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Appeal No. 841 of 1974.
Appeal by Special Leave from the Judgment and Order dated 30 3 1970 of the Kerala High Court in Writ Appeal No. 39/70 and Civil Appeal No. 1575 of 1970.
Appeal by Special Leave from the Judgment and Order dated 22 12 1969 of the Kerala High Court in O.P. No. 211/65, 939 V. Sivarama Nair and ,4.
section Nambiar for the Appellants in both :the Appeals.
M.C. Bhandare and K.M.K. Nair for Respondent No. 1 in CA 841 and R. 2 in CA 1575/70.
(Mrs.) Shyamla Pappu and Girish Chandra for Respondent No. 1 in CA No. 1575/70.
K.S. Ramanurthi, N. Sudhakaran and P.K. Pillai for Respondent No. 45 in CA 1575/70.
The Judgment of the Court was delivered by CHANDRACHUD, J.
Since these two appeals involve identi cal questions, we propose to state the facts of one of these only.
The decision in Civil Appeal No. 1575 of 1970 will govern the other appeal.
The three appellants were .appointed as temporary Junior Engineers in the Madras High Way Subordinate Service under rule 10(a)(i)(1) of the Madras State and Subordinate Serv ices Rules.
Appellants 1 and 2 were appointed on June 6 and June 8, 1951 respectively while the third appellant was appointed on June 30, 1950.
A few years later they were appointed to the very same posts after selection by the Public Service Commission and in course of time, orders were issued under rule 23(a) of the aforesaid rules permit ting them to commence their probation from dates anterior to the dates of their appointments after selection by the Public Service Commission but subsequent to the dates of their initial 'appointments under rule 10(a)(i)(1).
The first appellant was permitted to commence his probationary period on July 4, 1954, the second on July 18, 1954 and the third on March 15, 1953.
On November 1, 1956, on the reorganisation of States, appellants were allotted as Junior Engineers to.
the Kerala State.
which was formed by inclusion therein of parts of the States of Madras and Travancore Cochin.
As in other States, so in Kerala, it became necessary to fix rules of seniority governing employees drawn from different States, parts of which were integrated in Kerala.
A conference of Chief Secretaries of various States was held on May 18 and 19, 1956, to consider problems arising out of reorganisation of States and the consequent integration of services.
Pursuant to the decision taken in that Conference, the Government of Kerala passed an order on December 29, 1956 providing that the relative seniority as between persons drawn from different States and holding posts declared to be equivalent shall be determined by considering the length of continuous service in the equated grade, whether such serv ice is temporary or officiating, quasi permanent or permanent.
The order, however, expressly provided that in the aforesaid determination, the period for which an ap pointment was held "in a purely stop gap or emergency ar rangement" was to be excluded.
On April 3, 1957 the.
Gov ernment of India issued a directive under section 117 of the States ReorganisatiOn Act stating that it was agreed that in determining the relative seniority as between two persons holding posts declared as equivalent to each other and drawn 'from different States the length 12 206sC1/77 940 of continuous service, whether temporary or permanent, in the particular grade should be taken into account, exclud ing "periods for which an appointment is held in a purely stop gap or fortuitous arrangement.
" On April 2, 1958 the Government of Kerala issued a clarificatory order stating that for computing length of continuous service "only short periods for which an appointment was held in purely stop gap or emergency appointment will be excluded.
" It issued another order on August 16, 1961 stating that one year of temporary service of Junior Engineers allotted from Madras would be excluded for the purposes of fixing their inter state seniority.
Representations were made against this order to the Government Of India which directed by an order dated March 1, 1962 that services rendered under provisional or emergency appointments by the Travancore Cochin or Madras personnel prior to November 1, 1956 before regulari sation of their appointments should be taken into account for the purposes of deciding interstate seniority, only if such service is either regularised, or it is in a time scale of pay and is reckoned for grant of increments in the time scale and is continuous.
On May 16, 1962 the Govern ment of Kerala passed an order modifying its earlier orders so as to conform to the decision taken by the Government of India on March 1, Consequently, in October 1962 a provi sional integrated gradation list of Junior Engineers was prepared by the State Government giving to the appellants ranks therein at serial nos.
145, 137 and 123 respectively.
Employees drawn from the Travancore Cochin area being evidently prejudiced by the decision of the Kerala Govern ment made representations to the Government of India which, on February 16, 1963 recommended three alternatives for the acceptance of Kerala Government.
The first alternative thus recommended was that the officers allocated to Kerala from the former Madras State may be allowed the benefit of emer gency service towards seniority in the equated category if such service would have been regularised from the date of their emergency appointment and if it would have been count ed for interstate seniority on November 1, 1956, had these officers remained in Madras.
The second alternative was that the principles laid down by the Government of Madras in their order dated July 17, 1957 be accepted.
By the third alternative it was stated that the Government of India would have no objection even if the State Government was to adopt the rule that interstate seniority would be determined on the basis of the length of continuous service in the equated grade subject to the exclusion of service rendered in purely stop gap or emergency arrangements and that only short periods for which appointment was held under such arrangements should be excluded.
On May 10, 1963 the Government of Kerala passed an order adopting the first two alternatives but not the third.
The appellants thereafter field a writ petition in the Kerala High Court which was disposed of in December 1964 by directing them to file representations to the Government of India on the basis of a certain decision rendered by the High Court earlier.
The appellants accordingly made repre sentations and on.
those being rejected, they filed a writ petition in the High Court in August 1965.
That writ peti tion having been dismissed, they have filed this appeal by special leave.
941 The question which arises for decision is whether the services rendered by the appellants under rule 10(a) (i) (1) of the Madras State and Subordinate Services Rules must be taken into account for the purpose of fixing.
their seniori ty in the service of the Kerala Government as from November 1, 1956.
It is urged on behalf of the appellants that the aforesaid service ought to be taken into account because such service can be taken into account under rule 23, sec ondly because such service is not liable to be excluded by reason of the directives issued earlier by the Government of India and thirdly because if the appellants had remained in Madras, the temporary service rendered by them would have been taken into account for fixing their seniority.
Counsel for the appellants says that they were granted increments from the date of theft initial appointments, that the temporary service rendered by them was counted for the.
purpose of eligibility for promotion to the higher post of Assistant Engineers, that they were duly qualified to hold the post of Junior Engineers, that they were entitled and permitted to appear for departmental tests which are open only to the probationers, that their service books were opened from the data of their initial appointments, and that the concurrence of the Public Service Commission was ob tained for continuing them in service after the expiry of three months and then again after the expiry of one year.
These facts and circumstances, according to the appellants, would justify the counting of temporary service rendered by them for the purpose of fixing their seniority.
Having given every consideration to these matters we think it impossible to accept the appeal.
A fact of funda mental importance which permeates every one of these consid erations is that the appellants were appointed under rule 10(a)(i)(1) of the Madras State and Subordinate Services Rules which runs thus: "10.
Temporary appointments. (a)(i)(1) Where it is necessary in the public interest owing to.
an emergency which has arisen to fill immediately a vacancy in a post borne on the cadre of a service, class or category and there would be undue delay in making such appointment in accordance with these rules and the Special Rules, the appointing au thority may temporarily appoint a person, otherwise than in accordance with the said rules.
" This provision contemplates the making of temporary appoint ments when it is necessary in the public interest to do so owing to an emergency which has arisen for filling a vacancy immediately.
Such appointments, in terms, are permitted to made otherwise than in accordance with the rules.
The letters of appointment issued to the appellants mention expressely that they were appointed under rule 10(a) (i)(1), that the appointments were "purely temporary necessitated on account of the non availability of regularly selected candi dates conferring no claim for future appointment as Junior Engineers . and that the appointment is liable to be terminated at any time without previous notice.
" In face of the provisions of the rule and the terms of the appointment it seems to us clear that the appellants Were appointed purely as a matter of stop gap or emergency arrangement.
Since 942 such service cannot be taken into account for purposes of seniority, the appellants cannot contend that the entire service rendered by them from the date of their initial appointment must count for purposes of seniority.
Clause (iii) of rule 10(a) makes 'this position clearer by providing that a person appointed under clause (i) shall, whether or ' not he possesses the qualifications prescribed for the service, be replaced as soon as possible by a member of the service or an approved candidate qualified to hold the post under the relevant rules.
The fact that the appellants were qualified to.
hold the posts cannot, there fore, entitle them to count for the purposes of seniority the period during which they served in a stop gap or emer gency arrangement.
Clause (v) of rule 10(a) provides that a person appointed under clause (i) shall not be regarded as a probationer, that he is not entitled by reason only of such appointment to any preferential claim to future appointment to the service .and that the services shall be liable to be terminated at any time without notice and without assigning any reason.
These provisions reflect significantly on the nature of the appointment held by the appellants and show that the appellants were appointed initially on a uniquely precarious tenure.
Such tenures hardly ever count for sen iority in any system of service jurisprudence.
It is now only necessary to consider the appellant 's argument that had they remained in Madras, their entire service would have counted for purposes of seniority.
In support of this argument reliance was placed on the corre spondence between the Governments of Kerala and Madras, but neither that correspondence nor a certain order dated June 11, 1960, which is at exhibit P 17 in the record, can avail the appellants.
In a way of saying, the proof of pudding is in the eating.
It is needless to speculate as to what course the appellants ' destiny would have taken had they remained in Madras, because the Government of Madras itself did not treat the entire service of the appellants as regular when they were selected by the Public Service Commission.
That parent government undoubtedly assigned to.
them artificial dates for fixing the commencement of their probationary periods but such dates, though anterior to the dates of their actual selection by the Public Service Commission, were quite subsequent to the dates of their initial appoint ment.
As stated earlier, the appellants were appointed initially in June 1951 and June 1950, but the Government of Madras, prior to the reorganisation of the States, had directed that their probationary periods should be deemed to commence in July 1954 and March 1953.
This shows that the services rendered by the appellants under rule 10(a)(i)(1) were treated by the Government which appointed them as a matter of stop gap, 'emergency or fortuitous arrangement.
The decision in C.P. Damodaran Nayar vs State of Kerala(1) on which the appellants ' counsel has placed reli ance for showing that temporary service of the kind rendered initially by the appellants can (1) ; 943 be counted for the purposes of seniority has no application to the instant case.
One of the appellants in that case was selected as a District Munsif by the Madras Public Service Commission and was posted as such on May 26, 1951.
He was in continuous service in than post since his appointment but on being allotted to the State of Kerala on November 1, 1956 his seniority was reckoned from October 6, 1951 on the footing that the said date was assigned to him as the date of commencement of his continuous service.
Dealing with the appeal arising out of the dismissal of his writ peti tion, this Court held that the service rendered by the appellant after his initial appointment was neither emergen cy service nor was it a purely stop gap or fortuitous ar rangement.
The distinguishing feature of that case, which is highlighted in the judgment of the Court, is that the appellant therein was "appointed in a regular manner through the Public Service Commission" and therefore his appointment could not "by any stretch of imagination" be described as having been made to fill a purely stop gap or fortuitous vacuum (p. 876).
In our case the initial appointment was not only made without any reference to the Public Service Commission but the various rules and the terms of the appel lants ' appointment to which we have drawn attention show that the appellants were appointed purely as a matter of fortuitous or stop gap arrangement.
The concurrence of the Public Service Commission to the continuance of the appel lants in the posts filled by them, first after the expiry of three months and then after the expiry of one year, was obtained not with a view to regularising the appointments since their inception but for the purpose of meeting the requirements of a provision under which such concurrence is necessary to obtain if an appointment made without selec tion by the Public Service Commission is required for any reason to be continued beyond three months or a year.
For these reasons we confirm the judgment of the High Court and dismiss this appeal.
There will be no order as to costs.
Civil Appeal No. 841 of 1974 will also stand dismissed but without an order of costs.
S.R. Appeals dis missed.
| The three appellants, who were appointed as temporary junior engineers in the Madras High Way Subordinate Service under rule 10(a)(i)(1) of the Madras State and Subordinate Services Rules on 13 6 1950, 6 6 1951 and 8 6 1951 respectively, on being selected by the Public Service Com mission and again appointed to the same posts were permitted by an order issued under rule 23(a) ibid to commence their probationary period with effect from 15 3 1953, 4th July, 1954 and 18th July 1954 respectively.
On 1 11 1956, on the re organisation of States, they were allotted as junior engineers in the Kerala State which was formed by inclusion therein of parts of the Slates of Madras and Travancore Cochin.
For the propose of fixing the interstate seniori ty, several orders were passed, from time to time, both by the Central Government and the Government of Kerala.
A provisional integrated gradation list of junior engineers was prepared by the State Government in October 1962 giving the appellants ranks therein at serial Nos. 123, 132 and 145 respectively.
On a representation by the employees of the Travancore Cochin area, the Government of India recommended three alternatives for the acceptance of the Kerala Govern ment on 16 2 1963.
They were: (1) The Officers allocated to Kerala from the former Madras State may be allowed the benefit of emergency service towards seniority in the equated category if such service would have been regula rised from the date of their emergency appointment and if it would have been counted for interstate seniority on Novem ber 1, 1956 had these officers remained in Madras.
(2) The principles.
laid down by the Government of Madras in their order dated July 17, 1957 be accepted and (3) The Government of India would have no objection even if the State Government was to adopt the rule that interstate seniority would be determined on the basis of the length of continuous service in the equated grade subject to the exclusion of service rendered in purely stop gap or emer gency arrangements and that only short periods for which appointment was held under such arrangements should be excluded.
The Government of Kerala passed an order on May 10, 1963 adopting the first two alternatives but not the third.
The writ petition filed by the appellants in the Kerala High Court challenging he said orders dated 10 5 1963 was rejected.
In appeal by special leave, the appellants contended: (1) The emergency service rendered under Rule 10(a)(i)(1) of the Rules ought to be taken into account because such service can be taken into account under Rule 23(a) ibid (ii) Such service is not liable to be excluded by reason of the directives issued earlier by the Government of .India on 3rd April 1957 and 1st March 1962, (iii) If the appellants had remained in Madras, the temporary service rendered by them would have been taken in.to account for fixing their seniority and (iv) Such service should count in view of the grant of increments to them from the date of their initial appointments in view of the temporary service rendered by them having been counted for the purpose of eligibility for promotion to the higher post of Assistant Engineers, they being duly qualified to hold the posts of Junior Engineers, they having been permitted to appear for departmental tests which are open only to the probationers, their service books having been opened from the. date of their appointment and the concurrence of the Public Service Commission having been obtained for continuing them in service after the expiry of three months and again after the expiry of one year of their emergency service.
938 Dismissing the. appeals, the Court, HELD: (1) A fact of fundamental importance which perme ates every one of these cOnsiderations is that the appel lants were appointed under rule 10(a) (i)(1) of the Madras State and Subordinate Services Rules.
In face of the provi sions of these rules and the express terms of their ap pointment, to the effect, "that appointments were under rule 10(a) (i) (1) purely temporary necessitated on account of the non availability of regularly selected candi dates, conferring no claim for future appointment as junior engineers and they were liable to be terminated at any time without previous notice", it is clear.
that the appointments were purely as a matter of stop gap or emergency arrange ment and such service cannot be taken into account for the purpose of seniority from the date of their initial appoint ment.
[941 E, H, 942 A] (2) Clauses (iii) and (iv) of rule 10(a) reflect signif icantly on the nature of the appointment held by the appel lants and show that the appellants were appointed initially on a uniquely precarious tenure.
Such tenures hardly even count for seniority in any system of service jurispru dence.
[942 C D] (3) The fact that the appellants were qualified to hold the posts cannot, in view of clause (iii) of rule 10(a) entitle them to count for the purpose of seniority the period during which they served in a stop gap or an emer gency arrangement.
[942 B] (4) The contention that if the appellants had remained in Madras their entire service would have counted for the purpose of seniority is without any merit and one of specu lation as to what course the appellants ' destiny would have taken had they remained in Madras.
The Government of Madras itself did not treat the entire service of the appellants as regular when they were selected by the Public Service Commission.
That parent government undoubtedly assigned to them artificial dates for fixing the commencement of their probationary periods but such dates, though anterior to the dates of their actual selection by the Public Service.
Com mission, were quite subsequent to the dates of their initial appointment.
The services rendered by them under rule 10(a) (i)(1) were treated by the Government which appointed them as a matter of stop gap, emergency or fortuitous arrange ment.
[942 D G] (5) The concurrence of the Public Service Commission to the continuance of the appellants in the post filled by them, first after the expiry of three months and then after the expiry of one year was obtained not with a view to regularising the appointments but for the purpose of meeting the requirements of a provision under which such concurrence is necessary to.
obtain if an appointment made without selection by the Public Service Commission is required for any reason to be continued beyond three months or a year.
[943 E F] (6) In the instant case, the initial appointment was not only made without any reference to the Public Service Com mission but the various rules and the terms of the appoint ment shove that the appellants were appointed purely as a matter of fortuitous or stop gap arrangement.
Their initial temporary services cannot therefore be counted for the purpose of seniority.
[943 B C] C.P. Damodaran Nayar vs State of Kerala ; , distinguished and held not applicable.
|
Civil Appeal No. 1800 of 1968 From the Judgment and order dated 20 10 1967 of the Delhi High Court in Civil Writ No. 1376 of 1967.
section N. Kacker, Sol.
Genl., section N. Anand and R. N. Sachthey for the Appellant.
V. M. Tarkunde and Gautam Goswami for Respondent No. 1.
Yogeshwar Prasad and (Mrs.) Rani Chhabra for the Interveners.
Ex parte against Respondents Nos. 2 and 3.
72 The Judgment of the Court was delivered by KOSHAL, J.
The facts giving rise to this appeal by the Delhi Administration on certificate granted by the High Court of Delhi against its judgment dated the 20th October 1967 in a petition under articles 226 and 227 of the Constitution of India (Civil Writ Petition No. 1376/ 67) are not in dispute and may be briefly stated.
The Governments of the States of Punjab and Delhi entered into an agreement about 3() years back providing for the running of public service vehicles in routes which covered each of the two States so that every one of such routes had one terminus in one of the States and the other in the other.
In pursuance of the agreement one of the Governments would issue permits under the (hereinafter referred to as the Act) and the same would be counter signed by the other State before the former plied its buses on the routes covered by such permits.
One such permit related to the Delhi Karnal route and was countersigned by the State Transport Authority Delhi in the following terms: "Countersigned for the portion of the route Delhi Karnal from 31 7 1967 to 30 11 1967 subject to the condition that tickets will be issued for the destinations bet wen Delhi and Karnal.
Destination board should be exhibited.
Bus will cover the full route and all other conditions applicable under Motor Vehicle Laws.
" Other permits for the Delhi Karnal route and other interstate routes were counter signed in the same terms.
The routes above mentioned were extended by the Punjab State authorities under permits granted by them for intra State routes connecting different towns in the State of Punjab itself.
Thus a permit was issued in favour of the Punjab roadways for the route from Karnal to Chandigarh so that the bus operating on the Delhi Karnal route would carry passengers from Delhi to Chandigarh via Karnal.
On the 25th July 1956, officers of the two States came to an agreement whereby the State of Punjab was given the right to extend its services on inter State routes to any town in the State of Punjab.
This agreement was subject to ratification by the Governments of the Two States, which`was, however, never accorded.
In the year 1966, the State of Delhi objected to the exploitation by the State of Punjab of the inter State routes in the manner above stated, that is, by extending them beyond the termini specified in that behalf under the counter signatures made by the State of Delhi and approached the Inter State Transport Commission (hereinafter called the commissions) constituted under sub section (1) of Section 63A of the Act with 73 a request for interference.
After hearing counsel for the two States the Commission passed an order dated 27th August, 1966, in favour of the State of Delhi. 'the operative part of that order alongwith the reasons listed by the Commission in support of it is extracted below: "Section 48(2) of the , prescribes that every stage carriage permit shall be expressed to B. be valid only for a specified route or routes of for a specified area.
It appears, therefore, that if a permit is expressed to be valid only for the one specified inter State route, the same transport vehicle covered by the same inter State permit can not be allowed to proceed further to another route with liberty to pick up passengers in route on a second route, which is C: an intra State route, as this would be in violation of the provisions of the Act.
There is no objection to the same vehicle running on another route under a different permit, but it would be objectionable if passengers who embark on the route covered by the inter State permit are given direct tickets to any town on the second route for which the vehicle holds on intra State permit.
The issue of scull a direct ticket would amount to extending the span to the inter State route, which is not permissible under the .
In other words, there can be no objecting to the linking of the two routes but this linking should not involve boarding of direct passengers, i.e., those holding one ticket for travel over both the routes on either of the two routes.
"On a careful consideration of the provisions of the , the Commission advise under Section 63A(2) (b) of the , that it would not be in order if one vehicle operating on two permits for two routes were to book direct passengers travelling on both the routes on direct tickets for places on both the routes.
Operations which would contravene this advice should be stopped and the services be so regulated to ensure that the provisions of the are not violated " The State of Punjab went up in appeal to the Inter State Trans port Appellant Tribunal (hereinafter called the 'Tribunal) under rule 24 of the Inter State Transport Commission Rules, 1960.
That appeal was dismissed on the 4th July 1967 through an order, paragraph 3 to 7 of which may be re produced for facility of reference: "3.
The learned counsel for the Delhi Administration replied that the issue of tickets was a condition of a permit under Section 48(3) (xiv) of the .
The 6 520SCI/78 74 inter State permit from Delhi to Karnal was, therefore, subject to the condition that tickets bearing specified particulars shall be issued to passengers and shall show the fares actually charged.
This must be construed to mean that the ticket which is issued as a condition attaching to a single permit would be restricted to the route or routes covered by that permit.
As the inter State route alone is covered by the permit which is countersigned by the Delhi Administration, the said permit would require the issue of a ticket only on the Delhi Karnal route but not beyond.
We think that the contention of the Delhi Administration is further supported by Section 42(1) of the under which no owner of a "transport vehicle" (which includes a stage carriage) shall use the vehicle in any public place, save in accordance with the conditions of a permit granted or countersigned by a Regional or a State Transport Authority authorising the use of the vehicle in that place in the manner in which the vehicle is being used.
The vehicle starting from Delhi on the Delhi Karnal route would be governed by the conditions of the inter State permit countersigned by the Delhi Administration.
The use of the vehicle at Delhi or, for the matter of that, at any place on the inter State route, must be governed by the conditions of the inter State permit alone.
We have already construed session 48(3) (xiv) to mean that the tickets which must be issued as a condition of the permit must relate to the route or routes or area covered by that permit.
It would follow therefore that tickets to be issued from Delhi could not be for any place which was beyond Karnal and, therefore, not covered by the inter State permit.
Learned Counsel for the Government of Punjab submitted that the Delhi Administration has countersigned only the inter State route covered by a permit issued by the Government of Punjab with the knowledge that the same permit was valid floor a further intra State route also.
however, cannot mean that the Delhi Administration are estopped from contending that under the conditions of the inter State permit, a ticket for a place beyond the Inter State route cannot be issued.
From the point of view of the convenience of the passengers, we would have liked the vehicle starting from Delhi to issue a long distance ticket to a place even beyond 75 Karnal so that the passengers starting from Delhi could A be assured of reaching their destination beyond Karnal.
Unfortunately, the attainment of this objective has been fettered by the existing provisions of the referred to above.
For the above reasons, therefore, we are of the view that the advice given by the Inter State Transport Commission was, on the whole, correct, though we have taken the liberty of adding to the reasons on which the advice could be supported.
The appeal is, therefore, dismissed." This order of the Tribunal was challenged by the State of Haryana (which had been carved out of the erstwhile State of Punjab in the meantime) in the petition under Articles 226 and 227 of the Constitution of India which we have mentioned above and which has been accepted by a Division Bench of the High Court of Delhi.
The High Court took note of the various provisions of the Act and concluded that there was no warrant for the proposition that tickets could not be issued at Delhi for stations beyond Karnal by the Haryana Roadways for a bus operating under a permit in respect of the Delhi Karnal route and that the Commission and the Tribunal had both erred in holding to the contrary.
The High Court observed that under clause (xiv) of sub section (3) of Section 48 of the Act, the Delhi State could impose conditions subject to which its countersignature in relation to a permit covering an inter state route was to be valid, but added that such.
conditions could only be those which were covered by that clause and no others.
It further found that no condition preventing the permit holder from issuing a direct ticket from Delhi to Chandigarh via Karnal was ever imposed by the State Transport Authority, Delhi, and also that such a condition could not be imposed inasmuch as (a) the same would not be relatable to the inter State route and (b) it would not be covered by clause (xiv) aforesaid.
It turned down a plea that the issuance of tickets from Delhi to Chandigarh by the Haryana Roadways affected the identity of the Delhi karnal route or amounted to its extension.
In the result, therefore, the High Court issued a writ of certiorari quashing the orders of the Commission and the Tribunal and restrained the Delhi Administration from interfering with the operation of the Stage carriages of the State of Haryana on the Delhi Haryana inter state routes on the plea that the issue of direct tickets beyond the terminal stations in Haryana on those routes was prohibited either by the provisions of the Act or by any condition attached by the State Transport Authority, Delhi.
Before us, the contentions raised on behalf of the appellant are: (1) The Regional Transport Authority, Delhi, had the power under sub sec.
(2) of Sec. 63 read with clause (xiv) above mentioned to impose, while according its counter signature to a permit relating to an inter State route, a condition to the effect that tickets shall not be issued for any station beyond the two specified termini and such a condition could be spelt out of the counter signature above extracted by necessary implication.
(2) The counter signatures covered only inter State routes having specified termini and the issuance of tickets by the Haryana Roadways for stations beyond the terminus located in the Haryana State and specified in a particular permit (which has been countersigned by the Delhi State authorities) amounted to an extension of the route which the Act did not permit.
We find no force in either of these contentions for the reasons which follow and which are substantially the same as advanced by the High Court in the detailed judgment under appeal.
Sub section (2) of Section 63 of the Act states: "(2) A Regional Transport authority when countersigning the permit may attach to the permit any condition which it might have imposed if it has granted The 'permit, .
and may likewise vary any condition attached to the permit by the Authority by which the permit was granted.
" The conditions which a Regional Transport Authority may attach to a permit while granting it are contained in clause (xiv) above mentioned which runs thus: (xiv) that tickers bearing specified particulars shall be is sued to passengers and shall show the fares actually charged and that records of tickets, issued shall he kept in a specified manner;" According to this clause, the conditions attached to the grant of a permit may be (a) that the tickets issued to passengers shall bear specified particulars; 77 (b) that the tickets shall show the fares actually charged; A and (c) that records of the tickets issue(l shall be kept in the manner specified.
None of these conditions embraces a restriction on the permit holder that he shall not ply his vehicle beyond the specified inter state route even if that is done under another permit which is valid according to law, and we, therefore, do not see how clause (vix) as above extracted read with sub sec.
(2) of section 63 of the Act helps the case of the appellant.
Nor can we agree with the plea that the counter signature above extracted could be construed as laying down a condition that the permit holder could not ply his vehicle beyond the specified terminus in the State of Haryana.
Learned counsel for the appellant has laid emphasis on the words "Tickets will be issued for the destinations between Delhi and Karnal.
Destination boards should be exhibited," and wants us to interpret them as implying a prohibition on the use of the concerned vehicles beyond Karnal.
We are of the opinion, however, that no such interpretation can be placed on them.
They merely lay down positive instructions which the permit holder had to carry out, namely, that he would not refuse the issue of a ticket between the two termini, i.e., Delhi and Karnal, and that he would also exhibit a board stating that the vehicle in question would cover the route from Delhi to Karnal.
Beyond that the words do not go and cannot be construed to mean that the vehicle could not ply beyond p Karnal or that a board saying that it was going to Chandigarh via Karnal cloud not be exhibited, or that tickets could not be issued for any stations except those lying between Delhi and Karnal.
In fact, the authority counter signing the permit had no concern at all with any route beyond Karnal.
The playing J of the vehicle from Karnal to Chandigarh would be governed not by the permit covering the Delhi Karnal route or by the counter signature on it but by another permit issued by the authority competent to deal with the route between Karnal and Chandigarh.
The first contention raised on behalf of the appellant is, therefore, found to be without substance.
We also find no force in the plea that the plying of vehicles by the Haryana Roadways beyond the inter State route under valid permits issued by the competent authority would amount to an 78 "extension" of the route such as is prohibited by the Act.
Reliance in support of the plea was placed on sub section
(8) of section 57 of the Act which lays down: "(8) An application to vary the conditions of any permit, other than a temporary permit, by the inclusion of Ba new route or routes or a new area or, in the case of a stage carriage permit, by increasing the number of trips above the specified maximum or by altering the route covered by it or in the case of a contract carriage permit or a public carrier 's permit, by increasing the number of vehicles covered by the Permit, shall be treated as an application for the grant of a new permit: Provided that it shall not be necessary so to treat an application made by the holder of a stage carriage permit who provides the only service on any route Or in any area to increase the frequency of the service so provided, without any increase in me number of vehicles.
" As pointed out by the High Court, the language of the sub section applies only to a case where the permit holder applies for the variation of the conditions of his permit by inclusion of a new route or routes or a new area or by increasing the number of services above the specified maximum.
In the case before us this situation does not arise at all inasmuch as the Haryana Roadways has not applied for the variation of any permit in any way and has, on the other hand, taken and exploited quite another permit for an entirely different route from another competent authority.
Apart from sub sec.
(8) above mentioned, we have not been referred to any provision of the Act in support of the plea under consideration which, therefore, fails.
Learned Counsel for the appellant drew our attention to a Possible unfortunate situation which might result from the conclusions which the High Court has reached and, in our opinion, reached rightly.
His apprehension was that in order to make more money and to avoid inconvenience to itself the Haryana Roadways, while operating under the permit pertaining to the Delhi Karnal route, would perhaps not issue any tickets to passengers bound for stations lying II in between Delhi and Karnal so long as it could find customers travelling directly from Delhi to Chandigarh and that in that event the real purpose of the counter signature would be wholly defeated.
We 79 would certainly not approve of such a situation but then it is nobody 's A case that the Haryana Roadways has been plying its buses on the Delhi Chandigarh route or, for that matter, any other route, in that fashion.
However, we may make it clear that if any long distance passengers are given preference over those leaving Delhi for a station lying between the termini specified in any permit bearing the countersignature of the Delhi State authorities, a peremptory condition attach ed to the counter signature would have been violated, and that State would be entitled to take such action as may be open to it under the law.
subject to this observation, the appeal fails and is dismissed, but with no order as to costs.
S.R. Appeal dismissed.
| The appellants are owners of theaters in the twin cities of Hyderabad and Secunderabad, where fulls are exhibited.
Within the same premises as the theaters, in every case, there is a canteen and a cycle stand, leased out to contractors under instruments of lease.
The contractors employ their own servants to run the canteen and the cycle stand.
In regard to persons so employed by the contractors the owners of the theaters were treated as 'principal employers ' and notices of demands were issued to them calling upon them to pay contribution under the Employees State Insurance Act.
Thereupon the appellant filed an application under section 75 of the Act before the Employees Insurance Court for a declaration that the provisions of the Act were not application to their theaters and that they were not liable to any contribution in respect of the persons employed in the canteen and the cycle stands attached to their theaters.
The Insurance Court found "that the canteens are meant primarily for the convenience and comfort for those visiting the cinema theaters though in a few cases the persons in charge of the canteens seem to be allowing the general public also to have access to the canteens" and that the cycle stands "are meant exclusively for the convenience of the persons visiting the theaters".
The Insurance Court held that the owners of the theaters were, therefore, principal employers with reference to the persons employed by the contractors in the canteens and the cycle stands attached to the theaters and rejected the application filed by the contractors under section 75 of the Act.
In appeal the High Court confirmed the said findings and hence the appeal by special leave.
Dismissing the appeal, the court ^ HELD: (1) Law is essentially the formal expression of the regulation of.
economic relations in society.
In view of the complexities of modern business organisations, 'the principal employer ' is made primarily liable for payment of contribution "in respect of every employee, whether directly employed by him or by or through an immediate employer," under the Insurance Act, the main purpose of which is to insure all employees in factories or establishments against sickness and allied disabilities, but the funding.
to implement the policy of insurance is by contribution from the employers and the employees.
The benefits belong to the employees and are intended to embrace as extensive a circle 81 as is feasible.
In short the social orientation, protective purpose and human A coverage of the Act are important considerations in the statutory construction, more weighty than mere logomachy or grammatical nicety.
[83A, 85G H, 86A B] (2) In the field of labour jurisprudence, welfare legislation and statutory construction which must have due regard to Part IV of the Constitution, a teleological approach and social perspective must play upon the interpretative process. 'The reach and range of the definition of 'employee ' in section 2(9) of the E.S.I. Act is apparently wide and deliberately transcends pure contractual relationships.
[88C] (3) Clause (9) of section 2 contains two substantive parts.
Unless the person employed qualifies under both he is not an employee.
Firstly he must be employed "in or in connection with" the work of an establishment.
The expres sion "in connection with the work of an establishment ' ' ropes in a wide variety of workmen who may not be employed in the establishment.
Some nexus must exist between the establishment and the work of the employee but it may be a loose connection.
"In connection with the work of an establishment" only postulates some connection between what the employee does and the work of the establishment.
He may not do anything directly for the establishment concerned; he may not clo anything statutorily obligatory in the establishment; he may not do anything which is primary or necessary for the survival or smooth running of the establishment or integral to the adventure.
It is enough if the employee does some work which is ancillary, incidental or has relevance to or link with the object of the establishment.
Surely, the amenity or facility for the customers who frequent the establishment has connection with the work of the establishment.
the question is not whether without theat amenity or facility the establishment cannot be carried on but whether such amenity or facility even peripheral may be, has not a link with the establishment.
Nor indeed is it legal ingredient that such adjunct should be exclusively for the establishment if it is mainly its ancillary.
C] The primary test in the substantive clause being thus wide, the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment.
A narrower constriction may be possible but a larger ambit is clearly imported by a purpose oriented interpretation.
The whole goal of the statute is to make the principal employer primarily liable for the insurance of kindred kinds of employees on the premises, whether they are there in the work or are merely in connection with the work of the establishment.
Merely being employed in connection with the work of establishment, in itself, does not entitle a person to be an "employee".
He must not only be employed in connection with the work of the establishment but also be shown to be employed in one or other of the three categories mentioned in section 2(9) (1).
[89D F] (4) section 2(9) (i) covers only employees who are directly employed by the 'principal employer '.
It is imperative that any employee who is not directly employed by the principal employer cannot be eligible under section 2(9) (i).
In the present case the employees concerned are admittedly not directly employed by the cinema proprietors.
[89F G] 82 (5) The language of section 2(9) (ii) is extensive and diffusive imaginatively embracing all possible alternatives of employment by or through an independent employer.
In such cases the principal employer has no direct employment relationship since the immediate employer of the employee concerned is someone else.
Even so such an employee if he works (a) on the premises of the establishment, or (b) under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the establishment or which is preliminary to the work carried on in or incidental to the purpose of the establishment", qualifies under section 2(9) (ii).
The plurality of persons engaged in various activities who are brought into the definitional net is wide and considerable and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent.
[89G H, 90A B] (6) A thing is incidental to another if it merely appertains to something else as primary.
Surely such work should not be extraneous or contrary to the purpose of the establishment but need not be integral to it either.
such depends upon time and place, habits and appetites, ordinary expectations and social circumstances.
Keeping a cycle stand and running a canteen are incidental or adjuncts to the primary purpose of the theatre.
[90D E] (7) May be punctilious sense of grammar and minute precision of language may sometimes lend unwitting support to narrow interpretation.
But language is the handmaid, not mistress.
Maxwell and Fowler move along different streets, sometimes.
It will defeat the objects of the statute to truncate its semantic sweep and throw out of its ambit those who obviously are within the benign contemplation of the Act, when, as in section 2(9) the definition has been cast deliberately in the widest terms and the draftsman has endeavoured to cover every possibility so as not exclude even distant categories of men employed either in the primary work or cognate activities.
Salvationary effort, when the welfare of the weaker sections of society is the statutory object and is faced with stultifying effect, is permissible judicial exercise.
The findings, in the instant case, arc correct and the conclusion reached deserves to be affirmed.
[90G H, 91A B] [In view of the fact that the contribution was determined without hearing under section 45 A of the ESI Act, the Court directed the Corporation authorities to give a, fresh hearing to the principal employers i.e. the employers in tune with the ruling of this Court in the Central Press case [19771] 3 SCR 351.
|
Civil Appeal No. 2601 of 1969.
Appeal by Special Leave from the Judgment dated 21 8 1069 of the Allahabad High Court in Second Appeal No. 2693/63.
W.S. Barlingay and R.C. Kohli for the Appellant.
S.L. Aneja and K.L. Taneja for the Respondent.
The Judgment of the Court was delivered by SARKARIA, J.
This appeal by special leave is directed against a judgment, dated August 21, 1969, of the High Court of Allahabad, affirming on second appeal the judgment of the Civil Judge, Dehra Dun.
It arises out of these facts: Umrao Singh, respondent herein, who died during the pendency of proceedings in this Court and is substituted by his legal representatives, instituted a suit on September 26, 1961 against Ram Deo, appellant herein, for damages and for eviction from House No. 122B, Choharpur, District Dehra Dun.
Umrao Singh was the landlord of the suit premises.
Ram Deo was occupying the premises at a monthly rent of Rs. 25.
On June 13, 1960, a sum of Rs. 600 was due to the respondent from the appellant as arrears of rent and an agreement was executed between the parties on that date, according to which the tenant had to pay Rs. 50 every month to the respondent, to wit Rs. 25 towards liquidation of the compounded arrears of rent, and Rs. 25 per month towards the current rent falling due.
The appellant fell in arrears again.
Thereupon, the respondent served a notice of demand upon the plaintiff on August 21, 1961, requiring him to pay Rs. 380 as the arrears of rent (Rs. 5 being balance due from the period April 10, 1960 to May 9, 1960 and Rs. 370 for the period from May 10, 1960 to August 9, 1961) within one month from the receipt of the notice.
The tenant appellant pleaded that the parties had acted upon the said agreement dated June 12, 1960, and on settlement of accounts in April 1961, a sum of Rs. 305 was alleged to be due to the respondent.
Thereafter the appellant made another payment of Rs. 50 to the respondent on June 6, 1961.
On September 27, 1961 appellant tendered to the respondent a sum of Rs. 200.
The respondent did not 69 accept this tender, and instead, instituted the suit for damages and eviction of the appellant from the said premises.
The tenant further pleaded that the arrears of rent due at the date of notice was Rs. 75 only which did not exceed three months ' rent, that the rest of the amount (Rs. 75) demanded represented only past arrears covered by the agreement in respect of which the landlord had waived his right of ejectment.
The trial court held that from exhibit A 2, it was clear that only three months ' rent was in arrears and therefore, no ground for eviction had been made out under Section 3(a) of the U.P. (Temporary) Control of Rent and Eviction Act No. III of 1947 (hereinafter referred to as the Act).
With this reasoning, the trial court dismissed the respondent 's petition for eviction.
On appeal, the Additional Civil Judge, Dehra Dun, by his judgment dated May 29, 1963, reversed the finding of the Munsif and held that the rent which was in arrears upto June 13, 1960 and which was the subject matter of the agreement of that date, did not lose its character as "arrears of rent" merely because there was an agreement to pay the same in instalments.
On these premises, he allowed the appeal and directed eviction of the tenant.
The tenant carried a further appeal to the High Court.
The High Court affirmed the finding of the Civil Judge and dismissed the appeal.
Hence this appeal by the tenant.
Dr. Barlingay, learned counsel for the appellant has advanced two contentions.
First, that out of the amount of Rs. 150 due to the respondent at the date of the notice, Rs. 75 was due under the agreement dated June 12, 1960, and that amount could not be treated as arrears, of rent and tacked on to three months current rent in arrears, for the purpose of clause (a) of Section 3(1) of the Act.
It is argued that the liability to pay the past amount of Rs. 75 arises out of the aforesaid agreement which furnished an independent cause of action different from that founded on the rent note or the lease of the premises.
Second, that Section 114 of the Transfer of Property Act will be applicable to the situation because this is a matter on which the Rent Act is silent.
Since the tenant has cleared all the arrears of rent on the first hearing of the suit, he could not be evicted in view of the provisions contained in Section 114 of the Transfer of Property Act.
In reply, Mr. Aneja submits that the pre agreement arrears of rent did not lose their original character as arrears of rent, merely because the landlord had agreed to allow the tenant to clear them in instal 70 ments.
It is emphasised that what was intended to be an accommodation could not be turned into a handicap for the landlord.
It is argued that since on the date of the demand notice served upon the appellant, the latter was admittedly liable to pay Rs. 150; Rs. 75 towards the rent of 3 months prior to August 12, 1961 and Rs. 75 towards the rent of three months preceding the demand notice, he was in arrears of rent for a period of "more than three months" within the meaning of clause (a) of Section 3 of the Act, and, as such, was liable to be evicted.
We will now deal with the first contention canvassed by Dr. Barlingay.
The material part of Section 3 of the Act reads as follows: "3(1).
Subject to any order passed under sub section (3) no suit shall, without the permission of the District Magistrate, be filed in any civil court against a tenant for his eviction from any accommodation, except on one or more of the following grouds: (a) That the tenant is in arears of rent for more than three months and has failed to pay the same to the landlord within one month of the service upon him of a notice of demand.
(b) to (g). . . . ." In order to make out a ground for eviction under clause (a) of Section 3(1) the landlord must establish three facts: (i) that the tenant is in arrears of rent; (ii) that such arrears are of rent for more than three months, and (iii) the tenant has failed to pay the same to the landlord within one month of the service upon him of a notice of demand.
If any one of these factual ingredients is not established, no order of eviction can be passed under this Clause.
In the present case, there is no dispute that at the date of the notice, the tenant owed an amount of Rs. 150 to the landlord, out of which Rs. 75 represented three months ' rent preceding the notice.
There is also no dispute that the balance of Rs. 75 due from the tenant related to the period prior to the agreement, dated June 12, 1960, and under the agreement, the tenant was bound to pay the same in three monthly instalments, which he had, in breach of the agreement, failed to pay.
Controversy centres round the question, whether this balance of Rs. 75 could also be treated as "arrears of rent" and tacked on to the arrears of rent relating to the three months preceding the notice for the purpose of clause (a) of Section 3(1) of the Act.
In our opinion, the answer to this question must be in the negative.
As a result of the aforesaid 71 agreement, the pre agreement arrears lost their original character as "arrears of rent" and assumed the character of a consolidated debt which, under the terms of the agreement, was payable by the debtor (appellant) in monthly instalments.
The agreement had in respect of the past arrears, brought into being a new cause of action and created a liability against the tenant, independent and distinct from that founded on the rent note or the lease of the premises.
Consequently if the appellant, in breach of the agreement, defaulted to pay any instalment, the remedy of the respondent (creditor) would be to file a suit for the recovery of the amount due on the basis of the agreement, dated June 12, 1960.
Thus, the arrears of three instalments due under the agreement had ceased to be "arrears of rent" and could not be tacked on to the arrears of three months rent due at the date of the notice, for the purposes of clause (a) of Section 3(1).
The proposition can be tested by taking an example.
Supposing, the appellant had defaulted to pay four monthly instalments of Rs. 25 each in accordance with the aforesaid agreement, but had regularly paid the rent as it fell due every month for the post agreement period.
Will the respondent in such a situation be entitled to sue for the eviction of the tenant on the ground that he has committed four successive breaches and defaults under the said agreement ? The answer is an obvious 'No '.
The respondent 's remedy in such a situation, will only be to sue for the recovery of the amounts due on the foot of the aforesaid agreement.
In the light of the above discussion the conclusion is inescapable that for the purposes of clause (a) of Section 3(1) the appellant was in arrears of rent for three months, only.
In other words, he was not in "arrears of rent for more than three months" within the meaning of clause (a) and, as such, was not liable to be evicted under that clause.
The High Court and the first appellate court were in error in holding to the contrary.
In the view we take, it is not necessary to deal with the second contention canvassed by Dr. Barlingay.
In the result, we allow this appeal, set aside the decree of the High Court and dismiss the respondent 's suit.
In the circumstances of the case however, we leave the parties to pay and bear their own costs in this Court.
P.B.R. Appeal allowed.
| The first respondent owned certain Land forming part of a town planning scheme, situated within the city limits.
At the request of the second respondent, a Corporative Housing Society, the State Government issued a Notification under section 4 of the Act on August 3, 1960 stating that the land was likely to be needed for a public purpose and it was followed by a further notification of the State Government under Section 6 of the Act dated August 21, 1961 that the land was to be acquired at the expense of the Cooperative Housing Society for the public purpose specified in column 4 of the Schedule to the notification.
The entire expense of the acquisition was to be borne by the second respondent.
The first respondent moved the High Court under Article 226 of the Constitution challenging the validity of the notification under section 6 of the Act.
During the pendency of the Writ Petition, the appellant by a notification dated May 27, 1963 cancelled the earlier notification under section 6 and issued a fresh notification.
The High Court struck down the second notification dated September 10, 1964 issued under section 6 of the Act.
In the appeal to this Court, on the question of the validity of the 2nd notification dated September 10, 1964. ^ HELD: (i) The High Court was in error in striking down the second notification under section 6 of the Act issued on September 10, 1964.
(ii) This Court in Valjibhai Muljibhai Soneji vs State of Bombay has held that the Government has no power to issue a notification for acquisition of land for a public purpose, where the compensation is to be entirely paid by a company.
[287 C D] In the instant case the first notification issued by the Government for acquisition of land for a public purpose at the expense of the second respondent, the cooperative society was therefore, invalid and the Govt.
was justified in issuing the second notification under section 6 after removing the lacuna by providing for acquisition of the land for public purpose, at public expense.
[287 D E] (iii) The acquisition of land for cooperative housing society is a public purpose.
The Govt.
is the best judge to determine whether the purpose in question is a public purpose or not.
It cannot be said that a Housing Scheme for a limited number of persons cannot be construed to be a public purpose.
When a notification under section 6 of the Act is invalid, the Govt.
may treat it as ineffective and issue a fresh notification under section 6 of the Act 2nd nothing in section 48 of the Act precludes the Government from doing so.
[291 C E] 285 Girdharilal Amratlal Shodan & Ors.
vs State of Gujarat Madhya Pradesh & Ors.
; , Pandit Jhandu Lal & Ors.
vs The State of Punjab & Ors. ; Ratilal Shankarbhai & Ors.
vs State of Gujarat & Ors.
A.I.R. , Ram Swarup vs The District Land Acquisition Officer, Aligarh & Ors. , referred to.
(iv) In the instant case, tho Respondent had not taken any ground in the Writ Petition with regard to the delay in the issuance of the second notification.
The High Court was therefore, not justified in observing that "the appellant had not explained the delay by filing any affidavit.
" If there was no ground taken, there could be no occasion for filing of any such affidavit.
[292 B C] (v) There is nothing in the Act which precludes the Govt.
from issuing a fresh notification under section 6 of the Act if the earlier notification is found to be ineffective.
The delay of one year and four months between the date of cancellation and the issue of the second notification cannot be regarded to be unreasonable.
[292 E F] Gujarat State Transport Corpn.
vs Valji Mulji Soneji
|
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.
| 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]
|
il Appeals Nos. 62 and 63 of 1953.
Appeals under Article 132 (1) of the Constitution of India from the Judgment and Order dated 22nd December, 1952, of the High Court of Judicature at Patna (Ramaswami and Sarjoo Prosad JJ.) in Miscellaneous Judicial Cases Nos. 238 and 242 of 1952.
P. R. Das (J. C. Sinha and L. K. Chaudhry, with him) for the appellant in both the appeals.
M. C. Setalvad, Attorney General for India (L. N.Sinha and Bajrang Sahai, with him) for the respondents in both the appeals.
April 17.
The Judgment of the Court was delivered by section R. DAB J.
721 DAS J.
This judgment disposes of Civil Appeals No. 62 of 1953 and No. 63 of 1953 which have been heard together.
The Motipur Zamindari Company Ltd., the appellant in Civil Appeal No. 6.) of 1953, was incorporated in 1932 under the Indian Companies Act and has its registered office in Bengal.
It supplies sugar cane to a sister concern named Motipur Sugar Factory Ltd. Raja Jankinath Roy and Narendra Nath Roy and Co., Ltd., the appellant in C. A. No. 63 of 1953, was incorporated in 1933 under the Indian Companies Act and also has its registered office in Bengal.
This company owns Zamindari Properties in Purnea in the State of Bihar as well as in Malda in the State of West Bengal.
It carries on business, amongst others, as banker and financier.
On the 30th December, 1949, a bill entitled the Bihar Land Reforms Bill was passed by the Bihar Legislature and having been reserved for the consideration of the President received his assent on the 11th September, 1950.
The Act so passed and assented to was published in the Bihar Gazette on the 25th September, 1950, and was brought into force on the same day by a notification made by the State Government in exercise of powers conferred on it by section 1(3) of the Act.
Many of the proprietors and tenure holders of Zamindari estates took proceedings against the State of Bihar for appropriate orders restraining the State Government from taking over the estates under the provisions of the Act which they claimed to be beyond the legislative competency of the Bihar Legislature and otherwise void.
On the 12th March, 1951, a Special Bench of the Patna High Court held that the Act was unconstitutional on account of its contravention of article 14 of the Constitution.
The State of Bihar appealed to this Court.
Pending that appeal, the provisional Parliament passed the Constitution (First Amendment) Act, 1951.
The respondents in the main appeal took proceedings in this Court, contending that the Act amending the Constitution was invalid.
This 722 Court however, on 5th October, 1951, upheld the validity of the amending Act.
On 6th November, ' 1951, notifications were issued under section3 of the Bihar Act declaring that certain Touzies belonging to the appellants specified in the notification had passed to and become vested in the State.
Both the appellants made separate applications to the Patna High Court under article 226 of the Constitution praying for mandamus or suitable direction or order restraining the respondent from taking possession of their respective estates or tenures by virtue of the said notifications and for other ancillary reliefs.
The appeals filed by the State of Bihar against the order of the Special Bench declaring the Act to be void came up for hearing before this Court and this Court upheld the validity of the Act, except as to a few provisions mentioned in the majority judgment which were hold to be severable.
Thereafter, the two applications made by the two appellants under article 226 before the Patna High Court came up for hearing and were dismissed by a Bench of that Court on the 22nd December, 1952.
The present appeals have been filed with leave of the Patna High Court against the said dismissal.
The question raised before the High Court was whether the Act was, on its true construction, intended to apply to Zamindari estates of companies incorporated under the Indian Companies Act.
In support of the appellants ' contention that it was not, it was urged that the Bihar Legislature had no authority to legislate with respect to trading corporations or non trading corporations whose objects were not confined, to one State.
Reference was made to entries 43, 44 and 45 of List I to show that it was Parliament alone which was authorized to make law with respect to matters set forth in those entries.
The contention was that the Bihar Legislature in enacting the Act invaded the Union field and so the Act was invalid.
This argument was sought to be reinforced by reference to the provisions of the Act and the winding up provisions of the Companies Act.
The Patna High 723 Court overruled this contention and Mr.P.R.Das appearing in support of these appeals has not challenged this part of the decision of the Patna High Court.
The main point urged by Mr. P. R. Das is that even if the Bihar Legislature could make a law for acquiring Zamindari estates of incorporated companies it did not, by the Act, in fact do so.
Section 3 authorises the State Government to declare by notification that the estates or tenures of a proprietor or tenure holder have passed to and become vested in the State.
It will be recalled that it was under this section that the State Government on the 6th November, 1951, issued the notifications with respect to the estates of the appellants situate within the State.
Mr. P. R. Das 's principal contention is that the appellant companies do not come within the terms, " proprietor" or " tenure holder" as defined by the Act and consequently no part of their estates were intended 'to be vested or did in fact vest in the State.
" Proprietor" is defined by section 2(o) as meaning a person holding in trust or owning for his own benefit an estate or a part of an state and includes the heirs and successors in interest of a proprietor and, where a proprietor is a minor or of unsound mind or an idiot, his guardian, committee or other legal curator.
Tenure holder is defined by section 2 (r) as meaning a person who has acquired from a proprietor or from any tenure holder a right to hold land etc.
The argument is that the word "person" in the two definitions referred to above does not, in the context of the Act, include a company.
It is conceded that under section 4(40) of the Bihar General Clauses Act the word "person" would ordinarily include a company, but it is urged by Mr. P.R. Das that the definitions given in that section apply only where there is nothing repugnant in the subject or context.
His contention is that the definition of "proprietor" and "tenureholder" indicates that a company which owns Zamindaries is not covered by that definition.
We are unable to accept this contention.
It is not disputed 94 724 that a company can own an estate or a part of an estate and, indeed, the appellant companies are fighting these appeals only to protect the estates they own.
Therefore, they come within the first part of the definition.
The definition after stating what the word means proceeds to state what else the definition would include under certain specified circumstances, namely, the heirs and successor in interest etc.
The word "heir" certainly is inappropriate with regard to a company, but there is nothing inappropriate in the company having a successor in interest.
It is pointed out that there is no provision in the definition of proprietor to include the directors, managing agents and, in case of winding up, the liquidator of the company.
This circumstance does not appear to us to be a cogent reason for holding that the word "proprietor" as defined does not cover a company.
It is to be noted that the agent or, in case of insolvency, the official assignee or receiver of an individual proprietor are also not included in the definition.
Reference to proprietor who is a minor or of unsound mind or an idiot and his guardian etc.
, was obviously necessary because those proprietors suffer from legal disabilities.
Mr. P. R. Das refers us to various sections and rules framed under section 43 of the Act to show that ' only natural persons were intended to be affected by the Act, because, ha urges, the company is not competent to do the acts therein referred to.
It is not ,disputed by Mr. P. R. Das that there is no difficulty on the part of an incorporated company to do all these acts by its directors or managing agents or other officers empowered in that behalf by its articles of association, but his contention is that the provisions of the Indian Companies Act should not be imported into the consideration of the provisions of his Act.
He relies primarily on the case of Pharmaceutical Society vs The London and Provincial Supply Association, Limited(1) whore it was held,that a corporation (1) 725 did not come within the word "person" used in the Pharmacy Act, 1868 (31 & 32 Vic., Chapter 121).
Reliance was placed upon the observations of Lord Selborne L.C. at page 863.
The preamble to that Act recited, amongst other things, that it was "expedient for the safety of the public that persons keeping open shop for the retailing, dispensing or compound ing of poisons, and persons known as chemists and druggists should possess a competent practical knowledge of their business.
" This clearly comtemplated persons skilled in matters pharmaceutical and not impersonal corporate bodies which would know nothing about that particular business.
Indeed, Lord Blackburn in his speech in the House of Lords in the Pharmaceutical Society 's case(1) referred to this preamble and observed at page 870: "Stopping there, it is quite plain.
that those who used that language were not thinking of corporations.
A corporation may in one ' sense, for all substantial purposes of protecting the public, possess a competent knowledge of its business,, if it employs competent directors, managers, and so forth.
But it cannot possibly have a competent knowledge in itself.
The metaphysical entity, the legal 'person ', the corporation, cannot possibly have a competent knowledge.
Nor I think, can a corporation be supposed to be a 'person known as a chemist and druggist '.
" His Lordship then referred to the provisions of sections 1 and 15 of that Act and came to the conclusion that the word "person" in that Act.
meant a natural person.
The effect of 'that case is that whether the word "Person" in a statute can be treated as including a corporation must depend on a consideraiion of the object of the statute and of the enactments passed with a view to carry that object into effect.
In view of the object of that Act as recited in the preamble there could be no manner of doubt that the word "person" in that Act could not possibly, include a corporation.
Lord Selborne towards the end of page 863 indicated, by reference to the 18th (1) (188o) L.R. 5 App.
857 726 section, that the legislature by the word "person" referred only to individual persons as it was clearly repugnant to the subject of that Act to include a corporation within the word "person" as used in 'that Act.
Mr. P. R. Das urges that the judgment of Lord Selborne was founded on the fact that the corporation could not come within the term "person" on the ground that it could not make an application in writing signed by it.
From this Mr. P. R. Das urges that the necessary implication of this part of the judgment of Lord Selborne is that it was not permissible to take the provisions of the Companies Act into consideration for construing another Act.
If that were the implication of the speech of Lord Selborne, with respect, we are unable to accept the same.
Indeed, one cannot think of a company unless one has in view the provisions of the Companies Act, for a company is the creature of the Companies Act.
Its existence, powers and rights are all regulated by that Act.
The trend of the, speeches of the noble Lords in the case relied on by Mr. P. R. Das is that the object of the particular Act under consideration was entirely repugnant to the word "corporation" being included within the term "Person" as used in that Act, and as we apprehend it, that decision lays down nothing beyond that.
In support of his contention that a company owning an estate was never intended to be affected by the Act, Mr.P. R. Das draws our attention to the winding up sections of the Indian Companies Act and urges that it is not possible to fit in the scheme of winding up into the scheme of the Bihar Act.
If the Zamindari assets of the company are taken over and compensation is paid by non transferable bonds it will, he contends, be impossible, to apply the law of winding up in case the company goes into liquidation.
There will, according to him, be conflict of jurisdiction between the Court where the winding up is proceeding, which may conceivably be in another State, land the Bihar Government and its officers. 'We see no force in this contention.
Upon a 727 notification being issued under section 3, the Zamindari estate will vest in the State and the company will cease to have any interest in it.
Its only right will be to receive compensation.
In case of winding up the liquidator will have to pursue the remedy provided by this Act.
He or the company will be in no worse position than the official assignee or official receiver of an individual proprietor who may happen to become insolvent in another State.
Finally, Mr. P. R. Das strongly relies on section 41 of the Act and contends that that section would be wholly inapplicable to a company and that circumstance by itself would indicate that the Bihar Legislature did not intend that a company owning an estate should be governed by this Act.
A corporation, it is true, cannot be made liable for treason, felony or any misdemeanour involving personal violence or for any offence for which the only penalty is.
imprisonment or corporal punishment.
(Halsbury, 2nd Edition, Volume IX, article 5, p. 14).
Section 41 does not prescribe punishment by imprisonment only.
Mr. P. R. Das suggests that the infliction of imprisonment or fine would depend upon the gravity of the offence and not on the character of the offender.
This argument, however, would seem to run counter to the opinion of Lord Blackburn set forth at pages 869 870 of the report of the very case relied on by Mr. P. R. Das.
The recent cases of Director of Public Prosecutions vs Kent and Sussex Contractors Limited(1) and Rex vs I.C.B. Haulage, Limited and Another(2) seem to indicate that a corporation may be convicted even of an offence requiring an act of will or a state of mind.
Apart, however, from the consideration whether a company may be held guilty of wilful failure or neglect, as to which we need not express any definite opinion on this occasion, there can be no difficulty in applying the provisions of section 41 to the officers or agents of the company.
On a notification under section 3(1) being published the estate vests in the State.
Section 4 sets out the (1) [1944] I.K.B. 14 6.
(2) [1944] I.K.B. 551.
728 consequences of such vesting.
Clause (g) of that section empowers the Collector by written order served in the prescribed manner to require any person in possession of.
such an estate or tenure or any part thereof to give up possession of the same by a date specified in the order and to take such steps or use such force as may be necessary for securing compliance with the said order.
If any officer or agent of the company in the possession of the estate wilfully fails or ignores to comply with such lawful order, then surely he can be proceeded against under section 41.
Likewise, under section 40, the.
officers therein mentioned are authorized at any time before or after the date of vesting by a written order served in the prescribed manner to require a proprietor or tenureholder or any other person in possession of such an estate or tenure or any agents or employees of such proprietor, tenure holder or other person to produce at a time and place specified in the order such documents, papers or registers or to furnish such informa tion relating to such estate or tenure as such officer may from time to time require for any of the purposes of this Act.
A wilful failure or neglect to comply with such order would clearly bring the recalcitrant officer or agent of the company within the penalty provided under section 41.
Section 41 therefore, does not necessarily preclude the application of the Act to incorporated companies.
It cannot be denied that a company is competent to own and hold property.
The whole.
object of the impugned Act is thus stated by Mahajan J. in the State of Bihar vs Kameshwar Singh(1): " Now it is obvious that concentration of big blocks of land in the hands of a few individuals is contrary to the principle on which the Constitution of India is based.
The purpose of the acquisition contemplated by the impugned Act therefore is to do away with the concentration of big blocks of land and means of production in the hands of a few individuals and to so distribute the ownership and control of the (1) at p. 941.
729 material resources which come in the hands of the State as to subserve the common good as best as possible.
In other words, shortly put, the purpose behind the Act is to bring about a reform in the land distribution system of Bihar for the general benefit of the community as advised.
" In view of this, purpose there is no reason to differentiate between an individual proprietor and a company which owns estates or tenures.
Indeed, there is not only nothing repugnant in the subject or context of the Act which should prevent the inclusion of a company owning estate within the definition of "proprietor", such inclusion is necessary in order to give full effect to the very object of the Act.
In Appeal No. 63 of 1953 Mr. P. R. Das raises an additional point, namely, that the appellant company in that appeal owns estates which are situate in Purnea in the district of Bihar and in Malda in the district of West Bengal but it has to pay a single Government revenue at Purnea.
It is further alleged that the appellant company has let out portions of the estates on Patni leases, each of the Patnis comprising land situate both within and outside Bihar.
The acquisition of that part of the estate, which is situate in Bihar has made it difficult, if not impossible, for the appellant company to pay its revenue or recover its rent.
That part of the estate which is in Bihar cannot be severed from the rest and therefore the notification covering only the portion of the estate situate in Bihar is invalid.
We do not think there is any substance in this argument.
As stated by the High Court it is a simple case of apportionment of the revenue and also apportionment of the rent.
The necessity for such apportionment cannot possibly affect the validity of the notification.
For reasons stated above these appeals fail and must be dismissed with costs.
Appeals dismissed.
| The word " person " in the definitions of " proprietor "" and tenure holder " contained in a. 2 (o) and section 2 (r) respectively of the Bihar Land Reforms Act, 1950, includes companies incorporated under the Indian Companies Act, 1913.
There is nothing repugnant in the subject or context of the Act to prevent the inclusion of a company within the terms proprietor " and " tenure holder ".
On the contrary such inclusion is necessary in order to give full effect to the object of the Act.
Pharmaceutical Society vs The London and Provincial Supply Association, Limited distinguished.
|
Appeal Nos.
2621 22 of 1977.
From the Judgment and Order dated 9.11.1976 of the Calcutta High Court in Civil Rule Nos.
1817 and 1818 of 1972.
P.S. Poti and Rathin Das for the Appellant Dr. Shankar Ghosh for the Respondent.
The Judgment of the Court was delivered by SAWANT, J.
On 18th December, 1970, the Assistant Settlement Officer, Diamond Harbour, initiated proceedings under Section 44 [2a] of the West Bengal Estate Acquisition Act, 1953 [the 'Act '] for revising the finally published record of rights in respect of Khatians Nos. 10, 11 of Mouza Haradhanpore and Khatians Nos 6,7,13,15 and 24 of Mouza Kailpara within his jurisdiction.
According to him, incorrect entries were made in favour of the respondent in the record of rights in respect of the said Khatians based on the purchases made by the respondent in auction sales of the Khatians in execution of the decrees for arrears of rent.
Two different cases Case No. 156/70 and No. 22/70 were respectively initiated in regard to the two properties.
In both these cases, in the record of rights, the name of the respondent auction purchaser was entered as raiyat on the basis of the said sales.
These sales were effected on 6th November, 1954 and 3rd December, 1954 respectively.
The sales were admittedly of the rights of the raiyats, and hence the Assistant Settlement Officer took proceedings for revision of the record of rights taking the view that such rent execution sales effected after 1st June, 1954 would be invalid under Section 5B of the Act.
By his orders dated 8th January, 1971 and 27th January, 1971 respectively passed in the two cases, he directed the correction of the record of rights by substituting the names of the original raiyats for the auction purchaser.
The auction purchaser preferred appeals before the Tribunal appointed for the purpose under Section 44[3] of the Act being E.A. Nos. 86 and 87 of 1971.
The Tribunal allowed the appeals and set aside the orders of the Assistant Settlement Officer holding that Section 5B of the Act had no application to raiyati interest.
Against the decision of the appellate authority, the appellant State of West Bengal approached the High Court by way of a writ petition under Article 227 of the Constitution.
The Division Bench before which the matters came, referred them to a Special Bench since questions of public importance relating to the interpretation of the provisions of Section 5B of the Act were involved.
The Special Bench 348 held, that (i) the effective date in section 5B in respect of sales of raiyati and underraiyati holdings under the relevant statutes mentioned therein is 1st June, 1954 as provided therein; [ii] Section 5B does not operate as a bar to the execution of decree for arrears of rent as money decree against raiyati or under raiyati interests and Section 168A [1] of the Bengal Tenancy Act is impliedly repealed by the vesting of the interests of the intermediary which include raiyats and under raiyats] in the State.
In this view of the provisions of the Act, the High Court held that the initiation of the proceedings by the Assistant Settlement Officer Under Section 44 [2a] was without jurisdiction, and confirmed the order of the appellate authority.
It is this order which is questioned before us.
In order to appreciate the answer to the question raised before us, it is necessary to have a brief glance at the relevant provisions of the Act.
As its preamble shows, the Act has been placed on the statute book to provide for the acquisition of estates, of the rights of intermediaries therein and also certain rights of raiyats and under raiyats and of the rights of certain other persons in the lands comprised in the estates.
Section 2 (i) of the Act defines "intermidiary" as follows: "intermediary" means a proprietor, tenure holder, under tenureholder or any other intermediary above a raiyat or a non agricultural tenant and includes a service tenure holder and, in relation to mines and minerals, includes a lessee and a sub lessee".
By virtue of Section 2 (p), the "tenure holder" and "raiyat" as defined under the Bengal Tenancy Act, 1885 [hereinafter referred to as to the Tenancy Act '] are to be read in the present Act.
They are defined under Section 5 (1) & (2) of the Tenancy Act as follows: "5.
Meaning of Tenure holder and Raiyat.
(1) "Tenure holder" means primarily a person who has acquired from a proprietor or from another tenure holder a right to hold land for the purpose of collecting rents or bringing it under cultivation by establishing tenants on it, and includes also the successors in interest of persons who have acquired such a right.
(2) "Raiyat" means primarily a person who has acquired a right to hold land for the purpose cultivating it by himself, or by members of his family or by servants or labourers or with the aid of partners, 349 and includes also the successors in interest of persons who have acquired such a right.
Explanation Coming back to the present Act, Chapter II of the Act deals with the ,.acquisition of estates and of the rights of intermediaries therein" and consists of Sections 4 to 13.
For our purpose, the relevant sections are Sections 4,5,5A and 5B. Sub sections (1) and (2) of Section 4 read as follows: "4.
Notification vesting estates and rights of intermediaries.
(1) The State Government may from time to time by notification declare that with effect from the date mentioned in the notification, all estates and rights of every intermediary in each such estate situated in any district or part of a district specified in the notification, shall vest in the State free from all incumbrances.
(2) The date mentioned in every such Notification shall be the commencement of an agricultural year; and the notifications shall be issued so as to ensure that the whole area to which this Act extends, vests in the State on or before the 1st day of Baisakh of the Bengali year 1362.
" Section 5 refers to the effect of notification published under Section 4 and states that on or from the date of vesting, among other things, the estates and the rights of intermediaries in the estates to which the declaration applies, shall vest in the State free from all incumbrances.
It further states that in particular and without prejudice to the generality of the provisions, everyone of the following rights which may be owned by an intermediary shall vest in the State.
Among the rights so mentioned are the rights in sub soil, in mines and minerals, in hats, bazaars, ferries etc.
Clause (c) of Sub section (1) of the said section then states as follows: "5.
Effect of notification.
(1) Upon the due publication of a notification under section 4, on and from the date of vesting [a] [b] 350 (c) Subject to the provisions of sub section (3) of section 6, every non agricultural tenant holding any land under an intermediary, and until the provisions of Chapter VI are given effect to, every raiyat holding any land under an intermediary, shall hold the same directly under the State, as if the State had been the intermediary, and on the same terms and conditions as immediately before the date of vesting: x x x x x x XI ' Section 5A places restrictions on certain transfers.
Sub sections (1) and (2) thereof read as follows: "5A. Restrictions on certain transfers.
(1) The State Government may after the date of vesting enquire into any case of transfer of any land by an intermediary made between the 5th day of May, 1953 and the date of vesting, if in its opinion there are primafacie reasons for believing that such transfer was not bonafide.
(2) If after such enquiry the State Government finds that such transfer was not bonafide, it shall make an order to that effect and thereupon the transfer shall stand cancelled as from the date on which it was made or purported to have been made;" Then comes Section 5B which without its proviso with which we are not concerned, reads as follows: "5B. Estate or tenure not liable to be sold under Act XI of 1859, Cooch Behar Act V of 1897, Bengal Regulation VIII of 1819 and Act VIII of 1885.
On and from the 1st day of June, 1954, no estate, tenure or under tenure shall be liable to be sold under the Bengal Land Revenue Sales Act, 1859 or the Cooch Behar Revenue Sales Act, 1897 or the Bengal Patni Taluks Regulation, 1819 or the Bengal Tenancy Act, 1885, as the case may be, and any sale which took place on or after that day under any of those acts or that Regulation shall be deemed to have been void and of no effect:" We are not concerned in the present case with Chapter IIl which deals with "assessment and payment of compensation" for the estates of the intermediaries acquired; Chapter IV which relates to "mines and minerals" and which has overriding effect over other provisions of the Act and Chapter V which relates to 351 the "preparation of the record of rights".
Chapter VI deals with the "acquisition of rights of raiyats and under raiyats".
As it stood at the relevant time, it consisted of Sections 49 and 52, which were newly inserted in place of the old Sections 49 and 52 retrospectively by the Amending Act 35 of 1955.
The same amending Act deleted Sections 50 and 5 1.
Section 49 reads as follows: "49.
When this Chapter is to come into force.
The provisions of this Chapter shall come into force on such date and in such district or part of a district as the State Government may, by notification in the Official Gazette, appoint and for this purpose different dates may be appointed for different districts or parts of districts".
Section 52 without its proviso, is as follows: "52.
Application of Chapters 11, III, V and VII to raiyats and underraiyats.
On the issue of a notification under section 49 the provision of Chapters 11, III, V and VII shall, with such modifications as may be necessary, apply mutatis mutandis to raiyats and under raiyats as if such raiyats and under raiyats were intermediaries and the land held by them were estates and a person holding under a raiyat or an under raiyat were a raiyat foe the purposes of clauses (c) and (d) of section 5:" It is on record that by notification No. 6804 L. Ref dated 9th April, 1956 published in Calcutta Gazette Extraordinary of the same day, Part , Chapter VI came into force in all the districts of West Bengal with effect from the 10th April, 1956.
It is clear from the aforesaid provisions of the Act that when notifications are issued under Section 4, all estates and rights of every intermediary in each such estate, vest in the State, free from all incumbrances.
The notifications under that Section have to be issued so as to ensure that the whole area to which the Act extends vests in the State on or before 15th April, 1955 which corresponds to the 1st day of the Baisakh to the Bengali year 1362 mentioned therein.
When Chapter VI of the Act comes into force by virtue of the notification issued under Section 49, Section 52 which falls under that Chapter makes the provisions of Chapter II, among others, applicable also to the raiyats and the under raiyats as if such raiyat and under raiyat were intermediaries and the lands held by them were estates.
In other words, Sections 4, 5, 5A and 5B, among others, of Chapter II become applicable to the raiyati and the under raiyati interests on the issuance of such 352 notification.
In the present case, as stated above, the notification under Section 49 was brought into force w.e.f.
10th April, 1956.
It was not given retrospective effect from 15th April, 1955.
The effect of this notification was that by virtue of Section 4 the intermediary interests stood vested in the State at the latest from 15th April, 1955 while the raiyati and the under raiyati interests stood vested in the State with effect from 10th April, 1956.
The restriction on transfer of the said interests, however, came into effect retrospectively on or from 1st June, 1954 by virtue of Section 5B, since that date is mentioned in the Section itself.
Hence there cannot be any dispute that no estate, tenure or under tenure including raiyati and under raiyati interests could be sold under the statutes mentioned in section 5B including the Tenancy Act with which we are concerned, on and after 1st June, J954 and a sale after that date under any of those statutes would be void and have no effect under that Section.
Admittedly, the present auction sales were held in execution of the decrees for the arrears of rent under the Tenancy Act and took place on 6th November and 3rd December, 1954 respectively.
What came to be sold under the said sales were the raiyati interests of the judgment debtors, and the respondents were entered in the record of rights as raiyats in place of the original raiyats on the basis of the said sales.
The High Court has rightly held that the effective date in Section 5B for prohibition of the sales of raiyati and under raiyati holdings under the statutes mentioned therein, is 1st January, 1954 as is provided therein.
This conclusion of the High Court is not challenged before us.
However, the High Court has further held that Section 5B does not operate as a bar against the sale of raiyati or underraiyati interests if the execution of the rent decree is treated as an execution of money decree under the Code of Civil Procedure [hereinafter referred to as the 'Code '.
According to the High Court, the sale made pursuant to the execution of the money decree under the Code even though for rent, and of the raiyati or underraiyati interest holder, would not be a sale under the statutes mentioned in Section 5B including the Tenancy Act.
It is this conclusion of the High Court which is under challenge before us.
In order to arrive at the said conclusion, the High Court has reasoned that Section 5B only declares void, sales of tenures of holdings under the statutes mentioned therein but does not prohibit the sales under the Code.
According to the High Court, the Section has no concern with other sales since the tenure or holding was transferable and inheritable under the provisions of the Tenancy Act and other connected regulations till the estates vested in the State w.e.f. 15th April, 1955 by notification issued under Section 49 of the Act.
353 6.
We are afraid that the interpretation placed by the High Court ignores some obvious provisions of law.
In the first place, it, is not correct to say that the sale or transfer of the holding or tenure, was permissible till the estates vested in the State.
Section 5A of the Act applies to the case of transfer of any land by an intermediary, made between the 5th May, 1953 and the date of vesting.
Under that section, the legislature has given power to the.
State Government to make an inquiry into the question whether such a transfer was bonafide or not, and if the State Government came to the conclusion that the transfer was not bonafide, consequences stated in the said section followed.
It cannot be suggested that the voluntary transfers of the tenure or under tenures or raiyati or under raiyati interests in the estates, the sale of which is prohibited under the relevant statutes mentioned in Section 5B, is not covered by Section 5A of the Act.
Secondly, the Tenancy Act is a piece of legislation which amends and consolidates certain enactments relating to the law of landlord and tenant.
Under section 3 [6] of that Act "landlord" is defined as "a person immediately under whom a tenant holds, and includes the Government" while under Section 3 [17] of that Act "tenant" is defined as "a person who holds land under another person, and is, or but for a special contract would be, liable to pay rent for that land to that person".
The classes of tenants mentioned under Section 4 of that Act include [i] tenure holders, including under tenure holders, [ii] raiyats, and [iii] under raiyats.
The said Act further exclusively governs the relations between the landlord and the tenant as is evident from the provisions of that Act.
It 'is not necessary to refer to all the said provisions.
Suffice it to say that the matters relating to the fixation, payment and enhancement of rent, the grounds of ejectment of the tenant and the procedure for their ejectment, transfer and surrender of tenancies, improvements on land, record of rights, the occupancy and non occupancy rights, the judicial procedure to be followed in suits between landlord and tenant, the sale of interests in land for arrears under a decree, the restrictions on the exclusion of the provisions of the Act by agreement between the landlord and the tenant, the limitation for suits to be filed under the Act, the penalties for illegal interference with the produce of the land, damages, for denial of landlord 's title, and even matters relating to the agents and representatives of landlords are all subjects regulated by the said Act.
We are concerned in the present case with regard to the suit for the arrears of rent and with the execution of the decree obtained in such suit.
Chapter XIII which contains Sections 143 to 158 relates to the "judicial procedure" to be followed in suits between the landlord and the tenant.
Section 143 gives power to the High Court to make rules from time to time with the approval of the State Government consistent with the said act declaring that any portion of the Code shall not apply to suits between landlord and tenant as such or to any specified classes of such suits, or shall apply to them subject to modifications specified in the rules made 354 by the High Court.
Subject to any rules so made and subject also to the other provisions of the said Act, the Code applies to all suits between the landlord and the tenant.
Section 144 confers jurisdiction on the suits under the Act on the civil courts which would have jurisdiction to entertain a suit for the possession of the tenure or holding in connection with which the suit is brought.
The section also makes clear that no suit between landlord and tenant under the Act shall be instituted in any court other than such court.
Section 145 specifies the persons who can be recognised agents of the landlord, and the manner in which they are to be authorised by the landlord to be his agents, and notwithstanding anything contained in the said Act, every such agent is empowered to verify the pleadings on behalf of the landlord without the permission of the Court.
Section 146 ordains that the particulars of the suits between the landlord and the tenant should be entered in a special register to be kept by each civil court in such form as the State Government may prescribe in this behalf instead of in the register of civil suits prescribed by the court.
Section 146A makes a special provision for joint and several liability for rent of co sharer tenants notwithstanding anything contained in the Contract Act.
Section 146B likewise lays down a special procedure in rent suits against co sharer tenants notwithstanding anything contained in the Limitation Act.
Section 147 prevents a landlord from instituting successive rent suits against a raiyat except under circumstances mentioned therein.
Section 147A prevents the Court from wholly or partly adjusting by agreement or compromise, any suit between landlord and tenant unless the agreement can be enforced under the said Act, viz., the Tenancy Act.
This provision again is made notwithstanding anything contained in this behalf under the Code.
Section 148 then lays down a special procedure to be followed in rent suits.
It states in clause [a] thereof that Sections 68 to 72 of the Civil Procedure Code and rules 1 to 13 of Order XI, rule 83 of Order XXI and Rule 2 of Order XLVIII in Schedule 1 of the said Code and Schedule III thereof shall not apply to such suit.
Clause [b] thereof states that the plaint in such suit shall contain in addition to the particulars specified in the code, certain additional particulars which are mentioned therein.
Clauses [c] and [d] require further particulars in such plaints in certain situations mentioned therein.
Clause [e] thereof states that the summons shall be for the final disposal of the suit unless the court is of opinion that it should be for the settlement of issues only.
Clause [f] lays down a special mode of service of summons if the High Court by rule so directs and also permits the Court to presume service of summons in certain circumstances.
Clauses [g] and [h] similarly relate to the special procedure of summons in such suits.
Clause [i] requires leave of the Court to file a written statement.
Clause [i] makes the rules for recording the evidence of witnesses contained in rule 13 of Order XVIII in Schedule 1 to the Civil Procedure Code applicable in the trial of such suits, whether 355 an appeal is allowed or not.
Sub clause (j) of Clause [k] permits a Court to issue a special summons under certain circumstances notwithstanding anything contained in the Code and Sub clause (ia) thereof, and also provides for the procedure for effecting the service of the special summons and Sub clause (ii) provides for the consequences for the non appearance of the defendants in answer to such special summon.
Clause [m] permits the Court to order execution of oral application of the decree holder unless the decree is for ejectment for arrears.
Clause [n] requires the Court not to insist on a fresh vakalatnama or to file a copy of the decree for the purpose of executing the decree notwithstanding any thing contained in the Code.
Likewise, notwithstanding anything contained in the Code.
Clause [o] prohibits an application for the execution of a decree for arrears by an assignee of the decree unless the landlord 's interest in the land is vested in such assignee.
Section 148A permits a co sharer landlord to sue for rent in respect of his share in the tenure.
Section 149 requires the defendant to deposit the amount in Court once he admits that money is due from him even though he pleads that it is not due to the plaintiff but to a third person.
Section 150 likewise requires the defendant to deposit the admitted amount due to the landlord notwithstanding the defendant 's plea that the plaintiff s claim is in excess of the amount due.
Section 153 then provides for appeals in rent suits and while doing so, lays down conditions under which the appeal will lie and will not lie.
Section 153A lays down special conditions under which an application to set aside decree, or for review of the judgment won Id lie.
Section 154 provides for the dates from which the decree for enhancement of rent would take effect.
Then comes Section 155 which provides for relief against forfeiture under certain circumstances and Section 156 lays down the rights of ejected raiyats and under raiyats in respect of crops and land prepared for sowing.
Section 157 lays down special power of the Court to fix fair rent as alternative to ejectment.
Section 158 gives power to the Court to determine incidence of tenancy on the application either of the landlord or tenant.
Chapter XIV of the Act provides for "Sale for arrears under Decree".
We are directly concerned with the said Chapter.
Section 159 thereof details "general powers of purchaser as to avoidance of incumbrances".
Section 160 mentions the "protected in terests" within the meaning of the said Chapter.
Section 161 gives a special meaning of "incumbrance" and "registered and notified incumbrance" for the purpose of the said Chapter.
Section 162 gives the particulars of the statement which a decree holder has to produce when he makes an application for attachment and sale of the tenure or 356 holding in execution of the decree.
Section 163 makes special provision for a combined order of attachment and proclamation of sale to be issued notwithstanding anything contained in the code on the subject.
Section 164 provides for the sale of tenure or holding subject to "registered and notified incumbrance" and the effect thereof.
Section 165 is another special provision which provides for sale of tenure or holding with power to avoid all incumbrances and states the effect thereof.
Likewise, Section 166 makes provision for sale of occupancy holdings with power to avoid all incumbrances and for the effect thereof.
Section 167 gives procedure for annulling incumbrances under Sections 164, 165 or 166.
Section 168A with which we are directly concerned in the present case then states as follows: "168A. Attachment and sale of tenure or holding for arrears of rent due thereon, and liability of purchasers thereof.
[1] Notwithstanding anything contained elsewhere in this Act, or in any other law, or in any contract [a] decree for arrears of rent due in respect of a tenure or holding, whether having the effect of a rent decree or money decree,or a certificate for such arrears signed under the Bengal Public Demands Recovery Act, 1913, shall not be executed by the attachment and sale of any movable or immovable property other than the entire tenure or holding to which the decree or certificate relates: Provided that the provisions of this clause shall not apply if, in any manner other than by surrender of the tenure or holding, the term of the tenancy expires before an application is made for the execution of such a decree or certificate; [b] The purchaser at a sale referred to in clause (a) shall be liable to pay to the decree holder or certificate holder the deficiency, if any, between the purchase price and the amount due under the decree or certificate together with the costs incurred in bringing the tenure or holding to sale and any rent which may have become payable to the decree holder between the date of the institution of the suit and the date of the confirmation of the sale.
[2] In any proceeding pending on the date of the commencement of the Bengal Tenancy (Amendment) Act, 1940, in execution of a decree or certificate to which the provisions of sub section (1) apply, if there has been attached any immovable property of the 357 judgment debtor other than the entire tenure or holding to which the decree or certificate relates, and if the property so attached has not been sold, the Court or Certificate officer as the case may be shall, on the application of the judgment debtor, direct that, on payment by the judgment debtor, of the costs of the attachment, the property so attached shall be released.
