. Sorabjee, urges that one of the most important features of the Indian Constitution is morality.
By the impugned amendment, morality is destroyed because Article 361 before the amendment contained a solemn promise to the future generations.
By the impugned amendment the solemn promise is breached.
The privy purses are charged upon the consolidated fund of India and therefore, goes out of control of Parliament.
These privy purses are payable during the life time of Maharajas or Princes.
If, therefore, it is temporary in nature and is to last only for a stated period, would the Parliament have intended to amend the law? If that was the intention of incorporation of these provisions in the Constitution, the amendment would run counter to such an intention and therefore, cannot be supported.
Article 14 guarantees equality which forbids unfair treatment.
Where by reason of this amendment, the petitioner is subject to unfair treatment, there is an impairment of basic structure since equality is a basic structure.
In connection with this submission, the learned counsel cites case dealing with equality as Ajay Hasia vs Khalid Mujib Sehravardi; , and Minerva Mills Ltd. vs Union of India & Ors., ; and 538 In any event, privy purse is property.
If the petitioner is deprived of the same, it is unfair and is violative of basic structure.
Even from that point of view, the amendment cannot be supported.
Mr. A.K. Ganguli, learned counsel on behalf of the intervenor in I.A. No. 3/92 in W.P. 351/72 would submit that under Article 291 of the Constitution, payment of any sum has been guaranteed or assured.
This guarantee is of great importance.
The guarantee would mean continuity of provision.
Article 32(4) also contains the word 'guarantee '.
The same meaning must be ascribed to guarantee under Article 291.
It is not without purpose that the privy purse is charged upon the consolidated fund of India as seen from Article 112(g).
In this connection, reference may be made to O.N. Mohindroo vs District Judge, Delhi, [1971] III SCC 9.
As to what would constitute the basic structure, could be gathered from Kesavananda Bharati Sripadagalvaru 's case (supra), par ticulary, the passages occurring at parts 582 83, 631, 632, 1159 & 1473.
Mr. R.F. Nariman, learned counsel appearing for petitioner No. 1 would draw our attention to Section 87(b) of the Code of Civil Procedure.
That provision lists the immunities of foreign rulers.
That was challenged as violative of Article 14 of the Constitution.
That challenge was repelled in Mohanlal Jain vs His Highness Maharaja Shri Swai Man Singhji, [1962] 1 SCR 702.
On the same line of reasoning, it should be held, where by the impugned amendment, the princes who form a class is sought to be destroyed there is violation of Article 14.
Wherever unequals are treated as equals, this Court has disapproved of such treatment as seen from Ramesh Prasad Singh vs State of Bihar & Ors., ; at page 793 and Nagpur Improvement Trust & Another vs Vithal Rao & Ors., [1973] III SCR 39.
If, therefore, there is violation of Article 14 that would be offensive of basic structure as seen from Minerva Mills Ltd. case (supra).
It is added that the impugned amendment is violative of Article 51(c) of the Constitution.
The learned Attorney General in countering these submissions advanced on behalf of the petitioners, would argue that the agreements with the princes were pre constitutional agreements.
Admittedly, they were entered into for the purposes of facilitating integration of the nation and 539 creating the constitutional documents for all citizens including those of the native states.
The history of the development relating to the merger agreements and the framing of the Constitution clearly shows that it is really the union of the people of the native states with the people of the erstwhile British India.
The instruments of accession arc the basic documents and not the individual agreements with the rulers.
Therefore, to contend that the agreements were entered into by the rulers as a measure of sacrifice by them is untenable.
Secondly, the nature of the covenant is not that of a contract since a contract is enforceable at law.
On the contrary, these covenants are made non justiciable as seen from Articles 363.
The convenants are political in nature and no legal ingredients as the basis can be read into these agreements as laid down in Usman Ali Khan vs Sagar Mal, 119651 3 SCR 201.
The guarantees in Articles 291 and 362 are guarantees for the payment of privy purses.
Such a guarantee can always be revoked in public interest; more so, for fulfilling a policy objective or the directive principles of the Constitution.
This is precisely what the preamble to the impugned amendment says.
That being so, the theory of sanctity of contract or the unamendability of Article 291 or 362 does not have any foundation.
The theory of political justice is also not tenable since political justice means the principle of political equality such as adult suffrage, democratic form of Government, etc.
The treaties/covenants/etc.
entered into between the Union of India and the Rulers were as a result of political action.
No justiciable rights were intended to be created.
Article 363 as it stood in its original form spells out this proposition.
The rights and privileges in the Articles prior to the 26th Amendment were as acts of State of the Government and not in recognition of the scarifies of the rulers.
By no means, can it be contended that these guarantees given to the rulers were ever intended to be con tinued indefinitely.
Turning to basic feature, the proper test for determining basic feature is to find out what are not basic features.
Rights arising out of covenants which were non justiciable cannot be regarded as basic features.
Where, therefore, Article 363 makes these features non justiciable, the 540 question of basic feature does not arise.
It is equally incorrect to contend that the amendment is violative of Article 14.
There is no such violation.
It is not that by the proposed amendment, Article 14 is amended.
Whether a provision is violative of basic feature of the Constitution has to be decided on the language of the provisions.
The observations in Madhav Rao 's case have to be read in the context of the Constitution as it then stood.
The Court did not intend limiting the amending power.
The 26th Amendment does not in any manner amend the Constitution impairing a basic structure.
The right to property even as a fundamental right was not a part of the basic structure.
Even conceding that pre 26th Amendment right to privy purses to be property, it was a right capable of being extinguished by authority of law.
A permanent retention of the privy purses and the privileges of the rulers would be incompatible with a sovereign and republican form of Government.
Such a retention would also be incompatible with the egalitarian form of the Government envisaged by Article 14.
The words 'integral part of the scheme of the Constitution ' in the majority judgment in Mudhavrao 's case (supra) are not the same as basic structure.
They have to be read in the context of a challenge to an ordinance which sought to render nugatory certain rights guaranteed in the Constitution then existing.
In any event, the constitutional bar of Article 363 denudes the jurisdiction of any court in relation to disputes arising from covenants and treaties executed by rulers.
Hence, it is idle to contend that the impugned amendment in any manner interferes with the basic structure of the Constitution.
Usman Ali 's case (supra) is still good law.
What is overruled by Madhav Rao 's case (supra) is the political character.
Articles 291, 362, 366(22) could never have intended to form a basic structure.
They have no overall applicability permeating throughout the entire Constitution so to say that their absence will change the nature of the Constitution.
The 541 intrinsic evidence is the availability of a machinery for enforcement.
In the case of the rights guaranteed under Part III of the Constitution, a machinery is available for the enforcement.
On the contrary, such a machinery for enforcement of privy purses is not available under Article 363.
Therefore, it is submitted that it is a inferior right than the fundamental right.
Hence, it cannot be called a basic structure at all.
As to what is the meaning of basic structure, reference must be made to Kesavanand 's case (supra).
The learned Attorney General also draws our attention to an Article of K. Subba Rao, Ex Chief Justice of India in [1973] 2 SCC page 1 journal section entitled as "The two judgments: Golaknath and Kesavananda Bharati".
As to the morality part of the impugned amendment, it is urged that there is nothing immoral about it.
Where the changed situation and anxiety to establish an egalitarian society require the change of law it is valid.
In reply to these submissions, Mr. Soli J. Sorabjee would contend that the submissions of learned Attorney General that the guarantees under Articles 291 and 362 are unenforceable in view of Article 363 are not tenable in view of the judgment of this Court in Madhav Rao 's case (supra).
It is also not correct to argue that it is an act of State and therefore, no relief can be granted in respect of matters covered by it.
Such a submission has not been accepted by this court as seen from Madhav Rao 's case (supra) at pages 53; 90 93.
Strong reliance was placed on Usman Ali Khan 's case (supra) that the privy purses are in the nature of compensation.
The observations relied upon by the learned Attorney General have been regarded by the majority in Madhav Rao case as not only obiter but also incorrect as seen from Usman Ali khan 's case at pages 98, 145 & 193.
The submission that the privy purses are mere privileges is contrary to the decision of Madhav Rao 's case (supra) since these have been held to be fundamental rights guaranteed under Articles 19(1)(b) and 31.
Having regard to the above submissions, the sole question would be whether the 26th Amendment is beyond the constituent power of the Parliament ? To put it in another words, does the amendment damage any 542 basic or essential feature of the Constitution ? The law prior to and after 26th Amendment has already been set out in the tabulated statement.
As could be seen by the impugned amendment, Articles 291 and 362 have come to be omitted.
A new Article 363A has come to be inserted.
The original cause 22 of Article 366 has come to be substituted by a new clause.
In pith and substance, this amendment seeks to terminate the privy purses and privileges of the Princes of the former Indian States.
It also seeks to terminate expressly the recognition already granted to them as guaranteed and assured under Articles 291 and 362 of the Constitution.
Therefore, the impugned amendment has withdrawn the guarantees and assurances and abolished the privy purses, personal rights, privileges and dignities.
The validity of the amendment is attacked under: (i) Articles 291, 362 and 366(22) of the Constitution form an important basic structure and demolition of these articles would amount to violation of basic structure.
(ii) The covenants entered into are in the nature of contracts backed by constitutional guarantees.
They are further affirmed by making the privy purses an expenditure charged upon the consolidated fund of India.
Such being the position, a breach of the covenant cannot be made since they were intended to incorporate a just quid pro quo which has come to be nullified by the impugned amendment.
(iii) It is arbitrary and unreasonable and is, therefore, violative of Article 14 and consequently basic structure.
(iv) It is not moral.
In order to appreciate the above points, it is necessary to set out the background in which the Articles came to be incorporated in the Constitution.
It was on July 5th, 1947, Sardar Vallabhbhai Patel exhorted as under: "This country, with its institutions, is the proud heritage of the people who inhabit it.
It is an accident that some live in the States and some in British India, but all alike partake of its culture and character.
We are all knit together by bonds of blood and feeling no less than of 543 self interest.
None can segregate us into segments; no impassable barriers can be set up between us.
I suggest that it is, therefore, better for us to make law sitting together as friends than to make treaties as aliens.
I invite my friends, the Rulers of States and their people to the councils of the Constituent Assembly in this spirit of friendliness and cooperation in a joint endeavor, inspired by common allegiance to our motherland for the common good of us all.
We are at a momentous stage in the history of India.
By common endeavour, we can raise the country to a new greatness while lack of unity will expose us to fresh calamities.
I hope the Indian States will bear in mind that the alternative to co operation in the general interest is anarchy and chaos which will overwhelm great and small in a common ruin if we are unable to get together in the minimum of common tasks.
Let not the future generation curse us for having had the opportunity but failed to turn it to our mutual advantage.
Instead, let it be our proud privilege to leave a legacy of mutually beneficial relationship which would raise this sacred land to its proper place amongst the nations of the world and turn it into an abode of peace and prosperity.
" While clarifying the position, he spoke on 13th November, 1947: 'The State does not belong to any individual.
Paramountcy has been eliminated, certainly not by the efforts of the Princes, but by that of the people.
It is therefore, the people who have got the right to assert themselves and the Nawab cannot barter away the popular privilege of shaping its destiny.
" In this connection, it is worthwhile to quote the following from "The framing of India 's Constitution" by B. Shiva Rao at page 520 as under 'The Indian National Congress was in the past wellknown for its sympathy with the Indian States People 's Conference, a body which sought to establish popular 544 governments in the States.
Jawaharlal Nehru himself was closely associated with this movement.
The start of the proceedings in the Constituent Assembly was not particularly propitious for cooperation between the Assembly and the Rulers.
Moving the Objectives Resolution on December 13, 1946, in the Constituent Assembly (in which neither the Indian States nor the Muslim League were at that time represented) Nehru explained that the resolution did not cern itself with what form of Government the States had or "whether the Rajas and Nawabs will continue or not".
He also emphasized that if a part of the Indian Republic desired to have its own administration it was welcome to have it.
But at the same time he made it clear that the final decision in the matter whether or not there should be a monarchical form of Government in the States was one for decision by the people of the States.
" The political background in which the Articles came up to be incorporated in the Constitution has already been set out.
At this stage, what requires emphasis is that the people brought about the integration of the States with the erstwhile British India which came to be freed from the foreign yoke.
This is very clear from the speech of Sardar Vallabhbhai Patel on 13th November, 1947 quoted above.
It was in recognition of the privileges and powers which existed hitherto the privy purses came to be conferred.
The articles assured the payment of privy purses.
Nature of What exactly is a nature of privy purse in the realm of Privy Purse law could be gathered from Usman Ali Khan 's case (supra) at page 206 as under : "The third contention of Mr. Pathak raises the question whether an amount payable to a Ruler of a former Indian State as privy purse is a political pension within the meaning of Section 60(1)(g), Code of Civil Procedure.
The word "pension" in Section 60(1)(g), Code of Civil Procedure implies periodical payments of money by the Government to the pensioner.
See Nawab Bahadur of 545 Murshidabad vs Kamani Industrial Bank Ltd., (4) 1931 LR 58 IA.
215, 219 & 220 and in Bishamber Nath vs Nawab Imdad Ali Khan, 1890 L.R. 17 IA.
181,186, Lord Watson observed "A pension which the Government of India has given a guarantee that it will pay, by a treaty obligation contracted with another sovereign power, appears to their Lordships to be, in the strictest sense, a political pension.
The obligation to pay, as well as the actual payment of the pension must, in such circumstances, be ascribed to reasons of State policy.
" Now, the history of the integration and the ultimate absorption of the Indian States and of the guarantee for payment of periodical sums as privy purse to the Rulers of the former Indian States are well known.
Formerly Indian States were semi sovereign vassal States under the suzerainty of the British Crown.
With the declaration of Independence, the paramountcy of the British Crown lapsed as from August 15, 1947 and the Rulers of Indian States became politically independent sovereigns.
The Indian States parted with their sovereignty in successive stages, firstly on accession to the Dominion of India, secondly on integration of the States into sizeable administrative units and on closer accession to the Dominion of Indian and finally on adoption of the Constitution of India and extinction of the separate existence of the States and Unions of States.
During the second phase "of this political absorption of the States, the Rulers of the Madhya Bharat States including the Ruler of Jaora State entered into a Covenant on April 22, 1948 for the formation of the United State of Gwalior, Indore and Malwa (Madhya Bharat).
By Article 11 of the Covenant, the Covenanting States agreed to unite and integrate their territories into one State.
Article VI provided that the Ruler of each Covenanting State shall not later than July 1, 1948 make over the administration of the State to the Rajpramuckh and thereupon all rights, authority and juris 546 diction belonging to the Ruler and appertaining or incidental to the Government of the State would vest in the United State of Madhya Bharat.
Article XI (1) provided that "the Ruler of each covenanting State shall be entitled to receive annually from the revenues of the United State for his privy purse the amount of specified against that Covenanting State in Schedule I. ' In Schedule 1, a sum of Rs. 1,75,000 was specified against the State of Jaora.
Article XI(2) provided that the amount of the privy purse was intended to cover all the expenses of the Ruler and his family including expenses of the residence, marriage and other ceremonies and neither be increased nor reduced for any reason whatsoever.
Article XI(3) provided that the Rajpramukh would cause the amount to be paid to the Ruler in four equal instalments at the beginning of each quarter in advance.
Article XI(4) provided that the amount would be free of all taxes whether imposed by the Government of the United State or by the Government of India.
Article XIII of the Covenant secured to the ruler of each Covenanting State al l personal privileges, dignities and titles then enjoyed by them.
Article XIV guaranteed the succession, according to law and custom, to the gaddi of each Covenanting State and to the personal rights, privileges, dignities and titles of the Ruler.
The covenant was signed by all the Rulers of the covenanting state.
At the foot of the Covenant, it was stated that "The Government of India thereby concur in the above Covenant and guarantee all its provisions." In confirmation of this consent and guarantee, the Covenant was signed by a Secretary to the Government of India.
On the coming into force of the Constitution of India, the territories of Madhya Bharat became an integral part of India.
Article 291 of the Constitution provided : "Where under any covenant or agreement entered into by the Ruler of any Indian State before the commencement of this Constitution, the payment of any sums, free 547 of tax, has been guaranteed or assured by the Government of the Dominion of India to any Ruler of such State as privy purse : (a)Such sums shall be charged on, and paid out of, the Consolidated Fund of India; and (b)the sums so paid to any Ruler shall be exempt from all taxes on income." In view of the guarantee by the Government of the Dominion of India to the Ruler of Jaora State in the Covenant for the formation of the United State of Madhya Bharat, the payment of the sums specified in the covenant as privy purse to the Ruler became charged on the Con solidated Fund of India, and became payable to him free from all taxes on income.
Article 362 provides that in the exercise of the legislative and executive powers, due regard shall be had to the guarantee given in any such covenant as is referred to in Article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State.
Article 363(1) provides that notwithstanding anything contained in the Constitution, the Courts would have no jurisdiction in any dispute arising out of any provision in any covenant entered into by any Ruler of an Indian State to which the Government of the Dominion of India was a party, or in any dispute in respect of any right accruing under or any liability or obligation arising out of any of the provisions of the Constitution relating to any such covenant.