[3] A sale referred to in clause (a) of sub section (1) shall not be confirmed until the purchaser has deposited with the Court or Certificate officer, as the case may be, the sum referred to in clause (b) of that sub section.
" We will revert to this section soon.
Section 169 provides for special rules for disposal of the sale proceeds instead of the rules contained in the Code.
Similarly, Section 170 provides for circumstances under which tenancy of holding is to be released from attachment notwithstanding the provisions of the Code in that behalf.
Section 173 enables a decree holder to bid for the purchase of the tenure or holding in an auction sale without the permission of the Court which is against the provisions of the Code.
Section 174 provides for application to set aside the sale and makes the relevant provisions of the Code inapplicable in certain circumstances.
Section 174A provides for the circumstances under which sale shall become absolute or shall be set aside and purchase money will be returned.
It is also necessary to refer to Section 178 in Chapter XV of the Act which expressly provides for restrictions on the exclusion of the Act by agreement between the parties.
Sub section [c], in particular of that section, states that nothing in any contract between a landlord and a tenant made before or after the passing of the said Act shall entitle a landlord to eject a tenant otherwise than in accordance with the provisions of the said Act.
Section 184 provides for special limitation in suits, appeals and applications filed under that Act and Section 185 makes certain provisions of the Limitation Act inapplicable to such suits.
Section 186 provides for penalties for illegal interference with produce.
Section 186A provides for damages for denial of landlord 's title.
Section 187 gives landlord power to act through agents.
These are all the provisions which are necessary for us to notice.
It will be apparent from the said provisions that the Act is a self contained Code governing the relations between the landlord and the tenant, for resolution of their disputes, for the suits to be filed by them, for the procedure to be followed in such suits and the conditions on which decrees may be passed in such suits, for the execution and 358 satisfaction of the said decrees.
The Act incorporates certain provisions of the Code in toto while others with modification.
At the same time, it makes still other provisions inapplicable to the proceedings in the suit filed under it.
The Act by implication prevents any suit between landlord and tenant to be filed otherwise than under its provisions.
Thus all proceedings in the suit filed under the Act from its inception to the satisfaction of the decree are to be governed by its provisions and the provisions of the Code are applicable to such proceedings only to the extent and subject to the conditions stated therein.
The Code as such is not applicable to the proceedings or to any part of it and hence no part of the proceedings can be prosecuted under the Code.
It is thus clear that even if simple money decree is obtained for the arrears of rent, no interest of the tenant can be brought to sale in execution of such decree except under the provisions of the Act.
In other words, no such interest can be sold under the Code an independently of the Act.
Secondly, if any doubt in that behalf was left, it is removed by the provisions of Section 168A.
The said section which is reproduced above begins with the non obstante clause which excludes all other provisions of the Tenancy Act itself as well as of any other law and the provisions of any contract as well.
Clause [a] of that section states that a decree for arrears of rent whether having the effect of a rent decree or a money decree or even a certificate for such arrears under the Bengal Public Demands Recovery Act, 1930 shall not be executed by the attachment and sale of any movable or immovable property other than the entire tenure or holding to which the decree or certificate relates.
That provision will not apply only if the term of the tenure has expired before an application is made for the execution of such decree or certificate.
What is further, when the entire tenure or holding is purchased in execution of a decree for arrears of rent in respect thereof, Clause [b] of sub section [1] of that section provides that the purchaser shall pay to the decree holder or certificate holder, as the case may be, the deficiency, if any, between the purchase price and the amount due under the decree or the certificate, together with the cost incurred for the auction sale and also the rent which may have become due between the date of the institution of the suit and the date of the confirmation of the sale.
This provision is inconsistent with the provisions of the Code.
The High Court has held that the said Section 168A [1] stands impliedly repealed by the vesting in the State of the interests of the intermediary which include raiyati and under raiyati interests and attract the proviso thereunder leaving the decree holder free to execute his decree as money decree in view of Section 5B of the Act, against any other property of the judgment debtor, tenureholder or tenant.
There is no doubt that after the intermediary interests vest in the State, they cannot be brought to sale and the remedy of the decree holder is to proceed against other property of the judgment debtor, if any.
In that event, Section 168A would not come in the picture.
359 However, the High Court has gone further and observed as follows: "In Bithika Maity 's case, it was correctly decided that the effective date in section 5B in respect of raiyati and under raiyati holdings is also the first day of June 1954.
The decision however failed to take notice that the impugned sale therein held on September 10, 1954 could be treated a,,; a sale under the Code of Civil Procedure as a sale in execution of a money decree.
This aspect of the case was not taken in consideration possibly because the case was heard exparte.
We are accordingly unable to approve the decision that all sales between the first day of June 1954 to the vesting of raiyati interest are to be deemed as being under the Statutes mentioned therein and hence to be declared void as was summarily held by it.
On the contrary, such sales though deemed as invalid and of no effect under the aforesaid acts, are to be treated and will have the effect of sales under the Code of Civil Procedure in execution of money decrees, if otherwise valid.
Accordingly accepting Mr. Mitra 's contention, we hold that the name of the opposite party being auction purchaser of the right, title and interest of the judgment debtor was validly recorded as raiyat in respect of the disputed holdings in the finally published record of rights in place and stead of defaulting judgment debtors who held the sake [sic] holdings.
" It is difficult to appreciate these observations which are self contradictory.
There is a conflict of view on the question as to when the raiyati and the underraiyati interests vested in the State, viz., whether on 15th April, 1955 when Section 4 became applicable to them by virtue of the retrospective operation of Sections 49 and 52 or on 10th April 1956 when the notification under Section 49 was issued.
It is not necessary for us to go into that question on the facts of the present case nor was the question debated before us.
Hence we would refrain from expressing any opinion on the point there is, however, no dispute before us that the sales even of raiyati and under raiyati interests effected after 1st June, 1954 were invalid under Section 5B of the Act.
Hence, the sales of the raiyati interest in the present case effected on 6th November, 1954 and 3rd December, 1954 were obviously invalid.
After 15th April, 1955 or 10th April, 1956, as the case may be, (according to the conflicting views of the High Court), when the raiyati and under raiyati interests came to be vested in the State, no sale could have been held of those interests, and the decree holder would have been required to proceed against the other properties of the judgment debtor.
However, admittedly in the present case it is the raiyati interests of the judgment debtor in the land in question which were sold.
Hence, the sales were void.
The High Court has reasoned that the sales can be treated as 360 being pursuant to a money decree and, therefore, under the Code and independently of the Tenancy Act.
The High Court unfortunately missed the vital fact that whether, it is a money decree or a rent decree, the entire raiyati interests of the judgement debtor in the land in question had to be sold under the said Section 168A, but could not be sold in view of the bar imposed by Section 5B of the Act.
The bar cannot be overcome by treating the sale under the Code to circumvent the provisions of the Tenancy Act and in particular of Section 168A of that Act.
We have already pointed out that the decree pursuant to the suit under the Tenancy Act cannot be executed except under the provisions of that Act.
There cannot, therefore, be a sale of the property in question pursuant to such decree under the provisions of the Code.
What is further, the intention of the legislature in enacting Section 5B was to prevent sales of the intermediary interests after 1.6.1954.
In view of the provisions of the Tenancy Act, the said interests could be sold only under and in accordance with the provisions of that Act.
The sale of such interests in the land pursuant to a decree for arrears of rent in respect of that land could not therefore be made under the Code.
Admittedly in the present case, the raiyati interests were sold after 1.6.1954 in execution of the decree for arrears of rent in respect of the land in question.
Hence the proceedings initiated by the Assistant Settlement Officer to revise the entries in the record of rights made in favour of the auction purchaser and the orders passed by him on January 8 and 27, 1971 recording the name of the former raiyats as raiyats with possession of the lands and deleting the names of the auction purchaser, were valid.
We, therefore, set aside the impugned decision of the High Court and restore that of the Assistant Settlement Officer.
The appeals are allowed accordingly.
In the circumstances of the case, there will be no order as to costs.
RP Appeals allowed.
| The daughter of the appellant was married to the respondent and a girt child was born out of the wed lock.
The couple went to the U.S.A. alongwith the child, but the latter was sent back on her mother 's behests.
While the child was in the custody of the appellant the mother also came back, and committed suicide, leaving the child in the custody of the appellant.
Meanwhile the first respondent married an American girl and embraced christianity.
Thereupon the appellant applied to the local court for appointment as guardian of the child.
The respondent appeared in court but took the child to U.S.A. forcibly, and entrusted her to the custody of his newly wedded wife.
On being appointed as guardian of the child the appellant filed a complaint of kidnapping against the respondent and three others.
The respondent applied for exemption from personal appearance in the proceedings in criminal court.
The permission was granted subject to the condition that he will appear whenever called upon to do so.
On the completion of the evidence, the advocate of the respondent sought permission for examination under section 313 Cr.
P.C. in place of the respondent.
Thereupon the appellant sought direction for personal appearance of the respondent for being examined under Section 313 Cr.
The Magistrate dismissed the application of the appellant This Court examined the provision of Sub Section (1) of Section 313 Cr.
P.C. and, HELD:Introduced in its present form pursuant to the recommendations made in the 41st Report of the La* Commission, sub section (1) of 468 Section 313 begins with the words: "In every inquiry or trial.
" (472 B) The old sub section (1) of Section 342 has been divided Into two (a) & (b).
Clause (a) us" the expression 'may ' to indicate dot the matter is left to the discretion of the court to put questions to the accused at any stage of the inquiry or trial, whereas clause (b) uses the expression "shall" to convey that it is mandatory for the court to examine the accused after the witnesses for the prosecution have been examined.
(472 C) The proviso was added to sub section (1) with a view to enabling the court to dispense with the examination of the under clause (b) in a summons case in the court has already dispensed with this personal attandence if the court on completion of the prosection evidence finds that there are certain circumstances appearing in the evidence against the accused, the court is obliged by clause (b) to question the accused before be Ls called upon to enter his defence.
(472 D) Section 313 (1) applies to all inquiries and trials under the co&, to give the accused an opportunity to explain the circumstances appearing against him.
The trial court is empowered by clause (a) to question the at any stage of inquiry or trial, while clause (b) obligates it to question the accused before he enters his defence.
The rule of audi alterm partem incorporated therein is intended for the benefit of the accused.
(472 F) The proviso is in the nature of an exception to dawn (b) of sub section (1) of section 313 Cr.
P.C. and applies to a sommons case.
Where the personal presence of the accused has been dispensed with, the magistrate can dispense with the mandatory requirement of clause(b).
(472 G) Since the offence under section 363 [PC is punishable with imprisonment for a term exceeding two years it is a warrant cm, so even if the court has dispensed with the personal attendence of the accused the examination of the accused u/s 313 Cr.
P.C. is mandatory.
The examination of a lawyer would not be sufficient complaince@ with the @ate of the mid provision.
(473 B) BibhWi Bhushen Dat GWM & Aar.
vs State of West Be"W, A.I.R. (1%9) S.C. 381= 11%9] 2 SCR 104, referred to.
469 In that case this court pointed out that the privilege of making a statement under Section 342 of the old code, is personal to the accused.
This requirement cannot be satisfied by examining his pleader in his place, as the right of the pleader to represent the accused does not extend to the pleader answering questions under section 342 (now 313) Cr.
P.C. (473 E) This court set aside the impugned order and directed the trial magistrate, to pass appropriate orders in regard to the examination of the respondent under section 313 (1) (b) Cr. P. C. (474 D)
|
ivil Appeal No. 1755 & 1756 of 1982 From the Judgment and Order dated 11.12.1981 of the Delhi High Court inC.M.P.No. 41 to 1981.
P.R. Andhyarjina, D.N. Misra and M.P. Baroocha for the Appellant.
G. Ramaswamy, Additional Solicitor General, V.P. Singh and Miss Sushma Relan for the Respondents.
960 The Judgment of the Court was delivered by DUTT, J.
These two appeals by special leave one pre ferred by the National Agricultural Co operative Marketing Federation of India Ltd (for short 'NAFFD ') and the other by Alimenta S.A. (for short 'Alimenta '), a Swiss Company are both directed against the judgment of the Delhi High Court dated December 11, 1981 whereby the application of NAFFD under section 33 of the , has been allowed in part.
A contract dated January 12, 1980 was entered into by and between the parties, namely, NAFED and Alimenta for the sale and supply of 5,000/8,000 M.T. of HPS groundnut kernels Jaras.
After the usual terms as to quality, quantity, price, etc., the contract provided in clause 11 thereof as follows: "Other terms and conditions as per FOSFA 20 contract terms.
" The expression 'FOSFA ' means the Federation of Oils, Seeds and Fats Association Ltd. Subsequently, another contract dated April 3, 1980 was entered into between the parties in respect of 4,000 metric tonnes of groundnut kernels.
Clause 9 of this contract provided as follows: "All other terms and conditions for supply not specifically shown and covered hereinabove shall be as per previous contract signed between us for earlier supplies of H.P.S." The FOSFA 20 contract contains an arbitration clause which is as follows: "ARBITRATION: Any dispute arising cut of this contract, including any question of law arising in connection there with, shall be referred to arbitration in London (or else where if so agreed) in accordance with the Rules of Arbitra tion and Appeal of the Federation of Oils, Seeds and Fats Association Limited, in force at the date of this contract and of which both the parties hereto shall be deemed to be cognizant.
Neither party hereto, nor any persons claiming under either of them shall bring any action or other legal proceedings against the other of them in respect of any such dispute 961 until such dispute shall first have been heard and deter mined by the arbitrators, umpire or Board of Appeal (as the case may be) in accordance with the Rules of Arbitration and Appeal of the Federation, and it is hereby expressly agreed and declared that the obtaining of an Award from the arbi trators, umpire, or Board of Appeal (as the case may be), shall be a condition precedent to the right of either party hereto or of any person claiming under either of them to bring any action or other legal proceedings against the other of them in respect of any such dispute.
" Disputes and differences arose between the parties.
Alimenta alleged that NAFED committed breach of their obli gations under both the contracts and sought to commence arbitration proceedings.
On the other hand, on March 19, 1981, NAFED filed a petition in the Delhi High Court under section 33 of the alleging, inter alia, that there was no valid arbitration agreement between the parties.
It was contended by NAFED that when it agreed in clause 11 of the first contract that the parties would be governed by the terms and conditions of FOSFA 20 contract, it only had in mind such terms and conditions as would govern the relationship between the parties.
Further, the fact that there was an arbitration clause in FOSFA 20 con tract came as a complete surprise to NAFED.
In other words, it was sought to be contended that NAFED was not at all aware of any arbitration clause in FOSFA 20 contract and, accordingly, it could not agree to incorporate any such arbitration clause in the contracts in question.
The said petition under section 33 of the was opposed by Alimenta.
A learned Single Judge of the High Court came to the finding that in view of the fact that NAFED had been nomi nated as the canalising agent for export of HPS groundnut under the provisions of the Export Control Order by the Central Government, it would not be unjustified to assume that the Senior Manager of NAFED was well aware of the foreign trade in groundnut and the implications of reference to FOSFA 20 contract when he put his signature to the con tract in question.
The learned Judge could not believe that the Manager of NAFED was not aware of the terms of FOSFA 20 contract.
Accordingly, the plea of NAFED that it was not aware of the existence of an arbitration clause in FOSFA 20 contract was overruled.
The learned Judge held that the arbitration clause in FOSFA 20 contract was incorporated into the first contract dated January 12, 1980 by virtue of clause 11 thereof providing "other terms and conditions as per FOSFA 20 contract terms".
962 So far as the second contract dated April 3, 1980 is concerned, it was pointed out by the learned Judge that it did not make any mention of FOSFA 20 contract and all that was stated in clause 9 thereof was that all other terms and conditions for supply not specifically shown and covered therein should be as per previous contract signed between the parties for similar supply of HPS.
The learned Judge took the view that only those terms and conditions which were referred to or connected with and germane to the sup ply, ,had been made applicable from the earlier contract that is to say, the first contract dated January 12, 1980.
Further, it was observed that a term about arbitration was not incidental to supply of goods and it was difficult to read from the provisions of clause 9 of the second contract that the arbitration clause was lifted from there and made a part of the same.
Upon the said findings, the learned Judge allowed the petition under section 33 of the in so far as it related to the second contract dated April 13, 1980.
It was held that no arbitration agreement existed between the parties and, as such, none of them was entitled to seek reference to arbitration with regard to the first contract, and that the same was governed by the arbitration clause as having been incorporated therein from the FOSFA 20 contract.
The petition under section 33 was disallowed so far as the first contract was concerned.
Hence, these two appeals one by NAFED against the judgment of the learned Judge disallowing the petition under section 33 in respect of the first contract and the other by Alimenta in so far as it allowed the petition relating to the second contract.
We may at first deal with the appeal preferred by the appellant NAFED relating to the first contract.
The question is whether by clause 11 in the first contract, the arbitra tion clause in FOSFA 20 contract can be said to have been incorporated into the contract.
It is now well established that the arbitration clause of an earlier contract can, by reference, be incorporated into a later contract provided, however, it is not repugnant to or inconsistent with the terms of the contract in which it is incorporated.
Mr. G. Ramaswamy, learned Additional Solicitor General appearing on behalf of the appellant, has strenuously urged that the High Court was wrong in holding that the arbitration clause in the FOSFA 20 contract was incorporated into the first con tract by virtue of the incorporation clause.
He has drawn our attention to the second illustration at page 46 of Russell on Arbitration, Twentieth Edition.
The illustration refers to the decision of Lord Esher M.R. in Hamilton & Co. vs Mackie & Sons, We have looked into that decision as much reliance has been placed thereon on behalf of NAFED.
In that case a bill of lading 963 contained the words "all other terms and conditions as per charterparty".
The charterparty contained an arbitration clause.
It was contended on behalf of the ship owners that the arbitration clause in the charterparty was incorporated into the bill of lading.
In overruling the said contention Lord Esher M.R. Observed: "Where there was in a bill of lading such a condition as this, 'all other conditions as per charterparty ', it had been decided that the conditions of the charterparty must be read verbatim into the bill of lading as though they were there printed in extenso.
Then if it was found that any of the conditions of the charterparty on being so read were inconsistent with the bill of lading they were insensible, and must be disregarded.
The bill of lading referred to the charterparty, and therefore, when the condition was read in, 'All disputes under this charter shall be referred to arbi tration, 'it was clear that condition did not refer to disputes arising under the bill of lading, but to disputes arising under the charterparty.
The condition therefore was insensible, and had no application to the present dispute, which arose under the bill of lading.
" According to Lord Esher M.R., the arbitration clause in charterparty "all disputes under this charter shall be referred to arbitration", if incorporated into the bill of lading would be quite insensible because of the words "under this charter".
The arbitration clause was, therefore, meant only for the charterparty and not for the bill of lading.
In a Full Bench decision of the Calcutta High Court in Dwarkadas & Co. vs Daluram Gaganmull, AIR 1951 Cal 10 F.B., the said observation of Lord Esher M.R. was considered by Harries, CJ.
The learned Chief Justice also took the view that if the arbitration clause in the charterparty was imported into the bill of lading it would be quite meaning less because no dispute under the charter could arise in the contract evidenced by the bill of lading.
According to the learned Chief Justice, if the words of the arbitration clause in the charterparty had read "all disputes under this contract shall be referred to arbitration", then if that term was transported into the bill of lading, it would be a perfectly sensible and reasonable term, for, once it had imported the phrase "all disputes under this contract", it would refer to all disputes arising under the bill of lad ing.
There would, therefore, be nothinhg inconsistent be tween such a term and the terms of the bill of 964 lading and that being so, cases similar to the case of Hamilton & Co. vs Mackie & Sons (supra) would have no appli cation to the case.
This view was also taken by the other learned Judges of the Full Bench.
In our opinion, Harries, C J, had taken a very reasona ble and sensible view.
It is true, as pointed out by Lord Esher M.R., that the expression "all disputes under this charter", if incorporated into the bill of lading, would be quite insensible.
But if, the clause had been "any dispute under this contract", then after incorporation into the bill of lading the words "this contract" would only mean the bill of lading into which it had been incorporated.
In the in stant case, as has been already noticed, the arbitration clause in the FOSFA 20 contract provides "any dispute aris ing out of this contract" and, as such, there is no diffi culty in the incorporation of the arbitration clause into the first contract, for, the words "this contract" would mean the first contract into which it has been incorporated.
Such incorporation would be quite intelligible and not inconsistent with the terms of the first contract.
There is, therefore, no substance in the contention made on behalf of the appellant on the basis of the decision in Hamilton & Co. vs Mackie & Sons, (supra).
It is next contended by the learned Additional Solicitor General that the arbitration clause in FOSFA 20 contract not being germane to the subject matter of the first contract, it cannot be said to have been incorporated therein.
It is pointed by him that the FOSFA 20 contract is a CIF contract relating to cost, insurance and freight, while the first contract is a f.o.b. contract.
It is, accordingly, submitted by the learned Counsel that the arbitration clause is not germane to the subject matter of the first contract.
In support of his contention he has placed much reliance upon the decision of the Court of Appeal in the case of The Annefield, [1971] 1 AII.E.R. 394.
In that case the question was whether the arbitration clause in the charterparty was incorporated into the bill of lading by ' virtue of the incorporation clause.
Clause 39, which was the arbitration clause, contained the words "All disputes from time to time arising out of this contract".
In considering the question Lord Denning M.R., referred to the decision in The N]egos, [935] AII.E.R. Rep. 863, where in the course of the discus sion, it transpired that these clauses in the charterparty and bill of lading had been in existence since 1914 and, it had always been held that the arbitration clause was not incorporated in the bill of lading.
On behalf of the ship owners in that case it was argued that if the arbitration clause 39 was incorporated into the bill of lading, the expression "this contract" in clause 39 would then be the contract evidenced by the bill 965 of lading.
In other words, the arbitration clause must be read in its bill of lading context.
This contention was made on the basis of the observation made by Lord Esher M.R., as extracted above.
The contention also finds support from the observation of Harries, C J, in Dwarka Das 's case (supra).
Lord Denning M.R. took the view that a clause which is directly germane to the subject matter of the bill of lading that is, to the shipment, carriage and delivery of goods, could and should be incorporated into the bill of lading contract, even though it might involve a degree of manipula tion of the words in order to fit exactly the bill of lad ing.
But, if the clause was one which was not thus directly germane, it should not be incorporated into the bill of lading contract unless it was done explicitly in clear words either in the bill of lading or in the charterparty.
It was, however, held by Lord Denning M.R. that an arbitration clause was not directly germane to the shipment, carriage and delivery of goods.
So, it was not incorporated by gener al words in the bill of lading.
Relying upon the decision in The Annefteld, it is sub mitted on behalf of the appellant that the arbitration clause in FOSFA 20 contract is not germane to the subject matter of the first contract and, accordingly, it was not incorporated into the first contract.
We are unable to accept the contention.
It has already been noticed earlier that there has been a long continued practice in England that the arbitration clause is not incorporated into the bill of lading by general words, unless it is explicitly done in dear words either in the bill of lading or in the charterparty.
In the instant case, we are not, however, concerned with a charterparty and a bill of lading contract.
Even assuming that the subject matters of FOSFA 20 contract and the f.o.b. contract are different, we do not think that any question as to the germaneness of the arbitration clause to the subject matter would be relevant.
It has been found by the learned Judge of the High Court that the Manager of NAFED, who had signed the first contract, was aware of the terms of the FOSFA 20 contract inducting the arbitration clause contained therein.
It is, therefore, manifestly dear that by the incorporation of clause 11 in the tint contract, the appellant intended to incorporate into it the arbitra tion clause of FOSFA 20 contract.
Thus where, as in the instant case, the parties are aware of the arbitration clause of an earlier contract, the subject matter of which is different from the contract which is being entered into by them, incorporates the terms of the earlier contract by reference by using general words, we do not think there would be any bar to such incorporation merely because the subject matters of the two contracts are different, unless, however, the incorporation of the arbitration clause will be 966 insensible or unintelligible, as was in Hamilton & Co. vs Mackie & Sons, (supra).
In the instant case, the arbitration clause in FOSFA 20 contract will fit in the first contract.
In other words, it will not be either insensible or unintel ligible.
In our opinion, therefore, the High Court was tight in holding that the arbitration clause in FOSFA 20 contract was incorporated into the first contract.
In the other appeal which has,been preferred by Alimen ta, it has been held by the High Court that there has been no incorporation of the arbitration clause into the second contract.
In the second contract, clause 9 provides "all other terms and conditions for supply not specifically shown and covered hereinabove shall be as per previous contract signed between us for earlier supplies of HPS".
There is a good deal of difference between clause 9 of this contract and clause 11 of the first contract.
Clause 11 has been couched in general words, but clause 9 refers to all other terms and conditions for supply.
The High Court has taken the view that by clause 9 the terms and conditions of the first contract which had beating on the supply of HPS were incorporated into the second contract, and the term about arbitration not being incidental to supply of goods, could not be held to have been lifted as well from the first contract into the second one.
It is, however, contended on behalf of the appellant that the High Court was wrong in its view that a term about arbitration is not a term of supply of goods.
We do not think that the contention is sound.
It has been tightly pointed out 'by the High Court that the normal incidents of terms and conditions of supply are those which are connected with supply, such as, its mode and process, time factor, inspection and approval, if any, reliability for transit, incidental expenses etc.
We are unable to accept the conten tion of the appellant that an arbitration clause is a term of supply.
There is no proposition of law that when a con tract is entered into for supply of goods, the arbitration clause must form part of such a contract.
The parties may choose some other method for the purpose of resolving any dispute that may arise between them.
But in such a contract the incidents of supply generally form part of the terms and conditions of the contract.
The first contract includes the terms and conditions of supply and as clause 9 refers to these terms and conditions of supply, it is difficult to hold that the arbitration clause is also referred to and, as such, incorporated into the second contract.
When the incor poration clause refers to certain particular terms and conditions, only those terms and conditions are incorporated and not the arbitration clause.
In the present case, clause 9 specifically refers to the terms and conditions of supply of the first 967 contract and, accordingly, only those terms and conditions are incorporated into the second contract and not the arbi tration clause.
The High Court has taken the correct view in respect of the second contract also.
In the result, the judgment of the High Court is af firmed and both these appeals are dismissed.
There will, however, be no orders as to costs.
M.L.A Appeals dis missed.
| The appellant and the respondent entered into two con tracts on two different dates for supply of HPS groundnut Kernels jaras.
After the usual terms as to quality, quanti ty, price etc., the first contract provided in clause II thereof "that other terms and conditions as per FOSFA 20 contract terms.
" However, clause 9 of the second contract did not make any mention of FOSFA 20 contract and all that was stated was that all other terms and conditions for supply not specifically shown and covered therein should be as per previous contract signed between the parties for similar supply of HPS groundnut.
The 'FOSFA 20 contract ' contained an arbitration clause to the effect that any dispute arising out of this contract, including any question of law arising in connection therewith, shall be referred to arbitration and neither party, hereto, nor any persons claiming under either of them shall bring any action or other legal proceedings against the other in respect of any such dispute until such dispute shall first have been heard and determined by the arbitrators.
Disputes and differences arose between the parties.
The appellant in Civil Appeal No. 1755/1982 alleged that the respondent therein committed breach of their obligations under both the contracts and sought to commence arbitration proceedings.
The respondent on the other hand filed a peti tion in the High Court under s.33 of the alleging that there was no valid arbitration agreement between the parties and contended that when it agreed in clause 11 of the first contract that the parties would be governed by the terms and conditions of 'FOSFA 20 contract ', it only had in mind such terms and 958 conditions as would govern the relationship between the parties and the fact that there was an arbitration clause in FOSFA 20 contract came as a complete surprise to the re spondent.
This petition was opposed by the appellant.
A Single Judge of the High Court held that in view of the fact that the respondent had been nominated the canalis ing agent for export of HPS groundnut, it would not be unjustified to assume that the respondent was well aware of the foreign trade in groundnut and the implications of reference to 'FOSFA 20 contract ' when he put his signatures to the contract in question; that the arbitration clause in FOSFA 20 contract was incorporated into the first contract by virtue of clause 11 providing 'other terms and conditions as per FOSFA 20 contract terms '.
With regard to the second contract it was held that it did not make any mention of FOSFA 20 contract and all that was stated in clause 9 there of was that all terms and conditions for supply not specifi cally shown and covered therein should be as the previous contract signed between the parties for similar supply of HPS.
It was accordingly held that there existed no arbitra tion agreement between the parties and, as such, none of them was entitled to seek reference to arbitration; and that a term about arbitration was not incidental to supply of goods and it was difficult to read from the provisions of clause 9 of the contract that the arbitration clause was lifted from there and made a part of the same.
The applications under s.33 of the was allowed in so far as it related to the second contract, and disallowed so far as the first contract was concerned.
Both parties filed appeals to this Court.
Dismissing the appeals, HELD: 1(i) The arbitration clause of an earlier contract can, by reference, be incorporated into a later contract provided however, it is not repugnant to or inconsistent with the terms of the contract in which it is incorporated.
[962F G] 1(ii) Where the parties are aware of the arbitration clause of an earlier contract, the subject matter of which is different from the contract which is being entered into by them, incorporating the terms of the earlier contract by reference by using general words, there would be no bar to such incorporation merely because the subject matters of the two contracts are different, unless however, the incorpora tion of the 959 arbitration clause will be insensible or unintelligible.
[965G H; 966A] 1 (iii) There is no proposition of law that when a contract is entered into for supply of goods, the arbitra tion clause must form part of such a contract.
The parties may choose some other method for the purpose of resolving any dispute that may arise between them.
But in such a contract the incidents of supply generally form part of the terms and conditions of the contract.
[966F G] 1 (iv) When the incorporation clause refers to certain particular terms and conditions, only those terms and condi tions are incorporated and not the arbitration clause.
[967A] 2.
The normal incidents of terms and conditions of supply are those which are connected with supply, such as, its mode and process, time factor, inspection and approval, if any, reliability for transit, incidental expenses etc.
An arbitration clause is not a term of supply.
[966E F] In the instant case, there is a good deal of difference between clause 9 of the second contract and clause 11 of the first contract.
Clause 11 has been couched in general words, but clause 9 refers to all other terms and conditions for supply.
The first contract includes the terms and conditions of supply and as clause 9 refers to these terms and condi tions of supply, it is difficult to hold that the arbitra tion clause is also referred to and, as such, incorporated into the second contract.
[966C D] Dwarkadas & Co. vs Daluram Gaganmull, AIR 1951 Cal 10 F.B., approved.
Hamilton & Co. vs Mackie & Sons, ,The Annefield, & The Njegos, , held inapplicable.
|
ivil Appeal No. 1112 of 1980.
From the Judgment and Order dated 13.5.
1980 of the Punjab and Haryana High Court in L.P.A. No. 521 of 1976.
Ms. Kamini Jaiswal for the Appellants.
V.M. Tarkunde, Harbans Singh and S.K. Bagga for the Respondents.
The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
Major General Gurbux Singh and his wife Gulwant Kaur were estranged and were living apart.
Their son and daughter in law were living with Gulwant Kaur at Chandigarh.
Gulwant Kaur was apparently complaining that Major General Gurbux Singh was not providing her with ade quate maintenance.
Therefore, on July 28, 1958, he wrote her a letter, the relevant parts of which are as follows:.
579 "To, Shrimati Gulwant Kaur, You have been complaining that I have not paid even a penny for maintenance for the last seven/eight months.
Here is an account from November 1957 to July, 1958, the details of which run as under: XXXXXXXXXXXXX XXXXXX XXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXX Now, so far as the question of future expenses is concerned, the maintenance shall be like this: FOR YOURSELF: 1.
The land and house situated at Mangwal, which was constructed with the earning of my whole life, is entrusted to you, the half portion of which already stands in your name and in lieu of the produce thereof Madanjit shall provide to you, if not more, free lodging and boarding (expenses for maintenance).
You stay in your own home.
The land at Khurana is also entrusted to you.
Its produce, lease money, etc. will fetch you a minimum of Rs. 1200 annually i.e. Rs. 100 per month for maintenance.
I shall pay Rs. 100 every month for maintenance.
xxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxx XXXXXX The letter of Gurbux Singh suggested that he was making adequate provision for meeting the expenses of Gulwant Kaur even at the cost of great inconvenience and discomfort to himself and so.
Gulwant Kaur was not entitled to complain.
Gulwant Kaur apparently felt disgusted and frustrated at the tone of the letter and by her letter dated August 5, 2958, she queried if she was not to take maintenance from 580 Gurbux Singh from who else was she to get any maintenance.
She said that she was not demanding anything and made no claim on him and that everything including the land and kothi belonged to him.
The Khurana land also belonged to him.
He might give her maintenance or not give her mainte nance as he chose.
She said that she was nothing more than a heap of dust and her life was not worth living.
In another portion of the letter, she mentioned that the Khurana land had not yet been leased and that there had been some delay.
Other correspondence passed between the parties which is not important for the present case.
Later, after a few years, Gurbux Singh conceived the idea of selling the Khurana land.
The wife protested.
Her letter dated January 15, 1966 was as follows: "Most respected husband, Sat Siri Akal; Previously in the summer, Col. Gurcharan Singh told us that you want to sell the land of Khurana.
Now, on the day you visited Sangrur, it was learnt from you that you were interested in selling the land.
I also told you that we depend upon only that.
This land was given to me by you voluntarily.
You had written letters to me and Madanjit on July 28, 1958 copy whereof is being sent to you by me.
Therein, it was decided that I would continue enjoying the produce thereof till my life.
Now, on hearing that you want to sell it, I was very much shocked . . .
Now this letter is being written to you in order to impress upon you not to sell the land of Khurana because Madanjit and I depend upon it.
You are very well aware that we do not possess anything else . . . .
I fully hope that you will continue giving me this land and the maintenance grants to me as per your decision and will not think of selling this land.
You are aware how we are hardly mai ntaining ourselves.
I have made this prayer to you.
I have full right over it.
I hope that you will reply soon." Gulwant Kaur 's letter did not have any effect on Major General Gurbux Singh.
Instead of replying her, he sold the Khurana land to the plaintiff respondents on June 18, 1968.
The purchaser instituted the present suit out of which the appeal arises for an injunction restraining Gulwant Kaur and Madanjit Singh from interfering with their possession.
The defendants contested the suit initially on the ground that the 581 land had been gifted to Gulwant Kaur orally by Major General Gurbux Singh.
It was also claimed that Gulwant Kaur had acquired title by adverse possession.
Later the written statement was amended and a further plea was taken that the land in dispute had been given to Gulwant Kaur in lieu of maintenance and that she had become the absolute owner of the land under sec.
14 of the Hindu Succession Act.
All the courts found that there was no oral gift.
A learned single Judge of the High Court who heard the second appeal held that the Khurana Land was given to Gulwant Kaur by her husband Major General Gurbux Singh in lieu of maintenance and that by virtue of sec.
14 of the Hindu Succession Act, she had become full owner of the property.
On an appeal under the Letters Patent, a Division Bench of the High Court of Punjab & Haryana held that Gulwant Kaur was merely al lowed to receive the proceeds of the land in dispute in order to meet her day to day expenses and that she did not at all acquire any such right or interest in the property as could be termed 'limited ownership ' so as to permit her to take the benefit of the provisions of sec.
14(1) of the Hindu Succession Act.
According to the learned Judges, "If the General had given over the land in dispute completely to the lady then the question of sending more money could not have arisen . .
The reading of the letter leaves no manner of doubt that there was never any intention on the part of the General to give away the land of village Khurana to the lady and that instead of sending the total amount in cash, the General allowed her to utilise the amount of ckakota for meeting her day to day expenses.
" The Division Bench reversed the judgment of the learned Single Judge.
We are unable to agree with the conclusions of the Division Bench of the High Court.
The question was not whether Major General Gurbux Singh intended to give away the Khurana land absolutely to Gulwant Kaur but whether the land was given to her in lieu of maintenance.
A perusal of the letter dated July 28, 1958 from Major General Gurbux Singh to Gulwant Kaur and the letter dated January 15, 1966 clear ly establish that the Khurana land was given to Gulwant Kaur by Gurbux Singh in lieu of her maintenance.
We are unable to understand the distinction made by the High Court between day today expenses and maintenance.
It was argued by Shri Tarkunde, learned counsel for the respondents that even if the land was given to Gulwant Kaur in lieu of maintenance, it must be established that what was given to her was a limited estate in the sense of ownership without the right of alienation and that under sec.
14 of the Hindu Succession Act only such a limited estate would blossom into an abso lute estate.
We are unable to agree with the submission of Shri Tarkunde.
Shri 582 Tarkunde invited our attention to some decisions of this court as supporting the preposition stated by him.
We will presently refer to all of them.
14 of the Hindu Succession Act is as follows: "(1) Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner.
Explanation In this sub section, "property" includes both movable and immovable property acquired by a female Hindu by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatsoever, and also any such property held by her as stridhana immediately before the commencement of this Act.
(2) Nothing contained in sub section (1) shall apply to any property acquired by any of gift or under a will or any other instrument or under a decree or order of a civil court or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restricted estate in such property.
" It is obvious that sec.
14 is aimed at removing restric tions or limitations on the right of a female Hindu to enjoy, as a full owner, property possessed by her so long as her possession is traceable to a lawful origin, that is to say, if she has a vestige of a title.
It makes no difference whether the property is acquired by inheritance or devise or at a partition or in lieu of maintenance or arrears of maintenance or by gift or by her own skill or exertion or by purchase or by prescription or in any other manner whatsoev er.
The explanation expressly refers to property acquired in lieu of maintenance and we do not see what further title the widow is required to establish before she can claim full ownership under sec.
14(1) in respect of property given to her and possessed by her in lieu of maintenance.
The very right to receive maintenance is sufficient title to enable the ripening of possession into full ownership if she is in possession of the property in lieu of maintenance.
Sub sec.
2 of sec.
14 is in the nature of an exception to sec.
583 14(1) and provides for a situation where property is ac quired by a female Hindu under a written instrument or a decree of court and not where such acquisition is traceable to any antecedents right.
In Bramma vs Verrupanna, on the death of the last male holder, his two step mothers who had no vestige of title to the properties got possession of the properties and in answer to a suit by the rightful heirs, one of them claimed that she had become full owner of the property under sec.
14 of the Hindu Succession Act.
The Supreme Court pointed out that the object of sec.
14 was to extinguish the estate called limited estate and to make a Hindu woman who would otherwise be a limited owner, a full owner of the property but it was not to confer a title on a female Hindu, who did not in fact possess any vestige of title.
The case did not deal with the case of Hindu a woman who was given property in lieu of maintenance and in whom therefore a right or interest was created in the property.
In Badri Pershad v, Smt, Kanso Devi; , The Court pointed out that a Hindu widow who after the death of her husband obtained properties under a partition award between herself and her sons, would be entitled to an abso lute estate under sec.
14(1) of the Act and that merely because the partition was by means of an arbitration award, sec.
14(2) would not be attracted.
It was made clear that sec.
14(2) was in the nature of a proviso or an exception to sec.
14(1) and that it came into operation only if the Hindu woman required the property in any of the methods indicated therein for the first time without their being any pre existing right in her to the property.
The principle of the case far from supporting Shri Tarkunde 's submission supports the submission of the appellants, In Naraini Devi vs Smt.
Rano Devi and Ors.
, ; the case of Badri Pershad vs Smt.
Kanso Devi (supra) was distinguished on the ground that the widow had no pre exist ing right in the property which she obtained under an award and therefore, the case fell squarely within sec.
14(2) of the Hindu Succession Act.
In Tulasamma vs Sesha Reddi, ; , it was clearly laid down that sec.
14(1) would be applicable to property given to a female Hindu in lieu of maintenance.
It was also made clear that sec.
14(2) would apply only to cases where the acquisition of property was made by a Hindu female without any pre existing right.
It was said.
"It will, therefore, be seen that sub sec.
(1) of sec.
584 14 is large in its amplitude and covers every kind of acqui sition of property by a female Hindu including acquisition in lieu of maintenance and where such property was possessed by her at the date of commencement of the Act or subsequently acquired and possessed, she would become the full owner of the property.
Now, sub section (2) of sec.
14 provides that nothing contained in sub sec.
(1) shall apply to another property acquired by way of gift or under a will or any instrument or under a decree by order of a civil court or under an award when the terms of the gift, will or other instrument or the decree, order or award prescribed a restricted estate in such property.
This provision is more in the nature of a proviso or an exception to sub sec.
(1) and it was regarded as such by this court in Badri Pershad vs Kanso Devi (supra) . . . . . . . . . . . . . . . .
It is, therefore, clear that under the Shastric Hindu Law a widow has a right to be maintained out of joint family property and this right would ripen into a charge if the widow takes the necessary steps for having her maintenance ascertained and specifically charged in the joint family property and even if no specific charge is created, this right would be enforceable against joint family property in the hands of a volunteer or a purchaser taking it with notice of her claim.
The right of the widow to be maintained is of course not a jus in rem, since it does not give her any interest in the joint family property but it is certain ly jus ad rem, i.e., a right against the joint family property.
Therefore, when specific property is allotted to the widow in lieu of her claim for maintenance, the allot ment would be in satisfaction of her jus ad rem, namely, the right to be maintained out of the joint family property.
It would not be a grant for the first time without any preex isting right, in the widow.
The widow would be getting the property in virtue of her pre existing right, the instrument giving the property being merely a document effectuating such pre existing right and not making a grant of the property to her for the first time without any antecedent right 'or title.
There is also another consideration which is very relevant to this issue and it is that, even if the instrument were silent as to the nature of the interest given 585 to the widow in the property and did not, in so many terms, prescribe that she would have a limited interest, she would have no more than a limited interest in the property under the Hindu Law 'as it stood prior to the enactment of the Act and hence a provision in the instrument prescribing that she would have only a limited interest in the property would be, to quote the words of this Court in Nirmal Chand 's case (supra), "merely recording the true legal position" and that would not attract the applicability of sub section (2) but would be governed by sub section (1) of section 14.
The conclusion is, therefore, inescapable that where property is allotted to a widow under an instrument, decree, order or award prescribes a restricted estate for her in the property and sub section (2) of section 14 would have no application in such a case." In Bai Vajia vs Thakorbhai Chelabhai, ; , the court referred to the earlier judgment in Tulsamma 's case and said, "All the three Judges were thus unanimous in accepting the appeal on the ground that Tulsamma 's right to maintenance was a pre existing right, that it was in recognition of such a right that she obtained property under the compromise and that the compromise therefore did not fall within the ambit of sub section (2) of section 14 of the Act but would attract the provisions of sub section (1) thereof coupled with the Explanation thereto.
With respect we find ourselves in complete agreement with the conclusions arrived at by Bhagwati and Fazal Ali, JJ., as also the reasons which weighed with them in coming to those conclusions.
" Shri Tarkunde particulary relied on the following passage in Bai Vajia vs Thakorbhai 's case: "A plain reading of sub section(1) makes it clear that the concerned Hindu female must have limited ownership in property, which limited ownership would get enlarged by the operation of that sub section.
If it was intended to enlarge any sort of a right which could in no sense be described as ownership, the expression "and not as a limited owner" would not have been used at all and becomes redundant, which is against the well recognised 586 principle of interpretation of statutes that the Legislature does not employ meaningless language.
" We do not understand the court as laying down that what was enlarged by sub sec. 1 of sec.
14 into a full estate was the Hindu woman 's estate known to Hindu law.
When the court uses the word 'limited estate ', the words are used to connote a right in the property to which the possession of the female Hindu may be legitimately traced, but which is not a full right of ownership.
If a female Hindu is put in possession of property pursuant to or in recognition of a right to maintenance, it cannot be denied that she has acquired a limited right or interest in the property and once that position is accepted, it follows that the right gets en larged to full ownership under sec.
14(1) of the Act.
That seems to us to follow clearly from the language of sec.
14(1) of the Act.
In Sellammal vs Nellammal, AIR 1977 SC 1265, the court held that property allotted to a Hindu widow in lieu of her maintenance in recognition of her pre existing right became her the asbolute property.
In Santnanam vs Subramanya, AIR 1977 SC 2024, it was again held that property in the possession of a widow of the deceased coparcener which had been allotted to her for life in lieu of maintenance without power of alienation became her absolute property under section 14(1) of the Act with powers of alienation.
In Krishna Das vs Venkayya, AIR 1978 SC 36 1, it was reiterated that where a widow was put in possession of joint family property in lieu of her right to maintenance, her right to the property became enlarged into an absolute estate under section 14(1).
We, therefore, think that it is rather late in the day for Shri Tarkunde to contend that the Khurana land which was given to Gulwant Kaur in lieu of maintenance did not vest in her absolutely.
We may finally refer to a recent decision of this Court in Jagannathan Pillai vs Kunjithapadam Pillai, ; where Thakkar and Ray, JJ. pointed out.
" On an analysis of Section 14(1) of the Hindu Succession Act of 1955, it is evident that the legislature has abolished the concept of limited ownership in respect of a Hindu female and has enacted that any property possessed by her would thereafter be held by her as a full owner.
Section 14(1) would come into operation if the property 587 (Sic) at the point of time when she has an occasion to claim or assert a title thereto.
Or, in other words, at the point of time when her right to the said property is called into question.
The legal effect of section 14(1) would be that after the coming into operation of the Act there would be no property in respect of which it could be contended by anyone that a Hindu female is only a limited owner and not a full owner.
(We are for the moment not concerned with the fact that sub section(2) of section 14 which provides that Section 14(1) will not prevent creating a restricted estate in favour of a Hindu female either by gift or will or any instrument or decree of a civil court or award provided the very document creating title unto her confers a restricted estate on her).
There is nothing in Section 14 which supports the proposition that a Hindu female should be in actual physical possession or in constructive possession of any property on the date of the coming into operation of the Act.
The expression 'proposed ' has been used in the sense of having a right to the property or control over the property.
The expression 'any property possessed by a Hindu female whether acquired before or after the commencement of the Act ' on an analysis yields to the following interpretation: (1) Any property possessed by a Hindu female acquired before the commencement of the Act will be held by her as a full owner thereof and not as a limited owner.
(2) Any property possessed by a Hindu female acquired after the commencement of the Act will be held as a full owner thereof and not as a limited owner.
" In view of the foregoing discussion, we allow the ap peal, set aside the judgment of the Division Bench of the High Court and restore that of the learned single Judge.
N.P.V. Appeal allowed.
| The appellant, a stage carriage operator, applied for renewal of a permit to ply his bus on a particular route but was granted only a temporary permit to do so.
Thereafter he applied for issue of a regular permit, but once again, action was initiated for issue of a temporary permit only.
Aggrieved by this approach of respondent No. 1, who was exercising the power of the Regional Transport authorities in the State, the appellant filed a writ petition seeking a direction that respondent No. 1 should consider and grant stage carriage permits to eligible persons under section 46 read with section 57(2) and grant renewal of such permits under section 58 of the .
The High Court dismissed the petition at the admission stage.
Respondent No. 1, in his counter affidavit, stated that the State Government had approved and published two Schemes under section 68(D) (2) of the Act for grant of stage carriage permits in favour of State Transport Undertakings and pri vate operators in two specified areas of the State which envisaged the complete take over of all the routes by the State Transport Undertakings in a phased manner within 3 years of the expiry of the Scheme.
Since the State Transport Undertakings had not taken over the operations from the private operators in accordance with the two Schemes and the State Government had neither announced new schemes to re place them, nor declared its transport policy, Respondent No. 1 had considered it inadvisable to grant regular permits on long term basis and was issuing temporary permits only.
Allowing the appeal by special leave, 662 HELD: The Transport Authorities which are statutory authorities have to discharge the duties imposed on them by the Act without waiting for any policy to be announced by the State Government.
In doing so, primary consideration should be given to the public interest and also to the fundamental right of the citizens to carry on motor trans port business in accordance with law.
This Court has ob served in several decisions that a Regional Transport Au thority would be failing in its duty if it grants repeatedly temporary permits to ply stage carriages on routes even though it is aware of the fact that there is a permanent need for granting regular permits in respect of the said routes.
[666E; G] The entire policy followed by the State Government and the 1st Respondent is contrary to the general scheme of the Act.
The schemes said to have been published under s.68 D do not specify any notified routes or any notified areas.
It is not possible also to find out from the said schemes whether private operators have been excluded from any particular area or route.
The schemes appear to be incomplete and, therefore, are ineffective.
In the above situation the Regional Transport authorities whose functions have been delegated under the Act to the State Transport Commissioner, Punjab, cannot decline to grant stage carriage permits on applications properly made to them by intending operators only because the State Government has not announced its transport policy.
The State Government cannot have any policy different from or independent of the provisions contained in Chapters IV and IV A of the Act.
[666B E] In the instant case, it is not denied that there is a permanent need to grant permits to ply stage carriages on the several routes in the State of Punjab.
The policy adopt ed by the 1st Respondent, namely, issuing of temporary permits from time to time, is highly irregular and is against the language and spirit of section 62 of the Act, which provides for the grant of temporary permits.
[666F]
|
Appeal No. 258 of 1967.
Appeal front the judgment and order dated October 3, 1966 of the Madras High Court in Writ Petition No. 1159 of 1966.
G. Ramaswamy, R. Gopalakrishnan and K. K. Venugopal, for the appellant.
M.N. Ranghachari, M.K. Ramamurthy, Shyamala Pappu and Vineet Kumar, for respondent No.1 The Judgment of the Court was delivered by Sikri, J.
This appeal by certificate granted by the High Court of Madras is directed against its order dated October 3, 1966, 15 allowing the writ petition filed under article 226 of the Constitution by M/s Raman & Raman (P) Ltd., Kumbakonam, and quashing the order of the Regional Transport Authority, Thanjavur, dated March 28, 1966, whereby the Regional Transport Authority had granted the application for variation of the route Sirkali to, Kumbakonam of M/s Sri Ram Vilas Service Ltd. Kumbakonam, in respect of two stage carriages.
On December 9, 1965, the application of M/s Sri Ram Vilas Service Ltd., Kumbakonam for variation of the route Sirkali to, Kumbakonam was notified under section 57(3) of the .
M/s Raman & Raman (P) Ltd., among others, filed objections and after hearing the objections, by order dated March 28, 1966, the Regional Transport Authority, Thanjavur, granted the application as, according to it, the variation applied for was in the interest of the travelling public.
The distance covered by the variation extended beyond 24 kilometers.
M/s Raman & Raman (P) Ltd. filed the petition under Art 226 of the Constitution to quash the order of the Regional Transport Authority.
The question which arises in this appeal is whether the Regional Transport Authority had jurisdiction to vary the route by extending it beyond 24 kms.
The High Court, following its earlier decision in M/s Swami Motor Transport (P) Ltd. vs M/s Murugan Transports, Tiruchirapalli and Others(1) held that "any variation in excess of 24 kilometers would be ex facie illegal and violation of the intendment of the legislature enacting Act 3 of 1964.
" The answer to the question posed above depends upon the true construction of some sections of the .
as amended by the Madras Act III of 1964.
The relevant statutory provisions are as follows : "48(1).
Subject to the provisions of section 47, a Regional Transport Authority may on an application made to it under section 46, grant a stage carriage pen nit in accordance with the application or with such modification as it deems fit or refuse to grant such a permit; Provided that no such permit shall be granted in respect of any route or area not specified in the, application.
(3)The Regional Transport Authority, if it decides to grant a stage carriage permit, may grant the permit for service of stage carriages of a specified description or for one or more particular stage carriages, and may, subject to any rules that may be made under this Act, (1) Writ Petition No. 3744 of 1965, judgement dated September 7, 1966.
16 attach to the permit any one or more of the, following conditions, namely : (i)that the stage carriage or stage carriages shall be used only on a specified route or routes or in a specified area. . .
(xxi)that the Regional Transport Authority, may after giving notice of not less than one month : (a)vary, extend or curtail the route or routes or the area specified in the permit.
Provided that in the case of (i)variation, the termini shall not be altered and the distance covered by variation shall not exceed 24 kms.
(ii)extension of the distance covered by the extension shall not exceed 24 kms.
from the termini (aa) vary any other condition of the permit." "section 57(8).
An application to vary the conditions of any permit other than a temporary permit by the inclusion of a new route or routes or a new area or by the variation, extension or curtailment of the route or routes or area specified in the permit or in the case of a stage ,carriage permit, by increasing the number of services above the specified maximum, or in the case of a contract carriage permit by increasing the number of vehicles, covered by the permit shall be treated as an application for the grant of a new permit.
" "Rule 208.
(a) Upon application made in writing by the holder of any permit, the Transport Authority may, at any time, in its discretion, vary the permit or any of the conditions thereof subject to the provisions ,of sub rule (b).
(b)If the application is for the variation of the permit by the inclusion of an additional vehicle or vehicles or if the grant of variation would authorize transport facilities materially different from those authorized by the original permit the Transport Authority shall deal with the application as if it were an application for a permit.
Provided that nothing contained in this rule shall prevent the Transport Authority or its Secretary, if authorized in this behalf, from summarily rejecting an application for the variation of a stage carriage permit 17 so as to provide transport facilities on a road which has been or is certified to be unfit for motor vehicular traffic by an officer not below the rank of Divisional Engineer of the Highways Department.
(c)Every application for variation of conditions of permit under sub section (8) of section 57 of the Act in respect of a transport vehicle shall be.
in form PVA.
(d)The provisions of rules 163(b) shall, mutatis mutandis, apply to application for the variation of a permit or the variation of the counter signature, if any, thereof by the inclusion of an additional vehicle sanctioned subject to the production of the registration certificate of the additional vehicle.
" Section 5 of the Madras Act III of 1964, reads as follows " 5(1).
Notwithstanding anything contained in the principal Act, the route or routes or the area specified in every stage carriage permit granted before the commencement of this Act shall be deemed to be a condition attached to such permit under sub section (3) of section 48 of the principal Act, as if this Act were in force on the date of grant of such permit.
(2)Notwithstanding any judgment or order of any Court, all proceedings taken for the grant of, and all orders passed granting any variation, extension or curtailment of the route or routes or the area specified in a stage carriage permit before the commencement of this Act by the State Transport Authority or by a Regional Transport Authority or by an authority or person to whom the powers and functions of the State Transport Authority or a Regional Transport Authority have been delegated, or by an authority exercising the powers of appeal or revision against the orders of the State Transport Authority or a Regional Transport Authority, shall not be deemed to, be invalid merely by reason of the fact that the State Transport Authority or the Regional Transport Authortiy, as the case may be, had no power to grant such variation, extension or curtailment and all such proceedings taken or orders passed shall be deemed always to have been validly taken or passed in accordance with law notwithstanding the distance covered by the variation or extension exceeded twenty four kilometers." The learned counsel for the respondent contends that section 4 8 3 (xxi), as amended, operates whether a condition to that effect has been put in a permit or not.
But we are unable to read section 48 18 in this sense.
Section 48 (3) clearly enables the Regional Transport Authorityto attach to the permit any or one of the twenty one conditions.
It may in a particular case put one or two or more of the condition,; or it may put all the conditions.
It seems to be common ground that if any of the first twenty conditions in section 48(3) is not attached to a permit it will not have effect.
What makes condition (xxi) different is hard to appreciate.
If condi tion (xxi) as amended is not attached to a permit it is difficult to see how the Regional Transport Authority can derive any power from the existence of section 48 (3) (xxi) in the Act.
Section 5 (1) of Act If of 1964 makes the route or routes or the area specified in every stage carriage permit granted before the commencement of the Amending Act a condition attached to such permit tinder subsection (3) of section 48 of the principal Act; it does not say that section 48(3) (xxi) shall be deemed to be a condition attached to every such permit.
The learned counsel for the respondent says that this was theintention of the amendment, but if this was so, the intention has not been carried out.
It was argued before us that the history of legislation supports the interpretation placed by the High Court but, in our view, the Act as it stands amended by Act III of 1964 is quite clear and it is not necessary to go into the history of the legislation.
It seems to us that the High Court erred in holding that section 48 (3) (xxi) of the Act, as amended, by itself gave power to the Regional Transport Authority to vary the route within certain limits.
This power, in our View, Would be exercisable only if a condition to that effect is put in the permit.
In the case of the appellant we saw the permit and what it contained was a condition similar to the condition mentioned in section 48 (3) (xxi) before its amendment by Act If 1 of 1964.
Therefore, for the purpose of this appeal we must treat section 48 (3) (xxi), as amended, as nonexistent.
If section 48(3)(xxi), as amended, is treated as non existent, then there can be no difficulty in coming to the conclusion that no limitation had been placed on the powers of the Regional Transport Authority in respect of the grant of applications for variation of the route.
The order of the Regional Transport Authority cannot, therefore, be challenged as being beyond its jurisdiction.
Another question that was debated before us was whether r. 208 of the Madras Motor Vehicles Rules, extracted above, confer powers on a Transport Authority to vary permits or whether it is merely a procedural rule.
It seems to us that as the Act stands at present, r. 208 does confer power on a transport authority to vary all kinds of permits or conditions attached therein.
This power is exercised on an application made in writing by the holder of any permit.
19 It follows from the above reasoning that the Regional Trans port Authority had the authority under r. 208 to vary the permit and nothing contained in section 48 (3) (xxi) limited its power in respect of the distance covered by the variation in this, case.
We may mention that it was argued before us that section 57(8) is not merely procedural but also implies a power to receive applications and vary the conditions in a permit.
This may be so, but it is not necessary to decide in this case because in Madras r. 208 clearly confers power on the Transport Authority to vary the conditions of the permit.
In the result the appeal is allowed and the judgment of the High Court set aside.
The appellant will have the costs incurred in.
this Court.
| The appellant 's application for variation of a route extending beyond 24 kilometers was accepted by the Regional Transport Authority.
The respondent, who had unsuccessfully objected before the Authority filed a writ petition in the High Court to quash the order.
The High Court accepted the writ petition holding that any variation in excess of 24 kilometers was ex facie illegal and violation of the intendment of the legislature enacting Madras Act 3 of 1964.
which amended the Motor Vehicles Act.
In appeals this Court, HELD : The Regional Transport Authority had authority under r. 208 to vary the permit and nothing contained in section 48(3)(xxi) of the Motor Vehicles Act limited its power in respect of the distance covered by the variation in this case.
[19A] Section 5(1) of Madras Act 3 of 1964 made the route or routes or the area specified in every stage carriage permit granted before the commencement of the Amending Act a condition attached to such permit tinder sub section
(3) of section 48 of the Principal Act; it did not that section 48(3)(xxi) shall be deemed to be condition attached to every such permit.
[18c] The High Court erred in holding that section 48(3)(xxi) of the Act, is amended.
by itself gave power to the Regional Transport Authority to vary the route within certain limits.
This power Could be exercised only if a condition to that effect was put in the permit.
In the case of the appellant the permit contained a condition similar to the condition mentioned in section 48 (3) (xxi) before its amendment by Act 3 of f 964.
Therefore, for the purpose of this appeal section 48(3)(xxi).
is amendment has to be treated ,is non existent.
[18E G]
|
Appeal No. 587 of 1962.
Appeal by special leave from the judgment and order dated April 12, 1961, of the Bombay High Court in Civil Revision Application No. 441 of 1961.
232 S.V. Gupte, Additional Solicitor General of India and R.H. Dhebar, for the appellant.
S.G. Patwardhan and A.G. Ratnaparkhi, for respondent No. 1.
The Judgment of the Court was delivered by RAGHUBAR DAYAL J.
This appeal, by special leave, raises the question whether the amount of interest decreed for the period subsequent to the institution of a suit comes within the expression 'amount or value of the subject matter in dispute ' in article 1 of Schedule 1 of the Bombay Court fees Act, 1959, hereinafter called the Act, for purposes of court fee payable on the memorandum of appeal.
The plaintiff respondent No. 1 instituted Special Suit No. 5 of 1957 in the Court of the Civil Judge (Senior Division) at Ahmedabad to recover Rs.13,205 on account of the principal lent to defendant No. 7 and interest up to the date of the suit at the rate of 9 % per annum.
On July 18, 1960, his claim was decreed in a sum of Rs. 13,033 6 6 with future interest from the date of suit till realization at 40% per annum on a sum of Rs. 10, 120.
Defendant No. 7 appealed to the High Court against the decree.
In the memorandum of appeal, defendant No. 7 valued the claim for purposes of jurisdiction and court fee at Rs. 13,033 6 6 and his grounds Nos. 1 and 48 of appeal were as follows: 1.
That the lower Court erred in decreeing the plaintiff 's suit.
That the decree is otherwise erroneous, unjust and illegal and therefore deserves to be set aside.
" The remaining 46 grounds related to the merits of the plaintiff 's claim and did not deal with the correctness of the trial Court awarding future pendente site interest on the rate at which it was to be calculated.
The Taxing Officer was of opinion that the appeal was against the whole decree and that the amount of value of the subject matter in dispute for purposes 233 of court fee was Rs. 14,036.
80nP. as the amount of interest from the date of the suit till the date of the decree on Rs. 10,120 came to Rs. 1,033.40 nP. and it bad been conceded by the counsel for the defendant appellant that the subject matter of the appeal was the decree passed by the trial Court.
He therefore directed the defendant appellant to pay the deficit court fee of Rs. 70 on the memorandum of appeal and to amend the claim accordingly.
The defendant appellant then filed a revision to the High Court under section 5(2) of the Act.
His objection was upheld by the learned Judge who expressed the view: "The subject matter in appeal is the real matter in dispute between the parties and not something which must stand or fall with the decision oil it.
In other words, it must mean the right which is in dispute between the parties.
" He accordingly set aside the order of the Taxing Officer and held that the amount of court fee paid on the memorandum of appeal was the proper court fee.
The State of Maharashtra has filed this appeal by special leave against this order.
Mr. Gupta, for the appellant State, contends that the view expressed by the learned Judge is not correct and mainly relies on the construction put by Courts on the expression ' value or subject matter in dispute ' in the relevant provisions relating to the High Court 's giving leave to appeal to the Privy Council.
In Gooroo persad Khoond vs Juggutchunder (1) the Judicial Committee said, in connection with the requirements of the directions in the Order in Council of April 10, 1938, with respect to the conditions for granting leave to appeal to the Privy Council, that leave to appeal was to be given in cases where the value of the matter in dispute in the appeal amounted to the specified sum of Rs. 10,000 and that in (1) 8 M.I.A. 166. 234 determining such value, the amount of interest decreed up to the date of the decree be included to the amount of the principal.
Doorga Doss Chowdry vs Ramanauth Chowdry (1) is an authority for the proposition that the costs of a suit are no part of the subject matter in dispute.
Their Lordships of the Privy Council said: sum claimed, it would be in the power of every litigant, by swelling the costs, to bring any suit up to the appealable value.
" It may also be said that a litigant 's conduct may lead to a protracted trial and consequently to the increase in the amount of pendente lite interest which may raise the value of the subject matter in dispute in appeal to the appealable value.
We do not consider it correct that the expression in the Act be construed in the light of the construction placed on a similar expression for the purposes of considering whether the case had come within the rule allowing the High Courts to give leave for appeal to the Privy Council.
The Act is a taxing statute and its provisions therefore have to be construed strictly, in favour of the subject litigant.
The other provisions are for the purpose of allowing the party feeling aggrieved against the decision of the High Court to take up his case to the next higher Court.
the Privy Council and therefore the relevant provisions in that regard had to be given a liberal construction.
In the present case we have to construe the expression 'value of the subject matter in dispute in appeal ' for the purposes of determining the amount of Court fee due on a memorandum of appeal and not for determining such valuation for preferring an appeal to this Court.
The relevant provision governing the question of court fee to be paid on the memorandum of appeal filed in a Civil Court is contained in article 1 of Sche (1)8 M.I.A. 262.
235 dule 1 of the Act.
it is to be paid ad valorem according to the amount or value of the subject matter in dispute.
The rates applicable with respect to the various amounts are mentioned in the article.
The maximum amount of court fee, however, is Rs. 15,000.
The amount of court fee payable, therefore, depends on the amount or value of the subject matter in dispute in appeal.
The defendant appellant valued his claim at Rs. 13,033 6 6 and paid the requisite court fee on that amount.
It is obvious therefore that he disputes in appeal that part of the decree which awarded Rs. 13,033 6 6 against him on account of principal and interest due up to the date of the institution of the suit.
He did not dispute, according to the value of his claim, the amount of interest which could be found on calculation for the period between the date of the suit and the date of the decree at 4% per annum on a sum of Rs. 10,120 as had been awarded under the decree.
Whether his appeal is competent or not without his including this amount in his claim in appeal, is a question different from that relating to the value of the subject matter in dispute in appeal.
He does not dispute the decree for that amount and therefore the Court has not to decide about it and so this amount cannot be included in the amount of the subject matter in dispute in appeal covered by the relevant expression.
None of his grounds of appeal refers specifically to this amount of interest between the date of the suit and the date of the decree.
This makes it further plain that he does not question the propriety of awarding of future interest or the rate at which it was awarded or even the amount on which it could be awarded.
It is not possible to say, in these circumstances, that the value of the subject matter in dispute in the appeal must include this amount of interest between the date of the suit and the date of the decree.
Mr. Gupta has rightly conceded that it is well settled that the plaintiff has to value his appeal against the dismissal of his suit on the amount of the claim he had made in the plaint and has not to include 236 the interest due on the amount claimed up to the date of instituting the appeal, that the defendant has not to include that amount of future interest subsequent to the date of the decree till the institution of the appeal in the valuation of the appeal for the purposes of court fee and that no court fee is to be paid on the amount of costs decreed in the suit when the party aggrieved appeals against the decree.
On what principle are these amounts not treated as forming part of the value of the subject matter in dispute in appeal? Such value is to be determined on the substantial allegation in the plaint or from the pleas in the memorandum of appeal with respect to the points in dispute between the parties and sought to be determined by the Court.
Such are necessarily the points affecting the rights of the parties sought to be adjudicated by the Court.
Claims not based on any asserted right but dependent on the decision of the disputed right and reliefs in regard to which are in the discretion of the Court do not come within the purview of the expression 'subject matter in dispute in plaint or memo of appeal '.
There appears no good reason to make a distinction between the decreed amount of costs and that of pendente lite interest for the purpose of determining the amount of the subject matter in dispute in appeal.
It is true that costs of suit arise independently of the claim and are really those which are incurred by the plaintiff while the decree for the amount of pendente lite interest is directly related to the plaintiff 's claim though its award is within the discretion of the Court, but this will not justify the distinction.
The costs too, and particularly the costs on account of court fee and counsel 's fee, arise directly on account of the claim put forward in Court.
The reason really is that it is the value of the right claimed in the suit or appeal which is covered by the expression 'amount or value of subject matter in dispute in article 1, Schedule 1, of the Act and that the plaintiff ' has no right to get any of these amounts from the defendant though the Court may, in its discretion, allow future interest 237 and costs according to the circumstances of the suit in view of sections 34 and 35 C.P.C.
This principle equally applies to the non inclusion of the decreed amount ' of pendente lite interest in evaluating the subjectmatter in dispute in appeal as that too is awarded in the exercise of its discretion by the Court an the plaintiff has no right or claim for that amount against ' the defendant.
It is obvious that if the defendant appellant succeeds in establishing to the satisfaction of the appellate Court that the decree for the principal and interest up to the date of the suit is bad in whole or in part, that will itself lead the appellate Court to exercise its discretion with respect to the amount of costs and future interest in such a way that if the plaintiff 's claim is dismissed in too, he will not be awarded any future interest or any costs of the suit or appeal and that in case his claim succeeds in part, the amount of future interest and costs decreed in his favour would be appropriately modified by the appellate Court.
The defendant appellant has therefore no reason to appeal against the decree for costs or the decree for future interest unless he disputes those amounts wholly or partially for certain reasons.
If he disputes expressly the propriety or correctness of the decree with respect to the costs or pendente lite interest independently of the claim to the subject matter in the Trial Court he will have to pay court fee on the amounts challenged as in that case he does dispute those amounts in appeal and therefore those amounts do come within the expression 'value of the subjectmatter in dispute in appeal '.
This has been the basis of the various decisions of the Courts in which court fee has been demanded on the amount of costs or future interest.
In Mitthu Lal vs Chameli (1) it was held that no courtfee was to be paid on interest pendente lite granted by the lower Court unless the awarding of it was specifically challenged in appeal.
It was said at p. 76: 57 All.
238 "Interest pendente lite is awarded under section 34 of the Civil Procedure Code.
The Court may award it whether the plaintiff claims it or not.
In this respect the court 's power stands on the same footing as its power to award costs to a successful party.
It is well settled rule that no court fee is payable on the amount of costs awarded by a decree appealed from, if no ground is specifically directed against the award of costs. . . . .
The same principle is applicable to interest pendente lite which the Court may award in the exercise of its power under section 34.
On a proper reading of the appellant 's grounds of appeal in the lower appellate court we are satisfied that the subjectmatter of his appeal to that court was the principal amount and interest up to the date of the suit." In Keolapati, Mst. vs B.N. Varma "I it was held that unless the appellant expressly challenges the award of future interest, no court fee is to be paid on the amount of interest accruing from the date of the suit till the date of the filing of the appeal.
In Ashutosh vs Satindra Kumar (2) it was said at at p. 382: "Costs are not regarded as being any part of a subject matter in dispute either in the suit or in the appeal.
In the appeal, the appellant does not in such an event really dispute the order as to costs for it is the natural order that is ordinarily made following the decision as to the main subject matter in dispute and if he himself succeeds in the appeal in regard to the main subject matter, automatically he will expect to succeed with regard to the costs.
" We therefore hold that the amount of pendente lite interest decreed is not to be included in the 'amount or value of the subject matter in dispute in appeal ' for the purposes of article 1 of Schedule 1 of the Act unless the appellant specifically challenges the cor (1) I.L.R. 12 Luck.
(2) 239 rectness of the decree for the amount of interest pendente lite independently of the claim to set aside that decree.
The appellant here has not specifically challenged the decree in that respect and therefore the High Court is right in holding the memorandum of appeal to be, sufficiently stamped.
The appeal T. is therefore dismissed with costs.
Appeal dismissed.
| The plaintiff respondent No. 1 instituted a suit for recovery of the amount lent to the defendant with interest upto the date of the suit.
His claim was decreed in a sum of Rs. 13,033 6 6 with future interest from the date of suit till realisation at 4 % per annum on a sum of Rs.10,120.
Against this decree the defendant appealed to the High Court and valued the appeal at Rs. 13,033 6 6 and paid the requisite court fee on that amount.
All his grounds of appeal related to the merits of the plaintiff 's claims and did not deal with the correctness of the trial court awarding future pendente lite interest on the rate at which it was to be calculated.
The Taxing Officer directed the defendant to pay the deficit court fee of Rs. 70 on the memorandum of appeal as he was of the opinion that the appeal was against the whole decree and that the amount of value of the subject matter in dispute for purpose of court fee was Rs. 14,036.80nP. as the amount of interest from the date of the suit till the date of the decree on Rs. 10,120 came to Rs. 1,033.40nP. 231 The defendant challenged this order in revision before the High Court under section 5(2) of the Bombay Court fees Act, 1959.
The High Court set aside the order of the Taxing Officer and the learned Judge expressed the view: "The subjectmatter in appeal is the real matter in dispute between the parties and not something which must stand or fall with the decision on it.
In other words, it must mean the right which is in dispute between the parties".
In this Court the appellant State challenged the correctness of the said view of the High Court and relied mainly on the construction put by courts on expression " value or subject matter in dispute," in the relevant provisions relating to the High Court 's giving leave to appeal to the Privy Council.
Held:(i) That the expression 'amount or value of the subjectmatter in dispute ' in article 1 of Schedule 1 of the Bombay Court fees Act, cannot be construed in the light of the construction placed on a similar expression for the purposes of considering whether the case had come within the rule allowing the High Courts to give leave for appeal to the Privy Council.
The Act is a taxing statute and its provisions have to be construed strictly, in favour of the subject litigant.
Gooroopersad Khoond vs Juggutchunder, 8 M.I.A. 166 and Doorga Doss Chowdry vs Ramanauth Chowdry, 8 M.I.A. 262, held in applicable.
(ii)Claims not based on any asserted right but dependent on the decision of the disputed right and reliefs in regard to which are in the discretion of the court do not come within the purview of the expression 'subject matter in dispute in plaint or memo of appeal '.
(iii)The amount of pendente lite interest decreed is not to be included in the 'amount or value of the subject matter in dispute in appeal ' for the purposes of article 1 of Sch. 1 of the Act unless the appellant specifically challenges the correctness of the decree for the amount of interest pendente lite independently of the claim to set aside that decree.
In the present case, the decree in that respect was not specifically challenged and therefore the view of the High Court must be held to be correct.
Mitthu Lal vs Chameli, 57 All.
7 1, Keolapati Mst.
vs B.N. Varma, I.L.R. 12 Luck.
466 and Ashutosh vs Satindra Kumar, 54 C.W.N.380, referred to.
|
: Criminal Appeal No. 45 of 1982.
597 From the Judgment and Order dated the 9th July, 1981 of the Punjab and Haryana High Court at Chandigarh in Criminal Appeal No. 333 DB of 1981, AND S.L.P. (Crl.) No. 2948 of 1982.
R.L. Kohli and R. C. Kohli for the Appellants.
T.U. Mehta and A.G. Ratnaparkhi for Respondent No. 1.
N.C. Talukdar and R.N. Poddar for Respondent No. 3.
N.C. Talukdar and R.N. Poddar for the Petitioner in S.L.P. (Crl.) No. 2498/81.
D. D. Sharma for the State.
The Judgment of the Court was delivered by MISRA, J.
The appeal as well as the special leave petition are directed against the judgment of the High Court of Punjab and Haryana at Chandigarh dated 9th July, 1981.
Criminal appeal has been filed by the complainant while the special leave petition has been filed by the State of Himachal Pradesh.
Vinay Kumar and his mother Chhano Devi were convicted for the murder of Asha, the wife of Vinay Kumar by burning her alive and sentenced to life imprisonment by the learned Sessions Judge, Gurdaspur.
On appeal by the accused, the High Court acquitted them by the impugned judgment.
The prosecution case set up at the trial was that the deceased Asha was married with Vinay Kumar in July, 1972.
The marriage was an arranged marriage.
It did not prove to be a success, the apparent cause for the failure of marriage was that Asha was only a matriculate and not cultured enough to move about in the society with the husband.
To make up this deficiency the deceased again resumed her studies and started attending college at Nagrota Bhagwan.
While prosecuting her studies she was rebuked and abused and sometimes even thrashed, whenever she visited the house of her in laws.
She however, kept on suffering in the vain hope that in due course of time things might improve.
There was, however, no improvement and she was fed up with the maltreatment and 598 cruelty meted out to her in the in laws house.
She left the matrimonial home and started living with her parents sometime in the year 1975 or early 1976.
In 1977 Vinay Kumar filed a petition in the court of the District Judge, Kangra at Dharamshala under section 13 of the Hindu Marriage Act for the dissolution of his marriage with the deceased on various grounds including one of desertion.
The District Judge in the first instance tried for reconciliation between the spouse and as an interim arrangement Asha returned to her in laws house in June 1978 on trial basis, while divorce petition was kept pending and adjourned to July 29, 1978.
As the parties did not appear in the Court on the date fixed, it was presumed that they were living happily and the proceedings were, therefore, consigned to the record.
On 5th of August, 1978 at about 11 a.m.
Kanwal Nain P.W. 4, Bil Bhandur P.W. 14, employee of the Post office, which was just in front of the house of the accused at a distance of 10/12 feet, and a number of other persons saw smoke coming out of the window of the house of the accused.
When Bil Bhandur and others went to the house, they found the outer door locked.
There was no other means of ingress to the house.
After a short while one Raj brought the key from Chhano Devi accused with which the lock was opened and entry gained into the house.
Asha was found burning and after extinguishing the fire, she was removed to the local hospital.
Dr. O. P. Dutta attended her and sent an intimation of the incident to the Incharge local Police Post.
He recorded the statement of Asha on the out patient register 13x.
Meanwhile Kesar Singh, Assistant Sub Inspector, arrived there an d after getting a certificate from Dr. Dutta, he also recorded her statement exhibit PU.
From Civil Hospital, Kangra Asha was removed in a truck to a Civil Hospital in Dharamshala (H.P.) where she breathed her last.
The police suspected no foul play and did not register any case.
The father of the deceased Hanumant Dass, however, made a report on 7th August, 1978 and a case was registered on that basis.
The accused were sent up for trial.
When the case was pending in the Court of Sessions Judge, Dharamshala in Himachal Pradesh, the complainant moved an application to the 599 Supreme Court for transfer of the case from Himachal Pradesh to some other province.
The case was transferred to a Court of competent jurisdiction at Gurdaspur in Punjab.
The Sessions Judge, Gurdaspur convicted both the accused under section 302 read with section 34 of the Indian Penal Code and sentenced them to life imprisonment.
This conviction was based only on the circumstantial evidence.
Accused went up in appeal to the High Court.
The High Court in its turn set aside the order of conviction and acquitted the accused of the charge.
The complainant has filed the present appeal.
Shri Kohli appearing for the complainant has strenuously contended that the appeal before the High Court has been allowed in the absence of the State of Himachal Pradesh and without any notice to that State and as such the impugned judgment of the High Court is a nullity and should be set aside on that ground alone.
The accused had impleaded only the State of Punjab as a party and the High Court has issued notice to the Advocate General of Punjab.
As a second limb to this argument it has been contended by Shri Kohli that the appeal was filed in the High Court on 15th June, 1981 and while considering the application for bail on 22nd of June, 1981, posted the appeal for hearing on 6th of July, 1981 after service of notice on the Advocate General of Punjab and the appeal was decided on 9th July, 1981 without even summoning the record.
Thus the High Court was in a hot haste to dispose of the appeal even without reasonable opportunity being afforded to the counsel for the State and without impleading the appropriate State as a party to the appeal and without notice to the counsel for the State of Himachal Pradesh.
We may first deal with the criticism of the learned counsel about the undue haste in the disposal of the appeal by the High Court.
It appears that Shri M.R. Mahajan, counsel for the appellants while moving the application for bail made a statement before the High Court and it is on his statement that the case was posted for hearing at the earliest possible.
This will be apparent from the order dated 22.6.1981 passed by the High Court while disposing of the application for bail.
The order insofar as it is material for consideration of the point reads: ".
Mr. Mahajan, Advocate states that on the findings of fact recorded by the learned trial Judge, the conviction of the appellants cannot be sustained.
Notice for 6.7.81.
600 to the Advocate General, Punjab.
Copy of the grounds of appeal and the judgment rendered by the learned trial Judge be delivered in the office of the A. C. Punjab within two days, The case is likely to be disposed of on that date . " Therefore, the charge levelled against the High Court that it was in a hot haste to decide the appeal at the earliest possible appears to be uncalled for.
This leads us to the main contention raised by Shri Kohli that the transfer of the case from Dharamshala lying within the territorial jurisdiction of the High Court of Himachal Pradesh to Gurdaspur Lying within the jurisdiction of the Punjab and Haryana High Court, does not change the parties and the parties remain the same even after the transfer of the case from Dharamshala to Gurdaspur.
In this view of the legal position, the State of Himachal Pradesh where the offence was committed was a necessary party and should have been impleaded in appeal.
In the absence of the State of Himachal Pradesh as a party and in the absence of notice to the counsel for the State of Himachal Pradesh, the High Court was not justified in disposing of the appeal and its judgment is only a nullity.
This contention is based on section 385 of the Code of Criminal Procedure.
Insofar as it is material for the purpose of the case it reads : "385(1): If the Appellate Court does not dismiss the appeal summarily, it shall cause notice of the time and place at which such appeal will be heard to be given (i) to the appellant or his pleader; (ii) to such officer as the State Government may appoint in this behalf; (iii) if the appeal is from a judgment of conviction in case instituted upon complaint, to the complainant; (iv) if the appeal is under section 377 or section 378, to the accused, and shall also furnish such officer, complainant and accused with a copy of the grounds of appeal.
601 (2) The Appellate Court shall then send for the record of the case, if such record is not already available in that Court, and hear the parties: Provided that if the appeal is only as to the extent or the legality of the sentence, the Court may dispose of the appeal without sending for the record.
In the appeal before the High Court, State of Punjab was made a party and notice .
Of the appeal was also given to the Advocate General of Punjab.
According to Shri Kohli this does not satisfy the requirement of law.
It would be appropriate at this stage to refer to other relevant provisions of the Code: Section 225 provides that "In every trial before a Court of Session, the prosecution shall be conducted by a Public Prosecutor.
" Section 2(4) defines public prosecutor "Public Prosecutor means any person appointed under section 24, and includes any person acting under the direction of a public prosecutor.
" Section 24 deals with "Public Prosecutors in the High Court": "24.
Public Prosecutors: (I) For every High Court, the Central Government or the State Government shall, after consultation with the High Court, appoint a Public Prosecutor and may also appoint one or more Additional Public Prosecutors, for conducting in such Court, any prosecution, appeal or other proceeding on behalf of the Central Government or State Government, as the case may be. . . . . . .
Section 378 talks of an appeal in case of acquittal.
(2) If such an order of acquittal is passed in any case in which the offence has been investigated by the Delhi Special Police Establishment constituted under the , or by any other agency empowered to make investigation into an offence under any Central Act other than this Code, the Central Government may also direct the Public Prosecutor to present an appeal, subject to the provisions of sub sec.(3) to the High Court from the order of acquittal.
Section 432 authorises the appropriate Government to suspend or remit sentences. "432(1): When any person has been sentenced to punishment for an offence, the appropriate Government may, at any time, without conditions or upon any conditions which the person sentenced accepts, suspend the execution of his sentence or remit the whole or any part of the punishment to which he has been sentenced.
(2) Whenever an application is made to the appropriate Government for the suspension for remission of a sentence, the appropriate Government may require the presiding Judge of the Court before or by which the conviction was had or confirmed, to state his opinion as to whether the application should be granted or refused, together with his reasons for such opinion (3) .
. . (4). . (s) (6) The provisions of the above sub sections shall also apply to any order passed by a Criminal Court under any section of this Code or of any other law which restricts the liberty of any person or imposes any liability upon him or his property, 603 (7) In this section and in section 433, the expression "appropriate Government" means (a) in cases where the sentence is for an offence against, or the order referred to in sub section (6) is passed under, any law relating to a matter to which the executive power of the Union extends, the Central Government; (b) in other cases, the Government of the State within which the offender is sentenced or the said order is passed.
From the various provisions extracted above it is evident that there shall be a Public Prosecutor for conducting any prosecution appeal or other proceeding on behalf of the Central Government or State Government in the High Court.
Shri Kohli, however, contends that occurrence in the instant case took place within the territorial limits of Himachal Pradesh.
That State, therefore, will continue to be a necessary party in the appeal irrespective of the fact that the appeal was filed in the Punjab High Court.
Section 432(7) extracted above defines "appropriate Government".
"Appropriate Government" means (a) in cases where the sentence is for an offence against, or the order referred to in subsection (6) is passed under any law relating to a matter to which the executive power of the Union extends, the Central Government; (b) in other cases, the Government of the State within which the offender is sentenced or the said order is passed.
According to this section the appropriate Government is the Government of the State of conviction and not the Government of the State where the offence was committed.
A somewhat similar question came up for consideration in the State of Madhya Pradesh vs Ratan Singh & Ors.,(1) where the respondent was convicted and sentenced to imprisonment for life by a court in the State of Madhya Pradesh.
At his request he was transferred o a Jail in the State H 604 of Punjab, to which State he belonged.
He applied to the Government of Punjab that under the Punjab Jail Manual he is entitled to be released since he had completed more than 20 years of imprisonment.
The application was sent to the Government of Madhya Pradesh, which rejected it.
In a Writ petition filed by him the High Court of Punjab and Haryana held that the State of Punjab was the appropriate authority to release him and directed the State of Punjab to consider the matter.
This Court in appeal observed "a perusal of this provision clearly reveals that the test to determine the appropriate Government is to locate the State where the accused was convicted and sentenced and the Government of that State would be the appropriate Government within the meaning of sec.
401 of the Code of Criminal Procedure.
Thus since the prisoner in The instant case, was tried, convicted and sentenced in the State of Madhya Pradesh, the State of Madhya Pradesh would be the appropriate Government.
to exercise the discretion for remission of the sentence under sec.
401(1) of the Code of Criminal Procedure. .
" That was a case based on section 401 of the old Criminal Procedure Code, but the Code of Criminal Procedure, 1973 has put the matter completely beyond any controversy and reiterated the provisions of section 402(3) in sub section (7) of section 432, Lastly it was contended that the appeal was disposed of by the High Court even without summoning the record.
There is no warrant for this assumption.
No specific allegation has been made in the special leave petition that the record was not summoned.
We have perused the Judgment of the High Court and the tenor of the judgment indicates that the record must have been there before the court.
There is copious reference to the materials on the record which could be possible only when the record was there before the court.
the counsel for the appellant made a statement before the court that on the finding of fact recorded by the High Court he was entitled to an acquittal and in this view of the matter even if the record had not been summoned (for which there is no basis) that would not be fatal, Proviso to sub section (2) of section 385 itself provides ". the court may dispose of the appeal without sending for the record.
" in a certain situation.
The rigour of subsection (2) of sec.
385, which provides that "the Appellate Court shall then send for the record of the case. " has been taken away by the proviso in a certain situation.
If the appellant himself says that the appeal can be allowed on the findings recorded by the Sessions Judge, the non summoning of the record, if it was at all so, 605 would not to our mind be fatal.
The complainant was present with his counsel, the State Advocate General was also present.
If there had been any grievance about the record, they would have raised an objection.
Their non objection on this point is also an indicator that the record was there or in any case, the summoning of the record was not thought to be necessary by the parties.
B Assuming for the sake of argument, that there were certain irregularities it the procedure the judgment of the High Court could not be set aside unless it was shown by the appellant that there has been failure of justice, as will be evident from section 465 of the Criminal Procedure Code which reads: "465.
no finding, sentence or order passed by a Court of competent jurisdiction shall be reversed or altered by a Court of appeal, confirmation or revision on account of any error, omission or irregularity in the complaint, summons, warrant, proclamation, order, judgment or other proceedings before or during trial or in any inquiry or other proceedings under this Code, or any error, or irregularity in any sanction for the prosecution, unless in the opinion of that Court, a failure of justice has in fact been occasioned thereby.
(2) In determining whether any error, omission or irregularity in any proceeding under this Code, or any error, or irregularity in any sanction for the prosecution has occasioned a failure of justice, the Court shall have regard to the fact whether the objection could and should have been raised at an earlier stage in the proceedings.
" We have perused the judgment of the High Court which was placed before us in full.
It shows that each and every aspect of the matter has been thoroughly discussed and the High Court has also referred to the error committed by the Sessions Judge in the approach of the case and also in making unwarranted assumptions.
on merits we fully agree with the appraisal of the evidence made by the High Court.
It is not necessary to repeat the same 606 over again.
There is no eye witness.
The fate of the case hinges upon the circumstantial evidence.
The High Court has dealt with the two dying declarations, one recorded by the Doctor and the other by the Assistant Sub Inspector.
The High Court also took into consideration the oral dying declaration on which the prosecution strongly relied.
But even that declaration does not implicate the accused.
The reason given by the High Court for acquittal in our opinion is cogent and plausible.
For the foregoing discussion, the criminal appeal and the special leave petition must fail and they are accordingly dismissed.
| The appellant and the respondent belong to the Parsi community and they were married in Bombay on the 27th December 1960 according to the rights and ceremonies of the Zoroastrian religion and custom.
A son was born to them on the 6th of May, 1965 and a daughter on the 18th April, 1971, whose name is Gospi and aged 11 years.
Irreconcilable difference and embittered relationship between the appellant and the respondent had led to the filing of Suit No. 14 of 1979.
by the appellant mother, for judicial separation.
In the several applications made by the parents for the custody of the child, the learned judges of the High Court, before whom the said applications came up for disposals interviewed the children separately and in the presence of the parents and passed appropriate and equitable orders, keeping in the forefront the welfare of the minor children.
The boy bas now become a major as per the Parsi Marriage and Divorce Act and tho question of his custody does not arise.
The custody of the minor daughter was ultimately given to the father as per the order of tho Division Bench of the Bombay High Court dated October 16,1981, Hence the appeal by the appellant mother, after obtaining Special Leave of the Court.
Allowing the appeal, the Court.
^ HELD: 1.
It is well settled that any matter concerning a minor, has to be considered and decided only from the point of view of the welfare and interest of the minor, the Court has a Special responsibility and it is the duty of the Court to consider the welfare of the minor and to protect the minor 's interest.
In considering the question of custody of a minor, the Court has to be guided by the only consideration of the welfare of the minor.
[79 B D] Rosi Jocob vs Jacob A. Chakrammakkal [1973] 3 S.C.R. 918 followed.
H 2:1 There is no duty or obligation cast on the part of the Court to interview the minor for ascertaining the wishes of the minor before deciding the question 50 of the child custody under section 49 of the .
[81 F G] 2:2 It is true that Section 17(3) of the speaks of the consideration by the court of the preference of the child "if the minor is old enough to form an intelligent preference".
The instant case, is not one under the Guardian of Wards Act 1890.
[83 B C] 2:3 However, there cannot be any manner of doubt as the Court 's power of entertaining any minor for ascertaining the wishes of the minor, if the Court consider it so necessary for its own satisfaction in dealing with the question relating to the custody of the minor.
[83 D] In the facts and circumstances of the case, the minor is not fit to form an intelligent preference which may be taken into consideration in deciding her welfare.
The report of the Social Welfare Expert records that the interviews, the minor girl faced before the several judges cast a gloom on the sensitive mind of the tender girl and caused a lot of strain and depression on her.
Torn between her love for both her parents and the acrimonious dispute between them resulting in the minor being dragged from court to court is bound to have effected the sensitive mind of the minor girl.
Though the girl is quite bright and intelligent as recorded by the learned judges of the Bombay High Court in their orders after their interviews with the girl who is of a tender age and is placed in a very delicate and embarrassing situation because of the unfortunate relationship and litigation between her parents for both of whom she has great deal of affection, she is not in a position to express any intelligent preference which will be conducive to her interest and welfare.
Mature thinking is indeed necessary in such a situation to decide as to what will ensure to her benefit and welfare Any child who is placed in such an unfortunate position.
can hardly have the capacity to express an intelligent preference which may require the court 's consideration to decide what should be the course to be adopted for the child 's welfare.
Therefore, sending for the minor and interviewing her in the present case, will not only not serve any useful purpose but will have the effect of creating further depression and demoralisation in her mind.
[83 E H, 84 A D] 3:1 on a consideration of all the facts and circumstances of the case and bearing in mind the paramount consideration of the welfare of the child, the child 's interest and welfare will be best served by removing her from the influence of home life and by directing that she should continue to remain in the boarding school, which is admittedly a good institution.
3:2 Home influence plays a very important role in shaping the life of every child.
Influence of a happy home where the children are brought up under the affectionate guidance of their parents and other relations, all concerned with the welfare of the children no doubt, enables the children to lead a normal healthy life and materially contributes to their welfare.
In a happy home, the children are free from any kind of unhappy tension and psychological strain and they grow up in a healthy environment where their interests and welfare are properly looked after by their parents.
In such a case, the court is normally not called upon to interfere and to consider the welfare of the children and the welfare of the children is well taken care of by their parents whose primary concern is to 51 see their interest and welfare.
It is also no doubt true that the children who stay at home with their parents and do not go to boarding school may also be very well disciplined in life and may have a very healthy happy and normal growth, while staying at home.
Therefore, in the interest of the children whom they have brought into existence and who are innocent, every husband and wife should try to compose their differences which are bound to be in any house.
Even when any husband and wife who are not in a position to reconcile their differences and are compelled to part, they should part in a way as will cause s least possible mischief to the children.
[84 E H, 85 H, 86 E] When the atmosphere in a house vitiated and rendered surcharged with tension as a result of bitter squabbles between husband and wife, causes misery and unhappiness to a child, who has to live in constant psychological strain in such a broken home in view of the bitter relationship between her parents fo each of whom she has great affection, the healthy and normal growth of their child is to be seriously affected.
In the interest and for the welfare of the child in such a case, the child is necessarily to be removed from such unhealthy environment of a broken home surcharged with tension.
In such a case, the proper and best way or serving the interest and the welfare of the child will be to remove the child from such atmosphere of acrimony and tension and to put the child in a place where the embittered relationship between her parents does not easily and constantly affect her tender mind.
[88 C E] 3:3 The question of the custody of the child must necessarily be considered from the only view point of tho welfare of the child.
The person to whom tho custody of the child has to be entrusted will necessarily be answerable to the school for payment of all charges and expenses of the child and also in relation to any matter concerning the child in her school life.
[89 D E] In the instant cases, it is clear that the father is not inclined to allow the child to remain in a Boarding institution, If the custody be left to him, the father iq view of the disinclination to allow the child to remain in the Boarding institution, may be in a position to create difficulties for the child for remaining in the institution by non payment of fees or otherwise. ' The 'father is obsessed, with the idea of obtaining exclusive control of the daughter and keeping the daughter with him in his house.
[89 B F] F It is not in dispute and it cannot be disputed that the mother has a great deal of affection for her daughter in her heart and to serve the best interest of the daughter the mother is prepared to make any necessary sacrifice for the welfare of the daughter.
The mother, at considerable expense, had put her in Kimmins Boarding School, Panchghani, which is recognised to be a very good institution She has been paying for all the expenses of the daughter at the G ' school.
She has steady income out of which she is in a position to meet all , the expenses of her daughter at the school.
The mother also does not suffer from any obsession regarding posession of the girl and she wants her daughter to lead a healthy normal life essential for her proper growth and development.
The mother is very anxious that the child should continue to remain in the Boarding; School.
The girl now aged about 11 years, is reaching an age when she will need the guidance of the mother.
Therefore, the custody of the girl should be given to the mother.
[89 F H, 90 A B] 52
|
ICTION: Civil Appeal No 1193 of 1984 and 572 573 of 1985.
From the Judgment and Order dated 12.10.1983 of the Punjab and Haryana High Court in C.W.P. Nos.
1659, 1777 and 1659 of 1983.
Writ Petition (C) Nos.
11106 27 of 1984.
PG NO 1053 (Under Article 32 of the Constitution of India) U.R. Lalit, D.N. Goburdhan and Pankaj Kalra for the Appellants.
R.N. Sachthey, D.S. Tewatia, Anip Sachthey and Mahabir Singh for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
In these appeals and writ petitions, the appellants and the petitioners have challenged the validity of the acquisition of their land by the State of Haryana under the Land Acquisition Act, 1894, hereinafter referred to as `the Act ', for a public purpose, namely, for the development and utilisation of land for industrial purpose at Gurgaon under the Haryana Urban Development Authority Act, 1977 by the Haryana Urban Development Authority (for short HUDA).
Although, both in the appeals and in the writ petitions the validity of acquisition has been challenged, we propose to deal with the appeals first.
The appeals are directed against the judgments of the Punjab & Haryana High Court dismissing the writ petitions of the Appellants questioning the validity of the acquisition of their land and praying for the quashing of such acquisition.
The first ground of attack to the acquisition, as urged by Mr. Lalit, the learned Counsel appearing on behalf of the appellants in Civil Appeal No. 1193 of 1984, is the non publication of the substance of the notification under section 4(1) of the Act in the locality of the land sought to be acquired It is true that section 4(1) enjoins that the Collector shall cause public notice of the substance of the notification to be given at convenient places in the locality.
It is however, preeminently a question of fact.
The allegation of the appellants as to the non publication of the notification under section 4(1), as made in the writ petition before the High Court, was emphatically denied and disputed in paragraph 8 of the affidavit in opposition affirmed by the Land Acquisition Collector Paragraph 8 reads as follows: "8.
In reply to para 8 of the writ petition.
it is submitted that the averments of the petitioners are wrong and denied.
The publicity of the substance of the notification was made in concerned locality of village PG NO 1054 Dundahera on 6th July, 1981 through Shri Chhattar Singh Chowkidar with loud voice and beating of empty tin.
The report exists in Roznamcha Vakyati at Serial No. 519 dated 6.7.1981.
Similarly, the publicity was made in concerned locality of village Mulahera through Shri Surjan Singh Chowkidar with loud voice and beat of empty tin (Kanaster).
A report to this effect exists in Roznamcha Vakyati at Serial No. 520 dated 6.7 1981.
The publicity was made on this very day on which the notification was issued.
In response to this publicity 157 land owners filed objection applications which clearly shows that due publicity was made in the concerned locality and the averments of the petitioners are wrong, baseless and hence denied.
" It is apparent from the statement made in paragraph 8 that the substance of the notification under section 4(1) was published in the concerned localities of villages Dundahera and Mulahera.
It is, however, urged on behalf of the appellants that it was not at all possible to make entries in the Roznamcha as to the publication of the notification under section 4(1) on the same day it was published in both the villages.
It is submitted that on this ground the statement in paragraph 8 as to the publication of the substance of the notification in the localities should not be accepted, and it should be held that there was no such publication is alleged.
We are afraid, we are unable to accept the contention.
Apart from the statement that there was publication of the notification, there is further statement in paragraph 8 that pursuant to such publication, 157 land owners filed objections to the proposed acquisition.
This fact has not been disputed before us on behalf of the appellants.
Moreover, Mr. Tewatia, learned Counsel appearing on behalf of the State of Haryana, has produced before us the original objection petitions filed by the land owners.
In each of these objection petitions there is a note at the end which reads as follows: "Note: The above referred notification was announced by the beat of drum in the village Dundahera on 6.7.1981, vide Patwari 's Roznamcha Report No. 519 dated 6.7.1981." Similar notes, as extracted above, are there in the petitions of objections filed by the land owners of village Mulahera.
In view of the facts stated above, the allegation of the appellants that the substance of the notification under section 4(1) of the Act was not published in the localities of the two villages mentioned above, is without any foundation whatsoever.
The contention of the appellants in this regard is rejected.
PG NO 1055 The next ground of attack to the acquisition comes from Mr. Kalra, the learned Counsel appearing on behalf of the appellants in Civil Appeals Nos. 572 & 573 of 1985.
It is urged by the learned Counsel that the sole purpose of the acquisition is for a profiteering venture of the Government to acquire land of the helpless farmers at a nominal price of Rs. 10, Rs. 20 or Rs. 50 per square yard and then to resale the same at a high profit.
It is submitted that a welfare State should work for the poor and the down trodden of the society rather than to displace them from their land for the sake of making profit.
Our attention has been drawn by the learned Counsel to an application filed in this Court by the Haryana State Industrial Development Corporation (for short HSIDC) praying for impleading it as a party respondent in these appeals.
In this application it has been stated, inter alia, by HSIDC that it plays an important role in the industrialisation of the State by providing concessional finance and offering land at no profit no loss basis along with infra structure facilities for setting up new industrial units in the State.
Further, it is stated that the land in Udhyog Vihar, Phase lV, (land which is the subject matter of these appeals), was acquired by HUDA and later sold to HSIDC at the approximate price of Rs 55,000 per acre.
In paragraph 5 of the application, it is stated that on account of the price of the above land of Phase lV, approximately Rs. 1.74 crores was paid by the the HSIDC to HUDA.
The said payment was made out of the amounts received from the intended allottees/entrepreneurs and also out to the funds/reserves of the HSIDC, and that a sum of Rs. 4.90 crores is estimated to be spent on the development of the industrial complex in question.
Relying upon the above statements in the said application of HSIDC, the learned Counsel for the appellants, endeavours to substantiate his contention that the impugned acquisition is nothing but a profiteering venture of the Government.
It is urged that the said statements in the application prove that the Government has made huge profit in the guise of development and utilisation of the land for industrial purpose at Gurgaon.
In support of the contention, Mr. Kalra has placed reliance upon an observation of Mahajan, J. (as he then was) in the State of Bihar vs Maharajadhiraja Sir Kameshwar Singh, , namely, that it is a well accepted proposition of law that property of individuals cannot be appropriated by the State under the power of compulsory acquisition for the mere purpose of adding to the revenues of the State.
The learned Counsel has also placed reliance on the observation in the minority judgment of Wanchoo, J. PG NO 1056 in Arnold Rodricks vs State of Maharashtra, AIR 1966 SC 1788.
In that case, the enquiries purported to be held under section 5A and section 11 of the Act were challenged as illegal, invalid and inoperative in law.
In that connection, the validity of the definition of "Public purpose" in clause (f) of section 3 of the Act, as amended by the Bombay Amendment Act 35 of 1953, also came to be considered.
Clause (2) of the amended definition in clause (f) reads as follows: "(f).
the expression "Public purpose" includes (1) . . . . . . . . . (2) the acquisition of land for purposes of the development of areas from public revenues or some fund controlled or managed by a local authority and subsequent disposal thereof in whole or any part by lease, assignment or sale, will be object of securing further development.
" Wanchoo, J. observed as follows: "(33).
The attack of the petitioners is on the second part of the addition in 1953 which provides for "subsequent disposal thereof in whole or in part by lease, assignment, or sale, with the object of securing further development.
" It is urged that all these words means that after the development envisaged in the first part of the addition the State or the local authority would be free to dispose of the land acquired in whole or in part by lease, assignment or sale, apparently to private persons.
This, it is said, means that the State or the local authority would acquire land in the first instance and develop it in the manner already indicated and thereafter make profit by leasing, assigning or selling it to private individuals or bodies.
It is also said that the object of securing further development which is the reason for sale or lease etc.
is a very vague expression and there is nothing to show what this further development comprises of.
It is true that when this part speaks of "subsequent disposal thereof in whole or in part by lease, assignment or sale", it is not unlikely that this disposal] will take place to private persons and thus in an indirect way the State would be acquiring the land from one set of individuals and disposing it of to another set of PG NO 1057 individuals after some development.
If this were all, there may be some force in the argument that such acquisition is not within the concept of "public purpose" as used in article 31(2).
But this in our opinion is not all.
We cannot ignore the words "with the object of securing further development", which appear in this provision.
It would have been a different matter if the provision had stopped at the words "lease, assignment or sale"; but the provision does not stop there.
It says that such lease, assignment or sale must be with the object of securing further development, and these words must be given some meaning.
It is true that the words "further development" have not been defined, but that was bound to be so, for further development would depend upon the nature of the purpose for which the land is acquired.
Of course, it is possible that further development can be made by the State itself or by the local authority which acquired the land; but we see no reason why the State or the local authority should not have the power to see that further development takes place even through private agencies by lease, assignment or sale of such land.
So long as the object is development and the land is made fit for the purpose for which it is acquired there is no reason why the State should not be permitted to see that further development of the land takes place in the direction for which the land is acquired, even though that may be through private agencies.
We have no doubt that where the State or the local authority decides that further development should take place through private agencies by disposal of the land so acquired by way of lease, assignment or sale, it will see that further development which it has in mind does take place.
We can see no reason why if the land so acquired is leased, assigned or sold, the State or the local authority should not be able to impose terms on such lessees, assignees or vendees that will enable further development on the lines desired to take place.
We also see no reason why when imposing terms, the State or the local authority may not provide that if the further development it desires the lessee, assignee or vendee to make is not made within such reasonable time as the State or the local authority may fix, the land will revert to the State or the local authority so that it may again be used for the purpose of further development which was the reason for the acquisition of the land.
" PG NO 1058 We fail to understand how does the above observation help the contention of the learned Counsel for the appellants that the acquisition has been made by the Government with a motive for profiteering in the guise of development and industrialisation.
The observation of Wanchoo, J relates to the definition of "Public purpose" under section 3(f) of the Act as amended by the Bombay Amendment Act 35 of 1953.
The amended provision specifically provides for the disposal of acquired land in whole or in part by lease, assignment or sale, but there is no such provision in the unamended section 3(f) of the Act with which we are concerned.
Wanchoo, J overruled the contention as to profiteering by the State or local authority as the amended provision made it very clear that such subsequent disposal of the acquired land will be for the purpose of securing further development.
We do not think we are called upon to express any opinion on the correctness or otherwise of the above observation, and all that we say is that there is no such provision like the amended definition in section 3(f) of the Act with which we are concerned.
In the circumstances.
the observation has no manner of application in the instant case.
In the writ petitions, the point was taken as an abstract point of law.
There was no attempt on the part of the appellants to substantiate the point by pleading relevant facts and producing relevant evidence.
It is apparent that there was no material in the writ petitions in support of the contention of the appellants that the impugned acquisition was nothing but a profiteering venture.
The contention was not also advanced before the High Court at the hearing of the writ petitions.
The facts stated in he said application of the HSIDC do not, in our opinion, support the contention of the appellants.
It is true that, as stated in the said application, HSIDC paid a sum of Rs. 1.74 crores to HUDA, but nothing turns out on that.
The land was acquired by the Government for the purpose of development and industrialisation.
The Government can do it itself or through other agencies.
In the instant case, the land was acquired at the instance of HUDA and, thereafter, HUDA had transferred the same to HSIDC.
It is not that the land was transferred in the same condition as it was acquired.
But, we are told by the learned Counsel appearing on behalf of HUDA and HSIDC that before transferring, HUDA had made external developments incurring considerable cost and HSIDC in its turn has made various internal developments and in this way the land has been fully developed and made fit for industrialisation.
Our attention has been drawn by the learned Counsel for HUDA and HSIDC to the various external developments made by HUDA at a cost of Rs. 1,66,200 per acre before it was transferred to HSIDC and the cost that was incurred for external developments was included in the price.
Thus, there was no motive for HUDA to make any profit.
PG NO 1059 The "public purpose" in question, already noticed, is development and industrialisation of the acquired land.
The appellants have not challenged the said "public purpose".
In the absence of any such challenge, it does not lie in the mouth of the appellants to contend that the acquisition was merely a profiteering venture by the State Government through HUDA.
The appellants will be awarded the market value of the land as compensation by the Collector.
If they are dissatisfied with the award they may ask for references to the District Judge under section 18 of the Act.
If they are still aggrieved, they can file appeals to the High Court and, ultimately, may also come to this Court regarding the amount of compensation.
The appellants cannot claim compensation beyond the market value of the land.
In such circumstances, we fail to understand how does the question of profiteering come in.
Even assuming that HUDA has made some profit, that will not in any way affect the public purpose for which the land was acquired and the acquisition will not be liable for any challenge on that ground.
As has been already noticed, although the point as to profiteering by the State was pleaded in the writ petitions before the High Court as an abstract point of law, there was no reference to any material in support thereof nor was the point argued at the hearing of the writ petitions.
Before us also, no particulars and no facts have been given in the special leave petitions or in the writ petitions or in any affidavit, but the point has been sought to be substantiated at the time of hearing by referring to certain facts stated in the said application by HSIDC.
In our opinion, when a point which is ostensibly a point of law is required to be substantiated by facts, the party raising the point, if he is the writ petitioner, must plead and prove such facts by evidence which must appear from the writ petition and if he is the respondent, from the counter affidavit.
If the facts are not pleaded or the evidence in support of such facts is not annexed to the writ petition or to the counter, affidavit, as the case may be, the court will not entertain the point.
In this context, it will not be out of place to point out that in this regard there is a distinction between a pleading under the Code of Civil Procedure and a writ petition or a counter affidavit.
While in a pleading, that is, a plaint or a written statement, the facts and not evidence are required to be pleaded, in a writ petition or in the counter affidavit not only the facts but also the evidence in proof of such facts have to be pleaded and annexed to it.
So, the point that has been raised before us PG NO 1060 by the appellants is not entertainable.
But, in spite of that, we have entertained it to show that it is devoid of any merit.
Equally untenable is the contention of the appellants that the acquisition is for HSIDC which is a `company ' within the meaning of section 3(e) of the Act and, accordingly, the acquisition is invalid for the non compliance with the provisions of Part III of the Act.
In the notification under section 4(1), it has been clearly stated that the development and industrialisation of the acquired land would be made under the Haryana Development Authority Act, 1977 by HUDA.
It is, therefore, manifestly clear that HUDA was the acquiring authority and not HSIDC.
It is for HUDA to develop the land fully either by itself or by any other agency or agencies.
HUDA has transferred the land to HSIDC for the purpose of development and allotment to various persons.
It is too much to say that as HUDA has transferred the acquired land to HSIDC, the latter is the acquiring authority.
We do not think that there is any substance in the contention and it is, accordingly, rejected.
Now we may consider the contention made on behalf of the petitioners in the writ petitions Nos. 11106 to 11127 of 1984.
The first point that has been urged by Mr. Goburdhan, learned Counsel appearing on behalf of the writ petitioners, is similar to that urged by Mr. Lalit in Civil appeal No 1193 of 1984, namely, non publication of the substance of the notification under section 4(1) of the Act in the locality.
This contention need not detain us long, for in the counter affidavit filed by the Land Acquisition Collector, it has been averred that the substance of the notification was published and out of 22 petitioners 16 filed their objections pursuant to the publication of the notification in the locality.
A similar note, as extracted above, appears in all these objections.
In the circumstances, there is no substance in the contention of the petitioners that the substance of the notification under section 4(1) of the Act was not published in the locality.
Next it is urged on behalf of the petitioners that before starting the proceedings for acquisition, the Government had not applied its mind to its policy decision, as contained in the circular No. 2099 R III 82/17113 dated 18.5.1982 wherein it has been stated that "in the matter of State 's need for land for its development activities, utmost restraint should be exercised in the acquisition of land.
" It is submitted that as the land is agricultural, it should not have been acquired in view of the said policy decision PG NO 1061 of the Government.
We are unable to accept the contention.
In a welfare State, it is the duty of the Government to proceed with the work of development and take steps for the growth of industries which are necessary for the country 's progress and prosperity and for solving the question of unemployment.
It is true that agricultural land is necessary and should not ordinarily be converted to non agricultural use, but keeping in view the progress and prosperity of the country, the State has to strike a balance between the need for development of industrialisation and the need for agriculture.
The allegation that before initiating the acquisition proceedings, the Government has not applied its mind to the need for agricultural land is a very vague allegation without any material in support thereof.
The contention is overruled.
Lastly, it is argued by Mr. Goburdhan for the writ petitioners that the petitioners have been discriminated inasmuch as the land of other persons in the village has not been acquired.
This contention is without any substance whatsoever.
The Government will acquire only that amount of land which is necessary and suitable for the public purpose in question.
The land belonging to the petitioners have been acquired obviously considering the same as suitable for the public purpose.
The petitioners cannot complain of any discrimination because the land of other persons has not been acquired by the Government.
The contention is devoid of any merit whatsoever.
Before parting with these cases, we may consider a short submission on behalf of the appellants as also the writ petitioners that as by the acquisition of their land they have become landless, they should be allotted land by HSIDC, after development, so that they may start their businesses and earn their livelihood.
After giving our anxious consideration to this submission, we direct that if any of the appellants or the petitioners, who has become really landless by the acquisition of his land, makes an application for the allotment of land, the HSIDC shall consider such application and give him priority in the matter of allotment provided he fulfils the conditions for such allotment and plot is available.
Another short submission has been made on behalf of the appellants in Civil Appeal No 1193 of 1984.
Our attention has been drawn to paragraphs 4 and 5 of the additional affidavit filed on behalf of the appellants, and affirmed by one Sat Prakash, son of Mathura Prashad, one of the appellants, that in Khasra No 21/6/2 and in Khasra No. 22/10/1, there are a temple, a Piaou and a Dharamshala.
It is submitted that the land comprising the temple, Piaou and Dharamshala may be exempted from acquisition.
We do not PG NO 1062 consider it necessary to give any direction in this respect.
The appellants, however, will be at liberty to make a representation in that regard to the authority concerned.
No other point has been urged in these cases.
For the reasons aforesaid, subject to the directions given on the short submissions, all the appeals and the writ petitions are dismissed.
There will, however, be no order as to costs in any of them.
H.S.K. Appeals and Petitions are dismissed.
| Somasundram Viswanath, Respondent No. 1 herein was working as an officer in the Defence Accounts Service.
Promotions to Level I & Level II of the Senior Administrative Grade of the said Service were governed by the Indian Defence Accounts Service (Recruitment) Rules, l95X (as amended from time to time) promulgated by the President of India under the proviso to article 309 of the Constitution of India.
Under the Rules, recruitments by promotion to the senior administrative posts were to be made by Selection on merit on the recommendations of a duly constituted Departmental Promotion Committee.
In accordance with the said Rules, when the case of the Respondent came within the Zone of consideration for promotion to the cadre of controller of Defence Accounts, the same was placed before the Departmental Promotion Committee, and the said Committee in order to make appropriate recommendations convened its meeting on 7.8.1986.
At the said meeting one of its members i.e. the Secretary to the Ministry of Defence could not be present even though he was duly notified about the date and time of the meeting.
In his absence the remaining members met and made the recommendation.
The 1st Respondent was graded good ' and was not put in the Select panel.
Aggrieved by the said decision Respondent filed a Petition before the Central Administrative Tribunal, Jabalpur Bench, challenging the validity of the recommendations made by the Department Promotion Committee and prayed for an order directing the appellant union of PG NO 146 PG NO 147 India not to promote his juniors to the higher grade.
The principal contention raised by the Respondent before the Tribunal was that the Departmental Promotion Committee was not properly constituted, as one of its members, was absent with the result the proceedings of its meeting held on 7.8.1986 stood vitiated and recommendation made by it should not be acted upon.
On the other hand the Deptt.
contended that the proceedings of the Committee were protected by the administrative instructions issued by the Government of India with regard to the procedure to be followed by the D.P.C.
In reply thereto the 1st Respondent pleaded that the administrative instructions issued by the Government of India could not override the rules made under the proviso to article 309 of the Constitution and the same has to be ignored.
On consideration of the rival contentions the Central Administrative Tribunal came to the conclusion that the D.P.C. had not been properly constituted at the meeting held on 7.8.1986 because of the absence of the Secretary to the Govt.
of India, Ministry of Defence and therefore the proceedings of the said Committee were not valid.
The Tribunal accordingly set aside the recommendations made by the Committee and directed that a fresh D.P.C. may be convened for reconsidering the agenda which was before the Departmental Committee on 7.8.86.
The Union of India being dissatisfied with the aforesaid order of the Tribunal appealed by special leave, to this Court.
Disposing of the appeal.
the Court, HELD: It is well settled that the norms regarding recruitment and promotion of officers belonging to the Civil appropriate Legislature or by rules made under the proviso to Article 309 of the Constitution of India or by means of executive instructions issued under Article 73 of the Constitution of India in the case of Civil Services under the Union of India and under article 162 of the Constitution of India in the case of Civil Services under the State Governments.
[152B] If there is a conflict between the executive instructions and the rules made under the proviso to Article 309, the rules made under the proviso lo Article 309 prevail, and if there is a conflict between the rules made under the proviso to Article 309 and the law made by the appropriate Legislature the law made by the appropriate Legislature prevails.
[152C] PG NO 148 The Office Memorandum dated 30.12.1976 1s in the nature of complete code with regard to the topics dealt with by it.
Unless there is anything in the Rules made under the proviso to Article 309 which is repugnant to the instructions contained in the Office Memorandum the Office Memorandum which is apparently issued under Article 73 or the Constitution is entitled to be treated as valid and binding on all concerned.
[153B C] This Court does not agree with the decision of the Central Administrative Tribunal that in the instant case the proceedings of the Departmental Promotion Committee on 7.8.1986 have been vitiated solely on account of the reason that the Secretary Ministry of Defence, one of its members was not present at the meeting of the Committee.
The proceedings of the Departmental Promotion Committee at its meeting held.
on 7.8.1986 are not invalid on this account.
[153E] The decision of the Tribunal set aside and the case remitted to the Tribunal to dispose it of afresh.
[153G]
|
tition No. 4305 of 1978.
Under Article 32 of the Constitution.
N. M. Ghatate and section V. Deshpande.
for the Petitioner Soli J. Sorabjee, Addl.
General and Girish Chandra for the Respondent.
The order of the Court was delivered by KRISHNA IYER, J. A litigation with a social dimension, even in a blinkered adversary system, serves a larger cause than the limited lis before the court.
This petition, with non specific reliefs, is One such.
Sobraj, the petitioner, by the frequency of his forensic com plaints against incarceratory torture and Dr. Ghatate, his counsel by the piquancy of his hortative advocacy of freedom behind bars.
have sought to convert the judicial process from a constitutional sentinel of prison justice which, emphatically, it is into a meticulous auditor general of jail cells which, pejoratively, it is not although, on occasions, 'thin partition do their bounds divide`.
Often, as here, the fountain of confusion in penitentiary jurisprudence is forgetfulness of fundamentals.
Once the legal basics are stated, Sobraj, with his disingenuous, finical grievances, will be out of court.
What are the governing principles, decisionally set down by this court in Batra and Sobraj? Has the court jurisdiction to decide prisoners ' charges of violation of rights ? If it has, can it meddle with the prison administration and its problems of security and discipline from an 'innocent ' distance ? Put tersely, both the 'hands off.
doctrine and the 'take over ' theory have been rebuffed as untenable extremes and a middle round has been found of intervening when constitutional rights or statutory prescriptions are transgressed to the injury of the prisoner and declining where lesser matters of institutional order and man management, though irksome to some, are alone involved.
Contemporary profusion of prison torture reports makes it necessary to drive home the obvious, to shake prison top brass from the callous complacency of unaccountable autonomy within that walled off world of human held incommunicado.
Whenever fundamental rights are flouted or legislative protection ignored, to any prisoner 's prejudice, this Court 's writ will run, breaking through stone walls and iron bars, to right the wrong and restore the rule of law.
Then the 515 parrot cry of discipline will not deter, of security will not scare of discretion will not dissuade, the judicial process.
For if courts 'cave in" when great rights are gouged within the sound proof, sight proof precincts of prison houses, where, often, dissenters and minorities are caged, Bastilles will be re enacted.
When law and tyranny begins: and history whispers, iron has never been the answer to the rights of men.
Therefore we affirm that imprisonment does not spell farewell to fundamental rights although, by a realistic re appraisal, courts will refuse to recognise the full panoply of Part III enjoyed by a citizen.
This proposition was not contested by the learned Additional Solicitor General Sri Soli Sorabjee.
Nor does its soundness depend, for us, upon the Eighth Amendment to the U.S. Constitution.
article 21, read with article 19(1) (d) and (5), is capable of wider application than the imperial mischief which gave its birth and must draw Its meaning from the evolving standards of decency and dignity that mark the progress of a mature society, as Batra and Sobraj have underscored and the American judges have highlighted.
Fair procedure is the soul of article 21, reasonableness of the restriction is the essence of article 19(S) and sweeping discretion degenerating into arbitrary discrimination is anathema for article 14.
Constitutional kurana is thus injected into incarceratory strategy to produce prison justice.
And as an annotation of article 21, this Court has adopted, in Kharak Singh 's case(I) that expanded connotation of 'life ' given by Field, J. which we quote as reminder: "Something more than mere animal existence.
the inhibition against its deprivation extends to all those limbs and faculties by which life is enjoyed.
The provision equally prohibits the mutilation of the body by the amputation of an arm or leg, or the putting out of an eye, or the destruction of any other organ of the body through which the soul communicates with the outer world".
The next axiom of prison justice is the court 's continuing duty and authority to ensure that the judicial warrant which deprives a person of his life or liberty is not exceeded, subverted or stultified lt is a sort of solemn covenant running with the power to sentence.
The U.S. Courts have intensified their oversight of State penal facilities reflecting a heightened concern with the extent to which the ills that plague so called correctional institutions violate basic rights.
points out Edward section Crowin.
Although.
the learned author, and.
(1) [1964] I SCR 357.
(2) Supplement to Edward section Corwin 's "The constitution ' and What it means Today; 1976 Edn.
p. 245.
516 indeed, the decisions show that reliance is placed on the Eighth: Amendment, as we have earlier pointed out.
the same.
sensitized attention and protective process emanate from the humane provisions of Part III of our Constitution.
Viewed differently, supposing, a court sentences a person to simple imprisonment or assigns him 'B ' class treatment and the jail authorities unwittingly or vindictively put him under rigorous imprisonment or subject him to 'C ' class treatment, does it not show contempt of the court 's authority and deprivation of liberty beyond a degree validated by the court warrant ? Likewise, where a prisoner is subjected to brutality, exploiting the fact that he is helplessly within the custody of the Jail Administration, does it not deprive the prisoner of his life and liberty beyond the prescribed limits set by the court ? Yet again, where conditions within a prison are such that inmates incarcerated therein will inevitably and necessarily become more sociapathic than they were prior to the sentence, is not the court ' punitive purpose, charged with healing hope, stultified by the prison authorities ? of course, where a prison practice or internal instruction places harsh restrictions on jail life, breaching, guaranteed rights.
the court directly comes in.
Every prison sentence is a conditioned deprivation of life and liberty, with civilised norms built in and unlimited trauma interdicted.
In this sense, judicial policing of prison practices is implied in the sentencing power.
The Criminal judiciary have thus a duty to guardian their sentences and visit prisons hen necessarily.
Many of them do not know or exercise this obligation.
Another jurisdictional facet may be touched upon in view of the widely worded relief sought to treat Sobraj 'in a human and dignified manner, keeping in view the adverse effect of` his confinement upon his mental and physical conditions .
The penological goals which may be regarded as reasonable justification For restricting the right to move freely within the confines of a penitentiary are now well settled.
And if prisoners have title to Article 19, 21 and 14 rights, subject to the limitation we have indicated, there must be some correlation between deprivation of freedom and the legitimate functions of a correctional system.
It is now well settled, as a stream of rulings of courts proves, that deterrence, both specific and general, rehabilitation and institutional security are vital considerations.
Compassion wherever possible and cruelty only where inevitable is the art of correctional confinement.
When prison policy advances such a valid goal, the court will not intervene officiously.
517 This overall attitude was incorporated as a standard by the American National Advisory Commission on Crimine Justice Standards and Goals: '. .
A rehabilitative purpose is or ought to be implicit in every sentence of an offender unless ordered otherwise by the sentencing court ' '.(l) The U.S. Supreme Court summed up: "In a series of decisions this court has held that, even though the governmental purpose be legitimate anti substantial, that purpose cannot be pursued by means that broadly stifle fundamental personal liberties when the and can by more narrowly achieved.
The breadth of legislative abridgment must be viewed in the light of less drastic means for achieving, the same basic purpose."( ') But when an inmate is cruelly restricted in a manner which supports no such relevant purpose the restriction becomes unreasonable and arbitrary and unconstitutionality is the consequence.
Traumatic ` futility is obnoxious to pragmatic legality.
Social defence is the raison of the penal code and bears upon judicial control over prison administration.
If a whole atmosphere of constant fear of violence, frequent torture and denial of opportunity to improve oneself is created or if medical facilities and basic elements of care arid comfort necessary to sustain life are refused then also the humane jurisdiction of the court will become operational based on article 19 '.
Other forms of brutal unreasonableness and anti rehabilitative attitude violative of constitutionality may be thought of in n penal system but we wish to lay down only a broad guideline that where policies.
with a 'Zoological touch ', which do not serve valid penal objectives are pursued in penitentiaries so as to inflict conditions so unreasonable as to frustrate the ability of inmates to engage in rehabilitations.
the court is not helpless.
However as prison system may make rational distinctions in making assignments to inmates of vocational.
educational Land work opportunities available but it is constitutionally impermissible to do sc without as functional classification system.
The mere fact that a prisoner is poor or rich, high born or ill bred, is certainly irrational as a differential ill a secular socialist high republic '.
Since the petitioner charges the jail staff with barbaric and inhuman treatment in prison we are called upon to delineate the broad boundaries of judicial jurisdiction vis a vis prison administration and prisoner 's rights.
(I) "To solve The age old Problem of crime" Roger Lanphear; J. D. p 19 (2) Ibid pr 21 518 The court is reluctant to intervene in the day to day operation of the State penal system; but undue harshness and avoidable tantrums, under the guise of discipline and security, gain no immunity from court writs.
The reason is, prisoners retain all rights enjoyed by free citizens except those lost necessarily as an incident of confinement.
Moreover, the rights enjoyed by prisoners under Articles 14, 19 and 21, though limited, are not static and will rise to human heights when challenging situations arise.
Cooper(1) and Menaka Gandhi(2) have thus compulsive consequence benignant to prisoners.
The petitioner in the present case has contended that barbaric and inhuman treatment have been hurled at him and that intentional discrimination has been his lot throughout.
These allegations invited us to examine the limits and purpose of judicial jurisdiction but we have to apply the principles so laid down to the facts of the present case.
Starry abstractions do not make sense except in the context of concrete facts.
That is why we agree with the propositions Of law urged by Dr. Ghatate but disagree with the distress and discrimination his client wails about.
True, confrontedm with cruel conditions of confinement, the court has an expanded role.
True, the light to life is more than mere animal existence, or vegetable subsistence.(3) True, the worth of the human person and dignity and divinity of every individual inform articles 19 and 21 even in a prison setting.
True, constitutional provisions and municipal laws must interpreted in the light of the normative laws of nations, wherever possible and a prisoner does not forfeit his Part lII rights.
But that are the facts here ? Charles Sobraj is no longer an under trial.
having to serve two sentence of long imprisonment.
He is given all the amenities of .1 'B ' class prisoner.
He goes on hunger strike but medical men take care of him.
Ward I, where he is lodged, gives him the facilities of wards XIll and XIV where he wants to he moved.
He has record of one escape and one attempt at suicide and Interpol reports of many crimes abroad.
There are several cases pending in India against him.
Even so, the barbarity of bat fetters inflicted on him lay a qualmless jail staff was abandoned under orders of this Court.
he seeks the other extreme of of coddling as if a jail were a country club or good hotel.
Give me finer foreigners as companions.
he demands.
Don 't keep convict cooks and warders as (1) [1971] l SCR Sl2.
(2) [1978] l SCR 248 (3) Mohammed Giasuddin vs State of Andhra Pradeh.
; 519 jailmated in my cell he rails.
Remove me from a high security ward like Ward I to a more relaxed ward like Ward 14 or 13, he solicits.
These delicate and genteel requests from a prisoner with his record and potential were turned down by the Superintendent and the reasons for such rejection, based on security, rules and allergy of other inmates to be his risky fellow inmates have been stated on oath.
We cannot be critical of the Administration if it makes a classification between dangerous prisoners and ordinary prisoners.
In the present case, the Superintendent swears, and it is undisputed, that the petitioner is not under solitary confinement.
We further aver that a distinction between under trials and convicts is reasonable and the petitioner is now a convict.
In fact, lazy relaxation on security is a professional risk inside a prison.
The court must not rush in where the jailor fears to tread.
While the country may not make the prison boss the sole sadistic arbiter of incarcerated humans, the community may be in no mood to hand over central prisons to be run by courts.
Each instrumentality must sanction within its province.
We have no hesitation to hold that while Sobraj has done litigative service for prison reform, he has signally failed to substantiate any legal injury.
We, therefore, dismiss the writ petition, making it clear that strictly speaking the petitioner being a foreigner cannot claim rights under article 19, but we have discussed at some length the import of Articles 14, 19 and 21 because they are interlaced and in any case apply to Indian citizens.
, Petition dismissed.
S.R. Petition dismisses.
| The appellants were charged under sections, 435 and 436 of the Indian Penal Code and were tried by a jury, who returned a majority verdict of guilty.
The Assistant Sessions judge disagreed with the said verdict and made a reference to the High Court.
At the hearing of the reference the counsel for the appellants only contended that the charge to the jury was defective, and did not place the entire evidence before the judges, who only considered the objections ' urged, and nothing more, and held the 35 274 reference to be incompetent and found the appellants guilty and convicted them.
Held, that in a reference under section 307 of the Code of Criminal Procedure it was the duty of counsel to place, and it was incumbent on the High Court to consider, the entire evidence and the charge as framed and placed before the jury and to come to its own conclusion, after giving due weight to the opinion of the trial judge and the verdict of the jury, and to acquit or convict the accused of the offences of which the jury could have convicted or acquitted him.
It was wrong of the ' High Court to pass judgment without considering the entire evidence.
It is not proper for the Supreme Court to adopt the procedure of considering the entire evidence and come to a conclusion which according to the provisions of s.307(3) of the Code of Criminal Procedure the High Court should have done.
Akhlakali Hayatalli vs The State of Bombay, (1954) S.C.R. 435 and Ramanugrah Singh vs The Emperor, A.I.R. T946 P.C. 151, referred to.
|
Civil Appeal No. 2126 of 1968.
Appeal by Special Leave from the Judgment and order dated 14 8 1968 of the Punjab and Haryana High Court in Civil Revision No 430 of 1967 In person (C.K. Babbar) for the Appellant.
Harbans Singh for the Respondent.
The Judgment of the Court was delivered by SEN, J.
This appeal by special leave in directed against the order of the.
Punjab and Haryana High Court dated 14 August, 1968 upholding an order of the trial court dated 23 May, 1967 striking out the defence of the defendant under order XI, rule 21 read with section 151 of the Civil Procedure Code, 1908 and directing that the defendant cannot be permitted to cross examine the plaintiff 's witnesses.
The suit out of which this appeal arises was brought by the respondent Trilok Nath Mahajan, as plaintiff, against the appellant defendant M/s. Babbar Sewing Machine Co., on 9th March, 1966 for recovery of a certain sum alleged to be due to M/s. Chitra Multipurpose Co operative Society (Jogyana) Ltd., Ludhiana which remained unpaid towards the price of sewing machines sold on credit from time to time, claiming to be an assignee under a deed dated 27 April, 1965.
The transaction sued upon was of the year 1959, and the suit was obviously barred by limitation.
The plaintiff however, pleaded that the defendant had acknowledged his liability by his letter dated 8 March, 1963 for Forwarding cheque No. 01194 dated 7 March, 1963 for Rs. 50 drawn on the Punjab National Bank Ltd., Yamunanagar.
The defendant disputed the plaintiff 's claim and pleaded, inter alia, that he does not owe anything to the said society and as such the suit was not maintainable, that there was no privity of contract between the parties nor does any relationship of a creditor and debtor exists between them.
He further pleaded that the suit was barred by limitation.
He also pleaded that the trial court had no jurisdiction to try the suit.
On 11 November, 1966, the plaintiff moved an application under order XI, rules 14 and 18 for production and inspection of the following documents: (a) Cash book, day book and ledger for the year 1 4 1959 to 31 3 1960 and 1 4 1960 to 31 3 1961.
H (b) Cash book and ledger for the years 1 4 1961 to 31 3 1966 60 (c) All the original bills issued in favour of the defendant by M/s. Chitra Multipurpose Cooperative Society Jogyana Ltd., including Bill No. 22 dated 13 5 1960, Bill No. 43 dated 2 8 19607 Bill No. 49 dated 14 9 1960, Bill No. 53 dated 26 9 1960.
(d) Original letters written by the plaintiff to the defendant and letters addressed by M/s. Chitra Multipurpose Cooperative Society Jogyana Ltd., to defendant.
(e) Counterfoils of cheque book in use on 7 3 1963.
(f) The original cheque No. 01194 dated 7 3 1963.
(g) Bank pass book from 1 4 1962 to 31 3 1964 with counterfoils of the cheque books with which the respondent (T.N. Mahajan) firm had an account.
Despite objection by the defendant, the trial court by its order dated 11 January, 1967, directed their production on 30 January, 1967 holding that they were relevant for the determination of the controversy between the parties.
On 30 January, 1967, when the suit came up for hearing, the court adjourned the suit to 7 February, 1967, for production of the documents.
In compliance with the court 's order, on 7 February, 1967, the defendant produced all the documents in his possession viz., account books for the years 1959 60 to 1965 65 but he was permitted by the trial court to ' take back the account books as they were required to be produced before the Income Tax officer, Yamunanagar on that day, with the direction that he should produce the same on '23 February, 1967.
On 23 February, 1967 the defendant appeared in the court with his books but the trial judge directed him to produce them on 16 March, 1967 and in the meanwhile allow their inspection to the plaintiff with three days ' notice.
The defendant accordingly sent a letter dated 25 February, 1967 asking the plaintiff to take inspection of the account books on 27 February, 1967.
On 28 February, 1967, the plaintiff made an application that the defendant had not produced the documents for inspection but this was apparently wrong, as is evident from the registered notice dated 1 March, 1967, sent by the defendant to the following effect: "After the last date of hearing on 23.2.1967 I wrote you a letter from Yamuna Nagar on 25.2.1967 informing you that I shall be present in the office of my counsel Sh.
H. L. Soni on 27th February, 1967 at 6 p.m. for affording you the inspection of the documents.
I reached at my counsel 's office at the scheduled informed time but you did not turn up.
I 61 kept waiting for you uptil 8.30 p.m.
On that day.
Later A I contacted your lawyer Shri section R. Wadhera but he expressed his inability to contact you.
Now I would be reaching Ludhiana again on the 9th March, 1967 and shall be available in my lawyer 's Shri H. L. Soni 's office from 7 p.m. to 9 p.m. and you will be free to inspect the documents at the afore mentioned venue and during the above noted time.
Three days ' clear notice is being given to you.
Please be noted to this effect " Admittedly, the plaintiff never sent any reply to the notice.
Nor did he avail of the opportunity of inspecting the account books at the office of the defendant 's lawyer on 9 March, 1967.
On 16 March, 1967 the trial court passed an order saying that the defendant should produce the books within four days in the court to enable the plaintiff 's counsel to inspect them before 29 March, 1967 i.e. the date fixed for evidence, failing which the defence of the defendant would be struck off.
On 29 March, 1967 three witnesses of the plaintiff were examined.
After the examination of these witnesses, the trial court asked the plaintiff 's counsel that he should apply under order XI, rule 21 to strike out the defence of the defendant.
On 31 March, 1967, the plaintiff accordingly made an application under C`order XI, rule 21 read with section 151 of the Code asserting that the defendant had failed to comply with the order of the court as regards production of documents inasmuch as he had not produced them for inspection.
The defendant opposed the application stating, that there was no failure on his part to produce the documents ordered.
It was stated that all the documents as were capable of identification had been produced in the court.
It was alleged that the plaintiff had already inspected the documents that were specifically set out in the application.
It was also alleged that the plaintiff had not once but thrice or even four times inspected the documents to his entire satisfaction except that he was prevented from making fishing, roving and searching enquiries into the entries which had no relevance to the suit transaction.
It was, therefore, urged that the striking out of the defence would not he warranted by law.
Feeling apprehensive that he would not get a fair trial at the hands of the trial Judge, the defendant applied to the District Judge, Ludhiana for the transfer of the suit on 10 April, 1967.
While the District Judge was seized of the transfer application, the defendant moved the 62 High Court for transfer of the suit to some other court of competent jurisdiction.
The High Court by its order dated 15 May, 1967 declined to interfere.
On 23 May, 1967, the trial court passed an order under order XI, rule 21 striking out the defence of the defendant stating that he was placed in the same position as if he had not defended the suit and adjourned the suit to 21 June, 1967, for examination of the remaining witnesses of the plaintiff.
On 21 June, 1967, the court did not allow the defendant 's counsel to cross examine plaintiff 's witnesses holding that in view of the fact that his defence has been struck off, he had no right to participate and, therefore, could not cross examine the witnesses produced in the court.
The defendant filed a revision before the High Court which was rejected on 14 August, 1968.
In this appeal, two questions are involved: firstly, whether the trial court was justified in striking out the defence of the defendant under order XI, rule 21 of the C.P.C., 1908, and secondly, whether the High Court was right in observing that in view of the clear language are of order XI, rule 21 the defendant cannot be permitted to cross examine the plaintiff 's witnesses.
It is a travesty of justice that the trial court should have, in the facts and circumstances of the case, passed an order striking out the defence of the defendant under order XI, rule ' '1 and that the High Court should have declined to set it aside.
The penalty imposed by order XI.
rule 21 is of highly penal nature, and ought only to be used in extreme cases, and should in no way be imposed unless there is a clear failure to comply with the obligations laid down in the rule.
Order XI, rule 21 of the Code of Civil Procedure reads: "21.
Where any party fails to comply with any order to answer interrogatories, or for discovery of inspection of documents, he shall, if a plaintiff, be liable to have his suit dismissed for want of prosecution, and, if a defendant, to have his defence; if any, struck out, and to be placed in the same position as if he had not defended.
and the party interrogating or seeking discovery or inspection may apply to the Court for an order to that effect, and an order may be made accordingly.
" Section 136 of the Code of Civil Procedure, 1882, corresponding to order XI, rule 21 of the C.P.C. 1908, was based upon order XXXI, rule 20, now replaced by order XXIV, rule 16 framed under the Judi 63 cature Act.
The practice of the English Courts is, and it has always A been, to make the order a conditional one, and to grant a little further time for compliance.
In practice this provision is virtually obsolete(l).
Even assuming that in certain circumstances the provisions of order Xl, rule 21 must be strictly enforced, it does not follow that a Suit can be lightly thrown out or a defence struck out, without adequate reasons.
The test laid down is whether the default is wilful.
In the case of a plaintiff, it entails in the dismissal of the suit and, therefore, an order for dismissal ought not be made under order XT, rule 21, unless the court is satisfied that the plaintiff was willfully withholding information by refusing to answer interrogatories or by withholding the documents which he sought to discover.
In such an event, the plaintiff must take the consequence of having his claim dismissed due to his default, i.e. by suppression of information which he was bound to give: Denvillier vs Myers.(2) In the case of the defendant, he is visited with the penalty that his defence is liable to be struck out and to be placed in the same position as if he had not defended the suit.
The power for dismissal of a suit or striking out of the defence under order XI, rule 21, should be exercised only where the defaulting party fails to attend the hearing or is guilty of prolonged or inordinate and inexcusable delay which may cause substantial or serious prejudice to the opposite party.
It is well settled that the stringent provisions of order XI, rule 21 should be applied only in extreme cases, where there is contumacy on the part of the defendant or a wilful attempt to disregard the order of the court is established.
An order striking out the defence under order XI, rule 21 of the Code should, therefore, not be made unless there has been obstinacy or contumacy on the part of the defendant or wilful attempt to disregard the order of the court.
The rule must be worked with caution, and may be made use of as a last resort: Mulla 's C.P.C. 13th Ed.
I, p. 581, Khajah Assenoolla Joo vs Khajah Abdool Aziz(3), Banshi Singh vs Palit Singh(4), Allahabad Bank Ltd. vs Ganpat Rai(5), Haigh vs Haigh(6) and Twycroft vs Grant(7).
(1) Halsbury 's Laws of England, 4th Ed., Vol. 13.
p. 32.
(2) (3) I.L.R. (4) 7 C.L.J. 29S. (5) I.L.R. (6) (7) 64 In Haigh v Haigh (supra) Pearson J. observed: "I have no hesitation in saying that I have the strongest disinclination, as I believe every other Judge has, that any case should be decided otherwise than upon its merits.
But this order was introduced to prevent plaintiffs and defendants from delaying causes by their negligence or willfulness.
So great was my anxiety to relieve this lady from the consequence of her wrong headedness if, by any possibility, I could on proper terms, that I hesitated to refuse to make the order asked for, and I have looked into all the cases I could find on the subject to see that the practice of the Court has been on this order.
And I can find no case in the books where it has been applied, where a man knowingly and wilfully has allowed judgment to go by default.
" In Twycroft vs Grant (supra) Lush J. interpreting corresponding order XXXI, rule 20 of the Judicature Act, held that he would only exercise the powers conferred by the rule in the last resort.
In England, the party against whom such an order is made would, it seems, be entitled to come in and ask that the order might be set aside on showing sufficient grounds for such an application.
In Khajah Assenoolla Joo vs Khajah Abdool Aziz (supra), Pigot J. therefore made an order striking out the defence of the defendant under section 136 of the C.P.C. 1882 in consequence of non compliance with the earlier order for production of certain documents, and at the same time mentioned that the party against whom the order was made might come in and seek to set it aside on showing sufficient grounds for the application.
It is settled law that the provisions of order XI, rule 21, should be applied only in extreme cases where obstinacy or contumacy on the part of the defendant or a wilful attempt to disregard the order of the court is established.
As pointed out by Lord Russel C.J. in Reg.
vs Senior (1) and affirmed by Cave L. C. in Tamboli vs G.l.
P. Rail way(2), "wilfully" means that: "the act is done deliberately and intentionally, not by accident or inadvertence, but so that the mind of the person who does the act goes with it." In this case, there was no default, much less any wilful default, on the part of the defendant, to comply with any order of the court under order XI, rule 18(2).
In obedience of the order of the court dated (1) (2) I.L.R. 65 11 January, 1967, the defendant came all the way from Yamunanagar to Ludhiana on 27 February, 1967 and was waiting at his lawyer 's office from 6.00 p.m. to 8.30 p.m. when the plaintiff or his counsel did not turn up.
Thereafter the defendant sent a registered notice dated I March, 1967 offering inspection of the documents at his lawyer 's office on 9 March, 1967, but the plaintiff did not avail of the opportunity of inspecting the documents.
The defendant had filed an affidavit that the rest of the documents were not in his possession and could not be produced.
The account books for the years 1961. 62, 1962 63 and 1963 64 had to be produced by the defendant before the Income Tax officer, Yamunanagar on 31 January, 1967, then 7 February, 1967 and 16 March, 1967.
An affidavit to this effect was also filed.
It is somewhat strange that the trial court should have fixed the dates which were the dates fixed by the Income Tax officer In view of the notice dated 1 March, 1967, there can be no doubt that the defendant had tried to comply with the order of the court by offering inspection on 27 February, 1967.
There is no dispute that 27 February, 1967 was the date mutually agreed upon between the counsel for the parties.
The only controversy is about the scheduled time.
The time fixed according to the plaintiff 's application dated 28 February, 1967 was 2.30 p.m. at his lawyer 's office while that according to the defendant 's notice dated 1 March, 1967 it was 6.3() p.m. in his lawyer 's office.
The plaintiff has not examined his counsel, S.R. Wadhera, nor is there any affidavit by Wadhera.
From the material on record it is amply clear that the appointed scheduled time and place for inspection of the defendant 's account books was 6.30 p.m. at his lawyer 's office.
The plaintiff was afforded another opportunity of inspection of the account books on 9 March, 1967 at the office of the defendant 's lawyer from 7.0 p.m. to 9.0 p.m.
In the circumstances, the trial court was not justified in holding that there WAS any non compliance of its order under order XI, rule 18(2).
It is common ground that the account books for the years 195960 and 1960 61 were Lying in court.
The suit transactions are of the year 1959.
Nothing prevented the plaintiff from inspecting these books.
As regards the account books for the years 1961 62 to 1964 65, they were required to be produced before the Income Tax Authorities at Yamunanagar on 20 March, 1967 and on subsequent dates.
It is not clear what relevance these books could have to the controversy between the parties unless the plaintiff wanted to find some entries to show that there was carry forward of the entries relating to the suit transaction in the account books for the years 1959 60 to the subsequent years So as to bring his claim within time.
Apparently, there were no such entries in the account books for the years 1959 60 66 and 1960 61.
As regards the bank pass book of the defendant 's account with the Punjab National Bank Ltd., for the period 1 April, 1962 to 31 March, 1963 and 1 April, 1963 to 31 March, 1964 and the counterfoil of cheque No. 01194 dated 7 March, 1963, alleged to be drawn by the defendant in plaintiff 's favour, the defendant has sworn an affidavit that he had no account with Punjab National Bank Ltd., Yamunanagar during that period nor he had issued any such cheque as alleged.
In view of this, the order of the trial court dated 23 May, 1967, striking out the defence of the defendant was wholly unjustified .
The principle governing the court 's exercise of its discretion under Order XI, rule 21, as already stated, is that it is only when the default is wilful and as a last resort that the court should dismiss the suit or strike out the defence, when the party is guilty of such contumacious conduct or there is a wilful attempt to disregard the order of the court that the trial of the suit is arrested.
Applying this test, it is quite clear that there was no wilful default on the part of the defendant of the courts order under order XI, rule 18(2) for the production of documents for inspection, and consequently, the order passed by the trial court on 23 May, 1967, striking out the defence of the defendant must be vacated, and the trial must proceed afresh from the stage where the defendant was not permitted to participate.
It was further contended that the High Court was in error in observing that 'in view of the clear language of order X[, rule 21 ' the defendant has no right to cross examine the plaintiff 's witness.
A persual of order XI, rule ,?1 shows that where a defence is to be struck off in the circumstances mentioned therein, the order would be that the defendant 'be placed in the same position as if he has not defended '.
This indicates that once the defence is struck of under Order XI, rule 21, the position would be as if the defendant had not defendant and accordingly the suit would proceed ex parte.
In Sangram Singh vs Election Tribunal(l) it was held that if the court proceeds ex parte against the defendant under order IX, rule 6(a), the defendant is still entitled to cross examine the witnesses examined by the plaintiff.
If the plaintiff makes out a prima facie case the court may pass a decree for the plaintiff.
If the plaintiff fails to make out a prima facie case, the court may dismiss the plaintiff s suit.
Every Judge in dealing with an ex parte case has to take care that the plaintiff 's case is, at least, prima facie proved.
But, as we set aside the order under order XI, rule 21, this contention does not survive for our consideration.
We, therefore, refrain from expressing any opinion on the question.
(1) ; 67 For the reasons given, the order passed by the trial court dated A 23 May, 1967 striking out the defence of the defendant under order XI, rule read with section 151 of the C.P.C., and its subsequent order dated 21 July, 1967 are both set aside and it is directed to proceed with the trial according to law.
There shall be no order as to costs.
S.R. Appeal allowed.
| Held, that a Commissioner appointed under the (XXVII of 1850) is not a court within the meaning of the (XXXII of 1952).
Shell Co. of Australia vs Federal Commissioner of Taxation ([1931] A.C. 275), Huddart,Parker & Co. vs Moorehead ([1909] ; , Rex vs Electricity Commissioners ([1924] 1 K.B. 171), Bharat Bank Limited vs Employees of Bharat Bank Ltd. ([1950] S.C.R. 459), Maqbool Hussain vs The State of Bombay ([1953] S.C.R. 730), Cooper vs Wilson ([1937] 2 K.B. 309), section A, Venkataraman vs The Union of India and Another ([1954] S.C.R. 1150), Royal Aquarium and Summer and Winter Garden Society Ltd. vs Parkinson ([1892] 1 Q.B. 431), Dawkins vs Lord Rokeby ([1873] L.R. 8 Q.B. 265), Kapur Singh vs Jagat Narain (A.I.R. 1951 Punjab 49) and M. V. Bajwade vs Dr. section M. Hassan, (A.I.R. , referred to.
|
Appeal No. 1690 of 1981.
167 From the Judgment and order dated 10.4.1980 of the Delhi High Court in Civil Writ No. 450 of 1971.
H.K. Puri for the Appellant.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
Whether the National Council of Educational Research and Training (NCERT) is "State" as defined under Article 12 of the Constitution ? This is the only question that calls for decision in this appeal.
The appellant was an employee of the NCERT.
This services were terminated by the Secretary of NCERT.
Challenging the termi nation he moved the Delhi High Court under Article 226 of the Constitution.
The NCERT raised a preliminary objection as to the maintainability of the writ petition.
The objection was that the NCERT is not amenable to the writ jurisdiction of the High Court as it is not an instrumentality or other authority within the meaning of Article 12 of the Constitu tion.
The High Court has upheld the preliminary objection and dismissed the writ petition.
The decision of the High Court has been challenged in this appeal.
There are only general principles but not exhaustive test to determine whether a body is an instrumentality or agency of the Government.
Even in general principles, there is no cut and dried formula which would provide correct division of bodies into those which are instrumentalities or agencies of the Government and those which are not.
The powers, functions, finances and control of the Government are some of the indicating factors to answer the question whether a body is "State" or not.
Each case should be han dled with care and caution.
Where the financial assistance from the State is so much as to meet almost entire expendi ture of the institution, or the share capital of the corpo ration is completely held by the Government, it would afford some indication of the body being impregnated with govern mental character.
It may be a relevant factor if the in stitution or the corporation enjoys monopoly status which is State conferred or State protected.
Existence of deep and pervasive State control may afford an indication.
If the functions of the institution are of public importance and related to governmental functions, it would also be a rele vant factor.
These are merely indicative indicia and are by no means conclusive or clinching in any ease See Sukhdev Singh vs Bhagat Ram, ; ; R.D. Shetty vs Inter national Airport Authority, [1979]3 SCC 489; Ajay Hasia vs Khalid Mujib Sehravardhi, [1981]1 SCC 722 and Som Prakash Rekhi vs Union of India, [1981]1 SCC 449.
168 Article 12 should not be stretched so as to bring in every autonomous body which has some nexus with the Govern ment within the sweep of expression "State".
A wide enlarge ment of the meaning must be tempered by a wise limitation.
It must not be lost sight of that in the modern concept of Welfare State; independent institution, corporation and agency are generally subject to State control.
The State control does not render such bodies as "State" under Article 12.
The State control, however, vast and pervasive is not determinative.
The financial contribution by the State is also not conclusive.
The combination of State aid coupled with an unusual degree of control over the management and policies of the body, and rendering of an important public service being the obligatory functions of the State may largely point out that the body is "State".
If the Govern ment operates behind a corporate veil, carrying out govern mental activity and governmental functions of vital public importance, there may be little difficulty in identifying the body as "State" within the meaning of Article 12 of the Constitution.
See: P.K. Ramachandra lyer vs Union of India, [1984]2 SCC 141 Central Inland Water Transport Corporation vs Brojonath Gangoli, and Tekraj Vasandhi alias K.L. Basandhi vs Union of India, [1988]2 SCR 260.
The NCERT is a society registered under the Societies Registration Act.
Like all societies, it has a Memorandum of Association.
It has Rules for internal management.
The High Court has elaborately examined the Memorandum of Association and the rules of the NCERT.
The relevant part of the discus sion by the High Court is as follows: "The NCERT is governed by a Memorandum of Association subscribed to by seven officers of the Government of India on 6.6.1961.
Under clause 3.1 of the Memorandum of Association the object of the Council is to assist and advise the Ministry of Education and Social Welfare in the implementation of its policies and major programmes in the field of education particularly school education.
Under clause 3.2 the Council is empowered for the realisa tion of the above objectives to undertake several kinds of programmes and activities which include coordination or research, exten sion services and training, dissemination of improved educational techniques and practices in schools, collaboration in educational programmes, distribution of ideas and informa tion, preparation and publication of books, materials, periodicals and other literature and allied activities.
Under clause 5 the income and property of the Council is to be applied towards the promotion of its ob 169 jects and cannot be disposed of by way of dividends, bonus etc.
But under this clause, the Council is free to apply the income and property towards its objectives in such manner as it may think fit.
It is subject to the limitations placed by the Government of India in this regard only in respect of the expendi ture of grants made by the Government.
Under clause 6 the Government of India could review the work and progress of the Council and take appropriate action to give effect to the reports received on enquiries.
In addition, the Government could at any time issue direc tions to the Council on important matters of policy and programmes.
" Rule 3 of the Rules of the Council provides for Constitution of the Council which consists mainly of various Government officials but also includes the Chairman of the University Grants Commission, four Vice Chancellors and a number of nomi nees, four from school teachers and several others.
Rule 7 enables the Government to fix the period of appointment of the members and to extend it from time to time.
The council 's affairs are conducted by the Executive Commit tee whose constitution is outlined in Rule 23.
This includes various Government servants but it also includes four educationists and three Professors and Heads of Departments who may be nominated by the President.
Rule 37 provides that if there is any difference of opinion the view of the majority will prevail subject to a veto which could be exercised by the Govern ment of India within a month.
It also enables the President to refer any question for the decision of the Government.
Rule 40 enables the Executive Committee to frame and amend Regulations not inconsistent with the rules.
Rule 42 empowers the Executive Committee to enter into arrangements.
with Government, public or private organisations or individuals in furtherance of its objectives and implemen tation of its programmes.
Rule 57 provides that the funds of the council shall consist of (i) grants made by Government; (ii) contribu tion from other sources; (iii) Income from the assets of the Council; and (iv) Receipts of the Council from other sources.
" The object of the NCERT as seen from the above analysis is to assist and advise the Ministry of Education and Social Welfare in the implementation of the Governmental policies and major programmes in the field of education particularly school education.
The NCERT undertakes several kinds of programmes and activities connected with the coordination of , 170 research extension services and training, dissemination of improved educational techniques, collaboration in the educa tional programmes.
It also undertakes preparation and publi cation of books, materials, periodicals and other litera ture.
These activities are not wholly related to Government functions.
The affairs of the NCERT are conducted by the Executive Committee comprising of Government servants and educationists.
The Executive Committee would enter into arrangements with Government, public or private organisa tions or individuals in furtherance of the objectives for implementation of programmes.
The funds of the NCERT consist of: (i) grants made by the Government, (ii) contribution from other sources and (iii) income from its own assets.
It is free to apply its income and property towards the promo tion of its objectives and implementation of the programmes.
The Government control is confined only to the proper utili sation of the grant.
The NCERT is thus largely an autonomous body.
Almost a similar case was considered by this Court in Tekraj Vasandhi alias K.L. Basandhi vs Union of India, [1988]2 SCR 260.
This Court was required to determine wheth er the Institute of Constitutional and Parliamentary Studies (ICPS) was State under Article 12.
The ICPS was a registered society financed mostly by the Central Government and partly by gifts and donations from Indian and foreign agencies.
The first President of the society was the then Speaker of the Lok Sabha.
Out of the five vice presidents three were the then central ministers; the other two were the then Chief Justice of India and the Attorney General.
The objects of the society were to provide for constitutional and parlia mentary studies, promotion of research in constitutional law, setting up of legislative research and reference serv ice for the benefit of legislators, organisation of training programmes in matters of parliamentary interest and impor tance and publication of a journal.
The Court found that ICPS was born as a voluntary organisation.
It found further that though the annual financial contribution from the State was substantial, it was entitled to receive aid from the public and in fact received contributions from other sources.
Its objects were not governmental business.
As regards the argument that the government exercised pervasive control over ICPS, the Court said: "In a Welfare State . . . .
Gov ernmental control is very pervasive and touch es all aspects of social exist ence . . .
A broad picture of the matter has to be taken and a discerning mind has to be applied keeping the realities and human experiences in view so as to reach a reasonable conclusion." In the light of all these factors it has held that ICPS was not "State". 171 In the present case, the High Court has relied upon the Constitution Bench decision of this Court in Sabhjit Tewari vs Union of India and Ors., ; There it was held that the Council of Scientific and Industrial Research (CSIR), which was sponsored and controlled by the Central Government and registered under the Societies Registration Act was not "State" within the meaning of Article 12.
But this decision has been distinguished and watered down in the subsequent decisions particularly in Ajay Hasia and Ramchan dra lyer cases (supra).
Counsel for the appellant strongly relied upon the decision in P.K Ramchandra lyer case where this Court held that Indian Council for Agricultural Research (ICAR) was "State" under Article 12.
But it may be noted that ICAR was originally an attached office of the Government of India and its position was not altered when it was registered as a society.
That case, therefore is clearly distinguishable.
In our opinion, the case on hand, having regard to the indications to which we have called attention earlier, does not satisfy the requirements of "State" under Article 12 of the Constitution.
We, therefore, agree with the conclusion of the High Court and dismiss the appeal.
In the circum stances of the case, we make no order as to costs.
R.P. Appeal dis missed.
| The appellants being aggrieved by the promotion policy of the respondent Bank dated 31.10.1983 read with the Circu lar dated 13.9.1989 for promotion from the cadre of Junior Management Grade 1 to Middle Management Grade II, moved the High Courts under Article 226 of the Constitution.
The policy provides for two channels for promotion, namely, the Merit Channel and the Seniority Channel.
For filling vacancies by promotion from the cadre of Junior Management Grade 1 to that of Middle Management Grade II, 65% of the total vacancies were reserved for the Seniority Channel and the remaining 35% for the Merit Channel.
The criterion mentioned in the policy for the Merit Channel provides 40 per cent marks for written test, 10 per cent marks for seniority, 20 per cent marks for performance appraisal, 20 per cent marks for interview and the remaining 10 per cent marks for passing the examina ' tion held by the Bankers ' institute.
The High Courts dismissed the writ applications,.
against which the appeals were filed in this Court.
TIle appellants contended that the marks under all other heads amounting to it maximum of 80 per cent instead of the maximum of 40 per cent prescribed for the written test should be the proper criterion to call a candidate for interview in order to make a proper selection on the basis of merit; that by taking into account the marks of written test alone there is exclusion of other meritorious candi dates whose aggregate 770 including the marks obtained under the other heads may exceed the corresponding aggregate of marks of candidates 'obtaining higher marks in written test alone.
On this basis the policy for filling vacancies from the Merit Channel by promotion was alleged to be arbitrary.
The respondent Bank, contended that the Provision for the Merit Channel for promotion was made in the policy to give accelerated pro.
motion to the academically brilliant persons with the object of providing incentive to them and thereby improving the quality of personnel in the higher cadre; that the policy of deciding merit on the basis of written test alone has been consistently followed and the Circular dated 13.9.1989 was merely a clarification of the manner of preparation of the Select List to make the selec tion more objective and to yield better results by getting the most meritorious candidates from all circles.
Dismissing the appeals, this Court, HELD: 1.
Keeping in view the laudable object of at tracting academically brilliant candidates into the Bank 's service as officers by direct recruitment by giving incen tive of accelerated promotion to the most meritorious amongst them who maintain a high standard of achievement is conducive to public interest and cannot be faulted.
[773C] 2.
Of the several heads under which the marks are divid ed for promotion to Merit Channel, written test and inter view are the only ones which depend on the current perform ance.
The marks under the remaining three heads of seniori ty, performance appraisal and C.A.LLB.
(passing of examina tion held by Bank 's Institute) relate to past performance of the candidate which are matters of record.
It is, therefore, the appraisal of the current performance by written test and interview which alone is the real part for a proper apprais al of the current performance of the candidate for the purpose of assessing his merit for promotion through the Merit Channel.
In this situation, if the marks obtained in the written test alone are taken into account for preparing the Select List to call candidates for an interview depend ing upon the number of vacancies available in Merit Channel the criterion adopted cannot be termed arbitrary.
[773C F] 3.
The marks obtained for seniority, performance ap praisal and C.A.I.I.B. are based on service record and not ' on appraisal of the candidate by a mode independent of service record for assessing the true current worth of the candidate.
Since, equal opportunity is available to all for competing through the Merit Channel, in addition to the 771 prospects through the Seniority Channel, the policy adopted cannot be treated as irrational, discriminatory or arbi trary.
[773F.G]
|
vil Appeal No. 4115 and 4116 of 1985.
From the Judgment and Order dated 12.4.1985 of the Allahabad High Court in Civil Misc.
Writ Petn.
No. 3441 of 1984.
J.P. Goyal, Rajesh for the Appellants in C.A. No. 41 15 of 1985.
Anil Dev Singh, Mrs. section Dikshit and Sudhir Kulshreshta for the Appellants in C.A. No. 4116 of 1985.
R. Ramachandran for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
These two appeals by special leave, one pre ferred by the State of U.P. and the other by the Cane Super visors of the Cane Development Department, U.P., are direct ed against the judgment of 975 the Allahabad High Court directing the State Government to merge the posts of Ganna Gram Sewaks and Ganna Supervisors into the cadre of Ganna Sahayak in the pay scale of Rs.400 615 with effect from 1 7 1979.
In the hierarchy of field officers in the Cane Develop ment Department, U.P., the post of Ganna Gram Sewak is at the bottom.
The next higher post is the post of Cane Super visor.
Under the Cane Development (Fourth Class) Service Rules, 1972 framed under Article 309 of the Constitution of India, the posts of Ganna Gram Sewaks are filled by direct recruitment and the minimum qualification prescribed there for by Rule 9(3) of the said Rules is that a candidate for recruitment in the post of Ganna Gram Sewak must have passed the High School Examination from the Board of High Schools and Intermediate Education, U.P. or an equivalent examina tion and he must know Hindi in Devnagri script.
Under the Uttar Pradesh Ganna Paryavekshak (III) Service Rules, 1978, also framed under Article 309 of the Constitution of India, 50 per cent of the posts of Cane Supervisors are to be filled by direct recruitment and the remaining 50 per cent by promotion on the basis of seniority from amongst perma nent Ganna Gram Sewaks of the concerned region.
The basic qualification for the post of Cane Supervisor is Intermedi ate (Agriculture) or equivalent or High School with two years Diploma in Agriculture.
The duties that are to be performed by the Ganna Gram Sewaks are preparation of progress report, survey of the cane areas and development programmes.
The Cane Supervisors are responsible for plant protection, inputs godown and nurseries in the areas of Ganna Gram Sewaks.
The State of U.P. appointed a Second Pay Commission in the year 1979.
The Ganna Gram Sewaks submitted a representa tion to the Commission demanding that since their qualifica tions were similar to those of Cane Supervisors and they performed the same kind of duties, they should get the same pay scale as that of the Cane Supervisors.
It appears that on the suggestion of the Pay Commission, the State Govern ment appointed a Task Force Committee.
The Task Force Com mittee in its report recommended the merger of the posts of Ganna Gram Sewaks and Cane Supervisors into one group to be designated as Ganna Sahayaks and allotted an equal field of operation.
It was observed that the merger being effected would satisfy the demand of the Ganna Gram Sewaks for the equalisation of their pay scale with that of the Cane Super visors.
The said recommendation was made by the Task Force Committee on the ground that there was no special difference between these two categories of posts in regard to 976 the duties performed by the members of each category.
The Second Pay Commission, however, did not accept the recommen dation made by the Task Force Committee for the merger of these two categories of posts .into one category, namely, Ganna Sahayak.
After taking into consideration the minimum academic qualification and the nature of duties for each category, the Second Pay Commission, inter alia, recommended the revision of the pay scales as follows: CANE DEVELOPMENT DEPARTMENT section No. Name of Post Pay Scale Existing Proposed 46.
Cane Supervisor/ 230 385 400 615 Seed Asstt.
Ordinary Ordinary Grade Grade 250 425 510 675 (Selection After Grade) After 10 years of service Selection Grade ( 15% Selection Grade on the post of Supervisor) 47.
Ganna Gram Sewak 185 265 325 495 Ordinary Ordinary Grade Grade 200 320 400 540 Selection After 15 years Grade of service Selection Grade on 15% posts.
The recommendation of the Second Pay Commission was considered by the Review Committee and, thereafter, by the Cabinet Sub Committee.
There is a dispute between the par ties as to whether the Cabinet Sub Committee had accepted the recommendation made by the Task Force Committee.
Be that as it may, the State Govern 977 ment accepted the recommendations of the Second Pay Commis sion only with a slight modification that instead of a pay scale of Rs.325 495 for Ganna Gram Sewaks, it would be Rs.330 495.
One of the Ganna Gram Sewaks, Shri Vyas Muni Mishra, the respondent No. 1, filed a writ petition before the Allahabad High Court praying for a writ of mandamus directing the State Government to merge the posts of Ganna Gram Sewaks and Cane Supervisors into one cadre of 'Ganna Sahayak '.
The High Court took the view that although the minimum educational qualifications required were High School for Ganna Gram Sewaks and Intermediate in Agriculture for Cane Supervisors, since 1975 the minimum qualification for both Ganna Gram Sewaks and Cane Supervisors became Intermediate in Agricul ture.
Further, the High Court was of the view that the nature of duties performed by the members of these two categories of posts was the same.
Accordingly, relying upon the principle of equal pay for equal work, as contained in Article 39(d) of the Constitution, the High Court allowed the writ petition and directed the State Government to merge the posts of Ganna Gram Sewak and that of Cane Supervisor into one post as Ganna Sahayak in the pay scale of Rs.400 615 with effect from July 1, 1979.
The State of U.P. and the Cane Supervisors being aggrieved by the judgment of the High Court have preferred the above appeals.
At the outset it may be said that the High Court exceed ed its jurisdiction in directing the merger of the two posts.
It may be that the Task Force Committee and the Review Committee had recommended for the merger, but it was for the State Government to consider whether such merger should be made or not.
The State Government after considera tion of the relevant reports and recommendations accepted the recommendation of the Second Pay Commission only with regard to the revision of the pay scale of the Ganna Gram Sewaks with the slight modification by an increase of Rs. 5 at the initial stage of the recommended pay scale.
The question whether two posts should be merged into one or not is absolutely within the jurisdiction and authority of the Executive Government.
However much the High Court was influ enced by the principle of equal pay for equal work for both men and women as contained in Article 39(d) of the Constitu tion, the High Court was not justified in exceeding its jurisdiction for giving effect to the said doctrine.
The principle of equal pay for equal work requires on the face of it that the work to be performed by two groups of persons must be 978 equal.
It has been already noticed that the duties that had to be performed by the Ganna Gram Sewaks are preparation of progress report, survey of the cane areas and development programmes.
On the other hand, the Cane Supervisors are responsible for plant protection, inputs godown and nurser ies in the areas of Ganna Gram Sewaks.
Thus the nature of duties that are performed by the members of these two cate gories of posts is different.
It has been observed by the Second Pay Commission that the Department has so fixed the duties of the two functionaries that both of them now func tion more or less independently.
The High Court did not discuss in detail as to whether the Ganna Gram Sewaks and the Cane Supervisors perform the same duties.
The High Court has only referred to an observation in the report of the Task Force Committee that there were not much differences in the duties performed by these two categories of officers.
As has been stated already, the Second Pay Commission did not accept the recommendation of the Task Force Committee for the merger of the two posts into one.
It is true that the Cane Supervisors are not doing any supervision of the work of the Ganna Gram Sewaks, but in view of the nature of duties performed by both, as mentioned above, it is diffi cult to hold that both perform the same kind of duties.
We have also looked into the reports of the Task Force Commit tee and the Review Committee.
In our opinion, these two Committees have not properly dealt with the nature of duties performed by the Ganna Gram Sewaks and Cane Supervisors, although both these Committees have recommended the merger of the two posts.
As soon as, therefore, it is held that the two groups of persons do not perform the same kind of du ties, the question of equal pay for equal work does not arise.