Article 366(22) provides that the expression "Ruler ' in relation to an Indian State means a person by whom the covenant referred to in Article 299(1) was entered into and who for the time being is recopied by the President as the Ruler of the State, ,and includes any person who for the time being is rccognised by the President as the successor of such Ruler.
Now, the covenant entered into by the Rulers of Madhya Bharat by which they gave up their sovereipity over their respective territories and vested it in the new United 548 State of Madhya Bharat.
The Covenant was an act of State, and any violation of its terms cannot form the subject of any action in any municipal courts.
The guarantee given by the Government of India was in the nature of a treaty obligation contracted with the sovereign Rulers of Indian States and cannot be enforced by action in municipal courts.
Is sanction is political and not legal On the coming into force of the Constitution of India, the guarantee for the payment of periodical sums as privy purse is continued by Article 291 of the Constitution, but its essential political character is preserved by Article 363 of the Constitution, and the obligation under this guarantee cannot be en forced in any municipal court.
Moreover, if the President refuses to recognise the person by whom the covenant was entered into as the Ruler of the State, he would not be entitled to the amount payable as privy purse under Ar ticle 291.
Now, the periodical payment of money by the Government to a Ruler of a former Indian State as privy purse on political considerations and under political sanctions and not under a right legally enforceable in any municipal court is strictly a political pension within the meaning of Section 6(1)(g) of the Code of Civil Procedure.
The use of the expression "purse" instead of the expression 'pension" is due to historical reasons.
The privy purse satisfies all the essential characteristics of a political pension, and as such, is protected from execution under Section 60(1)(g), Code of Civil Procedure.
Moreover, an amount of the privy purse receivable from the Government cannot be said to a debt or other property over which or the proceeds of which he has disposing power within the main part of Section 60(1), Code of Civil Procedure.
It follows that the third contention of Mr. Pathak must be accepted, and it must be held that the amounts of the privy purse are not liable to attachment or sale in execution of the respondent 's decree." (emphasis supplied) This case is an authority, for the proposition that it is a political pension.
The question is whether this dictum has been overruled by Madhav Rao 's case (supra).
549 At page 145 of the said decision, it is held "On the coming into force of the Constitution of India, the guarantee for payment of periodical sums as privy purse is continued by Article 291 of the Constitution, but its essential political character is preserved by Article 363 of the Constitution and the obligation under this guarantee cannot be enforced in any municipal court.
With all respect, it appears to me, that all the above was not strictly necessary for the decision of the case and it would have been enough to say that privy purse was a pension a word which according to the Oxford Dictionary means, "a periodical payment made specially by a Government, company, employer etc. ' which was political in nature because it was based on a political settlement.
However it was not the expression of opinion of only one learned Judge but the unanimous view of three learned Judges of this Court.
In Kanwar Shri Vir Rajendra Singh vs Union of India ; a Bench of another five learned Judges of this Court have pronounced on the non enfor ceability of the provision for payment of privy purse under Article 291 by resort to legal proceedings.
In my view, on the reasoning already given by me it must be held that the payment of privy purse although placed on a pedestal which defies annihilation or fragmentation as long as the above mentioned constitutional provisions enure is still subject to the constitutional bar of non justiciability and cannot be upheld or secured by adjudication in a court of law including this Court.
Further, at page 193 of the said decision, it is held "The learned Judges in that case had no occasion to consider nor did they go into the scope of Article 291 or Article 363.
Every observation of this Court is no doubt, entitled to weight but an obiter, cannot take the place of the ratio.
" A careful reading of the above shows what is overruled is the political character and not that the privy purse is not a political pension.
Even 550 otherwise, if really, this dictum has been overruled, the very basis of the judgment of Usman Ali Khan 's case (supra) would disappear.
Then the reasoning in relation to the attachability under Section 60 of Code of Civil Procedure would be incorrect.
Be that so, what is argued by Mr. Soli J. Sorabjee is the guarantee under Article 291 is enforceable notwithstanding Article 363.
Therefore, this discussion need not detain us.
As to the scope of Article 363, it could be culled from Madhav Rao 's case (supra) at page 99 : "A dispute as to the right to receive the privy purse, is therefore not a dispute arising out of the covenant within the first limb of Article 363, nor is it a dispute with regard to a right accruing or obligation arising out of a provision of the Constitution relating to a covenant.
But since the right to the privy purse arises under Article 291 the dispute in respect of which does not fall within either clause, the jurisdiction of the Court is not excluded in respect of disputes relating to personal rights and privileges which are granted by statutes.
" One thing which must be borne in mind while appreciating the scope of Madhav Rao 's case (supra) is what occurs at page 75 as under: Scope of Scindia "whether the Parliament may by a constitutional amend,Ruling amendment abolish the fights and privileges accorded to the Rulers is not, and cannot be, debated in this petition, for no such constitutional amendment has been made.
The petitioner challenges the authority of the President by an order purporting to be made under Article 366(22) to withdraw recognition of Rulers so as to deprive them of the rights and privileges to which they are entitled by virtue of their status as Rulers." (emphasis supplied) This Court had no occasion to go into the scope of constitutional amendment like the present one.
Therefore, all reasons addressed for striking down the presidential order must be confined only to the authority of the President to issue the order under Article 366(22) of the Constitution.
551 BASIC STRU This takes us to the power of amendment conferred CTURE under Article 368.
That power of amendment is unlimited except that the basic structure of the Constitution cannot be amended.
What then is the basic structure ? In Kesavananda 's case (supra), Sikri CJ.
stated at page 165 as under: whether "The learned Attorney General said that every Articles 291, provision of the Constitution is essential; otherwise, it would 362, 366(22) not has been put in the Constitution.
This is true.
But this does not place every provision of the Constitution in the same position.
The true position is that every provision of the Constitution can be amended provided in the result the basic foundation and structure of the constitution remains the same.
The basic structure may be said to consist of the following features : (i) Supremacy of the Constitution; (ii) Republican and Democratic form of Government; (iii) Secular character of the Constitution; (iv) Separation of powers between the Legislature, the executive and the judiciary; (v) Federal character of the Constitution.
The above structure is built on the basic foundation, i.e. the dignity and freedom of the individual.
This is of supreme importance.
This cannot by any form of amend ment be destroyed.
The above foundation and the above basic features are easily discernible not only from the preamble but the whole scheme of the Constitution, which I have already discussed." 552 Shelat & Grover, JJ.
in the said judgment stated at page 280 as under: "The basic structure of the Constitution is not a vague concept and the apprehensions expressed on behalf of the respondents that neither the citizen nor the Parliament would be able to understand it are unfounded.
If the historical background, the Preamble, the relevant provisions thereof including Article 368 are kept in mind there can be no difficulty in discerning that the following can be regarded as the basic elements of the constitutional structure.
(These cannot be catalogued but can only be illustrated).
The supremacy of the Constitution.
Republican and Democratic form of Government and sovereignty of the country.
Secular and federal character of the Constitution.
Demarcation of power between the legislature, the executive and the judiciary.
The dignity of the individual secured by the various freedoms and basic rights in Part III and the mandate to build a welfare State constrained in Part IV. 6.
The unity and the integrity of the nation.
" Hedge & Mukherjea, JJ.
in the said judgment stated at page 314 as under : "We find it difficult to accept the contention that our Constitution makers after making immense sacrifices for achieving certain ideals made provision in the Constitution itself for the destruction of these ideals.
There is no doubt as men of experience and sound political knowledge, they must have known that social economic and political chan ges are bound to come with the passage of time and the Constitution must be capable of being so adjusted as to 553 be able to respond to those new demands.
Our Constitution is not a mere political document.
It is essentially, a social document.
It is based on a social philosophy and every social philosophy like every religion has two main features, namely, basic and circumstantial.
The former remains constant but the latter is subject to change.
The core of a religion always remains constant but the practices associated with it may change.
Likewise, a Constitution like ours contains certain features which so essential that they cannot be changed or destroyed.
In any event it cannot be destroyed from within.
In other words, one cannot legally use the Constitution to destroy itself.
Under Article 368 the amended Constitution must remain 'the Constitution ' which means the original Constitution.
When we speak of the 'abrogation ' or 'repeal ' of the Constitution, we do not refer to any form but to substance.
If one or more of the basic features of the Constitution are taken away to that extent the Constitution is abrogated or repealed.
If all the basic features of the Constitution are repealed and some other provisions inconsistent with those features are incorporated, it cannot still remain the Constitution referred to in Article 368.
The personality of the Constitution must remain unchanged." (emphasis supplied).
Further, at page 322, it was stated as under 'On a careful consideration of the various aspects of the case we are convinced that the Parliament has no power to abrogate or emasculate the basic elements or fundamental features of the Constitution such as the sovereignity of India, the democratic character of the individual freedoms secured to the citizens.
Nor has the Parliament the power to revoke the mandate to build a welfare State and egalitarian society.
" Jaganmohan Reddy, J. in the said judgment stated at page 517 as,under: 554 "I will now consider the question which has been strenuously contended, namely, that there are no essential features, that every feature in the Constitution is essential, and if this were not so, the amending power under the Constitution will apply only to non essential features which it would be difficult to envisage was the only purpose of the framers in inscribing Article 368 and that, therefore, there is no warrant for such a concept to be read into the Constitution.
The argument at first flush is attractive, but if we were to ask ourselves the question whether the Constitution has any structure or is structureless or is a "jelly fish" to use an epithet of the learned Advocate for the petitioner, the answer would resolve our doubt.
If the Constitution is considered as a mechanism, or call it an organism or a piece of constitutional engineering, whichever it is, it must have a structure, or a composition or a base or foundation.
What it is can only be ascertained, if we examine the provisions which the Hon 'ble Chief Justice has done in great detail after which he has instanced the features which constitute the basic structure.
I do not intend to cover the same field once again.
There is nothing vague or unascertainable in the preamble and if what is stated therein is subject to this criticism it would be equally true of what is stated in Article 39(b) & (c) as these are also objectives fundamental in the governance of the country which the State is enjoined to achieve for the amelioration and happiness of its people.
The elements of the basic structure are indicated in the preamble and translated in the various provisions of the Constitution.
The edifice of our Constitution is built upon and stands on several props, remove any of them, the Constitution collapses.
These are: (1) Sovereign Democratic Republic; (2) Justice, social, economical and political; (3) Liberty of thought, expression, belief, faith and worship; (4) Equality of status and of opportunity.
Each one of these is important and collectively they assure a way of fife to the people of India 555 which the Constitution guarantees.
To withdraw any of the above elements the structure will not survive and it will not be the same Constitution, or this Constitution nor can it maintain its identity, if something quite different is substituted in its place, which the sovereign will of the people alone can do.
" Palekar, J. in the said judgment would say at page 619 "Since the 'essential features and basic principles ' referred to Mr. Palkhivala are those culled from the provisions of the Constitution it is clear that he wants to divide the constitution into parts one of the provisions containing the essential features and the other containing non essential features.
According to him the latter can be amended in any way the Parliament likes, but so far as the former provisions are concerned, though they may be amended, they cannot be amended so as to damage or destroy the core of the essential features.
Two difficulties arise, who is to decide what are essential provisions and non essential provisions? According to Mr. Palkhivala it is the court which should do it.
If that is correct, what stable standard will guide the court in deciding which provision is essential and which is no essential? Every provision, in one sense, is an essential provision, because if a law is made by the Parliament or the State Legislatures contravening even the most insignificant provision of the constitution, that law will be void.
From that point of view the courts acting under the constitution will have to look upon its provisions with an equal eye.
Secondly, if an essential provision is amended and a new provision is inserted which, in the opinion of the constituent body, should be presumed to be more essential than the one repealed, what is the yardstick the court is expected to employ? It will only mean that whatever necessity the constituent body may feel in introducing a change in the constitution, whatever change of policy that body may like to introduce in the constitution, the same is liable to be struck down if the court is not satisfied either about the 556 necessity or the policy.
Clearly this is not a function of the courts.
The difficulty assumes greater proportion when an amendment is challenged on the ground that the core of an essential feature is either damaged or destroyed.
What is the standard? Who will decide where the core lies and when it is reached? One can understand the argument that particular provisions in the constitution embodying some essential features are not amendable at all.
But the difficulty arises when it is conceded that the provision is liable to be amended, but no so as to touch its core '.
Apart from the difficulty in determining where the 'core of an essential features ' lies, it does not appear to be sufficiently realised what fantastic results may follow in working the Constitution.
Suppose an amendment of a provision is made this year.
The mere fact that an amendment is made will not give any body the right to come to this Court to have the amendment nullified on the ground that it affects the core of an essential feature.
It is only when a law is made under the amended provision and that law affects some individual 's right, that he may come to this Court.
At that time he will first show that the amendment is bad because it affects the core of an essential feature and if he succeeds there, he will automatically succeed and the law made by the Legislature in the confidence that it is protected by the amended constitution will be rendered void.
" Khanna, J. in the said judgment at page 720 stated as under "So far as the question is concerned as to whether the right to property can be said to pertain to basic structure or framework of the Constitution, the answer, in my opinion, should plainly be in the negative.
, Mathew, J. in the said judgment at page 827 828 observed "But the question will still remain, even when the core or the essence of a Fundamental Right is found, whether the Amending Body has the power to amend it in such a way as to destroy or damage the core.
I have already said 557 that considerations of justice, of the common good, or "the general welfare in a democratic society" might require abridging or taking away of the Fundamental Rights.
I have tried, like Jacob of the Old Testament to wrestle all the night with the angel, namely, the theory of implied limitation upon the power of amendment.
I have yet to learn from what source this limitation arises.
Is it because the people who were supposed to have framed the Constitution intended it and embodied the intention in an unalterable framework? If this is so, it would raise the fundamental issue whether that intention should govern the succeeding generations for all time.
If you subscribe to the theory of Jefferson, to which I have already referred and which was fully adopted by Dr. Ambedkar, the principal architect of our Constitution and that is the only same theory I think there is no foundation for the theory of implied limitations.
Were it otherwise, in actual reality it would come to this: The representatives of some people the framers of our Constitution could bind the whole people for all time and prevent them from changing the constitutional structure through their representatives.
And, what is this sacredness about the basic structure of the Constitution? Take the republican form of Government, the supposed cornerstone of the whole structure.
Has mankind, after its wandering through history, made a final and unalterable verdict that it is the best form of government? Does not history show that mankind has changed its opinion from generation to generation as to the best form of Government? Have not great philosophers and thinkers throughout the ages expressed different views on the subject? Did not Plato prefer the rule by the Guardians? And was the sapient Aristotle misled when he showed his proclivity for a mixed form of government? If there was no consensus yesterday, why expect one tommorow?" Commenting on this case and Golaknath 's decision, Subba Rao, exhibit C.J.I. in 'The two judgments : Golaknath and Kesavananda Bharati" (supra) 558 says at page 18: "The result is that the Supreme Court by majority declared that the Parliament under the Indian Constitution is not supreme, in that it cannot change the basic structure of the Constitution.
It also declared by majority that under certain circumstances, the amendment of the fundamental rights other than the right to property would affect the basic structure and therefore would be void.
The question whether the amendment of the fundamental right to property would under some circumstances affect the basic structure of the Constitution is not free from doubt; the answer depends upon the view the Supreme Court takes hereafter of the impact of the opinion of Matthew, Beg, Dwivedi and Chandrachud, JJ.
the funda mental rights are the basic features of the Constitution on the opinion of the six judges, who held that the core of the fundamental rights is part of the basic structure of the Constitution.
One possible view is that together they form a clear majority on the content of the basic structure; another possible view is that their opinion should be read along with that the entire Constitution, except perhaps the bare machine of Government, could be repealed by amendment.
" If this be the law, the question would be whether Articles 291,362 366(22) could ever be intended to form a basic structure.
The answer should be in the negative.
They have no overall applicability permeating through the entire Constitution that the absence of these provisions will change the nature and character of the Constitution.
While examining the question whether these Articles constitute the basic structure, one must have regard to Article 363 of the Constitution.
They are made enforceable in a Court of law.
If really they are to form basic structure, would not a corresponding right as occurring under Article 32(4) have been provided? In Indira Nehru Gandhi 's case (supra), the following observations are found in para 663 : 559 "The preamble, generally, uses words of "passion and power" in order to move the hearts of men and to stir them into action.
Its own meaning and implication being in doubt,the preamble cannot affect or throw fight on the meaning of the enacting words of the Constitution.
Therefore, though our Preamble was voted upon as is a part of the Constitution, it is really "a preliminary statement of the reasons ' which made the passing of the Constitution necessary and desirable.
As observed by Gajendragadkar, J. in In re Berubari Union vs Exchange of Enclaves, what Willoughby has said about the preamble to the American Constitution, namely, that it has never been regarded as the source of any substantive power, is equally true about the prohibitions and limitations.
The preamble of our Constitution cannot therefore be regarded as a source of any prohibitions or limitations." Therefore, regard must be had to the scope of the preamble which states : "The concept of Rulership, with privy purses and special privileges unrelated to any current functions and social purposes, is incompatible with an egalitarian social order.
Government have therefore decided to terminate the privy purses and privileges of the Rulers of former Indian States.
It is necessary for the purpose, apart from amending the relevant provisions of the Constitution, to insert a new article therein so as to terminate expressly the recognition already granted to such rulers and to abolish privy purses and extinguish all rights liabilities and obligations in respect of privy purses.