In directing merger of the two posts, the High Court has greatly relied upon the fact that although the minimum educational qualification for Ganna Gram Sewaks was High School, since 1975 the minimum educational qualification for the Ganna Gram Sewaks has been Intermediate in Agriculture.
In other words, according to the High Court the minimum educational qualification required for both these posts is Intermediate in Agriculture.
We have already referred to the Rules framed under Article 309 of the Constitution under which the minimum qualification for the posts of Ganna Gram Sewaks has been prescribed as High School or equivalent examination and for the Cane Supervisors as Intermediate (Agriculture) or equivalent or High School with two years ' Diploma in Agriculture.
The minimum qualifications, as prescribed, have not yet been changed by the amendment of the said Rules.
In entertaining the view that the minimum qualification for the Ganna Gram Sewaks has been since 1975 Intermediate in 979 Agriculture, the High Court has placed reliance upon a letter dated March 10, 1975 addressed by the Cane Commis sioner, U.P,, to the Deputy Secretary, Cane Development Department, Government of U.P.
In that letter, it was recom mended that the minimum educational qualification for the Ganna Gram Sewaks should be Intermediate in accordance with the proposal of the Ganna Gram Sewaks ' Union, U.P.
It was, accordingly, requested by the Cane Commissioner in the said letter that the Government might consider the minimum quali fication as recommended.
It is the case of the State of U.P. that the said letter was issued in connection with 600 new posts of Ganna Gram Sewaks to be created under non statutory bodies, namely, Sakkar Nidhi and Ganna Board.
It is contend ed that these 600 posts have nothing to do with the posts of Ganna Gram Sewaks under the Cane Development Department of the State of U.P.
In our opinion, the High Court should not have placed any reliance upon any such recommendation made by the Cane Commissioner, when, under the Rules framed under Article 309 of the Constitution, the minimum qualification required for the Ganna Gram Sewaks is High School or equiva lent.
So long as the Rules are amended and the minimum qualification is not enhanced to Intermediate in Agricul ture, the Cane Development Department of the Government cannot prescribe or insist on a minimum qualification of Intermediate in Agriculture.
The Second Pay Commission could not also equate the posts of Ganna Gram Sewaks with that of Cane Supervisors on the ground that the minimum qualifica tion for the two posts are different.
The High Court was, therefore.
not justified in relying upon the said letter of the Cane Commissioner in preference to the Rules framed under Article 309 of the Constitution.
In our view, there fore, not only the nature of duties attached to each post is different, but also the minimum qualification required for each post is also different.
As stated earlier, the posts of Ganna Gram Sewaks are filled by direct recruitment.
So far as .the posts of Cane Supervisors are concerned, 50 per cent of the same are filled by promotion from the posts of Ganna Gram Sewaks and the remaining 50 per cent are filled by direct recruitment.
Thus, the post of Cane Supervisor is a promotional post vis a vis the post of Ganna Gram Sewak.
In our view where, as in the instant case, of the two posts, one being the promotional post and the other being the feeder post, it will be beyond the jurisdiction of the Court to implement the principle of equal pay for equal work inasmuch as such implementation will practically result in the amalgmation of the two posts leading to great administrative difficulties.
Article 39(d) of the Constitution lays down the Directive Principle of 980 equal pay for equal work for both men and women.
The direc tive principles contained in Part IV of the Constitution are not enforceable in any court of law.
It is a constitutional goal that has to be achieved at the instance of the State.
Merger or bifurcation of a cadre is an executive act and normally the Court does not deal with it.
It is for the State to consider whether two groups of persons working under two distinct posts perform the same kind of duties or not and whether in implementing the directive principle, as contained in Article 39(d) of the Constitution, it is neces sary to merge these two posts into one cadre or post.
If the State Government is of the view that it is necessary that there should be a merger of the two posts into one post, the State Government has to take steps in that regard by framing proper rules with regard to seniority, promotions, etc.
But, when two groups of persons are in the same or similar posts performing same kind of work, either in the same or in the different Government departments, the Court may in suitable cases direct equal pay by way of removing unreasonable discrimination and treating the two groups, similarly situ ated, equally.
In the facts and circumstances of the instant case, we are of the view that the High Court was not justi fied in directing a merger of the two posts, namely, the posts of Ganna Gram Sewaks and Cane Supervisors.
For the reasons aforesaid, the impugned judgment of the High Court is set aside and the writ petition is dismissed.
Both these appeals are allowed.
There is, however, no order as to costs.
This judgment, however, will not prevent the State of U.P. from considering the merger of these two posts and the consequent equalisation of pay.
P.S.S, Appeals allowed.
| On the death of R, a Hindu jat, in April or May, 1920, the widow of his pre deceased son, H, took possession of the properties and on August 24, 1920, obtained a mutation of the settlement records showing her as the owner of the lands in the place of R. A gift of half of the properties by H to her daughter K 949 gave rise to disputes between them and the collaterals but the matter was settled on H executing a document on February 6, 1932, whereby, inter alia, she agreed that the lands would belong to her for her life and after her death to her daughter for the latter 's life and that none of them would be entitled to sell or mortgage the lands.
The document, however, was not registered.
In 1939 H made a gift of the entire lands to K who obtained a mutation of the settlement records showing her as the owner of the lands, and in 1945 a suit was filed by the collaterals challenging the transaction as not binding on them as the reversionary heirs of R. Under the general custom governing the parties as admitted by them a widow of a pre deceased son was entitled only to maintenance when there were collaterals, and as H was in possession of the properties since 1920 it was said by her and K that she had, at the date of the gift, acquired an absolute title by adverse possession.
It was contended for the plaintiffs, interalia, that the agreement of February, 1932, though not admissible in evidence to prove that H and K had only life estates in the lands, was admissible to show the nature of H 's possession and that it showed that her possession was not adverse.
Held, that the document dated February 6, 1932, was in admissible in evidence, in view Of section 49 of the Indian , as H had been in possession before the date of the document and to admit it in evidence to show the nature of her possession subsequent to it would be to treat it as operating to destroy the nature of the previous possession and to convert what had started as adverse possession into a permissive possession, and therefore, to give effect to the agreement contained in it.
Varatha Pillai vs jeevarathnammal, (1918) L.R. 46 I. A. 285, distinguished,
|
Appeal No. 1308 of 1970.
Appeal by special leave from the order dated September 8.
1970 of the Calcutta High Court in Income Tax Reference No. 50 of 1971.
N. A. Palkhivala, Veda Vyasa, T. A. Ramachandran and D. N. Gupta, for the appellant.
Y. section Desai, section K. A iyar and H. D. Sharma, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by special leave from an order of the Calcutta High Court directing the Income tax Appellate Tribunal, 'B ' Branch, Calcutta, to draw a statement of case relating to four questions of law which, it was stated, arose out of the order of the Tribunal in the matter of assessment of the appellant which was the assessee in respect of the assessment year 1962 63.
The Appellate Tribunal had rejected the application of the Commissioner of Income tax requiring it to refer those questions to the High Court.
The High Court, on being moved, issued a rule nisi and then made it absolute after full arguments without giving any reasons, whatsoever.
140 The assessee is a 100% subsidiary of Imperial Chemical In dustries Ltd., incorporated in the United Kingdom (hereinafter referred to as I.C.I. for convenience).
I.C.I. advanced large amounts by way of loans to the assessee from time to time.
This, it was claimed, was done for subscribing to shares in three Indian Companies called Indian Explosives Ltd., Alkalai & Chemical Corporation of India and Atic Industries Private Ltd., (hereinafter called as I.E.L., A.C.C.I and ATIC respectively).
Subsequently the assessee transferred the shares in the aforesaid companies at par to I.C.I. in satisfaction of the loans advanced by that company.
The Income tax Officer applied section 52 of the Income tax Act, 1961 (hereinafter called the 'Act ') and assessed the assessee to capital gains.
The Appellate Assistant Commissioner took the contrary view and held that on the facts which had been established, the assessee was not liable to capital gains under the aforesaid section.
The Tribunal upheld the decision of the Appellate Assistant Commissioner by a detailed and well reasoned order.
Broadly, the case of the assessee was that I.C.I. wanted to make investments in India in sterling currency.
The assessee was already in existence but the other three companies which have been mentioned, were incorporated later.
I.C.I. devised a scheme by which it could make the investment as desired by it and by which it could also take advantage of the tax relief which could be availed of by the new enterprises under section 15(C) and 56.(A) of the Income tax Act, 1922.
The scheme in short was that I.C.I. would arrange to let the assessee hold shares in the three com panies by investing the money which was to be given by I.C.I. to the assessee.
The modus operandi was that I.C.T. would give that money by way of loans to the assessee who agreed that the shares in the three companies would be transferred to I.C.I. in satisfaction of the loans at par or issue price as and when desired by I.C.I. All this was done after negotiations with the concerned Department of the Government of India at the highest level and with the approval of the Reserve Bank of India.
The entire scheme was conceived and was put into operation prior to 30th November 1956 when the Finance Bill was introduced reimposing capital gains tax which had remained abolished for certain years.
There was a provision for charging interest by the I.C.I. from the assessee at a rate not exceeding 1/2% above the Indian Bank rate which came to 51% per annum but the interest was not to exceed in any case the dividends received by the assessee from those shares.
It was claimed on behalf of the assessee that this arrangement was advantageous both to I.C.I. and the assessee, I.C.I. having taken the risk (of depreciation in shares or otherwise) attached to the new business pioneering adventures, ensured that capital appreciation of the shares, if 'any, also went 141 to itself.
The assessee did not suffer any disadvantage because it had to pay no interest if no dividend was received and it could keep and get the benefit of any dividend in excess of 5 1/2%.
As a result of I.C.I. investments being held through the assessee instead of directly, I.C.I. achieved an advantage of saving tax in U.K. amounting to pound 68,000 in the relevant years.
In 1959 the structure of Indian taxation regarding the grossing up of dividends was radically changed and by the Finance Act 1959, the system of grossing up of dividends (under section 16(2) and 18(5) of 1922 Act) was abolished and intercorporate dividends became liable to income tax at each stage.
Thus, the dividends passing from the three companies through the assessee to I.C.I. became liable to tax stages.
This affected the net return of I.C.I. on its investments in the three companies substantially.
In these circumstances, it was decided by I.C.I. that the investments in the three companies should 'he held by it directly.
For that reason it called upon the assessee in February 1961 to transfer to it the aforesaid shares in the three companies at the issue price in satisfaction of the sterling loans in accordance with the previous agreements.
The approval of the Reserve Bank to these transfers was received in February 1961 and the transfers were made in March/April 1961.
According to the assessee there was no question of the transfer of shares having been affected with the object of avoidance or reduction of the liability of the assessee to capital gains which alone could attract the applicability of section 52 of the Act.
Section 52 is in the following terms "Consideration for transfer in cases of under statement: Where the person who acquires a capital asset from an assessee is directly or indirectly connected with the assessee and the Income tax Officer has reason to believe that the transfer was effected with the object of avoidance or reduction of the liability of the assessee under section 45, the full value of the consideration for the transfer shall, with the previous approval of the Inspecting Asstt.
Commissioner, be taken to be the fair market value of the capital asset on the date of the transfer".
The necessary ingredients of the section are (i)there should be a direct or indirect connection between the person who acquires a capital asset and the assessee; (ii) the Income tax Officer should have reason to believe that the transfer was effected with the object of avoidance or reduction of the liability of the assessee to capital gains; (iii) if the first two conditions are satisfied then the full value of consideration for the 142 transfer can be taken to be the fair market value of the capital asset on the date of the transfer.
As regards the first requirement, that was admittedly satis fied in the present case.
The second requirement could be satisfied only if there was any cogent material on which the Income tax Officer could have reason to believe that the transfers were effected with the object of avoidance and reduction of liability to capital gains.
It is abundantly clear that the intention with which a particular transfer is made and the object which is to be achieved by such transfer is essentially a question of fact the conclusion relating to which is to be arrived at on a consideration of the relevant material.
In other words, before the Income tax Officer can have any reason to believe that a transfer was effected with the object mentioned in the section facts must exist showing that the object was to avoid or reduce the liability to capital gains.
The Tribunal examined fully the correspondence and the other material with regard to each of the three Indian companies in which the investment had been made of the money advanced by I.C.I. to the assessee.
We may briefly notice the discussion relating to each company.
It was in or about 1949 that I.C.I. was asked by the Government of India to consider the manufacture of commercial Lasting High Explosives in India.
Negotiations advanced more towards October 1953 when the representatives of I.C.I. met the officials of the Government of India.
The Tribunal referred to the minutes of the meeting held on October 1, 1953 as also on the 6th October 1953.
In the final draft of the Declaration of Intention dated November 5.
1953, it was mentioned that the Government had agreed that if T.C.I. made a loan to the assessee the latter would hold the shares in I.E.L. and that the loan "may be repaid by a transfer of the shares to I.C.I. at any time".
On 21st December 1954, the assessee applied to the Reserve Bank of India for formal sanction for borrowing Rs. 160 lakhs from I.C.I. for the purchase of shares in I.E.L. in terms of the agreement dated November 5, 1953.
It was stated in the letter that I.C.I. would charge no interest until such time as the shares began to yield dividends.
The loans were advanced from 30th September 1954 to 30th June 1957 by the I.C.I. to the assessee of the equivalent of Rs. 160 lakhs in Sterling.
The other correspondence relating to the aforesaid amount was also noticed by the Tribunal.
In 1958 there was a Rights Issue by I.E.L. I.C.I. agreed to give a loan of Rs. 80 lakhs to the assessee to cover the Sterling requirement of I.E.L. The assessee was to take up shares of that amount.
The terms of the loan were that I.C.I. had the right to acquire at any time the shares held by the assessee in I.E.L. 143 at par in satisfaction of the loan and the rate of interest payable on the loan was to be I% above the Indian Bank rate.
This was followed by other correspondence and a resolution which was recorded on 30 9 1958 containing terms of the second loan of Rs. 80,00,000/ .
It is not necessary to refer to the other correspondence looked into by the Tribunal with regard to that loan.
On 15 2 1961 the assessee was called upon by I.C.I. to transfer the investments in satisfaction of the loans.
After the sanction was obtained from the Reserve Bank of India, the shares were transferred at par.
The Tribunal referred to the undisputed facts relating to the circumstances in which the scheme for advancing the loan to the assessee for investment in I.E.L. came to be mooted and was ultimately approved by the Government.
This is what the Tribunal said : "The above background would show that the idea was not to make the assessee the real beneficial owner of the shares.
The fact that the shares should be held only for a time beneficially by the assessee is clear from the "Declaration of Intention" dated 5 11 1953".
Before the Tribunal the counsel for the Department had accepted the position that if there was an arrangement or agreement before the reintroduction of capital gains tax he would have no case.
According to him, until the transfers were actually made of the shares, there was no agreement on which the parties could have gone to court in order to obtain the share transfers at par in favour of I.C.I.
The Tribunal proceeded first to examine whether there was any kind of understanding between the assessee and I.C.I. regarding the transfer of shares at par.
After recapitulating the correspondence and the relevant facts, the Tribunal came to the following conclusion: "Taking this along with the minutes of the meeting with the officials of the Government of India, in October 1953, it is clear that the whole idea of I.C.I. throughout was to make some funds available to the assessee so that the shares could be acquired in its name and that the shares could be transferred to I.C.I. as and when it demanded".
It was, however, stated by the Tribunal that taking into account the correspondence and the documents referred to earlier it was satisfied with the assessee 's case that the transfer of shares to London at issue price or at par was throughout the basis of the advances of loans to the assessee.
It is necessary to reproduce paragraph 31 of the order of the Tribunal : "In October 1953, there was no mention of any capital gains tax being revived.
At that time the asses 144 see could not have had any idea of avoiding or reducing any liability to capital gains tax.
The learned counsel for the department laid some emphasis on the fact that there was no enforceable arrangement.
The question as to whether there was an enforceable arrangement or not is not really material.
What we have to find out is whether the object in putting through these transactions of taking over the shares at par or at issue price was one of avoidance or reduction of liability to capital gains tax.
That object does not get established by the mere absence of an enforceable arrangement.
Having regard to the assessee being the subsidiary of I.C.I., there is nothing surprising about the arrangement not being so formal or not being put through after complying with all the necessary legal formalities.
The absence of formal agreement is thus understandable in this context and cannot by itself suggest anything in favour of the department.
Businessmen are not always motivated by legalistic considerations.
Even taking that the arrangement was only binding morally and not legally, still so long as the assessee wanted to fulfil a moral obligation and had not the capital gains tax in mind, it cannot be said that the transaction was entered into with the object of avoidance or reduction of liability to capital gains tax".
The Tribunal proceeded to say "We have to find out the object of the, transaction.
It is removed in point of time from the result.
In such a case one cannot try to infer the object from the results.
We really have to put ourselves at a point of time when the transaction was conceived.
Taking the materials before us, we consider that there is nothing to suggest that the parties had the capital gains tax in their mind in 1953 and later when they put through the aforesaid transactions.
We have, therefore, to hold that the factual requisites of section 52 have not been established here".
In dealing with the second Company, namely, A.C.C.I it was pointed out by the Tribunal that the scheme for manufactur ing Polythene was placed before the Government of India by a letter of the assessee dated 13 12 1955 addressed to Mr. H. V. R. lengar, Secretary, Minister of Commerce & Industry, in which it was specifically stated that to enable the assessee to subscribe for the new shares I.C.I. would lend the subscription monies to the assessee on the understanding that at a later date I.C.I. could acquire at the issue price these new shares in satisfaction of its 145 loan.
The Tribunal dealt with all the relevant facts relating to the loan advanced to A.C.C.I. including those stated in the affidavits of P. T. Manzies dated 17 8 1966 and U. R. Newbery dated 10 1 1967 and considered that the transaction relating to this Company was not in any way different from those relating to the I.P. L. ATIC, the third Company was incorporated primarily for the manufacture of certain Dye stuffs.
On 29 12 1955 I.C.I. agreed to advance Rs. 25 lakhs as loan to the assessee.
The shares acquired under the loan could be transferred to I.C.I. on request by the latter at the issue price.
I.C.I. waived its right to interest on the loan until the commencement of the period in respect of which ATIC paid the dividend.
There was a further loan of Rs. 35,00,000 on the same terms.
These shares were age subsequently required to be transferred to I.C.I. in February 1961.
The Appellate Assistant Commissioner had referred to the affidavits which had been filed on behalf of the assessee and had mentioned that the Department had not cross examined the deponents.
Before the Tribunal the counsel for the Department stated that he accepted the affidavits as correct in so far as facts were concerned but he only disputed the inferences therefrom.
The Tribunal in this connection observed: "In our opinion, once the facts mentioned therein are taken as correct, the inference that the transaction was not for *he purpose of avoiding or reducing liability to capital gains tax has to follow".
Finally the Tribunal, as stated before, confirmed the decision of the Appellate Assistant Commissioner that the material on record did not justify the conclusion of the Income tax Officer that the object of the transfer of the shares of all the three Companies by the assessee to I.C.I. was the avoidance of liability to capital gains which would attract the applicability of section 52 of the Act.
The Commissioner of Income tax asked for a reference on six questions.
The Tribunal again examined the further contentions of the Department in its order dated 28 7 1969 by which it declined to make the reference on the ground that no question of law arose out of the order of the Appellate Tribunal, Only four questions appear to have been pressed for being referred.
As regards question No. 1 (which was No. 3 before the Tribunal) it was pointed out that it proceeded on the basis that there was some dispute about the construction of the correspondence or documents.
The Tribunal observed that there was no such dispute and it had not been suggested that a particular expression in any letter or document had been wrongly construed.
Regarding question No. 2 (which was No. 4 before the Tribunal), the Departmental representative was asked to particularise the docu 146 ments or evidence omitted from consideration.
He referred to certain documents and evidence which according to him had not been considered by the Tribunal.
The Tribunal made it cleat that all the relevant materials which had been referred to had been considered by it.
These materials were distributed over four bulky volumes of typed records and, therefore, each document could not have been mentioned in the order.
Nothing relevant was actually over looked.
At any rate the documents on which particular reliance was placed on behalf of the Department were considered and the Tribunal observed that the grievance of omission of materials from consideration related to irrelevant matters.
As regards (the other two questions, the Tribunal observed that the charge of perversity was only a disparate attempt at extracting a question of law where, none existed and that the object or intention of an assessee was always a question of fact.
It was a factual inference to be drawn from other facts.
It was pointed out that on the construction of section 52, the parties had not joined, any issue.
We may now mention the four questions which the High Court directed to be referred : 1. "whether on the facts and in +he circumstances of the case and on a proper construction of the documents referred to and/or considered by it the Tribunal was right in arriving at the finding that the transfer of the shares to Imperial Chemical Industries Ltd., London at the issue price or par was throughout the basis of the advance of loans to the assessee ? 2.
Whether, in arriving at the said finding the Tribunal misdirected itself in law in basing the said finding on evidence covering some matters only and ignoring, evidence on other essential matters ? 3.
Whether, on the facts and in +,he circumstances of the case and particularly in view of the finding that there was no enforceable agreement making it obligatory upon the assessee to transfer the shares to Imperial Chemical Industries Ltd., London, at par or issue price the conclusion of the Tribunal that the transfer of the shares by the assessee to the latter company at par was not effected with the object of avoidance or reduction of the liability of the assessee to capital gains tax was unreasonable or perverse ? 4.
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding, that 147 section 52 of the Income tax Act, 1961, was not applicable to the facts of the case ? On the analysis of section 52 of the Act made by us at a previous stage and the clear, cogent and precise findings and conclusions of the Appellate Tribunal, we are wholly unable to comprehend, how any question of law of the nature sought to be referred arose; or arises from the order of the Appellate Tribunal.
It is unfortunate that in a case of this nature and magnitude, the High Court did not choose to record a speaking order to enable us to appreciate the reasons which prevailed with it for directing the four questions to be referred.
The jurisdiction in the matter of reference can be exercised (i) when the point for determina tion is a pure question of law such 'as construction of a statute or document of title; (ii) when the point for determination is a mixed question of law and fact.
While the finding of the Tribunal on the facts is final its decision as to the legal effect of those findings is a question of law, (iii) a finding on a question of fact is open to attack as erroneous in law when there is no evidence to support it or if it is perverse.
Where, however, the finding is one of fact, the fact that it is an inference from other basic facts will not alter its character as one of fact (See Sree Meenakashi Mills Ltd. vs, Commissioner of Income tax, Madras(1).
In that case it was held that there was no question of construction of any statutory provision or document of title.
The issues which arose for determination, whether the sales entered in books of the ap pellant in the names of the intermediaries were genuine, and if not, to whom the goods were sold 'and for what price, were all questions of fact.
Their determination did not involve the application of any legal principles to facts established by the evidence.
The findings of the Tribunal were amply supported by evidence and were eminently reasonable.
It, therefore, followed that there was no question which could be referred to the Court under section 66(1) of the Income tax Act 1922.
The same principles will apply when a reference is sought under section 256 of the Act.
We are altogether unable to see how findings of the Appellate Tribunal that the transfer of shares in the present case was not made with the intention or object of avoidance or reduction of liability to capital gains were not questions of fact and did not depend on inference of facts from the evidence or the material before the Tribunal.
It can well be said that the determination of the question whether the object of the assessee was to avoid or reduce its liability to capital gains by making the transfers in question did not involve the application of any legal principles to the facts established by the evidence.
The findings of the Tribunal were amply supported by evidence and were eminently reasonable.
It (1) 148 is true that the amount involved is very large but that cannot Justify a reference as under section 256 of the Act neither the Appellate Tribunal could make a reference nor could the High Court direct the reference to be made to it by the Tribunal on pure questions ,of fact.
The learned counsel for the Commissioner has sought to invite our attention to certain parts of the order of the Tribunal and, in particular, to the statement extracted by us at an earlier stage about the question whether the assessee had held the shares beneficially and the point which was debated before the Tribunal whether there was any binding legal agreement between the assessee and I.C.I. for transfer of the shares at par.
We are unable to see how these matters were relevant for the purpose of determining the intention or object under lying the transfer of the shares to I.C.I. by the assessee.
Once the Tribunal came to the conclusion which was purely one of fact that before there was any proposal to reimpose capital gains tax which came to be embodied in the Finance Bill towards the end of November 1956, the scheme had been fully evolved between the assessee and I.C.I. of making the loans by the latter to the former for being invested in the three companies and that the shares would be transferred at par by the assessee to I.C.I. whenever desired, the applicability of section 52 could not be attracted as the same depended on certain facts which must exist or must be found and which had not been so found by the Tribunal.
In the result the appeal is allowed and the order of the High ,Court is hereby set aside.
The assessee shall be entitled to its costs in this Court.
V.P.S. Appeal allowed.
| Under section 32 of the U.P. Cooperative Societies Act, 1965 the business to be conducted at the annual general meeting of a society includes inter alia election of the committee of management of the society.
Under Rule 409 of the Act namely the Cooperative Societies Rules, 1967 a Cooperative society may, for the purpose of the election of the Committee of management, with the previous sanction of the Registrar of Cooperative Societies (a) divide its membership into different groups on territorial or any other rational basis, and (b) also specify the number or proportion of the members of the committee of management in such a manner that different arm or interests, as the case may be, in the society may, as far as may be, get suitable representation on the committee of management.
On 5 November 1969 the Registrar issued a circular interpreting Rule 409 and laid down the principle that "all the members of the general body" of the cooperative society would "exercise their right of vote in filling all the seats of elected Directors".
The elections in the cooperative societies concerned in the present appeals were held according to the aforesaid directions given by the Registrar.
The elections were challenged and set aside in proceedings under the Act.
On the question whether the circular interpreting Rule 409 issued by the Registrar was valid, this Court, HELD : Under rule 409 the principal matters to be kept in the forefront are these.
First, the society will divide the constituencies on territorial basis or any other rational basis.
By territorial basis is meant territory where the member will reside.
Residence is therefore the relative re quirement of territorial basis.
If any other rational basis like occupation or vocation is determined to be the basis of a constituency the persons falling within the constituency will satisfy that test.
Secondly, the society will specify the proportion of members of the committee in such a manner that different areas or interests may get suitable representation.
The inherent idea is that such areas or interest will obtain representation.
If membership is on territorial basis the different areas will get representation according to the interest of such territories.
Again, if occupational or professional tests are created for dividing groups such interests will have to be given suitable representation.
Representation is therefore with reference to areas or interests.
Judged by these principles the impeached circular of the Registrar suffered from the vice of giving the members the right of casting vote in constituencies to which they did not belong.
This strikes at the basic root of the fight of representation.
This also reads as under the principle of one member one vote which is made a role of law in the Act.
[155 E G] 150 The words 'affairs of the society ' in section 20 cannot be equated with the constituencies to give each member a right to vote for each constituency.
That would defeat the purpose of section 20 and rule 409.
The basic idea of representation for each constituency depends on the mandate of the respective constituency and not of other constituencies.
That is why section 20 of the Act speaks of one member having one vote irrespective of shareholding.
It means equality of votes of members.
[155 H] The impeached circular of the Registrar was illegal and unwarranted.
The Registrar has no power to interpret rule 409.
The Registrar has equally no power to express view with regard to the conduct of the election and regulate the voting rights by giving members more than one vote.
The society is to frame rules for elections.
The rules and the bye laws cannot be in derogation of the statute and statutory rules.
At an election of members of the committee of management one member will have only one vote for the constituency to which he belongs.
[156 E] The result was that the elections which were held following the circular of the Registrar were bad.
|
Civil Appeal Nos.
1742 1743 of 1969.
Appeals by Special Leave from the Judgment and order dated 12 12 1968 of the Allahabad High Court in R.S.A. No. 2777 of 1972.
section N. Andley, Uma Datta and T. C. Sharma for the Appellant in CA 1742/69.
A. P. section Chauhan and N. N. Sharma for Respondent No. 1 in CA 1742/69 and for the Appellant in CA 1743/69.
1000 The Judgment of the Court was delivered by KOSHAL, J.
The facts giving rise to these two cross appeals by special leave may, with advantage, be stated with reference to the following pedigree table: CHHITAR MAL | ___________________________________________________________ | | | | Salag Ram Banshi Dhar Narain Dass Bhagwan Dass | (died | | | issueless) | | | | | | | | | Balu Ram Ram Chander | | | | | | | Tirlok Chand | | | (plaintiff) | | | | | | | | | Rag Vir Ram Nath Bhagirath | | Saran (defendant) (Defendant | | No. 3) No. 4) No. 5) | | | | | | | | | Devi Sahai Piarye Lal Gopi Nath | (died in (Defendent | | 1943) No. 2) | | | | | | | | | | | Damodar Dass Smt Barfi | (defendant (daughter) | No. 6 | ____________________________________________________ | | | | Murli Kewal Ram Govind Jagananth =Smt.
Chhoti Dhar (dies Ram (died (died (died issueless (died issueless issueless in 1925) in 1952) issue in 1940 in 1955) in 1952) ____________________________________________________________ The litigation between the parties started with suit No. 1912 of 1958 instituted by Tirlok Chand for partition of properties detailed in schedules A,B and C forming part of the plaint.
His case was that 1001 the property described in schedule A had been acquired by his great grand father Chhitar Mal, that the property detailed in schedule B was jointly acquired by Salag Ram 's sons Jagannath and Govind Ram, the two of whom constituted a joint Hindu family, and that the property specified in schedule C had once belonged exclusively to Jagannath, son of Salag Ram and that it was from him that it had descended to his widow Smt.
Chhoti.
Apart from defendants Nos. 2 to 6 whose names appear in the pedigree table, Banwari Lal [who is the appellant before us in Civil Appeal No. 1742(N) of 1969] was arrayed as defendant No. 1 and he has been the real contesting defendant whose claim was based on his adoption by Govind Ram, grandson of Chhitar Mal and on two registered wills, both dated the 25th of September, 1950, purporting to have been executed by Govind Ram and Smt.
Chhoti respectively.
He claimed that the two testators had bequeathed their entire property to him, that the property covered by schedule A was acquired not by Chhitar Mal but by Salag Ram and that the one embraced by schedule C had been purchased by Smt.
Chhoti with her stridhana and was never the property of her husband Jagannath.
He therefore claimed to be entitled to all the properties in suit exclusively for himself, it being common ground between the parties that those properties were the subject matter of the two wills.
The plaintiff denied the adoption set up by defendant No. 1 and challenged the two wills as forgeries.
The trial court and the first appellate court found that the property covered by schedule A had been acquired not by Chhitar Mal but by his son Salag Ram.
There was no contest in relation to the property embraced by schedule B which was therefore treated to have been acquired jointly by Govind Ram and Jagannath as part of their joint Hindu family assets.
In relation to the property detailed in schedule C, the trial Court held that it had been acquired by Jagannath but the finding was reversed by the first appellate court which found that the acquisition was made by Smt.
Chhoti with funds of her own, her husband Jagannath having no interest therein.
On behalf of defendant No. 1 no evidence was led to prove that he had been given or taken in adoption.
The trial court therefore held that the adoption had not been proved.
In the will of Govind Ram however, there was a recital that defendant No. 1 was his adopted son and this recital was considered by the first appellate court to be sufficient to prove the adoption.
Both the wills were held to be genuine 1002 and legally valid and the suit was therefore dismissed by the trial court and the first appellate court in toto.
In second appeal the High Court upheld all the findings of fact arrived it by the first appellate court except the one relating to adoption.
The High Court was of the opinion that the recital in the will of Govind Ram about defendant No. 1 being his adopted son was not sufficient to prove the adoption which therefore was held not to have been established.
It was further held by the High Court that a half share in the property specified in schedules A and B having descended from Jagannath to Smt.
Chhoti as a life tenant only, she was not competent to will it away and that the plaintiff, along with other members of the family, was entitled to succeed to that half share.
It was vehemently contended before the High Court that even if the wills be taken to be genuine, they would operate only if defendant No. 1 was shown to have been validly adopted by Govind Ram because both Govind Ram and Smt.
Chhoti had described him as Govind Ram 's adopted son and must therefore be presumed to have executed the wills in favour of defendant No. 1 by reason of his being the adopted son of Govind Ram.
The contention was repelled by the High Court (as it had also been by the trial court) on the ground that the mention of defendant No. 1 as the adopted son of Govind Ram in each of the two wills had been made merely as a description of the devisee and not as a motivation for the execution of either will.
Support was found for this view from Ranganathan Chattiar and Another vs Periskaruppan and Another.
In the result the High Court accepted the appeal of the plaintiff in part, set aside the dismissal of the suit and remitted the case to the trial court for declaring the shares of the parties in the property which descended to Smt.
Chhoti from her husband, in the light of its (the High Court 's) judgment and for partition of the property accordingly thereafter.
Both the contesting parties feel aggrieved by the judgment of the High Court.
While defendant No. 1 claims in Civil Appeal No. 1742 of 1969 the entire property covered by schedules A, B and C, the plaintiff has filed a cross appeal (Civil Appeal No. 1743 of 1969) seeking to defeat in toto the claim of defendant No. 1. 3.
We have heard learned counsel for the parties at length.
In so before as the findings of fact are concerned they are not open to challenge before us.
The first question which learned counsel for the plaintiffs 1003 has re opened before us is whether the two wills were rightly held to be operative in favour of defendant No. 1 inspite of the fact that he was found not to have established his character as an adopted son which was the description given to him in both the wills.
To this question also we think the High Court gave the correct answer.
In this connection reference may be made to the relevant part of Govind Ram 's will and the same is extracted below : "Shri Banwarilal is the adopted son and heir of the executant.
Shrimati Chhoti is the widow of Jagannath Prasad, resident of Pilkhuwa, Pargana Dasna, Tahsil Ghaziabad.
Both the persons live along with the executant and render all due service to the executant.
Therefore, I make the following will: That after the death of the executant all my estate movable and immovable, with all other goods and household property along with Dharamshala No. 1/60 and one storeyed shop No. 1/57 bounded as given below shall be owned by Shrimati Chhoti widow of Jagannath Prasad, occupation shopkeeper, resident of Pilkhuwa, who shall have no right to sell the estate.
She shall have the right to spend for the Dharamshala the income of shop No. 1/57 connected with the Dharamshala.
After the death of Smt.
Chhoti, Banwarilal, adopted son and heir of the executant, shall be the owner .
Interpreting this document and considering the surrounding circumstances of the case, the trial court found that the motive for the execution of the will was not merely the recognition by the testator of his relationship through adoption with the devisee but mainly the existence of feelings of love and affection for him.
It was found as a fact that Banwari Lal was living with Govind Ram and Smt.
Chhoti, that he had served them during their illness and that he was affectionately attached to them so that at the time when the wills were executed there was no one nearer or dearer to Govind Ram and Smt.
Chhoti than Banwari Lal.
In this view of the matter, the failure to establish the stated relationship is not decisive of the point under consideration, and as remarked by the High Court, it appears that the testator made the will not for the reason that he had in fact and lawfully adopted Banwari Lal but for the reason that he treated Banwari Lal as an adopted son and was moved really by the service which the latter had rendered to him.
The relationship mentioned in the will was merely a description of the devisee as understood by the testator who executed the will in favour of the devisee not because of the relationship 1004 brought about by the adoption but by reason of feelings of affection which the devisee had earned by his association and assistance.
The only other noticeable point raised on behalf of the plaintiff was that the will executed by Smt.
Chhoti must be held to be wholly inoperative in so far as properties detained in schedules A and B are concerned.
There is no force in that contention either.
One half of the properties mentioned in those two schedules had vested in Smt.
Chhoti under the will of Govind Ram which itself declared that Smt.
Chhoti would hold them merely as a life tenant and that thereafter they would devolve on defendant No. 1.
In devising those properties to defendant No. 1 Smt.
Chhoti did nothing more than carry out the behest of her own testator, which behest was good in law and would have been effective even if Smt.
Chhoti had made no will in favour of defendant No. 1 in respect of the properties acquired by her under Govind Ram 's will.
On behalf of defendant No. 1 the only submission made was that the two wills must be given effect to not only with regard to the properties received by Smt.
Chhoti from Govind Ram but also in respect of those which devolved on her as a successor to her husband Jagannath.
This submission is also without substance.
Jagannath died in 1940 when Smt.
Chhoti came into his property on the usual life tenure without any right of a alienation (except for necessity) or of devise.
To the extent that she overstepped her rights in devising Jagannath 's property the will transgressed the law and has been rightly held to be inoperative, the result being that her reversioners and not her devisee would succeed to Jagannath 's share in the properties covered by schedules A and B. The situation would certainly have been different if the adoption had been proved; for, in that case, defendant No. 1 would have succeeded as the sole reversioner to the estate left by Smt.
Chhoti, being her husband 's brother 's son and therefore his nearest and sole heir.
And that is why a contention was raised on behalf of defendant No. 1 that a valid adoption had been proved and that the finding to the contrary arrived at by two of the courts below was unsupportable.
Reference in this connection was made to the recital in the will executed by Govind Ram about defendant No. 1 being the adopted son of the devisor and to the oral evidence of Raj Pal, DW 2 who attested that will and deposed that defendant No. 1 had been adopted by the testator.
These two pieces of evidence were considered by the trial court as well as the High Court, both of whom regarded the material as insufficient to hold that a valid adoption was proved.
The finding in relation to the adoption is a finding of fact which we see no reason to interfere with in the circumstances of the case.
The 1005 adoption is alleged to have taken place within about a decade immediately preceding the suit between the parties so that evidence of witnesses who were present at the actual adoption and had seen the 'giving and taking ' would normally have been available.
However, no attempt was made to produce any such witness nor to explain why no such witness was forthcoming.
Different considerations may have prevailed if proof of adoption was required to be submitted to court after a very long period of its having taken place, which is not the case here.
The statement made by the testator in the will about the adoption is certainly a piece of admissible evidence as observed in Chandreshwar Prasad Narain Singh vs Bisheshwar Pratap Narain Singh cited by learned counsel for defendant No. 1 but there is no rule of law or prudence laying down the principle that such a statement must be regarded as conclusive, and this was also the view taken in that case.
And the burden of proof of adoption was heavy on the defendant.
In this connection we may refer to the following passage in Article 512 of Mulla 's Hindu Law (14th edition): ".
But the evidence in support of an adoption must be sufficient to satisfy the very grave and serious onus that rests upon any person who seeks to displace the natural succession by alleging an adoption.
That onus is particularly heavy where the adoption is made a long time after the date of the alleged authority to adopt. " It is true, as pointed out by Mulla in a later passage occurring in the same article that when there is a lapse of a very long period between the adoption and its being questioned, every allowance for the absence of evidence to prove the factum of adoption must be favourably entertained; but then that is not the situation here as we have already pointed out.
We are therefore one with the High Court in holding that on the evidence adduced, defendant No. 1 has not been successful in establishing the alleged adoption.
In the result both the appeals fail and are dismissed with no order as to costs.
P.B.R. Appeals dismissed.
| In 1962, a site was chosen for a grain market and the foundation stone for it was laid.
This spot belonged to a cousin of Respondent No. 22, an ex Minister and an influential politician.
This spot was eventually abandoned in favour of the lands of Respondents Nos. 1 to 21, which were notified in 1971.
The landowners resisted and successfully impeached the acquisition on the ground of mala fides before the High Court.
After a long interval, the State initiated acquisition proceedings in respect of the same land a second time, invoking the emergency powers under Section 17 of the Land Acquisition Act.
The Respondents Nos. 1 to 21 assailed the acquisition before the High Court on the ground that the statutory power to acquire land had been misused to satisfy the personal ends of Respondent No. 22 and that the acquisition was not for a legitimate statutory purpose.
The High Court struck down the 'declaration ', and invalidated the acquisition.
Dismissing the Special Leave Petition of the State, ^ HELD: Krishna Iyer, J.) 1.
It is fundamental that compulsory taking of a man 's property is a serious matter and the smaller the man the more serious the matter.
Hearing him before depriving him is both reasonable and preemptive of arbitrariness, and denial of this administrative fairness is constitutional anathema except for good reasons.
Save in real urgency where public interest does not brook even the minimum time needed to give a hearing, land acquisition authorities should not, having regard to Articles 14 (and 19), burke an enquiry under section 17 of the Land Acquisition Act.
[1078H 1079B] In the instant case a slumbering process, pending for years and suddenly exciting itself into immediate forcible taking, makes a travesty of emergency power.
[1079B] 1072 2.
The power to select land for acquisition proceedings is left to the responsible discretion of Government under the Act, subject to Articles 14, 19 and 31 (then).
The Court is handcuffed in this jurisdiction and cannot raise its hand against what it thinks is a foolish choice.
Wisdom in administrative action is the property of the Executive and judicial circumspection keeps the court lock jawed save where power has been polluted by oblique ends or is otherwise void on well established grounds.
[1075 F G] 3.
Legal malice is gibberish unless juristic clarity keeps it separate from the popular concept of personal vice.
Bad faith which invalidates the exercise of power sometimes called colourable exercise or fraud on power and often times overlaps motives, passions, and satisfactions is the attainment of ends beyond the sanctioned purposes of power by simulation or pretension of gaining a legitimate goal.
If the use of the power is for the fulfillment of a legal object the actuation or catalysation by malice is not legicidal.
The action is bad where the true object is to reach an end different from the one for which the power is entrusted, goaded by extraneous considerations, good or bad, but irrelevant to the entrustment.
When the custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested, the court calls it a colourable exercise and is undeceived by illusion.
[1075H 1076C] 4.
Fraud on power voids the order if it is not exercised bona fide for the end designed.
Fraud in this context is not equal to moral turpitude and embraces all cases in which the action impugned is to effect some object which is beyond the purpose and intent of the power, whether this be malice laden or even benign.
If the purpose is corrupt the resultant act is bad.
If considerations, foreign to the scope of the power or extraneous to the statute, enter the verdict or impel the action, mala fides or fraud on power vitiates the acquisition or other official act.
[1076 D E] In the instant case the moving consideration was not that this land was needed for the mandi, in the judgment of Government, but that the mandi need was hijacked to reach the private destination of depriving an enemy of his land through back seat driving of the statutory engine.
Respondent No. 22 when he became State Minister of Panchayat and Development constituted a Selection Board and appointed himself as President thereof.
The choice was made of the site belonging to Respondents 1 to 21 and lest the take over delayed, even the S5A enquiry was scuttled by invoking the emergency power S17.
At times, natural justice is the natural enemy of intolerant authority.
The judicial process under Article 226 therefore, rightly invalidated the acquisition on the ground of mala fide.
[1076F, 1078 C E] 5.
This court does not upset a factual finding unless it is upset by perverse assessment, absence of evidence and the like.
[1077A] 6.
Counsel in court are 'robed ' representatives, within the parameters of the adversary system, geared to the higher cause of justice, not amoral attorneys paid to ventriloquize the case of the principal.
Every 'lawless ' cause brought recklessly before the Court, is a dubious gamble which blocks the better ones from getting speedy remedy.
[1074E, 1073F] 1073 (Per Pathak J. concurring) 1.
On a conspectus of the material on the record it does seem that the impugned acquisition proceeding cannot be sustained.
There is reason to believe that the statutory power to acquire land has been misued to satisfy the personal ends of the Respondent No. 22, an individual who appears to be not without considerable political influence.
Despite an opportunity afforded to controvert the allegations made by the Respondents Nos. 1 to 21, no attempt has been made by him to contradict the allegations.
[1079 E F] 2.
Whether or not the deliberations which were said to have led to the selection of the land belonging to Respondent Nos.
1 21, were affected by the influence or pressure of the Respondent No. 22 is a matter to which the officials or members selecting the land could alone be privy.
In the absence of any denial of the allegations made by the Respondents Nos. 1 to 21 in the writ petition by a person having personal and direct knowledge in the matter, and having regard to the entire history of the case, it is difficult to resist the conclusion that the averments in the writ petition alleging mala fides must be accepted.
[1079H 1080B]
|
iminal Appeal No. 23 of 1965.
Appeal by special leave from the judgment and order dated July 17, 1964 of the Patna High Court in Criminal Revision No. 597 of 1963.
Nur ud din Ahmed and D. Goburdhan, for the appellant.
R.C. Prasad.
for respondent No. 1.
The Judgment of the Court was delivered by Hidayatullah, J.
This is an appeal against the judgment.
July 17, 1963.
of a learned single Judge of the High Court at Patna setting aside the acquittal of the appellant ordered by the 1 st Additional Sessions Judge.
Gaya and directing his retrial.
The only question in this appeal is whether the High Court in exercising its revisional powers under section 439 of the Code of Criminal Procedure acted in accordance with the principles settled by this Court for interference with acquittal by way of revision filed 288 by a private party.
To apply those principles, certain facts first be stated.
The appellant was tried on three charges levelled against him First was under section 302 of the Indian Penal Code for intentionally causing the death of one Kuldip Singh with a fire arm on December 18, 1961 in village Gajra Chatar; the second was attempt murder Kuldip Shigh 's companion Sarju Singh by shooting at him with the same weapon; and the third was the unlawful possession of the weapon (a revolver) which is an offence under the Arms Act.
It appears that there was some iII feeling between the appellant and Kuldip Singh, not directly, but because the appellant, who is a lawyer, was conducting cases on behalf of his sister in prolonged litigation started by Kuldip Singh and his party.
The litigation concerned the possession of land and it is admitted before us that all the cases had in fact ended in favour of the appellant 's sister.
The occurrence is stated to have taken place when an inquiry into a case under section 107 of the Code of Criminal Procedure was taking place.
A notice had been issued to Kuldip Singh 's party to show cause why they should not be proceeded against and asked to furnish interim bail.
The prosecution story is that the deceased Kuldip Singh accompanied by Sarju Singh the injured man, and one Musafir Singh (P. W. 12) were proceeding towards village Nawadah via Tilaiya Railway Station. ' They had started early in the morning and had taken an hour and a half to reach village Gajra Chatar where the incident is said to have taken place.
When they reached near a garden.
they found two persons sitting under a tree and approaching them they recognised the appellant but the other was unknown.
These persons began to shadow Kuldip Singh and his companions, and after they had proceeded a little further towards the garden, one of them fired at Kuldip on his back.
The prosecution case is that Sarju immediately turned round and attempted to catch hold of the appellant who had fired with a revolver, but 'the appellant shot Sarju on his leg behind the knee.
Thereafter.
the appellant and his companion ran away.
The report of the incident was made by Kuldip Singh himself who seems not to have lost his consciousness and in that report he named the appellant.
Subsequently, Kuldip made two dying declarations in which he again named the appellant as the assailant.
describing the weapon of attack as a revolver.
Kuldip died and the case was started against the appellant as stated already.
The, learned Sessions Judge on an appraisal of the evidence found it unsatisfactory.
He began by stating that the medical evidence as also the evidence of 'the ballistic expert (P.W. 17) clearly disclosed that the assault was not committed with a revol vet but with a shot gun.
He also could not believe the evidence.
289 that Sarju could be shot from behind when he was grappling with the appellant.
He felt that this created doubt as to whether the injured persons and Musafir who all consistently described the weapon as a revolver had in fact been able to see the weapon or to identify the assailant.
Having found this unworthy of credit, the learned Sessions Judge went into a number of other circumstances which in his opinion tended to show that the prosecution case was not free from concoction and hence not free from doubt.
He felt that the attack was from an ambush and the deceased and 1he witnesses had named the appellant with whom they had deep enmity but they had not seen the real assailant.
He accordingly gave the benefit of doubt to the appellant and ordered his acquittal.
In revision, the learned Judge in 'the High Court went into the evidence very minutely.
He questioned every single finding of the learned Sessions Judge and gave his own interpretation of the evidence and the inferences to be drawn from it.
He discounted the theory that the weapon of attack was a revolver and suggested that it might have been a shot gun or country made pistol which the villagers in the position of Kuldip and Sarju could not distinguish from a revolver.
He then took up each single circumstance on which the learned Sessions Judge had found some doubt and interpreting the evidence de novo held, contrary to the opinion of the Sessions Judge that they were acceptable: All the time he appeared to give the benefit of the doubt to the prosecution.
The only error of law which the learned Judge found in the Sessions Judge 's judgment was a remark by the Sessions Judge that the defence witnesses who were examined by the police before they were brought as defence witnesses ought to have been cross examined with reference to their previous statements recorded by the police, which obviously is against the provisions of the ' Code.
Except for this error, no defect of procedure or of law was discovered by the learned Judge of the High Court in his appraisal of the judgment of the Sessions Judge.
As stated already by us,he seems to have gone into the matter as if an appeal against acquittal was before him making no distinction between the appellate and the revisional powers exercisable by the High Court in matters of acquittal except to the extent that instead of convicting the appellant he only ordered his retrial.
In our opinion the learned Judge was clearly in error in proceeding as he did in a revision filed by a private party.
against the acquittal reached in 1he Court of Session.
The practice on the subject has been stated by this Court on more than one occasion.
In D. Stephens vs Nosibolla(1), only two grounds are mentioned by this Court as entitling the High Court set aside an acquittal in a revision and to order a retrial.
They 290 are that there must exist a manifest illegality in the judgment of the Court of Session ordering the acquittal or there must be a gross miscarriage of justice.
In explaining these two propositions, this Court further states that the High Court is not entitled to interfere even if a wrong view of law is taken by the Court of Session or if even there is misapprehensions of evidence.
Again, in Logendranath Jha and others vs Shri Polailal Biswas(1), this Court points out that the High Court is entitled in revision to set aside an acquittal if there is an error on a point of law or no appraisal of the evidence at all.
This Court observes that it is not sufficient to say that the judgment under revision is "perverse" or "lacking in true correct perspective".
It is pointed out further that by ordering a retrial, the dice is loaded against the accused, because however much the High Court may caution the Subordinate Court, it is always difficult to reweigh the evidence ignoring the opinion of the High Court.
Again in K. Chinnaswamy Reddy vs State of Andhra Pradesh(2), it is pointed out that an interference in revision with an order of acquittal can only take place if there is a glaring defect of procedure such as that the Court had no jurisdiction to try the case or the Court had shut out some material evidence which was admissible or attempted to take into account evidence which was not admissible or had overlooked some evidence.
Although the list given by this Court is not exhaustive of all the circumstances in which the High Court may interfere with an acquittal in revision it is obvious that the defect in the judgment under revision must be analogous to those actually indicated by this Court.
As stated ', ' not one of these points which have been laid down by this Court was covered in the present case.
In fact on reading the judgment of the High Court it is apparent to us that the learned Judge has reweighed the evidence from his own point of view and reached inferences contrary to those of the Sessions Judge on almost every point.
This we do not conceive to be his duty in dealing in revision with an acquittal when Government has not chosen to file an appeal against it.
In other words, the learned Judge in the High Court has not attended to the rules laid down by this Court and has acted in breach of them.
We have had the two judgments read out to us and we are of opinion that there is much that can be said in favour of the judgment of the Sessions Judge who probably felt that the identity of the real assailant not having been found, the persons chose to name the most likely persons or one who was responsible for their discomfiture in the litigation which was going on for years.
That the appellant might have hired some assassins or might even have himself been present at the occurrence may be true but the question (1) ; (2) ; 291 was whether the Sessions Judge was not within his rights in rejecting the prosecution case on a proper appraisal of the evidence which he found to be unsatisfactory.
Looking to all the circumstances that have been brought to our notice, we are satisfied that the Sessions Judge acted within his rights in deciding the case which to us appears also to be somewhat doubtful in many respects and the High Court was therefore in error in taking upon itself the l duty of hearing a revision application as if it was an appeal and setting aside the acquittal not by convicting the accused but reaching the same result indirectly by ordering a retrial.
In our opinion, the judgment of the High Court cannot be allowed to stand.
The appeal succeeds and the order of retrial is therefore revoked and the acquittal is restored.
Y.P. Appeal allowed.
| In a revision filed by a private party, the High Court in its powers under section 439, Code of Criminal Procedure directed the retrial of the appellant, who had been acquitted by the Sessions Judge.
In doing so.
the High Court, went into the evidence very minutely, questioned every finding of the Sessions Judge, gave its own interpretation of the evidence de novo.
HELD: In setting aside an acquittal in a revision and ordering a retrial, there must exist a manifest illegality in the judgment of acquittal or a gross miscarriage of justice.
An interference in revision with an order of acquittal can only take place, if there is a glaring defect of procedure such as that the Court has no jurisdiction to court had shut out some material evidence which was admissible or attempt to take into account evidence which was not admissible or had overlooked some evidence.
Although the list given is not exhaustive of all the circumstances in which the High Court may interfere with an an, acuital in revision it is obvious that the defect in the judgment under revision must be analogous to those actually indicated by this Court.
[290 A,D E] D. Stephens vs Nosibolla, ; , Logendranath ]ha and others vs Shri Polailal Biswas; , and K. Chinnaswamy Reddy vs State of Andhra Pradesh, ; , followed.
|
Appeals Nos. 221 & 222 of 1963.
Appeals by special leave from the judgment and order dated April 16, 1959 of the Mysore High Court in Writ Petitions Nos. 138 and 139 of 1956.
N. D. Kharkhanis and R. N. Sachthey, for the appellants (in both the appeals).
K. Srinivasan and R. Gopalakrishnan, for the respondent (in the appeals).
March 11, 1964.
SARKAR J. and HIDAYATULLAH J. delivered separate opinions dismissing the appeals.
SHAH J. delivered a dissenting opinion allowing the appeal.
SARKAR J.
The question in these two appeals is whether certain proceedings for the recovery of tax from the assessee under the Income tax Act, 1922, were invalid and should be quashed as the assessment order on which they were based had been revised in appeal.
The High Court of Mysore held them to be invalid and quashed them.
The revenue authorities have now appealed to this Court against that decision.
I think it will be helpful to set out the facts chronologi cally.
The tax sought to be realise a became due under two assessment orders passed by an Income tax Officer on March 23, 1955, in respect of the years 1953 54 and 1954 55 finding that the assessee 's income for the earlier year was Rs. 61,000/ on which a tax of Rs. 19,808 1 0 was due and that for the other year was Rs. 1,21,000/ creating a tax liability of Rs. 66,601 3 0.
Notices of demand under section 29 of the Act were issued in respect of these dues.
The assessee tiled appeals to the Appellate Assistant Commissioner against the assessment orders but did not pay the tax as demanded by the notices.
On such failure to pay, the Income tax Officer sometime in September 1955 sent certificates to the Deputy Commissioner, Kolar under section 46(2) of the Act for recovery of the tax as arrears of land revenue and the latter in the course of the same month attached various properties of the assessee under the Revenue Recovery Act.
Thereafter on December 17, 1955, the appeals filed by the assessee which were till then pending were decided by the Appellate Commissioner.
He reduced the assessable income of the assessee to Rs. 27,000/ for the year 1953 54 and to Rs. 45,000/ for the year 1954 55 and directed the Income tax Officer to recompute the tax on the basis of the reduced income and to refund the excess if any collected.
It appears that thereafter on February 19, 1956, the Income tax Officer informed the assessee that his tax liability for 1953 54 150 had reduced to Rs. 4,215 9 0 Rs. 13,346 8 0 and called upon him to pay these amounts at once into the local treasury.
The assessee filed further appeals against the orders of the Appellate Commissioner and asked that the recovery proceedings might be stayed pending decision of these appeals and on that request being rejected, moved the High Court of Mysore by two petitions under article 226 of the Constitution for quashing the recovery proceedings as invalid with the result earlier mentioned.
We are not concerned with the appeals filed by the assessee from the appellate orders and no further reference to them will be made in this judgment.
The contention of the assessee is that in view of the orders of the Appellate Commissioner the earlier orders, notices of demand and certificates must be deemed to have been super seded and the attachments therefore ceased to be effective from the date of the appellate orders and could no longer be proceeded with.
He contends that the Income tax Officer had to start afresh by serving a new notice of demand and taking the necessary further steps thereon for realisation of the tax which then was due only under the appellate orders.
These contentions were accepted by the High Court.
The revenue authorities on the other hand, contend in short that the Act does not provide for any such supersession.
Now, the scheme of the Income tax Act for realisation of moneys becoming due under it appears to be this.
The tax becomes due on the making of an assessment order or an order imposing penalty or requiring interest to be paid.
There after a notice of demand in respect of that amount has to, be served.
This is provided by section 29 which is set out below: section 29.
When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable.
The form mentioned contains directions as to the time within which, the person to whom and the place at which the payment is to be made.
The consequences that follow a non compliance with a notice of demand served under section 29 are set out in section 45 which so far as material is in the following terms: Section 45.
Any amount specified as payable in a notice of demand under sub section (3) of section 23A or under section 29 or an order under section 31 or section 33, shall be paid within the time, at the place and to the person mentioned in the 151 notice or order, of if a time is not so mentioned then on or before the first day of the second month following the date of the service of the A notice or order, and any assessee failing so to pay,,, shall be deemed to be in default, provided that when an assessee has presented an appeal under section 30, the Income tax Officer may in his dis cretion treat the assessee as not being in default as, long as such appeal is undisposed of.
It will be noticed that this section is not confined to the effect of a failure to comply with the terms of a notice of demand issued under section 29 but makes the same consequence arise on the failure to carry out the terms of a notice under section 23A(3) and orders under sections 31 and 33.
That consequence is that the assessee is to be deemed to be in default.
It is after an assessee is so in default that coercive processes for realisation of the amount due start.
Provision for this is made in section 46 to which I will immediately come.
Before doing so, however, I wish to observe that section 45 gives an Income tax Officer on an appeal being filed, a discretion to treat an assessee as not in default.
An argument has been founded on this aspect of the section and to it I will later refer.
Passing on now to section 46, it will be enough for the purposes of these appeals to refer only to sub section
(2) of that section.
This provides that "The Income tax Officer may forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee, and the Collector on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein as if it were an arrear of land revenue.
" It was under this provision that in the present case the Income tax Officer sent the certificates to the Deputy Commissioner and the latter effected the attachment thereafter under the Revenue Recovery Act.
Now there is no dispute that all steps taken in the present case by the revenue authorities were valid when taken for the appellate orders had not till then been made.
The only question is as to the effect of the appellate orders.
It is contended on behalf of the revenue authorities that the Act does not provide that the consequences of a default incurred under the Act cease to be available to the revenue authorities for realisation of the amount due in case the order which was the basis of the default was later revised in appeal.
It is, therefore, said that those consequences are not affected by the revision of the order except where it is annulled and hence all notices and attachments remain in force and can be acted upon for recovering the tax due.
I am unable to agree with this proposition.
It may be that the Act contains no express provision stating what would 152 happen which it was incurred was later revised in appeal.
But within there is enough in the Act to indicate that in some of these cases at least the default comes to an end.
If it does, it seems to me to follow inevitably that the consequences of the default also disappear.
I would first refer to section 45 which says that when an order under section 31 specifies an amount as payable and the amount is not paid within the time, at the place and to the person mentionect in the order or where no time is mentioned in it, within the time specified in the section itself, the assessee so failing to pay shall be deemed to be in default.
The order under section 31 is an order by the Appellate Commissioner.
If lie specifies an amount as payable in his order and mentions the time when, the place where and the person to whom the payment is to be made, then noncompliance with that order would create a, default.
Now this order is made in an appeal from an order made by the Income tax Officer.
Suppose there is already a default as a result of non compliance with a, notice under section 29 given in respect of the Income tax Officer 's order.
As clearly there could not be two defaults for there was one liability, the Act must in such a case be taken to have provided by necessary implication that the default incurred as a result of non compliance with the notice to pay the amount mentioned in the Income tax Officer 's order must be deemed to have been superseded by the appellate order.
The contention that the Act does not contemplate a default ceasing to be so except when an assessment order is annulled by the appellate order, is, therefore, unfounded.
Take another case.
Suppose the appellate order says only that a different amount from that mentioned in the Income tax Officer 's order shall be payable on income for a certain period without specifying the person to whom or the place where it is to be paid.
The effect of it must be to wipe out the Income tax Officer 's order since the two cannot exist together.
In such a case along with the superseded order the default if any incurred in connection with it must also disappear.
There will have to be a fresh notice under section 29 in respect of the amount due under the appellate order on breach of which a fresh default may arise.
It was, however, said that the Act nowhere requires the appellate order to state the amount payable or to specify the time when, the place where and the person to whom it is to be paid.
That may be so but that does not affect what I have said.
Section 45 clearly contemplates the appellate order setting out these things and there is nothing in the Act to prevent the Appellate Commissioner from setting them out.
Since section 45 cannot be read as contemplating an impossibility, it must be held that the Appellate Commissioner may in his order specify the amount payable and state the other particulars about time of 153 payment etc.
If he can do so, that would be enough for my present purpose and it is not necessary for it that the Act must in every case require him to do so.
In case where the appellate order specifies an amount as payable, the Income tax officer 's order must be deemed to have been superseded.
One other argument to which I have to refer at this stage is that if the assessee 's contention be correct, then the discretion given to the Income tax Officer by section 45 not to treat an assessee in default becomes infructuous for then in every case on the making of the appellate order the default earlier incurred must disappear.
This does not seem to me to put the position accurately.
It is not in dispute that the filing of an appeal does not stay the operation of the original order.
So if before the appellate order is made, the amount due is realised by the coercive process following the default, then those steps do not become invalid.
There may be a, liability to refund but none the less what was done was legal when done.
Again it would, in my view, depend on the terms of the appellate order whether the earlier default was wiped out or not.
If, for example, the appellate order confirms the original order, then the default already incurred may not be affected.
In both these cases the discretion to treat the assessee as a defaulter was effectively exercised.
The argument that the acceptance of the assessee 's contention would render part of section 45 nugatory and should, therefore, not be accepted, is in my opinion unsound.
How then does the matter stand? It seems to me that the crux of it is the effect of the appellate order on the original order.
If the original order has been destroyed or replaced by the appellate order, then the notice of demand and all other steps based upon the original order must be deemed to have become ineffective.
In such a case the default earlier incurred must be taken to have disappeared and cannot support further action for recovery of any tax.
Now the general proposition is that an original order merges in the appellate order: cp.
Madan Gopal Rungta vs Secretary to the Government of Orissa(1).
But in the present case, it is not necessary to rely on that proposition.
Section 31(3) of the Act seems to me to make express provision on the subject.
It states that in the case of an appeal from an order of assessment, which is the kind of order with which we are now concerned, the Appellate Commissioner may "(a) confirm, reduce, or enhance or annul the assessment, or (b) set aside the assessment and direct the Income tax Officer to make a fresh assessment after making such further enquiry as the Income tax Officer thinks fit or the Appellate Assistant Commissioner may direct, and the Income tax Officer shall thereupon proceed (1) [1962] Suppl.
3 S.C.R. 906.
154 to make such fresh assessment and determine where necessary the amount of tax payable on the basis of such fresh assess ment.
" There will, of course, be no occasion to determine the amount of the tax payable on the basis of the fresh assessment if the income on that assessment appears to be below the taxable level.
I will consider the various orders contemplated by section 31(3)(a) & (b) and their effect.
It may be that when an appellate order confirms the original order, the default earlier incurred and all steps taken pursuant thereto remain unaffected, for such an order may maintain intact the original order.
Now it is not in dispute that when the appellate order annuls the earlier order, the default disappears.
It is said that that is because the debt ceases to exist.
I do not quite follow this.
It has never been questioned that the debt becomes due when demand is made under section 29 and section 45 of the Act: see Doorga Prosad Chamaria vs Secretary of State(1).
Therefore if a debt is to cease to exist it must be because the source from which it sprang, namely, the original order, has been annihilated by the appellate order annulling it.
In fact section 31(3)(a) contemplates an annulment of the original assessment order itself; the demand under section 29 or section 45 is not annulled directly by it.
Therefore, in the case of an order of annulment under section 31 the original order of assessment is itself destroyed.
If it disappears, I cannot conceive the default based on it continuing in force.
Likewise, where under cl.
(b) of section 31(3) the appellate order sets aside the assessment, the same result must clearly follow.
There is not much difference between annulling an order and setting it aside; both wipe out 'the original order.
I now come to an appellate order enhancing the assessment.
With regard to it, it has not been disputed that a fresh notice of demand must issue.
If this notice has to be in respect of the entire amount, then clearly the default earlier incurred for the smaller amount found due by the original order must have gone for the liability was one and there could not be two defaults in respect of it.
But it was said that the notice has to be issued in respect of the enhanced amount only.
Indeed in some of the cases cited at the bar it has been so said.
I have very grave doubts about the correctness of this view.
The notice of demand can only issue in respect of the amount due in consequence of an order.
Unless, therefore, the appellate order specifies only the enhanced amount as due I do not see how a notice in respect of that amount can be issued under section 29.
The appellate order has to specify an amount due.
If it specifies the entire amount due including the enhancement, then it cannot be said that under it the amount of the enhancement only is due and no notice demanding such an amount (1) 72 I.A. 114. 155 only under section 29 can be issued.
If the appellate order specifies only the amount of the enhancement, it will be making an.
additional or supplementary assessment.
Apart from section 34 of the Act with which we are not now concerned, I am not aware,.
of any other provision which permits such an assessment.
In any case section 31(3)(a) does not seem to me to contemplate it.
Therefore, in my view when an order of enhancement of assessment is made under section 31 the notice must be in respect of the entire amount and in such a case the earlier notice issued in respect of original order must be deemed to have been superseded.
But assume I am wrong in this.
Assume that an appellate order of enhancement may be confined to the amount of the enhancement only.
Even so I am wholly unable to agree that the appellate order cannot specify the entire enhanced amount due.
There is nothing in the Act to prevent this being done.
When this is done then at least the original order and the notice must be deemed to have been put out of existence along with the default arising from the non compliance with the latter and all its consequences.
That leaves only the case of an appellate order reducing the amount.
It seems to me that it would be somewhat curious if in all other cases excepting the case of a confirmation, the appellate order destroys the original order it does not do so in the case of a reduction.
An order confirming may be different for it confirms and, therefore, does not destroy.
It has, however, been said that "if subsequently the demand is modified on appeal and the amount of the tax payable is reduced, all that happens is that the liability sought to be imposed by the notice of demand, in respect of the amount by which the assessment is reduced is found to have never been a liability at all but the liability in respect of the remainder which stands unaffected by the appellate order remains" and also that "where a notice of the demand has, in fact, been issued in respect of a larger amount as determined by the assessment order, it has been issued even in respect of the smaller amount which is ultimately found to be the tax properly payable.
That being so, the assessee was under an obligation to pay it by the date fixed and if he did not pay it by that date, he became a, defaulter": see Ladthuram Taparia vs D. K. Ghosh and Ors.(1) With great respect I am unable to accede to this proposition and the conclusion based thereon that the default and its conse quences continue even after the appellate order reducing the original assessment.
How does the assessee know before the appellate order the smaller amount which he might ultimately be liable to pay? It would be curious if he did not know what he had to pay and could still have defaulted in paying it.
(1) , 423, 424.
156 The order of reduction must, in my opinion, necessarily have the effect of setting aside the original order as a whole.
It does not simply strike out a few of the figures appearing in the original order.
That would really be a case of rectification for which provision is made in section 35 of the Act.
What an appellate order does in a case of reduction is, as in the present case, to go into all the figures and arrive afresh at the assessable income which replaces the amount of the income arrived at by the Income tax Officer.
Therefore it seems to me that in all cases of an appellate order reducing the assessment the original order goes and if it goes, of course the notice of demand also falls to the ground and the default based thereupon also ceases to be default anymore.
Suppose the appellate order itself stated that a smaller amount of tax was payable after it had reduced the figure of the assessable income at which the Income tax Officer had arrived.
Indeed I cannot imagine how else it can be expressed.
After such an order the original order must go for the debt being one the two cannot exist together.
If that order goes, all default arising out of it must also go.
Therefore I think that on the Income tax Officer 's order being revised in appeal, the default based on it and all consequential proceedings must be taken to have been superseded and fresh proceedings have to be started to realise the dues as found by the revised order.
Coming now to the present case, in view of the order made in it, it seems to me impossible to contend that the original default continued.
What happened in the present case was that on December 17, 1955 the Appellate Commissioner reduced the assessable income of the assessee as found by the Income tax Officer by a large sum and directed him to recom pute the tax due on the basis of the assessable income stated in the appellate order.
The assessee was not informed about the recomputed amount of tax till February 14, 1956.
The assessee had not paid the tax mentioned in the Income tax Officer 's order.
If he had done that then he would under the express terms of the appellate order have become entitled to a refund.
What then was the position between these two dates? If the revenue authorities are right, then the assessee continued to be in default even after the appellate order.
But what was the amount in respect of which he was so in default? Clearly he could not have continued to be in default in respect of the amount found due by the Income tax Officer in his original order for that amount was no longer due.
He could not have been in default in respect of the amount which was found due on recomputation by the Income tax Officer according to the direction of the Appellate Commissioner because be did not know that amount.
It would be absurd if the Act contemplated a default without the assessee knowing the amount in respect of which the default occurred and without his having a chance 157 to pay it.
It would be impossible to construe the in a way to produce that result.
It has, therefore, to be held that between the date of the appellate order and the communication of the recomputed amount of the tax to the assessee by the Income tax Officer there could be no default.
Since the, Act does not provide for a default being in suspension for a period it must be held that the original default ceased to exist after the appellate order was made.
Proceedings initiated on the original ,default before the appellate order could not, therefore, be continued any more.
Indeed the appellate order superseded the original order and its consequences.
If the effect of an appellate order reducing the assessment as in the present case did not wipe out the original order, a most anomalous situation would, in my view, arise.
Under section 46(1) of the Act after a default has been committed in terms of section 45(1) the Income tax Officer may impose a penalty not ,exceeding the amount of the tax due in respect of which the default has occurred.
This penalty may be recovered in the ,same way as the tax due, that is to say, by a notice under section 29 and thereafter by a certificate issued under section 46(2).
Now suppose the penalty for the full amount of the tax found due by the Income tax Officer has been imposed and thereafter the appellate order reduces the amount of the tax.
What happens to the order of penalty then? Obviously it does not automatically stand reduced to the reduced amount of the tax.
It would again be absurd if the penalty could be recovered for the full ,original amount.
The only sensible view to take in such a case would be that the order of penalty falls to the ground and the only logical way to support that conclusion would be to say that the original default has disappeared.
For these reasons I have come to the conclusion that the decision of the High Court was right and I would, therefore, dismiss the appeals.
HIDAYATULLAH, J.
These appeals by special leave arise from a common order in two writ petitions under article 226 of the Constitution passed by the High Court of Mysore on April 16, 1959.
The Income tax Officer, Kolar and the Commissioner of Income tax, Bangalore are the appellants before us.
The assessee Seghu Buchiah Setty, who is the respondent, is a merchant of Srinivaspur, Kolar District.
The appeals relate to the assessment years 1953 54 and 1954 55 in respect of which assessments were made under section 23(4) of the Incometax Act.
For the assessment year 1953 54, the assessee 's income was estimated to be Rs. 61,000/ and the tax levied was Rs. 19,808 1 0.
For the second year, his income was estimated to be Rs. 1,21,000 and the tax levied was Rs. 66,601 3 0.
The assessee applied under section 27 of the Income tax Act for the cancellation of these assessments but his applications were 158 rejected.
It was stated before us that other proceedings were pending in this behalf; but I am not concerned with them except in so far as a preliminary objection based on those and some other proceedings was made before us to which I shall refer presently.
After the assessment was made, the Incometax Officer sent notices of demand asking the assessee to pay Rs. 86,409 4 0 as tax, and on default, issued a certificate under section 46(2) of the Act to the Collector of Kolar District to recover the amount as arrears of land revenue.
On December 17, 1955, the Appellate Assistant Commissioner, "A" Range, Bangalore, before whom the assessments were challenged by appeal, passed his order and assessed the income for the two years to be Rs. 28,000/ and Rs. 46,000/ respectively.
The Income tax Officer did not issue any fresh notices of demand under section 29 of the Act but wrote a letter demanding the reduced tax for the two years which now stood reduced to Rs. 4,215 9 0 and Rs. 13,346 8 0 respectively.
It is significant that the reduction in the tax was from eighty six thousand rupees to seventeen thousand rupees.
It appears that the assessee took further appeals to the Income tax Appellate Tribunal and the matter was said to be pending there.
The assessee then applied to the High Court under article 226 of the Constitution for quashing the old certificates issued under section 46(2) by the Income tax Officer on the ground that as.
no fresh notices of demand were issued against him in respect of the reduced tax, he was not in default.
The High Court accepted this contention and the necessary writs quashing the proceedings were issued.
After the decision of the High Court, fresh notices of demand for the reduced tax were issued to the assessee on May 8, 1959 and those proceedings were also pending.
The preliminary objection which is based on the pendency of the other proceedings and particularly the last fact is really of great force, because these appeals do not now appear to serve any tangible purpose.
However, the appeals were heard at length and I must express my decision on the point mooted before us.
In these appeals, the Department contends that the original notices of demand issued in September 1955 had not become inoperative after the order of the Appellate Assistant Commissioner.
The reason advanced is that there is nothing in the Income tax Act which requires that a fresh notice of demand must issue every time the amount of tax is reduced in appeal.
It is pointed out that if a previous notice of demand is not complied with, the assessee becomes a defaulter and it is submitted that he continues to be a defaulter, in respect of the balance.
It is however conceded that where the Appellate Assistant Commissioner increases the assessment, a fresh notice 159 of demand must issue.
It is urged that proceedings for recovery which may have commenced are likely to become useless if, fresh notices were compulsory, and it is submitted that all that is necessary is to inform the assessee and the Collector by, letters what the reduced amount is and as the default still continues, the reduced amount can straightaway be realised on the old certificates and a refund can be ordered if excess amount has already been recovered.
The assessee contends that the original notice of demand lapses and with it the default and the certificate, and that the Income tax Officer is bound to issue a fresh notice of demand.
The High Court accepted the assessee 's contention following a decision of the Calcutta High Court in Metropolitan Structural Works Ltd. vs Union of India(1).
The appellants contend that the true view of the law is contained in a later decision of the Calcutta High Court reported in Ladhuran Taparia vs D. K. Ghosh and others(2), where the earlier case was explained.
The appellants rely further on The Municipal Board, Agra vs Commissioner of Income tax, United Provinces: No. 2(3), Auto Transport Union (Private) Ltd. vs Incometax Officer, Alwave(4) and Hiralal vs Income tax Officer(5) for support.
in Metropolitan Structural Works Ltd. Gv.
Union of India(1) there were successive demand notices after the Appellate Assistant Commissioner and the Tribunal reduced the assessment and the Income tax Officer finally sent a certificate under section 46(2) of the Act.
The assessee in that case, relying upon the seventh sub section of section 46, claimed that the proceedings were barred as according to it, the period of one year could only be calculated from the last day of the financial year in which demand was made and this could only be the first demand.
It was contended by the assessee that the Act did not provide that a fresh notice should issue after revision of assessment, though it was admitted that there was no prohibition.
Chakravartti, C. J. and Lahiri, J. observed: "The real point, however, is whether a second or a third notice of demand is at all permissible under section 29, even when an assessment is altered in a first or a second appeal.
It appears to me that the necessity of issuing a fresh notice of demand in such circumstances is beyond argument." (Italics supplied) (1) (1) (3) (4) (5) 160 The learned Chief Justice gave illustrations of those cases which the earlier notice becomes "inappropriate".
Addressing.
himself to the necessity of a new notice, the learned Chief Justice observed: "In my view the answer to that could only be in the affirmative." (Italics supplied) The difference between the words 'in consequence of any order ' used in the Act and 'in consequence of any assessment order in pursuance of this Act ' which, he pointed out, could have easily been used, was next stressed and he held that the orders of the Appellate Assistant Commissioner and the Tribunal answered the former description.
He expressed his conclusion thus: "If so, when there is some tax due in consequence of an order passed by the Appellate Assistant Commissioner or in consequence of an order passed by the Appellate Tribunal, a clear occasion arise& under the words of the section to serve a notice of demand upon the assessee.
That such fresh notice should be issued when the assessment is altered is but common sense and I see no reason to construe the section against reason and against the actual necessities of realisation.
" In the next case, Ladhuram Taparia vs D. K. Ghosh and others(1) the facts were the converse.
There a demand notice was issued and then the tax was reduced.
The assessee contended that there should be a fresh notice of demand before he was deemed to be in default.
Chakravartti, C. J. and Das, Gupta, J. held that on reduction of assessment nothing further was required beyond an intimation to the assessee and the.
Collector of the reduction of the tax.
The reason given was that the demand in respect of the excess stood 'eliminated ' and the demand for the balance remained.
It was held that a case of enhancement was different and it needed a fresh notice of demand.
It was however not pointed out whether the fresh demand should be for the excess amount or the whole of the amount.
Nor was it shown why a letter to the assessee and the Collector would not do in that case also.
In either case, speaking arithmetically, a portion of the demand is saved, but speak ing legally, the demand notice, to quote the words of the earlier judgment, 'becomes inappropriate '.
Whether the learned Chief Justice was right on the first occasion or on the second can only be said after discussing the relative sections of the Income tax Act, but this much must 161 say (and I say it with considerable hesitation and diffidence since I have always held the learned Chief Justice in high esteem) that he has not been able to get clear of the words used by him on the earlier occasion.
It seems anomalous that if the tax is increased from Rs. 10,000/ to Rs. 10,010/ a fresh notice of demand must go, that is to say the earlier default is wiped off; but if it is reduced from Rs. 10,010/ to Rs. 10 / a fresh notice is not required and the assessee must be deemed to be in default for Rs. 10 with all the evil consequences of default because he did not pay an extra ten thousand rupees with the ten rupees.
But it may be said, there is no room for logic and mathematics if the Act so requires and the true answer can only be furnished by what the law requires.
Before dealing with the pertinent sections to determine how the matter stands there, I may say that the other cases of the other High Courts cited earlier do not add to the discussion, but mention must be made of The Municipal Board Agra vs Commissioner of Income tax, United Provinces: No. 2(1).
In that case, though a fresh notice of demand was served after reduction of tax under section 35 of the Income tax Act, calculation of limitation from the date of service of that notice was not allowed because the clauses relating to right of appeal, period of limitation etc. were pencilled through.
The reason given was that section 35(4) makes it compulsory to serve a notice of demand only when there is enhancement and as no fresh notice is made compulsory when the tax is reduced, none need issue.
An assessee might, on such construction, lose his limitation for appeal in a case under section 27 of the Income tax Act even before the order under section 27 determining the amount of tax is passed.
It is contended that there is no provision that a second or third notice of demand must issue.
There is no need that the Act must expressly authorise the issue of fresh notices of demand.
Even if such a power is not expressly included, it flows from section 14 of the General Clauses Act under which a power can be exercised as often as the occasion demands.
I am, however, of the opinion, that (except in cases of demnin is) the Act does contemplate, that a fresh notice of demand shall issue.
There are two reasons for it.
The first is the language of section 29 and the other is the consequences following the issuance of a notice of demand.
I shall deal first with the second ground.
After the demand is made, the tax, penalty and interest become a debt due to the Government.
This was decided a long time ago by the Privy Council in Doorga Prasad vs Secretary of State(2).
Further, by issuing a notice of demand, the (1) (2) at 289.
L/P(D)1SCT 6 162 period of limitation for appeals under section 30 of the Act starts in many cases.
Further still, when the notice of demand is not complied with, the assessee can be treated as a person in default and he is liable to pay a penalty equal to the tax debt under section 46(1) of the Income tax Act.
Lastly, on the failure of the assessee to pay after a notice of demand is issued, the recovery proceedings can be started within a time limit and the amount of tax can be treated as an arrear of land revenue.
It follows, therefore, that the notice of demand is a vital document in many respects.
Disobedience to it makes the assessee a defaulter.
It is a condition precedent to the treatment of the tax as an arrear of land revenue.
It is the starting point of limitation in two ways and the breach of obedience to the notice of demand draws a heavy penalty.
The notice of demand which is issued must be in a form prescribed by r. 20 and the form includes the following particulars: it shows the amount which has to be paid and indicates the person to whom, the place where and the time within which it has to be so paid.
Compare with it section 45 of the Income tax Act which provides: "Any amount specified as payable in a notice of demand. under section 29 or an order under section 31 or section 33 shall be paid within the time, at the place and to the person mentioned in the notice or order, or if a time is not so mentioned, then on or before the first day of the second month following the date of the service of the notice or order, and any assessee failing so to pay shall be deemed to be in default, provided that, when an assessee has presented an appeal under section 30, the Income tax Officer may in his discretion treat the assessee as not being in default as long as such appeal is undisposed of:" (Proviso and Explanation omitted).
From this section, it follows that an assessee is deemed to be in default if he disobeys either a notice of demand under section 29 or an order under sections 31 and 33.
The contents of the notice of demand may be included in these orders and the order then serves the purpose of a notice of demand as well.
In both cases, if time is not mentioned, the assessee must pay the tax on or before the first day of the second month following the date of the service of the notice or order.
Once a default is incurred, it continues and the filing of an appeal does not save the assessee from the default.
The Income ,Lax Officer can start and continue the proceedings for recovery of the tax notwithstanding the filing of the appeal.
It is however to be 163 seen that he has been given the power to treat the assessee as not in default as long as the appeal is undisposed of.
This power is conferred, because section 46(1) provides: "When an assessee is in default in making a payment.
of income tax, the Income tax Officer may in his discretion direct that, a sum not exceeding that amount shall be recovered from the assessee by way of penalty.
" To save an assessee from penalty, the Income tax Officer may treat him as not in default but if he does not, he is within his rights.
Now take a case in which an assessee is considered to be in default after it notice of demand is served.
Assume that the tax which is due is Rs. 10,010.
The Income tax Officer, can, in his discretion, add another Rs. 10,010 by way of penalty and issue a certificate against him for recovery as arrears of land revenue of a sum of Rs. 20,020.
Suppose the assessment is then reduced and his tax liability is found to be Rs. 10.
To say that the old proceedings for the recovery of Rs. 20,020 can still be pursued in respect of Rs. 20 and the petty amount recovered as arrears of land revenue, when, if a notice of demand for Rs. 10 were sent the assessee would have paid the sum readily, is to make the law operate very harshly with out any advantage.
To say again that the assessee whose tax is enhanced must receive a fresh notice of demand because the old notice becomes inappropriate is to make the lot of a person whose tax is reduced worse than that of a person whose tax is increased.
At least the contumacy of the latter is the same if not greater than that of the former.
It is said that all that is necessary is that the Income tax Officer should write a letter informing the assessee that the tax is reduced from Rs. 10,010 to Rs. 10.
The question is, why not send him a fresh notice of demand? If there is no provision in the Income tax Act to send a fresh notice there is none authorising the sending of letters.
No doubt, the old proceedings for recovery of the tax might become out of date and inappropriate, but it is one thing to use coercion to recover an amount which the assessee did not but probably could not pay, and another to recover an amount which the assessee could and would pay readily.
However, if the law requires that a notice of demand need not go, that would be the end of the matter; but, in my opinion, section 29 in its terms is extremely clear and indicates that a notice of demand must always issue.
It reads: "When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income tax Officer shall serve L/P (D) 1 SCI 6 upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable." The learned Chief Justice of the Calcutta High Court, if may say respectfully, was perfectly right in pointing out its meaning in his first case.