" If the 26th amendment aims to establish an egalitarian society which is in consonance with the glorious preamble, how could this provision be called a basic structure? No doubt, in Madhav Rao 's case (supra), it was held that these provisions are an integral part of the Constitution of this country.
Apart from the fact that all these reasons were addressed against the power of the President under Article 366(22), this statement cannot tantamount to basic 560 structure.
Nor would it mean the same as the basic structure.
To determine whether these provisions constitute basic structure or not they cannot be viewed in the historic background.
By repeal of the provisions the personality of the Constitution has not changed.
India could still retain its identity and it can hardly be said that the personality has changed.
The repudiation of the guarantees might result in the nullification of a just quid pro quo.
But, if it is the will of the people to establish an egalitarian society that will be in harmony with the changing tunes of times.
It cannot be denied that law cannot remain static for all times to come.
The extract of Matthew, J. in Kesavananda 's case highlights this aspect as under : "But the question will still remain, even when the core or the essence of a Fundamental Right is found, whether the Amending Body has the power to amend it in such a way as to destroy or damage the core.
I have already said that considerations of justice, of the common good, or 'the general welfare in a democratic society ' might require abridging or taking away of the Fundamental Rights. ' Weems vs United States, 54 Law Edition 801 quoted in Francis Coralie Mullin vs Administrator, Union Territory of Delhi & Ors., ; at page 617 succinctly states the law on this aspect as under : "Time works changes, brings into existence new conditions and purposes.
Therefore, a principle, to be vital, must be capable of wider application than mischief which gave it birth.
This is peculiarly true of Constitutions.
They are not ephemeral enactments designed to meet passing occasions.
They are, to use the words of Chief Justice Marshall "designed to approach immortality as nearly as human institutions can approach it".
The future is their care, and provisions for events of good and bad tendencies of which no prophecy can be made.
In the application of a Constitution, therefore, our contemplation cannot be only of what has been, but of what may be.
Under any other rule a 561 Constitution would indeed be as easy of application as it would be deficient in efficacy and power.
Its general principles would have little value, and be converted by precedent into impotent and lifeless formulas.
Rights declared in the words might be lost in reality.
And this has been recognised.
The meaning and vitality of the Constitution have developed against narrow and restrictive construction." (emphasis supplied) Robert section Peck in "The Bill of Rights & the Politics of Interpretation" states at page 316 317 as under : "The Constitution, then, is not a beginning nor an end, but part of a timeless process.
Any constitution "intended to endure for ages to come" (Mcculloch vs Maryland, 17 U.S. ; , 415(1819) cannot be a closed system or temporally bound.
The Constitution is more properly seen as part of a stream of history.
That stream is not always unbroken and has, frequently, taken radical turn, , That it is path has been winding is not surprising, since history is not a steady and predictable progression following earlier events.
Still, constitutional rights must be viewed as traveling down a single historic stream.
Today 's conclusions, to remain principled and persuasive, need to relate back to earlier origins.
When cases come before the Courts, purposes and concerns of timeless character require translation into practical rules that apply to their most modern manifestations.
In this role, courts perform a mediating function, harmonizing different strands into a coherent order.
But the courts do not exercise an exclusive authority in giving coherence to constitutional law.
Political leaders and political institutions have played this roles well, advancing both the law and the mechanisms available to promote constitutional liberty.
"Great constitutional provisions must be administered with caution. ' Justice Oliver Wendell Holmes remained us. 'Some play must be allowed for the joints of the machine, and it must be remembered that legislatures are ultimate guardians of the liberties and welfare of the people in quite as great a 562 degree as the Courts.
(Missouri, Kansas & Texas Rly Co. vs May, ; , 270 (1904)).
the Courts are insulated from the political winds that buffer, motivate andsometimes disable a legislature.
This independence from thelarger political world is critical to discharge of the tasks the successful discharge of the tasks we assign the judiciary Nevertheless, the courts operate in a political world of their own.
In this variety of politics, courts must harmonize past with present, conflict with resolution, change with continuity.
And they must contend with a variety of interest groups that influence the process by their actions and by the appeal of their arguments" In the words of the famous poet Jaames Russel Lowell New occasions teach new duties:Time makes ancient good uncouth: They must upward stilt and onward, who would keep abreast of Truth.
" Nodoubt, unity and integrity of India would constitute the basic structureas laid down in Kesavananda 's case (supra) but it is too far fetched aclaim to state that the guarantees and assurances in these Articles have gone into the process of unification and integration of the country.
One cannot lose sight of the fact that it was the will of the people and the urge to breathe free air of independent India as equal citizens that brought about the merger of these princely states.
Therefore, the contention that the Articles 291 and 362 facilitated the organic unity of India is unacceptable.
Next as to the violation of Article 14, it is true as laid down in Bhimsinghji 's case (supra) that if a particular provision of a constitution violates Article 14, it would affect the basic structure of the Constitution.
This case dealt with the validity of Section 27(1) of the Urban Land (Ceiling and Regulation) Act, 1976.
The relevant portion of the judgment in Bhimsinghji 's case (supra) can now be extracted 563 "Further, the restriction under Section 27(1) in the absence of any guidelines governing the exercise of the power on the competent authority in the matter of granting or ' refusing to grant the permission is highly arbitrary, productive of discriminatory results and,.
therefore, violates the equality clause of Article 14.
Which of the three objectives mentioned in the preamble should guide the exercise of power by the competent authority in.
any given case is not clear and in any case no standard has been laid down for achieving the objectives of preventing concentration, speculation, and profiteering in urban land or urban property.
Because of these reasons the provisions for appeal and revision under Sections 33 and 34 against the order passed by the competent authority under Section 27, would also not be of much avail to preventing arbitrariness in the matter of granting or refusing to grant the permission.
Section 27 is thus ultra vires and unconstitutional.
" Per Chandrachud, CJ.
and Bhagwati J. (Krishna Iyer, J., concurring) 'Sub section (1) of Section 27 of the Act is invalid insofar as it imposes a restriction on transfer of any urban or urbanisable land with a building or a portion only of such building, which is within the ceiling area.
Such property will, therefore, be transferable without the constrains mentioned in sub section (1) of the Act.
* (paras 5,8, &10) Per Krishna Iyer, J (concuming) "I agree with the learned Chief Justice both regarding the constitutionality of the legislation and regarding partial invalidation of Section 27(1).
" Per Seth J. "Sub sections (1), (2) and (3) of section 23 and the opening words 'subject to the provisions of sub sections 564 (1), (2) and (3) in Section 23(4) are ultra vires the Parliament and are not protected by Articles 31 B and 31 C of the Constitution and further, Section 27(1) is invalid insofar as it imposes a restriction on transfer of urban property for a period of ten years from the commencement of the Act, in relation to vacant land or building thereon within the ceiling limits. ' Krishna lyer, J. stated in the said judgment at page 186 as under : "The question of basic structure being breached cannot arise when we examine the vires of an ordinary legislation as distinguished from a constitutional amendment.
Kesavananda Bharati, 1973 Supp.
SCR cannot be the last refuge of the Propreitariate when benigh legislation takes away their 'excess ' for societal weal.
Nor, indeed, can every breach of equality spell disaster as a lethal violation of the basic structure.
Perioheral inequality is inevitable when large scale equalisation processes are put into action.
If all the judges of the Supreme Court in solemn session sit and deliberate for half a year to produce a legislation for reducing glaring economic inequality their genius will let them down if the essay is to avoid even peripheral inequalities.
Every, large cause claims some martyr, as sociologists will know.
Therefore, what is a betrayal of the basic feature is not a mere violation of Article 14 but a shocking unconscionable or unscrupulous travesty of the quintessence of equal justice.
If a legislation does go that far it shakes the democratic foundation and must suffer the death penalty.
But to permit the Bharati (supra) ghost to haunt the corridors of the court brandishing fatal writs for every feature of inequality is judicial paralysation of parliamentary function.
Nor can the constitutional fascination for the basic structure doctrine be made a Trojan horse to penetrate the entire legislative camp fighting for a new social order and to overpower the battle for abolition of basic poverty by the 'basic structure ' missile.
Which is more basic? Eradication of die hard, deadly and per 565 vasive penury degrading all human rights or upholding of the legal luxury of perfect symmetry and absolute equality attractively presented to preserve the status quo ante ? To use the Constitution to defeat the Constitution cannot find favour with the judiciary I have no doubt that the strategy of using the missile of 'equality ' to preserve die hard, dreadful societal inequality is a stratagem which must be given short shrift by this Court.
The imperatives of equality and development are impatient for implementation and judicial scapegoats must never be offered so that those responsible for stalling economic transformation with a social justice slant may be identified and exposed of Part IV is a basic goal of the nation and now that the Court upholds the urban ceiling law, a social audit of the Executive 's implementation a year or two later will bring to tight the gaping gap between verbal velour of the statute book and the executive slumber of law in action.
The Court is not the anti hero in the tragedy of land reform, urban and agrarian.
" In this case, the amendment does not either treat unequals as equals or in any manner violates Article 14.
AD the privy purses holders are treated alike by the withdrawal of all those privileges.
The next aspect of the matter is can the Court go into the morality in withdrawing these assurances and guarantees.
The following extract from 'Law and Morality ' by Louis Blom Cooper Gavin Drewry at page 2 is very useful : "The relationship between law and morals is in effect quadripartite, but it is only the fourth part that engages our current interest.
The first part is an historical and casual question.
Has the law been influenced by moral principles? No one doubts the answer is affirmative; conversely law has influenced moral principle.
The Suicide Act, 1961 no doubt accurately reflected the long standing moral view that to take one 's own life was not a crime against the law, a view which had not always been shared 566 by the judiciary (originally) for reasons having to do as much with property as with theological morality).
The statutory abolition of the crime of suicide in its turn buttressed and affirmed the moral attitude.
The second part questions whether law necessarily refers to morality at all; do morals and law overlap in practice, simply because both share the common vocabulary of rights and duties? It is here that the natural lawyers and legal positivists have engaged most fiercely in controversy.
The antagonists have found temporary refuge in the sterile argument about whether law is open to moral criticism.
Can a rule of law, 'properly ' derived (in constitutional terms) to be held to conflict with some moral principle? Those who witnessed Parliament, through the vehicle of the War Damage Act, 1965 reversing retrospectively the House of Lords ' decision in Burmah Oil Co. Ltd. vs Lord Advocate, ; and thus depriving a large cor poration of its fruits of litigation, would acknowledge readily the dissociation of law and political, if not social, morality.
In any event, does it matter that the law is immorally enacted, if we are all bound by it? Its enforceability (if not its actual enforcement) is unlikely to be affected by such theoretical objections.
Perhaps political morality can be defined only in terms of the franchise, and the efficacy of representative government though again the argument rests on a philosophical and psychological, rather than on an empirical plane. ' Then again, dealing with constraints on Constitutional interpretation.bent Greenwalt in conflicts of fits of Law and Morality ' 1987 Edition states at page as follows impugned 'Like ordinary legislation, constitutional provisions amendmentprotecting rights reflect the moral judgments of those who whether adopted them in this case complex judgments that certain coral activities should be put beyond the range of control by the 567 Political branches of the government.
In constitutions, as in statutes, language may embody a compromise of competing moral claims, though nothing in out federal Constitution resembles the relatively precise accommodation of the criminal law rules governing use of force in selfdefence.
The fact that the Constitution itself represents moral evaluations does not, of course, establish that moral evaluation is also the task of those who must decide if statutes and their applications fall a foul of constitutional restraints.
Widespread agreement exists on the appropriateness of some other techniques of interpretation.
The point if clearest for actions that the language of the Constitution, the intent of the Framers, and the decisions of earlier courts place squarely within the area of constitutional protection.
For these actions, a modern court win rarely need to engage in any debatable moral evaluation.
Usually it will apply the plain law, perhaps after determining that no overwhelming argument has been made contrary to the indications of these powerful sources.
Even for harder cases, judicial interpretation is not simple moral evaluation; the implications of the textual language, the Framers ' intent, and the precedents count for something if they point in one direction or another.
" To the same effect, Michael J. Perry in 'Morality Politics and law" 1988 Edn. states at page 129 as under : 'According to the view of democracy that underlies originalities, it is illegitimate for the judiciary to go beyond the enforcement of policy choices to the making of policy choices at least, it is illegitimate unless the judiciary is authorised to do so by the legislative and executive branches.
And it is illegitimate in extremis for the undemocratic judiciary to oppose itself, in constitutional cases, to the democratic branches and agencie s of government on the basis of beliefs never constitutionality by the gratifiers.
" 568 Therefore, this Court cannot concern itself with the moral aspect of the impugned amendment.
The impugned amendment is the will of the people expressed through Parliament.
In view of the foregoing discussion these petitions Are liable to be dismissed.
Accordingly, these petition stand dismissed.
V.P.R. petition dismissed.
| The petitioner was a Co Ruler of an Ex Indian State of Kurundwad.
His Co Ruler, on behalf of both, executed an instrument of accession under Section 5 of the Government of India Act, 1935 and their State became a part of the Dominion of India.
A Merger Agreement was executed on the 19th February, 1948 and the administration of the State of the petitioner was also handed over to the Dominion Government on the 8th March, 1948.
The case of the petitioner was that under the Merger Agreement he 480 481 was entitled to receive annually from the revenues of the State his privy purse as specified in the Merger Agreement.
Certain groups of States entered Into covenants for the establishment of United States comprising the territories of the covenanting States and Talukas with a common executive, legislature and judiciary.
On 13th October, 1949 the Constituent Assembly of India adopted inter alia two Articles namely, Article 291 relating to payment of privy purse and Article 362 relating to personal rights and privileges of the Rulers.
The Rulers and Rajpramukhs of the States agreed to adopt the Constitution drafted by the Constituent Assembly of India.
In pursuance of Article 366(22) of the Constitution of India, the petitioner was recognized as the Ruler of the Kurundwad State with effect from 26th January, 1950 and had been in the enjoyment of the privy purse, privileges, titles and dignities issued by Merger Agreement, and by the Constitution of India.
The Parliament enacted the Constitution (Twenty Sixth Amend ment) Act of 1971, repealing Articles 291 and 362 of the Constitution, a new Article 363 A was inserted and new clause (22) to Article 366 was substituted.
It resulted in depriving the Rulers of their recognition already accorded to them and declaring the abolition of the privy purse and extinguishing their rights and obligation in respect of privy purse.
The petitioner filed the writ petition challenging the impugned Amendment Act as unconstitutional and violative and the fundamental rights of the petitioner guaranteed under Articles 14, 19(1)(f), 21 and 31(1),(2) of the Constitution.
In the Writ Petition No. 351/72, I.A. Nos. 1 to 3 of 1992 were filed by the daughters of Late Maharaja of Mysore.
WRIT PETITION NO.
798 OF 1992 The petitioner was the successor to the Ruler of Mysore also challenged the Constitution (26th Amendment) Act of 1971 on the same grounds as in Writ Petition No. 351/72.
482 The petitioner in W.P. No. 351/72 submitted that Articles 291, 362 and 366(22) of the Constitution were integral part of the constitutional scheme and formed the important basic structure since the underlying purpose of these Articles was to facilitate stabilization of the new order and ensure organic unity of India; that the deletion of the Articles damaged and demolished the very basic structure of the Constitution; that the covenants entered into were in the nature of contracts which was guaranteed constitutionally and affirmed by making the privy purse an expenditure charged under the Consolidated Fund of India; that the deletion of the Articles amounted to a gross breach of the principle of political justice enshrined in the preamble by depriving or taking away from the princes the privy purses which were given to them as consideration for surrendering all their sovereign rights and contributing to the unity and integrity of the country; that the Rulers acceded to the Dominion of India and executed Instruments of Accession and Covenants in consideration of the pledges and promises enshrined in Articles 291 and 362; that the impugned Amendment Act was beyond and outside the scope and ambit of the constitutional power of the Parliament to amend the Constitution as provided under Article 368 of the Constitution; that the Constitution (Twenty Sixth Amendment) Act was unconstitutional, null, void and violative of Articles 14, 19(1) (g), 21, 31 (1) and (2) of the Constitution; and that Articles 291 and 362 when incorporated were intended to grant recognition to the solemn promises on the strength of which the former Rulers agreed to merge with the Indian Dominion and the guarantee of privy purses and certain privileges was as a just quid pro quo for surrendering their sovereignty and dissolving their States.
The petitioner in I.A. No. 3 submitted that the fact that the expression "guarantees" occurring both in Article 32 and Article 291 besides in Article 362 ( 'guarantee ') clearly demonstrated the mind of the Constitution makers that they intended the said provisions of Articles 291 and 362 to be the basic and essential structure of the Constitution.
The petitioner in 1 A No. 1 contended that the erstwhile rulers of the princely States formed a class apart and there was real and substantial distinction between them and the citizenry of India; that the impugned amendment which violated the basic structure of the Constitution was unconstitutional that the Amendment Act was violative of the essential features contained in Articles 14 and 19(1)(f).