I cannot add to what he said and I adopt all lie said.
But I would add a few words.
The mandatory part of the section is quite clear.
"The Income tax Officer shall serve a notice of demand upon the assessee" are emphatic words and the earlier part shows that he has to do it when tax is due in consequence of "any order".
Any order means not only an order passed by himself, but also an order passed by reason of the success of an appeal which the assessee may file and in which the old assessment is set aside.
In view of the consequences that ensue, it is clear to me that when an asssessment is gone through a second time and the amount of tax is reduced, the Income tax Officer must intimate to the assessee the reduced amount of tax and make a demand and give him an opportunity to pay before treating him as a defaulter. 'his is incumbent because the assessment resulting in the tax is itself set aside or modified and as assessee is entitled to a proper assessment and ascertainment of tax before a demand can be made on him.
It is said that the Income tax Officer can send a letter but the law says that he 'shall serve upon the assesses a notice of demand in the prescribed form '.
When the law requires that a notice of demand should issue, the mode of compliance by a letter is excluded.
It may be that the letter is a good substitute for a notice of demand but the section demands that it should be 'in the prescribed form '.
If a letter is to be written. why not a notice of demand? In other words, when the assessment is altered, whether it is reduced or it is increased, by reason of any order under the Act, it is the duty of the Income tax Officer to issue a notice of demand in the prescribed form and serve it upon the assessee.
The learned Chief Justice of the Calcutta High Court clearly was of the view in the first case that there was only one answer to the question and I respectfully agree with him.
He could only depart from his earlier view by finding fault with the drafting of section 45. 1 regret I can not agree with him there.
Section 45 intends that the order of the Appellate Assistant Commissioner and the Tribunal may in some cases also serve as notices of demand.
Further it is not clear from the later decision whether on the enhancement of the tax, a fresh notice of demand is required for the excess only or for the whole of the sum.
That answer is not furnished in any of the other cases to which reference was made at the bar.
If default is saved in respect of the reduced amount a 165 165 default would also be saved in respect of the original amount when the demand is increased.
If a notice of demand were to issue in respect of the excess only, there will be two notices of demand and two starting points of limitation, both for the purpose of coercive action under section 46(7) as well as for purposes of any appeal that might lie.
If, however, a fresh notice of demand is to go in respect of the composite sum, the question to ask would be, what happens to the default which was incurred already '? How does it disappear? In my opinion, there is only one possible answer and it was given by the learned Chief Justice in the earlier case.
I would therefore dismiss these appeals and all the more readily because a fresh notice of demand has issued in this case.
If it is disobeyed, the Income tax Officer would be able to recall the old certificate issued to the Revenue Officer, amend it and bring it in line with the tax now demandable and return it to him for continuing the recovery proceedings.
I would dismiss the appeals but in the circumstances of the case, I would make no order about costs.
SHAH, J.
The Income tax Officer, Kolar Circle, Kolar, assessed Seghu Buchiah Setty respondent in this appeal to income tax under section 23(4) of the Indian Income tax Act, 1922 for the year 1953 54 on an estimated income of Rs. 61,000 and for the year 1954 55 on an estimated income of Rs. 1,21,000 and served notices of demand under section 29 of the Act for the tax due under the two orders of assessment.
On the respondent failing to comply with the notices of demand within the period specified, the Income tax Officer treated the respondent as in default and sent certificates under section 46(2) of the Act to the Deputy Commissioner, Kolar, for recovery of the tax determined by the orders of assessment.
The Deputy Commissioner attached certain properties belonging to the respondent.
In appeals filed by the respondent against the orders of assessment the Appellate Assistant Commissioner reduced the income assessed for the year 1953 54 to Rs. 28,000 and for the year 1954 55 to Rs. 46,000.
The Income tax Officer did not issue fresh notices of demand pursuant to the modification in the orders of assessment made by the Appellate Assistant Commissioner, but by his letter dated February 14, 1956 informed the respondent that he had to pay tax as reduced by the appel late order.
The respondent did not pay the amount of tax demanded, and applied to the High Court of Mysore under article 226 of the Constitution for a writ of certiorari quashing the certificates issued by the Income tax Officer treating him as in default and a writ of prohibition prohibiting the Income tax Officer from enforcing the certificates under section 46(2) of the Income tax Act.
The High Court of Mysore relying upon the 166 judgment of the Calcutta High Court in Metropolitan Structural Works Ltd. vs Union of India(1) held that the In come tax Officer could not, without issuing fresh notices of demand, after the Appellate Assistant Commissioner of In come tax reduced the taxable income, setting out the tax payable by him for the two years in question, treat the respondent as a defaulter and that the proceedings of the Collector based on the certificates issued pursuant to the order of assessment by the Income tax Officer were illegal.
Against the orders passed by the High Court, the Income tax Officer has appealed to this Court, with special leave.
The question which falls to be determined in this appeal is about the legal effect of the reduction of the assessable income by the order of the Appellate Assistant Commissioner on the notices of demand previously issued by the Income tax Officer.
The respondent contends that by the modifications made in the orders of assessment the notices of demand issued by the Income tax Officer must be deemed cancelled or superseded, and he cannot be regarded as in default, unless fresh notices of demand are issued by the Income tax Officer specifying the amount payable pursuant to the appellate order.
The respondent says that there was at the material time no outstanding demand notice or order specifying the amount payable failure to comply with which may be regarded as constituting a default.
The respondent strongly relies upon the observations made by Chakravartti, C. J., in his judgment in Metropolitan Structural Works Ltd 's case(1) that where the income assessed by the Income tax Officer is reduced in appeal, the notice of demand issued by the Income tax Officer in respect of the income assessed by him will on such reduction cease to be appropriate, such being the meaning of the statute and any interpretation to the contrary is "against reason" ' and against the actual necessities of realization".
The respondent therefore submits that an order of the, Appellate Assistant Commissioner in appeal not only super sedes the order of assessment against which the appeal is carried, but also the notice of demand issued by the Income tax Officer and all proceedings taken for recovery of tax in pursuance of the notice of demand, and therefore default which has resulted from the failure to comply with the notice of demand becomes inoperative, when the Appellate Assistant Commissioner passes his order in appeal against the order of assessment, whether such order is of confirmation or variance.
The Income tax Officer may, submits the respondent, issue a certificate under section 46 if there be a fresh default resulting from non compliance of the order of the Appellate authority.
If this submission is true, the demand notices must be issued and all ' (1) steps pursuant to an order of assessment for recovery must be completed before the appeal against the order of assessment is disposed of.
If the proceedings are not completed, they will be superseded by the order passed by the appellate authority.
We may examine the correctness of the plea raised by the respondent in the light of the scheme for recovery of tax, penalty or interest due under the provisions of the Act.
After the income of an assessee is computed, and liability to pay tax, penalty or interest is determined in the manner provided by the Act, proceedings for recovery of the amount commence.
A notice of demand is the foundation of such proceedings and of the jurisdiction to collect the tax.
It is the notice of demand which converts the liability determined by the order of assessment into a debt due by the assessee to the State.
There must therefore be a valid order of assessment, on which a notice of demand may be founded.
Section 29 invests the Income tax Officer alone with jurisdiction to issue a notice of demand, and no other officer out of the hierarchy of Revenue Officers has that jurisdiction.
It provides: "When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice in the prescribed from specifying the sum so payable.
" The notice of demand has to be in the form prescribed under rule 20 which requires that the amount demanded, and the person to whom together with the place where it is to be paid, must be stated in the notice.
Section 45 of the Act provides that the amount specified as payable in the notice of demand or an order under section 31 or section 33 shall be paid within the time, at the place and to the person mentioned therein, or if no time be so mentioned, then on or before the first day of the second month following the date of the service of the notice or order and if the assessee fails to pay the tax he shall be deemed to be in default, unless the assessee has presented an appeal 'under section 30 of the Income tax Act and the Income tax Officer in his discretion treats the assessee as not being in default as long as such appeal is undisposed of.
Section 45 therefore prescribes the conditions under which a person may be treated as in default.
Section 46 provides the mode and time of recovery of the amount due by an assessee.
Sub sections (2) to (6) of section 46 lay down the method which may be adopted for recovery of the dues.
Sub section (2) authorises the Income tax Officer to forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee.
The Collector, on receipt of such certificate has to proceed to 168 recover from such assessee the amount specified therein as if it were an arrear of land revenue.
Sub sections (3) to (6) deal with other modes of recovery.
But resort to the modes of recovery is subject to sub section
(7) which provides that save in accordance with the provisions of sub section
(1) of section 42, or of the proviso to section 45, (which are for the purposes of this case not material) no proceedings for recovery of any sum payable under the Act shall be commenced after the expiration of one year from the last day of the financial year in which a demand is made under the Act.
The Act therefore provides that if an assessee makes default in complying with the notice of demand or order under sections 31 or 33, proceedings may be taken in the manner provided in section 46 for recovery of the tax due but such proceedings shall not be commenced after the expiration of the period specified in sub section
By the determination of tax under section 23, or imposition of penalty in circumstances mentioned in section 28, or liability for payment of interest in circumstances mentioned in section 18 A(4), (6), (7) or (8) obligation to pay tax, penalty or interest arises, and upon service of a notice of demand under section 29 or an order under section 31 or section 33, the tax, penalty or interest become due and payable, and if the tax is not paid within the time specified, the assessee must, unless the Income tax Officer otherwise directs, be treated as in default.
Against the assessee in default, the Income tax Officer may take appropriate steps for recovery of tax as prescribed in cls.
(2) to (6) of section 46.
But the Legislature has not enacted that steps taken by the Income tax Officer for recovery of tax will lapse or be superseded when the appeal against the order of assessment passed by the Income tax Officer is disposed of by the appellate authority.
Section 45 in terms provides that when an assessee is served with the notice of demand and has failed to comply with the notice, he shall, unless otherwise ordered, be deemed to be a defaulter.
The Act provides a right of appeal against the order of assessment, but on the presentation of the appeal the power of the Income tax Officer to take steps for recovery of tax is not suspended.
The Income tax Officer is obliged by the statute to issue a notice of demand for payment of tax, penalty or interest due in consequence of any order passed under or in pursuance of the Act.
Lodging of an appeal does not operate as a stay and would not entitle the assessee to withhold payment of tax till the appeal is decided.
The Income tax Officer may in his discretion treat the assessee as not in default as long as such appeal is not disposed of, but unless such an order is passed the assessee would, on failure to comply with the order, be a defaulter and proceedings for recovery of tax may be initiated and continued during the pendency of the appeal.
169 It is clear therefore that when tax, penalty or interest is determined and demanded, proceedings shall be commenced for recovery, and these proceedings may be commenced and continued, notwithstanding the presentation of an appeal.
By failing to comply with the demand the assessee becomes a defaulter, and it is not provided that he shall cease to be a defaulter on the disposal by the appellate authority of the appeal against the order of assessment.
In the absence of such a provision, it is difficult to perceive any ground for holding that the proceedings commenced against a defaulting tax payer for recovery of tax must be abandoned, and fresh proceedings commenced for recovery of tax pursuant to the order of the appellate authority.
If on the passing of an order by the appellate authority, the notice of demand previously issued is deemed to be cancelled or superseded, an assessee must be treated as absolved from the consequences of his default even if the appellate authority confirms the order of the Income tax Officer, because the earlier default by the tax payer will in every case go by the board, and the proceedings must be commenced again after service of a fresh notice of demand.
The discretion vested in the Income tax Officer to treat or not to treat an assessee pending appeal in default will, in all cases be valueless.
The provisions of the Act do not indicate any such legislative intent and express enactment conferring upon the Incometax Officer, in his exercise of discretion, power not to treat a person who has preferred an appeal as a defaulter, contains strong indication to the contrary.
Therefore, in my view a person who has failed to comply with a notice of demand would continue to be a defaulter notwithstanding the reduction of liability by order of the appellate authority.
There would be only one exception to this rule i.e. when the order of assessment is wholly set aside.
But that is not a real exception, for against the assessee no steps can be taken because there is no debt due by him.
It was urged that a person can be said to be in default in payment of tax, when he fails to comply with a demand for a specific amount, and when the amount payable by him is reduced in appeal, he is no longer in default because he has had no opportunity to meet the reduced demand.
But the status of a defaulter under the Act is a condition for initiation of proceedings for recovery, and by the reduction of liability in appeal the status is not altered.
Even if the amount due is modified, the status persists, but the process for recovery will be adjusted according to the modified demand including the imposition of penalty under section 46(1).
It is true that the Act contains no express provision which enables the Income tax Officer to modify the certificate which is issued to the Collector, but the absence of such a provision does not detract from 170 the duty of the Income tax Officer to give information to the recovering authority about the reduction in the liability for tax, penalty or interest made by the appellate authority and to request such authority to adjust his proceeding to the modified demand.
Such a duty must necessarily be implied.
An error in the certificate can always be clarified by an amendment and if that power be granted, there is no reason to suppose that a demand which is reduced because of subsequent events, such as modification of the assessment by the appellate authority, or payment made by the tax payer as directed by the notice of demand may not be enforced in a manner consistent with the outstanding demand.
If in an appeal the Appellate Assistant Commissioner enhances the tax, the Income tax Officer may give intimation to the recovering authority about the enhanced demand.
No fresh notice is contemplated to be given by the Act in the case either of reduction of assessment or enhancement.
The plea that a fresh notice of demand may have to be issued when the assessment is enhanced is not warranted by the statute, and the argument that against the assessee two notices of demand may in certain cases be issued, failure to comply with which may make him doubly a defaulter has no valid basis.
Counsel for the respondent urged that it is open to the Appellate Assistant Commissioner to specify by his order the time and place at which the tax determined by him is to be paid, and the person to whom it is to be paid.
If the Appellate Assistant Commissioner does so specify the amount, the person to whom and the place at which the payment is to be made, the order of the Income tax Officer would be deemed to be superseded and it would be the duty of the assessee then to pay the tax determined pursuant to the order of the Appellate Authority after a fresh notice is served upon him and he cannot be deemed to be in default unless he has failed to comply with the directions of the Appellate Assistant Commissioner within the period prescribed by that order.
Section 45 does undoubtedly refer to the amount specified in an order passed under section 31 which deals with the procedure and the power of the Appellate Assistant Commissioner hearing an appeal from the order of the Income tax Officer, and to the amount specified in an order under section 33 dealing with the procedure and the power of the Income tax Appellate Tribunal in appeal against the order of the Appellate Assistant Commissioner, and provides that default in payment of the amount so specified can only arise if it is not paid within the time at the place and to the person mentioned in the order under section 31 or section 33 or in the demand notice under section 29.
But sections 31 & 33 do not provide that in making their respective orders the Appellate Assistant Commissioner and the Appellate Tribunal shall determine the 171 tax, penalty or interest, and shall also prescribe the time within which, the person to whom, and the place at which the amount specified shall be paid, and it would be difficult to accept the contention that the Legislature in enacting section 45 a provision relating to recovery of tax intended to provide that in exercise of the appellate powers, the Appellate Assistant Commissioner and the Income tax Tribunal shall comply with certain requirements.
In certain exceptional cases such as those in which an appeal is filed only against the amount of tax determined under section 23 or against imposition of penalty under section 28 or against orders specifying the amount of interest payable under section 18 A, the Appellate Assistant Commissioner or the Tribunal may, in their final orders, specify the amount to be paid and also the time within which and the place at which and the person to whom the amount is to be paid.
Such a direction is intended only to effectuate in appropriate cases the order of the Appellate Assistant Commissioner or the Tribunal.
It does not take the place of a notice of demand, but if made, may operate if not complied with to make the person liable to pay the amount specified a defaulter.
An Appellate Assistant Commissioner may, in an appeal against the order of the Incometax Officer, either confirm the assessment or modify it by reducing or increasing it.
Similarly the Tribunal may confirm the assessment of the Appellate Assistant Commissioner or may reduce the assessment.
But the Appellate Assistant Commissioner and the Tribunal are not required by statute to specify the amount as payable in their order, nor are they required to direct payment to be made in their order.
The Appellate Assistant Commissioner and the Tribunal have power to impose penalty in the conditions specified in cls.
(a), (b) or (c) of sub section
(1) of section 28 of the Income tax Act.
But these orders are passed in exercise of their appellate jurisdiction conferred by sections 31 and 33 of the Act and where the Appellate Assistant Commissioner imposes penalty he may specify the amount thereof.
Similarly the Tribunal imposing penalty may specify the amount of penalty.
To such cases the provision relating to default arising on failure to comply with the direction to pay may apply if the person to whom, and the place at which, it is to be paid are specified.
The assumption that section 45 of the Income tax Act requires the appellate authority to specify the amount payable in the order therefore seems to be unwarranted and the fact that under certain circumstances, having regard to the nature of the order appealed from, the appellate authority may specify in the order such particulars, does not justify the interpretation either that the Income tax Officer has the power to issue the notice of demand only in those cases where by inadvertence the Appellate Assistant.
Commissioner or the Tribunal 172 have failed to specify the amount payable or superseding the notices for any provision orders by the Appellate Assistant Commissioner or the Tribunal deciding the appeal has the effect of superseding the notices of demand issued by the Income tax Officer.
In the absence of any provision imposing an obligation upon the Income tax Officer to issue successive notices of demand from time to time for recovery of the amount due during the process of assessment, it must be held that the notices of demand issued by the Income tax Officer in exercise of the power under section 29 may be enforced in the manner provided by section 46 and within the period of limitation provided in cl.
(7) of section 46, even after the appeal against the order of assessment by the Incometax Officer is disposed of, subject to adjustment of the amount to be recovered in the light of the order of the Appellate Assistant Commissioner.
Observations made by Chakravartti, C. J., in the case in Metropolitan Structural Works Ltd 's case(1) do lend support, to the argument that the issue of a fresh notice on modification by the appellate authority was a "matter of reason" and "based on the actual necessities of realisation" and that it is obligatory upon the Income tax Officer to issue such a notice on every occasion when the assessment was modified.
But the learned Chief Justice himself explained the observations in his judgment in Ladhuram Taparia vs D. K. Ghosh and others(2) and pointed out that in Metropolitan Structural Works Ltd 's case(1) the sole question which fell to be determined was as to the commencement of the period of limitation under section 46(7) for enforcement of a notice of demand when successive notices of demand were in fact issued by the Income tax Officer, and that the earlier judgment was not intended to lay down and did not lay down that the Income tax Officer was under an obligation to issue a fresh notice of demand merely because the Appellate Assistant Commissioner had modified the assessment.
Chakravartti, C. J., after referring to the contention which was advanced and his observations regarding the necessity of issuing a fresh notice of demand where the earlier notice had become inappropriate by reason of reduction in the amount of the tax payable observed at p. 422: "To say that was not to say that a necessary modification of the demand could only be made by issuing a second notice under section 29 and could not be made in any other way, or to put it in other words.
it was not to say that the necessity of issuing a fresh notice of demand was an invariable and imperative necessity (1) (2) I am altogether unable to see how that decision can be construed as having laid down that whenever an assessment order was modified by an appellate order, an obligation arose to issue a second notice of demand under section 29, if the,, modified amount was sought to be made payable and if it was sought to establish that a default in respect of the modified demand has been committed.
" The observations of Chakravartti, C. J., in the Metropolitan Structural, Works Ltd 's case(1) relating to the necessity of issuing a fresh notice on the modification of the assessment were somewhat wide and literally read may support the argu ment advanced by the counsel for the respondent in this case, but they were, in my judgment, unnecessary for the purpose of deciding the case and did not correctly interpret the provisions of sections 29, 45 and 46.
The view which has been expressed by Chakravartti, C. J., in Ladhuram Taparia 's case(2) has been adopted in other cases as well: Auto Transport Union (Private) Ltd. vs Income tax Officer, Alwaye (3) and Hiralal vs Income tax Officers and Mali Ram vs Collector Bhilwara (4).
In my view the validity of a certificate issued under section 46(2) to the Collector for recovery of tax must depend upon the power of the Income tax Officer to issue that notice.
That power may be exercised only if the assessee is a defaulter, and the proceedings are commenced within the period provided in section 46(7).
If because of failure to comply with the notice of demand issued by the Income tax Officer the assessee is in default, I fail to appreciate how such a person can be regarded as not in default, merely because the order of assessment is modified but is not vacated.
The High Court was, therefore, in error in holding that it was necessary to issue a fresh notice of demand, if the Appellate Assistant Commissioner modified the assessment so as to reduce the amount of tax due and unless such a notice was issued, the assessee could not be regarded as in default.
The appeal will therefore be allowed and the petition filed by the respondent will stand dismissed with costs in this Court and the High Court.
ORDER By order of the majority, the appeals are dismissed.
But there will be no order as to costs.
Appeals dismissed.
(1) (2) (3)45 I.T.R. 103.
| As a result of the passing of the , Vidharbha area which was in the State of Madhya Pradesh became part of the State of Bombay and when the State of Bombay was divided under the Bombay Reorganisation Act, 1950, the said area remained in the State of Maharashtra.
Before 1956.
the Bombay State Road Transport Corporation and Provincial Services established under the , were operating in the States of Bombay and Madhya Pradesh respectively.
To meet the situation arising from these territorial changes, Parliament made amendments to the , by which, inter alia section 47 A was introduced providing for the reconstitution, reorganisation and dissolution of the corporations established under the Act.
On May, 27, 1961, the Central Government made an Order under section 47 A of the Act, inter alia, approving a scheme for the reorganisation of the Bombay State Road Transport Corp oration and amalgamating with it the Provincial Transport Services which had, under the Reorganisation Act, 1956, become a commercial undertaking of the State of Bombay and which had been operating in the Vidharba area.
Clause 9(1) of this provided for the abolition of all the posts in the Provincial Transport Services and for discharge of all persons holding such posts for service but giving such people an option of continuing in the service of the Maharashtra State Road Transport Corporation.
Notice ter minating the services of the persons employed by the Provincial Transport Services (operating in Vidharba) were issued.
Thereupon, two former employees of the Provincial Transport Services and the Union of the workmen of that concern made an application before the High Court of Bombay under articles 226 and 227 of the Constitution of India, challenging the validity, inter alia, of the notices of termination of service served on the employees on the ground that the action taken by the Government in abolishing the posts and issuing notices of termination of services of the employees was bad as it contravened, inter alia, the pro visions of section 31 of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947.
Held: Abolition of all posts of an establishment did not amount to reduction of posts within the meaning of Item 1 of the Schedule II of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947; and the Government order abolishing the posts and terminating the services of the employees.
640 did not amount to a change within the meaning of section 31 of the Act.
The Government was, therefore, not required to follow the procedure mentioned in section 31.
|
Appeal No. 264 of 1962.
Appeal from the judgment and order dated April 24, 1959 of the Madras High Court in L.P.A. No. 75 of 1958.
A. V. Viswanatha Sastri and R. Ganapathy Iyer, for the appellants.
M. C. Setalvad, M. A. Sattar Sayeed and R. Thiagarajan, for the respondent.
1018 March 4, 1964.
The Judgment of GAJENDRAGADKAR C.J., SHAH and SIKRI JJ.
was delivered by Shah J.
The dissenting opinion of WANCHOO and AYYANGAR JJ. was delivered by AYYANGAR J. SHAH J.
The appellant Vajrapani Naidu and his mother Bangarammal hereinafter collectively called 'the lessors granted a lease of an open site in the town of Coimbatore to Abirama Chettiar under a registered deed dated September 19, 1934, for 20 years at an annual rental of Rs. 1,080/ for putting up a building suitable for use as a theatre.
Abirama Chettiar constructed a theatre on the site, and assigned his rights to the New Theatre Carnatic Talkies Ltd., Coimbatore hereinafter called 'the Company '.
The Com pany attorned to the lessors and was recognised as tenant under the lease dated September 19, 1934.
On March 9, 1954 the lessors served a notice calling upon the Company to vacate and surrender vacant possession of the site, and the Company having failed to comply with the requisition, the lessors commenced an action against the Company for a decree in ejectment and for mesne profits at the rate of Rs. 1,000/ per mensem from September 19, 1954.
The Subordinate Judge at Coimbatore awarded to the lessors a decree for possession and mesne profits at the rate of Rs. 350/ per mensem and costs of the suit.
Against the decree the Company preferred an appeal to the District Court at Coimbatore which was transferred for trial to the High Court at Madras.
During the pendency of this appeal by G.O. No. 608 dated February 10, 1958, the State of Madras extended the Madras City Tenants ' Protection Act 3 of 1922, as amended by Madras Act 19 of 1955, to the Municipal town of Coimbatore.
The Company then applied under section 9 of the Act for an order directing the lessors to convey the site demised to the Company for a price to be fixed by the Court.
Panchapakesa lyer, J., directed that the lessors do sell to the Company the site in dispute under section 9 of the Madras City Tenants ' Protection Act, 1922.
against payment of the full market value of the land on the date of the order, and further directed that the trial Court do appoint a Commissioner to fix the value of the site based on the market value prevalent on July 28, 1958.
1019 An appeal under cl. 15 of the Letters Patent of the High Court against the order of Panchapakesa lyer, J., was dis missed.
With certificate granted by the High Court of Madras, this appeal is preferred by the lessors.
Two questions fall to be determined in this appeal : (1) Whether the Company is entitled under section 9 of the Madras City Tenants ' Protection Act, 1922, notwithstanding the terms of the lease, to an order calling upon the lessors to sell the land demised under the deed dated September 19, 1934; and (2) Whether the terms of section 9 of the Act infringe the fundamental right under articles 19 (1 ) (f ) and 31(1) of the Constitution, of the lessors, and section 9 is on that account invalid.
It is necessary in the first instance to notice the material terms of the lease.
The land demised under the lease was a vacant site situate in the municipal town of Coimbatore.
The annual rent stipulated was Rs. 1,080/ and the period of the lease was 20 years from the date of delivery of possession of the site.
The land was to be utilised for constructing buildings thereon for "purposes of Cinema, drama, etc.".
After the expiry of the term of 20 years stipulated under the deed the lessee had an option of renewal for another period of 20 years on fresh terms and conditions.
The deed provided that "if after the termination of the stipulated period" * * the lessees "fail to pay the arrears of rent that will fall due till that date and hand over possession of the site" to the lessors "after making it clear by dismantling the constructions therein and by demolishing the walls etc.
" the lessors "shall, besides realizing the arrears of rent due to them according to law, have the right to take possession through Court of the site in which the aforesaid buildings are put up after dismantling the constructions and demolishing the buildings therein".
The other covenants of the lease are not material.
It appears that before 1922, in many cases on lands in the town of Madras belonging to others constructions had 1020 been put up by tenants obtained under periodic leases "in the hope that they would not be evicted so long as they paid fair rent".
But on account of the inflationary pressure in the wake of the First World War, there was a steep rise in land values and rents, and many tenants who had constructed buildings on lands obtained on leases were sought to be evicted by the landlords.
To prevent loss to the tenants consequent upon the enforcement of the strict provisions of the Transfer of Property Act, the Legislature enacted the Madras City Tenants ' Protection Act 3 of 1922.
Under the Act every tenant is on ejectment entitled to be paid as compensation the value of any building which may have been erected by him or by his predecessors in interest and for which compensation has not already been paid to him.
ln a suit for ejectment against a tenant in which the landlord succeeds, the Court has to ascertain the amount of compensation which is to be the value as on the date of the order of the buildings constructed, trees planted and other improvements made by the tenant and the decree in the suit must declare the amount so found due and direct that, on_payment by the landlord into Court, within three months from the date of the decree, of the amount so found due, the tenant has to put the landlord into possession of the land and the building.
By section 9 it is provided that any tenant entitled to compensation and against whom a suit in ejectment has been instituted may within the time prescribed apply to the Court for an order that the landlord shall sell the whole or part of the land for a price to be fixed by, the Court.
The price under the Act as originally enacted was to be the market value of the land on the date of the order, but by an amendment made in 1926 it has to be the lowest market value prevalent within seven years preceding the date of the order.
On the price being fixed, the tenant has the option within a period not being less than three months and not more than three years from the date of the order to pay into Court or otherwise the price either the whole or in instalments with or without interest as directed, and when the payment is made the Court has to pass the final order directing conveyance of the land by the landlord to the tenant, and thereupon the suit or proceeding is to stand dismissed, and any decree or order in 1021 ejectment that may have been passed therein but which has not been executed is to stand vacated.
By section 12 it is provided : "Nothing in any contract made by a tenant shall take away or limit his rights under this Act, provided that nothing herein contained shall affect any stipulations made by the tenant in writing registered as to the erection of buildings, in so far as they relate to buildings erected after the date of the contract.
" The Act as originally enacted extended only to lands in the City of Madras, let out before the commencement of the Act for construction of buildings for non residential as well as residential use.
By Madras Act 19 of 1955 power was conferred upon the State Government to extend Act 3 of 1922 by notification to tenancies of land created before the date on which the Act was extended, to any other municipal towns and any specified village within five miles of the City of Madras or such municipal town with effect from such date as may be specified in the notification.
Exercising this power, the Government of Madras issued a notification on 'February 10, 1958, extending the provisions of the Act to the municipal town of Coimbatore.
The scheme of the Act as extended by notification issued under Act 19 of 1955 is that when under a tenancy of open land within the municipal town created before the date with effect from which the Act is extended, a building has been constructed by the tenant, and he is sued in ejectment by the landlord, he has the right on ejectment to be paid as compensation the value as at the date of the order of ejectment, of the building constructed and trees planted by him, and he has in the alternative the right to claim an order from the Court that the land belonging to the lessor shall be sold to him at the price fixed by the Court according to the terms of the statute.
By section 12 it is provided that the rights conferred by the Act shall not be taken away or restricted by any contract made between the landlord and the tenant provided, however, the stipulations made by the tenant in writing registered as to the erection of buildings, 1022 in so far as they relate to buildings erected after the date of the contract of lease, are exempt from this restriction.
The lease granted by the lessors in this case was before the date on which the Act was extended to the Coimbatore municipal town and it is common ground that the buildings were constructed after the date of the contract of lease.
Ex facie, the Company as lessee had, when an order for ejectment was made, an option to receive compensation for the value of the structure, or to claim that the lessors shall sell to it the land demised.
But the lessors contend that because of the stipulations in the deed of lease (which is registered under the law in force for registration of assurances) relating to the obligation of the tenant on the expiry of the lease to deliver vacant possession of the land after dismantling the constructions therein, the Company has by the terms of section 12 disentitled itself to 'the benefit of section 9 of the Act.
It is submitted that the stipulation relating to delivery of vacant possession of the site on the expiry of the period of the lease after removing the buildings is a stipulation "as to the erection of buildings" within the meaning of section 12, and therefore the restriction on the liberty of contract between landlord and tenant imposed by the opening clause of section 12 is removed, and the Company is bound by the terms of the lease and is not entitled to claim the benefit of section 9 of the Act.
We are, for reasons presently to be set out, unable to uphold that contention.
Section 12 of the Act consists of two parts : by the first part it enacts that the rights conferred upon the tenant under the Act may not be taken away or limited by any contract made by a tenant.
Such rights would, amongst others, include the right to claim compensation under sections 3 and 4 and the right to purchase the land from the lessor by order of the Court under section 9.
By the second part of section 12, the protection granted by the first part does not avail the tenant in certain conditions.
If there be a stipulation "as to the erection of buildings" made by the tenant in writing registered, in so far as it relates to buildings erected after the date of the contract, the protection conferred by the first part of section 12 shall not apply.
A covenant in a lease which is duly registered that the tenant shall on expiry of 1023 the lease remove the building constructed by him and deliver vacant possession, is undoubtedly a stipulation relating to the building, but it is not a stipulation as to "the erection of building".
Section 12 has manifestly been enacted to effectuate the object of the Act which is set out in the preamble viz. "to give protection to tenants who .
have constructed buildings on others ' lands in the hope that they would not be evicted so long as they pay a fair rent for the land".
The Legislature has sought thereby to protect the tenants against any contractual engagements which may have been made expressly or by implication to deprive themselves wholly or partially of the protection intended to be conferred by the statute.
And the only class of cases in which the protection becomes ineffective is where the tenant has made a stipulation in writing registered as to the erection of buildings, erected after the date of the contract of lease.
The restriction is therefore made only in respect of a limited class of cases which expressly attract the description of the stipulations as to the erection of buildings.
Having regard to the object of the Act, and the language used by the Legislature, the exception must be strictly construed, and a stipulation as to the erection of buildings would not, according to the ordinary meaning of the words used, encompass a stipulation to vacate and deliver possession of the land on the expiry of the lease without claiming to enforce the statutory rights conferred upon the tenant by section 9.
The stipulations not protected in section 12 are only those in writing registered and relate to erection of buildings such as restrictions about the size and nature of the building constructed, the building materials to be used therein and the purpose for which the building is to be utilized.
It is true that the operative part of section 12 protects the tenant against the deprivation or limitation of his rights under the Act and the rights conferred by the Act do not directly relate to covenants relating to erection of buildings.
But on that account it is not possible to give a wider meaning to the expression "as to the ' erection of buildings" that the stipulation as:to the erection of buildings would include stipulations to remove buildings on the determination of the lease.
It cannot be said that the literal meaning of the expression is likely to render the exception ineffective,, for stipulations 1024 concerning erection of buildings in registered leases, or contracts subsequent to the leases, providing for forfeiture on failure to comply with the terms of the lease relating to the erection of buildings may undoubtedly involve limita tions or deprivation of the rights of the tenant under the Act and to that extent the protection conferred by section 12 in favour of the landlord may be lost.
The construction for which the appellant contends assigns no meaning to the words "as to the erection of buildings" and makes them superfluous, besides it materially affects the scope of the relief which the Act obviously extends to the tenants falling under its provisions.
Section 9(1) which enables a tenant to purchase on determination of the lease the land of the landlord is somewhat unusual.
But it cannot be said that it imposes an unreasonable restriction upon the right of the landlord to hold and dispose of property within the meaning of article 19(1)(f) of the Constitution.
The Act applies to only a limited class of lands : it applied to lands granted in lease for construction of buildings before the date with effect from which the Act is extended to the town or village.
It was enacted with a view to give protection to the tenants who had, notwithstanding the usual covenants relating to determination of tenancies, obtained lands on lease in the hope that so long as they paid and continued to pay fair rent, they would not be evicted, but because of changed conditions as a result of the War, appreciation in land values and consequent increase in the level of rents.
were faced with actions in ejectment involving dismantling of properties constructed by them, and eviction.
The protection becomes effective only when the landlord seeks to obtain, in breach of the mutual understanding, benefit of the unearned increment in the land values, by instituting a suit in ejectment.
It was manifestly in the interest of the general public to effectuate the mutual understanding between the landlords and the tenants as to the duration of the tenancies, and to conserve building materials by maintaining existing buildings for purposes for which the leases were granted.
Restriction imposed upon the right of the landlord to obtain possession of the premises demised according to the terms 1025 of the lease would, therefore, not be regarded as imposing an unreasonable restriction in the exercise of the right conferred upon the landlord by article 19(1)(f) of the Constitution, because the restriction would be regarded as in the interests of the general public.
We ought to empha sise that what section 9 does is not so much to deprive the landlord of his property or to acquire his rights to it as to give effect to the real agreement between him and his tenant which induced the tenant to construct his building on the plot let out to him.
If the law is not invalid as offending article 19(1)(f) of the Constitution, no independent infringement of article 31(1 ) of the Constitution may be set up.
It was urged, however, that by the statute as amended by the Madras City Tenants ' Protection (Amendment) Act VI of 1926 (before it was amended by Act 13 of 1960), the price which the Court may fix and at which the tenant is entitled to purchase the land is to be the lowest market value prevalent within seven years preceding the date of the order.
This, it was submitted was unreasonable.
But it is not necessary for the purpose of this case to decide that question, for the Company has offered to pay the market value of the land as at the date on which the order was passed by Panchapakesa lyer, J. That absolves us from the necessity to adjudicate upon the reasonableness of the provisions relating to payment of compensation at the rate prescribed by the Act as amended by Act VI of 1926.
We may observe that by the Amending Act 13 of 1960 several alterations have been made as regards the extent of the right of the tenants to require the landlords to sell the land and the price which has to be paid by the tenants for purchasing the land.
For instance, under the Amending Act the Court nay direct sale only of the minimum area of land necessary for convenient enjoyment by the tenant of the house built by him and the price is to be the average marked value in the three years immediately preceding the date of the order.
In view of this amendment, and having regard to the special circumstances, viz. the offer made by the Company, notwithstanding the provisions of the Act, to pay the market value of the land it the date of the order, we decline to enter upon an academic consideration as to the validity of the 134 159 S.C. 65 1026 provision fixing compensation at the lowest market value prevalent within seven years preceding the date of the order.
Assuming that a provision fixing such compensation is Unreasonable and therefore invalid, it would be clearly severable from the rest of the statute and would not affect the validity of the provision relating to acquisition by the tenant of the land demised by purchasing it from the land lord.
At best, the landlord would be entitled to obtain compensation which is equivalent to the market value, and that the Company has agreed to pay.
That, however, is a matter on which we express no opinion.
The appeal therefore fails and is dismissed.
There will be no order as to costs.
AYYANGAR, J. We regret our inability to agree with the order that the appeal should be dismissed.
The facts of the case have been set out in the Judgment of our brother Shah, J. and do not, therefore, require to be repeated.
The two principal points arising for consideration and on which the decision of the appeal would turn are, first, the interpretation of section 12 of the Madras City Tenants Protection Act (Madras Act III of 1922) and, second, the constitutional validity of section 9 of that enactment.
Section 12 enacts : "Nothing in any contract made by a tenant shall take away or limit his rights under this Act, provided that nothing herein contained shall affect any stpulations made by the tenant in writing registered as to the erection of buildings, in so far as they relate to buildings erected after the date of the contract.
" The question that first calls for examination is the proper construction of section 12 and in particular the meaning and effect of the proviso contained in it.
Before, however, taking up the words of the section, it would be useful to read the preamble and certain of the other provisions of the Act because it is in the light of the guidance afforded by them that the content of the proviso to section 12 could be determined, The preamble recites that the Act had been 1027 enacted as it was "found necessary to give protection to tenants who in municipal towns and adjoining areas in the State of Madras have constructed buildings on others ' land in the hope that they would not be evicted so long as they pay a fair rent for the land".
Section 1 (3) of the Act which defines the tenancies within the local area to which the Act extends enacts (to read the provision as it now stands) that the Act shall apply only "to tenancies of land created before the commencement of the Madras City Tenants Protection (Amendment) Act, 1955 and in any municipal town or village to which this Act is extended by notification under sub section
(2) only to tenancies created before the date with effect from which this Act is extended to such town or village.
" From these provisions two matters are clear: (1) that the Act was enacted in order to ensure that the hope entertained by tenants who had constructed buildings on others ' lands that they would not be evicted so long as they paid fair rent was not frustrated, and (2) that the Act has application only to tenancies which having commenced earlier were subsisting on the date on which the Act came into force in the particular area.
With these preliminary observations we shall proceed to deal with the, construction of section 12 of the Act.
The tenancy under which the respondent was inducted into the land on which he has constructed buildings was of 1934, a date long anterior to 1958 when by a notification issued under section 1(2) of the Act its provisions were extended to the municipal town of Coimbatore where the land involved in the present proceedings is situated.
It was therefore a tenancy governed by the provisions of the Act.
Next, the lease under which the respondent held the land was in writing registered, and therefore the only question to be considered is whether the stipulations it contains are comprehended by the proviso.
Section 12, it would be seen, is made up of two limbsfirst a general provision saving to tenants comprehended by the Act, the rights conferred by its operative terms, notwithstanding any contract, and next a proviso which makes an inroad into the generality of the saving, by saving con 1028 tractual stipulations from the operation of the statutory rights created by the Act.
The entirety of the debate before us is as to the nature, scope and width of the saving effected by the proviso.
It does not need any argument to establish that if section 12 had stopped with its first limb, the respondent would be entitled to the benefit of every right conferred upon tenants by the Act, but the proviso it is conceded is intended to cut down the scope of that saving.
Expressed in other terms, from the prohibition against the operation of any stipluation in a contract limiting the rights conferred on tenants by the Act an exception is carved out.
So much is common ground but the controversy is as regards the scope and limits of that exception.
As regards the exception contained in the proviso four matters are clear: (1) The stipulation must find a place in a contract in writing which is registered, (2) the stipulation which is within the proviso and to that extent detracting from the non obstante provision contained in the opening words must be one in relation to "the erection of buildings", (3) it must relate to buildings erected after the date of the contract, and (4) if there is a stipulation satisfying these three conditions such stipulation would have effect notwithstanding anything in the previous part of section 12 which would be the same things saying that the rights of the tenant under the Act may be taken away or limited by such a stipulation.
It is common ground and beyond controversy that conditions 1 & 3 above are satisfied and the only point in dispute is whether the 2nd condition is satisfied so as to attract the operation of condition 4.
The learned Judges of the High Court have understood the words "as to the erection of buildings" occurring in the proviso as equivalent to a stipulation regarding the manner in which the building may be erected, the materials to be used, the area the building should cover and other details in relation to the construction of the building and as not apt to cover the case of a stipulation whereby the tenant undertakes to remove the buildings constructed by him on the termination of the tenancy; and that was also the submission made to us by Mr. Setalvad on behalf of the respondent.
With the greatest respect to the learned Judges 1029 of the High Court we are unable to agree with this construc tion of the proviso.
Before examining this we think it convenient and even necessary to refer to the terms of the lease deed under which the appellant became a tenant before considering whether it is a stipulation which would fall within the words "stipulations as to the erection of buildings".
The lease deed which has been marked as exhibit B 1 in the case is a registered instrument dated September 19, 1934.
The term of the demise was a period of 20 years from the date of delivery of possession and the rent stipulated was Rs. 1,080/ per year.
The purpose for which the site was leased is stated in the document to be "to construct buildings thereon as he (the lessee) requires on the aforesaid site for the purpose of cinema, drama etc.
at his own expense and also further constructions necessary for the same".
This is followed by two clauses which have some relevance.
Notwithstanding that the lease was for a fixed definite period of 20 years, the lessee was permitted to surrender the lease if he found that the business venture for which the lease was taken was not profitable.
In that event the lessee was entitled to surrender the lease, and put an end to the tenancy, when he had to dismantle the buildings constructed by him at his own expense and pay to the lessors one year 's rent for loss by the latter sustained by the premature termination of the lease,.
If this condition as to the removal of buildings were not fulfilled by the lessee, the lessors were authorised to take possession of the vacant site dismantling the constructions and demolishing the walls.
On the termination of the stipulated period of 20 years the lessees stipulated that they would dismantle the constructions by demolishing the walls etc.
and deliver possession of the vacant site to the lessors.
The question now for consideration is whether this stipulation contained in the registered lease deed that at the end of the term the lessee would demolish the buildings which he had erected and deliver vacant possession of the site is a stipulation which is saved by the proviso to section 12.
If the scope of the proviso had to be construed in the light of the preamble, it is obvious that the tenant who had entered into a contract with a stipulation of the sort we have extracted, could not be said to have constructed the buildings on 1030 another 's land "in the hope that he would not be evicted so long as he pays rent for the land".
The preamble would, therefore, indicate that the Act would not apply to afford protection in a case where by an express term in a registered lease deed a tenant agreed to surrender the site on which he had erected a building where he specifically contracted that he would demolish the building and deliver vacant possession of the site on the termination of his tenancy.
The next matter to be noticed is that the tenancies dealt with by the Act are tenancies which came into existence prior to the enactment or prior to the date the Act became operative in the local area and therefore one cannot expect stipulations worded in exactly the same terms as in the Act, because exconcessis the Act and its provisions were not in the contemplation of the parties when they entered into the contract.
The mere fact, therefore, that a stipulation as regards the erection of the buildings is not worded in the same manner as under the provisions of the Act or in terms of the Act is no ground for refusing effect to it.
Lastly, since what is saved by the proviso from the operation of the Act are the rights which are created in favour of tenants by the Act, we are led to an inquiry as to the rights which are conferred by the Act, for the saving must obviously have reference to and be determined by these rights.
Broadly speaking two kinds of rights have been conferred on lessees under tenancies failing within the scope of the Act first a right to the payment of compensation for buildings erected by them on leased land before they are evicted, (under section 3 of the Act) and secondly (this of course could be only in the alternative) a right or option to require the landlord to sell them the land under lease for a price to be computed in accordance with section 9.
It is obvious from the very nature of things having regard to the time when the lease was entered into that there would not and could not in terms be a stipulation in a deed against the option accorded to a tenant to purchase the leased land, and the matter is so self evident as not to need any argument in support.
We therefore reach the position that the stipulation contemplated by the proviso to section 12 could only be one in relation to the right of the tenant to claim compensation for the buildings erected by him after the 1031 commencement of the tenancy.
Expressed differently, though the proviso is worded as to permit the saving of stipulations contained in registered deeds whether the stipulations relate to the right to the compensation receiv able by tenants under section 3, or their right to require the sale of the leased land to them under section 9 when on the termination of the tenancy they are sought to be evicted, the latter right is not one which could be affected by an express stipulation in that regard, but its non availability to the tenant could be brought about only by a stipulation bearing on the right of the tenant to compensation under section 3 for buildings erected by him during his tenancy.
We shall now proceed to ascertain the stipulation which would affect the right to compensation in respect of build ings erected conferred on tenants by section 3.
That provision reads : "Every tenant shall on ejectment be entitled to be paid as compensation the value of any building, which may have been erected by him, by any of his predecessors in interest, or by any person not in occupation at the time of the ejectment who derived title from either of them, and for which compensation has not already been paid.
A tenant who is entitled to compensation for the value of any building shall also be paid the value of trees which may have been planted by him on the land and of any improvements which may have been made by him.
" A stipulation which if effective would limit the quantum of compensation payable in respect of buildings constructed by a tenant provided for by section 3, it is conceded, is within the proviso to section 12 as being one with respect to the "erection of buildings".
The effect of this concession on the meaning of the proviso, we shall consider later.
But the question is whether these words can on any resonable construction be limited or confined to such a contingency.
us take a case where in a lease like the one before us for a fixed term say of 20 years there is a stipulation that the tenant shall not build on the land and that if lie erected 1032 buildings he shall remove the structures, and deliver vacant possession at the end of the tenancy.
Obviously such a stipulation would imply that he shall not claim any com pensation, for the structures which contrary to his under taking he erects.
We did not understand Mr. Setalvad to whom this was put during arguments to contend that the tenant, who constructed buildings under a lease with a stipulation such as this would be able to obtain compensa tion under section 3, with the attendant rights conferred by section 9.
This can only be on the basis that a stipulation forbidding the erection of buildings by the lessee is a stipulation as regards "erection of buildings" notwithstanding that it is part and parcel of this stipulation that the tenant shall demolish buildings which he constructed.
If a stipulation forbidding erection of buildings and requiring their removal before surrendering possession of the site is conceded to be one 'in respect of erection of buildings ' as has to be conceded, it is not possible to accept the construction that a stipulation for the removal of buildings which the lessee is permitted to erect and keep in the site only for the duration of the tenancy is any the less one "in respect of erection of buildings".
We understand these words to mean a stipulation which bears on or is in relation to the erection of buildings.
Such a construction would reconcile the proviso with the preamble which sets out the object sought to be achieved by, the Act.
If the lease deed contains no stipulation whatsoever in regard to the erection of.
buildings, as was the case with the large number of leases in the city of Madras which were entered into prior to the enactment of the Act in 1922.
the tenant who erected a building exconcessis without contravening any undertaking on his part., obtains protection under the Act.
Again if the lease though it contains such a stipulation against construction of buildings on the leased land is not by a registered instrument as were again several leases in the city the statutory rights to compensation and purchase were protected.
If however the parties had recourse to a formal registered instrument for putting through the transaction and such a deed contained a stipulation against erection of buildings, or against the continuance of the buildings on the land at the termination of the tenancy, or what comes to the same thing against the tenant being entitled to compensation for the buildings 1033 erected by him during the currency of the lease, the stipulation would govern the rights of the tenant and not the statute.
This in oar opinion is the proper construction of the proviso to section 12.
The test would therefore be"did the parties advert to and have in mind the contingency of the tenant erecting buildings on the leased land"? If they had and had included in a solemn registered deed a provision which would bear upon the relative rights of the parties in the event of the erection of buildings on the site, the stipulation would have effect notwithstanding the Act; for in such an event the tenant would not have constructed buildings on the land in the hope that he would not be disturbed from possession so long as he paid the rent agreed upon.
Before concluding we shall examine how far the limited meaning attributed to the phrase "as to the erection of buildings" can be sustained.
First let us take a case where there is a stipulation in a registered deed under which the lessee in consideration of a favourable rent undertakes to construct buildings of a particular type and deliver possession of the site as well as the building constructed at the end of the term without any claim to compensation.
On the construction put forward by the respondent this would be a stipulation which would be saved by the proviso since it refers to the construction of buildings and not removal, though it negatives all right to compensation to which he would be entitled under section 3.
Such a stipulation being valid and enforceable, on a suit for ejectment being filed, the tenant would not be entitled to compensation and would therefore be outside section 9 because section 9 applies only to cases where the tenant is entitled to compensation.
Now, does it make any difference if the deed stipulated that the buildings erected by the tenant should be removed, without any claim to compensation in the event of non removal.
We can see no sensible distinction between the two cases, and if the one is a stipulation in respect of "erection of buildings", the other is equally so.
Next we shall take the case which the respondent asserts is precisely the one intended to be covered by the proviso viz: a stipulation that the lessee shall not construct a building in excess of a particular plinth area, or beyond a ground floor, or in excess of a specified number of rooms.
134 159 S.C. 66.
1034 Obviously the question about the applicability of the proviso would come in only if the tenant broke the covenant and we shall therefore assume that in breach of the stipulation, the tenant erects buildings contrary to his undertaking.
In such an event it is said that when the compensation to which the tenant is entitled under section 3 is computed, the amount would be confined to what he would have got, if he had abided by the contract.
But this is to ignore the basic feature of the Act, under which the tenant who is entitled to compensation under section 3, and certainly the limited compensation that the tenant obtains even when he breaks a covenant would still be compensation under that section, is entitled to purchase the lease land under section 9.
The construction suggested therefore comes to this that though under the proviso to section 12 there might be stipulations which might reduce the quantum of compensation to which a tenent would be entitled under section 3, there cannot be a stipulation apart possibly from a covenant against any erection of buildings which we have already dealt with, which would preclude a tenant from his right under section 9.
If as must be conceded the first limb of section 12, save the statutory rights of tenants both under sections 3 & 9 from the operation of any contract, it appears to us to stand to reason that the proviso which saves rights under contracts from the rights conferred by the Act should be construed to be co extensive with and operate on the same field as the opening portion of section 12.
We are, therefore, clearly of the opinion that the learned Judges of the High Court were in error in their construction of the proviso to section 12.
In this view the question as regards the constitutional validity of section 9 would not really arise for consideration, and we express no opinion on it.
We would accordingly allow the appeal and decree the suit for ejectment filed by the appellant ORDER In accordance with the majority opinion, the appeal is dismissed.
No order as to costs.
Appeal dismissed.
GMGIPND L 134 59 section C. of India (6021 46) 18 10 65 2,500.
| The appellant and his mother (the lessors), granted a lease of an open site in the town of coimbatore to Abirama Chettiar under a registered 'deed dated September 19,1934.
The annual rent stipulated under the lease was Rs. 10,80 and the period of the lease was 20 years.
The term under the lease was that the land was to be utilised for constructing buildings thereon for "purposes of cinema.
drama etc.
" It was further agreed between the parties that at the end of the term the lessee would demolish the buildings which he had.
constructed and deliver vacant possession of the site Lo the lessor.
Abirama Chettiar constructed a theatre on the site, and assigned his rights to the respondent company.
In an action against the company for a decree in ejectment and for mesne profits, the Trial Court awarded to the lessors a decree for possession and mesne profits.
Against the decree the company respondent preferred an appeal to the District Court which was transferred for trial to the High Court.
During the pendency of this appeal, the State of Madras extended the Madras City Tenants ' Protection Act, 3 of 1922, as amended by Madras Act 19 of 1955 to the Municipal Town of Coimbatore.
The company then applied under a. 9 of the Act and on this application the High Court directed that the lessors do sell to the company the site in dispute under section 9 of the Madras City Tenants Protection Act, 1922.
against payment of the full market value of the land on the date of the order.
The order was confirmed in an appeal under the Letters Patent Held: Per Gajendragadkar, C.J., Shah and Sikri, JJ.
section 12 has been enacted to protect the tenants against any contractual engagements which may have been made expressly or by implication to deprive themselves wholly or partially of the protection intended to be conferred by the Statute.
And the only class of cases in which the protection becomes ineffective is where the tenant has made a stipulation in writing registered as to the erection of buildings, erected after the date of the contract of lease.
The stipulations not protected in section 12 are only those in writing registered and relate to erection of buildings.
such as restrictions about the size and nature of the building constructed, the building materials to be used therein and the purpose for which the building is to be utilised.
(ii)Section 9(1) of the Act was manifestly in the interest of the general public to effectuate the mutual understanding between the, landlords and the tenants as to the duration of the tenancies, and to conserve building materials by maintaining existing buildings for purposes for which the leases were granted.
Restriction imposed upon the right of the landlord to obtain possession of the premises demised according to the terms of the lease would, therefore not be regarded as imposing an unreasonable restriction in the exercise of the right conferred upon 1017 the landlord by article 19(1) of the Constitution, because the restriction would be regarded as one in the interests of the general public.
What section 9 does is not so much to deprive the landlord of his property or to acquire his rights to it as to give effect to the real agreement between him and his tenant which induced the tenants to construct his building on the plot let out to him.
If the law is not invalid as offending article 19(1)(f) of the Constitution, no independent infringement of article 31(1) of the Constitution may be set up.
Per Wanchoo and Ayyangar, JJ (dissenting) (1) The preamble of the Act would indicate that the Act would not apply to afford protection in a case where by an express term in a registered lease deed a tenant agreed to surrender the site on which he had erected a building, where he specifically contracted that he would demolish the building and deliver vacant possession of the site on the termination of his tenancy.
If the scope of the proviso to section 12 had to be construed in the light of the preamble, it is obvious that the tenant who had entered into a contract with a stipulation of the sort as stated above could not be said to have constructed the buildings on another 's land "in the hope that he would not be evicted so long as he pays rent for the land".
The High Court erred in interpretting the proviso to section 12 of the Act.
(ii) These words "as to the erection of buildings" mean a stipulation which bears on or is in relation to the erection of buildings.
Such a construction would reconcile the proviso with the preamble which sets out the object sought to be achieved by the Act.
If the lease deed contains no stipulation whatsoever in regard to the erection of buildings, as was the case with the large number of leases in the city of Madras which were entered into prior to the enactment of the Act in 1922, the tenant who erected the building exconcessis without contravening any undertaking on his part, obtains protection under the Act.
The test would therefore be "did the parties advert to and have in mind the Lontingency of the tenant erecting buildings on the leased land"? If they had and had included in a solemn registered instrument a provision which would bear upon the relative rights of the parties in the event of the erection of buildings on the site, the stipulation would have effect notwithstanding the Act; for in such an event the tenant would not have constructed buildings on the land in the hope that he would not be disturbed from possession so long as he paid the rent agreed upon.
|
Civil Appeal Nos.
2040 2042 of 1987 From the Judgment and order dated 11.2.1986 of the Central Administrative Tribunal, New Delhi in Appln.
Registration No. 4, 9 and 10 of 1985 Shanti Bhushan, K.R. Nagaraja, R.S. Hegde and Jayant Bhushan for the Appellants.
V.C. Mahajan, C.V. Subba Rao, A. Subba Rao and T.S. Sundrarajan in person for the Respondents.
The Judgment of the Court was delivered by RAY, J.
In these appeals under special leave the only question that falls for consideration is whether the service rule requiring 8 years of approved service as Section officer both for the direct recruits as well as for promotees for being eligible for consideration for promotion to the Grade I Post in Central Secretariat Service is arbitrary being in contravention of Articles 14 and 16 of the Constitution of India.
The matrix of the case is that the appellants along with one Rajiv Kalsi made four applications under section 19 of the challenging the vires of proviso to sub rule 2 of Rule 12 of Central Secretariate Service (C.S.S.), 1962 as amended by Notification No. 5/8/80 CS.
I dated 29th December, 1984 prescribing 8 years of approved service as Section officer as condition of eligibility for being considered for promotion to Grade I Post in C.S.S.
The appellants, Miss Prabha Devi and Shri Rajiv Kalsi were recruited directly through examination held by Union Public Service Commis 151 sion in 1978 as Section officers.
The appellants Shri G.S. Grewal and Shri Surjit Singh were recruited through examination held by Union Public Service Commission in 1980 as Section officers.
These direct recruits had been appointed in substantive vacancies of Section officers in accordance with the quota reserved for direct recruits by the service rules.
The inter se seniority of the direct recruits and the promotees is fixed in accordance with the quota and rota system.
The appellants are seniors to the promotees in accordance with the said quota and rota Rule.
The promotion to Grade I post of C.S.S. Rules is made in accordance with the provisions of sub rule 2 of rule 12 of the said Rules.
The proviso to sub rule 2 of rule 12 of C.S.S. Rules, 1962 was originally to the following effect: "Provided that if any person appointed to the Section officers ' Grade before the prescribed date is considered for promotion to Grade I in accordance with the provisions of this sub rule, all persons senior to him in that grade before the prescribed date shall also be considered notwithstanding that they may not have rendered l0 years ' approved service in the grade.
" According to this rule the direct recruits were eligible for consideration for promotion to Grade I in C.S.S. even though they have not rendered 10 years ' service when promotee Section officers junior to them are considered for promotion to Grade I. The promotee Section officers had to render 10 years ' approved service as Section officer before being considered for promotion to Grade I.
This proviso to sub rule (2) of Rule 12 was substituted by the following proviso with effect from July 31, 1972: "Provided further that if any person appointed to the Section officers ' Grade is considered for promotion to Grade I under this sub rule, all persons senior to him in that grade shall also be considered notwithstanding that they may not have rendered 10 years ' approved service in that grade.
" The proviso to sub rule (2) of rule 12 was again substituted by the following proviso with effect from February 23, 1978: "Provided further that if any person appointed to the Section officers ' Grade is considered for promotion to Grade I under this sub rule, all persons senior to him in Section Officers ' Grade who have rendered not less than six years ' 152 approved service in that Grade, shall also be considered notwithstanding that they may not have rendered 10 years ' approved service in that Grade; provided that the aforesaid condition of six years ' approved service shall not apply to a person belonging to the Scheduled Castes or the Scheduled Tribes." Thus according to this proviso to sub rule (2) of rule 12 a direct recruit Section officer who has rendered six years ' approved service in that grade was eligible for consideration for promotion to Grade I whereas a promotee Section officer would have to render ten years ' approved service in the grade of Section officer before being eligible for consideration for promotion.
In 1979 the substantive part of sub rule (2) of rule 12 was amended to provide eight years ' approved service in the Section officers ' Grade as against ten years approved service for eligibility for promotion to Grade I of C.S.S.
The third proviso of sub rule (2) of rule 12 was further substituted by the following proviso by Notification dated December 29, 1984: "Provided further that if any person appointed to the Section officers ' Grade is considered for promotion to Grade I under this sub rule, all persons senior to him in Section officers ' Grade, belonging to the Scheduled Castes or the Scheduled Tribes who have rendered not less than 4 years ' approved service in that grade, shall also be considered for promotion.
This amended rule enjoins that a directly recruited Section officer has to render 8 years ' approved service in the grade of Section officer before being eligible for consideration for promotion to Grade I.
The only exception made in this rule is with regard to Section officers belonging to the Scheduled Castes or Scheduled Tribes who shall have to render only four years approved service in that grade in order to qualify themselves for being considered for promotion to the said Grade I.
This condition of eligibility as introduced by the 1984 amendment of the third proviso of sub rule (2) of rule 12 has been questioned in the petitions before the Central Administrative Tribunal which after hearing the parties dismissed the applications by a common judgment holding inter alia that neither the amendment of February, 1978 nor the amendment of December, 1984 made in the proviso to sub rule (2) of rule 12 of the C.S.S. Rules, 1962 is discriminatory or arbitrary or 153 unreasonable so as to be declared ultra vires of Articles 14 and 16 of the Constitution of India.
It has been further held that the amended rule of December, 1984 is valid, just and equitable and no exception can he taken to it.
Aggrieved by the said order these three appeals on special leave have been preferred before this Court.
Mr. Shanti Bhushan, learned counsel appearing on behalf of the appellants has advanced three fold submissions before this Court.
The first submission is that the impugned amendment made in third proviso of sub rule (2) of rule 12 of C.S.S. Rules purports to entrench upon the prospects of the directly recruited Section officers for being considered for promotion to Grade I in as much as they are left out of the zone of consideration while their juniors i.e. the promotee Section officers are eligible for being considered for promotion to Grade I.
This condition of eligibility has no nexus to suitability for promotion to the post and as such this is in violation of the equality clause in Article 16 of the Constitution of India.
It has been submitted that any rule framed by the Government must be subject to the Fundamental Rights guaranteed by the Articles 14 and 16 of the Constitution of India.
Seniority of the direct recruits entitles them for consideration for promotion to the higher post while their juniors i.e. promotee Section officers are being considered for promotion to the higher post.
The purpose of the seniority in service is that the senior will be considered for promotion before those who are junior to them in the service.
Of course, a senior incumbent may be considered not suitable for promotion.
It has been submitted that the condition of eligibility as laid down in the said rule has no reference to suitability for promotion to the post and as such it is arbitrary and so void.
It has been submitted in this connection that prior to 1978 directly recruited Section officers having rendered 3 4 years of service in that grade had been promoted to Grade I and they had duly performed their duties.
Some of them have rendered their service in the promoted post very efficiently and they have earned remarks such as "very meritorious and outstanding" from the Department.
There is nothing to show that the promoted direct recruits were proved inefficient in discharging their duties and responsibilities of the higher post.
Mr. Shanti Bhushan furhter submitted that even in accordance with the provisions of sub rule (2) of rule 12 as amended in 1978 direct recruit Section officers after having rendered six years ' approved service in the grade had been considered for promotion and were promoted to Grade I.
This system worked out very satisfactorily and 154 the direct recruit Section officers who were promoted to Grade I post performed their duties attached to the higher post duly and satisfactorily.
The amendment of the eligibility qualification in 1984 providing a longer period of service as S.O. is, therefore, arbitrary and inequitable.
There is no rationale behind this amendment which works to the serious prejudice of the direct recruit Section officers for being considered for promotion to Grade I of the C.S.S. Service even though the promotee Section officers junior to them are being considered for promotion.
It has been secondly contended that the rule of determination of seniority on quota rota basis in the grade of Section officers having been held valid and not arbitrary by this Court in the case of H.V. Pardasani and ors.
vs Union of India and Ors., , the condition of eligibility introduced by the 1984 amendment of sub rule (2) of rule 12 is wholly unjust and arbitrary as it excludes direct recruit Section officers from the zone of consideration for promotion even though their juniors having put in eight years ' approved service as Section officers are eligible for consideration for promotion.
It has been submitted that the effect of the amendment is to neutralise and negative the decision of this Court which held that the rules of seniority on the basis of quota rota basis are unexceptionable.
It has been lastly contended that at any rate the promotee Section officers form a very small portion of the officers promoted to the Grade I Post and as such elimination of the direct recruit Section officers from the zone of consideration for promotion will not have any appreciable effect in as much as it will not obviate the frustration of the promotee Section officers for not being promoted to the higher post.
It has also been submitted that it is unjust and arbitrary to prevent the senior Section officers from being considered for promotion by enhancing the period of service from six years to eight years to be rendered in the grade of Section officer.
Mr. T.S. Sundara Rajan, a promotee Section officer, Respondent No. 2 has submitted that the appellants who are directly recruited Section officers on the result of examination held by the Union Public Service Commission in 1978 and 1980 against substantive vacancies, have become senior to the promotee Section officers on the basis of the quota reserved for direct recruits even though the promotee Section officers have rendered more than thirteen years ' service as Section officers.
This Fixation of seniority has no reference to the length of service.
The inter se seniority between the direct recruits and the promotee Section officers being determined on the basis of the 155 quota, the promotee Section officers even though they have been A promoted to the post of Section officers and have rendered service for a considerable period have become juniors to them in service and were not considered for promotion even.
These promotee Section officers like the Respondent No. 2 have not been considered for promotion in spite of their rendering service as such for more than thirteen years whereas the direct recruit Section officers who were appointed much later were considered and promoted purely on the ground of seniority.
This has created frustration in the minds of the promotees.
To obviate this the Government after due consideration of all aspect has by Notification dated December 29, 1984 amended the proviso to sub rule (2) of rule 12 of C.S.S. Rules prescribing an uniform eligibility of rendering eight years ' approved service as Section officers by both the direct recruit Section officers and the promotee Section Officers for being considered for promotion to Grade I (Under Secretary).
The said amendment, it has been submitted, is neither arbitrary nor unjust.
It has been further submitted that the promotee Section officers if given promotion will render their service duly and efficiently as has been rendered by the direct recruit Section officers promoted to Grade I.
According to the C.S.S. Rules, 1962, the substantive vacancies of Section officers are manned by direct recruits and promotees and a quota of one fifth of the total substantive vacancies has been reserved to be filled up by direct recruits.
The remaining substantive vacancies of Section officers are filled up by appointment of persons included in the select list i.e. by promotion.
The inter se seniority between the direct recruits and promotees is determined on the basis of the quota rota rule.
The direct recruits on their appointment against substantive vacancies become senior to the promotees.
This Court in the case of H.V. Pardasani and ors.
vs Union of India and Ors.
(supra) considered the question of the validity of rule providing for fixation of seniority between the direct recruits and promotees in the grade of Section officer on the basis of quota reserved for direct recruits and held that the prescription of quota becomes necessary to work out a scheme constituting a service manned by both the direct recruits as well as promotees.
Such a scheme is unexceptionable and seniority based upon the rota is also not open to attack.
The scheme does not appear to be arbitrary and the rules and regulations to give effect to the scheme are not ultra vires either Article 14 or Article 16 of the Constitution.
Therefore, the inter se seniority of direct recruit and promotee Section officers on the basis of 156 quota rota rules has been held to be valid.
This does not mean that the A direct recruits who are senior to the promotees are entitled to be considered for promotion to a higher post even though they do not fulfil the eligibility qualification specified in the rule framed by the rule making authority.
The rule making authority by the amendment made in 1984 has brought in an uniform eligibility qualification of eight years ' approved service to be rendered by the Section officers both promotees and direct recruits before coming within the Zone of consideration for promotion to Grade I.
Thus it treats all Section officers equally and there is no discrimination between the Section officers.
It has been submitted that this rule is arbitrary and unreasonable as it prescribes a certain minimum service in a lower post for promotion to a higher post on the ground that it has no nexus to suitability for holding the higher post.
This submission in our considered opinion, cannot be sustained in as much as experience over certain number of years in service and also due performance of the duties and responsibilities attached to the post of Section officer is very relevant and as such prescribing such an eligibility qualification has nexus to the suitability for the promoted post.
The directly recruited Section officers are not totally excluded from the zone of consideration for promotion.
They will be considered like the promotee Section officer as soon as they have rendered eight years ' approved service as Section officer.
The Tribunal has held that: "The qualifications for any post are prescribed having regard to the nature of the post and the duties and responsibilities attached to it.
For due discharge of duties attached to a post, academic excellence alone may not be sufficient.
Factors like experience over certain number of years in service and holding a post of a certain level are relevant.
That gives them the opportunity to deal with several files, handle different situations, tackle varied problems, extract work from subordinates of varying capabilities and serve under superiors with differing styles of functioning.
They acquire knowledge of men and matters and the necessary acumen to deal with issues arising from time to time.
Academic brilliance and excellent performance at the competitive examinations by themselves cannot wholly substitute experience.
They can only supplement.
However brilliant a person may be, he needs experience such as can be gathered only by discharging the duties and responsibilities attached to a post.
If recruitment to a post is by way of promotion, the minimum 157 number of years one should serve in the lower post would have to be prescribed.
Valuable experience gained in service, better equips a person to shoulder higher responsibilities and man the superior post.
Period spent in discharge of duties of a post has nexus to.
the object of enlisting experienced officers of proven merit with consistent good record over sufficiently long period to man the higher posts by way of promotion.
" The 1984 amendment of the rules providing an eligibility condition of rendering eight years ' approved service as section officer for coming within the zone of consideration for promotion to Grade I Post of C.S.S. is not at all arbitrary and unreasonable as it prescribes a minimum period of eight years ' of service as Section officer both for direct recruits and promotees as a condition of eligibility for consideration for promotion to the higher post.
This rule is, therefore, not violative of Articles 14 and 16 of the Constitution of India.
The rule making authority is competent to frame rules laying down eligibility condition for promotion to a higher post.
When such an eligibility condition has been laid down by service rules, it cannot be said that a direct recruit who is senior to the promotees is not required to comply with the eligibility condition and he is entitled to be considered for promotion to the higher post merely on the basis of his seniority.
The amended rule in question has specified a period of eight years ' approved service in the grade of Section officer as a condition of eligibility for being considered for promotion to Grade I post of C.S.S.
This rule is equally applicable to both the direct recruit Section officers as well as the promotee Section officers.
The submission that a senior Section officer has a right to be considered for promotion to Grade I post when his juniors who have fulfilled the eligibility condition are being considered for promotion to the higher post, Grade I, is wholly unsustainable.
The prescribing of an eligibility condition for entitlement for consideration for promotion is within the competence of the rule making authority.
This eligibility condition has to be fulfilled by the Section officers including senior direct recruits in order to be eligible for being considered for promotion.
When qualifications for appointment to a post in a particular cadre are prescribed, the same have to be satisfied before a person can be considered for appointment.
Seniority in a particular cadre does not entitle a public servant for promotion to a higher post unless he fulfils the eligibility condition prescribed by the relevant rules.
A person must be eligible for promotion having regard to the qualifications prescribed for the 158 post before he can be considered for promotion.
Seniority will be relevant only amongst persons eligible.
Seniority cannot be substituted for eligibility nor it can over ride it in the matter of promotion to the next higher post.
The rule in question which prescribes an uniform period of qualified service cannot be said to be arbitrary or unjust violative of Articles 14 or 16 of the Constitution.
It has been rightly held by the Tribunal: "When certain length of service in a particular cadre can validly be prescribed and is so prescribed, unless a person possesses that qualification, he cannot be considered eligible for appointment.
There is no law which lays down that a senior in service would automatically be eligible for promotion.
Seniority by itself does not outweight experience.
" It has also been observed: "In any event, the appropriate Rule making Authority is the best judge in this regard.
The Rule making Authority is certainly competent to amend the Rule and extend the period from 6 years to 8 years so as to make the direct recruits more experienced and suitable for the higher post.
That is a matter for the Rule making Authority; the Tribunal cannot sit in judgment over the opinion of the Rule making Authority.
No Court or Tribunal can substitute its own view in a matter such as this.
Such a Rule framed by a competent Authority cannot be struck down unless it is shown to be violative of any Fundamental Right guaranteed to a citizen under the Constitution.
" We do not find any infirmity in the above findings arrived at by the Tribunal.
In the premises aforesaid we hold that the third proviso to sub rule 2 of Rule 12 of Central Secretariat Service Rules, 1962 as amended by Notification No. 5/8/80 CS.
I. dated 29th December, 1984 is not ultra vires of Articles 14 and 16 of the Constitution.
The judgment and order of the Central Administrative Tribunal is hereby affirmed and the appeals are dismissed without costs.
G.N. Appeals dismissed.
| % The appellants are direct recruit Section officers and were appointed in substantive vacancies of Section officers in accordance with the quota reserved for direct recruits.
The inter se seniority of the direct recruits and promotees is fixed in accordance with the quota and rota system.
According to the C.S.S. Rules, 1962, the substantive vacancies of Section officers are manned by direct recruits and promotees and a quota of one fifth of the substantive vacancies has been reserved to be filled up by direct recruits.
The remaining substantive vacancies of Section officers are to be filled up by appointment of persons included in the select list i.e. by promotion.
The direct recruits on their appointment against substantive vacancies become senior to the promotees, as is in the present case.
The promotion of Section officers to Grade I post of C.S.S. Rules is made in accordance with the provisions of sub rule 2 of rule 12 of the said Rules framed in 1962.
According to this rule the direct recruits were eligible for promotion to Grade I in C.S.S. even though they have not rendered 10 years service, when promotee Section officers junior to them are considered for promotion to Grade l.
The promotee Section officers had to render 10 years ' approved service as Section officer before being considered for promotion to Grade I.
This rule had been 148 amended from time to time, the last of which was in 1984 by way of Notification No. 5/9/80 CS.
I dated 29th December, 1984 which prescribed 8 years of approved service as Section officer as condition of eligibility for being considered for promotion to Grade I post in C.S.S.
This amendment was challenged before the Central Administrative Tribunal which dismissed the applications, holding that the amended rule is valid, just and equitable and no exception can be taken to it, and that it is not ultra vires of Articles 14 and 16 of the Constitution.
Aggrieved by the said order three appeals have been preferred before this Court, by way of special leave.
It was contended that the amendment purports to entrench upon the prospects of the directly recruited Section officers for being considered for promotion to Grade l in as much as they are left out of the zone of consideration while their juniors i.e. the promotee Section officers are eligible for being considered for promotion to Grade I.
This condition of eligibility has no nexus to suitability for promotion to the post and as such is in violation of the equality clause in Article 16 of the Constitution of India.
It was contended that for purposes of seniority in service the senior will be considered for promotion before those who are junior to them in service, and that the condition of eligibility as laid down in the said rule has no reference to suitability for promotion to the post and as such it is arbitrary and so void.
The system prior to the amendment worked out satisfactorily and the direct recruit Section officers who were promoted to Grade I post performed their duties attached to the higher post duly and satisfactorily, and therefore the amendment is arbitrary and inequitable, and that this amendment works out to the serious prejudice of the direct recruit Section officers.
It was submitted that the effect of the amendment is to neutralise and negative the decision of this Court in H.V. Pardasani & Ors.
vs Union of India & Ors., which held that the rules of seniority on the basis of quota rota basis are unexceptionable.
On behalf of the promotee Section officers it was contended that the inter se seniority between direct recruit Section officers and promotee Section officers is fixed in accordance with the quota rota rule and thus has no reference to the length of service.
The promotee Section officers have not been considered for promotion m spite of their rendering service as such for more than 13 years, whereas the direct recruit 149 Section officers who were appointed much later were considered and promoted purely on the ground of seniority.
This has created frustration in the minds of the promotees and in order to obviate this, the Government has amended the proviso and that the amendment is neither arbitrary nor unjust.
Dismissing the appeals, this Court, ^ HELD: 1.
The rule in question which prescribes on uniform period of qualified service cannot be said to be arbitrary or unjust or violative of Articles 14 or 16 of the Constitution.
The rule making authority, by the amendment made in 1984, has brought in an uniform eligibility qualification of 8 years ' approved service to be rendered by the Section officers both promotees and direct recruits before coming within the zone of consideration for promotion to Grade I.
Thus it treats all Section officers equally and there is no discrimination between the Section officers.
The directly recruited Section officers are not totally excluded from the zone of consideration for promotion.
They will be considered like the promotee Section officers as soon as they have rendered eight years ' approved service as Section officers.
The eligibility conditions imposed has a nexus to the object sought to be achieved, viz. enlisting experienced officers of proven merit to man the higher posts by way of promotion.
[158B; 156B D] 2.
The validity of rule providing for fixation of seniority between the direct recruits and promotees in the grade of Section officer on the basis of quota reserved for direct recruits (i.e. 1/5 of the total substantive vacancies) has already been upheld by this Court.
But this does not mean that the direct recruits who are senior to the promotees are entitled to be considered for promotion to a higher post even though they do not fulfil the eligibility qualification specified in the rule framed by the rule making authority.
The rule making authority is competent to frame rules laying down eligibility condition for promotion to a higher post, and it cannot be said that a direct recruit who is senior to the promotees is not required to comply with the eligibility condition and he is entitled to be considered for promotion to the higher post merely on the basis of his seniority.
The submission that a senior Section officer has a right to be considered for promotion to Grade I post when his juniors who have fulfilled the eligibility condition are being considered for promotion to the higher post, is wholly unsustainable.
[155G; 156A B; 157D F] H.V. Pardasani & Ors.
vs Union of India, , followed.
150 3.
When qualifications for appointment to a post in a particular cadre are prescribed, the same have to be satisfied before a person can be considered for appointment.
Seniority in a particular cadre does not entitle a public servant for promotion to a higher post unless he fulfils the eligibility condition prescribed by the relevant rules.
A person must be eligible for promotion having regard to the qualifications prescribed for the post before he can be considered for promotion.
Seniority will be relevant only amongst persons eligible.
Seniority cannot be substituted for eligibility nor can it over ride it in the matter of promotion to the next higher Post.
[157G H: 158A]
|
Appeal No. 1212 of 1974.
From the Judgment and Order dated 26 4 74 of the Madhya Pradesh High Court in Election Petition No. 4/72.
526 Hardayal Hardy and S.K. Gambhir, for the Appellant.
D.V. Patel, B. Jindal, M.M.L. Srivastava and E.C. Agarwa la, for the respondent.
The Judgment of the Court was delivered by JASWANT SINGH, J.
This appeal under section 116 A of the Representation of the People Act, 1951 (hereinafter referred to as 'the Act ') is directed against the judgment and order dated April 26, 1974, of Indore Bench of the High Court of Madhya Pradesh whereby the election of the appel lant to the Madhya Pradesh Legislative Assembly from Kha chrod Assembly Constituency No. 247 at the general elections of 1972 has been set aside under section 100(1)(b) of the Act on the election petition filed by Vimal Kumar Choudhury, respondent herein, who Was an elector in the said constituency.
Pursuant to the notifications issued under section 30 of the Act calling upon the aforesaid constituency to elect a member to the M.P. Legislative Assembly, nomination papers by the appellant and some others were filed on February 8, 1972.
On scrutiny of the nomination papers held by the Returning Officer on February 9, 1972, nomination of 8 candidates was found valid.
Out of the said 8 candidates, 3 withdrew their candidature with the result that only five candidates including the appellant who was set up by Bhar tiya Jan Sangh and Rajendra Jain (p.W. 39) who was set up by the Indian National Congress contested the election.
The poll took place on March 8, 1972.
On March 12, 1972, the appellant was declared elected as a result of counting of the polled votes which showed that he had secured 23,572 votes as against 22,327 secured by Rajendra Jain (P.W. 39), his nearest rival.
On April 24, 1972, the respondent herein presented an election petition challenging the elec tion of the appellant alleging commission by the latter of various acts of corrupt practices.
The particulars of cor rupt practices alleged to have been committed by the appel lant were set out by the respondent in Paragraphs 13, 14 and 15 of his election petition.
In paragraph 13 of the elec tion petition, it was inter alia stated as under : "(13).
That the respondent has committed the corrupt practice of publication of false statement of fact in relation to the personal character and/or conduct of Shri Rajendra Jain (hereinafter referred to as the 'Congress Candidate ') falling in the purview of section 123(4) of the Act as per the facts and particulars mentioned hereinafter.
Leaflet (13)(xi).
That the Congress candidate is the follower of the Jainism wherein the eating of cow meat is absolutely prohibited.
Shri Rajendra Kumar Jain does not eat meat at all.
Amongst Hindus who form a majority of the voters in the Constituency, cow is regarded as a sacred animal and worshipped like God.
Persons who eat cow meat are looked with hatred by the Hindus and are discarded from the society.
527 (13) (xii).That the respondent/Election Agent got printed and distributed a leaflet enti tled: "Beware, understand the Congress Candidate." (Leaflet is attached hereto and marked as Annexure 'A ').
(13)(xiii).
That the leaflet Annexure 'A ' contains the following statement of facts which are false, which the respondent either believed to be false or did not believe to be true in relation to the personal character and for conduct of the Congress Candidate, being the statement reasonably calculated to prejudice the prospects of Congress candidate 's election: " .
What to speak of other things, Rajendra Jain went on tour to those countries where beef is prepared and served in Hotels and there he took beef even.
Do you want to cast your vote in favour of a person who is atheist who is a beef eater and is devoid of Dharma . " (13) (xiv) .
That the pararticulars re garding the date, place, time and name regarding the distributors of Annexure 'A ' are given herein below : Sr.
Date Place Name of Time Distribution (a) 5.3.
72 Khachrod (Shukar Rampartap s/o About variya Chouk)in Ramsukh 3.00 P.M. the meeting of Jan Khachrod Sangh at which the respondent and his election age nt Shri Amrudda Heda were also present.
(b) 6. 3.72 Ramsingh 9.00 A.M. to R/o Ganesh 11.00 A.M. Chowk, Birlagram, Nadga.
The election petition was vigorously contested by the appellant.
In the course of the written statement filed by him, the appellant denied to have any concern with or knowledge of the aforesaid leaflet and averted that during the election time, he never saw any such leaflet; that it was only in the course of the election petition that he came to know of the leaflet and that he had no knowledge of the truth or falsity of the contents thereof.
The appellant further averred that it was only after the defeat of Rajen dra Jain that the story of the leaflet was manouvred and manufactured for the purpose of the election petition.
The appellant further averred that he did not do anything to prejudice the prospects of the election of Rajendra Jain.
On the pleadings of the parties, the learned Judge (to whom the election petition was .assigned for trial and disposal by the Chief Justice of the High Court) framed a number of issues but it is only with the following issues with which we are concerned in this appeal: 528 "4) (a).
Whether the leaflet Annexure 'A ' was published by or with the consent of the respondent by the persons and on the dates mentioned in para (13)(xiv) of the petition ? (b) If so, whether the said leaflet contained false statements in relation to the personal char acter and conduct of the congress candidate Rajen dra Jain which the respondent did not believe to be true or believed to be false ?" On consideration of the evidence adduced by the parties during the course of the regular trial of the petition, the learned trial Judge allowed the election petition and set aside the election of the appellant under section 100(1)(b) of the Act.
The findings arrived at by the learned Judge in so far as they are relevant for the purpose of this appeal are as follows : "Though the findings on most of ,the issues are against the petitioner yet it has been found that the pamphlet exhibit P 10 which was a false state ment with regard to the personal conduct and char acter of the candidate Rajendra Jain was got print ed by the respondent at the printing press of P.W.34 Ramprasad.
The defence raised by the re spondent with regard to this pamphlet has been found to be not established.
It has been held that it was the respondent who himself by letter exhibit
P 20 got this pamphlet printed in the printing press of P.W. 34.
Ramprasad.
The evidence given by the petitioner about its distribution by Ram Singh (P.W. 21) and Rampratap Dhakad (not examined) with the consent of the respondent has been disbelieved.
However, it has been found as a fact that it was the respondent himself who got 2000 copies of this pamphlet printed and published.
This is, therefore, a clear case where the respondent is guilty of getting this pamphlet printed and published against the congress party candidate Rajendra Jain.