483 The petitioner in W.P. No. 798/92 added that the two Articles were not at all amendable on the principle of prohibition against impairment of the contractual obligations; that the impugned Amendment Act was an ugly epitome of immorality perpetrated by the India Parliament, that, too, In the exercise of its constituent powers and the said Amendment Act constituted an unholy assault on the spirit which was impermeable and that the principle of justice, fairness and reasonableness were beyond the amending powers of the Parliament; that the equality clause as interpreted by this Court in various decisions was the most important and indispensable feature of the Constitution and destruction thereof would amount to changing the basic structure of the Constitution and that the authority of the Parliament to amend the Constitution under Article 368 could be exercised only if the Amendment in the Constitution was justifiable and necessitated because of the socioeconomic reasons broadly referred to in the directive principles of the State Policy and that any Amendment unrelated to any genuine compulsion amounts to an abuse of the power and was therefore a fraud on the exercise of power itself Respondent Union of India contended that the Instruments of Accession were only the basic documents but not the individual agreements with the Rulers and therefore to attribute the agreements entered into by Rulers as a sacrifice by the Rulers was unfounded; that the nature of the covenants was not that of a contract because a contract was enforceable at law while these covenants were made non justiciable by the Constitution vide Article 363; that the covenants were political in nature and that no legal ingredients as the basis could be read into these agreements and that the guarantees and assurances embodied in Articles 291 and 362 were guarantees for the payment of privy purses; that such a guarantee could always be revoked in public interest pursuant to fulfilling a policy objective or the directive principles of the Constitution; that being so, the theory of sanctity of contract or unamendability of Articles 291 or 362 did not have any foundation; and that the theory of political justice was also not tenable because political justice meant the principle of political equality such an adult suffrage democratic form of Government etc.
Dismissing the Writ Petitions and the I.As., this court, HELD : (By Full Court) ; The Constitution (Twenty Sixth Amendment) Act of 1971 is valid in its entirety.
[529G] 484 Per section Ratnavel Pandian, J. on his behalf and on behalf of the Chief justice of India, B.P. Jeevan Reddy and S.P. Baucha, JJ.: 1.01.
The only question is whether there is any change in the basic structure of the Constitution by deletion of Articles 291, 362 and by insertion of Article 363A and amendment of clause (22) of Article 366.
The question is answered in the negative observing that the basic structure or the essential feature of the Constitution is /are in no way changed or altered by the Constitution (Twenty Sixth Amendment) Act of 1971.
[529D] 1.02.
In our democratic system, the Constitution is the supreme law of the land and all organs of the government executive, legislative and judiciary derive their powers and authority from the Constitution.
A distinctive feature of our Constitution is its amendability.
[518G] 1.03.
The power of amendment is plenary and it includes within itself the power to add, after or repeal the various Articles of the Constitution including those relating to fundamental rights, but the power to amend does not include the power to alter the basic structure or framework of the Constitution so as to change its identity.
In fact, there are inherent or implied limitations on the power of amendment under Article 368.
[515G] 1.04.
There are specific provisions for amending the Constitution.
The amendments had to be made only under and by the authority of the Constitution strictly following the modes prescribed, of course, subject to the limitations either inherent or implied.
The said power cannot be limited by any vague doctrine of repugnancy.
There are many outstanding interpretative decisions delineating the limitations so that the Constitutional fabric may not be impaired or damaged.
The amendment which is a change or alteration is only for the purpose of making the Constitution more perfect, effective and meaningful.
But at the same time, one should keep guard over the process of amending any provision of the Constitution so that it does not result in abrogation or destruction of its basic structure or loss of its original identity and character and render the Constitution unworkable.
[519B D] 1.05.
The Courts are entrusted with important Constitutional responsibilities of upholding the supremacy of the Constitution.
An amendment of a Constitution becomes ultra vires if the same contravenes or transgresses the limitations put on the amending power because there 485 is no touchstone outside the Constitution by which the validity of the exercise of the said powers conferred by it can be tested.
[518H, 519A] 1.06.
The Court is not concerned with the wisdom behind or propriety of the Constitutional amendment because these are the matters for those to consider who are vested with the authority to make the Constitutional amendment.
All that the Court is concerned with are (1) whether the procedure prescribed by Article 368 is strictly complied with? and (2) whether the amendment has destroyed or damaged the basic structure or the essential features of the Constitution.
[519D E] 1.07.
If an amendment transgresses its limits and impairs or alters the basic structure or essential features of the Constitution then the Court has power to undo that amendment.
[519F] 1.08.
No principle of justice, either economic, political or social is violated by the Twenty sixth Amendment.
Political justice relates to the principle of rights of the people, i.e., right to universal suffrage, right to democratic form of Government and right to participation in political affairs.
Economic justice is enshrined in Article 39 of the Constitution.
None of these rights are abridged or modified by this Amendment.
[523C] 1.09.
There is no question of change of identity on account of the Twenty sixth Amendment.
The removal of Articles 291 and 362 has not made any change in the personality of the Constitution either in its scheme not in its basic features nor in its basic form nor in its character.
The question of identity will arise only when there is a change in the form, character and content of the Constitution.
1527G] 1.10.
A moral obligation cannot be converted into a legal obligation.
Courts are seldom concerned with the morality which is the concern of the law makers.
[527D E] 1.11.
In a country like ours with so many disruptive forces of regionalism, communalism and linguism, it is necessary to emphasise and re emphasise that the unity and integrity of India can be preserved only by a spirit of brotherhood.
India has one common citizenship and every citizen should feel that he is Indian first irrespective of other basis.
In this view, any measure at bringing about equality should be welcome.
There is no legitimacy in the argument in favour of continuance of princely 486 privileges.
Abolition of privy purses is not violative of Article 14.
[528F] 1.12.
The Court cannot make surmises on 'ifs ' and 'buts ' and arrive to any conclusion that Articles 291 and 362 should have kept in tact as special provisions made for minorities in the Constitution.
It is but a step in the historical evolution to achieve faternity and unity of the nation transcending all the regional, linguistic, religious and other diversities which are the bed rock on which the constitutional fabric has been raised.
The distinction between the erstwhile Rulers and the citizenary of India has to be put an end to so as to have a common brotherhood.
[529E F] Nawab Usmanali Khan vs Sagamial ; ; H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors.
vs Union of India; , ; Minerva Mills vs Union of India, ; ; His Holiness Kesavananda Bharati Sripadagalavaru vs State of Kerala and Another, [1973] 4 SCC 225; Shankari Prasad vs Union of India, ; ; Sajjan Singh vs State of Rajasthan, ; at 966; Golak Nath vs State of Punjab, ; ; Rustom Cawasjee Cooper vs Union of India, ; ; Waman Rao and Others vs Union of India and Others, ; at 588 89; Maharao Sahib Shri Bhim Singhji vs Union of India and Others, at 212; Madhav Rao vs Union, ; at 74 and 83; Indira Nehru Gandhi vs Raj Narain, ; Sanjeev Coke Manufacturing Company vs Bharat Cooking Coal Ltd., ; , Varinder Singh & Ors.
vs State of U.P., ; at 435; Maneka Gandhi vs Union of India, [1978] 2 SCR 621; R.D. Shetty vs International Airport Authority of India, ; ; Kasturi Lal Lakshmi Reddy vs State of Uttar Pradesh, ; ; E.P. Royappa vs State of Tamil Nadu, ; ; Krishna Kumar vs Union of India, ; ; Mfd.
Usman & Ors.
vs State of Andhara Pradesh and Ors.
, [1971] Suppl.
SCR 549, Ramesh Prasad Singh vs State of Bihar & Ors., ; , rererred to.
Report of the Joint Select Committee on Indian Constitutional Reforms (1933 34); Report of (he Expert Committee headed by Nalini Ranjan Sarkar (published in December, 1947), Report of the Indian States ' Finances Enquiry Committee, chaired by Sir V.T. Krishanamachary (appointed on 22nd October, 1948).
Report of the Rau Committee chaired by Sir B.N. Rau (appointed in November, 1948); Dias: Jurisprudence, Fifth Edition, at pages 355 and 356; Bentham : Theory of Legislation, Chapter XII at page 60, referred to.
487 Per section Mohan, J. (Concurring) 1.01.
One of the tests of identifying the basic feature is, whether the identity of the Constitution has been changed.
[537A] 1.02.
The personality of the Constitution must remain unchanged.
It is not necessary that the constitutional amendment which is violative of a basic or essential feature should have an instant or immediate effect on the basic structure.
It is enough if it damages the essential feature.
[537B] 1.03.
The test to be applied, therefore, is whether the amendment contravenes or runs counter to an imperative role or postulate which is an integral part of the Constitution.
[537B] 1.04.
Turning to basic structure, the proper test for determining basic feature is to find out what are not basic features.
Rights arising out of covenants which were non justiciable cannot be regarded as basic feature.
Where, therefore, Article 363 makes these features non justiciable, the question of basic feature does not arise.
[539H, 540A] 1.05.
The guarantees in Articles 291 and 362 are guarantees for the payment of privy purses.
Such a guarantee can always be revoked in public interest; more so, for fulfilling a policy objective or the directive principles of the Constitution.
This is precisely what the preamble to the impugned amendment says.
That being so, the theory of sanctity of contract or the unamendability of Article 291 or 362 does not have any foundation.
The theory of political justice is also not tenable since political justice means the principle of political equality such as adult suffrage, democratic form of Government, etc.
[539D E] 1.06.
If the 26th amendment aims to establish an egalitarian society which is in consonance with the glorious preamble, how could this provision be called a basic structure? No doubt, in Madhav Rao 's case, it was held that these provisions (Articles 291, 362, 366 (22) are an integral part of the Constitution.
Apart from the fact that all these reasons were addressed against the President under Article 366(22), this Statement cannot tantamount to basic structure.
Nor would it mean the same as the basic structure.
1559G H] 1.07.
To determine whether these provisions constitute basic struc 488 ture or not, they cannot be viewed in the historic background.
By repeal of these provisions the personality of the Constitution has not changed.
India could still retain its identity and it can hardly be said that the personality has changed.
[560A] 1.08.The repudiation of the guarantees might result in the nullification of a just quid pro quo.
But, if it is the will of the people to establish an egalitarian society that will be in harmony with the changing of times.
It cannot be denied that law cannot remain static for all times to come.
[560C] 1.09 Unity and integrity of India would constitute the basic structure as laid down in Kesavananda 's case but it is too far fetched claim to state that the guarantees and assurances in these Articles have gone into the process of unification and integration of the country.
One cannot lose sight of the fact that it was the will of the people and the urge to breathe free air of independent India as equal citizens that brought about the merger of these princely States.
Therefore, the contention that the Articles 291 and 362 facilitated the organic unity of India is unacceptable.
[562E F] 1.10 In this case, the amendment does not either treat unequals as equals or in any manner violates Article 14.
All the privy purses holders are treated alike by the withdrawal of all those privileges.
[565E] 1.11.
This Court cannot concerns itself with the moral aspect of the impugned amendment.
The impugned amendment is the will of the people expressed through Parliament.
[568A] Virendra Singh and Others vs State of Uttar Pradesh, ; at 454; H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur & Ors.
vs Union of India, ; ; His Holiness Kesavananda Bharati Sripadagalavaru vs State of Kerala, [1973] Supp.
SCR 1; Waman.
Rao and Others vs Union of India and others; , at 588 89; Maltarao Sahib Shri Bhim Singh Ji vs Union of India & Ors., at 212; Indira Nehru Gandhi vs Raj Narain, [1975] Supp, SCC 1 at 252; Ajay Hasia vs Khalid Mujib Sehravardi, ; ; Minerva Mills Ltd. vs Union of India & Ors., ; & 119861 3 SCR 718; O.N. Mohindroo vs District Judge, Delhi, ; Mohanlal Jain vs His Holiness Maharaja Shri Swai Mari Singh Ji, [1962] 1 SCR 702; Ramesh Prasad Singh vs State of Bihar Another vs Vithal Rao & Ors., ; ; Usman Ali Khan vs Sagar 489 Mal ; ; Golak Nath vs State of Punjab, ; ; Weems vs United States, 54 Law Edition 801; Francis Coralie Mullin vs Administrator, Union Territory of Delhi & Ors., ; at 617, referred to.
"The Framing of India 's Constitution ' : By B. Shiva Rao at page 520; Robert section Peck "The Bill of Rights & the Politics of Interpretation", at page 316 317; "Law and Morality" : By Louis Blom Cooper Gavin Drewry at page 2; Kent Greenawalt : "Conflicts of Law and Morality", 1987 Edition at page 338, referred to.
|
etition (Civil) No. 508 of 1988.
(Under Article 32 of the Constitution of India).
(With WP(C) Nos. 534/88, CA.
5513/85, 5679/85, 5686/85, 183/86, 192, 235 36/86, 363,/86, 447/86, 510 15/86, 529/86, 646/86, 647/86, 1199/86, 1200/86, 1250/86, WP.
(C) Nos.
143, 269, 434/86, T.P. (C) Nos. 76, 77, 78 79/86, 88/86, 139 49/86, 154/86, 155/86, CA.
Nos. 81 83/86, T.C. (C) No. 81/86, I.A. Nos. 1 & 2/92 in CA.
No. 5513,185) WITH (CA.
No. 174/86 Manipal Finance Crop.
vs U.O.L, and Anr.
With CA.
193/86, 624/86, 509/86, W.P. (C) No. 1506/87, CA.
69699/86, 949 50/86, 541/86, W.P. (C) No. 602/89) D.N. Dwivedi, Additional Solicitor General, G. Viswanatha Iyer, K.N. Bhat, Anil B. Diwan, E.M.S. Anam, P.H. Parekh, C.N. Sree Kumar, R. Mohan, section Balakrishnan, M.K.D, Namboodiri, M.S. Ganesh, S.S. Khanduja, Y.P. Dhingra, B.K. Satija, Kuldeep, section Paribar.
H.S. Parihar, Ms. A Sub hashini, C.V. Subba Rao, K,R. Nambiar, M.P. Shorawala, D.K, Garg, S.K. Nandy,Randhir Jain, Ms.
Malini Poduval,M.A.Krishna Moorthy, K.J,John, Ms. section Vaidyalingam, A.K. Sanghi, P.N. Puri, Ms. Abha Jain, Ms. Madhu Moolchandani and A.G. Ratnaparkhi for the Appearing Parties.
The Judgment of the Court was delivered by MOHAN, J.
All these civil appeals arise by certificate granted by the 836 High Court of Delhi against the decision reported in Kanta Mehta vs Union of India and others, Company Cases Vol.
62 1987 page 769.
All these civil appeals and writ petitions challenge the constitutional validity of Chapter 111 C read with section 58B (5A) of the , introduced by the Banking Laws (Amendment) Act, 1983 (Act 1 of 1984).
Hence, they are dealt with under a common judgment.
In order to appreciate the challenge the necessary legal background may be set out.
In the year 1949, the Banking Regulation Act of 1949 was enacted.
That contained regulatory, provisions in regard to banking under the surveillance of the Reserve Bank of India as to what would constitute "banking" as defined under Section 5(b) of the 1949 Act.
In the year 1959, the Banking Companies (Amendment) Act, 1959 was passed.
Sections 17 and 18 were substituted which required banking companies to create reserve fund and maintain cash reserve.
In the year 1963, Banking Laws (Miscellaneous Provisions) Act, 1963 inserted Chapter III B in the .
This Chapter conferred extensive powers on the Reserve Bank of India to issue suitable instructions, to regulate and monitor diverse activities of non banking companies.
The powers to control and regulate these non banking institutions are set out in Sections 45 I to 45 L.
While exercising these powers, the Reserve Bank of India was issuing various directions to these non banking financial institutions.
One such important direction was issued on 1st of January, 1967 to the effect that the non banking financial companies were not to hold deposits in excess of 25 per cent of its paid up capital and the reserves as also to non banking, non financial companies.
They were also required to take steps to keep the deposits within the limits.
This direction was challenged unsuccessfully before the Madras high Court as seen from the case reported in Mayavaram Financial Corporation vs Reserve Bank of India.
In, 1968, by Banking Laws (Amendment) Act, 1968, Sections 10A to 10D were introduced.
Section 10A provided that the Board of Directors shall include persons with professional or special knowledge.
Section 10A(5) empowered the Reserve Bank of India to vary the composition of the Board.
837 When a report of the Study Group of non banking financial intermediaries was submitted in the year 1971 that was studied.
Thereafter in 1973 the Reserve Bank of India issued Miscellaneous Non Banking Companies (Reserve Bank) Directions, 1973 placing certain restrictions on companies carrying on prize chit and chit business from receiving deposits from the public.
In 1974, Section 58A of the Companies Act was inserted by the Companies (Amendment) Act of 1974, which came into force from 1st of February, 1975.
The object was to regulate deposits received by non banking non financial companies.
The financial companies were already covered by Reserve Bank of India directions under the .
Therefore, they were exempted under Section 58A (7) from the purview of that Section.
Since the non banking non financial companies came within the purview of Section 58A, the earlier directions issued by the to non banking nonfinancial companies in the year 1966 Were withdrawn.
By an amendment of 1977, Section 58A was further enlarged and the Central Government was empowered to grant extensions.
In June 1974, another Study Group was constituted which is popularly known as James Raj Committee.
In July 1975, the above Study Group gave its report.
In accordance with the recommendations of the Study Group elaborate rules were issued by the Central Government under Section 58A, called Banking Companies (Acceptance of Deposits) Rules, 1975 with a view of regulate the various activities of the companies to accept deposits from public.