The respondent is, in the light of the aforesaid finding clearly guilty of committing the corrupt practice as mentioned in sub section (4) of section 123 of the Representation of the People Act.
When such a pamphlet is published by the returned candi date the only inference that can be drawn is that the publication was reasonably calculated to prejudice the prospects of the election of the other contesting candidate Rajendra Jain; Conse quently under section 100(1)(b) the election of the respondent is liabIe to be declared void and set aside.
" The trial Judge, however, left the parties to pay and bear their own costs of the petition.
It is against this judgment and order that the present appeal has been pre ferred.
Mr. Hardy, who has taken great pains to present the case of the.
appellant has, in the first instance, attempted to lead us to the realm of hyper technicalities.
He has tried to pick up faults in the verifica 529 tion on the election petition and the affidavit accompanying the petition and has urged that the petition ought to have been dismissed by the High Court in limine under section 86 of the Act in view of the fact that the verification and the affidavit ,did not contain sufficient particulars of the corrupt practices attributed to the appellant and did not at all give particulars ,of printing of the offending leaflet.
He has further urged that the petition was also liable to be dismissed as the copy of the petition meant to be served on the appellant was not accom panied by a copy of annexure 'A ' i.e. Exh.
We find ourselves unable to accede to these contentions.
The alle gations of corrupt practice and particulars thereof as given in paragraph 13 of the election petition reproduced above are sufficiently clear and precise.
The affidavit accompanying the petition in support of the allegations of corrupt practice and the particulars thereof also conform to the form prescribed for the purpose.
The appellant had an easy access to the court record and could have no difficulty in gathering the necessary material to meet the case set up by the respondent by a reference to the leaflet (Exh.
P 10) which formed an annexure to the election petition.
It is also now well settled that failure to give pariculars of printing of the pamphlet is not detrimental and cannot lead to the dismissal of the petition.
(See Prabhu Narayan vs A. K. Srivastava) (1).
That apart, the petition could also not have been dismissed in view of section 99 of the Code of Civil procedure which clearly says that a defect which does not affect the merits of the case or the jurisdiction of the Court cannot invalidate the decision.
The preliminary con tentions of Mr. Hardy cannot, therefore, be sustained.
Continuing his arguments, Mr. Hardy, while fairly.
and rightly conceding that the contents of the aforesaid leaflet (Exh.
P 10) do cast a reflection on the personal conduct and character of Rajendra Jain (P.W. 39) and as such fall within the mischief of section 123(4) of the Act, has vehemently assailed the aforesaid findings of the trial Judge with regard to the printing and publication of the leaflet (Exh.
P 10) by the appellant.
He has contended that the evidence adduced in the case does not at all establish that it was the appellant or his election agent or any one of his sup porters who got the offending leaflet (Exh.
P 10) printed or published or that the leaflet was distributed to the members of the public of Khachrod Constituency with the consent of the appellant or his election agent to prejudice the election prospects of Rajendra Jain (P.W.39).
In view of the concession made by Mr. Hardy that the contents of the aforesaid leaflet (Exh. P 10) do cast a reflection on the personal conduct and character of Rajendra Jain (P.W. 39) and as such would fail within the mischief of section 123(4) of the Act, the only point that survives for decision in this appeal is whether the High Court was right in setting aside the election of the appellant on the ground of 'publication ' by him or with his consent: of the leaflet which according to the respondent contained false statement of facts as to the personal character and conduct of Rajendra Jain (P.W. 39) and was reasonably calculated to prejudice the prospects of the latter 's election to the State Legislative Assembly in the general elections of 1972.
(1)[1975] 3 S.C.C. 788.
530 The first and foremost question which is required to be determined in this connection is whether it was the appel lant who got the offending leaflet printed.
It is necessary to go into the question of printing of the leaflet (Exh.
P 10) as the finding in respect thereof is bound to have as held by this Court in Prabhu Narayan 's case (supra), an important bearing on the question of its distribution either by the appellant or with his consent and a discussion of the evidence regarding printing provides a satisfactory method of assuring oneself as to whether the distribution was made, as alleged, by the appellant or with his consent.
Now the proof regarding printing of the leaflet (Exh.
P 10) consists of the evidence of Ramprasad (P.W.24) who is the Manager of Kamla Printing Press, Ujjain, which is owned by his wife.
Mr. Hardy has stressed that the statement of Ramprasad is untrustworthy; that his conduct does not inspire confidence and that his statement being that of an accomplice cannot be relied upon without independent corrob oration.
Though Mr. Hardy his levelled trenchant criticism against the evidence of Ramprasad (P.W. 24,), we are not inclined to agree with him.
There is nothing strange about the conduct or behaviour of Ramprasad which may impel us to discard his testimony.
Despite the searching cross examina tion to which he was subjected, his credit has remained unshaken.
The mere fact that he printed the offending leaflet cannot clothe him with the character of a guilty associate or partner in the crime of corrupt practice within the meaning of ,section 123 (4) of the Act, which consists in the publication by the candidate or his agent or by any other person with the consent of the candidate or.
his election agent, of any statement of fact which is false or which he either believes to be false or does not believe to be true, in relation to the personal character or conduct of any candidate which is reasonably calculated to prejudice the prospects of that candidate 's election.
In the instant case, Ramprasad (P.W. 24) was neither the election agent of the appellant nor is there any allegation that he published the offending leaflet.
Section 127 A of the Act on which Mr. Hardy has placed strong reliance in support of his contention that Ramprasad (P.W. 24) was in the position of an accomplice has no relevance.
It has nothing to do with the offence in question.
The ommission on the part of Ramprasad to send to the concerned District Magistrate a copy each of the declaration and the printed material as required by sub section (2) of section 127 A of the Act may lay him open to prosecution for an offence under sub section (4 ) of section 127 A of the Act but would not make him an accomplice or render his statement untrustworthy.
Ramprasad (P.W. 24) has affirmed that on February 22, 1972, Rajaram from Khachrod .came to him and made inquiries from him regarding the printing charges of a leaflet, and that he turned up again on the following day with letter (Exh. P 20) from the appellant and told him that he had been sent by him.
The witness has further deposed that Rajaram departed after handing over to him the letter (Exh.
P 20), the draft or manuscript of the leaflet (Exh.
P 21) which had to be printed and the printing charges amounting to Rs. 45/ .
He has further stated that the charges were acknowledged by him the same day by means of a receipt of the even date; that on February 24, 531 1972, when he had completed the composition of draft of the leaflet, Anirudh Hada (R.W. 1), an advocate of Ujjain, came to him and after telling him that he was the representative and worker of the appellant, went through the printed proof (Exh. P .23) of the leaflet (Exh.
P 10) and advised him that the name of Rajaram Parmar appearing at one place on the first sheet and at two places on the second sheet in the proof should be removed and replaced by the words 'a citizen of Khachrod '.
The witness has further stated that 2,000 copies of the leaflet were printed by him on February 25, 1972 and handed over to Rajaram.
The state ment of Ramprasad (P.W. 24) receives strong corroboration not only from the various documents viz. the draft (manu script) (Exh.
P 21), carbon copy of receipt (Exh. P 22), proof (Exh.
P 23) of the offending leaflet, carbon copy of the bill (Exh.
P 24), entry (Exh.
P 25) in his cash book dated February 24, 1972 regarding the payment of the print ing charges of Rs. 45/ and entry (Exh. P 26) in his Order Book Register in respect of the leaflet produced by him but also from the letter (Exh.
P 20) which admittedly bears the signatures of the appellant and contents whereof are in the handwriting of his brother, Surendra Singh.
The letter runs as follows : " 23.2.72 Shri Ramprasadji, KamaIa Press, Ujjain.
Please print 2000 pamphlets of the matter which I have sent through Rajaram.
I need this pamphlet early.
Hence print it within a day or two.
I am sending Rs. 45/ with Rajaram, which please accept.
The proof will be seen by Hadaji, who will come to you.
Sd/ Kunwar Virendra singh, Member, Legislative Assembly, M.P. Constituency Khachrod, District Ujjain.
" The above letter, it would be seen, contains intrinsic evidence which goes a long way to support the testimony of Ramprasad (P.W. 24).
It clearly establishes (i) its own despatch to the witness by the appellant through Rajaram; (ii) the despatch to the witness by the appellant through Rajaram of the draft or manuscript of the matter to be printed, (iii) the placing of the order by the appellant for printing of 2,000 copies of the manuscript (Exh.
P. 2.1) in the form of leaflets; (iv) the remittance by the appellant through Rajaram of Rs. 45/ to defray the printing charges; and (v) the advice by the appellant to the witness that the proof would be seen by Mr. Anirudh Hada.
Although Mr. Hardy has tried hard to persuade us to hold that the letter could not have been written by or at the instance of the appellant, we are not inclined to agree with him.
There is nothing unusual in the contents of the letter being in the hand of 532 Surendra Singh in view of the statement of Chander Singh (R.W. 25) (corroborated as it is by the clear admission of the appellant himself that the relations between the two brothers i.e. Surendra Singh and the appellant remained cordial from the time of the wedding of the appellant 's daughter which took place in August, 1967 to nearly four months after the general elections of 1972.
and that in the said general elections, Surendra Singh worked with the appellant and also accompanied him sometimes.
That Ramprasad 's (P.W. 24 's) statement possesses a ring of truth and he was not trumped up by any of the arch ene mies of the appellant including Surendra Singh and Rajendra Jain (P.W. 39) as Mr. Hardy would have us believe is mani fest from another telling circumstance viz. the significant omission on the Part of the appellant to contradict Rampra sad (P.W. 24) by examining Rajaram who was no other than his own polling agent as is evident from Exhibit P 30 which admittedly bears the signatures of the appellant.
It can, therefore, be safely presumed that Rajaram was not prepared to support the appellant by refuting the statement of Ram prasad (P.W.24).
The assertion of the appellant that he deputed his brother, Surendra Singh alongwith Chander Singh (R.W. 25) to go to Ranasan in the State of Gujarat to bring his jeep from his relative, Thakur Harish Chander Singh, who was not returning, the same despite several demands made from him through letters and telegrams; that while so deputing his brother he handed over to him six blank official letter heads which were used by him as a Member of the State Legis lative Assembly after putting his signatures and affixing the rubber stamp of his designation thereon so that they might be utilized for making reports/complaints to the Police or other officials of the Transport Department in case his relative refused to return his jeep and that Surendra Singh misused one of the aforesaid letter heads and fabricated Exh.
P 20 as his relations with him became strained over the demand for division of the landed property which was got mutated by his father during his lifetime in the name of Surendra Singh 's son is nothing but a tissue of lies woven to escape the grave consequences of addressing the letter (Exh.
P 20) to Ramprasad (P.W. 24).
The contents of the letter (Exh.
P 26) being, therefore, in the hand of Surendra Singh is not a circumstance which can rea sonably arouse suspicion regarding its genuineness.
On the contrary, it is consistent with the normal course of human conduct.
It may well be that the appellant being otherwise busy, dictated the contents of the letter (Exh.
P 20) to his brother,Surendra Singh and thereafter put his own signature thereon.
It cannot also be overlooked that the appellant has been shifting his stand from time to time with regard to the aforesaid blank sheets to suit his own convenience.
Whereas at one place in the complaint (Exh. P 33) filed by him on July 31,1973, in the Court of Magistrate 1st Class, Khahrod, he averted that he delivered those forms 533 to Chand Singh Raghubanshiand Berulal, Driver, at another place in the same complaint, he made a veiled averment to the effect that the letter heads were handed over by him to his brother, Surendra Singh.
The plea taken by the appellant that he gave six blank letter heads with his signatures thereon to his brother, Surendra Singh, is also falsified by the .First Information Report (Exh.
R 79) made by him to the station House Officer, Police Station, Chhatripura, Indore, on September 26, 1973 wherein he appears to have stated that Surendra Singh sold his Fiat car No. MPO.
1241 by forging his signatures on a document.
If the appellant had in fact handed over.
six blank letter heads with his signatures thereon to Surendra Singh, as asserted by him, the latter could have easily used one of those letter heads.
It is also worthy of note that whereas at the foot of the complaint (Exh.
P 33), the appellant cited Chand Singh, s/o Saman Singh Raghubanshi, resident of Mosi Gate, Khachrod as his witness, in the instant election petition he has produced Chander Singh, s/o Chandrabhansingh of Khachrod as his witness in proof of the handing over of the afore said six letter heads bearing his signatures to Surendra Singh.
It is also difficult to believe that the appellant would hand, over half a dozen blank letter heads bearing his signatures to his brother, Surendra Singh specially when his wife, according to his own admission in the report (Exh. R 84) dated July 26, 1973 accompanied his brother to Ranasan.
All these circumstances furnish a proof positive of the falsity of the statement of the appellant in regard to the circumstances in which letter (Exh.
P.20) came into existence.
The foregoing discussion leaves no room for doubt that it was the appellant who got the offending leaflet printed at the Kamla Printing Press, Ujjain.
This takes us to the crucial question of the distribu tion of the offending leaflet by the appellant or his election agent or by some other person with the consent either of the appellant or his election agent.
Though the appellant and his election agent, Anirudh Hada, advocate (R.W. 1) have asserted that they had no connection with the distribution of the leaflet and the learned counsel for the appellant has also sought to make capital out of the High Court 's observation at one place that the distribution of the, leaflet was not by the appel lant or with his consent and at another place that the appellant himself was responsible for the publication of the leaflet (which according to the decision of this Court in Prabhu Narayan 's case (supra) means distribution of the printed material).
We shall show by reference to the unim peachable direct and circumstantial evidence which the High Court has failed to consider in its proper perspective that the only conclusion which could reasonably have been arrived at was that the distribution of the leaflet (which has not been disbelieved by the High Court to have been made) was by and with the consent of the appellant or his election agent.
534 As already stated the respondent had alleged in the election petition that the leaflet was distributed on two different dates and at two different places in his constit uency (1) on March 5, 1972 at Shukravariya Bazar, Khachrod at the meeting of Jan Sangh at which the appellant and his election agent, Anirudh Hada, Advocate were seated on the dais and (ii) on March 6, 1972 at Nagda.
The distribution of the leaflet on March 5, 1972 is alleged to have been made by Rampratap and on March 6, 1972 by Ram Singh (P.W. 21).
We propose to discuss the evidence with regard to these two distributions separately.
That a public meeting was organised and held on the afternoon of March 5, 1972 by the Jan Sangh Party in Shukravariya Bazar, Khachrod, at which the Rajmata of Gwalior, the appellant and his election agent, Anirudh Hada, advocate (R.W. 1 ) were seated on the dais and which was addressed by the Rajmata of Gwalior admits of no doubt as the same is admitted by both the appellant and his election agent, Anirudh Hada, (R. W. 1) as also by the appellant 's witness, Ramdas (R.W. 24).
It is only the distribution of the leaflet (Exh.
P 10) at this meeting which is denied by them.
The denial cannot, however, be sustained in view of clear and convincing evidence of Badri lal (P.W. 15), Nanalal (P.W. 27) Khursheed Ahmed (P.W. 35) and Shaitanmal Sisodia (P.W. 38).
All these witnesses have categorically stated that at the aforesaid meeting at which besides others the Rajmata of Gwalior, the appellant and his election agent, Anirudh Hada (R.W. 1) were seated on the dais, they saw leaflet (Exh. P 10) which appeared to have been issued in the name of a Nagrik of Khachrod being distributed to the persons who had assembled to attend the meeting by Rampratap Dhaked of Khachrod.
The witnesses have further stated that in the aforesaid leaflet (Exh. p 10) it was inter alta written that Rajendra Jain "while touring abroad had taken cow meat.
" If the appellant or Anirudh Hada had nothing to do with the distribution of the leaflet, there was nothing to stop them from restraining Rampratap from distributing the same or admonishing him for doing so.
It is no doubt true that the respondent has not been able to produce Rampratap in proof of his allegation but it cannot be lost sight of that the former did summon the latter as his witness but he did not appear despite serv ice.
the course of the statement made by him as his own witness, the respondent has explained that on Rampratap 's omission to appear before the Court as his witness despite service, he contacted the latter to enquire about the reason for his non appearance and was told by the latter that he could not attend the Court since his brother was married to the niece of Vardiram (R.W. 30) and his appearing as a witness in the Court would strain his relations with Vardiram.
In the course of his statement, Vardiram (R.W. 30,), who is staunch worker of Jan Sangh and who appears to have worked for Jan Sangh and addressed public meetings in support of its candidates during the last general elections had to admit that his real nephew was engaged to the daugh ter of Rampratap.
It is also significant that though Ram pratap was also summoned as a witness by the appellant, the latter gave him upon December 12, 1973.
It is, therefore, crystal clear that the non appearance of Rampratap as a witness for the 535 respondent was entirely due to his anxiety to maintain cordial relations with Vardiram.
The totality.
of the evidence adduced in the case, therefore, leaves no room for doubt that the distribution of the leaflet (Exh. P 10) at the meeting of the Jan Sangh Party held on the afternoon of March 5, 1972 in Shukravariya Bazar, Khachrod, was with the consent of the appellant or his election agent, Anirudh Hada, advocate (R.W. 1).
The distribution of the copies of the leaflet (Exh. P 10) at Nagda on March 6, 1972 also stands proved.
by the direct evidence of Ram Singh (P.W. 21), Ajit Singh (P.W. 22), Shanker Singh (P.W. 23) and Jawahar Lal (P.W. 37).
Ram Singh (P.W. 21) who besides being an employee of the Gwalior Rayon Mills is a newspaper hawker has stated that during the last general elections, he worked for Thakur Virendrasingh who was a candidate of the Jan Sangh party.
He has further stated that two days before the date of voting, he distributed free of cost about 300 copies of leaflet (Exh.
P 10) in which it was stated that Rajendra Jain was a meat eater, that he eats flesh and that the voters should know him.
The witness has unequivocally stated that it was the appellant who gave him the leaflets and asked him to distribute the same and told him that his remuneration for this job would be duly paid to him and that subsequently, Rs. 4/ were paid to him as remuneration for distributing the leaflets by the President of Nagda Nagar Jan Sangh Party.
Although it has been emphasized by Mr. Hardy that the statement of Ram Singh (P.W. 21) cannot be relied upon as he is a staunch worker of the Congress organ isation and is also a member of the Indian National Trade Union Congress which is a subsidiary institution of the Indian National Congress, it cannot be ignored that the Indian National Congress and the Indian National Trade Union Congress did not see eye to eye with each other in the matter of choice of the candidates for election during the last general elections.
This is evident from the statement of appellant 's own witness, Vishnu Singh (R.W. 2) who has deposed that the Indian National Trade Union Congress sup ported Maheshchandra Lala who was an independent candidate.
The statement of Ram Singh (P.W. 21) receives ample corroboration from the evidence of Shanker Singh (P.W. 23) and Jawahar Lal (P.W. 37) (who is a non Congressman).
These witnesses have clearly stated that one or two days before the date of voting, Ram Singh (P.W. 21) who is also a news paper hawker distributed copies of leaflet (Exh.
P 10) without any charge in Nagda in which it was inter alia mentioned that Rajendra Jain was a cow meat eater and during his trip abroad he stayed at the places where cow meat was served.
Ajit Singh (P.W. 22) has also affirmed that about two days before the date of polling when he had gone to Nagda Mandi for shopping, he came across a leaflet wherein it was mentioned that "while Rajendra Jain was abroad, he stayed in hotels where cow meat was served and that he being a Jain, stayed in such hotels." Even if the testimony of Ram Singh (P.W. 21) which has been disbelieved by the High Court is excluded from consideration, even then there are some unimpeachable and telling pieces of =circum stantial evidence to establish the distribution of the leaflet (Exh.
P 10) by the 536 appellant or with his consent which cannot be easily ignored.
These circumstances are (i) it was the appellant who as already observed caused the election leaflet (Exh.
P 10) to be printed by Ramprasad (P.W. 24.) at the Kamla printing Press, Ujjain; (ii) in the normal course of human conduct, no one gets any material printed without a purpose and in the instant case, the purpose manifestly was to malign the conduct and character of Rajendra Jain by distri bution of the leaflet (Exh.
P 10) amongst the inhabitants of Khachrod Constituency, (iii) the selection of time and place for distribution of the leaf .
let (Exh.
P 10)) which openly denounced Rajendra Jain and cast aspersions on his personal character and conduct and appealed to the elector ate not to vote for him.
The offending leaflet was got distributed at a largely attended election meeting held at Khachrod to canvass support for the appellant where both the appellant and his election agent were present and at other places in Nagda which were frequented by the voters of Khachrod Constituency at a time when the tempo of the elect iion campaign was at its climax, and (iv) the omission on the part of the appellant to prove that the leaflet (Exh.
P 10) emanated from a source which had no connection with the appellant or his election agent.
Not only is the distribution of the offending leaflet proved to have been made by the appellant or his election agent or with their consent but it has also been proved by the unrebutted testimony of Rajendra Jain that the leaflet contained false statement of facts calculated to injure his personal conduct and character with a view to prejudice the prospects of his election.
In the result, the appeal fails and is hereby dismissed with costs.
P.B.R. Appeal dismissed.
| The appellant booked rice for being transported by train, from Bareilly railway station to Trivandrum railway station.
On delivery, the rice was found to be damaged and short in quantity.
The appellant claimed damages from the respondent, who resisted the claim on the grounds that the suit was not maintainable as the Union of India had not been impleaded as a defendant, and that a suit by a State against the Union of India could only be instituted in the Supreme Court under article 131 of the Constitution.
The suit was dismissed by the Trial Court, and an appeal from it was dismissed by the High Court.
Dismissing the appeal, the Court, HELD: The Southern Railway is owned by the Union of India.
As such, a suit dealing with the alleged liability of that railway should have been brought against the Union of India.
Section 80 of the C.P.C. contemplates institution of a suit against the Central Government even though it relates to a railway.
[422 E FI] Sukhanand Shamlal vs Oudh Rohilkhand Railway AIR 1924, Born.
306; Hirachand Succaram Gandhy & Ors.
G.I.P. Rail way Co., AIR 1928 Born.
421; Shaikh Elahi Bakhsh vs
E.I. Railway Administration, AIR 1941 Patna 326: Chandra Mohan Saha & Ant.
vs Union of India & Anr.
and P.R. Narayanaswami lyer & Ors.
vs Union of India AIR 1960 Madras 58, Approved.
(2) Neither the definition of the "railway administra tion" in Section 3(6) of the Indian Railways Act, nor the language of sections 72 to 80 of the Act, lends support for the view that the railway administrations are to be treated as separate personalities, entries or separate juridical persons.
[423 B C] Dominion of India vs Firm Musaram Kishunprasad AIR 1950 Nagpur 85.
overruled.
(3) The demarcation of the different State owned rail ways as distinct units for administrative and fiscal pur poses cannot have the effect of conferring the status of juridical person upon the respective railway administrations or their General Managers for the purpose of civil suits.
|
: Criminal Appeal No. 193 of 1971.
Appeal by Special Leave from the Judgment and Order dated 11 5 71 of the Orissa High Court in Criminal Appeal No. 14/70.
Gobind Das, Mrs. Sunanda Bhandare, ,A. K. Mathur, A. K. Sharma and M.S. Bhandare, for the Appellant.
S.C. Agarwal and G.S. Chatterjee, for the Respondent.
The Judgment of the Court was delivered FAZAL ALl, J.
In this appeal by special leave, the appellant has been convicted for criminal misconduct under s.5(2) read with S.5(1) (c) of the Prevention of Corruption Act, 1947 and sentenced to rigorous imprisonment for three years.
He has also been convicted under section 5(1)(d) of the Prevention of Corruption Act but no separate sentence has been passed thereunder.
The appellant preferred an .appeal to the High Court of Orissa against the order of the Special Judge which was, however, dismissed, and the convic tions and sentences imposed on him were confirmed by the High Court.
Thereafter an application for leave to appeal to this Court was made before the High Court, which having been refused the appellant obtained special leave from this Court, and hence this appeal.
After going through the judgments of the Courts below, we are constrained to observe that the High Court as well as the Trial Court have made a wholly wrong approach in apply ing the provisions of the Prevention of Corruption Act in the case of the appellant.
Put briefly, the prosecution case was as follows: The appellant was the Additional District Magistrate, Cuttack from September 1964 to June 1966 and in that capaci ty he was in 442 overall charge of the Nizarat and land acquisition sections of the Collectorate.
Sayad Allamuddian Ahmed P.W. 8 was the District Land Acquisition Officer and one A. Ballav Pradhan P.W. 9 was the Nizarat Officer, whereas Prahalad Mahapatra P.W. 1 was the Nazir and Rajkishore Das P.W. 2 was the Assistant Nazir under P.W. 1 P.W. 3 Bhakta Charan Mohanti was the Land Acquisition Inspector.
It appears that a number of lands had been acquired by the Government for certain public projects in various villages particularly Mauza Balichandrapur with which we are concerned in the present case.
A huge compensation amount to be given to land owners had been deposited in the treasury for payment to them.
It appears that a sum of Rs. 31,793.85 had been disbursed by July 24, 1964 leaving a balance of Rs. 11,650 61 but no disbursement could be made between July 24, 1964 and January 20, 1965 as the villagers refused to accept the payments and wanted the Land Acquisition proceedings to be withdrawn.
The prosecution case further is that the appellant as Addi tional District Magistrate attended a meeting at the Secre tariat in the office of the Secretary of Works Department at Bhubaneswar on September 25, 1964 where certain decisions were taken.
There appears to be some divergence of opinion between the appellant and the prosecution on the delibera tions of the aforesaid meeting which we shall consider later.
It is further alleged that on January 9, 1965 the appellant directed the Nazir to pay him a sum of Rs. 10,000/from the cash which remained with the Nazir P.W. 1 for the purpose of distributing the amount to the land owners of the village Balichandrapur.
As, however, the A.D.M. 's visit to Balichandrapur could not materialise because the Executive Engineer with whom he was to go there was not available, the visit was postponed and the A.D.M. went to some other place.
On January 20, 1965 the appellant again took a sum of Rs. 10,000/ from the Nazir and decided to visit the village Balichandrapur along with the Executive Engineer and the Land Acquisition Inspector.
It is said that the S.D.O., P.W.D., also accompanied the party to the village Balichandrapur, and the case of the appellant is that the Land Acquisition Inspector also travelled to Bali chandrapur with the appellant, though this fact is disputed by the Land Acquisition Inspector.
It is, however, the admitted case of the prosecution that there ,was no dis bursement in village Balichandrapur and thereafter the amount of Rs. 10,000/ was not deposited with the Nazir but remained in the personal custody of the appellant who ap pears to have retained it dishonestly for about six months.
This is the gravamen of the charges against the appellant.
We may also mention that the amount was paid to the Nazir towards the end of September 1965 when it was deposited in the treasury.
On receiving certain applications, the Vigi lance Organisation of the State of Orissa instituted an inquiry against the appellant and after completing the same lodged a formal F.I.R. on May 13, 1966.
The appellant thereafter was challaned under various sections of the Prevention of Corruption Act and ultimately convicted as indicated above.
The case of the appellant was that he had no doubt withdrawn a sum of Rs. 10,000/ from the Nazir on January 9, 1965 but on his return from tour as he could not disburse the money to the 443 villagers he had returned it to the Nazir at Cuttack on January 13, 1965.
When, however, he again decided to go to the village with the Executive Engineer and others on Janu ary 20, 1965 he again directed the Nazir to pay him the amount for disbursement.
He went to the village Balichan drapur and tried to persuade the villagers to accept the compensation amount so that the Government project may be started as soon as possible.
The villagers wanted some other alignment to be made or the compensatioion to be increased, and the appellant persuaded them to accept part payment and assured them that he will try to get the amount increased.
It was also the definite case of the appellant that in the meeting held in the secretariat on September 25, 1964, the appellant was expressly directed to proceed to the spot and persuade the villagers to accept the compensation money and it was in consequence of this mandate from the Secretary of works Department that the A.D.M. proceeded to the village Balichandrapur and made all possible efforts to persuade the tenants to accept compensation even by holding out promises to them.
Unfortunately, however, the villagers refused to accept the compensation and the party had to come back to Cuttack disappointed.
The appellant further seemed to suggest that although he had failed to persuade the villagers to accept the money he had not com pletely lost all hopes and that there was a possibility of the villagers coming round to his point of view and ulti mately decide to accept the compensation and for this reason the appellant returned the sum of Rs. 10,000/ to the Nazir on his return from the village but directed him not to deposit the same in the treasury or to make any entry in the Cash Register so that if the villagers came to Cuttuck to demand the money they could be given the same immediately without any formality of a fresh withdrawal.
The appellant further averred that because of some personal jealousies, a false complaint was made against him which necessitated an inquiry.
The Courts below accepted the prosecution case and disbelieved the version of the defence completely.
The High Court has found that as the entrustment was proved and admitted by the appellant himself and the explanation given by him was absolutely false, this would lead to the irre sistible inference that the appellant had temporarily misap propriated the money.
It was also suggested by the prosecu tion that at the relevant time the appellant was building a house and he had already applied for loans from the Govern ment and it may be that for this purpose he might have been in need of the money to build his house.
One of the essential peculiarities of this case is that as many as three witnesses examined by the prosecution to prove its case, namely, P.Ws. 6, 7 and 8, had been declared hostile and the Public Prosecutor sought permission of the Court to cross examine those witnesses which was readily allowed.
According to the prosecution these witnesses tried to help the accused and made certain statements which sup ported the case of the appellant and, therefore, had to be crossexamined by the prosecution.
Having regard to the stand taken by the parties, the matter lies within a very narrow compass.
So far as the entrustment of Rs. 444 10,000/ is concerned that is undoubtedly admitted by the appellant, and the only explanation given by him is that he had returned the money to the Nazir after his return from the village Balichandrapur and he had also directed the Nazir not to deposit the money in the treasury.
If once the explanation of the accused is disbelieved, or proved to be absolutely false, then it is quite natural that he must be presumed to have retained the money with himself for a period of six months.
Although the Onus lies on the prose cution to prove the charge against the accused, yet where the entrustment is proved or admitted it will be difficult.
for the prosecution to prove the actual mode or manner of misappropriation and in such a case the prosecution would have to rely largely on the truth or the falsity of the explanation given by the accused.
In Jaikrishnadas Manohar das Desai and Anr.
vs State of Bombay(1) this Court observed as follows: "The principal ingredient of the offence being dishonest misappropriation or conversion which may not ordinarily be a matter of direct proof, entrustment of property and failure in breach of an obligation to account for the property entrusted, if proved, may in the light of other circumstances, justifiably lead to an inference of dishonest misappropriation on conversion.
Convic tion of a person for the offence of criminal breach of trust may not, in all cases, be founded merely on his failure to account for the property entrust ed to him, of over which he has dominion, even when a duty to account is imposed upon him, but where he is unable to account or renders an explanation for his failure to account which is untrue, an infer ence of misappropriation with dishonest intent may readily be made.
" The Courts below appear to have convicted the appellant on the basis of the decision referred to above and have held that since the explanation given by the appellant was false, an inference of misappropriation could reasonably be drawn against him.
This proposition cannot be doubted.
But the question is whether the explanation given by the appellant in this case can be said to be absolutely false ? Another question that arises is what are the standards to be em ployed in order to judge the truth or falsity of the version given by the defence ? Should the accused prove his case with the same amount of rigour and certainty, as the prose cution is required, to prove a criminal charge, or it is sufficient if the accused puts forward a probable or reason able explanation which is sufficient to throw doubt on the prosecution case ? In our opinion three cardinal prin ciples of criminal jurisprudence are well settled, namely: (1) that the onus lies affirmatively on the prosecution to prove its case beyond reasonable doubt and it cannot derive any benefit from weak ness or falsity of the defence version while prov ing its case; (1) , 324. 445 (2) that in a criminal trial the accused must be presumed to be innocent unless he is.
proved to.
be guilty; and (3) that the onus of the prosecution never shifts.
It is true that under section 105 of the Evidence Act the onus of proving exceptions mentioned in the Indian Penal Code lies on the accused, but this section does not at all indicate the nature and .standard of proof required.
The Evidence Act does not contemplate that the accused should prove his case with the same strictness and rigour as the prosecution is required to prove a criminal charge.
In fact, from the cardinal principles referred to above, it follows that, it is sufficient if the accused is able to prove his case by the standard of preponderance of probabil ities as envisaged by section 5 of the Evidence Act as a result of which he succeeds not because he proves his case to the hilt but because probability of the version given by him throws doubt on the prosecution case and, therefore, the prosecution cannot be said to have established .the charge beyond reasonable doubt.
In other words, the mode of proof, by standard of benefit of doubt, is not applicable to the accused, where he is called upon to prove his case or to prove the exceptions of the Indian Penal Code on which he seeks to rely.
It is sufficient for the defence to give a version which competes in probability with the prosecution version, for that would be sufficient to throw suspicion on the prosecution case entailing its rejection by the Court.
This aspect of the matter is no longer res integra but is concluded by several authorities of this Court.
In Harbha jan Singh vs State of Punjab (1) this Court observed as follows: "But the question which often arises and has been frequently considered by judicial decisions is whether the nature and extent of the onus of proof placed on an accused person who claims the benefit of an Exception is exactly the same as the nature and extent of the onus placed on the prosecution in a criminal case; and there is consensus of judicial opinion in favour of the view that where the burden of an issue lies upon the accused, he is not re quired to discharge that burden by leading evidence to prove his case beyond a reasonable doubt.
That, no doubt, is the test prescribed while deciding whether the prosecution has discharged its onus to prove the guilt of the accused; but that is not a test which can be applied to an accused person who seeks to prove substantially his claim that his case falls under an Exception.
Where an accused person is called upon to prove that his case fails under an Exception, law treats the onus as dis charged if the accused person succeeds "in proving a preponderance of probability.
" As soon as the preponderance of probability is proved, the burden shifts to.
the prosecution which has still to discharge its original onus.
It must be remembered that basically, the original onus (1) ; , 241 446 never shifts and the prosecution has, at all stages of the case, to prove the guilt of the accused beyond a reasonable doubt.
" The same view was taken in a later case in State of U.P. vs Ram Swarup & Anr.(1) where this Court observed as follows: "That is to say, an accused may fail to establish affirmatively the existence of circum stances which would bring the case within a general exception and yet the facts and circumstances proved by him while discharging the burden under section 105 of the Evidence Act may be enough to cast a reasonable doubt on the case of the prosecu tion, in which event he would be entitled to an acquittal.
The burden which rests on the accused to prove the exception is not of the same rigour as the burden of the prosecution to prove the charge beyond a reasonable doubt.
It is enough for the accused to show, as in a civil case, that the preponderence of probabilities is in favour of his plea." While the Courts below have enunciated the law correct ly, they seem to have applied it wrongly by overlooking the mode and nature of proof that is required of the appellant.
A perusal of the oral and documentary evidence led by the parties goes to show that the Courts not only sought the strictest possible proof from the appellant regarding the explanation given by him, but went to.
the extent of mis placing the onus on.the accused to prove even the prosecu tion case by rejecting the admissions made by the prosecu tion witnesses and by not relying on the documents which were in power and possession of the prosecution itself on the speculative assumption that they were brought into existence by the accused through the aid of the officers.
Further more, the Courts below have failed to consider that once the appellant gives a reasonable and probable explana tion, it is for the prosecution to prove affirmatively that the explanation is absolutely false.
In a criminal trial, it is not at all obligatory on the accused to produce evi dence in support of his defence and for the purpose of proving his version he can rely on the admissions made by the prosecution witnesses or on the documents field by the prosecution.
In these circumstances, the Court has to probe and consider the materials relied upon by the de fence instead of raising an adverse inference against the accused, for not producing evidence in support of his defence, because as we have already stated that the prosecu tion can not derive any strength or support from the weak ness of the defence case.
The prosecution has to stand on its own legs, and if it fails to prove its case beyond reasonable doubt, the entire edifice of the prosecution would crumble down.
Thus it would appear to us that both the Courts below have made an absolutely wrong approach in deciding the truth of the defence version and have not followed principles laid down by this Court in judging the case of the accused.
The Courts below have based the conviction of the appel lant on the sole testimony of P.W. 1 the Nazir who has categorically stated (1) [1975] 1.S.C.R. 409, 416 17. 447 in the Court that the appellant had taken a sum of Rs. 10,000/ on January 9, 1965 and thereafter he never returned this amount to the Nazir until September 30, 1965.
The Courts below have chosen to place implicit reliance on the evidence of P.W. 1 completely ignoring the important admis sions made in favour of the accused by other prosecution witnesses some of whom were declared hostile and some of whom were not.
Before analysing the evidence, it may be necessary to describe the exact allegation made by the prosecution against the accused.
The starting point of the case is a meeting which is said to have taken place in the Secretariat on September 25, 1964 in which according to the appellant he was positively directed to visit the villages and persuade the land owners to receive the compensation and this formed the occasion for the A.D.M. to have withdrawn the money to visit the spot with the money.
According to the prosecution no such decision was at all taken in the meeting and the visit to the village Balichandrapur might have been for some other purpose and the question of distri bution was only a pretext invented by the accused to shield his guilt.
We would, therefore, now take up the evidence regarding the meeting said to have taken place on September 25, 1964.
We might also mention that the learned Special Judge has believed the statement of the accused that he did attend the meeting in the Secretariat on September 25, 1964, as would appear from the finding given by him at p. 79 of the Paper Book.
What the Special Judge has not accepted is the assertion of the accused that he had been directed to visit the village personally and distribute the amounts to the villagers.
The meeting is said to have been called by the Secretary Works Department and therefore the Secretary Works Department was the best person who would have thrown light on the subject and would have clinched the issue.
The Secretary, Works Department, was a Government servant and it was not at all difficult for the prosecution to have examined him to settle the controversy on this matter.
For the reasons best known to the prosecution, the Secretary, Works Department, was not at all examined and we have to decide this question on the basis of oral and documentary evidence produced by the prosecution.
The Special Judge, instead of drawing an adverse inference against the prosecu tion, has placed the onus on the accused for not having summoned the Secretary, Works Department, as a witness in defence forgetting that it was part of the prosecution case itself that no decision to distribute the amount was taken in the meeting and therefore, the money was not taken for distribution to tenants in the village but was misappropri ated.
It was not for the defence to prove the prosecution case which formed the bulwark of the charge of misappro priation.
Further more, the Secretary, Works Department, was a high Officer of the Government and he could have thrown a flood of light on this question.
Now coming first to the oral evidence, P.W. 8 Sayad Allamuddin who was the Land Acquisition Officer Cuttack has testified to the fact that in the meeting held on September 25, 1964 the appellant had been asked to take early action for payment of compensation money by going personally to persuade the tenants.
Perhaps, it was because of this statement, that this witness was declared hostile, and the prosecution 448 sought permission to cross examine him.
The actual state ment made by him in the Court may be quoted thus: "The accused had been asked to take early action for payment of the compensation money, by going personally and by persuading the tenants.
It was the duty of the accused to see that compensa tion amounts were paid for land acquisition.
" When the witness was declared hostile, all that was elicited from him was as follows: "It is not a fact that I had not stated to Investigating Officer that the accused and the Executive Engineer persuaded the tenants to receive the compensation amount.
It is not a fact that I had stated to the Investigating Officer that while we were returning, some people wanted to take part payments for the lands already acquired, but no payment was made by the accused as we were then leaving.
" Thus the prosecution even in cross examination did not give any suggestion that the witness who was present in the meeting held on September 25, 1964 had stated on earlier occasions that no decision was taken in the meeting direct ing the accused to visit the village and persuade the ten ants to receive the compensation amounts.
He merely did not state to the police that when the accused and the Executive Engineer visited the spot they did not persuade the tenants to receive the compensation amounts.
This was a case of a mere omission of a broad detail and not a case of contra diction.
In these circumstances, therefore, the evidence of this witness on the question as to what transpired in the meeting and the nature of the directions given to the appel lant remains unchallenged, and even if he was declared to be a hostile witness, he does not cease to be a reliable witness.
if the Court chooses to accept his testimony.
Before proceeding further we might like to state the law on the subject at this stage.
Section 154 of the Evidence Act is the only provision under which a party calling its own witnesses may claim permission of the Court to cross examine them.
The section runs thus: "The Court may in its discretion permit the person who calls a witness to put any question to him which might be put in cross examination by the adverse party.
" The section confers a judicial discretion on the Court to permit crossexamination and does not contain any conditions or principles which may govern the exercise of discretion.
It is, however, well settled that the discretion must be judiciously and properly exercised in the interests of justice.
The law on the subject is well settled that a party will not normally be allowed to cross examine its own witness and declare the same hostile, unless the Court is satisfied that the statement of the witness exhibits an element of hostility or that he has 449 resiled from a material statement which he made before an earlier authority or where the Court is satisfied that the witness is not speaking the truth and it may be necessary to cross examine him to get out the truth.
One of the glaring instances in which this Court sustained the order of the Court in allowing cross examination was where the witness resiles from a very material statement regarding the manner in which the accused committed the offence.
In Dahyabhai Chaganbhai Thakker vs State of Gujarat(1) this Court made the following observations: "Section 154 does not in terms, or by neces sary implication confine the exercise of the power by the court before the examination in chief is concluded or to any particular stage of the exami nation of the witness.
It is wide in scope and the discretion is entirely left to the court to exer cise the power when the circumstances demand.
To confine this power to the stage of examination in chief is to make it ineffective in practice.
A clever witness in his examination in chief faith fully conforms to what he stated earlier to.
the police or in the committing court, but in the cross examination introduces statements.
in a subtle way contradicting in effect what he ;stated in the examination in chief.
If his design is obvious, we do not see why the court cannot, during the course of his cross examination, permit the person calling him as a witness to put ques tions to him which might be put in cross examina tion by the adverse party." "Broadly stated, the position in the present case is that the witnesses in their statements before the police attributed a clear intention to the accused to commit murder, but before the court they stated that the accused was insane and, therefore, he committed the murder.
" A perusal of the above observations will clearly indicate that the permission to cross examination was upheld by this Court because the witnesses had categorically stated before the police that the accused had committed the murder but resiled from that statement and made out a new case in evidence before the Court that the accused was insane.
Thus it is clear that before a witness can be declared hostile and the party examining the witness is allowed to cross examine him, there must be some material to show that the witness is not speaking the truth or has exhibited an ele ment of hostility to the party for whom he is deposing.
Merely because a witness in an unguarded moment speaks the truth which may not suit the prosecution or which may be favourable to the accused, the discretion allow the party concerned to cross examine its own witnesses cannot be allowed.
In other words a witness should be regarded as adverse and liable to be cross examined by the party calling him only when the Court is satisfied that the witness bears hostile animals against the party for whom he is deposing or that he does not appear (1) ; ,368, 369 70.
450 to be willing to tell the truth.
In order to ascertain the intention of the witness or his conduct, the Judge concerned may look into the statements made by the witness before the Investigating Officer or the previous authorities to find out as to whether or not there is any indication of the witness making a statement inconsistent on a most mate rial point with the one which he gave before the i previous authorities.
The Court must, however, distinguish between a statement made by the witness by way of an unfriendly act and one which lets out the truth without any hostile inten tion.
It may be rather difficult to lay down a rule of univer sal application as to when and in what circumstances the Court will be entitled to exercise its discretion under section 154 of the Evidence Act and the matter will largely depend on the facts and circumstances of such case and on the satisfaction of the Court on the basis of those circum stances.
Broadly, however, this much is clear that the contingency of cross examining the witness by the party calling him is an extra ordinary phenomenon and permission should be given only in special cases.
It seems to us that before a Court exercises discretion in declaring a witness hostile, there must be some material to show that the wit ness has gone back on his earlier statement or is not speaking the truth or has exhibited an element of hostility or has changed sides and transferred his loyalty to the adversary.
Further more, it is not merely on the basis of a small or insignificant omission that the witness may have made before the earlier authorities that the party calling the witness can ask the Court to exercise its discretion.
The Court, before permitting the party calling the witness to cross examine him, must scan and weigh the circumstances properly and should not exercise its discretion in a casual or routine manner.
It is also clearly well settled that the mere fact that a witness is declared hostile by the party calling him and allowed to be crossexamined does not make him an unreliable witness so as to exclude his evidence from consideration altogether.
In Bhagwan Singh vs State of Haryana(1), Bhag wati, J., speaking for this Court observed as follows: "The prosecution could have been avoided requesting for permission to cross examine the witness under Section 154 of the Evidence Act.
But the fact that the court gave permission to the prosecutor to cross examine his own witness, thus characterising him as, what is described as a hostile witness, does not completely efface his evidence.
The evidence remains admissible in the trial and there is no legal bar to base a convic tion upon his testimony if corroborated by other reliabIe evidence.
" Applying these principles, we would now examine the position.
So far as P.W. Sayad Allamuddin was concerned, he was the Land Acquisition Officer and merely because he happened to be working ; , 391 92. 451 under the accused, there was no reason for him to depose falsely at a time when the appellant had been suspended and was facing a trial before the Special Judge.
Further more, on the basic point that the accused had been asked in the meeting to go personally to the village and persuade the tenants to receive compensation money nothing has been elicited from him even in cross examination to show that this statement was an after thought or was in any event incorrect or false.
We shall presently show that this statement is supported by documents of an unimpeachable nature which have been produced by the prosecution itself and whose genuineness cannot be doubted.
Exhibit 2 which is a note by this witness dated January 9, 1965 long before an inquiry started against the accused contains categorically a statement which runs as follows: "In the last meeting held in the Secretariat the Secretary, Works Department suggested that the A.D.M. and the Executive Engineer (R & B) should .try to persuade the villagers and make payment of the compensation.
" This note further shows that the appellant proposed to pay a visit to the area along with the Executive Engineer and he had suggested that the A.D.M. should take an amount of Rs. 10,000/ for disbursement if the villagers agreed to receive compensation.
This document, according to P.W. 1, the Nazir, who is the star witness of the prosecution, was received by him as far back as January 9, 1965 along with Ext. 1 the order of the appellant directing the Nazir to pay him Rs. 10,000/ .
It would be impossible to suggest that as early as January 9, 1965 the witness Sayad Allamuddin Ahmed P.W. 8 was fabricating this document regarding an event which had taken three or four months ago without any rhyme or reason.
Thus Ext.
2 fully corroborates the evidence of P.W. 8 on the point as to what transpired at the meeting held in the Secretariat and demolishes the prosecution case that no instructions were given to the appellant on Septem ber 25, 1964 in the meeting for visiting the spot and per suade the tenants to accept compensation money.
In these circumstances, therefore, we feel that the Trial Court was not at all justified in declaring P.W. 8 as a hostile wit ness or in allowing the prosecution to cross examine him.
Even if he was cross examined his evidence appears to be fully acceptable and worthy of credence.
He is a person of status and responsibility and there is nothing to show why he should depose falsely merely to help the accused knowing full well that being a Government servant he might be harmed if he made a false statement in order to support the appellant.
This fact is further supported by another official docu ment which is Ext.
10, namely, the tour diary of the appel lant dated January 7, 1965 to January 31, 1965.
In this diary the appellant, as far back as January 7, 1965, made a clear mention of the facts that transpired at the meeting and stated thus: "Discussed with Revenue Secretary regarding various allegations of Kanika Tahasil pending for enquiry.
He also wanted that I should visit the spot and enquire into the matter 452 personally and also make a thorough enquiry into the various encroachments in different forest blocks of Kanika Tahasil." This statement which is made in an official document in the discharge of his duties has been made even before the money was sought to be withdrawn from the treasury and at a time when there was no dispute at all regarding the question of misappropriation.
This document also fully corroborates the evidence of P.W. 8.
Thus from the evidence of the prosecu tion itself, the fact that in the meeting held in the Secre tariat a decision was taken by Which the appellant was directed to visit the village Balichandrapur and persuade the tenants to accept the compensation has been amply proved.
The only person who could have contradicted this fact or falsified the same would have been the Secretary, Works Department, in whose presence the meeting took place whom the prosecution did not choose to examine.
On the materials produced by the prosecution itself, it is manifest that the prosecution has miserably failed to prove that the visit of the A.D.M. to the village Balichandrapur on Janu ary 9, 1965 was not in connection with the payment of com pensation to the villagers as no such decision was taken in the meeting.
The next question that arises is whether the appellant had actually taken the money for disbursement to the vil lage Balichandrapur.
On this point also oral and documen tary evidence led by the prosecution clearly proves the version given by the appellant.
To begin with, P.W. 7 who was an Executive Engineer at the relevant.
time has categor ically stated that he had accompanied the appellant to village Balichandrapur and the appellant did try to persuade the tenants to receive the compensation but they refused to accept the same.
In this connection the witness deposed as follows: "The accused thereafter enquired from the parties as to on what terms they were willing to give up possession of their lands which had already been selected for acquisition.
The parties stated that if they were paid compen sation at the rate of Rs. 200/ per gunth, they would part with their lands.
The accused stated that he did not have sanction for payment of Rs. 200/ per gunth and could not pay them off hand, but if the parties wanted payment at the rate of Rs. 150/ per gunth he was willing to pay them cash at the spot.
The parties did not agree.
The accused said that they would be paid Rs. 200/ .
when that rate would be sanctioned and he was going to write about it.
" This witness was also declared hostile and that too not because he had not made the statement referred to above before the police, but because of certain minor omissions in his statement before the police.
These omissions consisted of the facts that there is no mention about the previous visit to Balichandrapur or that he had stated that while he was returning to Cuttuck he remained sitting in the car and the accused asked P.W. 3 to follow him with the bag 453 and things like that.
It has, however, not been elicited from him in cross examination nor has it been argued that the witness had told the Investigating Officer that the accused had not met or had not talked at all with the ten ants in his presence in order to persuade them to accept the compensation.
P.W. 6 Udaynath Parida who is a villager of Balichandra pur has categorically supported the statement of P.W. 7 that the accused had agreed to pay compensation at the rate of Rs. 200/ per gunth and persuaded them to give up possession but the villagers refused.
In this connection, the witness stated thus: "On hearing of the arrival of the accused we met him in Balichandrapur near the market place.
We demanded payment of compensation money at a rate higher than what was proposed by Government.
The accused and his party agreed to pay us compensation at the rate of RS.
200/per gunth and persuaded us to give up possession so that Government may not be forced to take possession forcibly with the help of police.
" "The accused had informed the villagers in cluding me that if we would be willing to accept the rate already fixed by Government, at Rs. 150/ per gunth, he would pay us at the spot;" This witness was also declared hostile, merely because of certain facts which he had omitted to state before the police.
Thus it would appear that all the prosecution witnesses P.Ws. 6, 7 and 8 had been allowed to be declared hostile without any justification and the Trial Court appear to have exercised its discretion mechanically in readily accepting the prayer of the prosecution without making any probe into the reasons for allowing the cross examination.
Indeed if suck a discretion is freely exercised, then the accused will suffer serious prejudice and will be deprived of taking advantage of any damaging admission made by the prosecution witnesses, merely because the prosecution is allowed to cross examine them by declaring them hostile.
Such a course of action would have serious repercussion on the fairness of the trial.
After going through the evidence of P.Ws. 6 and 7 we see absolutely no reason to distrust their evidence.
So far as P.W. 7 is concerned he is a very high officer being an Executive Engineer at the relevant time and in no way subor dinate to the appellant.
He has admitted in his cross examination by the prosecution that even his confidential reports are not written by the accused.
There is also nothing to show that he was in any way interested in the accused or was his great friend and supporter.
In these circumstances, he had no reason to make a false statement that the accused had visited the village and persuaded the tenants to accept the compensation.
The evidence of the villager P.W. 6 Udayanath Parida who is an independent wit ness also proves that the accused had taken the money to the village and made efforts to persuade the tenants to accept the money.
In fact the evidence of these two witnesses on this point follows as a logical corollary from the decision taken at the meeting held by the Secretary, Works Depart ment, where the appellant was 454 directed to visit the spot and persuade the tenants to accept compensation.
The evidence of P.W. 7 is fully cor roborated by Ext.
B a letter written by P.W. 7 Executive Engineer dated July 6, 1966, a copy of which was sent to the appellant and other officers.
In this letter which is addressed to the Assistant Engineer, Road, Office of the Chief Engineer, Bhubaneswar, P.W. 7 as Executive Engineer had clearly mentioned that he along with the appellant had visited the site at Balichandrapur and persuaded the tenants to accept the money by enhancing the amount to Rs. 200/ per gunth to which the tenants.
agreed but for this the sanction had to be taken.
It was, however, submitted by counsel for the State that this letter appears to have been brought into existence after the inquiry against the accused was launched in order to help him.
This was an official letter and we do not see any reason why such a high officer as the Executive Engineer should have gone to the extent of fabricating an unnecessary letter to help the appellant against whom an inquiry had been ordered.
Even if this letter be excluded from consideration, the other evidence both oral and docu mentary clearly show that the appellant had visited the spot in village Balichandrapur on January 20, 1965 with a view to distribute the compensation money and did make an attempt to persuade the tenants to accept the compensation but they refused to accept the same unless the compensation was raised to Rs. 200/ per gunth.
As against this the prosecution relied merely on the fact that in the tour diary of the accused Ext.
8 of the even date, viz. January 20, 1965, as also in the office report there is no clear mention that the appellant tried to persuade the tenants to accept the money or that he had taken the money with him to the spot.
These documents undoubtedly contain the statement regarding the visit of the appellant to the spot and some other matters.
The question of actual distribution or persuasion of the tenants being a matter of detail does not appear to have been mentioned in those documents.
It would have been necessary to be men tioned in the documents, if the tenants had agreed to accept the money and if the money was actually disbursed to them.
As the proposal suggested by the appellant did not materia lise, there was no occasion for mentioning these facts in those documents.
As we have already indicated, it was not for the accused but for the prosecution to prove, before raising an adverse inference against the accused, that the visit of the appel lant to Balichandrapur was merely a hoax.
On the materials placed before us, not only the prosecution has miserably failed to prove this fact, but the explanation given by the accused appears to be not only probable but proved by the accused, even applying the standard of benefit of doubt.
For these reasons, therefore, we do not agree with the finding of the Courts below that the accused did not take the money with him to Balichandrapur or made any attempt to distribute it to the tenants but has misappropriated and retained it dishonestly.
We might mention here that P.W. 3 Bhakta Charan Mohanti is another Witness who has supported the case of the ac cused.
But as 455 the witness has made inconsistent statements which sometimes go to support the prosecution and sometimes the accused and is further, contradicted by his own tour diary and T.A. Bills, we do not choose any reliance on the evidence of this witness.
The next and the last question that falls for determina tion is as to whether or not the accused after returning from Balichandrapur handed over the money to the Nazir.
It may be mentioned that the appellant had made no secret of the fact that after returning the money to the Nazir he had instructed him not to deposit the same in the treasury but to keep it out of cash for the reason which we have already indicated.
In this connection we have only the word of P.W. 1 the Nazir as against the word of the appellant.
The Nazir also does not appear to be a witness who is completely above suspicion.
Crossexamination of this witness clearly re vealed that the manner in which he had kept the accounts was not at all satisfactory and he was in the habit of allowing huge amounts to remain with him without depositing them in the treasury and that he was also building a house for which he had taken some loans.
Instead of applying a very strict standard to test the testimony of such a witness, the High Court seems to have explained the irregularities committed by the Nazir P.W. 1 thus: "Heavy cash remaining with the Nazir that Ext.
D discloses and the facts of the Nazir having secured housebuilding advance during September 1965 may raise speculations and surmises against the Nazir.
" There are, however, important circumstances to indicate that the explanation given by the appellant is both probable and reasonable.
P.W. 9 who was the Nizarat Officer and who had not been declared hostile (emphasis ours) has clearly stated that the amount was taken by the appellant for dis bursement.
The witness further deposes that in March 1965 he had a discussion with the appellant regarding the amount of Rs. 10,000/ taken by him and the appellant had then told him that the amount could not be disbursed as the tenants did not agree to take the amounts and that he had kept the amount with the Nazir.
In this connection his statement is as follows: "In March, 1965, I had a discussion with the accused regarding the amount of Rs. 10,000/ taken by him and the accused then told me that the amount could not be disbursed as the tenants did not agree to take the amounts and that he had kept the amount with the Nazir.
I did not make any enquiry from the Nazir regarding this as the balance amount as shown in the cash Book was the same in the cash sheet.
The accused had told me that the Nazir had kept the amount of Rs. 10,000/ outside the cash as per his instructions.
" It is, therefore, clear from the admission made by this witness that the case of the accused t,hat he had given money to the Nazir is fully supported by him because he has referred to the statement made to him by the appellant as far back as March 1965 when there was absolutely no dispute, no inquiry and no allegation of misappropriation against the appellant.
Much was made by the learned counsel for the 13 1104SCI/76 456 State out of the fact that the accused had directed the Nazir to keep the amount outside the cash which betrayed the falsity of his explanation.
A careful study of the circum stances in which the accused was placed would show that the accused was very much anxious to disburse the payments to the villagers, he had tried to persuade them to accept the money, but the villagers wanted more compensation and he had already taken steps to move the Government for increasing the amount of compensation to Rs. 200/ per gunth.
In these circumstances, therefore, there may be some justification in his thinking that the money should be readily available to be paid as soon as the villagers decided to accept the same.
It is possible that he may have made an error of judgment or calculation or he was rather too optimistic but this conduct by itself does not lead to the inference of dishonest inten tion to misappropriate the money.
At any rate, in view of the evidence of P.W. 9 the Nizarat Officer that the amount was given to the Nazir by the appellant which fact was disclosed to him as far back as March 1965, it will be difficult to accept the uncorroborated evidence and testimo ny of P.W. 1 the Nazir, that he did not receive the money from the appellant after January 9, 1965.
Further more there were other important circumstances why no reliance should be placed on the evidence of the Nazir P.W. 1.
It would appear from the evidence of the Nazir himself that on September 15, 1965 the cash in the hands of the Nazir was Rs. 11,16,066.57 out of which Rs. 7,36,810.86 were for land acquisition proceedings.
Admit tedly he did not deposit this amount until October 20, 1965.
He has given no explanation as to why he had kept such a huge amount with him without depositing the same in the Treasury.
This was undoubtedly a grave lapse on the part of the Nazir and should have been taken notice by the Courts below.
Exhibit D is the order of the appellant dated Septem ber 27, 1965 by which the Nazir was directed to deposit the amount in the treasury and it was only on October 20, 1965 as would appear from Ext.
D/4 that the Nazir deposited this amount in the treasury.
The Nazir has given no explanation for this delay.
Again it appears that the Nazir was also building a house and he had received advances from the Government which he had not repaid and the possibility that he might have himself misappropriated the money handed over to him by the appellant for the purpose of returning the advances cannot safely be excluded.
It would appear that the Nazir had taken a loan of Rs. 4,500/ on September 8, 1965 and another loan of Rs. 4,500/ was taken by him on Septem ber 27, 1965, total being Rs. 9,000/ , and it is quite possible that the Nazir may have paid these amounts of the loans from out of the money given to him by the appellant.
Finally even if the accused had not given any money to the Nazir P.W. 1 right from January 9, 1965 he should have at least approached him and should have drawn the attention of the appellant to the fact that the money paid to him for the purpose of disbursement had not so far been deposited with him.
No such thing was done by the Nazir.
It was suggested by the prosecution that as the appellant was in charge of the Treasury, the Nazir did not think it proper to interrogate him.
It was, however, not a question of inter rogation.
It was 457 only a question of a subordinate officer pointing out some thing of very great importance to a superior officer which a superior officer would never misunderstand.
In view of these circumstances, therefore, we are not in a position to place implicit reliance on P.W. 1.
There is yet another very important document which has been brought on record by the appellant which is Ext.
A dated December 8, 1965.
This is a statement by P.W. 3 which to a very great extent supports the case of the accused, but as we do not propose to rely on the evidence of P.W. 3, we would exclude this document from consideration.
Another document Ext.
H is a statement of the Accountant Ghansham Das which appears at p. 215 of the Paper Book wherein Mr. Ghansham Das clearly mentions that when he found that Rs. 10,000/ were not traceable, be brought the matter to the notice of the officer in charge and he was told by the Nazir that the amount of Rs. 10,000/ had been left with him by the appellant with instructions not to refund in the treas ury.
TIffs statement clinches the issue so far as the defence case is concerned and fully proves that the explana tion given by the appellant was correct.
This document would also have falsified the evidence of P.W. 1 who has tried to put the entire blame on the shoulders of the appel lant.
Unfortunately, however, the prosecution did not choose to examine Ghansham Das the Accountant who was a very material witness in order to unfold the prosecution narra tive itself, because once a reasonable explanation is given by the appellant that he had entrusted the money to the Nazir on his return from Balichandrapur on January 20, 1965 which is supported by one of the prosecution witnesses, P.W. 9, as referred to above, then it was for the prosecution to have affirmatively disproved the truth of that explanation.
If Ghansham Das would have been examined as a witness for the prosecution, he might have thrown a flood of light on the question.
In his absence, however, Ext.
H cannot be relied upon, because the document is inadmissible.
At any rate, the Court is entitled to draw an inference adverse to the prosecution for not examining Ghansham Das Accountant as a result of which the explanation given by the appellant is not only reasonable but stands unrebutted by the prosecution evidence produced before the Trial Court.
Having regard to these circumstances.
it is not neces sary for us to consider the other documents, like Exts.
F, G and E produced by the appellant because they do not throw much light on the question and the facts contained therein have been seriously disputed by the prosecution.
Similarly we have not referred to the other documents produced by the prosecution which show the entry of the money received by the appellant and 50 on because these facts are not disputed by the appellant at all.
On a consideration of the evidence and the circumstances we are satisfied that the appellant has been able to prove that the explanation given by him was both probable.and reason.able judged by the standard of the preponderance of probabilities This being the position, it was for the prosecution to prove affirmatively m what manner the amount was misappropriated after it had been transferred from the custody of 458 the appellant to the custody of the Nazir.
Such proof is wholly lacking in this case.
As the accused has given a reasonable explanation, the High Court was in error in drawing an adverse inference against him to the effect that he had misappropriated the money.
For these reasons, the appeal is allowed, the judgments of the Courts below are set aside, the convictions and sentences imposed on the appellant are quashed and he is acquitted of the charges framed against him.
P.H.P. Appeal allowed.
| Under section 32 of the Bombay Tenancy and Agricultural Lands Act 1948, the.
tiller of the land had the right to purchase the land tenanted to him.
Where the landlord is a minor or a widow or a person subject to any mental or physical disa bility, the right to purchase such land is postponed till their disability disappears and one year lapses thereafter.
But this embargo on the exercise ' of the right of purchase by the tenant does not operate as per proviso to section 32F(1)(a), if the property belongs to a joint family and there is a partition therein and the land is allotted to the person under disability.
In both the appeals, the family owned lands and other assets and there was a partition confined to agricultural land only.
In one case the share fell to a widow while in the other it fell to a minor, admittedly a disabled ' person within ' the meaning of s 32F(1).
Before the TribUnal and the High Court, the landlord claimed, therefore, protection under the proviso to clause (a) of section 32F(1) of the Act while the respondent contended that even if the agricultural land had been divided and other assets admittedly remained joint, the appellant was ineligible to claim the benefit of the proviso.
The High Court decided against the landlord and held: "The proviso is not satisfied unless the share of a disabled person is separated by metes and bounds in all the joint family property and unless the agricultural land allotted to him corresponds to his share in the entire property and is not in excess thereof '.
Dismissing the appeal to this Court, HELD: (1) The broad idea is to vest full ownership in the tenantry.
A compassionate exception is made in favour of a handicapped landlords who ' cannot prove their need to recover their land on approved grounds.
The Legislature conditioned the proviso by insisting that the separation should be from the whole joint family assets and not a tell tale transaction where agricultural lands alone are divided and secondly even where there iS a total partition only a fair proportion of the lands is allotted to the disabled person.
[682 C D F] What section 32F(1) insists upon is that (a) share of such person in the joint family has been separated by metes and bounds; (b).
the Mamlatdar is satisfied that the share of the disabled person in the land is separated in the same proportion as the share of that person in the entire joint family property and not in a larger proportion.
[681 G] (3) The imperative condition for the operation of the proviso is that there should be a total separation and so far as a disabled member is concerned, it must cover all the joint family properties.
The usage of the expressions "the share of such person in the joint .family", "the share of.
such person,, in the land", "the share of that person in the, entire joint family property in the section the clear statement in the proviso that the disabled person s share in the joint family must have been separated by metes and bounds and the statutory exercise expected of the Mam latdar by the proviso involving an enquiry into the share of the disabled person in the land and its value, the share of that person in the entire joint family properties, the proportion that the allot 679 ment of the land bears to his share in the entire joint family property with a view to see that there is no unfair manouvre to defeat the scheme of the Act lead to the neces sary postulate that it is not confined to the share of the land only but really means his share in the entire joint family property.
[683 E H, 684 A] (4) In the instant case there is no division of all the joint family property.
Only the landed properties have been separated.
[684 B] Observation: The reform of the inherited law making methodology may save court time and reduce litigation.
Our legislative process, not an unmixed blessing, works under such instant stress and ad hoc hephazardness that the whole piece of legislation when produced makes experienced draftsmen blush, as in the instant case, the involved drafting of section 32F has had its share in the marginal obscurity of meaning.
[682 B C]
|
iminal Appeals No,%.
79 and 89 of 1959.
Appeals by special leave from the judgment and order dated May 6,1959, of the Allhabad High Court in Criminal Appeal No. 1224 of 1957.
A. section R. Chari, B. K. Gary, D.P. Singh, section C. Agarvial and M. K. Ramamurthi, for the appellants.
G. C. Mathur and C. P. Lal for the respondent.
77 1961.
February 15.
The judgment of the Court was delivered by SUBBA RAO, J.
These two appeals are directed against the judgment of the High Court of Judicature at Allahabad dismissing the appeal preferred by the appellants and maintaining the convictions and sentences imposed on them by the learned Sessions Judge Meerut, under a. 147, section 424, section 452, section 325, read with section 149, and is.
323, read with section 149, of the Indian Penal Code.
Briefly stated the case of the prosecution is as follows: One Har Narain had obtained a decree from the court of the Additional Munsif, Ghaziabad, against one Sunehri Jogi for a sum of money.
In execution of that decree the Munsif issued a warrant for the attachment of the judgment debtor 's property.
The amin to whom the said warrant was entrusted attached, inter alia, three buffaloes and two cows, which were in the house of the judgment debtor, as his property.
The amin kept the cattle in the custody of one Chhajju, the sapurdar.
As the said sapurdar had no accommodation in his house for keeping the animals, he kept them for the night in the enclosure of the decree holder with his permission.
The next day at about 7 a. m., the nine appellants, armed with lathies, went to the enclosure of the decree bolder and began to untie two of the attached buffaloes.
The decree holder, his son and his nephew protested against the acts of the appellants whereupon the appellants struck the three inmates of the house with lathies, and when P.W. 4 intervened, they struck him also with lathies.
Thereafter, appellants 1. 2 and 3 took away the two buffaloes followed by the other appellants.
The defence version is that on June 1, 1955, at about 7 a. m. the first appellant, Tika, was taking his two buffaloes for grazing when Har Narain and 1 1 others came with the amin and forcibly snatched the said buffaloes, that when Tika objected to it, those 12 persons assaulted him with lathies, that when appellant 2, Raja Ram, came there, he was also assaulted, and that Tika and Raja Ram used their lathies in self defence.
78 The learned Sessions Judge, on a consideration of the evidence, held that the cattle were attached on the evening of May 31, 1955, and that, after their seizure, they were kept in the house of Har Narain.
The Sessions Judge disbelieved the defence version that the accused gave the beating to Har Narain and others at 11 a. m. on June 1, 1955 in self defence.
On that finding, he convicted the accused as aforesaid.
On appeal, the learned Judges of the High Court accepted the finding arrived at by the learned Sessions Judge and confirmed the convictions and the sentences passed by him on the accused, but directed the various sentences to run concurrently.
Hence the appellants have preferred these two appeals against the Judgment of the High Court.
Learned counsel for the appellants raised before us the following contentions: (1) The attachment of the buffaloes was illegal and, therefore, the appellants in taking away their own buffaloes from the possession of the decree holder did not commit any offence under section 424 of the Indian Penal Code.
(2) Even if the attachment was valid, neither the amin had any authority to keep the attached buffaloes in the custody of the sapurdar, nor the sapurdar had any power to keep them in the custody of the decree holder, and therefore the decree holder 's possession was illegal and the appellants in taking away the buffaloes did not commit any offence within the meaning of section 424 of the Indian Penal Code.
(3) The appellants also did not commit any offence under section 441 of the Indian Penal Code, as they had no intention to commit an offence or cause annoyance to the decree holder, but they entered the house of the decree holder only to recover their buffaloes from illegal custody.
(4) The appellants did not commit an offence under section 325, read with as. 147 and 149, of the Indian Penal Code, as their common object was not to cause grievous hurt to the decree holder and others, but was only to recover their buffaloes illegally detained by the decree holder.
The first two contentions may be considered together.
The material facts relevant to the said contentions may be stated.
Har Narain in execution of his 79 decree against Sunehri Jogi attached the buffaloes that were in the house of the judgment debtor.
Tika, appellant 1, filed a claim petition it is common case that subsequent to the incident his claim petition was allowed.
in the claim petition, the High Court pointed out that Tika did not question the validity of the attachment but only set up his title to the buffaloes.
Indeed, his defence in the criminal case also was not that the incident happened when the attached buffaloes were in the house of the decree holder but that the incident took place before the attachment was effected.
Before the Sessions Judge no point was taken on the basis of the illegality of the attachment.
For the first time in the High Court a point was sought to be made on the ground of the illegality of the attachment, but the learned Judges rejected the contention not only on the ground that official acts could be presumed to have been done correctly but also for the reason that the appellants did not question the legality of the attachment in the claim petition.
That apart, P.W. 1, the amin, was examined before the Sessions Judge.
He deposed that he had attached the heads of cattle from the house of the judgment debtor, Sunehri Jogi, and that he had prepared the attachment list.
He further deposed that the warrant of attachment received by him was with him.
A perusal of the cross examination of this witness discloses that no question was put to him in regard to any defects either in the warrant of attachment or in the manner of effecting the attachment.
In these circumstances, we must proceed on the assumption that the attachment had been validly made in strict compliance with all the requirements of law.
If so, the next question is, what is the effect of a valid attachment of moveables? Order XXI, rule 43, of the Code of Civil Procedure describes the mode of attachment of movable properties other than agricultural produce in the possession of the judgment debtor.
It says that the attachment of such properties shall be made by the actual seizure, and the attaching officer shall keep the attached property in his own custody or in the custody of one of his subordinates 80 and shall be responsible for the due custody thereof The relevant rule framed by the Allahabad High Court is r. 116, which reads, "Live stock which has been attached in execution of a decree shall ordinarily be left at the place where the attachment is made either in custody of the judgment debtor on his furnishing security, or in that Of some land holder or other respectable person willing to undertake the responsibility of its custody and to produce it when required by the court.
" The aforesaid rule also empowers the attaching officer to keep the animals attached in the custody of a sapurdar or any other respectable person.
Attachment by actual seizure involves a change of possession from the judgment debtor to the court; and the rule deals only with the liability of the attaching officer to the court.
Whether the amin keeps the buffaloes in his custody or entrusts them to a sapurdar, the possession of the amin or the sapurdar is in law the possession of the court and, so long as the attachment is not raised, the possession of the court continues to subsist.
Would it make any difference in the legal position if the sapurdar, for convenience or out of necessity, keeps the said animals with a responsible third party? In law the said third party would be a bailee of the sapurdar.
Would it make any difference in law when the bailee happens to be the decree holder? Obviously it cannot, for the decree holder 's custody is not in his capacity as decree holder but only as the bailee of the sapurdar.
We, therefore, hold that the decree holder 's possession of the buffaloes; in the present case was only as a bailee of the sapurdar.
But it is said that even on that assumption, appellant 1, being the owner of the buffaloes, was not guilty of an offence under section 424 of the Indian Penal Code, as he could not have acted dishonestly in trying to retrieve his buffaloes as their owner from the custody, of the court 's officer or his bailee.
This argument turns upon the provisions of section 424 of the Indian Penal Code.
The material part of a. 424 of the said Code reads: 81 "Whoever dishonestly or fraudulently removes any property of himself or any other person, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both".
The necessary condition for the application of this section is that the removal should have been made dishonestly or fraudulently.
Under section 24 of the Indian Penal Code, "Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person is said to do that thing ,dishonestly '.
" Section 23 defines "wrongful gain" and "wrongful loss". "Wrongful gain" is defined as gain by unlawful means of property to which the person gaining is not legally entitled; and "wrongful loss" is the loss by unlawful means of property to which the person losing is legally entitled.
Would the owner of a thing in court 's custody have the intention of causing wrongful gain or wrongful loss within the meaning of a. 23 of the Indian Penal Code? When an attachment is made, the legal possession of a thing attached vests in the court.
So long as the attachment lasts or the claim of a person for the thing attached is not allowed, that person is not legally entitled to get possession of the thing attached.
If he unlawfully takes possession of that property to which he is not entitled he would be making a wrongful gain within the meaning of that section.
So too, till the attachment lasts the court or it officers are legally entitled to be in possession of the thing attached.
If the owner removes it by unlawful means, he is certainly causing wrongful loss to the court or its officers, as the case may be, within the meaning of the words "wrongful loss", In the present case when the owner of the buffaloes removed them unlawfully from the possession of the decree holder, the bailee of the sapurdar, he definitely caused wrongful gain to him.
self and wrongful loss to the court.
In this view, we must hold that appellant 1 dishonestly removed the buffaloes within the meaning of section 424 of the Indian Penal Code and, therefore, he was guilty under that ,section.
82 Now we shall proceed to consider some of the decisions cited at the Bar in support of the contention that under no circumstances the owner of a thing would be guilty of an offence under section 424 of the Indian Penal Code, if he removed it from an officer of a court, even if he was in possession of it under a legal attachment.
Reliance is placed upon the decision of the Court of Criminal Appeal in Rex.
vs Thomas Knight (1) where a prisoner, the owner of the fowls, ' took them away from the possession of the Sheriff 's officer, the court held that the prisoner was not guilty of larceny.
"Larceny if; the willful and wrongful taking away of the goods of another against his consent and with intent to deprive him permanently of his property".
There are essential differences between the concept of larceny and that of theft; one of them being that under larceny the stolen property must be the property of someone whereas under theft it must be in the possession of someone.
It would be inappropriate to apply the decision relating to larceny to an offence constituting theft or dishonest or fraudulent removal of property under the Indian Penal Code, for the ingredients of the offenses are different.
In Sarsar Singh vs Emperor (2), Bajpai, J., held that "the mere fact that the judgment debtor, who is entitled to remove his crops which are not validly attached, has removed them does not prove that he has done so dishonestly".
There the attachment was made in derogation of the provisions of Order XXI, rule 44, Civil Procedure Code; and the Court held that the attachment was illegal and, therefore, the property would not pass from the judgment debtor to the court.
It further held that under such circumstances the court could not presume that the act of removal was done dishonestly within the meaning of section 24, I.P.C. This decision does not help the appellants, as in the present case the attachment was legal.
Sen, J., in Emperor vs Ghasi (3) went to the extent of holding that the owner cutting and removing a portion of the (1) (2) (3) All 214.
83 crops under attachment in execution of a decree and in the custody of a shehna did not constitute an offence under section 424, I.P.C. The learned Judge observed at p. 216, "If they were the owners of the crop and removed the same, their conduct was neither dishonest nor fraudulent".
The learned Judge ignored the circumstance that the attachment of the crops had the legal effect of putting them in the possession of the court.
For the reason given by us earlier, we must hold that the case was wrongly decided.
In Emperor vs Gurdial (1) Pullan, J., held that the owner by removing the attached property from the possession of the custodian and taking it into his own use, did not commit an offence under section 424, I.P.C. But in that case also the attachment was illegal.
But there is a current of judicial opinion holding that where there was a legal attachment, a third party claiming to be the owner of the moveables attached would be guilty of an offence under section 424 or section 379, I.P.C., as the case may be, if lie removed them from the possession of the court or its agent.
Where a revenue court had attached certain plots and certain persons were appointed as custodians of the crop standing on the plots and accused out and removed the crop in spite of knowledge of the promulgation of the order of attachment, the Allahabad High Court held in Dalganjan vs State (2) that the removal of the crop by the accused was dishonest and that the conviction of the accused under section 379, I.P.C. was proper.
The learned Judges said, "Since the possession passed from the accused to the custodians, the cutting of the crop by the accused in March 1951 was dishonest." In State vs Rama (3) the Rajasthan High Court held that where a person takes away the attached property from the possession of the sapurdar, to whom it is entrusted, without his consent, and with the knowledge that the property has been attached by the order of a court, he will be guilty of (1) All.
119., (2) A.I.R. 1956 All.
(3) Raj.
84 committing theft, even though he happens to be the owner of the property.
Though this was a case under s.379, I.P.C., the learned Judges considered the scope of the word "dishonestly" in section 378, which is also one of the ingredients of the offence under section 424, I.P.C. Wanchoo, C. J. observed at p. 775 thus: "There is no doubt that loss of property was caused to Daulatram inasmuch as he was made to lose the animals.
There is also no doubt that Daulatram was legally entitled to keep the animals in his possession as they were entrusted to him.
The only question is whether this loss was caused to Daulatram by unlawful means.
It is to our mind obvious that the loss in this case was caused by un lawful means because it can never be lawful for a person, even if he is the owner of an animal, to take it away after attachment from the person to whom it is entrusted without recourse to the court under whose order the attachment has been made." These observations apply with equal force to the present case.
A division bench of the Allahabad High Court in Emperor vs Kamla Pat (1) considered the meaning of the word "dishonestly" in the context of a theft of property from the possession of a receiver.
Sulaiman, J., observed at p. 372 thus: "Therefore when a property has been attached under an order of a civil court in execution of a decree, possession has legally passed to the court.
Any person who takes possession o f that property subsequent to that attachment would obviously be guilty tinder section 379 of the Indian Penal Code, if he knew that the property had been attached and was therefore necessarily acting dishonestly.
" We need not multiply decisions, as the legal position is clear, and it may be stated as follows: Where a property has been legally attached by a court, the possession of the same passes from the owner to the court or its agent.
In that situation, the owner of the said property cannot take the law into his own hands, but can file a claim petition to enforce his right.
If he resorts to force to get back his property, (1) All. 368. 85 he acts unlawfully and by taking the property from the legal possession of the court or its agent, he is causing wrongful loss to the court.
As long as the attachment is subsisting, he is not entitled to the possession of the property, and by taking that property by unlawful means he is causing wrongful gain to himself.
We are, therefore, of the view that the appellants in unlawfully taking away the cattle from the possession of the decree holder, who is only a bailee of the sapurdar, have caused wrongful loss to him and therefore they are guilty of an offence under section 424,I.P.C.
The next contention turns upon the provisions of section 441 of the Indian Penal Code.
The argument is that the appellants did not commit trespass with intention to commit an offence or intimidate, insult or annoy any person in possession of such property.
A distinction is made between intention and knowledge.
It is said that the appellants did not trespass into the house of the decree holder with any such intention as mentioned in that section.
But in this case we have no doubt, on the evidence, that the appellants entered the house of the decree holder with intent to remove the attached cattle constituting an offence under section 424 of the Indian Penal Code.
The appellants are, therefore, guilty of the offence and have been rightly convicted under section 441 of the Indian Penal Code.
The last contention is that the principal object of the accused was to get back their cattle which had been illegally attached and that their subsidiary object was to use force, if obstructed, and that in the absence of a specific charge in respect of the use of force the accused should not have been convicted of what took place in furtherance of the subsidiary object.
The relevant charge reads thus: "That you, on or about the same day at about the same time and place voluntarily caused such injuries on the persons of Om Prskash, Har Narain, Jhandu and Qabul, that if the injuries would have caused the death of Har Narain, you would have been guilty of murder and thereby committed an offence under section 307 read with section 149 86 I.P.C. and within the cognizance of the court of Sessions.
" Though section 149 of the Indian Penal Code is mentioned in the charge, it is not expressly stated therein that.
the members of the assembly know that an offence under section 325 of the Indian Penal Code was likely to be committed in prosecution of the common object of that assembly.
Under section 537 of the Code of Criminal Procedure, no sentence passed by a court of competent jurisdiction shall be reversed or altered on appeal or revision on account of any error, omission or irregularity in the charge, unless such error, omission or irregularity has in fact occasioned a failure of justice.
The question, therefore, is whether the aforesaid defect 'in the charge has in fact occasioned a failure of justice.
The accused knew from the beginning the case they had to meet.
The prosecution adduced evidence to prove that the accused armed themselves with lathies and entered the premises of the decree holder to recover their cattle and gave lathi blows to the inmates of the house causing thereby serious injuries to them.
Accused had ample opportunity to meet that case.
Both the courts below accepted the evidence and convicted the accused under section 325, read with section 149, I.P.C. The evidence leaves no room to doubt that the accused had knowledge that grievous hurt was likely to be caused to the inmates of the decree holder 's house in prosecution of their common object, namely, to recover their cattle.
We are of the opinion that there is no failure of justice in this case and that no case has been made out for interference.
No other point was raised before us.
In the result, the appeals fail and are dismissed.
Appeals dismissed.
| The appellant Devasthanam had certain properties, granted to it in inam by the Rajas of Tanjore centuries ago, which com prised salt pans.
After the passing of Regulation 1 of 1805 which prohibited manufacture of salt except on account of the Government or with their express sanction, the East India Company in 1806 took over possession of those properties and the agreement between the parties as recorded in the order passed on behalf of the Board of Revenue, was as follows, "As the Government have taken charge of the pagoda salt pans and Sea Customs of Thopputhurai, belonging to the above temple, the sum of 1848 Pagodas shall be given to the temple annually in cash from the treasury being calculated on the average amount of 10 years ' revenue besides which every possible assistance will be given to the temple." The previous correspondence between the Collector and the Board of Revenue showed that the properties were intended to be acquired permanently for the purpose of manufacturing salt and compensation was determined on that basis.
From 1886 till 1941 the appellant allowed the company and its successors, the respondents 1 and 2, to be in quiet possession of the properties in dispute on receipt of the said annual compensation.
Its case, negatived both by the trial Court as well as the High Court in appeal, was that the agreement represented a lease from year to year and it was contended on its behalf in this Court that in construing the document regard must be had to the limited powers of a manager of a Hindu Temple to alienate trust property and he must be held to have intended to act within his powers and not beyond them.
Held, that the transaction in question was a permanent lease and the appeal must fail.
Although it is indisputable that in construing a document executed by the manager of a Hindu temple the fair and reasonable rule would be to treat it as executed in pursuance of his legitimate authority and not in breach of it, that rule could have no application in the instant case, for the facts that more than a century had admittedly elapsed since the document in question had been executed and, further, that the then manager, 88 faced by the prohibition of the manufacture of salt by Regulation 1 of 1805, had no option, in the interest of the Devasthanam itself, but to enter into the agreement in order that he could provide for a recurring income to the temple, could not be ignored.