The validity of the section and the deposit rules were questioned.
This Court in DCM Ltd. vs U. O.L, ; upheld the same.
In 1977, directions were issued by the Reserve Bank of India superseding earlier directions of 1966 and 1973.
In 1978, Bill 183 of 1978 called Banking Laws (Amendment) Bill, 1978 was introduced in the Parliament.
The said Bill provided limits on depositors which were lower than the current provisions.
However, the Bill lapsed on dissolution of Parliament.
Thereafter prize chits and Money Circulation Schemes (Banning) Act, 1978 was enacted.
This was also challenged.
But that challenge was thrown out by this Court in Srinivasa Enterprises vs Union of India, ; 838 In 1981, several new regulatory directions were given by the Reserve Bank of India.
Inter alia they included restrictions on accepting or renewing deposits from shareholders, Directors etc.
which exceeded 15 per cent of the net owned funds of the companies as also restricted payment of interest on deposits at a rate of interest exceeding 15 per cent per annum.
The validity of the amendment was upheld by the Madras High Court in the case reported in AIR 1983 Madras 330 A.S.P. Ayar vs Reserve Bank of India.
In State of West Bengal vs Swapan Kumar Guha, known as Sanchaita case, reported in ; , this Court while quashing the F.I.R. launched against the firm, Sanchaita Investments, directed that the Government and Reserve Bank of India should look into the matter deeply.
It is in this background the Banking Laws (Amendment) Act, 1983 came to be enacted.
Section 45S states thus: 45 S : Deposits not be accepted in certain cases (1) No person, being an individual or a firm or an unincorporated association of individuals.
shall at any time, have deposits from more than the number of depositors specified against each, in the table below.
TABLE (i) Individual Not more than twenty five depositors excluding depositors who are relatives of the individual.
(ii) Firm Not more than twenty five depositors per partner and not more than two hundred and fifty depositors in all, excluding, in either case, depositors who are relatives of any of the partners.
(iii) Unincorporated Not more than twenty five depositors per Association of individual and not more than two hundred and individualsfifty depositors in all excluding, in either case, depositors who are relatives of any of the individuals constituting the association.
(2) Where at the commencement of Section 10 of the Banking Laws (Amendment) Act, 1983 the deposits her by any such person are not in accordance with sub section 839 (1), he shall before the expiry of a period of two years from the date of such commencement, repay such of the deposits as are necessary for bringing the number of depositors within the relative limits specified in that sub section.
Explanation : For the purposes of this section (a) a person shall be deemed to be a relative of another if, and only if, (i) they are members of a Hindu undivided family , or (ii) they are husband and wife; or (iii) the one is related to the other in the manner indicated in the list of relatives below List of Relatives 1.
Father.
Mother (including step mother).
Son (including Stepson).
Son 's wife.
Daughter (including step daughter).
Father 's father.
Father 's mother.
Mother 's mother.
Mother 's father.
Son 's son.
Son 's son 's wife.
Son 's daughter.
Son 's daughter 's husband.
Daughter 's husband.
Daughter 's son.
Daughter 's son 's wife.
Daughters daughter.
Daughter 's daughter 's husband.
Brother (including step brother) .
Brother 's wife.
Sister (including step sister).
Sister 's husband; (b) a person in whose favour a credit balance in outstanding for a period not exceeding six months in any account relating to mutual dealings in the ordinary course of trade or business shall not, on account of such balance alone, be deemed to be a depositor." Thus, the number of depositors has come to be limited.
As to the penalty for contravention of Section 45S it is provided for under Section 58B (5A).
It runs thus: "(5A).
If any person contravenes any provision of Section 45S, he shall be punishable with imprisonment for a terms which may extend to two years, or with fine which may extend to twice the amount of deposit received by 840 such person in contravention of that section or rupees two thousand, whichever is more, or with both." These provisions were challenged by the appellants in the various civil appeals as violative of Articles 14 and 19 of the Constitution.
A Division Bench of the High Court of Delhi in, Kanta Mehta 's case supra "Section 45S read with section 58B (5A) of chapter III C of the , as introduced by section 10 of the Banking laws Amendment) Act, 1983, is not violative of articles 14 and 19 of the Constitution.
There is nothing demonstrably irrelevant or perverse in limiting in section 45S the number of depositors that an individual, firm or association could accept.
Nor is there any element of compulsion on individuals and firms or associations which are not incorporated to incorporate themselves as a company and article 19(1)(c) is not violated by the provisions of section 45S limiting the number of depositors whom individuals, firms and unincorporated associations could accept.
Chapter III C of the , imposes reasonable restrictions on the right of individuals, firms and unincorporated associations to carry on the business of acceptance of deposits and advancing or giving loans to the public.
There is also a further safeguard that Chapter 111 C is being operated under the supervision and control of the Reserve Bank of India.
The business of acceptance of deposits from the public does not fall within entry .30 or entry 32 of List II.
of Schedule VII of the Constitution.
It falls within entry 45 or in any case under entry 97 of List I of Schedule VII under which only Parliament has power to pass the impugned legislation.
Parliament had full competence and power to pass Chapter III C of the ." Mr. G. Viswanatha Iyer, learned counsel for the writ petitioners in 841 WP.
508 and 534 of 1988 submits that Section 45B is violative of the fundamental right under Article 19(1)(g) of the Constitution as it restricts the number of depositors and the rate of interest under Section 4(2)(iii) of the Kerala Money Lenders Act, 1958 (hereinafter referred to as the Kerala Act).
The two years ' period prescribed under Section 42 is unreasonable.
Under Kerala Act, with effect from 15.10.85 only 14 per cent interest alone could be charged.
In any event, while receiving deposits it was not an offence, making it a criminal liability and directing payment, would amount, to ex post facto law, offending Article 20(1) of the Constitution.
In support of this submission, reliance is placed on Chinoy Bottling Co. Pvt. Ltd. vs Assistant Registrar of Companies, Madras, page 770 and Oudh Sugar Mills Ltd. vs Union of India, AIR 1970 SC 1070.
The other learned counsel seriously pressed the point relating to criminal liability and prayed for time to comply with the provisions of Section 45S.
Mr. Anil B. Diwan, learned counsel appearing for Respondent 2 in C.A. No. 447 of 1986, after referring us to the development of law, would submit that it is open to the Government to regulate the economic activities.
While examining the validity of such provisions the courts always have regard to the wisdom of the Legislature because that alone has the necessary information and expertise pointing to the need of such a legislation.
In R.K Garg vs Union of India, ; at 969 70 this aspect of the matter was highlighted.
It was in this view, this Court upheld Maharashtra Debt Relief Act, 1976 in Fatehchand Himmatlal and others vs State of Maharashtra, ; If properly analysed, it can be seen that these provisions constitute.
a regulatory scheme and not a penal liability.
Much is made of the penal provisions under Section 58B (5A).
It is submitted that imprisonment of a recalcitrant debtor is permissible in law.
If one goes by the facts of these cases even after 1986, they collect deposits 842 when law required them not to do so.
Under Section 45(1)(bb) deposit has been defined.
If as per the definition there are enough sources of deposit there is no reason why the appellants cannot reduce the deposits.
If, therefore, the package is reasonable there is no justification to dilute the effect of Section 58B (5A).
While examining the scope of the Section it might be contrasted with Section 125 (3) of the Criminal Procedure Code wherein a sufficient cause is provided.
In Reserve Bank of India vs Peerless General Finance and Investment Co. Ltd, ; this Court had occasion to consider the adventures indulged by the persons like appellants.
It criticised the fraud played by such financial vultures.
This approach was approved in Peerless General Finance and Investment Co. Ltd vs Reserve Bank of India, ; @ 354.
The learned counsel also draws our attention to the Non banking Financial Companies (Reserve Bank) Directions of 1966.
They came into force on January 1, 1967.
Clause 4 sub clause (3) specifically provides that the deposit shall be reduced to 25 per cent of the paid up capital for which two year period was provided.
Similar directions of 1977 known as Non Banking Financial Companies (Reserve Bank) Directions, 1977 came to be issued with effect from 1st of July, 1977.
There were complaints, even then, that the financial companies were not paying interest regularly and the Reserve Bank was requested to help the depositor.
Therefore, in the teeth of this provision, to say that suddenly the appellants and the writ petitioners are called upon to reduce, would work hardship and they should not be penalised, is incorrect.
They took a calculated risk and, therefore, they had to suffer for their own fault.
In examining the various submissions addressed on behalf of the appellants and the petitioners we propose to examine the same in the following background since it is a law relating to regulation of economic activities.
In R.K Garg 's case (supra) it is held at pages 969 70 .
"Another rule of equal importance is that laws relating 843 to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc.
It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or straight jacket formula and this is par ticularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature.
The greater play in the joints has to be allowed to the legislature.
The court should feel more inclined to give judicial deference to legislature judgment in the field of economic regulation than in other areas where fundamental human rights are involved.
Nowhere has this admonition been more felicitously expressed than in Morey vs Dond, ; where Frank further, J. said in his inimitable style: "In the utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative judgment.
The legislature after all has the affirmative responsibility.
The courts have only the power to destroy, not to reconstruct.
When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability.
" The court must always remember that "legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many 'problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry ' that exact wisdom and nice adaptation of remedy are not always possible and that 'Judgment is largely a prophecy 844 based on meagre and uninterpreted experience".
Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situations or anticipate all possible abuses.
There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid.
" At page 988 it is held: "That would depend upon diverse fiscal and economic considerations based on practical necessity and administrative expediency and ,would also involve a certain amount of experimentation on which the Court would be least fitted to pronounce.
The court would not have the necessary competence and expertise to adjudicate upon such an economic issue.
The court cannot possibly assess or evaluate what would be the impact of a particular immunity or exemption and whether it would serve the purpose in view or not.
There are so many imponderable that would enter into the determination that it would be wise for the court not to hazard an opinion where even economists may differ, The court must while examining the constitutional validity of a legislation of this kind, "be resilient, not rigid, forward looking, not static, liberal, not verbal" and the court must always bear in mind the constitutional proposition enunciated by the Supreme Court of the United States in Munn vs Illinois, namely, "that courts do not substitute their social and economic beliefs for the judgment of legislative bodies".
The court must defer to legislative judgment in matters relating to social and economic policies and must not interfere, unless the exercise of legislative judgment appears to the palpably arbitrary.
The court should constantly remind itself of what the Supreme Court of the United States said in Metropolis Theater Co. vs City of Chicago, (57 Lawyers ' Edition 730).
"The problems of 845 government are practical ones and may justify, if they do not require, rough accommodations, illogical it maybe, and unscientific.
But even such criticism should not be hastily expressed.
What is best is not always discernible, the wisdom of any choice may be disputed or condemned.
Mere errors of government are not subject to our judicial review.
No doubt, the impugned legislation places restrictions on the right of the appellants to carry on business, but what is essential is to safeguard the rights of various depositors and to see that they are not preyed upon.
From the earlier narration, it would be clear that the Reserve Bank of India, right from 1966, has been monitoring and following the functioning of non banking financial institutions which invite deposits and then utilise those deposits either for trade or for other various industries.
A ceiling for acceptance of deposits and to require maintenance of certain liquidity of funds as well as not to exceed borrowings beyond a particular percentage of the net owned funds have been provided in the corporate sector.
But for these requirements, the depositors would be left high and dry without any remedy.
Even the corporate sector was not free from blame.
It had done damage to the economy and brought ruination to small depositors.
This was why Section 58A in the Companies Act of 1956 came to be introduced.
It is worthwhile to quote the notes on clauses concerning this provision: "It has been the practice of the companies to take deposits from the public at high rates of interest.
Experience had shown that in many cases deposits taken by the companies have not been refunded on the due dates, either the companies have gone in liquidation or funds are depleted to such an extent that the companies are not in a position to refund the deposits, it was accordingly considered necessary to control the activities of the companies when accepting deposits from the 'the public".
We approve of the reasoning of the Delhi High Court in Kanta Mehta 's case (supra).
At pages 798 99 it runs as follows: "The danger of allowing deposits to be accepted without regulation is so acute and urgent, that to bind the 846 hands of the Legislature that only one course alone is permissible and not to permit a play of joints would be to totally make it ineffective in meeting the challenge of the social evil.
For, it must be remembered that "in the ultimate analysis, the mechanics of any economic legislation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class, the processual basis of price fixation has to be accepted in the generality of cases as valid.
" See Prag Ice and Oil Mills vs Union of India, ; , para 50).
Also such provisions meant to check such evil must be viewed, as Krishna Iyer J. said, through a socially constructive, not legally captious, microscope to discover glaring unconstitutional infirmity, that when laws affecting large chunks of the community are enacted, stray misfortunes are inevitable and that social legislation, without tears, affecting vested rights is virtually impossible.
See B. Banerjee vs Smt.
Anita Pan, ; , at pages 1150 51.
The stress by learned counsel for the petitioners on the private right of the petitioners to have unrestricted deposits and make advances in any manner they like must receive short shrift, for by now, it is too well settled to be doubted that private rights must yield to be public need and that any form of regulation is unconstitutional only if arbitrary, discriminatory or demonstrably irrelevant to the policy the Legislature is free to adopt.
" May be, Kerala Act restricts the rates of interest under Section 4(2)(iii) but that cannot enable the writ petitioners in W.P. Nos. 508 and 534 of 1988 to disregard these provisions, being the non banking financial institutions.
Hence, we reject the first of the arguments.
As regards the reasonableness of two year period Section 45(1)(bb) of the Reserve Bank Act defines "deposit" as follows: "(bb) "deposit" includes and shall be deemed always to have 847 included any receipt of money by way of deposit or loan or in any other form, but does not include (i) amounts raised by way of share capital; (ii) amounts contributed as capital by partners of a firm; (iii) any amount received from, (iv) any amount received from, (a) the Development Bank; (b) a State Financial Corporation established under the ; (c) any financial institution specified in or under section 6A of the ; or (d) any other financial institution that may be specified by the Bank in this behalf; (v) amounts received, in the ordinary course of business, by way of security deposit or dealership deposit; (vi) any amount received from an individual or a firm or an association of individuals not being a body corporate, registered under any enactment relating to money lending which is, for the time being in force in any State; and (vii)any amount received by way of subscriptions in respect of a conventional chit.
" Therefore, as rightly argued by Mr. Anil Diwan as per this definition, .if there are enough sources of deposit there is no reason why the appellants and the writ petitioners cannot reduce the deposits.
Further, non banking financial companies are required under clause 4 sub clause (3) as follows: "(3) Every non banking financial company, not being a hire purchase finance company, or a holding finance company, which on the date of commencement of these 848 directions holds deposits in excess of twenty five per cent of its paid up capital and free reserves shall secure before the expiry of a period of two years from the date of such commencement, by taking such steps as may be necessary for this purpose, that the deposits, received by the company and outstanding on its books are not in excess of the aforesaid limit.
" These directions came into force from 1st of January, 1967.
Similar directions came to be issued as Miscellaneous Non Banking Companies (Reserve Bank) Directions.
Clause 5 dealing with acceptance of deposits states as under: "Acceptance of deposits by miscellaneous non banking companies: On and from 1st of July, 1977, no miscellaneous nonbanking company shall: (a) receive any deposit repayable on demand or on notice, or repayable after a period of less than six months and more than thirty six months from the date of receipt of such deposit or renew any deposit received by it, whether before or after the aforesaid date unless such deposit, on renewal, is repayable not earlier than six months and not later than thirty six months from the date of such renewal; Provided that where a miscellaneous non banking company has before the 1st July, 1977, accepted deposits repayable after a period of more than thrity six months, such deposits shall, unless renewed in accordance with these directions, be repaid in accordance with the terms of such deposits; Provided further that nothing contained in this clause shall apply to monies raised by the issue of debentures or bonds.
(b) receive or renew: 849 (i) any deposit against an unsecured debenture or any deposit from a shareholder (not being a deposit received by a private company from its shares holders as is referred to in clause (vi) or paragraph 4) or any deposit guaranteed by any person who, at the time of giving such guarantee, was or is a director to the company, if the amount of any such deposits together with the amount of such other deposits of all or any of the kinds referred to in this sub clause and outstanding in the books of the company as on the date of acceptance or renewal of such deposits, exceeds fifteen per cent of its net owned funds.
(ii) any other deposit, if the amount of such deposit, together with the amount of such other deposits, not being deposits of the kind referred to in sub clause (i) of this clause already received and outstanding in the books of the company as on the date of acceptance of such deposits, exceeds twenty five per cent of its net owned funds.
" If, therefore, this was the position, it cannot be contended that suddenly the companies like the appellant and the petitioners arc called upon to reduce deposits.
Even otherwise, the interests of the depositors is the prime concern.
Coming to the last point, as to whether Section 58B (5A) is violative of Article 20(1) of the Constitution, we find, when a similar argument was raised against Section 58A of the Companies Act, that was repelled by this Court in Delhi Cloth and General Mills vs Union of India, ; at page 468 which runs thus: "Mr. G.A. Shah canvassed one more contention.
After stating that Rule 3A became operative from April 1, 19 ',8, he specifically drew attention to the proviso to Rule 3A (1) which required that with relation to the deposits maturing during the year ending on the 31st day of March, 1979, the sum required to be deposited or invested under sub rule 3A (1) shall be deposited or invested before the 30th day of September, 1978.
It was then contended that this provision would necessitate depositing 10% of the 850 deposits maturing during the year ending 31st March, 1979 which may have been accepted prior to the coming into force of rule 3A and to this extent the rule has been made retrospective and as there was no power conferred by sec.
58A to prescribe conditions subject to which deposits can be accepted retrospectively Rule 3A is ultra vires sec.
58A. Unquestionably, Rule 3A is to deposit 10% of the deposits maturing during the year in the manner prescribed in Rule 3.
Some deposits would be maturing between April 1, 1978 and March 31, 1979.
To provide for such marginal situation, a proviso is inserted.
Does it to make the rule retroactive? Of course, not.
In D.S. Nakara vs Union of India, ; a Constitution Bench of this Court has, in this context, observed as under: "A statute is not properly called a retroactive statute because a part of the requisites for its action is drawn from a time antecedent to its passing." Viewed form this angle, the provision can be properly called prospective and not retroactive.
Therefore, the contention does not commend to us.
" In the light of this, we should hold that the ruling of the Madras High Court in Chinoy Bottling Co. Pvt.
Ltd. (supra) is incorrect.
As to the plight of these depositors we need only to quote the case in Peerless General Finance and Investment Co. Ltd.; , At paragraph 37 it is held: "We would also like to query what action the Reserve Bank of India and the Union of India are taking or proposing to take against the mushroom growth of 'finance and investment companies ' offering staggeringly high rates of interest to depositors leading us to suspect whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings.
One has only to look at the morning 's newspaper to be greeted by advertisements inviting deposits and offering interest at astronomic rates.
851 On January 1, 1987 one of the national newspapers published from Hyderabad, where one of in happened to be spending the vacation, carried as many as ten advertisements with 'banner headlines ', covering the whole of the last page, a quarter of the first page and conspicuous spaces in other pages offering fabulous rates of interest.
At least two of the advertisers offered to double the deposit in 30 months.
2000 for 1000, 10,000 for 5,000, they said.
Another advertiser offered interes t ranging between 30 per cent to 38 per cent for periods ranging between six months to five years.
Almost all the advertisers offered extra interest ranging between 3 per cent to 6 per cent deposits were made during the Christmas Pongal season.
Several of them offered gifts and prizes.
If the Reserve Bank of India considers the Peerless Company with eight hundred crores invested in government securities, fixed deposits with National Banks etc.
unsafe for depositors, one wonders what they have to say about the mushroom non banking companies which are accepting deposits, promising most unlikely returns and what action is proposed to be taken to protect the investors.
It does not require much imagination to realise the adventurous and precarious character of these businesses.
Urgent action appears to be called for to protect the public.
While on the one hand these schemes encourage two vices affecting public economy, the desire to take quick and easy money and the habit of excessive and wasteful consumer spending, on the other hand the investors who generally belong to the gullible and less affluent classes have no security whatsoever.
Action appears imperative." And paragraph 42 also requires to be quoted "I share my brother 's concern about the mushroom growth of financial companies all over the country.
Such companies have proliferated.
The victims of the schemes, that the attractively put forward in public media, are mostly middle class and lower middle class people.
Instances are legion where such needy people have been 852 reduced penniless because of the fraud played by such financial vultures.
It is necessary for the authorities to evolve fool proof schemes to see that fraud is not allowed to be placed upon persons who are not conversant with the practice of such financial enterprises who pose themselves as benefactors of people.
" We may also add that this has been reaffirmed in Reserve Bank of India vs Timex Finance and Investment Co. Ltd., at page 354.
Therefore, we are in entire agreement with the Delhi High Court.
Since, as we have stated above, all the appellants and writ petitioners were praying for time to comply with these provisions, the matter was adjourned from time to time.
Though some of them have complied with the requirements of law yet a few others have not done so.
We make it clear that in spite of this indulgence, their failure to comply cannot be countenanced.
We dismiss the appeals and the petitions along with 1A.Nos.1 and 2 in C.A. No.5513 of 1985.
However, there shall be no orders as to cost.
N.V.K. Petitions and appeals dismissed.
| The petitioners in the writ petition challenged the constitutional validity of chapter III C read with Section 58B(5A) of the introduced by the Banking Laws (Amendment) Act, 1983.
Along with the writ petition were had several civil appeals, where the appellants had unsuccessfully challenged the aforesaid provisions as violative of Articles 14 and 19 of the Constitution, in the High Court of Delhi, which upheld their validity, and granted a certificate to appeal to this Court vide Kanta Mehta vs Union of India, The newly incorporated Section 45S of the provided that no individual or firm or an unincorporated association of individuals shall, at any time, have deposits from more than the number of depositors specified against each in the table mentioned therein.
It was further provided that where at the commencement of the Act, the deposits held were not in accordance thereof,a period of two years was prescribed for bringing down the number of depositors within the relative limits specified in the Act, and contravention thereof was rendered penal. 'These provisions were brought into force on February 15, 1984.
On behalf of the petitioners it was submitted that Section 45B was 833 violative of the fundamental rights under Article 19(1) kg) of the Constitution as it restricts the number of depositors and the rate of interest under Section 4(2)(iii) of the Kerala Moneylenders Act, 1958, that the two year period prescribed under Section 42 is unreasonable, and that under the Kerala Act with effect from 15110185 only 149% interest alone could be charged.
It was further submitted that while receiving deposits it was not an offence and making it a criminal liability and directing payment, would amount to ex postfacto law offending Article 20(1) of the Constitution.
The writ petition and appeals were contested by submitting on behalf of the Reserve Bank of India that it was open to the Government to regulate economic activities, and that while examining the validity of such provisions courts a laws have regard to the wisdom of the Legislature as it alone has the necessary information and expertise pointing to the needs for such a legislation.
Attention was also drawn to the provisions of the Non Banking Financial Companies (Reserve Bank) Directions of 1966 which came into force on January 1, 1969 which specifically provided that deposits shall be reduced to 25% of the paid up capital for which a two years period was prescribed and that similar directions knows as Non Banking Financial Companies Reserve Bank Directions, 1977 came to be issued with effect from 1st of July, 1977, Dismissing the writ petition and the appeals, this Court, HELD: 1.
The impugned legislation no doubt places restrictions on the right of the appellants to carry on business, but what is essential is to safeguard the rights of various depositors and to see that they are not preyed upon.
[844G] 2.
The Reserve Bank of India, right from 1966, has been monitoring and following the functioning of non banking financial institutions which invite deposits and utilise those deposits either for trade or for other various industries.
A ceiling for acceptance of deposits and to requires maintenance of certain liquidity of funds as well as not to exceed borrowings beyond a particular percentage of the net owned funds have been provided in the corporate sector.
But for these requirements, the depositors would be left high and dry without any remedy.
[844H, 845A] 3.
Even the corporate sector was not free from blame.
It had done damage to the economy and brought ruination to small depositors.
Ex 834 perience had shown that In many cases deposits taken by the companies had not been refunded on the due dates, either the companies had gone in liquidation or funds are depleted to such an extent that the companies were not in a position to refund the deposits.
It was accordingly considered necessary to control the activities of the companies when accepting deposits from the 'the public".
That was why Section 58A in the Companies Act of 1956 came to be introduced.
[845B, C D] 4.
The danger of allowing deposits to be accepted without regulation is so acute and urgent, that to bind the hands of the Legislature that only one course alone is permissible and not to permit a play of joints would be to totally make it ineffective in meeting the challenge of the social evil.
The mechanics of any economic legislation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class, the processual basis has to be accepted 5.
May be, Kerala Moneylenders Act restricts the rates of Interest under Section 4(2)(iii) but that cannot enable the writ petitioners to disregard these provisions introduced by the Banking laws (Amendment) Act 1983 being the non banking financial institutions.
[846D] 6.
Section 45 (1) (bb) of the Reserve Bank Act defines 'deposit.
If there are enough sources of deposit there is no reason why the appellants and the writ petitioners cannot reduce the deposits.
The prescription of the two year period for reduction is therefore reasonable.
[847D] 7.
Moreover, similar directions cam to be issued as Miscellaneous Non Banking Companies (Reserve Bank) Directions.
If, therefore, this was the position, it cannot be contended that suddenly the companies like the appellants and the writ petitioners are called upon the reduce deposits.
Even otherwise, the interests of the depositors is the prime concern.
[847G, 849B] Kanta Mehta vs Union of India and others, Company Cases Vol.
62 1987 page 769, approved.
Chiney Bottling Co. Pw. Ltd. vs Assistant Registrar of Companies, Madras, page 770, disapproved.
DCM Ltd. vs U. O.I., ; ; Srinivasa Enterpries vs Union 835 of India; , ; State of West Bengal vs Swapan Kumar Guha ; ; R.K Garg vs Union of India ; and Fatehchand Himmatlal and others vs State of Maharashtra ; , referred to, Reserve Bank of India vs Peerless General Finance and Investment Co. Ltd, ; ; Peerless General Finance and Investment Co. Ltd vs Reserve Bank of India, @ 354; Delhi Cloth and General Mills vs Union of India; , at page 468 and Reserve Bank of India vs Timex Finance and Investment Co. Ltd., at page 354, referred to.
|
tition (Civil) No. 47 of 1992.
(Under Article 32 of the Constitution of India).
789 P.L Singal and NA.
Siddiqui for the Petitioner.
D.N. Dwivedi, Additional Solicitor General and Mrs. Niranjana Singh for the Respondent.
The Judgment of the Court was delivered by SHARMA CJ.
By the present application under Article 32 of the Constantine of India, the petitioner has challenged the constitutional validity of the Representation of the People (Amendment) Ordinance, 1992 (Ordinance No.1 of 1992) and the Representation of the people (Second Amendment) Ordinance, 1992 (Ordinance No.2 of 1992), on the grounds of violation of Articles 14, 19 and 21.
By the first Ordinance, section 52 of the Representation of the People Act, 1951 (the Act) providing for countermanding elections in certain circumstances has been amended.
By the second Ordinance the period of 20 days in section 30 of the Act has been reduced to 14 days.
Later, when the Parliament met, the amendments were incorporated by an amending Act.
2.The provisions of section 52, as they stood before the amendment, provided for countermanding the election in either of 2 contingencies (i) if a candidate whose nomination was found valid on scrutiny under section 36 or who has not withdrawn his candidature under section 37 died and a report of his death was received before the publication of the fist of contesting candidates under section 38, (ii) if a contesting candidate died and a report of his death was received before the commencement of the poll.
On countermanding the Returning Officer will have to report the fact to the Election Commission; and all proceedings with reference to the election will have to be commenced de novo in all respects as if for a new election.
By the first Ordinance, the area attracting the provisions of countermanding has been narrowed down by confining the provisions only to such cases where a candidate of a retired political party dies.
3.Section 30 deals with appointment of dates for nomination, scrutiny and the holding of poll and in clause (d) it is provided that the date of poll shall not be earlier than the twentieth day after the last date for the withdrawal of candidatures.
With a view to expedite the whole process the words 'twentieth day ' have been substituted by the words "fourteenth day" in the said clause by the impugned Ordinace.
790 4.
Learned counsel for the petitioner has strenuously contended that the distinction made by the impugned amendment between a candidate set up by a recognised political party and any other candidate is artificial inconsistent with the spirit of the election law and discriminatory.
The Constitution does not confer on a candidate set up by a registered political party any special right and treats all candidates similarly.
It does not recognize any categorisation.
It is, therefore, argued that the difference which is being introduced by the impugned amendment is contrary to the scheme of the Constitution and violative of the equality clause in Article 14.
According to the learned counsel this will also infringe the guarantee under Article 19(1)(a) in respect of freedom of speech and expression.
5.Elaborating his argument, the learned counsel contended that the right to choose its representative belongs to the voters of a particular constituency, and this should not be whittled down by amendments which have a tendency to undermine this element.
Lack of wisdom in giving importance to recognized political parties was emphasised by saying that such parties almost always impose their choice of candidates in their own interest and at the cost of the welfare of the constituencies.
By introducing this imbalance in the Act, it is stated, the republican character of the Constitution is jeopardised.
The sum and substance of the argument on behalf of the petitioner is that no distinction can be made between one candidate and another purely depending on recognition as a political party.
6.So far the second Ordinance is concerned, the objection is that the period of 14 days, substituted by the amendment, is too short and the reduction from the period of 20 days is arbitrary and prejudicial to the larger interest for which elections are held.
7.In reply, Mr. Altaf Ahmad, Additional Solicitor General, appearing on behalf of the Union of India has strongly relied upon the statements made in the counter affidavit filed on behalf of the respondent stating that on account of increase in terrorism and physical violence in several parts of the country combined with the phenomenal increase in the number of independent candidates, the danger of disruption of the election process has been fast growing and the problem was, therefore, taken up for serious consideration.
The issue was examined by the Electoral Reforms Committee set up in 1990 under the Chairmanship of the then Minister of law and 791 Justice, late Dinesh Goswami.
After studying the problem deeply and considering various points of view presented in this regard the.
Committee made its recommendation and, accordingly, the impugned amendment was made.
Explaining the urgency of introducing the amendment by an Ordinance (when Parliament was not in session) the counter affidavit states that it had then been decided to hold the General Elections to the House of People from the State of Punjab as also the election to the State Legislature of that State and having regard to the law and order situation prevailing in the State, it was considered essential to curb the danger of disruption of the election process by amending section 52 immediately.
With the same object in view, the period of 20 days mentioned in section 30 was substituted by 14 days.
8.Before proceeding to examine the merits of the argument addressed on behalf of the petitioner it will be useful to note that the right to vote or to stand as a candidate for election is neither a fundamental nor a civil right.
In England also it has never been recognised as a common law right.
In this connection, we may usefully refer to the following observations in,Jyoti Basu & Others vs Debi Ghosal & Others, A.I.R.1982 S.C.983 and 986 which reads as under : "The nature of the right to elect, the right to be elected and the right to dispute an election and the scheme of the constitutional and statutory provisions in relation to these rights have been explained by the Court in N.P. Ponnuswani vs Retuming Officer, Namakkal Constituency, ; : ; and Jagan Nath vs Jaswant Singh, ; We proceed to state what we have gleaned from what has been said, so much as necessary for this case.
A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a Common Law Right.
It is pure and simple, a statutory right.
So is the right to be elected.
So is the right to dispute an election.
Outside of statute, there is no right to elect, no right to be elected and no right to dispute an election.
Statutory creations they are, and therefore, subject to statutory limitation.
" 792 The objection raised by the petitioner, therefore, must be examined in this background.
9.The challenge of the petitioner is directed against the differential treatment which the election law in India gives to candidates set up by political parties.
The main thrust of the argument of the learned counsel is that the party system and the recognition of political parties is itself detrimental to the cause of real democracy.
In any event, no additional advantage ought to have been allowed to candidates set up by political parties.
This stand runs counter to the constitutional scheme adopted by the nation.
It has firmly been established that the Cabinet system of Government has been envisaged by our Constitution and that the same is on the British pattern.
(See Shamsher Singh vs State of Punjab; , at 827).
In England where democracy has prevailed for longer than in any other country in recent times, the Cabinet system of Government has been found to be most effective.
In the other democratic countries also the party system has been adopted with success.
It has been realised that for a strong vibrant democratic Government, it is necessary to have a parliamentary majority as well as a parliamentary minority, so that the different points of view on controversial issues are brought out and debated on the floor of the Parliament.
This can be best achieved by the party system, so that the problems of the nation may be discussed, considered and resolved in a constructive spirit.
To abolish or ignore the party system would be to permit a chorus of discordant notes to replace an organised discussion.
In his book "Cabinet Government" (2nd Edition page 16) Sir Ivory Jennings has very rightly said.
"Party warfare is thus essential to the working of the democratic system".
It is, therefore, idle to suggest that for establishing a true democratic society, the party system should be ignored.
Our Constitution has clearly recognized the importance of this system, which was further emphasized by the addition of the 10th Schedule to it.
The Election Symbols (Reservation and Allotment) Order is also a step in that very direction.
There is also no merit whatsoever in the contention that candidates set up by political parties should not receive any special treatment.
The fact that candidates set up by political parties constitute a class separate from the other candidates has been recognized by this Court in numerous cases.
In paragraph 14 of the judgment in the case of Dr. P.N. Thampy Terah vs Union of India [1985] Suppl.
SCC 189, the Constitution 793 Bench observed thus : "It is the political parties which sponsor candidates, that are in a position to incur large election expenses which often run into astronomical figures.
We do not consider that preferring political parties for exclusion from the sweep of monetary limits on election expenses, is so unreasonable or arbitrary as to justify the preference being struck down upon that gournd." In D.M.L. Agarwal vs Rajiv Gandhi, ; a Division Bench of this Court took note of and emphasized the vital role of political parties in a parliamentary form of democracy and anxiety was expressed about the growing number of independent candidates.
For the reasons indicated above, we do not find any substance in the argument of the learned counsel for the petitioner challenging the constitutional validity of the impugned amendment of section 52.
The argument against the reduction of the period of 20 days to 14 days in section 30 is equally without any merit.