Bawa Magniram Sitaram vs Kasturbai Manibhai, (1921) L.R.49 I.A. 54, applied.
Maharanee Shibessouree Debta vs Mothoranath Acharjo, (1809) L.R. 13 Moo.
I.A. 270, Nainapillai Marakayar vs Ramanathan Chettiar, (1923) L.R. 51.
I.A. 83 and Palaniappa Chetty vs Deivasikamony Pandara, (1917) L.R. 44 I.A. 147, referred to.
|
(Crl.) No. 15 of 1989.
(Under Article 32 of the Constitution of India).
T.U. Mehta and S.C. Patel for the Petitioner.
G.A. Shah, M.N. Shroff and K.M.M. Khan for the Respond ents.
The Judgment of the Court was delivered by B.C. RAY, J.
We have already pronounced in Court on May 5, 1986 the order allowing the writ petition and stating there in that the written judgment will follow later on.
Pursuant to this, are passing the judgment embodying reasons.
This writ petition is directed against the order of detention made under section 3(1) of Gujarat Prevention of Anti Social Activities Act, 1985, mainly on the grounds that the grounds are not germane and relevant and there has been non application of mind by the detaining authority in making the said order.
The detenu was arrested and kept in Sabarmati Central Jail on 572 October 5,: 1988 under the impugned detention order made on October 5, 1988 by the respondent No. 1, Shri S.N. Sinha, Police Commissioner, Ahmedabad City and the grounds had been served on him.
The detenu immediately thereafter made representations to the detaining authority as well as to the State Govern ment and also to the Advisory Board against the impugned order of detention questioning the legality and validity of the detention order.
But uptil now he has not received any intimation in respect of his aforesaid representation.
The detenu thereafter challenged the impugned order of detention before this Court by the instant Writ Petition No. 15 of 1989for quashing the same.
Before proceeding to consider on merit it is necessary to quote excerpts of the grounds of detention.
"That in the Shahalam Chandola Tank area you, with the help of your companions, are committing acts affecting human body as shown in Chapter XVI of the Indian Penal Code with the help of Rampuri knife, Razor etc.
You are creating atmosphere of terror and danger by causing injuries and by showing lethal weapons to innocent citizens.
You are known as dangerous and terrible person in the said area.
Therefore you are a 'dangerous person ' as defined under section 2(c) of the said Act and you are, by creating atmosphere of danger and terror, becoming hurdle in the way of maintenance of law and order in the said area.
For such acts of yours the following criminal offences under the Indian Penal Code have been registered in the police record against you.
The details thereof are as under: section No. Police Stn.
Crime R. No. Section Result 1.
Kagdapith 96/85 324,504, 114 Compounded IPC, 135(1) B.P. 2.
Maninagar 120/86 Secs.
336,337, Compounded 427, 114 IPC 3.
Kagdapith 225/87 Sec.
135(1) B .P.
Conviction 4.
Maninagar 122/86 Secs.
307/451, 147, 148, 149,436, 440, 1208 IPC, 25C Arms Act, 3, 4, Explosive.
Not proved.
573 5.
Maninagar 33/88 Sec.
324, 504, Under in 114 IPC, 135(1) vestigation.
B.P. Act.
Kagdapith 51/88 307,232, 114 IPC Under in 135(1) B.P. Act.
vestigation.
Kagadapith 81/88 326, 114 IPC, Under in 135(1) B.P Act vestigation.
Thus, on scrutiny of the complaints, proposals and other papers therewith, it appears that you are committing of fences affecting human body in the said area by holding deadly weapons such as knife, razor, tamancha, sword, hockey stick, iron pipes etc.
Therefore, you are a dangerous person as defined in section 2(c) of the said Act.
Further, you are robbing persons who pass from there for business or service by showing deadly weapons.
In the said area in drunken condition you are demanding money from those passing from there.
If they do not give money you are threatening them of murder by showing razor of Rampuri knife.
You are beating peace loving citizens in the said area in public believing that they are giving information of your activities to the police.
By this you are coming in the way of maintenance of public order.
Particulars in support of your aforesaid anti social activities have been given by four persons residing in the said area or doing trade or business in the said area in their statements.
Copies thereof are given herewith.
Being afraid of you.
the aforesaid witnesses have asked not to disclose their names and addresses, because they are afraid of damage to their person and property and their safety and on reliable inquiry it is found to be true.
Therefore, you are not given names and addresses of those witnesses as provided in section 9(2) of PASA ACT, 1985 however contents of the facts states by them are given to you." ". . . . . . . . . . . . . . . " "Taking into consideration all the aforesaid facts, I am fully satisfied that you are committing offences punishable under the Indian Penal Code and affecting to human body.
You are a notorious, terrible and dangerous person.
Due to such activities of yours public order is disturbed very often in the said area.
By such activities you have 574 become hurdle in maintenance of public order.
" The respondent No. 1 has thus referred to seven criminal cases filed against the petitioner and also the statements of four persons residing in the area recorded by the police.
The respondent No. 1 has also made averments in the grounds alleging various anti social activities of the petitioner and after considering the same made the impugned order of detenu on forming an opinion that the petitioner is a dan gerous person within the meaning of section 2(c) of the said Act.
The names and addresses of the four witnesses have not been disclosed claiming privilege under section 9(2) of 'PASA ' Act.
As regards the seven criminal cases, the detenu has been acquitted of the charges ,in the first two cases that is, Kagdapith case No. 96/85 and Maninager case No. 120/86 which have been compounded, In the third case under section 135 of the Bombay Police Act, that is, Kagdapith case No. 225/87, the detenu has been convicted.
But it has no relevance for the purpose of forming an opinion that the petitioner is a dangerous person .under section 2(c) of PASA Act.
As regards the case No. 4, that is criminal case No. 122/86, the petitioner has been acquitted.
The other three criminal cases that is Maninagar case No. 33/88, Kagdapith case No. 51/88, & Kagda pith case No. 81/88 are all under investigation and in these cases the petitioner has been enlarged on bail.
It has also been stated that the grounds of detention supplied to the petitioner are vague and indefinite and as such the detenu could not make an effective and proper representation under article 22(5) of the Constitution.
It has further been stated that out of the aforesaid seven criminal cases, the first two criminal cases are not proximate to the date of making the impugned order of detention.
There is absolute non application of mind by the detaining authority in coming to his subjective satisfaction that the impugned order was necessary to be made to prevent the detenu from acting in any manner prejudicial to the maintenance of public order.
The respondent No. 1, filed an affidavit in reply stat ing inter alia that the petitioner detenu is indulging in criminal activities prejudicial to the maintenance of the public order and as such the order of detention was made against the detenu after considering that recourse to ac tions under the provisions of ordinary law will not be adequate.
It has been further denied in paragraph (d) of the said affidavit the statement that no effective representa tion could be made due to non supply of the names and ad dresses of the so called witnesses and other relevant mate rials as made in the petition.
It has also been stated that on the basis of the apprehension expressed by those four witnesses 575 whose statements have been recorded by the Police Inspector and verified by the Superintendent of Police that their names and addresses have not been disclosed by the detaining authority claiming the privilege available under section 9(2) of the Gujarat Prevention of AntiSocial Activities Act, 1985.
It has also been stated that the detaining authority has been subjectively satisfied that the petitioner is indulging in nefarious activities prejudicial to the maintenance of public order and as such the impugned order of detention was made by him against the detenu It has also been stated that in Criminal Case No. 225/87, the detenu was found with razor and he was convicted in that particular case.
It has also been.
stated that from the cases registered against the detenu from 1985 to 1988 that the detenu is involved in prejudicial activities from 1985 to 1988 and as such it was inferred that the passing of detention order was the only remedy to restrain the petitioner from indulging in similar prejudicial activities.
It is evident from the grounds of detention that the impugned order of detention was made on the ground that the petitioner is a dangerous and terrible person in the area as defined in section 2(c) of the PASA Act.
The said section states: "dangerous person" means a person, who either by himself or as a member or leader of a gang, during a period of three successive years habitually commit, or attempts to commit or abets the commission of any of the offences punishable under Chapter XVI or Chapter XVII of the Indian Penal Code (XLV of 1860) or any of the offences punishable under Chapter V of the (54 of 1959).
" In the grounds, it has been stated that the detenu by creat ing atmosphere of danger and terror has become hurdle in the way of maintenance of law and order in the said area.
It has also been stated that for such acts as well as due to the following criminal offences under the Indian Penal Code registered against him, the detenu has become a dangerous person of the area.
It has also been stated that the detenu has been robbing persons who pass from there for business or service by showing deadly weapons.
It has also been stated, "In the said area in drunken condition you are demanding money from those passing from there.
If they do not give money you are threatening them of murder by showing razor or Rampuri knife.
You are beating peace loving citizens in the said area in public believing that they are giving informa tion of your criminal activities to the police.
By this you are coming in the way of maintenance of public order.
" 576 It has already been stated hereinbefore that offences under Chapter XVI of Indian Penal Code have been compounded.
and the detenu has been acquitted.
As regards the third case that is, Kagdapith case No. 225/87 under section 135 of Bombay Police Act, the petitioner was convicted.
This offence is not one of the offences falling within the offences men tioned in section 2(c) of the PASA Act and as such this case cannot be taken into consideration to hold the detenu a dangerous person.
As regards the fourth case Maninagar case No. 122/86, being not proved against the petitioner he has been acquitted of the offences charged in the said case.
The other three remaining cases that is, Maninagar case No. 33/88, Kagdapith case No. 15/88 and 81/88 are all under investigation.
Therefore, the fourth case in which the petitioner had already obtained acquittal could not be taken into consideration.
For the purpose of determining the petitioner as a dangerous person, it is also very relevant to notice that section 2(c) defines dangerous person as a person who habitually commits or attempts to commit offences pun ishable under Chapter XVI or Chapter XVII of Indian Penal Code or any of the offences under Chapter V of the .
From the aforesaid seven criminal cases, two cases are of 1985 and 1986 which are not proximate to the date of the order of detention and so stale.
Moreover, the petitioner being acquitted the said cases could not be taken into consideration.
Similarly case No. 3 also fails outside the purview of the section 2(c) of the said Act.
Fourth case No. 122/86 can also not be considered as petitioner earned acquittal.
Merely on consideration of the other three crimi nal cases which are under investigation and are yet to be decided the detaining authority cannot come to his subjec tive satisfaction that the detenu was a dangerous person who habitually indulges in committing offences referred in section 2(c) of the PASA Act.
The other averments made in the said grounds and referred to hereinbefore are absolutely vague in as much as no particulars as to which persons have been robbed or what offences have been committed by showing deadly weapons at what place have not been mentioned.
There is also no mention when and where the detenu in a drunken condition demanded money from whom nor it has been stated when the detenu threatened whom to murder by showing razor or Rampuri knife.
There is no particular instance also as to which peace loving citizens and in which area the petitioner has beaten in public believing, that they are giving infor mation of his criminal activities to the police.
It is also a vague statement that the detenu is coming in the way of maintenance of public order.
Similarly the statement of the said four witnesses mentioned in the grounds of detention are also very vague and without any particulars of the names of the four witnesses and their addresses were not dis closed.
These statements are also 577 vague.
In such circumstances, it is not at all possible for the detenu to make a proper and effective representation except merely denying the alleged grounds of detention as mandatorily required under article 22(5) of the Constitution of India.
This ArtiCle confers on a detenu two fundamental rights namely, (1) that the detaining authority has to communicate to the detenu the grounds as early as possible on which the order of detention has been made and secondly the right to make an effective representation against the said order.
This obviously requires that the grounds must not be vague but must be specific, relevant in order to enable the detenu to make an appropriate and effecting representation against the same before the Advisory Board as well as before other authorities including detaining author ity.
The grounds and the averments made in the grounds which were served on the detenu are Vague and as such they are violative of the article 22(5) of the Constitution of India.
It is pertinent to refer in this connection the decision re ported in Pushkar Mukharjee & Ors.
vs The State of West Bengal, ; at page 641. "Similarly, if some of the grounds supplied to the detenu are so vague that they would virtually deprive the detenu of the statutory right of making a representation, that again may make the order of detention invalid.
" That has been referred to have been relied upon in the subsequent decision in the matter of Piyush Kantilal Mehta vs Commissioner of Police, Ahmedabad City & Anr., JT 1988(4) SC 703 at page 710.
"It was held by this Court that the ground was extremely vague and gave no particulars to enable the petitioners to make an adequate representation against the order of deten tion and it infringed the constitutional safeguard provided under article 22(5) of the Constitution of India.
" In the case of Pushkar Mukharjee, the ground No. 2 states: "You have become a menace to the society and there have been disturbances and confusion in the lives of peaceful citizens of Barnset and Khardah P.S. areas under 24 Parganas District and the inhabitants thereof are constant threat of disturbances of public order.
" It was held in this case that, "It is manifest that this ground is extremely vague and gives no particulars to enable the petitioner to make an adequate representation against the order of detention and thus infringes the constitutional safeguard provided under article 22(5).
" 578 The second crucial question that fails for consideration in this case is whether the grounds of detention particular ly referring to the seven criminal cases are relevant and germane grounds for passing of an order of detention under section 3(1) of the PASA Act.
All the seven criminal cases men tioned relate to problem of law and order and not public order in as much as they disclose cases relating to particu lar persons which has nothing to do with the maintenance of public order.
As has already been said hereinbefore that out of the seven criminal cases, two have been compounded and in the fourth case the criminal charges have not been proved against the petitioner as such he was acquitted.
The third case being under section 135 of the Bombay Police Act does not fall within the purview of the section 2(c) of the Act and it is ' confined to a private individual.
The other three cases which are under investigation also relate to assault to private individuals and they have nothing to do with the disturbance of even tempo of the life of the community or of men of a particular locality nor does it affect the even flow of life of the public as a whole.
Section 3(1) clearly mandates that the order of detention can be made only when the State Government or its authorised officer has come to a subjective satisfaction that a person is required to be detained in order to prevent him from acting in any manner prejudicial to the maintenance of the public order.
Sub section 4 embodies a deeming clause to the effect that a person should be deemed to act in any manner prejudicial to the maintenance of public order when such person is engaged in any activities as a dangerous person which affect ad versely or are likely to affect adversely the maintenance of public order.
Explanation 2 clause 4 further provides that for the purpose of this sub section public order shall be deemed likely to be affected adversely or shall be deemed likely to be affected adversely inter alia if any of the activities of any person referred to in this sub section directly or indirectly, is causing or is likely to cause any harm, danger or alarm or feeling of insecurity among the general public or any section thereof or a grave or wide spread danger of life, property or public health.
Coming to this particular case, the criminal cases mentioned in the grounds do not refer to any dangerous, harmful or adverse act or alarm which gives rise to a feeling of insecurity for the general public amongst the persons of a locality.
The criminal cases are confined to certain private individuals and it is merely a law and order problem and it has nothing to do with maintenance of public order.
Its reach and effect is not so deep as to affect the public at large.
It does not create or tend or create any panic in the mind of people of particular locality or public in general nor it affects adversely the maintenance of public order.
There is nothing to show that the above activities of the petitioner have 579 affected or tended to affect the even tempo of fife of the community.
An act may create a law and order problem but such an act does not necessarily cause an obstruction to the maintenance of public order.
The difference between 'the law and order and public order has been very succinctly stated by this Court in Dr. Ram Manohar Lohia vs State of Bihar & Ors., [966] 1 SCR 709 at page 746 wherein it has been stated that: "It will thus appear that just as "public order" in the rulings of this Court (earlier cited) was said to comprehend disorders of less gravity than those affecting "security of State" "law and order" also comprehends disor ders of less gravity than those affecting "public order".
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.
But using the expression, "maintenance of law and order" the District Magistrate was widening his own field of action and was adding a clause to the Defence of Indian Rules.
" In Pushkar Mukharjee vs State of West Bengal, (supra), it has been stated that: "It is manifest that every act of assault or injury to specific persons does not lead to public disorder.
When two people quarrel and fight and assault each other inside a house or in a street, it may be said that there is disorder but not public disorder.
Such cases are dealt with under the powers vested in the executive authorities under the provisions of ordinary criminal law but the culprits cannot be detained on the grounds that they were disturbing public order.
The contravention of any law always affects order but before it can be said to affect public order, it must affect the community or the public at large.
In this connection we must draw a line of demarcation between serious and aggravated forms of disor der which directly affect the community or injure the public interest and the relatively minor breaches of peace of a purely local significance which primarily injure specific individuals and only in a secondary sense public interest.
A mere disturbance of law and order leading to.
580 disorder is thus not necessarily sufficient for action under the Preventive Detention Act but a disturbance which will affect public order comes within the scope of the Act.
A District Magistrate is therefore entitled to take action under section 3(1) of the Act to pre vent subversion of public order but not in aid of maintenance of law and order under ordinary circumstances.
" It has also been observed in a recent decision of the Supreme Court in Piyush Kantilal Mehta vs The Commissioner of Police, Ahmedabad City, (supra) that: "The allegations made against the petitioner may give rise to a question of law and order but, surely, they have nothing to do with the question of public order.
A person may be very fierce by nature, but so long as the public generally are not affected by his activities or conduct, the question of maintenance of public order will not arise.
In order that an activity may be said to affect adversely the maintenance of public order, there must be materials to show that there has been a feel ing of insecurity among the general public.
If any act of a person creates panic or fear in the minds of the members of the public upset ting the even tempo of life of the community, such act must be said to have a direct bearing on the question of maintenance of public order.
The commission of an offence will not necessarily come within the purview of 'public order '.
" Our attention has been drawn to the decision in the case of Ashok Kumar vs Delhi Administration, In that case in the grounds of detention thirty six criminal cases have been referred to showing the prejudicial activi ties of the detenu leading to public disorder.
This Court in considering these series of criminal cases committed by the detenu held that the detenu appears to have taken a life of crime and become a notorious character.
The fact that the petitioner and his associates are facing trial or the mat ters are still under investigation only shows that they are such dangerous characters that people are afraid of giving evidence against him.
The armed holdup gangsters in an exclusive residential areas of the city where persons are deprived of their belongings at the point of knife or re volver reveal organised crime.
The particular acts enumerat ed in the grounds of detention clearly show that the activi ties of the detenu, cover a wide field and fall within the contours of the concept of public order.
The 581 grounds furnished were also neither vague nor irrelevant or lacking in particulars or were not inadequate or insuffi cient for the objective satisfaction of the detaining au thority.
Considering these, this Court held in the particu lar facts and circumstances of that case that the order of detention made by the detaining authority after being sub jectively satisfied that the acts of the detenu hinder the maintenance of public order.
The facts and circumstances of that case are distin guishable from the facts of the present case and as such it has got no application.
There is nothing in this case to show that the petitioner was a member of a gang which are engaged in criminal activities systematically in a particu lar locality and those create a panic and a sense of insecu rity amongst the residents of that particular area in con sideration of which the impugned order was made.
Considering the above decisions, we are unable to hold that the criminal cases mentioned in the grounds and the statements of the witnesses referred to in the vague and irrelevant grounds of detention do not in any way pose a threat to the maintenance of public order nor it disturbs the even tempo of public life as envisaged in section 3(1) of PASA Act.
So there has been complete non application of mind by the detaining authority before reaching a subjective satisfaction to make the im pugned order of detention.
It has been urged on behalf of the detenu that there has been no consideration by the detaining authority of the relevant facts and circumstances before making an order under section 9(2) of the PASA Act in not disclosing the names and addresses of the witnesses on whose statements the subjective satisfaction has been arrived at.
It has also been stated in this connection that in the grounds of deten tion it has merely been stated, "Being afraid of you the aforesaid witnesses have asked not to disclose their names and addresses because they are afraid of persons.
It has been urged with force that this ground does not refer that the detaining authority has himself considered and satisfied that the disclosure of their names and addresses are likely to cause damages to their person and properly.
It has been stated by the detaining authority that on relevant enquiry, it found those statements to be true and as such the names and addresses of those witnesses have not been given to the detenu is provided in section 9(2) of the PASA Act, 1985.
It has been contended on behalf of the petitioner that there is nothing to show that the detaining authority has himself considered that in public interest the names and addresses of these persons should not be disclosed and so such non disclosure is vague.
We do not want to enter into this controversy and decide the same as in our opinion the 582 detaining authority has been satisfied not to disclose the names of those witnesses under section 9(2) of the said Act.
No other grounds have been urged before us on behalf of the petitioner.
For the reasons aforesaid, we hold the order of deten tion is legal and bad and as such we allow the writ peti tion.
The order of detention is quashed and set aside and the detenu is set free forthwith.
Lal Petition allowed.
| The petitioner was detained, under an order passed by the detaining authority under Section 3(1) of the Gujarat Prevention of Anti Social Activities Act, 1985, with a view to preventing him from acting in any manner prejudicial to the maintenance of public order.
The detaining authority reached his subjective satisfaction on the grounds (i) that the detenu was a 'bootlegger ' within the meaning of Section 2(b) of the Act because he was indulging in criminal and anti social activities by illegally storing and selling foreign liquor and beer and that four cases were registered against him under the Bombay Prohibition Act, 1949; (ii) that he was also a 'dangerous person ' within the meaning of section 2(c) of the Act because he, as a member of a partic ular gang, was spreading an atmosphere of fear and terror by beating innocent people in the Ahmedabad city thus affecting the public order adversely and a case was also registered against him under Section 120(B), 212 and 307 of the Indian Penal Code, 1860 and Section 25 of the Arms Act besides under the provisions of various other Acts.
The petitioner filed a writ petition in this Court challenging the validity of the detention order contending that the conclusions drawn by 183 the detaining authority were not supported by materials.
Quashing the detention order and allowing the Writ Petition, HELD: 1. To bring a person within the definition of Section 2(c) of the Act it must be shown that the person either by himself or as a member of or a leader of a gang habitually commits or attempts to commit or abets the com mission of offences punishable under Chapter XVI or XVII or XXII of the Indian Penal Code or any of the offences punish able under Chapter V of the Arms Act.
It must be shown that he is habitually committing or attempting to commit or abetting the commission of offences enumerated therein.
[187 H; 188B] 1.1 In the instant case, the detenu is said to have committed offences under Sections 307, 120 B, 212 of the Indian Penal Code and Section 25 of the Arms Act besides under the provisions of various other Acts.
Only one case registered under the provisions of Section 307 of the Indian Penal Code and Section 25 of the Arms Act fails within the said definition clause.
The other two offences registered under Sections 120 B and 212 are not covered under Section 2(c).
Therefore, this solitary incident would hardly be sufficient to conclude that the detenu was habitually com mitting or attempting to commit or abetting the commission of offences.
The general and vague allegations made in the grounds of detention that the detenu was taking active part in communal riots and entered into conspiracy to spread an atmosphere of terror being a member of a particular gang in the absence of any specific instance or registration of any case thereof, cannot be construed as offences falling under any of the above three chapters of the Indian Penal Code or chapter V of the Arms Act enumerated under Section 2(c) so as to characterise the detenu as a 'dangerous person '.
[188A E] 2.
A conjoint reading of Section 2(b) and Section 3(4) with the explanation annexed thereto clearly spells out that in order to clamp an order of detention upon a 'bootlegger ' under Section 3 of the Act, the detaining authority must not only be satisfied that the person is a 'bootlegger ' within the meaning of section 2(b) but also that the activities of the said bootlegger affect adversely or likely to affect adversely the maintenance of public order.
[188H, 189A] 2.1 In the instant case, the vague allegations in the grounds of detention that the detenu is the main member of a particular gang indulging in bootlegging activities and that he is taking active part in such dangerous activities, are not sufficient for holding that his 184 activities affected adversely or were likely to affect adversely the maintenance of public order in compliance with sub Section 4 of the Section 3 of the Act that the activi ties of the detenu have caused harm, dangeror alarm or a feeling of insecurity among the general public or any Sec tion thereof or a grave or widespread danger to life, property or public health as per the explanation to Section 3(4).
The offences registered in the.
four cases, under the Bombay Prohibition Act, 1949 against the detenu on the ground that he was dealing in liquor have no bearing on the question of maintenance of public order in the absence of any other material that those activities of the detenu have adversely affected the maintenance of public order.
[189A D] Ashok Kumar vs Delhi Administration, and Piyush Kantilal Mehta vs The Commissioner of Police, Ahmedabad City and Anr, Judgments Today, [1988] 4 703, applied.
|
minal Appeal No. 645 of 1989.
From the Judgment and Order dated 17.3.89 of the Delhi High Court in Criminal Appeal No. 270/85.
AND Criminal Appeal No. 534 of 1989.
A.P. Mohanty and S.K. Sabharwal for the Appellants.
K. Lahri, V.C. Mahajan, Mrs. Indra Sawhney and B.K. Prasad for the Respondent.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Sardar Singh, his wife Saraswati and his brother 's wife Savitri were charged under Sections 302/34 and 201/34, Indian Penal Code (IPC) for the murder of one Charanjit.
The trial Court convicted Sardar Singh and his wife Saraswati on both the counts and sentenced them to imprisonment for life on the first count and for five years on the second count.
Accused Savitri was, however, acquitted by the trial Court.
The High Court dismissed the appeal filed by Sardar Singh.
Saraswati was acquitted of the charge under Sections 302/34, IPC but her conviction and sentence Under Section 201/34 IPC was maintained by the High Court.
These two appeals are by Sardar Singh and Saraswati against the judgment of the High Court.
67 Sardar Singh, appellant and one Tara Chand are real brothers.
Both the them were residing in village Jhatikara.
They were living in adjoining houses.
Deceased Charanjit was living in a house adjacent to their houses.
Charanjit 's wife had died about ten years ago and he was living in the house by himself.
Deceased Charanjit had developed illicit relation with Savitri wife of Tara Chand and also with appellant Saraswati.
The prosecution case in a nut shell is that deceased Charanjit was having illicit relations with both Saraswati and Savitri and used to visit them during night for the last so many years.
On March 31, 1983 the deceased had gone to sleep in his house in the evening and did not appear thereafter.
On April 4, 1983 Lakhmi Chand, brother of the deceased, lodged report with the police expressing suspicion against the appellants and Savitri.
It is alleged that during the course of interrogation Sardar Singh appellant made a disclosure statement and consequently led the policy party to his sitting room where he pointed out a spot covered by a cot.
Sardar Singh, thereafter, dug the floor and the dead body of the deceased was recovered from a five feet deep grave.
Thereafter, at the pointing out of the appellant Sardar Singh, the police also seized doe (wood cutter) and knife contained in a canvas bag hanging in the adjacent room.
The dead body was tied with a rope and was wrapped in three gunny bags.
The recovered knife had no blood stained while the doe was found stained with blood.
On examination by the Serologist the blood stains on the doe were found to be human and of the same group as that of the deceased.
The entire case of the prosecution is based on circumstantial evidence.
The circumstances relied upon by the prosecution are as under: (1) The deceased had illicit relations with Saraswati and Savitri, wife and brother 's wife of appellant Sardar Singh.
(2) The deceased was last seen on the night of March 31, 1983 when he went to sleep in his house and thereafter his dead body was found buried in the appellants ' house.
(3) Sardar Singh appellant, on interrogation made a disclosure statement leading to the recovery of the dead body from a five feet deep pit in the sitting room of the appellants.
(4) Recovery of doe from the possession of the appellant which was 68 found to bear the same human blood group as that of the deceased.
Relying upon the above mentioned circumstances the trial Court and the High Court have convicted the appellants.
So far as appellant Sardar Singh is concerned, the chain of circumstances relied upon by the prosecution and accepted by the courts below leaves no manner of doubt that it was he who committed the murder of Charanjit.
We have been taken through the judgments of the trial Court and that of the High Court.
We agree with the reasoning and the conclusions reached therein.
We, therefore, uphold the conviction and sentenced of appellant Sardar Singh and dismiss his appeal.
So far as appellant Saraswati is concerned the High Court dealt with her case in the following manner: "Before we part with this order, there is one more fact which needs our consideration.
In this case, the disclosure that led to the recovery of the dead body has been made by Sardar Singh appellant.
There is no evidence direct or indirect to connect the appellant Saraswati with the commission of murder, though it can safely be said that she being the inmate of the house was in know of the fact that the dead body was buried in the house with a view to cause the disappearance of evidence.
In our view, the process of digging a grave of 5 feet deep and of the size of the deceased in length, the filling of the grave and then erasing the traces of the same is a long process and she must have been necessarily involved in the same.
since, in our view, there is no evidence to connect her with the commission of murder we acquit the appellant Saraswati of the charge under Section 302/34 IPC but maintain her conviction and sentence under Section 201/34 IPC.
" We are of the view that the reasoning adopted by the High Court in acquitting Saraswati of the charge under Section 302/34 IPC is equally applicable to the charge against her under Section 201/34 IPC.
It may be correct that the process of digging a grave of five feet deep, the filling of the grave and then erasing the traces etc.
may not have been done by Sardar Singh alone but there is not an iota of evidence on the record not even a whisper to the effect that it was Saraswati who helped him in 69 concealing or causing the evidence of the commission of the offence to disappear.
Simply because she is the wife of appellant Sardar Singh and as such is supposed to be living in the same house, it cannot be assumed that she was guilty of the offence under Section 201/34 of the Indian Penal Code.
According to the Prosecution Saraswati was having illicit relation with the deceased for several years.
Sardar Singh may or may not have taken her help in concealing the dead body.
Her being wife of Sardar Singh by itself is not sufficient to prove the charge under Section 201/34 IPC against her.
We, therefore, give benefit of doubt to Saraswati, allow her appeal and acquit her of the charge under Section 201/34, Indian Penal Code.
She is already on bail.
Her bail bonds are cancelled.
T.N.A. Crl.
A. No.645/89 dismissed.
Criminal Appeal No. 534/89 allowed.
| 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]
|
Appeal No. 2210 of 1966.
Appeal by special leave from the judgment and order dated January 20, 1966 of the Assam and Nagaland High Court in Civil Rule No. 184 of 1964.
Naunit Lal, for the appellants.
D. N. Mukherjee, for respondent No. 1.
The Judgment of the Court was delivered by Vaidialingam, J.
This appeal, by special leave, is directed against the judgment, dated January 20, 1966 of the High Court of Assam and Nagaland, in Civil Rule No. 184 of 1964 by which the High Court quashed the inquiry proceedings conducted by the 4th respondent therein and the order, dated December 3, 1958 passed by the 3rd respondent dismissing the first respondent (hereinafter shortly referred to as the respondent) from service and the orders of the appellate authorities confirming the same.
89 The respondent joined the Assam Police Service as a constable in 1933 and was promoted to the post of Assistant Sub Inspector of Police in 1936.
He was then promoted as Sub Inspector of Police in 1944.
He was made permanent as Sub Inspector of .police in 1952.
In 1955, when the respondent was the Officer incharge of the Sorbhog Police Station, certain allegations appear to have been made against him in consequence of which a confidential enquiry was conducted by the Superintendent of Police, Anti Corruption Branch, who submitted a report to the Government on December 21, 1957.
In view of the complaints received against him, the respondent had already been placed under suspension with effect from July 24, 1957.
The Sub Divisional Police Officer, Barpeta, having been authorised under section 7 of the framed charges against the respondent on March 22, 1958.
It is not really necessary to enumerate the various items of charges, but they can be grouped under three broad heads.
Under charge No. 1, the respondent was alleged not to have taken cognisance of the items of cognizable offences reported to him and enumerated under that charge and, as such, he had neglected to perform his duty as a police officer in charge of a Police Station.
The second charge related to his having accumulated assets in his name as well as in .the name of his wife, far beyond his known sources of income.
Items of assets purchased by the respondent were again given in detail.
The third charge related to the respondent having concealed the items, enumerated therein, and given false statements regarding his assets in the declaration of assets submitted to the authorities on July 22, 1957.
The respondent submitted his explanation contravening the allegations made against him.
The enquiry was conducted by the Sub Divisional Police Officer, Barpeta (shortly referred to as the Enquiry Officer) and,.
as many as 14 witnesses were examined on the side of the prosecution.
The respondent cross examined those witnesses and he also examined four witnesses on his side.
The Enquiry Officer, by his report dated September 11, 1958 found the respondent guilty of the various charges, excepting regarding one item under the first charge.
He declined to place any reliance on the evidence adduced by the respondent and rejected the explanation furnished by him.
Ultimately, the Enquiry Officer, after finding the respondent guilty, submitted his report to the Superintendent of Police, Kamrup.
The Superintendent of Police, after referring to the charges framed against the respondent, the nature of the evidence adduced before the Enquiry Officer as well as the finding recorded by the said Officer, issued a memo, dated October 18, 1958 asking the respondent to submit his explanation.
A copy of the report of the Enquiry L 11 SupCI/70 7 90 Officer had already been given to the respondent.
Still the Superintendent of Police also sent a copy along with his memo.
On receipt of this memo, the respondent requested the Super intendent of Police, by his letter dated October 29, 1958 for being furnished with copies of the depositions of the prosecution and defence witnesses recorded by the Enquiry Officer to enable him to submit his explanation.
But this request was rejected by the Superintendent of Police stating that there was no rule for giving copies of statements.
The respondent submitted a fairly long explanation, dated November 21, 1958.
He disputed the correctness of the findings recorded against him by the Enquiry Officer and, ultimately stated that he was innocent and was not guilty of any offence.
He prayed that if in case he was found guilty, he should not be awarded the extreme punishment of dismissal from service.
But he ,added a request to the effect that he should be allowed to examine witnesses and submit documents and he should be exonerated by the Superintendent of Police after a perusal and consideration of the same.
On receipt of the explanation, the Superintendent of Police, by his order dated December 3, 1958 rejected the explanation of the respondent, accepted the findings of the Enquiry Officer and holding that the charges had been proved beyond all reasonable doubt, dismissed the respondent from service with immediate effect.
In the said order, the Superintendent of Police had referred to the charges framed against the respondent, the explanation furnished by him as well as the evidence recorded during the enquiry and the findings recorded by the Officer and the explanation sent by the respondent to the show cause notice and ultimately held that the charges had all been proved established and that the findings recorded by the Enquiry Officer were correct.
With regard to the request made by the respondent in his explanation dated November 21, 1958 the disciplinary authority stated that the respondent was afforded a full and fair opportunity to adduce all evidence that he desired to be placed before the Enquiry Officer and that opportunity had also been fully utilised by the respondent.
Therefore there was no further necessity for giving the respondent an opportunity to furnish documentary or oral evidence.
Regarding the punishment to be awarded, the Superintendent of Police stated that the charges proved against the respondent, who was a member of the Police force, were very serious and hence no leniency could be shown.
The respondent filed an appeal.
before the Deputy Inspector General of Police, Range, Assam, who, by his order dated May 11, 1960 dismissed the same.
91 The respondent thereupon filed a revision before the Inspector General of Police, Assam, which, again, was rejected on June 30, 1961.
A further revision, filed before the State Government was also dismissed on January 21, 1964.
On August 17, 1964 the respondent filed the writ petition in question, challenging the disciplinary proceedings initiated against him and the orders of dismissal passed on the basis of the enquiry conducted by the Enquiry Officer.
He had taken several grounds of attack as against the disciplinary proceedings.
He alleged that no reasonable opportunity was afforded to him during the enquiry proceedings.
During the enquiry, the Enquiry Officer was in frequent consultation and contact with the Deputy Superintendent of Police of the Anti Corruption Branch, regarding the charges which were being tried by him.
In particular, he referred to the record made by the Enquiry Officer in his proceedings that on July 14 and 15, 1958 he consulted the Deputy Superintendent of Police, Anti Corruption Branch about the proceedings and went through his records relating to the charges.
He averred that the nature of the consolation and the materials collected by the Enquiry Officer from the Deputy Superintendent, Anti Corruption Branch, were not made known to him and those materials had been taken into account in recording the findings against him.
He also alleged that copies of the report of the Anti Corruption Department, on the basis of which disciplinary proceedings had been initiated, had not been furnished to him nor were the copies of the evidence recorded during the enquiry given to him, though a specific request was made in that behalf.
On all these grounds, he sought to have all the orders quashed on the ground that there had been a gross violation of the principles of natural justice.
He took a further ground of attack that he had been appointed by the Inspector General of Police and the order of dismissal by a subordinate authority, viz., the Superintendent of Police, was illegal and void.
The allegations made by the respondent in the writ petition were controverted by the appellants.
They averred that the respondent was not entitled to a copy of the report of the Anti Corruption Branch, which was only in the nature of a preliminary investigation into the complaints received against the respondent to enable the disciplinary authority to consider whether disciplinary action against the respondent should be initiated or not.
It was further stated that the respondent was given a full and fair opportunity to participate in the enquiry and the witnesses were all examined in his presence and, apart from cross examining the prosecution witnesses, he had also adduced defence evidence on his behalf.
The State further averred that the mere circumstance that the Enquiry Officer consulted the Deputy Superintendent of 92 Police, Anti Corruption Branch, did not vitiate the enquiry proceedings as no information or material gathered therein had been used by the Enquiry Officer when he recorded findings against the respondent.
According to the State, the findings had been recorded on the basis of the evidence adduced during the actual enquiry.
It was also pointed out that the disciplinary authority, viz., the Superintendent of Police, after receipt of the report of the Enquiry Officer, had himself gone into the various items of evidence and, after a due consideration of the explanation submitted by the respondent, had agreed with the findings recorded by the Enquiry Officer and, after further consideration of the explanation submitted by the respondent to the show cause notice, ultimately passed the order of dismissal.
The appellate authority, the.
Deputy Inspector General of Police had also considered the matter in great detail and had upheld the order of the Superintendent of Police.
The State further averred that the appointing authority of persons like the respondent, was the Superintendent of Police and not the Inspector General of Police, and, as such, the order of dismissal passed by the former was perfectly legal.
On these grounds the State maintained that the enquiry proceedings were valid and legal and did not suffer from any infirmity.
Though, as pointed out above, several grounds of attack against the disciplinary proceedings initiated against the respondent were taken in the writ petition, it is seen from the judgment of the High Court under appeal that the order of dismissal was ultimately assailed only on two grounds : (1) The request of the respondent, made on October 29, 1958 after receipt of the second show cause notice dated October 18, 1958 issued by the Superintendent of Police, for supply of copies of the statements of the witnesses recorded at the enquiry, was arbitrarily rejected on the ground that there was no rule under which copies could be given and hence the respondent did not have any reasonable opportunity to show cause against the action proposed against him.
(2) The Enquiry Officer, during the course of the enquiry was keeping himself in regular contact with the Anti Corruption Branch and had utilised the material so gathered by him, behind the back of the respondent, against the respondent in the enquiry proceedings.
The respondent 's request for being furnished with a copy of the report of the Anti Corruption Branch had also been refused and therefore there had been a violation of the principles of natural justice in the conduct of the enquiry.
So far as the first ground of objection is concerned, the High Court did not accept the same as it was satisfied that the witnesses were all examined in the enquiry in the presence of the respondent 93 and that he had a full and fair opportunity of cross examining the prosecution witnesses and also of examining witnesses on his behalf.
Though the request of the respondent, made on October 29, 1958 for being furnished with copies of the evidence recorded during the enquiry was rejected, the High Court was of the view that as the respondent was fully aware of the nature of the evidence adduced in his presence during the enquiry, his grievance that he had no reasonable opportunity to show cause to the notice issued by the Superintendent of Police was unfounded.
So far as the second ground of objection was concerned, the High Court was impressed by the fact that the Enquiry proceedings showed that on July 14, 1958 and July 15, 1958 the Enquiry Officer consulted the Deputy Superintendent of Police of the Anti Corruption Branch about the proceedings and went through his records relating to those charges.
Based upon those entries found in the record of the enquiry proceedings, the High Court came to the conclusion that it was abundantly clear that the Enquiry Officer had discussion with the Anti Corruption Branch, the report of which had not been furnished to the respondent.
The High Court was further of the view that the Enquiry Officer had taken into consideration the materials gathered from the records of the Anti Corruption Branch.
It was the further view of the High Court that inasmuch as a copy of the report of the Anti Corruption Branch as well as the materials that were gathered by the Enquiry Officer during his consultation with that Branch had not been furnished to the respondent, the enquiry held under such circumstances was in clear violation of the principles of 'natural justice and hence the order dismissing the respondent from service was void.
In this view the High Court set aside the order of dismissal and allowed the writ petition, Mr. Naunit Lal, learned counsel for the appellant State, raised two contentions : (1) The report of the Enquiry Officer, dated September 11, 1958 clearly shows that the findings against the respondent have been recorded exclusively on the basis of the evidence adduced before him and there is nothing to show that the Enquiry Proceedings have been influenced by the consultations that the Enquiry Officer had with the Deputy Superintendent of Police, Anti Corruption Branch, on July 14 15, 1958.
(2) In any event, the disciplinary authority, viz., the Superintendent of Police, before accepting the findings recorded by the Enquiry Officer, has himself considered the entire evidence bearing upon the charges and the explanations offered by the respondent and it is after such a consideration that he has agreed with the findings of the Enquiry Officer regarding the guilt of the respondent.
The appellate authority, the Deputy Inspector General of Police, has also made a similar approach when disposing of the appeal 94 filed by the respondent and therefore there has been no violation of the principles of natural justice.
Mr. D. N. Mukherjee, learned counsel for the respondent, has urged that the High Court 's view that the enquiry proceed ings is vitiated inasmuch as the Enquiry Officer has acted upon the information collected from the Anti Corruption Branch is perfectly justified, especially in view of the record made by the Enquiry Officer himself.
Counsel pointed out that the examination of witnesses commenced on June 23, 1958 and concluded only on August 30, 1958.
It was during this period when the.
enquiry was actually going on that the Enquiry Officer, on July 14 and 15, 1958 consulted the Anti Corruption Branch about the matters connected with the enquiry proceedings and had gone through the records available with that Branch relating to the charges levelled against the respondent and which were being tried by the Enquiry Officer.
Counsel further urged that the respondent was not furnished with a copy of the report of the Anti Corruption Branch nor was he furnished with the information and materials that must have been gathered by the Enquiry Officer in his consultation with the Anti Corruption Branch and from their records which he inspected on July 14 and 15, 1958.
All these circumstances would clearly show that there had been a violation of the principles of natural justice in the conduct of the enquiry.
When once the enquiry proceedings were so vitiated,, the order of dismissal based upon the findings recorded at such an enquiry, has been rightly held by the High Court to be illegal and void.
We are of opinion that in the particular circumstances of this case, which will be indicated presently, the High Court has not made a proper approach when it came to the conclusion that there had been a violation of the principles of natural justice in the conduct of the enquiry, on the second ground of objection raised by the respondent.
The principle, in this regard, has been laid down by this Court in State of Mysore vs section section Makapur(1) "For a correct appreciation of the position, it is necessary to repeat what has often been said that tribunals exercising quasi judicial functions are not courts and that therefore they are not bound to follow the procedure prescribed for trial of actions in Courts nor are they bound by strict rules of evidence.
They can, unlike Courts, obtain all information material for the points under enquiry from all sources, and through all channels, without being fettered by rules and procedure, which govern proceedings in Court.
The only obligation which the law casts on them is that they should not (1) ; , 947.
95 act on any information which they may receive unless they put it to the party against whom it is to be used and give him a fair opportunity to explain it.
What is a fair opportunity must depend on the facts and circumstances of each case but where such an opportunity had been given, the proceedings are not open to attack on the ground that the enquiry was not conducted in accordance with the procedure followed in courts.
" It has been further laid down by this Court in The Collector of Central Excise and Land Customs vs Sanawarmal Purohit (1) that: "A quasi judicial authority would be acting contrary to the rules of natural justice if it acts upon information collected by it which has not been disclosed to the party concerned and in respect of which full opportunity of meeting the inferences which arise out of it has not been given.
" The above two extracts, it will be noted, emphasize that rules of natural justice can be considered to have been violated only if the authority concerned acts upon information collected by it and the said information has not been disclosed to the party against whom the material has been used.
In paragraph 10 of his writ petition the respondent had alleged that the Enquiry Officer had, during the course of the enquiry, maintained regular correspondence and contact with the Deputy Superintendent of Police, Anti Corruption Branch, Gauhati.
In para 12 he had further alleged that the Enquiry Officer started recording statements of witnesses on and from July 23, 1958 and after recording the statements of thirteen witnesses, came to Gauhati on July 14, 1958 and had consultation with the Deputy Superintendent, Anti Corruption Branch, about the proceedings against the respondent and also went through the record of the Anti Corruption Branch on July 15, 1958.
The request of the respondent for being furnished with a copy of the report of the Anti Corruption Branch was not complied with.
He further alleged that the enquiry proceedings show that the enquiry officer had taken into consideration, against the respondent, the report of the Anti Corruption Branch.
In the counter affidavit on behalf of the State, filed in the writ petition, it was contended in para 10 that the report of the Anti Corruption Branch being a confidential document and not having been used as an Exhibit in the disciplinary proceedings, the respondent was not entitled to a copy of the same.
It was further averred in para 11 that the findings of the Enquiry Officer, (1) Civil Appeals Nos.
1362 1363/1967 decided on 16 2 1968.
96 Barpeta, recorded against the respondent were based on the evidence recorded during the enquiry and not on any consultation with the Anti Corruption Branch officers.
It was further averred in Para 13 that as the report of the Anti Corruption Branch was not exhibited in the disciplinary proceedings, there was no question of the Enquiry Officer taking the said report into consideration and, as a matter of fact also the report was not taken into consideration by the Enquiry Officer and the findings against the respondent had been recorded on the basis of the evidence recorded by the Enquiry Officer and no part of it is based on the report of the Anti Corruption Branch.
From the above averments it will be noted that the respon dent no doubt made a grievance of the consultation stated to have taken place during the midst of the enquiry between the Enquiry Officer and the Anti Corruption Branch.
But his specific averment was that the findings against him recorded in the enquiry were based upon the report of the Anti Corruption Branch the copy of which was not furnished to him.
The State, on the other hand, did not controvert the fact that the Enquiry Officer did have consultation with the Anti Corruption Branch on the dates mentioned in the record of proceedings.
But, according to the State, no part of any information contained in that report had been taken into account in the enquiry proceedings and that on the other hand the report of the Enquiry Officer was exclusively based on the evidence adduced during the enquiry.
A perusal of the report of the Enquiry Officer, in the pro ceedings before us, shows that there is absolutely no reference to any data or material, if any, collected by him when he consulted the Deputy Superintendent of Police, Anti Corruption Branch on July 14 and 15, 1958.
But, we have to state that it is highly improper for an Enquiry Officer during the conduct of an enquiry to attempt to collect any materials from outside sources and not make that information, so collected, available to the delinquent officer and further make use of.
the same in the enquiry proceedings.
There may also be cases where a very clever and astute enquiry officer may collect outside information behind the back of the delinquent officer and, without any apparent reference to the information so collected, may have been influenced in the conclusion recorded by him against the delinquent officer concerned.
, If it is established that the material behind the back of the delinquent officer has been collected during the enquiry and such material has been relied on by the enquiry officer, without its having been disclosed to the delinquent officer, it can be stated that the enquiry proceedings are vitiated.
It was, under such circumstances, that this Court, in Executive Committee of U.P. State 97 Warehousing Corporation vs Chandra Kiran Tyagi(1) accepted the view of the High Court that the enquiry proceedings were vitiated by the enquiry officer collecting information from outside sources and utilising the same in his findings recorded against the delinquent officer without disclosing that information to the accused officer.
It was again, under similar circumstances that this Court in Sanawarmal Purohit 's Case (2 ) upheld the order of the High Court holding the enquiry proceedings to be contrary to the principles of natural justice when the enquiry officer had collected information from third parties and acted upon the information so collected, without disclosing the same to the accused.
If the disciplinary authority himself had been also the enquiry officer and, during the course of the enquiry he had collected materials behind the back of the accused and used such materials without disclosing the same to the officer concerned, the position will be still worse and the mere fact that such an order passed by the disciplinary authority had even been confirmed by an appel late authority without anything more, will not alter the position in favour of the department.
But, in the case before us, it is no doubt true that the enquiry officer has made a note that he consulted the Deputy Superintendent of Police, Anti Corruption Branch on July 14 and 15, 1958 and perused the records relating to the charges.
But the enquiry report does not show that materials, if any, collected by the Enquiry Officer on those two days, have been utilised against the respondent.
We do not find any warrant for the High Court 's view that : "there is no doubt that the S.D.P.O. took into consideration the materials found by the Anti Corruption Branch.
" On the other hand, a perusal of the report shows that each and every item of charge had been discussed with reference to the evidence bearing on the same and findings recorded on the basis of such evidence.
Therefore, it cannot be stated that the Enquiry Officer in this case has taken into account materials if any that he may have collected from the Anti Corruption Branch.
Nor is there anything to show that, in the discussion contained in his report, the Enquiry Officer was in any way influenced by the consultation that he had with the Anti Corruption Branch.
If so, it cannot be held that the enquiry proceedings are violative of the principles of natural justice.
The fact that a copy of the report of the Superintendent of Police, Anti Corruption Branch, dated December 21, 1957 was (1) C. A. No. 559 of 1967, decided on 8 9 1969.
(2) Civil Appeals Nos.
1362 1363/67 decided on 16 2 1968.
98 not furnished to the respondent is, in our opinion,, of no consequence in relation to the actual enquiry conducted against the respondent.
That report was necessitated in view of the complaints received against the respondent and the enquiry made by the Anti Corruption Branch was only for the purpose of enabling the Government to consider whether disciplinary proceedings should be initiated against the respondent.
On receipt of the report, the Government felt that disciplinary proceedings will have to be initiated against the respondent and that is how the enquiry proceedings were commenced.
The validity of the enquiry will have to be decided only by the manner in which it has been conducted.
So far as that is concerned, it is clear from the record that the respondent had a full opportunity of participating in the enquiry and adducing evidence on behalf of himself and of cross examining the witnesses for the prosecution and the entire evidence was recorded in his presence.
The non furnishing of the copy of the report of the Superintendent of Police, Anti Corruption Branch, does not vitiate the enquiry proceedings.
Over and above these circumstances, it is also to be seen that the enquiry officer was not the disciplinary authority competent to impose the punishment against the respondent.
The competent authority is the Superintendent of Police.
The show cause notice, issued on October 18, 1958 as well as the order of dismissal passed by the Superintendent of Police, dated December 3, 1958 clearly show that the said officer has independently gone into the evidence on record in respect of the charges for which the respondent was tried and has, after taking into account the explanations furnished by him, independently come to the conclusion that the respondent is guilty.
Similarly, the Deputy Inspector General of Police, Range Assam, before whom the respondent filed an appeal has also very elaborately and in considerable detail discussed the entire evidence on record and has agreed with the conclusions regarding the guilt of the respondent.
We have already held that there is no violation of the rules of natural justice in the enquiry proceedings.
Even assuming that there was any defect in the said enquiry proceedings, inasmuch as the punishing authority and the appellate authority, the Superintendent of Police and the Deputy Inspector General of Police, respectively, have independently considered the matter and found the respondent guilty on the evidence on record, it must be held that in the circumstances of this case there has been no violation of the principles of natural justice when the order of dismissal was passed.
We may state that the respondent, when he sent his explanation on November 21, 1958 to the show cause notice issued by the Superintendent of Police on October 18, 1958 did not make any 99 grievance regarding the consultation by the Enquiry Officer with the Anti Corruption Branch on July 14 and 15, 1958.
For the first time the respondent took this ground of objection to the enquiry proceedings only when he filed the appeal before the Deputy Inspector General of Police and the latter has quite rightly rejected this objection holding that any consultation that the Enquiry Officer had with the Anti Corruption Branch has not affected the case in any way since the findings had been recorded against the respondent entirely on the evidence adduced during the enquiry.
The High Court has not considered the various aspects, referred to above.
Both the contentions of the learned counsel for the appellant, in the circumstances, will have to be accepted and, in consequence, it must be held that the view of the High Court that the order of dismissal is illegal and void is erroneous.
Mr. Mukherjee, learned counsel for the respondent, raised the contention that the materials on record disclose that the respondent was appointed permanent Sub Inspector by the Inspector General of Police whereas the order of dismissal has been passed by a subordinate authority, the Superintendent of Police and therefore the order of dismissal is illegal and void.
Normally, this contention should not be entertained, because it is stated by the High Court that apart from the two points considered by it, no other grounds of objection were raised by the respondent against the order of dismissal.
But, if really the records support this contention of Mr. Mukherjee, that will make the order of dismissal illegal and so we permitted the counsel to raise this contention.
But, after a reference to the material on record, we are satisfied that this contention is devoid of merit.
The respondent, no doubt, averred in his writ petition that he, was appointed to the substanive post of Sub Inspector of Police by order of the Inspector General of Police, Assam, and therefore the order of dismissal passed by a subordinate authority, viz., the: Superintendent of Police, is illegal and ultra vires.
In the counter affidavit filed before the High Court, the State maintained that the Superintendent of Police was the appointing authority of a Sub Inspector of Police and it placed reliance upon rule 66, as corrected by the Correction Slip No. 150, dated June 1, 1938 of the Assam Police Manual, The State further categorically stated that the Superintendent of Police is the appointing and punishing authority of the Sub Inspector of Police and the respondent has been properly and validly dismissed by the competent authority.
Rule 66, referred to above, clearly supports the '.
contention of the State in this regard.
Annexure X to the counter affidavit of the State in the High Court is the order of the Inspector General of Police, Assam,, 100 dated December 16, 1952.
That refers to the selection for confirmation as Sub Inspectors of.
Police of the persons mentioned therein.
The respondent is serial number 5 in the said order.
Note No. 2 to this order specifically directs the Superintendents of Police to send to the Inspector General of Police, Assam, copies of confirmation orders issued by them in respect of the officers.
In accordance with the orders of the, Inspector General of Police dated December 16, 1952 the Superintendent of Police passed an order D.O. No. 3777 dated December 31, 1952 that among other officers, the respondent, who was officiating as Sub Inspector, has been selected for confirmation as Sub Inspector of Police (Unarmed Branch) with effect from September 1, 1951 and that he has been confirmed as Sub Inspector of Police (Unarmed Branch) from the same date and absorbed against an existing substantive vacancy in the district.
These orders clearly show that the respondent was appointed permanent Sub Inspector of Police not by the Inspector General of Police but by the Superintendent of Police.
Obviously because of these records, such a contention, as is now taken on behalf of the respondent, was not raised before the High Court.
The appeal is accordingly allowed and the judgment of the High Court set aside.
The first respondent will pay the costs of the appeal to the appellants.
G.C. Appeal allowed.
| One Perumal Nadar, a Hindu, married Annapazham, daughter of an Indian Christian, on November 29, 1950 at Kannimadam in the State of Travancore Cochin according to Hindu rites.
Of the two children born of the marriage one died.
The younger child, a son born in 1958, acting through his mother, the afoResaid Annapazham, as his guardian, filed an action in the Court of the Subordinate Judge, Tirunelveli, for separate possession of a half share in the properties of the joint family held by his father Perumal.
The 'suit was defended by Perumal.
The trial court decreed the suit and the High Court confirmed the decree.
In appeal to this Court by certificate Perumal, the appellant, contended : (i) that Annapazham was an Indian Christian and a marriage between a Hindu and an Indian Christian must be regarded as void; (ii) that the marriage was invalid because the appellant was already married .before he married Annapazham and bigamous marriages were prohibited by Madras Act 6 of 1949; (iii) that the appellant and Annapazham were living apart for a long time before the birth of the plaintiff and on that account the plaintiff could not be regarded as a legitimate child of the appellant.
HELD : (i) The question whether marriage between a Hindu male and a Christian female is valid or not did not arise for consideration in the present case because the finding of the Courts below that Annapazham was converted to Hinduism before her marriage with Perumal was amply supported by evidence.
[52 D E] A person may be a Hindu by birth or conversion.
A mere theoretical allegiance to the Hindu faith by a person born in another faith does not convert him into a Hindu, nor is a bare declaration that he is a Hindu sufficient to convert him to Hinduism.
But a bona,fide intention to be converted to the Hindu faith, accompanied by conduct unequivocally expressing that intention may be sufficient evidence of conversion.
No formal ceremony of purification or expiration is necessary to effectuate conversion.
[52 E F] Muthusami Mudaliar vs Musilamani alias Subramania Mudaliar I.L.R. and Goona Durgaprasada Rao vs Goona Sudarasanaswami, I.L.R. , referred to.
The evidence in the present case established that the parents of Annapazham arranged the marriage.
The marriage was performed 50 according to Hindu rites and ceremonies in the presence of relatives who were invited to attend : customary ceremonies peculiar to a marriage between Hindus were performed : no objection was raised to the marriage and after the marriage Annapazham was accepted by the local Hindu Nadar community as belonging to the Hindu faith; and the plaintiff was also treated as a Hindu.
On the evidence there could be no doubt that Annapazham bona fide intended to contract marriage with Perumal.
Absence of specific expiatory or purificatory ceremonies would not be sufficient to hold that she was not converted to Hinduism before the marriage ceremony was performed.
The fact that the appellant chose to go through the marriage ceremony according to Hindu rites with Annapazham in the presence of a large number of persons clearly indicated that he accepted that Annapazham was converted to Hinduism before the marriage ceremony was performed.
[53 C E] (ii) On the facts and pleadings the High Court was right in holding that it was not proved that the appellant was domiciled in the State of Madras at the date of his marriage with Annapazham.
He could not therefore rely upon the provisions of the Madras Hindu (Bigamy Prevention and Divorce) Act 6 of 1949.
[54 F] (iii) There was a concurrent finding by the courts below that there was no evidence to establish that the appellant living in the same village as Annapazham had no access to her during the time when the plaintiff could have been begotten.
Therefore, in view of section 112 of the Indian Evidence Act it could not be held that the plaintiff was an illegitimate child.
[55 A B] Chilukuri Venkateswarlu vs Chilukuri Venkatanarayana, , Karapaya vs Mayandi, I.L.R. 12 Rang.
243 (P.C) and Ammathayee vs Kumaresain, , applied.
|
.L.P. (Civil) No. 8896 of 1985.
From the Judgment and Order dated 18.12.
1984 of the Madras High Court in Civil Revision Petition No. 5539 of 1983.
WITH C.M.P. No. 28592 of 1988.
488 R.F. Nariman, J.P. Pathak, M.B. Shivraj and P.H. Parekh for the Petitioner.
T.S. Krishnamurthy Iyer and Mrs. section Dikshit for the Respondent.
The Judgment of the Court was delivered by K. JAYACHANDRA REDDY, J.
We have heard both the sides and the matter is being disposed of at the admission stage.
This petition is directed against the order of a learned Single Judge of the Madras High Court confirming the order passed by the Subordinate Judge, Nilgiris.
The matter arises under the ( 'Act ' for short) and the facts that give rise to the petition are as follows: The testatrix Mary Aline Browne was the wife of Herbet Evander Browne who was the eldest son of one John Browne.
The testatrix had a daughter of the name of Zoe Enid Browne and she died on 8.10.1977.
The respondent claiming to be the beneficiary to the estate of Mary Aline Browne who died on 28.3.1972 under the terms of a will said to have been exe cuted by her on 12.3.
1962 filed an application for letters of Administration with a copy of the will annexed in the Sub Court, Nilgiris.
The same is numbered as O.S. No. 23 of 1980.
Alongwith the application the respondent also filed an affidavit of an attestor of the Will.
In that proceeding, the petitioner and her deceased husband lodged a caveat on the ground that the said Mary Aline Browne did not execute any will and the will propounded by the respondent was a fictitious and forged one, intended to disentitle Zoe Enid Browne, daughter of the testatrix from claiming interest in the estate of her mother.
The petitioner also claimed that Zoe Enid Browne executed a will dated 23.6.1975 in favour of the petitioner and that she also executed a gift deed in her favour.
The petitioner also claimed that she was a trustee of John Browne Trust and that therefore, the peti tioner has caveatable interest.
Thus they opposed the pro bate of the will.
Before the Sub Court, several documents were filed.
The respondent herein contested the caveat stating that the petitioner herein has no interest in the estate.
The learned Subordinate Judge held that the peti tioner is not in any manner related either to Mary Aline Browne or Zoe Enid Browne.
The learned Single Judge of the High Court in an elaborate order having considered the rival contentions dismissed the Civil Revision Petition holding that the 489 petitioner cannot claim to be a person who has a caveatable interest in the estate of the deceased testatrix Mary Aline Browne.
We are told that the will has subsequently been probated and the letters of Administration have been grant ed.
The learned counsel for the petitioner contended that both the courts below have erred in holding that the peti tioner has no caveatable interest.
It is submitted that the petitioner is executor and legatee of the will dated 23.6.1975 executed by Miss Zoe Enid Browne daughter of Mrs. Mary Aline Browne and that Miss Zoe has also executed a registered gift deed dated 29.3.1974 in respect of the second item of the estate and that the petitioner was also appointed a trustee of John Browne Trust on 11.6.1975 and therefore, in law the petitioner has an interest in the property which is the subject matter of the will and thus have caveatable interest.
Under Section 283 of the , the District Judge or District Delegate may, if he thinks proper, issue citations calling upon all persons claiming to have any interest in the estate of the deceased to come and see the proceedings before the grant of probate or letters of administration.
Section 284 provides for lodging caveat against grant of probate or administration.
Section 285 lays down that no proceeding shall be taken on a petition for probate or letters of administration after a caveat against the grant thereof has been entered until the notice has been given to the caveator.
Section 286 deals with the power of a District Delegate and lays down that he shall not grant probate or letters of administration in any case in which there is "contention" as to the grant, or in which it otherwise appears to him that probate or letters of administration, ought not to be granted in this Court.
Under Section 288 where there is contention or where the District Delegate thinks that probate or letters of administration should be refused, the documents shall be returned to the applicant.
In the instant case the Sub Judge comes within the meaning of the District Delegate and the necessary powers were conferred on him by a notification which is not in dispute.
According to the learned counsel the petitioner duly lodged a caveat against the grant of probate and that both the courts below have not properly appreciated the effect of such a contention and erred in striking off the petitioner 's caveat.
In Nabin Chandra Guha vs Nibaran Chandra Biswas and Ors., AIR 1932 Calcutta 734, the Division Bench held that a person who has a real interest in the estate which is or is likely to be prejudicially 490 affected or adversely affected by the will can oppose the grant of probate or letters of administration.
In Gourishan kar Chattoraj vs Smt.
Satyabati Debi, AIR 1931 Calcutta 470, it is held that the petitioner therein who was related to the deceased through a common ancestor, can be said to have interest in opposing the application for probate.
In Shanti Devi Aggarwalla vs Kusum Kumari Sarkar & Ors., , Justice Ranganath Misra, as he then was, held that the vendor legatee is entitled to enter caveat and the purchaser having stepped into the shoes of vendor is also entitled to enter the caveat.
In Narayan Sah vs Smt.
Davaki, AIR 1978 Patna 220, considering the locus standi of a person to oppose grant, it is held that any interest, however, slight and even a bare possibility of an interest is suffi cient to entitle a person to enter caveat in a probate proceeding.
Relying on these decisions the learned counsel urged that the petitioner in the instant case has substantial interest in the estate.
The learned counsel for the respond ent did not dispute the legal position.
He, however, con tended that there was absolutely no material before the Courts below to substantiate the alleged interest of the petitioner in the estate.
It is submitted that the so called will said to have been executed by Miss Zoe Enid Browne, daughter of Mrs. Mary Aline Browne has not been filed.
Likewise, the gift deed also was not filed.
Coming to the trust of John Browne it is submitted that the trust does not exist and got extinguished.
The learned counsel for the respondent further submitted that except mentioning these three aspects in a bare manner no other material was placed before the Court.
Having gone through both the orders we are reclined to agree with the learned counsel for the respond ent that the petitioner did not establish her caveatable interest.
We have perused the entire order of the trial court in this context.
Admittedly neither the original nor a copy of the will said to have been executed by Zoe Enid Browne, was filed.
Now coming to the trust, it is in the evidence of P.W. 1 that John Browne Trust has come to an end in March, 1972 and the same was not in existence.
The trial court has considered both the documentary and oral evidence in this regard and has rightly held that the petitioner has no existing benefit from the trust.
Likewise the registered gift deed or a copy of it has not been filed.
Before the learned Single Judge of the High Court also same contentions were put forward.
The learned Judge observed that from the objections filed by the caveator she desires the Court in the probate proceedings to uphold her title on the strength of a gift deed and the Trust deed.
It is observed: "Equally, the petitioner has not placed before the Court 491 the will dated 23.6.
1975 stated to have been executed by Zoe Enid Browne to establish that under the will dated 12.3.
1962 stated to have been executed by Mary Aline Browne some interest given to the petitioner under the will dated 23.6.1975 of Zoe Enid Browne, is liable to be in any manner affected or otherwise displaced, by the grant of letters of administration in respect of the will dated 12.3.1962 stated to have been executed by Mary Aline Browne." Accordingly the learned Judge held that the petitioner has not established that she has a caveatable interest justify ing her opposition to the probate proceedings for grant of letters of administration.
In this state of affairs, we are unable to agree with the learned counsel that the petitioner has caveatable interest.
Learned counsel, however, submitted that the will exe cuted by Zoe Enid Browne on 23.6.1975 in favour of the petitioner though not filed but was subsequently probated in the year 1989 and the fact that probate is granted can be taken into consideration by this Court as a subsequent happening, as the appeal before this Court, is only a re hearing or the continuation of the matter.
Reliance is placed on Section 227 of the which reads thus: "Effect of Probate Probate of a will when granted estab lishes the will from the death of the testator, and renders valid all intermediate acts of the executor as such.
" It is submitted that since the will executed by Zoe Enid Browne in favour of the petitioner is probated it must be deemed that it was existing since the death of the testatrix namely Miss. Zoe Enid Browne and that validates all interme diary acts.
According to the learned counsel, the effect of such a probate is that the petitioner 's interest in the estate gets established even on the date of entering caveat.
We are unable to see any force in this submission.
The said probate, admittedly, took place in a court in the Madras City.
We do not know whether the citations were issued to all the persons interested.
This probate also admittedly was granted when the special leave petition was pending in this Court yet the respondent had no notice about this probate proceeding.
Under these circumstances, exercising our juris diction under Article 136 we do not see that it is expedient to acknowledge this probate proceeding and re open the matter.
492 Lastly an attempt was made to show that the Sub Court has no jurisdiction but we find that there a necessary notification issued by the High Court conferring powers on the Sub Court.
We see no force in any one of these submis sions.
The learned counsel, however, lastly submitted that the petitioner inspite of having substantial interest in the estate is losing her right, to prove that the alleged will by Miss Zoe Enid Browne is not a genuine one and that it is a fictitious one.
We must point out that by granting a probate, the court is not deciding the disputes to the title.
Even with regard to a probate granted, it can be revoked as provided under Section 263 of the in any one of the cases mentioned therein.
But the learned counsel for the petitioner submits that the findings of the Sub Court and the High Court regarding the caveatable interest will come in the petitioner 's way in seeking revocation of the grant of probate.
It is needless to say that the findings regarding the caveatable interest of the petitioner have a limited effect and are relevant only to the extent of grant ing of probate.
But they cannot deprive his right, if he has any, to invoke Section 263 of the and it is upto the petitioner to satisfy the Court.
With these observations, the special leave petition is dismissed.
T.N.A. Petition dismissed.
| The respondent, claiming to be the beneficiary to the estate of deceased 'M ' under a will executed by her, filed an application in the Sub Court for Letters of Administra tion.
The petitioner lodged a caveat and opposed the probate of the will on the ground that the will propounded by the respondent was a fictitious one intended to disentitle 'Z ', daughter of 'M ', from claiming interest in the estate of her mother 'M '.
The petitioner based her caveatable interest on the basis of membership of the Trust, a gift deed and a will executed by 'Z ' which was subsequently probated in her favour.
The Subordinate Judge struck off the petitioner 's caveat on the ground that she has no caveatable interest.
The petitioner filed a Civil Revision Petition in the High Court and a Single Judge of the High Court confirmed the order of the Subordinate Judge.
In the special leave to this Court it was contended on behalf of the petitioner that the courts below have erred (i) in holding that she has no caveatable interest and in striking off her caveat; (ii) that Z 's will in her favour which was subsequently probated established her interest in the estate on the date of entering the caveat.
487 Dismissing the petition, this Court, HELD: 1.
By granting a probate the Court does not decide the disputes to the title.
A probate granted can be revoked under Section 263 of the .
[492C] 1.1 In the instant case the findings regarding the caveatable interest of the petitioner have a limited effect and are relevant only to the extent of granting of probate.
But they cannot deprive her right to invoke section 263 of the Act.
[492D] 2.
The order of the Trial Court shows that admittedly neither the original nor a copy of the will said to have been executed by 'Z ' was filed.
Likewise the registered gift deed or a copy thereof was not filed.
It is also evi dent that the Trust has come to an end and the same was not in existence.
The Trial Court has considered both the docu mentary and oral evidence in this regard and has rightly held that the petitioner has no existing benefit from the trust.
Accordingly, it cannot be held that the petitioner has caveatable interest.
[490F G; 491C] 3.
In the instant case it is not known whether the citations were issued to all the persons interested before the grant of the probate.
The probate was also granted when the special leave petition was pending in this Court yet the respondent had no notice about this probate proceedings.
Under these circumstances it is not expedient to acknowledge this probate proceeding and re open the matter.
[491 G H] Nabin Chandra Guha vs Nibaren Chandra Biswas and Ors., AIR 1932 Cal.
734; Gourishankar Chattoraj vs Smt.
Satyabati Debi, AIR 1931 Cal.
470; Shanti Devi Aggarwala vs Kusum Kumari Sarkar & Ors., and Narayan Sah vs Smt.
Devaki, AIR 1978 Patna 220, referred to.
|
Civil Appeal No. 2891 of 1984.
From the Judgment and Order dated 28.2.84 of the Customs Excise and Gold Control Appellate Tribunal, New Delhi in Order No. 118/84 D. A.K. Ganguli, P. Parmeswaran and K. Swamy for the Appellant.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI,J.
This is a statutory appeal under Section 35 L(b) of the Central Excise & Salt Act, 1944, hereinafter called the 'Act ', against the Order dated February 22, 1944 passed by the Customs, Excise & Gold (Control) Appellate Tribunal, hereinafter called the 'CEGAT ' In this appeal we are concerned with the question whether there was exigibility to taxation on the item concerned under the Act.
It appears that during the course of investigations made against Swastik Investment Company, Bombay, the Central Excise Officers found that some of the consignments of the material described in the documents as 'crimpled uncut waste ' were cleared from M/s. Swadeshi Polytex Ltd., Ghaziabad, during the period from Jan '74 to Dec '77 and were purchased by the respondents herein and utilised in the manufacture of polyester staple fibre.
The Collector held that the so called 'crimpled uncut waste ' purchased by the respondents was, in fact, polyester fibre tow and the staple fibre which were commercially two distinct products and the respondents had carried on manufacture of polyester staple fibre from tow and, as such, exigible to duty.
The respondents filed an appeal before the Central Board of Excise & Customs against the Collector 's Order.
The appeal was thereafter transferred to CEGAT in pursuance of Section 35 P of the Act.
It appears that there is distinction between a tow and staple fibre.
The Ministry of Finance (Deptt. of Revenue) 's circular indicates as follows: "Tow is a collection of many parallel continuous filaments without twist which are grouped together in rope like form." "Tow is used for the same purpose for which staple fibre is 1009 used.
Tow is mainly converted into staple fibre and only a negligible quantity is converted directly into yarn.
It has been therefore decided that duty should be levied on Tow at the rate applicable to staple fibre (MF (DR & I) F. No. 50/7/71 CX 2 dt.
22.12.72)".
In other words, Tow is fibre in running length and staple fibre is obtained by cutting it into required short length.
On an examination of the material and the contention, the Tribunal came to the conclusion that the material which the respondents had purchased was already man made fibre but in running length.
All that the respondents did in relation to it, was to cut it into staple length after some manual sorting and straightening.
The question, therefore, is whether cutting the long fibre into short fibre resulted into a new and different articles of commerce.
Now it is well settled how to determine whether there was manufacture or not.
This Court held in the case of Union of India vs Delhi Cloth & General Mills, ; that 'manufacture ' means to bring into existence a new substance and does not mean merely to produce some change in a substance (emphasis supplied).
It is true that etymological word 'manufacture ' properly construed would doubtless cover the transformation but the question is whether that transformation brings about fundamental change, a new substance is brought into existence or a new different article having distinctive name, character or use results from a particular process or a particular activity.
The taxable event under the Excise Law is 'manufacture '.
See in this connection Empire Industries Ltd. & Ors. etc.
vs Union of India & Ors. etc.
, [1985] Suppl.
1 SCR page 292 and M/s Ujagar Prints vs Union of India, In the instant case it is not disputed that what the appellant did, was to cut the running length fibre (tow) into short length fibre (staple fibre).
It indubitably brought a change in the substance but did not bring into existence a new substance.
The character and use of the substance (man made fibre) remained the same.
It is true that by the change in the length of the fibre, it acquired a new name.
But since in this case the tariff entry recognised the single description 'man made fibre ' with no further sub division based on length of the fibre and even without any distinct enumeration of the various forms of fibre by cutting long fibres into short ones, the respondents did not bring into existence any new product so as to attract any levy under the same tariff entry.
Even by cutting, the respondents obtained man made fibre.
Such cutting, therefore, involved no manufacture and, hence, no duty liability can be imposed upon them.
1010 In that view of the matter and on the facts found by the Tribunal, we are of the opinion that the Tribunal was right in the view it took and that decision needs no interference.
This appeal, therefore, cannot be entertained and is accordingly dismissed.
N.V.K. Appeal dismissed.
| % The Central Excise Officers during the course of investigations made against M/s Swastik Investment Company, Bombay found that some of the consignments of the material described in documents as 'crimpled uncut waste ' were cleared from M/s Swadeshi Polytex Limited, Ghaziabad during the period from January, 1974 to December, 1977, were purchased by the respondents and utilised by them in the manufacture of 'polyester staple fibre '.
The Collector held that the 'crimpled uncut waste ' purchased by the respondents was in fact 'polyester fibre tow ' and that the respondents had carried on manufacture of 'polyester staple fibre ' from tow and, as such, exigible to duty.
Aggrieved by the Collector 's Order the respondents filed an appeal before the Central Board of Excise and Customs.
This appeal was transferred to the Customs Excise and Gold Control Appellate Tribunal in pursuance of section 35 P of the .
The Tribunal on an examination of the material and the contentions came to the conclusion that what the respondents had purchased was already man made fibre but in running length, and that what they did in relation to it, was to cut it into staple length after some manual sorting and straightening and held that such cutting involved no 1007 manufacture and hence no duty liability could be imposed.
In the Appeal by the revenue to this Court on the question: whether there was exigibility to taxation on the item manufactured by the respondent.
Dismissing the Appeal.
^ HELD: 1.
There is a distinction between 'tow ' and 'staple fibre '.
'Tow ' 'is fibre in running length and 'staple fibre ' is obtained by cutting it into required short length.
[1009B] 2.
The taxable event under the Excise Law is 'manufacture '. 'Manufacture ' means to bring into existence a new substance and does not mean merely to produce some change in a substance.
[1009D] 3.
Etymologically the word 'manufacture ' properly construed would doubtless cover transformation, but the question is whether the transformation in the instant case brings about fundamental change, a new substance is brought into existence, or a new different article having distinctive name, character or use results from a particular process or a particular activity.
[1009D E] In the instant case, it is not disputed that what the respondents did, was to cut the running length fibre (tow) into short length fibre (staple fibre).
It indubitably brought a change in the substance but did not bring into existence a new substance.
The character and use of the substance (man made fibre) remained the same.
By the change in the length of the fibre, the substance acquired a new name.
But since the tariff entry recognised the single description 'man made fibre ' with no further sub division based on length of fibre and even without any distinct enumeration of the various forms of fibre by cutting long fibres into short ones, the respondents did not bring into existence any new product so as to attract any levy under the same tariff entry.
Even by cutting, the respondents obtained man made fibre.
Such cutting, therefore, involved no manufacture and, hence, no duty liability can be imposed upon them.
[1009E H] Union of India vs Delhi Cloth & General Mills, ; ; Empire Industries Ltd. & Ors. etc.
vs Union of India & Ors. etc.
, [1985] Suppl.
1 SCR page 292 and M/s Ujagar Prints vs Union of India, , referred to. 1008
|
Appeal No. 135 of 1955.
Appeal by special leave from the judgment and order dated October 30, 1952, of the Labour Appellate Tribunal of India, Allahabad, in Misc.
Case No. C 146 of 1952.
R. R. Biswas, for the appellant.
Sukumar Ghose (amicus curiae), for the respondents.
November 28.
The Judgment of the Court was delivered by S.K. DAS J.
This is an appeal by special leave from the judgment and order of the Labour Appellate Tribunal of India at Allahabad dated October 30, 1952.
The relevant facts are these.
The Banaras Ice Factory Limited, the appellant before us, was incorporated on September 13, 1949, as a private limited company and was carrying on the business of manufacturing ice in the city of Banaras though its registered office was in Calcutta.
The factory worked as a seasonal factory and had in its employment about 25 workmen at all material times.
These workmen were employed from the month of March to the month of September 145 year.
The appellant company got into financial difficulties on account of trade depression, rise in the price, of materials and increase in the wages and emoluments of workmen.
It tried to secure a loan of Rs. 10,000/ from a Bank but met with no success.
Thereupon, it decided to close down the factory and on January 15, 1952, a notice was given to its workmen saying that the factory would be closed down with effect from January 17, 1952, and the services of the workmen would not be necessary for two months from that date.
The work.
men received their wages up to January 16, 1952.
On March 18, 1952, they were again taken into service but this temporary closing of the factory gave rise to an industrial dispute and the workmen complained that they were wrongfully laid off with effect from January 17, 1952.
The dispute was referred to the Regional Conciliation Officer, Allahabad, for adjudication.
In the meantime, that is, on June 6, 1952, the workmen gave a strike notice and as there was no coal in the factory, the appellant also gave a notice of closure on June 12, 1952.
A settlement was, however, arrived at between the parties on June 15, 1952, at the house of the Collector of Banaras.
The terms of that settlement, inter alia, were: (1) the management would withdraw its notice of closure dated June 12, 1952 ; (2) the workmen would withdraw their strike notice dated June 6, 1952; (3) there being no coal, the workers would remain on leave for a period of thirty days with effect from June 16, 1952, and would report for duty on July 16, 1952, at 8 A.M. and (4) after the workers had resumed their duty on July 16, 1952, the appellant would not terminate the services of any workmen or lay them off in future without obtaining the prior permission of the Regional Conciliation Officer, Allahabad.
On June 28, 1952, the Regional Conciliation Officer, Allahabad, gave his award in the matter of the industrial dispute between the appellant and its work , men with regard to the alleged wrongful laying off of the workmen from January 17, 1952, to March 18, 1952, 19 146 referred to above.
By his award the Regional Conciliation Officer gave full wages to the workmen for the period in question.
On July 16, 1952, none of the workmen reported for duty in accordance with the terms of the agreement referred to above, and on that date the appellant gave a notice to its workmen to the effect that the appellant found it difficult to run the factory and had decided to close it down; the workmen were informed that their services would not be required and would be terminated upon the expiry of thirty days from July 16, 1952.
The workmen, it is stated, accepted the notice and took their pay for one month (from July 16 to August 15, 1952) without any protest.
Against the award of the Regional Conciliation Officer dated June 28, 1952, the appellant filed an appeal to the Labour Appellate Tribunal on July 25, 1952.
On August 31, 1952, a complaint was made on behalf of the workmen to the Labour Appellate Tribunal under section 23 of the Industrial _ Disputes (Appellate Tribunal) Act, 1950, hereinafter referred to as the Act.
The gravamen of the complaint was that the appellant had contravened the provisions of section 22 of the Act.
because the appellant had discharged all the workmen with effect from August 15, 1952, without the permission in writing of the Labour Appellate Tribunal during the pendency before it of the appeal filed on July 25, 1952, against the award of the Regional Conciliation Officer.
The Labour Appellate Tribunal dealt with this complaint by its order dated October 30, 1952.
Before the Labour Appellate Tribunal it was urged on behalf of the appellant that there was no contravention of a. 22, because on July 16, 1952, when the notice of discharge was given by the appellant, no appeal was pending before it, the appellant 's appeal having been filed several days later, namely, on July 25, 1952.
This contention was not accepted by the Labour Appellate Tribunal on the ground that though the notice of discharge was given on July 16, 1952, the termination of service was to come into operation after one month, that is, from August 15, 1952, on which date the appeal before the Labour Appellate Tribunal was certainly pending.
As learned counsel for the 147 appellant has not again pressed this point before us, it is not necessary to say anything more about it.
A second point uroed before the Labour Appellate Tribunal was that the appellant had the right to close down the factory, when the appellant found that it was not in a position any longer to run the factory.
The agreement of June 15, 1952, did not stand in the appellant 's way, as the workmen themselves did not report for duty on July 16, 1952.
The closure being a bona fide closure, it was not necessary to obtain the permission of the Labour Appellate Tribunal and there was therefore no contravention of section 22 of the Act.
The Labour Appellate Tribunal apparently accepted the principle that the appellant had the right to close its business but took the view that permission should have been obtained before the closure.
It referred to the agreement of June 15, 1952, and held that though the appellant had the right to close its business, permission was still necessary and in the absence of such permission, the appellant was guilty of contravening cl.
(b) of section 22 of the Act, and directed that the appellant should pay its workmen full wages as compensation for the period of involuntary unemployment up to the date of its award, that is, during the period from August 16, 1952, to October 30, 1952.
Relying on the decision in J. K. Hosiery Factory vs Labour Appellate Tribunal of India (1), learned counsel for the appellant has urged three points before us.
His first point is that the termination of the services of all workmen on a real and bona fide closure of business is not 'discharge ' within the meaning of cl.
(b) of section 22 of the Act.
His second point is that if the word 'discharge ' in cl.
(b) aforesaid includes termination of services of all workmen on bona fide closure of business, then the clause is an unreasonable restriction on the fundamental right guaranteed in el.
(g) of article 19 (1) of the Constitution.
His third point is that, in any view, the Labour Appellate Tribunal, was not entitled to grant compensation to the workmen, because section 23 of the Act did not in terms entitle the Labour (1) A.I.R. 1956 All.
148 Appellate Tribunal to pass an order of compensation.
We may state here that if the appellant succeeds on the first point, it becomes unnecessary to decide the other two points.
For a consideration of the first point, we must first read sections 22 and 23 of the Act.
Section 22: " During the period of thirty days allowed for the filing of an appeal under section 10 or during the pendency of any appeal under this Act, no employer shall (a)alter, to the prejudice of the workmen concerned in such appeal, the conditions of service applicable to them immediately before the filing of such appeal, or (b)discharge or punish, whether by dismissal or otherwise, any workmen concerned in such appeal, save with the express permission in writing of the Appellate Tribunal.