The learned counsel could not suggest any good reason for holding that the period of 14 days would be inadequate or inappropriate, especially in the changed circumstances which are prevailing in the country.
Consequently, this writ petition is dismissed with costs assessed at Rs. 2,500 payable to the respondent Union of India.
N.V.K. Petition dismissed.
| The petitioner In his Writ Petition Under Article 32 of the Constitution of India, challenged the constitutional validity of the Representation of the People (Amendment) Ordinance, 1992 (Ordinance No. 1 of 1992), and the Representation of the People (Second Amendment) Ordinance, 1992 (Ordinance No.2 of 1992) on the grounds of violation of Articles 14, 19 and 21 of the Constitution of India.
The provisions of Section 52 of the Representation of the People Act, 1951 as they stood before amendment provided for countermanding the election In either of two contingencies: (1) If a candidate whose nomination was found valid on scrutiny under section 36 or who has not withdrawn his candidature under section 37 died and a report of his death was received before the publication of the list of contesting candidates under section 38, (II) If a contesting candidate died and a report of his death was received before the commencement of the poll.
By Ordinance No. 1 of 1992, the area attracting the provisions of countermanding in section 52 had been narrowed down by confining the provisions only to such cases where a candidate of a recognized political party dies.
787 Section 30 of the Representation of People Act, 1951 dealt with appointment of dates for nomination, scrutiny and the holding of poll, and in clause (d) it was provided that the date of poll shall not be earlier than the twentieth day after the last date for the withdrawal of candidatures.
With a view of expedite the whole process, the words 'twentieth day ' have been substituted by the words 'fourteenth day ' in clause (d) of Section 30 by the Second Ordinary viz. Ordinance No. 2 of 1992.
On behalf of the petitioner it was contended that the distinction made by the impugned amendment between a candidate set up by a recognised political party and any other candidate is artificial, inconsistent with the spirit of the election law and discriminatory, that the Con stitution does not confer on a candidate set up by a registered political party any special right, and treats all candidates similarly, and does not any categorisation, that the difference being introduced by the impugned amendment was contrary to the scheme of the Constitution and violative of the equality clause in Article 14, and that it also infringed the guarantee under Article 19(1) (a).
In respect of the Second Ordinance the objection was that the period of 14 days substituted by the amendment was too short, and the reduction from the period of 20 days was arbitrary and prejudicial to the larger interest for which elections are held.
The Petition was contested on behalf of Union of India by stating that on account of increase in terrorism and physical violence in several parts of the Country combined with the phenomenal increase in the number of independent candidates, the danger of disruption of the election process had been fast growing and the problem was, therefore, taken up, examined and it was considered that the amendments were essential to curb the danger of disruption of the election process.
Dismissing the Writ Petition, this Court, HELD : 1.
The right to vote or to stand as a candidate for election is neither a fundamental right nor a civil right In England also it has never been recognised as a common law right [791D] Jyoti Basu & Ors.
vs Debi Ghosal & Ors, ; and 986, referred to. 2.
The Cabinet system of Government has been envisaged by our 788 Constitution, and the same is on the British pattern.
In England, where democracy has prevailed for longer than in any other country in recent times, the Cabinet system of Government has been found to be most effective.
In other democratic countries also the party system has been adopted with success.
[792C D] Shamser Singh vs State of Punjab, ; at 827, referred to.
3.For a strong vibrant democratic Government, it is necessary to have a parliamentary majority as well as a parliamentary minority, so that the different points of view on controversial issues are brought out and debated on 'he floor of the Parliament.
This can be best achieved by the party system, so that the problems of the nation may be discussed, considered and resolved in a constructive spirit.
To abolish or ignore the party system would be to permit a chorus of discordant notes to replace an organised discussion.
[792E] Sir Ivor Jennings 'Cabinet Government 2nd Edn.
p.16, referred to.
4.Our Constitution has dearly recognised the importance of the party system, which was further emphasized by the addition of the 10th Schedule to it The Election Symbols (Reservation and Allotment) Order is also a step in that very direction.
[792F] 5.That candidates set up by political parties constitute a class separate from other candidates has been recognised in numerous cases by this Court which has also emphasized the vital role of political parties in a parliamentary form of democracy and expressed anxiety about the growing number of independent candidates.
[792H, 793C] Dr. P.N. Thampy Terah vs Union of India ; and D.M.L. Agarwal vs Rajiv Gandhi, ; , referred to.
6.The Representation of the People (Amendment) Ordinance, 1992 and theRepresentation of the People (Second Amendment) Ordinance, 1992 are constitutionally valid.
[789C]
|
mpt Petition No. 82 of 1992.
WITH Writ Petition No. 232 of 1992.
(Under Article 32 of the Constitution of India).
Vijay Kumar and Shiv Kumar Suri for the Petitioner/Applicant.
Milan K. Banerjee, Attorney General, D.P. Gupta, Solicitor General, V.C. Mahajan, Kapil Sibal, Mg.
A. Subhashii Gaurab Banarjee, K. Swamy, Ms. section Janani, S.K. Battacharya and L.K. Poonam for the Respondents.
The following Order of the Court was delivered: This matter came up for our consideration on December 8, 1992" pursuant to the order dated November 24, 1992, to decide the appropriate 774 order which needs to be made in the existing situation.
A brief resume of the events leading to the present stage may first be given.
This Court has held that the Speaker while deciding the question of disqualification of a Member of the Legislative Assembly under the Tenth Schedule to the Constitution acts as a statutory authority, in which capacity the Speaker 's decision is subject to judicial review by the High Court and this Court.
Pursuant thereto, certain orders were made by this Court in proceedings arising out of the order of disqualification of certain members, made by the contemner, Dr. H. Borobabu Singh who holds the office of Speaker of the Manipur Legislative Assembly, in spite of the clear decision of this Court that an order made under the Tenth Schedule by the Speaker relating to the disqualification of a Member of the Legislative Assembly is subject to judicial review and the Speaker while making an order under the Tenth Schedule acts merely as a statutory authority amenable to the court 's jurisdiction in that capacity, the contemner continued to resist the implementation of such orders made by this Court.
The petitioner, 1.
Manipal Singh was then the Secretary of the Manipur Legislative Assembly.
In his capacity as Secretary of the Assembly, the petitioner, 1.
Manilal Singh took steps to implement this Court 's orders.
The allegation made by 1.
Manilal Singh is that the contemner, Dr. H. Borobabu Singh got annoyed with him for or his attempt to secure obedience and implementation of this Court 's orders and, therefore, as an act of reprisal, the contemner has made an order of his compulsory retirement.
The petitioner, 1.
Manilal Singh, therefore, challenged the order of his compulsory retirement made by the contemner inter alia on the ground that it was mala fide being an act of reprisal by the contemner for the petitioner 's obedience of this Court 's orders.
This Court stayed the operation of the impugned order of compulsory retirement of the petitioner, I. Mandal Singh as well as the order of is sub is suspension passed by the contemner.
The petitioner then complained that in spite of this Court 's orders, the contemner was not permitting him of function as, the secretary of the Manipur Legislative Assewbly and was also not paying him his salary and other dues; and that another person had been appomted by the contemner to function as the Secretary.
On July 22, 1992, this Court made an order reiterating that the petitioner, 1.
Manilal Singh shall be allowed to function as the Secretary of the Manipur Legislative Assembly without delay and that all concerned with enable him to so function, and some further directions were also given 775 On August 4, 1992 another order was made by this Court as a result of the grievance made by the petitioner, I. Manilal Singh that in spite of the orders of this Court, he was neither allowed to function as the Secretary of the Legislative Assembly nor had he been paid his salary etc.
In that order, this Court further directed the Chief Secretary of the State of Manipur to ensure that the direction given for payment of dues to the petitioner was promptly obeyed.
When the matter was again taken up on August 25, 1992, the petitioner, I. Manilal Singh stated that another order had been made on August 19, 1992 declaring that the petitioner is to retire from service on August 31, 1992 as Joint Secretary which was in disobedience of this Court 's orders, and was a further act of reprisal against him by the contemner.
Accordingly, in the order dated August 25, 1992, this Court after recording that this action appears to be prima facie in violation of this Court 's order, stayed the operation of the order dated August 19, 1992.
The order after mentioning the statement made by the learned counsel for the Chief Secretary, H.V. Goswami expressed this Court 's concern at the apathy exhibited towards obedience of the mandate under Article 144 of the Constitution and after hearing all the counsel including Shri S.K. Bhattacharya, learned counsel for the contemner, directed that the Chief Secretary, H.V. Goswami, Deputy Secretary, Manipur Legislative Assembly, R.K. Chinglensana Singh and Dr. H. Borobabu Singh should be personally present in court at the next hearing which was fixed for September 8, 1992.
On September 8, 1992 the matter was adjourned to September 9, 1992.
On September 9, 1992, the Chief Secretary, Manipur, H.V. Goswami and R.K Chinglensana Singh, Deputy Secretary, Manipur Legislative Assembly were personally present.
On behalf of Dr. H. Borobabu Singh who did not appear, a request was made by his counsel, Shri Bhattacharya to adjourn the matter till after September 22, 1992 on the ground that the Manipur Legislative Assembly was in session.
The matter was, therefore, adjourned to September 25, 1992.
On September 25, 1992, in spite of earlier order in the contempt proceeding directing Dr. H. Borobabu Singh to appear in person, he did not appear.
His counsel.
Shri Bhattacharya filed an affidavit stating inter alia that Dr. H. Borobabu Singh is immune from such directions of the 776 court in view of his constitutional position as Speaker.
Accordingly, Shri Bhattacharya was heard on his objection which was found to be without substance.
On September 25, 1992, the Court while rejecting the contention of Shri Bhattacharya stated as under: ".
This is a case in which Dr. Singh 's function is not as a Speaker in the House.
The facts of the case which are on record in this matter clearly show that Dr. Singh was acting as Authority under the Tenth Schedule to the Constitution and in that capacity certain orders were passed which gave rise to the present contempt petition.
In a petition filed by the petitioner, Manilal Singh, directions issued by this Court relating to his service conditions which have, according to the allegations, not been respected by Dr. Singh.
In this context and background, we do not have any doubt that the capacity in which Dr. Singh was functioning was not that of the Speaker of the House, but as administrative head of the Secretariat of the Legislature in relation to the rights of one of the employees.
Accordingly, we hold that there is no merit at all in the plea raised regarding the jurisdiction of this Court and the objection is, therefore, rejected.
We asked Mr. G. Ramaswamy, learned Attorney General to examine the matter and indicate his opinion as to the enforceability of the directions of this Court requiring the personal appearance of Dr. H. Borobabu Singh in Court.
On earlier occasion also, learned Attorney General had indicated that this Court would have been justified in taking a far stricter view of the conduct of Dr. Singh and it is an appropriate case where it is not only within the power of this Court, but also its bounder duty to take such steps which will reassure the people of their faith in, and respect for the Institution, now that it is obvious that the indulgence granted so far to Dr. H. Borobabu Singh has been misplaced.
Mr. Altar Ahmed, learned Additional Solicitor General appearing for the Union of India fully supports the opinion and submission of learned Attorney General.
777 3.
Mr. Kapil Sibal who represents the Chief Secretary of Manipur also expressed his opinion on these lines. ' The remaining part of the order then considered the fact that Dr. H. Borobabu Singh was included as a Member of the Indian Parliamentary delegation to attend a conference abroad and the Court adjourned the matter to October 20, 1992 requiring the contemner, Dr. H. Borobabu Singh to give a written Undertaking, before he left the country that he would appear in the Court, and the Government of India was required to ensure compliance of that direction.
It is sufficient to mention that the contemner, Dr. H. Borobabu Singh did not give such an undertaking in spite of the persuasion of senior officers of the Government of India as well as the Union Home Minister, as appears from the documents filed on behalf of the Government of India.
Accordingly, the Government of India did not permit the contemner to leave the country.
When the matter was taken up on October 20, 1992, the contemner, Dr. H. Borobabu Singh did not appear in spite of the earlier direction given and the indulgence granted to him.
However, his counsel Shri Bhattacharya prayed for a short adjournment on the ground that he would be advising Dr. H. Borobabu Singh to file an unconditional affidavit to appear in person in court in pursuance to the direction of the court and to make a separate application for condoning his absence and exempting him from personal appearance in the court.
In spite of the background, we granted further indulgence to the contemner and accepting the request of Shri Bhattacharya adjourned the case to October 23, 1992 stating that if in addition to the unconditional affidavit to appear personally in the court pursuant, to the direction, a separate application, as indicated by Shri Bhattacharya, for condoning his absence and exempting him from personal appearance was filed by the contemner, the same would be considered on its merits.
At the request of Shri Bhattacharya, learned counsel for Dr. H. Borobabu Singh, we again adjourned the matter to November 12, 1992 recording his statement in the order as under : "Mr. S.K. Bhattacharya, the learned counsel for Dr. H. Borobabu Singh states that he has been instructed personally by Dr. H. B. Singh to make a statement in this Court that Dr. H.B. Singh will be filing his affidavit in the terms of our order of the last date.
We asked Mr. Bhattacharya 778 to clarify whether our order has been correctly understood that the affidavit has to be filed giving an unconditional undertaking to appear in this Court in pursuance of a direction by this Court and the application which Dr. H. B. Singh wants to make with a prayer for dispensing with his personal presence will be filed separately and be not a condition of the affidavit.
He states that the position has been correctly understood by Dr. H. B. Singh who has instructed Mr. Bhattacharya to state accordingly.
Mr. Bhat tacharya further states that the affidavit could not be filed today as Dr. H. B. Singh could not come to Delhi because of the prevailing deterioration of law and order situation due to insurgency in the eastern part of the country due to which he was advised by the authorities responsible for his security not to undertake a journey to Delhi at this stage.
He has also referred to the partial disruption in the air services between Manipur and Delhi.
Mr. Bhattacharya adds that the affidavit shall be filed by the 5th or the 6th November, 1992.
" When the matter was taken on November 12, 1992, the contemner, Dr. H. Borobabu Singh was again not present and the only thing done by him in the meantime was to file an affidavit dated November 6, 1992 indicating that he would not personally appear before the Court.
Thus, in spite of the clear statement made by Shri Bhattacharya on instructions of Dr. H. Borobabu Singh as stated by him and recorded in the order dated October 23, 1992, the contemner once again remained absent and neither filed the requisite affidavit containing his undertaking to appear nor made any application praying for condoning his absence and exempting him from personal presence for cogent reasons.
In these circumstances, it became necessary to consider the making of necessary consequential orders.
The matter was, therefore, adjourned to November, 24, 1992 to hear the learned Attorney General of India and all the other counsel appearing in the case for deciding the future course of action.
On November 24, 1992, the learned Solicitor General informed the Court that Mr. G. Ramaswamy had resigned from the office of Attorney General and, therefore, the matter may be adjourned to enable his successor in office to assist the court with his arguments.
The matter was, 779 therefore, adjourned to December 8, 1992.
On December 8, 1992 we have heard the learned Attorney General of India, the Solicitor General, on behalf of Union of India, Shri Kapil Sibal learned counsel for the Chief Secretary of the State of Manipur, Shri S.K Bhattacharya, learned counsel for the contemner, Dr. H. Borobabu Singh and learned counsel for the petitioner.
It may be mentioned that the contemner, Dr. H. Borobabu Singh has filed affidavits, the last being of December 7, 1992, making it amply clear repeatedly that he would not obey the orders of this Court directing his personal presence in the contempt matter nor would he make any application for condoning his absence and exempting him from personal presence for any cogent reasons.
The only reason indicated in the affidavit filed by Dr. H. Borobabu Singh and also reiterated by his counsel, Shri S.K. Bhattacharya is that by virtue of the office of Speaker of the Manipur Legislative Assembly held by Dr. H. Borobabu Singh, he is immune from the process of this Court even in a contempt proceeding where the direction for his personal presence has been given as a result of prima facie opinion formed by the court that he has wilfully disobeyed the orders of this Court in a capacity which does not relate to his functions as Speaker inside the House and has further deterred certain persons including the Chief Secretary of the State and officers of the Assembly Secretariat from acting in aid of this Court 's directions/orders in addition to taking ad ministrative action against the petitioner.
Manilal Singh, Secretary of the Manipur Legislative Assembly as an act of reprisal for his acting in aid of this Court 's orders.
This stand has been taken and continues to be persisted in spite of the contention being considered and rejected expressly on merits including in the order dated September 25, 1992.
The question, therefore, is of the action to be taken and the kind of order which it would be appropriate to make in these circumstances for implementation of this Court 's orders, to uphold the majesty of law for preservation of the 'rule of law.
The learned Attorney General submitted that the undisputed facts and the unequivocal stand taken by the contemner, Dr. H. Borobabu Singh leave no doubt about his wilful and contumacious disregard and disobedience of this Court 's orders which is without any doubt by itself sufficient to constitute criminal contempt of this Court.
The learned Attor 780 ney General submitted that apart from the power which this Court has under the and the Rules framed thereunder, the power of this Court under several provisions of the Constitution of India is wide enough to indicate that the procedure available to it for ensuring compliance of its orders directing the personal presence of the contemner, Dr. H. Borobabu Singh are not confined merely to the provisions in the and the Rules framed thereunder.
The learned Attorney General added that all steps considered necessary to ensure compliance of this Court 's order requiring the personal presence in this Court of the contemner, Dr. H. Borobabu Singh, are available to this Court which has a constitutional obligation to uphold the rule of law.
He submitted that the stage has now reached when this step can no longer be avoided due to the continuing contemptuous conduct of the contemner in persistently refusing to obey this Court 's orders requiring his personal presence in this contempt matter.
The learned Attorney General added that this Court also has the power to direct the Government of India to take the necessarily to produce the contemner, Dr. H. Borobabu Singh in this Court if the ordinary course of requiring a magistrate to produce him in the court is considered inappropriate in the present case.
The learned Solicitor General of India on behalf of the Government of India supported the submissions of the learned Attorney General of India and assured us that in case the Court considered it necessary to direct the Government of India to take the necessary steps to produce the contemner.
Dr. H. Borobabu Singh the direction would be duly and promptly complied with Shri Kapil Sibal on behalf of the Chief Secretary of the State of Manipur also supported the submission and so did the counsel for the petitioner, 1.
Manilal Singh, Shri S.K Bhattacharya, learned counsel for the contemner, Dr. H. Borobabu Singh reiterated the stand taken by the contemner that by virtue of the office of the Speakar which he holds, he is immune from the court 's process even in a contempt matter like this which does not relate to his function as Speaker inside the House.
The undisputed facts expose the conduct of the contemner, Dr. H Borobabu Singh, evident from the statement contained in his affidavits filed in this Court refusing to obey the orders of this Court directing him to appear in person in this Court to enable the hearing of the contempt proceedings against him, after the tentative opinion formed by this Court that his wilful and contemptuous violation of this Court 's orders and 781 deliberate obstruction of the persons acting in the aid of this Court 's orders coupled with his act of reprisal against the Secretary of the Legislative Assembly for obeying the orders made by this Court make out prima facie case of 'criminal contempt ', was recorded in the orders made in the presence of his counsel and known to him.
The contemner had refused to accept the notices sent to him directly but continued to be represented by counsel Shri S.K Bhattacharya through whom he communicated with the Court, in addition to filing some of his own affidavits to clearly indicate his refusal to appear in Court.
The only reason given by him, through counsel and in his affidavits is, that he being Speaker of a Legislative Assembly, is immune from process of court even in such a proceeding The present situation arises as a. result of repeated and emphatic refusal of the contemner to appear in person in this Court after due notice of the fact that his presence is required before the court on the date fixed for the hearing of the contempt proceeding to answer this charge of criminal contempt committed by him by acts done which were not per formed as a Speaker within the House.
Reference may now be made to some provisions of law applicable to the situation as indicated by the learned Attorney General and the other counsel supporting his submissions.
"The Rules to Regulate Proccedings for Contempt of the Supreme Court, 1975 ' framed by this Court provide in Rule 3 that the Court may take action even suo motu in such a matter.
Rule 6 requires the contemner, unless otherwise ordered, to appear in person before the Court as directed on the date fixed for hearing of the proceeding and to continue to remain present during hearing till the proceeding is finally disposed of by order of the Court.
Rule 10 provides that the Court may direct the Attorney General or the Solicitor General to appear and assist the Court.
It is in this manner that the Attorney General was directed to appear.
and assist the Court which the Solicitor General appeared in this matter for the Union of India.
Rule 11 provides that the Court may, if it has reason to believe, that the person charged is absconding or is otherwise evading service of notice, or if he fails to appear in person or to continue to remain present in person in pursuance of the directions, direct a warrant bailable or non bailable for his arrest, addressed to one or more police officers and the warrant shall be executed by the officer or officers to whom it is 782 directed.
These Rules, therefore, provides for procuring the personal appearance of the contemner in this Court if the Court has reason to believe that the contemner is evading service or he fails to appear in person in spite of the directions of this Court.
In the present case, the contemner 's repeated and categorical refusal to appear in this Court in spite of this Court 's orders and grant of considerable indulgence to him till now is clear from the statements made in his affidavits and through his counsel who has appeared for him throughout.
The learned Attorney General, the learned Solicitor General and Shri Kapil Sibal are right in their submission that the power of this Court in such matters is not confined merely to the provisions of the and the Rules framed thereunder but is plenary to punish any person for contempt of court, and for that purpose to require his presence in person in this Court in the manner considered appropriate in the facts of the case.
They refer particularly to Articles 129 and 142 apart from Article 145 of the Constitution of India.
Article 129 says that the Supreme Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself Article 142 provides for enforcement of decrees and orders of Supreme Court and lays down that the Supreme Court shall have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents, or the investigation or punishment of any contempt of itself, Article 141 declares the binding effect of the law declared by the Supreme Court which is a clear provision to indicate that the meaning of 'law ' is to be understood as declared by the Supreme Court.
Obviously, it is not for any one else including the Speaker to decide what the 'lay/ is, and make an interpretation of the 'law ' contrary to the declaration of law made by the Supreme Court.
Article 144 contains the constitutional obligation of all authorities in the territory of India to act in aid of the Supreme Court.
These provisions are well known and they are mentioned in this order once again in the, present case merely for the benefit of the contemner who has wilfully and deliberately refused to obey and ignored not merely the orders of this Court but has also chosen to ignore the provisions in the Constitution itself, to which he must have sworn allegiance before taking his seat as a Member 783 of the Manipur Legislative Assembly.
The contention of the contemner 's immunity from the process of this Court even in a contempt proceeding, wherein a prima facie case of criminal contempt is made out against him, requiring his personal presence to answer that charge and to be present at the hearing, hinted by the contemner in his affidavits and raised by his counsel is totally misconceived, and this was indicated to his counsel repeatedly.
The immunity given by Article 381 of the Constitution is not to a Speaker and no other provision supports this submission.
From the documents filed by the Union of India, it is evident that even the Union Home Minister has strongly advised the conteimner to desist from the course he has chosen to adopt and to obey the orders of this Court, which is his constitutional obligation.
The present Attorney General as well as his predecessor in office and the Solicitor General have also categorically and repeatedly expressed their opinion that it is the duty of the contemner to obey the orders of this Court and appear in this Court in person as directed.
Shri Kapil Sibal who appears for the Chief Secretary of the State of Manipur has also expressed the same view in his submissions.
After hearing learned counsel at laugh on December 8, 1992 we had reserved the order for further reflection.
On further and in depth consideration of this matter on account of the fact that the contemner also happens to occupy the office of Speaker of a Legislative Assembly, we find that there is no escape from the obvious and logical conclusion emerging from the submissions made by the learned Attorney General of India and endorsed by the learned Solicitor General of India and Shri Kapil Sibal.
While we reach this unfortunate decision in discharge of our constitutional obligation, we draw some solace from the fact that this situation is the creation of the contemner, Dr. H. Borobabu Singh himself who continues to persist in his contumacy by repeatedly declaring that he would not obey the orders of this Court directing his personal appearance to participate in the contempt proceedings against him.
It is unfortunate that a person who holds the constitutional office of Speaker of a Legislative Assembly has chosen to ignore the constitutional mandate that this country is governed by the 'rule of law and what the law is, is for this Court to declare in discharge of its constitutional obligation which binds all in accordance 784 with Article 141 of the Constitution of India and Article 144 then says that all authorities are to act in aid of the orders made by this Court.
The contemner has chosen to ignore also the obvious corollary of rule of law that no person is above law.
Having done our best to make the contemner see reason and be present by granting him indulgence repeatedly to the extent that the learned Attorney General of India at one of the earlier stages said that our indulgence and leniency was being construed as the weakness of the court, we are constrained to now take the only appropriate and logical course to which the court is driven in these circumstances.
That obvious course is to require the production of the contemner, Dr. H. Borobabu Singh in person before this Court, giving such a direction to the authority considered to be appropriate, in the circumstances of the case, to ensure compliance of this order.
It is our constitutional duty which requires us to make this order, to uphold the majesty of law and justify the confidence of the people, that no one in this country is above the law and governance is not of men but of the 'rule of law.
It is unfortunate that this action has to be taken against a person who happens to be the Speaker of a Legislative Assembly, but that does not permit us to apply the law differently to him when he was wilfully and contumaciouly driven the court to this course.
We must remind ourselves that the 'rule of law ' permits no one to claim to be above the law and it means 'be you ever so high the law is above you. ' It was said long back : 'to seek to be wiser than laws, is forbidden by the law.
We are also of the opinion that the issuance of a direction to any Magistrate to produce the contemner in this Court would be merely an exercise in futility in view of the obvious conduct of the contemner which includes the threat even to the Chief Secretary of the State as indicated by him.
The learned Solicitor General of India appearing for the Union of India submitted that in case it is considered appropriate to issue such a direction to the Government of India, necessary action in this behalf would be taken by the Government of India to comply with the order.
We have no doubt that in the existing situation to which this Court has been driven by the wilful and contumacious conduct of the contemner himself, the only appropriate order to make is to direct the Government of India to produce the contemner, Dr. H. Borobabu Singh in person in this Court on the next date of hearing, taking such steps as are necessary for the purpose direct, accordingly.
It is further clarified that the Government of India 785 would be entitled to take all such steps, which are necessary including the use of minimilm force which may be required, for compliance of this Court 's order directing the production of the contemner in this Court.
A copy of this order be sent forthwith by the Registrar (Judicial) to the Home Secretary, Government of India for prompt compliance.
The next date of hearing is fixed for March 23, 1993 on which date the Government of India must produce the contemner, Dr. H. Borobabu Singh before this Court.
List on March 23, 1993.
ORDER In obedience to the earlier directions of this Court, Dr. H. Borobabu Singh is present in person in Court.
We take note of his earlier affidavit filed on 18.3.93 that he has fully complied with all the orders and directions relating to the case of Manilal Singh.
Dr. Singh has also expressed regret for the unhappy events.
We appreciate this gesture on his part, though he could have done the same much earlier.
We take note of this and drop all further proceedings in the matter.
These contempt proceedings, therefore, come to an end.
N.V.K Petitions dropped.
| Dr. H. Borobabu Singh, the first respondent in the Contempt Petition held the office of Speaker of Manipur Legislative Assembly.
This Court having held that the Speaker while deciding the question of disqualification of a Member of the Legislative Assembly under the Tenth Schedule to the Constitution acts as a statutory authority, in which capacity the Speaker 's decision is subject to judicial review by the High Court and this Court, made certain orders quashing the disqualification of certain members of the Manipur Legislative Assembly.
In spite of the clear decision of this Court it was submitted, the contemner continued to resist the Implementation of such orders made by this court.
petitioner In the contempt petition 1.
Manilal Singh was then the of the Manipur Legislative Assembly, and as the Secretary be took steps to implement this Court 's orders.
The allegation made by him was that the contemner Dr. H. Borobabu Singh got annoyed with him for his attempt to secure obedience and implementation of this Court 's orders and, therefore, as an act of reprisal, the contemner had made an 769 770 order of his compulsory retirement.
The petitioner challenged the aforesaid order of his compulsory retirement, alleging that it was mala fide being an act of reprisal by the contemner for the petitioner 's obedience of this Court 's orders.
This Court stayed the operation of the order of compulsory retirement as well as the order of suspension passed by the contemner.
The petitioner then complained that the contemner was not permitting him to function as the Secretary of the Manipur Legislative Assembly, and was also not paying him his salary and other dues; and that another person had been appointed by the contemner to function as the Secretary.
On July 22, 1992, this Court made an order reiterating that the petitioner shall be allowed to function as the Secretary of the Manipur Legislative Assembly without delay and that all concerned will enable him to so function.
Further directions were also given.
As a result of the grievance made by the petitioner that in spite of the orders of this Court, he was neither allowed to function as the Secretary nor paid his salary etc.
another order was made on August 4, 1992 directing the Chief Secretary of the State to ensure that the direction given for payment of dues was promptly obeyed.
On August 25, 1992 the Court after recording that the action to retire the petitioner from service on August 31, 1992 as Joint Secretary appeared to be prima facie in violation of the Court 's order, stayed the operation of the order, expression its concern at the apathy exhibited towards obedience of the mandate under Article 144 of the Constitution, and after hearing all the counsel made an order directing that the Chief Secretary, Deputy Secretary of the legislative Assembly and the contemner should be per sonally present in Court at the next hearing in September 9, 1992.
On the aforesaid date the Chief Secretary and the Deputy Secretary were personally present, but on behalf of the contemner his Counsel sought an adjournment till September 22, 1992 on "he ground that the Manipur Legislative Assembly was in session, which was granted.
On September 25, 1992 the contemner did not appear in person but his Counsel filed an affidavit that he is immune from the directions of the Court in view of his constitutional position as Speaker.
The Court heard 771 the Counsel and rejected the contention and adjourned the matter to 20, 1"2 the contemner to give a written undertaking before be left the country as a member of the Indian parliamentary delegation that he would appear in the court.
The contemner did not give the aforesaid undertaiking and when the matter was taken up on November 12, 1M, the contemner was not present and the only thing done by him was to Me an affidavit dated November 6, 1992 indicating that he would not personally appear before the Court In the aforesaid circumstances and having regard to the attitude adopted by the contemner It became necessary for the Court to consider the making of necessary consequential orders to secure the presence of the contemner.
It accordingly heard arguments on December 8, 1992.
The Attorney General of India submitted that the undisputed and the unequivocal stand taken by the contemner left no doubt about his wilful and contumacious disregard and disobedience of the Court 's orders which is without any doubt by Itself sufficient to constitute criminal contempt of this Court.
That, apart from the power which this Court has under the and the Rules framed thereunder, the powers of this Coon under several provisions of the Constitution of India is wide enough to indicate that the procedure available to It for ensuring compliance of it,; orders Includes the taking of all steps considered necessary to ensure compliance of this Court 's orders which is a constitutional obligation of the Court, to uphold the role of law , and that the Court also had the power to direct the Government of India to take the necessary steps to produce the contemner in the Court if the ordinary course of requiring a Magistrate to produce him In the Court Is considered inappropriate.
The Solicitor General of India on behalf of the Government of India; and the Counsel for the Chief Secretary and the petitioner supported the submissions of the Attorney General, while the Counsel for the contemner reiterated the stand taken by the contemner, that by virtue of the office of the Speaker which he holds, he is immune from the Court 's process even in a contempt matter which does not relate to his function as Speaker inside the House.
Directing the production of the contemner Dr. H. Borobabu Singh before the Court on March 23, 1"3.
HELD : 1.
The undisputed facts expose the conduct of the contemner, Dr. H. Borobabu Singh, in refusing to obey the orders of this Court 772 directing him to appear in person in this Court to enable the hearing of the contempt proceedings against him, after the tentative opinion formed by this Court that his wilful and contumacious violation of this Court 's orders and deliberate obstruction of the persons acting in the aid of this Courts orders coupled with his act of reprisal against the Secretary of the legislative Assembly for obeying the orders made by this Court, make out a prima facie case of ' contempt, as recorded in the orders made and known to him.
[780G H, 781A] 2.The contemner 's repeated and categorical refusal to appear in person in this Court in spite of this Court 's orders and grant of considerable indulgence to him is clear from the statements made in his affidavits and through his counsel, who has appeared for him throughout [782B] 3.
From the documents filed by the Union of India, it is evident that even the Union Home Minister has strongly advised the contemner to desist from the course he has chosen to adopt and to obey the orders of this Court, which is his constitutional obligation.
[783C] 4.
Articles 141, 142 and 144 of the Constitution are well known and they are mentioned for the benefit of the contemner who has wilfully and deliberately refused to obey and ignored not merely the orders of this Court but has also chosen to ignore the provisions in the Constitution itself, to which he must have sworn allegiance before taking his sent as a Member of the Manipur Legislative Assembly.
[782H] 5.
The immunity given by Article 361 of the Constitution is not to a Speaker and no other provision supports the submission made by the contemner.
It is unfortunate that a person who holds the constitutional officer of Speaker of a Legislative Assembly has chosen to ignore the constitutional mandate that this country is governed by the 'rule of law, and what the law is, is for this Court to declare in discharge of Its constitutional obligation which bind all in accordance with Article 141 of Constitution of India, and Article 144 then says that all authorities a are to act in aid of the orders made by this Court.
The contemner has chosen to ignore also the obvious corollary of rule of law that no person is above law.
[782F G] 773 7.
Having doen its best to make the contemner see reason and be present by granting indulgence repeatedly, to the extent that the Attorney General said that the indulgence and leniency was being construed as the weakness of the Court, this Court is constrained to now take the only appropriate and logical course to which the Court is driven in these circumstances, viz. to require the production of the contemner Dr. H. ' Borobabu Singh in person before this Court It is the constitutional duty ' of this Court to uphold the majesty of law and justify the confidence of the people, that no one in this country is above the law and governance is not of men but of the 'rule of law '.
[783B D] 8.The Government of India is directed to produce Dr. H. Borobabu ' Singh in person in this Court on the next date of hearing taking such steps as are necessary for the purpose.
The Government of India would be entitled to take all steps, which are necessary including the use of minimum force which may be required for compliance.
[784H, 795A] 9.
A copy of the order to be sent forthwith by the Registrar (judicial) to Home Secretary, Government of India for prompt compliance.
The next, date of hearing fixed for March 23, 1993.
[785B]
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