" Section 23: " Where, an employer contravenes the provisions of section 22 during the pendency of proceedings before the Appellate Tribunal, any employee, aggrieved by such contravention, may make a complaint in writing, in the prescribed manner, to such Appellate Tribunal and on receipt of such complaint, the Appellate Tribunal shall decide the complaint as if it were an appeal pending before it, in accordance with the provisions of this Act and shall pronounce its decision thereon and the provisions of this Act shall apply accordingly." The short question before us is whether the word 'discharge ' occurring in cl.
(b) of section 22 includes termination of the services of all workmen on a real and bona fide closure of his business by the employer.
It is true that the word 'discharge ' is not qualified by any limitation in cl.
We must, however, take the enactment as a whole and consider section 22 with reference to the provisions of the , (XIV of 1947) which is in pari materia with the Act under our consideration.
We have had occasion to consider recently in two cases the general scheme and 149 scope of the .
In Burn & Co., Calcutta vs Their Employees(1) this Court observed that the object of all labour legislation was ' firstly, to ensure fair terms to the workmen and secondly, to prevent disputes between employers and employees so that production might not be adversely affected and the larger interests of the public might not suffer.
In Pipraich Sugar Mills Ltd. vs Pipraich Sugar Mills Mazdoor Union (2) it was observed " The objects mentioned above can have their fulfilment only in an existing and not a dead industry.
" We accepted the view expressed in Indian Metal and Metallurgical Corporation vs Industrial Tribunal(3) and K. M. Padmanabha Ayyar vs The State Of Madras (4) that the provisions of the , applied to an existing industry and not a dead industry.
The same view was reiterated in Hariprasad Shivshankar Shukla vs A. D. Divikar (5) where we held that 'retrenchment ' in cl.
(oo) of section 2 and section 25F did not include termination of the services of workmen on bona fide closure of business.
Turning now to section 22 of the Act, it is clear enough that el.
(a) applies to a running or existing industry only; when the industry itself ceases to exist, it is otiose to talk of alteration of the conditions of service of the workmen to their prejudice, because their service itself has come to an end.
The alteration referred to in cl.
(a) must therefore be an alteration in the conditions of service to the prejudice of the workmen concerned, in an existing or running industry.
Similarly, the second part of cl.
(b) relating to punishment can have application to a running or existing industry only.
When the industry itself ceases to exist, there can be no question of punishment of a workman by dismissal or otherwise.
We are then left with the word 'discharge '.
Unqualified though the word is, it must, we think, be interpreted in harmony with the general scheme and scope of the .
Our attention has been drawn to (1) ; (4) (2) 2.
(5) [1957] S.C. R.121.
(3) A.I. R. 150 the definition of 'workman ' in cl.
(s) of a. 2, which says ". for the purposes of any proceeding under this Act in relation to an industrial dispute, (the definition) includes any person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute.
" In the said definition clause also, the word 'discharge ' means discharge of a person in a running or continuing business not discharge of all workmen when the industry itself ceases to exist on a bona fide closure of business.
The true scope and effect of sections 22 and 23 of the Act were explained in The Automobile Products of India Ltd. vs Rukmaji Bala (1).
It was pointed out there that the object of section 22 was " to protect the workmen concerned in disputes which formed the subject matter of pending proceedings against victimisation " and the further object was " to ensure that proceedings in connection with industrial disputes already pending should be brought to a termination in a peaceful atmosphere and that no employer should during the pendency of these proceedings take any action of the kind mentioned in the sections which may give rise to fresh disputes likely to further exacerbate the already strained relations between the employer and the workmen.
" Those objects are capable of fulfilment in a running or continuing industry only, and not a dead industry.
There is hardly any occasion for praying for permission to lift the ban imposed by section 22, when the employer has the right to close his business and bona fide does so, with the result that the industry itself ceases to exist.
If there is no real closure but a mere pretence of a closure or it is mala fide, there Is no closure in the eye of law and the workmen can raise an industrial dispute and may even complain under a.23 of the Act.
For these reasons, we must uphold the first point taken before us on behalf of the appellant.
The Appellate Tribunal was in error in holding that the (1) ; 151 appellant had contravened cl.
(b) of section 22 of the Act.
The Appellate Tribunal did not find that the closure of the appellants business was not bona fide; on the ' contrary, in awarding compensation, it proceeded on the footing that the appellant was justified in closing its business on account of the reasons stated by it.
As to the agreement of June 15, 1952, the workmen themselves did not abide by it and the appellant 's right cannot be defeated on that ground.
In view of our decision on the first point, it becomes unnecessary to decide the other two points.
On the point of construction of section 22 of the Act,, we approve of the decision of the Allahabad High Court in J. K. Hosiery Factory vs Labour Appellate Tribunal of India (supra) but we refrain from expressing any opinion on the other points decided therein and we must not be understood to have expressed our assent, contrary to the opinion expressed by us in the case of The Automobile Product8 of India Ltd. (supra) to the view that under section 23 of the Act, it is not open to an industrial Tribunal to award compensation in an appropriate case.
In the result, the appeal is allowed and the decision of the Labour Appellate Tribunal dated the 30th October 1952 is set aside.
As the workmen did not appear before us, there will be no order for costs.
We are indebted to Mr. Sukumar Ghosh for presenting before us the case of the workmen as amicus curiae.
Appeal allowed.
| In both the Writ Petitions, when the petitioners were already in judicial custody and thus have been deprived of their liberty, the District Magistrate Adilabad passed the detention orders in exercise of the power conferred under Section 3(2) read with Section 3(3) of the .
The detenu in each of these petitions filed a petition for writ of habeas corpus in the Andhra Pradesh High Court and both the petitions were rejected.
In the present petitions, it was contended as follows: (i) that in both the cases, the detenus being in judicial custody were already prevented from pursuing any activity which may prove prejudicial to the maintenance of public order and, therefore, no order of detention could be passed against each of them; (ii) that the affidavit in opposition was filed by a sub inspector of police and not by the detaining authority, i.e. the District Magistrate had completely abdicated his powers; and (iii)that in flagrant violation of the assurances given at the hearing of A.K. Roy 's case, that the drastic and draconian power of preventive detention will not be exercised against political opponents, the affidavit in opposition would show that the power of preventive detention was exercised against political opponents because the detenu in each case was a member and organizer of C.P.I. (M.L.) (Peoples War Group), a political party operating in this country.
Allowing the petition, the Court 636 ^ HELD: 1:1.
A preventive action postulates that if preventive step is not taken the person sought to be prevented may indulge into an activity prejudicial to the maintenance of public order.
In other words, unless the activity is interdicted by a preventive detention order the activity which is being indulged into is likely to be repeated.
That this is the postulate, indisputably transpires from the language employed in sub section (2) of Section 3, which says that the detention order can be made with a view to preventing the person sought to be detained from acting in any manner prejudicial to the maintenance of public order.
If it is shown that the man sought to be prevented by a preventive order is already effectively prevented, the power under sub section (2) of Section 3, if exercised, would imply that one who is already prevented is sought to be further prevented which is not the mandate of the section, and would appear tautologous.
[640 F H, 641 A] 1.2 The detaining authority before exercising the power of preventive detention would take into consideration the past conduct or antecedent history of the person and as a matter of fact it is largely from the prior events showing the tendencies of a man that an inference could be drawn whether he is likely even in the future to act in a manner prejudicial to the maintenance of public order.
If the subjective satisfaction of the detaining authority leads to this conclusion it can put an end to the activity by making a preventive detention order.
If the man is already detained a detaining authority cannot be said to have subjectively satisfied himself that a preventive detention order can be made.
[641 A C] Ujagar Singh vs State of Punjab, Jagir Singh vs State of Punjab ; and Rameshwar Shaw vs District Magistrate, Burdwan and Anr.
[1964]4 S.C.R. 921 referred to.
The subjective satisfaction of the detaining authority must comprehend the very fact that the person sought to be detained in jail is under detention and yet a preventive detention order is a compelling necessity.
If the subjective satisfaction is reached without the awareness of this very relevant fact the detention order is likely to be vitiated.
But, it will depend on the facts and circumstances of each case.
[642 D F] Vijay Kumar vs State of J & K and Ors.
A.I.R. 1982 S.C. 1023, applied.
The awareness of the detaining authority must be of the fact that the person against whom the detention order is being made is already under detention.
This would show that such a person is not a free person to indulge into a prejudicial activity which is required to be prevented by detention order.
And this awareness must find its place either in the detention order or in the affidavit justifying the detention order when challenged.
The absence of this awareness would permit an inference that the detaining authority was not even aware of this vital fact and mechanically proceeded to pass the order which would 637 unmistakably indicate that there was non application of mind to the most relevant fact and any order of such serious consequences resulting in deprivation of liberty, if mechanically passed without the application of mind is liable to be set aside as invalid.
[643 D G] 3:1.
A sub inspector of police cannot arrogate to himself the knowledge about the subjective satisfaction of the District Magistrate on whom the power of detention is conferred by the .
If the power of preventive detention is to be conferred on an officer of the level and standing of a sub inspector of police, we would not be far from a police state.
[644 E F] 3:2.
Parliament has conferred power primarily on the Central Government and in specific cases, if the conditions set out in sub section (3) of section 3 of the Act are satisfied and the Notification is issued by the State Government to that effect, this extra ordinary power of directing preventive detention can be exercised by such highly placed officers as District Magistrate or Commissioner of Police.
[644 F G] 3:3.
In this case, (a) the District Magistrate, the detaining authority has not chosen to file his affidavit, (b) the affidavit in opposition filed by the sub inspector would imply either he had access to the file of the District Magistrate or he had influenced the decision of the Magistrate for making the detention order and in any case the District Magistrate completely abdicated his functions in favour of the sub inspector of Police because (i) the sub inspector does not say in the affidavit how he came to know about the subjective satisfaction of the District Magistrate or that he had access to the file, and (ii) the file was not made available to the Court.
If the District Magistrate is to act in the manner he has done in this case by completely abdicating his functions in favour of an officer of the level of a sub inspector of Police, the safe guards noticed by the Supreme Court are likely to prove wholly illusory and the fundamental right of personal liberty will be exposed to serious jeopardy.
Hence the affidavit in opposition cannot be taken notice of, here.
[644 G H, 646 A C] A.K. Roy vs Union of India & Ors. ; , referred to.
The affidavit in opposition filed in the present case would show that the power conferred for ordering preventive detention was exercised on extraneous and irrelevant consideration in respect of each detenu he being a member of and organiser of C.P.I. (M.L.) (People War Group), a political party operating in this country which fact motivated the order and, therefore, a flagrant violation of the assurances given on the floor of Parliament and while hearing the case of A.K. Roy wherein the constitutional validity of the Act was challenged that the drastic and draconian power of preventive detention will not be exercised against political opponents.
But it is unnecessary to examine this aspect on merits, in view of the fact that the detention orders have been found to be invalid for more than one reason.
Non examination of the contention need not lead to the inference that the contention is rejected but kept open to be examined in an appropriate case.
[646 D E, 647 A B]
|
Appeals Nos. 143 to 145 of 1954, 27 to 30 and 161 to 164 of 1956.
Appeals from the judgment and order dated September 14, 1953, of the former Travancore Cochin High Court in Original Petitions Nos. 53, 56 and 57 of 1952.
Appeals from the judgment and order dated December 14, 1954, of the Mysore High Court in C. P. Nos.
755 52 and 53 and W. P. Nos. 105 and 106 of 1954.
Appeals from the judgment and order dated March 22, 1955, of the Mysore High Court in Writ Petition No. 122 of 1954 and order dated April 7, 1955, in W.P. Nos. 35, 36 and 37 of 1955.
K.S. Krishnaswami Iyengar, M. U. Isaac and Sardar Bahadur, for the appellants in C. As.
143 45 of 1954.
H. N. Sanyal, Addl.
Solicitor General of India, B. Gana pathy Iyer and R. H. Dhebar, for the appellants in C. As.
27 30 and 161 164 of 1956.
R. Ganapathy Iyer and R. H. Dhebar, for the respondent in C. As.
143 145 of 1954.
A. V. Viswanatha Sastri and G. Gopalakishnan, for the respondents in C. As.
27 30 of 1956.
A. V. Viswanatha Sastri, K. R. Choudhury and G. Gopalakri shnan, for the respondents in C. As.
161 164 of 1956.
April 28.
The Judgment of the Court was delivered by S.K. DAS J.
This judgment relates to and governs eleven appeals which for convenience have been classified into two groups.
The first group may be called the group of Travancore Cochin appeals, and within this group fall Civil Appeals Nos. 143 to 145 of 1954.
The, second group may be called the group of Mysore appeals and within this group are eight appeals, namely, Civil Appeals Nos.
27 to 30 of 1956 and 161 to 164 of 1956.
By reason of the circumstance that certain common questions of law and fact arise in all these eleven appeals, they have been heard one after the other; but it will be convenient and will avoid confusion if we state the facts relating to the Travancore Cochin group first and then deal with the questions arising therefrom.
We shall then state the additional facts of the Mysore group of appeals, and answer the questions arising therefrom, in so far only as they have not been answered already in relation to the Travancore Cochin group.
It may be here added 756 that in the Travancore Cochin appeals (Civil Appeals 143 to 145 of 1954) the appellant is the assessee, A. N. Lakshmana Shenoy, of Messrs. New Guna Shenoy Company, Ernakulam, and the two respondents are the Income tax Officers of Ernakulam in Cochin and of Kottayam in Travancore.
In the other group of appeals, namely, the Mysore appeals, the appellants are the Income tax Officers of certain income tax circles in Bangalore and the respondents are assessees who carry on business within the jurisdictional area of the said Income tax Officers.
In the Travancore Cochin appeals, the High Court of Travancore Cochin came to a decision against the assessee, while in the Mysore appeals the High Court of Mysore came to an opposite conclusion on identical questions of law; that is why in the first group of appeals the assessee is the appellant and in the second group the appellants are the Income tax Officers.
Travancore Cochin appeals: We proceed now to deal with the Travancore Cochin appeals.
The assessee, A. N. Lakshmana Shenoy, is a hardware merchant who carried on his trade and business for several years in the then States of Travancore and Cochin, with his headquarters at Ernakulam in Cochin.
He was assessed to income tax in both the States under the income tax law in force there, namely, the Cochin Income tax Act of 1117 M. E. (hereinafter referred to as the Cochin Act) and the Travancore Income tax Act of 1121 M. E. (hereinafter referred to as the Travancore Act).
He was so assessed by the Incometax Officer at Ernakulam for the Cochin State and the Income tax Officer at Kottayam for the Travancore State.
It is a matter of history that Cochin and Travancore were formerly independent States, and till the lapse of paramountcy, the Crown as represented by and operating through the political authorities provided the nexus between those States and the Central Indian Government.
The Indian Independence Act, 1947, released the States from their obligation to the Crown; but in August, 1947, the Rulers of the two States acceded to the Dominion of India.
This was followed by a process of 757 two fold integration the consolidation of the States into sizeable administrative units and their democratisation.
On May 27, 1949, the Rulers entered into a covenant which was concurred in by the Government of India.
By that covenant the Rulers agreed that as from the first day of July, 1949, the States of Travancore and Cochin should be united in and form one State with a common executive, legislature and judiciary by the name of the United State of Travancore and Cochin.
The covenant further provided that " there shall be a Rajpramukh for the United State and the Ruler of Travancore shall be the first Rajpramukh; the executive authority of the United State shall be exercised by the Rajpramukh and there shall be a council of ministers to aid and advise him ".
Article IX of the covenant said that " the Rajpramukh shall within a fortnight of the appointed day execute on behalf of the United State an Instrument of Accession in accordance with the provisions of section 6 of the Government of India Act, 1935, and in place of the earlier Instruments of Accession of the covenanting States; and he shall by such Instrument, accept as matters with respect to which the Dominion Legislature may make laws for the United State all the matters mentioned in List I and List III of the Seventh Schedule to the said Act, except the entries in List I relating to any tax or duty ".
There was a proviso to the Article which said that nothing in the Article shall be deemed to prevent the Rajpramukh from accepting any or all of the entries in the said List I relating to any tax or duty as matters with respect to which the Dominion Legislature may make laws for the United State.
On July 14, 1949, a supplementary Instrument was executed by the Rajpramukh by which he accepted, on behalf of the United State, all matters enumerated in List I and List III of the Seventh Schedule to the Government of India Act, 1935, as matters in respect of which the Dominion Legislature might make laws for the United State, subject, however, to "the proviso that nothing contained in the said lists or in any other provision of the Government of India Act, 1935, shall be deemed to empower the 758 Dominion Legislature to impose any tax or duty in the territories of the United State.
The result was that in spite of the integration and accession of the United State to the Dominion of India, the Cochin Act continued to be in force in the territory formerly known as Cochin and the Travancore Act in the territory known as Travancore.
On November 24, 1949, there was a proclamation by the Rajpramukh which stated that in the best interests of the United State of Travancore and Cochin it was desirable that the constitutional relationship established between the United State and the Dominion of India shall not only be continued, but the relation as between that State and the contemplated Union of India shall be further strengthened ; it was then stated that the Constitution of India as drafted by the Constituent Assembly of India which included duly appointed representatives of the United State provided a suitable basis for strengthening the relation between the two States.
The proclamation then went on to say ' 'And whereas by virtue of the power vested in it under the Covenant establishing this State, the Legislative Assembly of the State has resolved that the Constitution framed by the Constituent Assembly of India be adopted by this State.
I now hereby declare and direct That the Constitution of India shortly to be adopted by the Constituent Assembly of India shall be the Constitution for the United State of Travancore and Cochin as for the other parts of India and shall be enforced as such in accordance with the tenor of its provisions.
That the provisions of the said Constitution shall as from the date of its commencement, supersede and abrogate all other constitutional provisions inconsistent therewith which are at present in force in this State.
" The Constitution of India came into force on January 26, 1950, and on that date Travancore Cochin became one of the Part B States within the Constitution of India.
Under that Constitution the subject of "taxes on income other than agricultural income" was 759 included in the Union Legislative List and Parliament alone ' had exclusive power to; make laws in respect thereof All laws in force in the territory of Travancore Cochin became subject to the Constitution of lndia when it came into force; but article 277 of the Constitution enaccted " Any taxes, duties, cesses or fees which immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State municipality, district or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law.
The result of the aforesaid provision of the Constitution was that the taxes leviable under the Cochin Act or the Travancore Act continued to be so levied until provision to the contrary was made by Parliament by law.
Such provision was made by the Finance Act, 1950 (XXV of 1950).
Section 3 of that Act extended the Indian Income tax Act, 1922, to the whole of India except the State of Jammu and Kashmir, with effect from April 1, 1950.
The interpretation of section 13 (1) of this Finance Act, 1950, is one of the questions argued in these appeals, and the relevant provision of that sub section must be quoted in full "If immediately before the 1st day of April, 1950, there, is in force in any Part B State other than Jammu and Kashmir, or in, Manipur, Tripura or Vindhya Pradesh or in the merged territor of CoochBehar any law relating to income tax or super tax or tax on profits of business, that law shall cease to have effect except for the purposes of the levy, assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income tax Act, 1922, for the year ending on the 31st day of March, 1951, or for any, subsequent year, or, as the case may be, the levy, assessment and collection of 97 760 the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March 1949.
Provided that any reference in any such law to an officer, authority, tribunal or court shall be construed as a reference to the corresponding officer, authority, tribunal or court appointed or constituted under the said Act, and if any question arises as to who such corresponding officer, authority, tribunal or court is, the decision of the Central Government thereon shall be final: ".
So far we have traced the constitutional history of the integration of Travancore Cochin, its accession to the Dominion of India and finally its acceptance of the Constitution of India whereby it became a Part B State within the Constitution of India.
We now go back to the story of the assessments made on the assessee.
The income of the assessee for the two accounting years, 1122 and 1123 M.E. (corresponding to the years ending on August 16, 1947, and August 16, 1948, respectively) was assessed in the two assessment years, 1123 and 1124 M.E. in accordance with the Cochin Act by the Income tax Officer at Ernakulam by his orders dated July 28, 1949, and January 31, 1950, respectively.
These assessments, the assessee alleged, became final and he paid the taxes accordingly.
Similarly, the income of the assessee in Travancore for the accounting years 1122 and 1123 M.E. was assessed under the Travancore Act for the assessment years 1123 and 1124 by the Income tax Officer, Kottayam, by his orders dated April 11, 1949, and July 30, 1949, and these assessments also, according to the assessee, became final and he paid the taxes accordingly.
The income of the assessee for the accounting year 1124 M.E.was assessed under the Indian Incometax Act ' 1922, in the assessment year 1951 52 by the Income tax Officer, Ernakulam, by his order dated January 21, 1952.
The account books of the assessee were rejected as unreliable and the Income tax Officer, Ernakulam, made a " best of judgment " assessment.
This assessment order is Ext.
VIII in the record.
The assessee appealed against it and, subsequently, on 761 December 14, 1953, that is, subsequent to the decision on the three writ petitions filed in the High Court of Travancore Cochin, the Appellate Assistant Commissioner, Trivandrum, passed an order which has been produced before us with an application for taking it on the record.
We accepted the application and both the assessment order, Ext.
VIII dated January 21, 1952, and the appellate order dated December 14, 1953, will be duly considered by us.
On February 12, 1952, the Income tax Officer, Ernakulam, issued four notices to the assessee, two under section 44 of the Cochin Act and two under section 47 of the Travancore Act stating therein that in consequence of definite information which had come into his possession, he had discovered that the income of the assessee assessable to income tax for the assessment years 1123 and 1124 M. E. had been under assessed and the Income tax Officer, therefore, proposed to re assess the said income; the assessee was asked to submit a return in respect of his total world income, for the two years in question.
On March 14, 1952, the Income tax Officer, Kottayam, issued two similar notices to the assessee under section 47 of the Travancore Act stating therein that he had discovered in consequence of definite information which had come into his possession that the income of the assessee for the two years 1123 and 1124 assessable to income tax had either escaped assessment or had been under assessed or had been assessed at too low a rate and therefore be proposed to re assess the said income.
Presumably, the Incometax Officer, Kottayam, issued the two notices, because it was doubtful if the Income tax Officer, Ernakulam, had authority to issue notices to the assessee under the Travancore Act.
Nothing, however, turns upon this, so far as the appeals before us are concerned.
On June 16, 1952, the assessee filed a writ petition in the High Court of Travancore Cochin in which he challenged the jurisdiction of the Income tax Officer, Ernakulam, to re assess his income for the two assessment years, 1123 and 1124 M. E.
On the very day on which the assessee filed his writ petition, the Incometax Officer, Ernakulam, made an " escaped income " 762 assessment under section 44 of the Cochin Act for the assessment year 1123.
This ' order was communicated to the assessee on June 17,1952, and the assessee filed a second writ petition in, the High Court TravancoreCochin ion June 19, 1952, in which he again challenged the, jurisdictions of the Income tax Officer, Erhakulam to make the assessment Linder section 44 of the Cochin Act and further said ' that %the assessment was made in spite of his application for adjournment 'and an 'order of stay passed by the High Court on June 17, 1952.
On June 20, 1952 the assessee filed a third writ petition in the Travancore Cochin High Court in respect of the two notices issued to him by the Income tax Officer, Kottayam.
By this writ petition the assessee challenged the jurisdiction of the Income tax Officer, Kottayam, to issue the two notices; in question under section 47 of the Travancore Act.
;These three writ petitions, numbered as original petitions 53, 56 and 57 of 1952, were dealt with together by the TravancoreCochin High Court and a Bench of three Judges of the said High Court held by their judgment and order dated September 14, 1953, that the, two Income tax Officers concerned had jurisdiction to re assess the income of the assessee for the: two assessment years 1123 and 1124 M. E.
They accordingly dismissed the writ petitions, but without costs.
They, however, gave a certificate that the cases were fit for appeal to the Supreme Court under article 133 of ' the Constitution and on that certificate the three appeals, which we have called Travancore Cochin appeals, have been brought to this Court, from the judgment and order of the High Court of Travancore Cochin dated September 14, 1953.
In the High Court three main points were urged on behalf of the assessee : the first point taken was that with the passing of the Finance Act, 1950, which made Travancore Cochin a " taxable territory " within the meaning of the Indian Income tax Act, 1922, incometax laws of Travancore and Cochin became void and inoperative and Parliament could not, under section 13, keep alive the Income tax Acts of Travancore and 'Cochin, or any, provisions thereof, inconsistent with 763 the Constitution Section 13 of the Finance Act, 1950,was, therefore, invalid in so far as it tried to keep alive the Cochin Act or the Travancore Act for the purpose of levy, assessment and collection of incometax, for, the period referred to therein.
The second contention was that even if section 13 of the Finance Act, 1950,was valid and kept alive the provisions of the Cochin Act and the Travancore Act, it did so only " for the purpose of the levy, assessment and collection of income tax and super tax " in respect of the period mentioned in the section, and section 13(1) did not have the, effect of saving the provisions of the Travancore Act or Cochin Act for, the purpose of " re assessment of income tax and super tax ".
The third contention urged was that neither of the two Income tax Officers concerned had any definite information in consequence of which they came to any discovery that the income of the assessee for the two years in question had been under ' assessed or escaped assessment or had been assesed at too low a rate.
It was contended on behalf of the assessee that the statements in the notices with regard to definite information etc.
were only " a pretence to clutch at jurisdiction " and the very foundation of the action sought to be taken by the Income.
tax Officers under section 44 of the Cochin Act or section 47 of the Travancore Act was non existent.
The learned Judges of the High Court negatived the aforesaid contentions, and as we have already stated, the writ petitions.
Before us the first point urged on behalf of the assessee in the High Court has not been pressed.
The other two points, namely, (1) the true construction of section 13(1) of the Finance Act, 1950, and (2) tile absence of any foundation for the action sought to be taken under section 44 of the Cochin Act or section 47 of the Travancore Act have been pressed with great vehemence.
A third point which was specifically raised in the Mysore appeals in the High Court there and which arises in the Travancore Cochin appeals also, has been taken :before us, though it was not specifically taken in the High Court of Travancore Cochin.
We have allowed learned counsel for the assessee to raise the point, as 764 it involves a pure question of law.
The point is this.
In the wake of accession and political integration of the States and Unions of States with India arose the problem of federal financial integration.
The States ,and Unions of States, so long as they continued as separate units, had retained their own pre existing public finance structures.
They had one common feature, distinguishing them from the Provinces of India, in that except in respect of certain matters covered by the Standstill Agreements, the States were free to follow their own policies in matters of federal finance and taxation, that is to say, in the field of public finance, such as customs, income tax, central excise, railways, posts and telegraphs etc.
When the question of integration of these States with India arose, naturally the question of extinguishing the special rights and obligations of the States in the field of federal finance and of making good to them the net gap in their revenues also arose.
By a resolution dated October 22, 1948, the Government of India appointed a committee of experts, referred to as the Indian States Finances Enquiry Committee, to consider the problem of federal finance.
The Committee 's terms of reference were, inter alia, as follows " To examine and report upon: (1)the present structure of Public Finance in Indian States and Unions of States; (2)the desirability and feasibility of integrating Finance in Indian States and Unions of States with that of the rest of India, to the end that a uniform system of Federal Finance may be established throughout the Dominion of India; (3)whether, and if so, the extent to which the process of integrating Federal Finance in the Indian States and Unions with that of the rest of India should be gradual and the manner in which it should be brought about; and the machinery required for his purpose, especially as regards the legislative groundwork and the administrative Organisation necessary for the imposition, assessment and collection of federal taxes; ".
The Committee submitted a report in due course and 765 made certain recommendations.
On the basis of those recommendations certain agreements were entered into between the President of India and the Rajpramukhs, including the Rajpramukh of Travancore Cochin and the Rajpramukh of Mysore.
We shall refer in somewhat greater detail to these agreements, particularly the agreements entered into by the Rajpramukhs of Travancore Cochin and Mysore.
The contention on behalf of the assessee is that these agreements with Part B States with regard to certain financial matters received constitutional sanctity in article 278 of the Constitution (now repealed by the Constitution (Seventh Amendment) Act, 1956).
Article 278, so far as it is relevant for our purpose, was in these terms " 278 (1).
Notwithstanding anything in the Constitution, the Government of India may, subject to the provisions of clause (2), enter into an agreement with the Government of a State specified in Part B of the First Schedule with respect to (a)the levy and collection of any tax or duty leviable by the Government of India in such State and for the distribution of the proceeds thereof otherwise than in accordance with the provisions of this Chapter ; (b). . (c). . and, when an agreement is so entered into, the provisions of this Chapter shall in relation to such State have effect subject to the terms of such agreement.
" The argument on behalf of the assessee is that the recommendations of the Indian States Finances Enquiry Committee which were accepted by the Rajpramukh of Travancore Cochin in the agreement entered into by the Rajpramukh with the President of India on February 25, 1950, were designed to secure " legal continuity of pending proceedings " and " finality and validity of completed proceedings " under the preexisting State legislation ; therefore, section 13(1) of the Finance Act, 1950, should be so construed as to be in consonance with the aforesaid agreement, and, in the alternative, if section 13(1) is construed to be at variance with the aforesaid financial agreement, it should be 766 held to be void by reason of the; provisions; of articles 278 and 295 of the Constitution.
We proceed now to a consideration in detail of the arguments urged before us on behalf of the assessee in the Travancore Cochin appeals.
In logical sequence the point as to the absence of foundation for the action taken by the two Income tax Officers of Ernakulam and Kottayam in the matter of the issue, of" notices.
for reassessment, comes first and we propose now to deal with it.
It is necessary at this stage to set out the two sections under which the Income tax Officers proposed to take action against the assessee.
The two sections are section 44 of the Cochin Act and section 47 of the Travancore Act.
Section, 44 of the Cochin Act, so far as it is relevant for our purpose, is in these terms " 44(1) If in consequence of definite information which has come, into his possession the Income tax Officer discovers, that income ' profits or gains chargeable to income tax have escaped assessment in any year, or have been under assessed, or have been assessed at too low a rate, or have been the subject of excessive relief under this Act the Income tax Officer way, in any case in which he has reason to believed that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within four years of the end of that year, serve, on the person liable to pay tax on such income, profits or gains, or, in the case of a. company, on the principal officer thereof, a notice containing all or any of the requirement, which may be included in a notice under sub section (2) of section 27, and, may proceed to assess or re assess such income profits or gains, and the provisions of this Act shall so far as may be, apply, accordingly,as if the notice were a notice issued under that sub section.
" Section 47 (1) of the Travancore Act is identical ill terms and need not therefore be, quoted.
It is worthy, of note that the terms of the.
aforesaid two sections are similar to section 34 of, the Indian Income tax Act, 1922, as it,.stood after the amending Act of 1939 and, before the amendments of 1948.
The two requisites conditions 767 for the application of the section are contained in the first part, and they are: firstly, there must be definite information which has come into possession of the Income tax Officer and, secondly, in consequence of that information, the Income fax Officer discovers that,, income, profits or gains chargeable to income tax have escaped assessment in any year etc.
It is only when these two conditions are fulfilled that the Income tax Officer can take necessary action under section 44.
The question before us is whether these two conditions were fulfilled in the cases out of which the TravancoreCochin appeals have arisen.
As in the High Court so also before us, the only document on which the Income tax Officers relied for this part of their case is Ext.
This document, according to the Income tax Officers, furnished the definite information in consequence of which they made the necessary discovery.
Learned counsel for the assessee has taken us through Ext.
VIII, Ext.
A (statement of the case submitted by the assessee to the Appellate Assistant Commissioner) and the order of the Appellate Commissioner, dated December 14, 1953, and he has contended that (1) Ext.
VIII does not relate to the years in question and cannot, therefore, constitute definite information for those years; (2) it gives certain highly speculative grounds for discrediting the account books of the assessee, which grounds have not been accepted by the Appellate Assistant Commissioner; and (3) in any view, it contained no information on which the Income tax Officers could be said to have made any discovery.
As to (1) above, the High Court rightly pointed out that Ext.
VIII contained information of a kind which disclosed a definite and systematic pattern of transactions for avoidance of tax not only in respect of the year covered by the order but spread over years anterior to it.
Secondly, Ext.
VIII disclosed, according to the Income tax Officers concerned, a systematic suppression of cash Bales., a regular trade in purchase and sale of controlled commodities at profiteering rates, passing bogus bills for purchases, understating stocks, segregating stocks 98 768 for clandestine sales, and selling goods to the branches at artificial book losses.
There can be no doubt that all this information, if honestly believed, would reasonably support the opinion of the Income tax Officers that there is a discovery of " escaped " income etc., within the meaning of section 44 of the Cochin Act and section 47 of the Travancore Act.
But learned counsel for the assessee argues that while it may be right to say that Ext.
VIII prima facie contains the kind of information which will satisfy the conditions of section 44 of the Cochin Act and section 47 of the Travancore Act, we must take note of the fact that according to the Appellate Assistant Commissioner, as shown by his order dated December 14, 1953, the so called information contained in Ext.
VIII was really non existent, and the information being non existent, there was no foundation for the action taken by the Income tax Officers.
We are unable to accept this argument as correct.
Apart from the consideration that the order of the Appellate Assistant Commissioner was not available when the Income tax Officers issued their notices, we think that the argument overstates the effect of the order of the Appellate Assistant Commissioner.
It is true that the Appellate Assistant Commissioner considered in detail the various criticisms of the Income tax Officer with regard to the account books along with the explanations offered on behalf of the assessee; but he expressed his final conclusion in the following words: " I have given my careful consideration to the various adverse criticisms of the Income tax Officer and to the Advocate 's answers thereto.
I have also looked into the accounts and other revelant papers.
As a result, I am satisfied that the Income tax Officer 's criticisms are in most cases not at all well founded and that the Advocate has successfully met almost every point raised by the former.
In fact, the Income tax Officer himself admitted at the time of the hearing that has order was shown to be quite vulnerable.
But he contended that it would not be enough if the Advocate merely answered the specific criticisms in the order and that the case should be looked at as a whole and a decision should be arrived at as to whether on such 769 a comprehensive view the appellant 's accounts could be regarded as completely faultless and worthy of unquestioned acceptance.
Seen from this broad angle, it cannot of course be said that the accounts are free from defects.
There is firstly no stock book for uncontrolled goods and the accuracy of the inventories of opening and closing stocks of such goods is therefore open to doubt.
Again, whatever may be the appellant 's reasons for not recording full details for cash sales, there is the admitted fact that the cash sales stand partly unvouched and details as to the names and addresses of purchasers are not available for the major part of the year, and there is therefore no possibility of satisfying one self whether all the cash sales have been duly brought to account.
There is also the further fact that at least some of the purchases are not satisfactorily vouched and that the rates of gross profit disclosed by the accounts both at the head office and the branches are not quite adequate.
These, in my opinion, are sufficient grounds for discrediting the book results and resorting to an estimate of the turnover as well as the gross profit.
" It cannot, therefore, be Raid that the order of the Appellate Assistant Commissioner washed out the entire information contained in Ext.
VIII so as to strike at the very root of the jurisdiction of the Income tax Officers concerned to issue the notices in question.
It is to be remembered that there is a distinction between receipt of definite information as a consequence of which a discovery is made and a notice is issued, and the final determination as to the liability or extent of liability for escaped assessment etc.
We accept as correct the view expressed in Firm Jitanram Nirmalram vs Commissioner of Income tax (1), that the phrase " definite information " cannot be construed in a universal sense and its meaning must depend on and vary with the circumstances of each case.
There is no doubt, however, that the information must be definite, that is, more than mere guess, gossip or rumour.
There must also be a causal connexion between the information and the discovery; but " discovery " in (1) A.I.R. 1952 Pat.
770 the context of the section does not mean a conclusion of certainty at the stage of notice.
What is necessary at that stage is that the Income tax Officer should have formed an honest belief upon materials which reasonably support such belief.
This, in our opinion, is the correct view, and judged from that standpoint, Ext.
VIII fulfilled the requirements of section 44 of the Cochin Act and section 47 of the Travancore Act.
We now turn to the construction of section 13 (1) of the Finance Act, 1950.
The argument on this point has meandered over a wide area; but it is really dependent on the meaning to be given to the expression for the purposes Of the levy, assessment and collection of income tax and super tax " occurring in the section.
Does the word 'assessment ' include 're assessment ' ? The contention of the assessee is that it does not.
The Travancore Cochin High Court did not accept this contention, but the Mysore High Court did in favour of the respondents in the Mysore appeals.
The general scheme of the Cochin Act and the Travancore Act is the same as that of the Indian Income tax Act, 1922, and for a clear understanding of the meaning of the expression 'levy, assessment and collection of income tax ', it is best to explain the general scheme of these Income tax Acts with reference to the Indian Income tax Act, 1922, which served more or less as their model.
Section 3 is the charging section which imposes liability in respect of " the total income of the previous year of every individual etc.", and 'total income ' means the 'total amount of income, profits and gains computed in the manner laid down in the Act '.
It is clear that so far as the charging section is concerned, the liability does not cease unless the total income, profits and gains have been computed in the manner laid down in the Act.
Section 4 states inter alia that subject to the provisions of the Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived.
Leaving out the sections which deal with Income tax authorities we come to the sections in Chapter 111, which explain what is 771 taxable income under different heads.
Chapter IV deals with deductions and assessment, and the words 'assessment ' and Ire assessment ' occur in several sections of this Chapter.
Under section 22(2) the Incometax Officer must serve notice on any person whose total income is in the Income tax Officer 's opinion of such an amount as to render such person liable to income tax, requiring him to furnish a return in the prescribed form of his total income during the previous year.
Sub section (4) authorises the Income tax Officer to serve on any person upon whom a notice has been served under sub section
(2) a further notice requiring him to produce accounts and documents, subject to the limitation that he shall not require the production of any accounts relating to a period more than three years prior to the year previous to the year of assessment.
Section 23 provides for the making of the assessment.
Sub section (1) requires the Income tax Officer, if he is satisfied that the return made under section 22 is correct and complete, to assess the total income and to determine the sum payable.
Under sub section
(2) if the Income tax Officer has reason to believe that the return is incorrect or incomplete he must serve on the person who made the return a notice requiring him either to attend at the Income tax Officer 's office or to produce any evidence relied on in support of the return.
Sub section (3) provides that the Income tax Officer, after hearing such evidence as the person who made the return may produce and such other evidence as the Income tax Officer may require on specified points shall by an order in writing assess the total income and determine the sum payable.
Subsection (4) makes provision for an assessment by the Incometax Officer to the best of his judgment if the assessee fails to make a return or to comply with the terms of the notices issued to him.
This whole procedure, it may be recalled, not only applies on first assessment but is also prescribed by section 34 if for any reason income, profits or gains have escaped assessment or have been assessed at too low a rate.
Section 27 deals with cancellation of assessment in certain circumstances, and states " the Income tax Officer shall cancel the 772 assessment and proceed to make a fresh assessment in accordance with the provisions of section 23 ".
Section 29 talks of a notice of demand to the person liable to pay the tax etc.
, the notice specifying the sum so payable.
Section 30 gives a right of appeal from certain orders.
Section 31 deals with.
hearing of appeals and states inter alia that the appellate authority may set aside the assessment, and direct the Income tax Officer to make.
a fresh assessment.
Section 33 provides for appeals against the orders of the Appellate Assistant Commissioner and sections 33A and 33B give powers of revision to the Commissioner.
In appropriate cases the Commissioner can cancel the assessment and direct a fresh assessment.
Then comes section 34 which corresponds to section 44 of the Cochin Act and section 47 of the Travancore Act.
In substance it deals with income which has escaped assessment for one reason or another and says in the operative part that the Income tax Officer " may proceed to assess or re assess such income, profits or gains etc.
" There has been some argument before us as to the meaning of the juxtaposition of the words " assess or re assess " occurring in the section, and it has been contended that a distinction has obviously been drawn between income which has totally escaped assessment and income which has been under assessed or assessed at too low a rate etc., and the word 'assess ' appropriately applies to the former case and the word ' re assess ' to the latter case.
Two other sections which are relevant for our purpose are sections 66 and 67.
Section 66 (7) says that notwithstanding that a reference has been made under this section to the High Court, income tax shall be payable in accordance with the assessment made in the case.
The word 'assessment ' here undoubtedly includes 're assessment '.
Section 67 which bars civil suits says that no suit shall be brought in any civil court to set aside or modify any assessment made under the Act.
Here again 'assessment ' must include 're assessment ', for it cannot have been the intention that a civil suit shall lie in respect of a reassessment under section 34 but not in respect of an assessment.
This brief resume of the relevant provisons of the 773 Income tax Act clearly establishes that the word assessment ' has to be understood in each section with reference to the context in which it has been used.
In some sections it has a comprehensive meaning and in some a somewhat restricted meaning, to be distinguished from a 're assessment ' or even a 'fresh assessment '.
Now, the question is in what sense has the word assessment ' been used in section 13(1) of the Finance Act, 1950.
Two circumstances may be noticed at once,.
The long title says that the Finance Act, 1950, is an Act to give effect to the financial proposals of the Central Government for the year beginning on April 1, 1950, and in section 13(1) the collocation of words is " levy, assessment and collection of income tax".
In our opinion, both these circumstances point towards a comprehensive meaning; for it could not have been intended, as part of the proposal of the Central Government, that those whose income had totally escaped assessment should be liable but those who had been under assessed should go soot free.
We can see nothing in the words of the section which would justify such a distinction: we say this quite apart from the argument that section 13(1) should be interpreted in consonance with the financial agreement entered into between the Rajpramukh and the President, an argument to which we shall presently advert.
Moreover, the collocation of the words, levy, assessment, and collection ' indicates that what is meant is the entire process by which the tax is ascertained, demanded and realised.
On behalf of the assessee it has been contended that (1) the Income tax Act makes a distinction between a normal or original assessment under section 23, a fresh assessment under section 27 and a re assessment or second assessment under section 34 and (2) inasmuch as section 13 (1) uses the word I assessment only, it must be taken to have been used in a restricted sense.
In support of these contentions great reliance has been placed on the decision of the Privy Council in Commissioner of Income tax, Bombay Presidency and Aden vs Khemchand Ramdas (1).
The Mysore High Court also referred (1)(1938) L.R. 65 I.A. 236, 248.
774 to this decision in support of its view on the construction of section 13 (1).
We are unable to accept these contentions as correct; nor do we think that the decision cited supports the view expressed by the Mysore High Court.
The facts in Khemchands case (1) were briefly these.
The firm of Khemchand applied to the Incometax Officer to have the firm registered, the consequence of such registration being that the profits of the firm would not be assessable to super tax.
On January 17, 1927, the Income tax Officer assessed the firm to income tax for the year 1926 27 under section 23, sub section
(4) of the Act; but no super tax was imposed as the firm having applied for registration was registered.
Notice of demand for the amount assessed was made in 1927.
Subsequently, the Commissioner ordered the cancellation of registration, and directed the Income tax Officer to take necessary action thereupon.
On May 4, 1929, the Income tax Officer imposed super tax and issued a notice of demand in May, 1929.
The question in the appeal was whether the Income tax authorities had any jurisdiction to assess Khemchand 's firm to super tax for the year 1926 27.
Their Lordships pointed out that the powers of the Commissioner tinder section 33 could only be exercised subject to the provisions of the Act, of which the provisions in sections 34 and 35 were important.
They held that it was debatable whether the circumstances of the case were such as to bring it within section 34 and so far as section 35 was concerned, the Income tax Officer was hopelessly barred by time.
In that context, their Lordships said: " It is possible that the final assessment may not be made until some years after the close of the fiscal year.
Questions of difficulty may arise and cause considerable delay.
Proceedings may be taken by way of appeal and cause further delay.
Until all such questions are determined, and all such proceedings have come to an end, there can be no final assessment.
But when once a final assessment is arrived at, it cannot, in their Lordships ' opinion, be reopened except in the circumstances detailed in sections 34 and 35 of the Act (to which reference is made hereafter) and within the time (1)[1938] L. R. 65 I. A. 236. 775 limited by those sections.
In the present case the liability of the respondents both for income tax and for super tax wag determined by the Income tax Officer on January 17, 1927.
In the order made by him on that date he assessed the respondents to income tax at the maximum rate, but as the respondents were at that time a registered firm he held, as he was bound to hold, that no super tax was to be levied.
On some date before the end of March, 1927, he served on the respondents a notice of demand for the tax that he had determined was properly leviable.
The assess ment having been made under section 23, sub section
(4), no appeal lay in respect of it.
The assessment of the respondents was therefore final both in respect of income tax and super tax.
Their liability in respect of both taxes had been finally determined, and none the less because the question of their liability to supertax had been determined in their favour.
It was, indeed, contended before their Lordships that the assessment could not be regarded as having been determined inasmuch as the Commissioner might at any time, and apparently after any lapse of time, however long, cancel the registration of the respondents as a registered firm and so subject the respondents to liability to pay super tax.
Their Lordships would, in any case, hesitate long before acceding to a contention that would lead to so extravagant results.
In their opinion, however, the contention cannot prevail.
The Commissioner 's powers under section 33 can only be exercised subject to the provisions of the Act, of which the provisions in sections 34 and 35 are in this respect of the greatest importance.
" These observations lend no support to the view that the word" assessment" must always bear a particular meaning in the Income tax Act.
On the contrary, at p. 247 of the report, their Lordships said: " These two questions are so closely related to one another that they can conveniently be considered together.
In order to answer them it is essential to bear in mind the method prescribed by the Act for making an assessment to tax, using the word assessment 99 776 in its comprehensive sense as including the whole procedure for imposing liability upon the tax payer.
The method consists, of the following steps.
In the first place, the taxable income of the tax payer has to be computed.
In the next place, the sum payable by him.
on the basis of such computation has to be determined.
Finally, a notice of demand in the prescribed form, specifying the sum so payable, has to be served upon the tax payer.
" If the word ' assessment ' is taken in its comprehensive sense, as we think it should be taken in the context of section 13(1) of the Finance Act, 1950, it would include I re assessment ' made under the provisions of the Act.
Such 're assessment ' will without doubt come within the expression 'levy, assessment and collection of income tax '.
In his speech in Commissioners For General Purposes of Income Tax For City of London vs Gibbs and Others (1), Lord Simon has pointed out that the word 'assessment ' is used in the English Incometax Code in more than one sense; and sometimes within the bounds of the same section, two separate meanings of the word may be found.
One meaning is the fixing of the sum taken to represent the actual profit and the other the actual sum in tax which the taxpayer is liable to pay.
It has been contended before us that the Finance Act and the Income tax Act should be read together as forming one Code, and so read the words I assessment ' and I re assessment 'acquire definite and distinct connotations.
We are unable to agree, for the reasons which we have already given, that even if we read the Finance Act along with the Income tax Act the word ' assessment ' can be given a restricted meaning.
To repeat those reasons: the income tax code itself uses the word assessment in different senses, and in the context and collocation of the words of the Finance Act, the word 'assessment ' is capable of bearing a comprehensive meaning only.
We can find no good.
reasons for holding that in the matter of levy, assessment and collection of income tax, the Finance Act, 1950, contemplated that some persons should enjoy a,, (1)[1942] A.C. 402, 406. 777 privilege and escape payment of the full tax leviable under the provisions of the relevant Act.
On this point we approve of the decision in Firm L. Hazari Mal vs Income tax Officer, Ambala (1), where Bhandari C. J., said "These three expressions 'levy ', 'assessment ' and 'collection ' are of the widest significance and embrace in their broad sweep all the proceedings. for raising money by the exercise of the power of taxation. .
This brings us to the third question.
Is there any thing in the financial agreement of February 25, 1950, and the recommendations of the Indian States Finances Enquiry Committee, which would restrict the meaning of the expression 'levy, assessment and collection of income tax '? Or, in the alternative, bring section 13(1) of the Finance Act, 1950, into conflict with articles 278 and 295 of the Constitution? The relevant portion of the agreement between the President of India and the Rajpramukh of TravancoreCochin dated February 25, 1950, states: " Now, therefore, the President of India and the Rajpramukh of Travancore Cochin, have entered into the following agreement, namely : The recommendations of the Indian States Finances Enquiry Commitee, 1948 49 (hereinafter referred to as the Committee) contained in Part I of its report read with Chapters, 1, 11 and III of Part 11 of its Report, in so far as they apply to Travancore Cochin (hereinafter referred to as the State) together with the recommendations contained in the Comittee 's Second Interim Report, are accepted by the Parties hereto, subject to the following modifications.
" The modifications which follow have no bearing on the question at issue and need not be set out.
Now, let us examine the relevant recommendations of the Committee, which are accepted by the Parties and form part of the agreement.
These recommendations are summarised in para.
9 of the annexure to Part I of the Committee 's report, and are set out below "Our suggestions concerning certain legal and 778 other matters of general importance, affecting most federal subjects including taxes on income), which will arise in connection with federal financial integration in all States, have been set out in paragraph 11 of Chapter 11 in Part 11 of our Report.
Those relating to legal matters are, however, re produced below for convenient reference: " (5) Apart from the constitutional requirement in connection with the integration of federal finances in States vide paragraphs 37 and 40 Part I of our Report certain important issues of a legal nature will arise in connection with the actual taking over of " federal " subjects in the States by the Centre.
This is a difficult subject upon which we are not qualified to offer competent advice.
We have endeavoured, however, to indicate below the main features of what we conceive will be required in order to establish " continuity of proceedings " in regard to all " federal " subjects whether relating to revenues, expenditure or Service Departments at the point of their transition from the States to the Centre;. (a)Almost every " federal " subject is dealt with in the State as in the rest of India, under powers conferred by appropriate legislation consisting of relevant Codes, Acts, Ordinances and Statutory Rules and Regulations.
Subject to the limitations indicated below, which are designed to secure legal " continuity " of pending proceedings and " finality and validity " of completed proceedings under the pre existing State legislation , we think the whole body of State legislation relating to " federal " subjects should be repealed and the corresponding body of Central legislation extended proprio vigore to the States, with effect from the prescribed date or as and when the administration of particular " federal " subject is assumed by the Centre.
(b)For the above purpose, as well as for future "federal" administration in States, it may be necessary specifically to extend not merely the legislative, but also the executive and administrative competence of the Centre, its officers and " authorities ", and the judicial authority of its Courts, to the territories of the States.
779 (c)Such State Courts (except Courts of final appeal from orders of the State High Courts) as may in fact correspond to particular grades and classes of "British Indian" Courts (Civil and Criminal) may have to be statutorily " recognised " as " corresponding judicial authorities " for purpose of dealing with cases arising in the States under the " federal " laws of the Union of India; and the Supreme Court in India will have to be made the Court of final appeal from decisions of the State High Courts to the same extent as in the case of Provincial High Courts.
(d) Those sections of the various Indian Acts and Ordinances which set out their territorial " extent of application " will require amending so as to include State territories with effect from the prescribed date.
(e)It will be necessary to provide that all matters and proceedings pending under, or arising out of, the preexisting State Acts shall be disposed of under those Acts, by so far as may be, the " corresPonding authorities ", (nominated by the Chief Executive Authority) under the corresponding Indian Acts.
" In view of the fact that the members of the Committee themselves felt that the legal issues involved in the actual taking over of " federal " subjects in the States by the Centre constituted a difficult subject on which they were not qualified to offer competent advice and their further statement that they were merely endeavouring to indicate the main features of what they considered to be required in order to establish " continuity of proceedings ", it has been argued before us on behalf of the Income tax authorities that it would be wrong to treat the recomendations as binding statutory rules, even though the financial agreement between the high contracting Parties states generally that the recommendations are accepted; it is contended that the Committee in express terms states that the recommendations merely endeavour to indicate the main features of what the Committee thought was required, and they should not be placed on a pedestal higher than what the Committee itself did.
We think that there is much force in this contention; but in the view which we have taken of these 780 recommendations, we do not think that it is necessary to decide finally what constitutional sanctity they have acquired by reason of their acceptance in the financial agreement and the provisions of article 278 of the Constitution.
Assuming but without deciding that they have binding force, what is their true meaning and effect? The argument on behalf of the assessee is that cl.
(a) of the recommendations is the operative clause, and inasmuch as it talks of " continuity of pending proceedings " and " finality and validity of completed proceedings " tinder the pre existing State legislation, the true effect is that all assessment proceedings which have become complete and finance I by the issue of a demand notice under section 29 of the Indian Income tax Act (or corresponding section of the Cochin Act or Travancore Act) are saved under the clause and cannot be reopened; and only proceedings actually pending on the relevant date can be continued thereunder.
We are unable to accept, this as the true meaning and effect of clause (a).
What is worthy of special notice is that cl.
(a) specifically says that the clauses which follow it are the limitations or qualifications subject to which the whole body of State legislation is to be repealed, and they are designed to secure two objects continuity of pending proceedings and finality and validity of completed proceedings; therefore, cl.
(a) is not the operative clause, and it merely indicates the reasons or objects for which certain limitations or qualifications are suggested on the proposal to repeal the State legislation.
Clause (a) is followed by cls.
(b), (c), (d) and (e).
Clause (b) which deals with executive and administrative competence of Incometax Officers and judicial authority of Courts need not detain us.
So also cls.
(c) and (d), which have little bearing on the problem before us.
Clause (e) is important, and it states that " all matters and proceedings pending under, or arising out of, the pre existing State Acts shall be disposed of under those Acts etc.
" That a proceeding for re assessment under section 44, Cochin Act, or section 47, Travancore Act, is a proceeding arising out of the pre existing State Acts admits of no doubt, and is clearly covered by cl.
We see no good grounds 781 why full effect should not be given to it; it is one of the limitations, as stated in cl.
(a), subject to which the State law is to be repealed.
The matter is made still more clear by what is stated in the paragraph that immediately follows, viz. paragraph 10 of the annexure to the report of the Committee.
That paragraph states " The recommendation made in the last two subparagraphs quoted above should be understood as requiring that all income, profits and gains accruing or arising in States, of all periods which are " previous years " of the States ' assessment years 1949 50 or earlier should, subject to the provisions of section 14(2)(c) of the Indian Income tax Act, be assessed wholly in accordance with the States ' laws and at the States ' rates, respectively, appropriate to the assessment years concerned etc." really no doubt left in the matter.
The Committee did not restrict the limitations they were suggesting, to a proceeding which was actually pending on the date of repeal of the State law; it gave a wider meaning to pending proceedings that is, "proceedings pending under and arising out of the preexisting State Acts".
It is to be remembered that where an assessment starts with a notice under section 34 of the Indian Income tax Act (or corresponding section of the Cochin or Travancore Act), all the relevant provisions of that Act apply as effectively as where the assessment starts with a notice under section 22 (2) or corresponding section of the Cochin or Travancore Act in the ordinary course.
It is also not disputed that the assessment made under section 34 in any year subsequent to the relevant assessment year must be made as if it were made in the relevant assessment year, and the assessment must be based on the provisions of the Act as it stood in the year in which the income ought to have been assessed.
Having regard to these considerations, we find no difficulty in holding that a re assessment proceeding under section 44, Cochin Act, or section 47, Travancore Act, is a proceeding which comes under cl.
(e) of the recommendations of the 782 Committee, and must be disposed of under the preexisting State law.
Section 13 (1) of the Finance Act, 1950, gives effect to that recommendation.
There is, therefore, nothing in the recommendations which would restrict the meaning of the expression " levy, assessment and collection of income tax " in section 13 (1) of the Finance Act; nor do they bring section 13 (1) into conflict with articles 278 and 295 of the Constitution.
We accordingly hold that there is no substance in any of the three points urged on behalf of the assessee in the Travancore Cochin appeals.
Mysore Appeals.
These are eight appeals and the relevant facts are these.
Civil Appeals 27 to 30 of 1956 arise out of four writ petitions numbered 52 and 53 of 1953, and 105 and 106 of 1954, which were dealt with together in the Mysore High Court by a common judgment dated December 14, 1954.
Civil Appeals 161 to 164 also arise out of four writ petitions (No. 122 of 1954 and nos.
35 to 37 of 1955) filed in the same High Court.
The orders passed in those writ petitions were that they were governed by the aforesaid decision dated December 14, 1954.
ln the result, all the writ petitions were allowed with costs.
In all these cases the petitioners, who are respondents before us, were assessed to income tax under the Mysore Income tax Act, 1923 (hereinafter called the Mysore Act) for different years previous to the integration of Mysore with India, and the assessment proceedings were completed and closed under the Mysore Act by demand notices issued by the Income tax Officers concerned.
But subsequent to the integration of Mysore, notices under section 34 of the Mysore Act were issued against the petitioners, and they challenged the jurisdiction of the Income tax Officers to issue such notices.
Section 34 of the Mysore Act states " If for any reason, income, profits or gains chargeable to income tax has escaped assessment in any year, or has been assessed at too low a rate, the Income tax Officer may at any time within four years of the end of that year, serve on the person liable to 783 pay tax on such income, profits or gains, or in the case of a company, on the principal officer thereof, a notice I containing all or any of the requirements which may be included in a notice under sub section 2 of section 22, and may proceed to assess, or re assess such income, profits or gains, and provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section: Provided that the tax shall be charged at the rate at which it would have been charged, had the income, profits or gains, not escaped assessment, or full assessment, as the case may be.
" It corresponds to section 34 of the Indian Income tax Act as it stood prior to the amending Act of 1939 and the general scheme of the Mysore Act was the same as that of the Indian Income tax Act, 1922, as it stood before 1939.
The two grounds on which the jurisdiction of the Income tax Officers was challenged were (1) Under the Finance Act, 1950, the Mysore Act stood repealed on and from April 1, 1950, and section 13 (1) of the Finance Act kept alive the Mysore Act for the purpose of levy; assessment and collection of incometax etc.
for the period mentioned therein, but did not save section 34 of the Mysore Act for the purpose of reassessment of income tax; therefore, the notices issued under section 34 of the Mysore Act were without jurisdiction and authority.
(2) Even otherwise, the financial agreement between the President of India and the Rajpramukh of Mysore on February 28, 1950, which received constitutional sanctity in article 278 of the Constitution rendered the initiation of such re assessment proceedings against the respondents unconstitutional and void.
The learned Chief Justice of the Mysore High Court upheld ground No. (1) and considered it unnecessary to pronounce on the second ground.
Mallapa J., in a separate but concurring judgment expressed the view that having regard to the wording of section 13 (1) of Finance Act, 1950, and the financial agreement of February 28, 1950, he had no doubt that section 13 (1) did 100 784 not provide for re assessment under section 34 of the Mysore Act.
The process of integration of Mysore with India was similar to.
that of Travancore Cochin.
The State of ,.Mysore acceded to the Dominion of India by an Instrument of Accession executed on August 9, 1947, and accepted by the Governor General on August 16, 1947.
A supplementary Instrument of Accession was executed on June 1, 1949.
By a Proclamation dated November 25, 1949, the Constitution of India to be adopted by the Constituent Assembly of India was accepted for Mysore, and on January 26,1950, Mysore became a Part B State within the Constitution of India.
A similar financial agreement was entered into by the Rajpramukh with the President of India on February 28, 1950.
On April 1, 1950, the Finance Act, 1950, applied the Indian Income tax Act, 1922, to Mysore, subject to the provisions of section 13 thereof.
In dealing with the Travancore Cochin appeals, we have fully dealt with the two grounds on which the respondent assessees in the Mysore appeals challenged the jurisdiction of the Income tax Officers concerned to issue the notices under.
section 34 of The Mysore Act.
Two additional points urged in support of ground No. (1) maybe stated here.
It has been urged that the proviso to section 34 of the Mysore Act brings out the distinction between I assessment ' and ' re assessment '; and secondly, it is contended that the jurisdiction under section 34 is limited to ascertainment of extra income not assessed and the section does not confer jurisdiction to make a new assessment, for taxing whole of that assessment, under the Act.
Learned counsel for the assessees has invited our attention to In re Kashi Nath Bagla (1); Madhavjee Damodar Thackersay and Another vs Commissioner of Income Tax, BOMBAY(2) and Anglo French Textile Co. Ltd. vs Commissioner of Income Tax, Madras, No. 4 (3).
The real question for decision in these appeals is the true scope and effect of section 13 (1) of the Finance Act, and on that question the additional points ' mentioned (1) A. 1.
R. 1932 All.
(2) (3) [1950] 18 785 above throw very little light.
There is, indeed, a dis tinction between an original or normal assessment under section 23 and a re assessment under section 34; but we ' have shown that the word " assessment " has been used in more than one sense in Income tax law, and( so far as section 13 (1) of the Finance Act, 1950, is concerned, there is no doubt that the expression I levy, assessment and collection of income tax ' has been used in a comprehensive sense so as to include the whole procedure for imposing liability upon the taxpayer.
Result : The final result, therefore, is (a) the TravancoreCochin appeals (Civil Appeals 143 to 145 of 1954) are dismissed with costs; and (b) the Mysore appeals (Civil Appeals 27 to 30 of 1956 and Civil Appeals 161 to 164 of 1956) are allowed and the judgment and orders of the Mysore High Court are set aside.
The appellants in these Mysore appeals will be entitled to their costs in this Court and the High Court of Mysore.
Appeals Nos. 143 to 145 dismissed.
Appeals No. 27 to 30 and 161 to 164 allowed.
| Section 13(1) of the Finance Act, 1950, provided If immediately before the 1st day of April, 1950, there is in force in any Part B State. any law relating to income tax or supertax or tax on profits of business, that law shall cease to have effect except for the purposes of the levy, assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income tax Act, 1922 for the year ending on the 31st day of March, 1951, or for any subsequent year, or, as the case may be, the levy, assessment and collection of the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March, 1949.
" The appellant, a merchant carrying on his business in the erstwhile States of Travancore and Cochin, was assessed to income tax for the two accounting years 1122 M. E. (1946 1947) and 1123 M. E. (1947 1948) under the income tax law in force there, namely, the Travancore Income tax Act of 1121 M. E. and the Cochin Income tax Act of 1117 M. E. Between 1947 and 1950 there were constitutional changes resulting in the integration of the two States, formation of the United State of Travancore and Cochin, accession of the latter to the Dominion of India, and finally, its acceptance of the Constitution of India whereby it became a Part B State within the Constitution of India.
The question of financial integration was considered by the Indian States Finances Enquiry Committee and on the basis of the recommendations made by it a financial agreement was entered into on February 25, 1950, between the President of India and the Rajpramukh of the State of Travancore Cochin.
By article 277 of the Constitution taxes leviable under the Travancore Income tax Act or the Cochin Income tax Act continued to be so levied until provision to the contrary was made by Parliament by law.
Such provision was made by the Finance Act, 1950, which extended the Indian Income tax Act, 1922, to the State of Travancore Cochin, but by section 13(1) saved certain provisions of the Travancore and Cochin Income tax Acts.
In respect of the assessment for the accounting year 1124 M. E. the Income tax Officer of Ernakulam rejected the appellant 's books of account as unreliable and made a " best of judgment " assessment by his order dated January 11, 1952.
On February 12, 1952, the Income tax Officer, Ernakulam, issued four notices to the appellant, two under section 44 Of the Cochin Income tax Act and two under section 47 of the Travancore Income tax Act stating therein that in consequence of definite information which had come into his possession, he had discovered that the income of the appellant 753 for the assessment years 1123 and II24 M. E had been under assessed and that he proposed to re assess the said income ; and the appellant was asked to submit a return in respect of his total world income for the two years in question.
The appellant challenged the jurisdiction of the Income tax Officer to re assess his income and contended (1) that the assessment order dated January 11, 1952, made by the Income tax Officer for the accounting year 1124 M. E. being the only document on which the Income tax Officer relied for issuing a notice to the appellant, the requisite conditions for the application of the statutory provisions were lacking, (2) that section 13(1) of the Finance Act, 1950, did not have the effect of saving the provisions of the Travancore Income tax Act or the Cochin Income tax Act for the purpose of re assessment of income tax, and (3) that the financial agreement made between the President of India and the Raj pramukh dated February 25, 1950, which received constitu tional sanctity in article 278 of the Constitution, rendered the initiation of such re assessment proceedings unconstitutional and void : Held, (1) that though the meaning of the phrase " definite information " in section 44 (1) Of the Cochin Income tax Act and section 47(1) Of the Travancore Income tax Act, must depend on the circumstances of each case, there must be a casual connection between the information and the discovery, referred to in the sections ; but discovery does not mean a conclusion of certainty at the stage of notice ; it is enough if the Income tax Officer forms an honest belief.
Accordingly, the assessment order dated January 11, 1952, which disclosed a definite and systematic pattern of transactions for avoidance of tax not only in respect of the year covered by the order but spread over years anterior to it, amounted to information which, if honestly believed, would reasonably support the opinion of the Income tax Officer that there was a discovery of " escaped " income, etc., within the meaning of the sections ; Firm jitanyam Niymalram vs Commissioner of Income tax, A. 1.
R. 1952 Pat.
163, approved.
(2)that the expression " levy, assessment and collection of income tax " in section 13(1) Of the Finance Act, 1950, was wide enough to comprehend re assessment proceedings under section 47 of the Travancore Income tax Act and section 44 Of the Cochin Income tax Act; Commissioner of Income tax, Bombay Presidency and Aden vs Khemchand Ramdas, (1938) L. R. 65 1.
A. 236, explained.
Firm L. Hazari Mal vs Income tax Officer, Ambala, A. 1.
R. 1957 Punjab 5, approved.
(3)that on a true construction of the recommendations of the Indian States Finances Enquiry Committee, the financial 754 agreement between the President of India and the Rajpramukh did not render the impugned proceedings unconstitutional or void.
In the connected appeals, the respondents who were merchants doing business in the State of Mysore, were assessed to income tax under the Mysore Income tax Act, 1923, for the years prior to the integration of Mysore with India.
But subsequent to the integration of Mysore notices under section 34 Of the Mysore Income tax Act were issued against them for re assessment of income tax for the years prior to the integration.
The respondents contended that the Income tax Officer had no jurisdiction to issue such notices on the grounds (1) that under the Finance Act, 1950, the Mysore Income tax Act, 1923, stood repealed on and from April 1, 1950, and section 13(1) of the former Act kept alive the Mysore Act for the purpose of levy, assessment and collection of income tax, etc., for the period mentioned therein, but did not save section 34 Of the Mysore Income tax Act for the purpose of re assessment of income tax and, therefore, the notices issued under section 34 were without jurisdiction and authority, (2) that the financial agreement between the President of India and the Rajpramukh of Mysore, dated February 28, 1950, rendered the initiation of such re assessment proceedings unconstitutional and void, and (3) that the jurisdiction under section 34 Of the Mysore Income tax Act was limited to ascertainment of extra income not assessed and the section did not confer jurisdiction to make a new assessment under the Act.
Held, (1) that the Finance Act, 1950, empowered the Income tax Officer to take proceedings under section 34 Of the Mysore Income tax Act, for re assessment, for the prior years, of the under estimated or escaped income; (2)that the financial agreement dated February 28, 1950, did not render the proceedings for re assessment, unconstitu tional or void; and (3)that though there was a distinction between an original or normal assessment under section 23 and a re assessment under section 34 of the Mysore Income tax Act, the expression " levy, assessment and collection of income tax " in section 13(1) of the Finance Act, 1950, had been used in a comprehensive sense so as to include the whole procedure for imposing liability upon the assessee.
|
Appeal No. 1626 of 1966.
Appeal from the judgment and decree dated July 7, 8, 1964 of the Calcutta High Court in Appeal from Original Decree No. 143 of 1960.
R. B. Datar, for the appellant.
B. Sen, N. R. Khaitan and B. P. Maheshwari, for respondent.
The Judgment of the Court was delivered by Shah, J.
Naresh Chandra Sanyal was the holder of a fully paid up share of the Calcutta Stock Exchange Association Ltd.hereinafter called the Exchange '.
As a member of the Exchange he was authorised to carry on business as a broker in shares, stocks and securities in the hall of the Exchange.
In December 1941 Sanyal purchased one hundred shares of the Indian Iron & Steel 'Company Ltd. from Johurmull Daga & Company, but did not arrange to take delivery of the shares on the due date.
Johurmull Daga and Company sold the shares pursuant to the authority given to them by the Sub Committee of the Exchange.
The transaction resulted in a loss of Rs. 438/10/ .
The Sub Committee directed Sanyal to pay the amount due by him, but he failed to carry out that direction.
On January 7, 1942 the complaint of Johurmull Daga & Company was referred to the Full Committee of the Exchange.
Sanyal failed to pay the amount directed to be paid by him and he was by resolution dated February 19, 1942 declared a defaulter.
On September 1, 1942, at a meeting at which Sanyal was present, the Full Committee resolved that the share standing in his name be forfeited to the Exchange with effect from September 1, 1942 and that Sanyal be expelled from the membership of the Exchange.
436Sup.
Cl/71 48 6 Sanyal then instituted an action in the High Court of Calcutta on its original side claiming a declaration that the articles of the Exchange providing for "forfeiture of a fully paid up share were ultra vires and illegal" and that "particularly articles 21, 22.
and 24 were invalid"; that the share held by him had not been "properly forfeited" by the Exchange and that forfeiture of the share was "irregular, void and inoperative and was not binding upon him" He also claimed an order that he be restored to the membership of the Exchange and that the share register be rectified accordingly.
In the alternative Sanyal claimed a decree for Rs. 55,0001 being the value of the share, or in any event to the surplus of the sale proceeds after "liquidating the debts due by him to the Exchange.
" The suit was resisted by the Exchange.
The Trial Court dismissed the suit.
In appeal under the Letters Patent the decree was confirmed.
With special leave Sanyal has appealed to this Court in forma pauperis.
The relevant Articles of Association of the Exchange are these article 21 "The Committee shall have power to expel or suspend any member or if being firm any member or authorised assistant of the firm in any of the events following (6) If the member or if being a firm any member or authorised assistant of the firm refuses to abide by the decision of the Committee in any matter which under these articles or under the Bye laws for the time being in force is made the subject of a reference to the Committee.
Provided always that in every case arising under the provisions of sub, section (5), (6), (7) and (8) of this Article no resolution for the expulsion of a member or if being a firm any member or authorised assistant of the firm shall be valid unless passed by a majority consisting of not less than two thirds of the members of the Committee at a meeting specially convened for the purpose and at which meeting not less than two thirds of the members of the committee at a meeting specially convened for the purpose and at which meeting not less than seven members of the Committee shah be present." 4 8 7 article 22 "Any member who has been declared a defaulter by reason of his failure to fulfil any engagement between himself and any other member or members and who fails to fulfil such engagements within six months from the date upon which he has been so declared a defaulter shall at the expiration of such period of six calendar months automatically cease to be a member.
" article 24 "Upon any member ceasing to be a member under the provisions of article 22 hereof and upon any resolution being passed by the Committee expelling any member under the provisions of Article 21 hereof or upon any member being adjudicated insolvent the share held by such member shall ipso facto be forfeited.
" article 27 "Any share so forfeited shall be deemed to be the property of the Association, and the Committee shall sell, re allot, and otherwise dispose of the same in such manner to the best advantage for the satisfaction of all debts which, may then, be due and owing either to the Association or any of its mem bers arising out of transactions or dealings in stocks and shares.
" article 28 "Any member whose share has been so forfeited shall notwithstanding be liable to pay and shall forthwith pay to the Association all moneys owing by the member to the Association at the time of the forfeiture together with interest thereon, from the time of forfeiture until payment at 12 percent per annum and the committee may enforce the pay ment thereof, without any deduction or allowance for the value of the share at the time of forfeiture.
" article 29 "The forfeiture of a share shall involve the extinction of all interest in and also of all claims and demands against the Association in respect of the share, and all other rights incidental to the share.
except only such of those rights as by these Articles expressly saved.
" article 31 "The Association shall have a first and paramount lien upon the share registered in the name of each member and upon the proceeds of sale thereof for his debts, liabilities and engagements.
488 article 32 "For the purpose of enforcing such hen the Association may sell the share subject thereto in such manner as, they think fit.
article 33 "The nett proceeds of any such sale shall be applied in or towards satisfaction of the debts, liabilities, or engagements, residue (if any) paid to such member, his executors, administrators, committee, curator or other representatives.
" The relevant bye laws of the exchange are: "Settlement of Disputes.
All disputes, complaints and claims between by and against members shall, on the application of either party, be decided by the Committee or by a Standing or Special Sub Committee appointed by the Committee for the purpose.
In the event of the matter being decided by the Committee the decision shall be, final and binding upon all members concerned but any member aggrieved with the decision of the Standing or Special Sub Committee may, within seven days of such decision being given, appeal to the Committee whose decision shall be final.
In the event of any member or members refusing, neglecting or failing to observe, carry out or comply with any decision of the Committee, or if no appeal is preferred, with the decision of the Standing or Special Sub Committee, such member or members so in default shall be dealt with by the Committee under the rules, regulations and/or by laws of the Association for the time being in force.
" Bye law 13 "Defaulters.
Any member who shall fail to pay any subscription or other moneys due by him to the Association on due date, or who shall fail to fulfil any engagement between himself and another member or members may be declared a 'defaulter ' by the Committee and on such declaration his name shall be posted as a 'defaulter ' on the notice board of the Association and so long as the name remains so posted he shall not be at liberty to exercise any of the privileges of member ship." Under the scheme of the Articles of Association of the Ex change, the Committee is authorised to expel or suspend a member on the ground, inter alia, that he refuses to abide by the decision of the Committee in any matter which is under the Articles or under the Bye laws referred to the Committee.
A person declared a "defaulter" because he fails to fulfil any engagement between himself and any other member or members within six months from 489 the date on which he has been declared a defaulter, ceases to be a member of the Exchange and his share also stands forfeited.
The share so forfeited is deemed to be the property of the Exchange.
But the Committee must sell, re allot or otherwise dispose of the share for satisfaction of the debts which may then be due and owing by the defaulter to the Exchange or to any of its members arising out of transactions or dealings in stocks and shares.
Forfeiture of a share involves extinction of all interest in and also of all claims and demands against the Exchange in respect of the share and all other rights incidental to the share, but not the liability of the.
erstwhile member to discharge his liabilities to the Exchange.
The Exchange has a first lien upon the share of a member and upon the proceeds of sale thereof for his debts and liabilities, and in enforcement of the lien, the Exchange may sell the share.
The net proceeds of the share subject to the lien it sold will be applied in or towards satisfaction of the debts, liabilities or engagements of the shareholder and the residue, if any, paid to such member, his executors, administrators, committee, curator or other representatives.
In this appeal counsel for Sanyal contended, that under the Indian Companies Act, 1913, a fully paid up share cannot be forfeited for failure to carry out any engagement by the shareholder other than an engagement to pay a call made by the Company to pay unpaid capital; that the procedure followed by the Sub Committee of the Exchange was irregular in that Sanyal had no notice of the meeting of the Committee to declare him a defaulter; that the Committee had no authority under the Articles of Association to direct sale of the share; and that in any event Sanyal was entitled to the balance remaining on hand with the Exchange after satisfying his debts, liabilities and engagements under the Articles of Association.
For failure to abide by the decision of the Committee in respect of his liability to pay the amount of loss due to Johurmull Daga & Company Sanyal was declared a defaulter, and when he continued to remain a defaulter for six months he was by resolution of the Full Committee expelled from the membership of the Exchange.
The Full Committee also resolved to forfeit his share.
The Exchange thereafter disposed of the share for Rs. 55,000/ .
The argument raised by counsel for Sanyal that a member of the Exchange forfeits his share only if a resolution expelling him and 490 a resolution declaring him a defaulter are passed is without substance.
The conductive "and" between the first two clauses of article 24 is used to indicate an Alternative, and does not make the two conditions cumulative.
We agree with the observations of Panckridge, J., in Surajmall Mohta vs Ballabhdas Mohta(1) that article 24 "is carelessly drawn, because, on its literal application, before his share could be forfeited, a member would both have to be expelled by the Committee under article 21 and automatically cease to be a member under article 22 Clearly this cannot be the intention of the article and it is obvious that by a slip, 'and ' has been substituted for "or".
" In any event the Full Committee passed on February 19, 1942 ,a resolution declaring the appellant a defaulter.
The appellant did not carry out his engagements for a period of six months there, after.
By resolution dated September 1, 1942 at a meeting of the Full Committee the appellant was expelled from the membership of the Exchange and it was resolved that his share shall stand forfeited.
There is no provision in the Indian Companies Act, 1913, which restricts the exercise of the tight of the Exchange to forfeit :share ,, for non payment of a call only.
The Indian Companies Act, 1913, made no provision relating to forfeiture of shares.
By section 17(2) of the Act, a company could adopt the regulations contained in Table A in the First Schedule but the Company was not bound to do so.
Regulations 24 to 30 of Table A dealt with the power and the procedure relating to forfeiture of shares.
Regulation 24, it is true, provided for exercise of the power to forfeit a share when there was default in paying calls, but no inference follows therefrom that the share of a member could be forfeited only for non payment of a call made in respect of the share which was not fully paid up.
In The Calcutta Stock Exchange Association Ltd. vs section N. Nundy & Co.(2), Harries C.J. after examining the provisions of the Companies Act 1913 reviewed the decisions of the Courts in England and of the High Court of Calcutta and observed that the Indian Companies Act as well as the English Companies Act contemplate, recognize and sanction forfeiture generally and not for non payment of calls only; that a company may by its Articles lawfully provide for grounds of forfeiture other than nonpayment of call, subject to the qualification that the Articles relating to for feiture do not offend against the general law of the land and in particular the Companies Act, and public policy; and that the forfeiture contemplated does not entail or effect a reduction in capital or involve or amount to purchase by the Company of its (1) I. L R. (2) I. L. R. [1950] 1 cal.
491 own shares nor does it amount to trafficking in its own shares.
The Court in that case was concerned to determine the true effect of the Articles of the Exchange which fall to be interpreted in this case.
This Court in Sri Gopal Jalan & Company vs Calcutta Stock Exchange Association Ltd.(1) also considered whether forfeiture of shares resulted in reduction of capital contrary to the provisions of the Companies Act where power of forfeiture was given by the Articles for failure to carry out an undertaking or satisfy an obligation of the member to forfeit the shares.
The Court in that case was interpreting the Articles which fall to be interpreted in this appeal.
The Court held that the Exchange was not liable to file any return of the forfeited shares under section 75(i) of the Indian when the same were re issued.
The Court observed that when a share is forfeited and re issued, there is no allotment, in the sense of appropriation of shares out of the authorised and unappropriated capital, and approved the observations, of Harries, C.J. in section N. Nundy 's case(2) that "on such forfeiture all that happened was that the right of the particular shareholder disappeared but the share considered as a unit of issued capital )continued to exist and was kept in suspense until another shareholder was found for it".
In the view of this Court, the shares so forfeited may not be "allotted ' in the sense in which that word is understood in the .
The Court also pointed out that re issue of forfeited shares is not allotment of the shares but only a sale, for, if it were not so the forfeiture even for non payment of call would be invalid as involving an illegal reduction of capital.
Article 27 of the Exchange it may be recalled is in terms mandatory.
The share forfeited to the Exchange must be re allotted or otherwise disposed of : it cannot be retained by the Exchange.
The share after forfeiture in the hands of the Company is subject to an obligation to dispose it of.
On that account there is no reduction of capital by mere forfeiture.
Mr. Datar appearing for the appellant however contended that in Sri Gopal Jalan & Company 's case(1) the parties argued the case on the footing that Articles of Association of the Exchange were not invalid, whereas in the present case the validity of the Articles is challenged.
But the Court in citing with approval the observations of Harries C.J. in section N. Nundy 's case(2) did in effect pronounce upon the validity of the Articles.
A forfeited share is, therefore, merely a share available to the Company for sale and remains vested in the Company for that purpose only.
By forfeiting a share pursuant to the authority of the (1) ; (2) I. L. R. 492 Articles of Association, no reduction of capital is achieved.
We are unable to agree with counsel for Sanyal that forfeiture of shares is permissible only in cases expressly contemplated by Table A Model Articles i.e. for non payment of calls in respect of a share which is not fully paid up.
Subject to the provisions of the the Company and the members are bound by the provisions contained in the Articles of Association.
The Articles regulate the internal management of the Company and define the powers of its officers.
They also establish a contract between the Company and the members and between the members inter se.
The contract governs the ordinary rights and obligations incidental to membership in the Company.
In the absence of any provisions contained in the Indian which prohibit a Company from forfeiting a share for failure on the part of the member to carry out an undertaking or an engagement the Articles of a Company which provide that in certain events membership rights of the shareholder including his right to the share will be forfeited are binding.
The Articles of Association of the Exchange expressly provide that in the event of the member failing to carry out the engagement and in the conditions specified therein his share shall stand forfeited.
Articles 22, 24, 26, 27 & 29 of the Exchange relating to forfeiture of shares in certain events are therefore valid.
There is in our judgment nothing in the procedure followed by the Sub Committee and the Full Committee which rendered the forfeiture of Sanyal 's share illegal.
It is not in dispute that Sanyal incurred liability in favour of one of the members of the Exchange to pay Rs. 438 10 0 in the transaction relating to the sale of Indian Iron & Steel Company 's shares and he failed to discharge that liability.
He continued to remain in default for six months even after the resolution of the Full Committee, and on that account he ceased to be a member and his share was forfeited.
The High Court has found that the copies of the letters dated 9th, 10th, 16th, 17th and 20th December, 1941, and of 8th January, 11th & 19th February, 1942, were sent to Sanyal and the usual notices relating to the complaints placed before the Sub Committee or the Full Committee were served upon Sanyal, that such notices were posted on the notice board of the Exchange that the appellant had opportunities at all stages of the proceedings to come before the Exchange and refute the charges made against him and that at no stage of the proceeding until September 1, 1942, did Sanyal appear before the Sub Committee or the Full Committee.
The High Court was of the view that the order had not been made against Sanyal contrary to the rules of natural justice.
It is true that Johurmull Daga complained about the default committed by Sanyal on December 9, 1941 and the meeting of the Sub Committee was held 493 on December 10, 1941.
Granting that the letter of the Sub Committee enclosing a copy of the complaint dated December 9, 1941, sent by post to Sanyal may not have reached him because he had left Calcutta, he had still ample notice of the proceeding of the SubCommittee because intimation was given to him by the notice posted on the board of the Exchange.
Sanyal raised no contention at any stage before the Sub Committee or before the Full Committee that he had not received the notices of the meetings dated December 10, 1941, December 17, 1941, January 7, 1942 of the Sub Committee and of the meeting dated February 19, 1942 of the Full Committee.
Regularity of the proceedings of the Com mittees at the various meetings is not challenged before us.
We are unable to agree with the contention raised by counsel for Sanyal that the rules of natural justice were not complied with when the Sub Committee and the Full Committee passed the impugned resolutions against Sanyal.
There is no substance in the plea that the Committee had no jurisdiction to order sale of the share forfeited.
Article 27 declares that the forfeited share is the property of the Exchange and that the Committee of the Exchange shall sell reallot or otherwise dispose of the share, for satisfaction of all debts due by the member to the Association or to its members out of transactions in shares and stocks.
Under its Articles the Exchange has, authority to sell the share and to appropriate the sale proceeds towards satisfaction of the debts, liabilities or engagements" But we are unable to agree with the view taken by the High Court that the balance of the amount remaining due after satisfying the liabilities of Sanyal remained the property of the Exchange and that Sanyal had no right thereto.
Under the stipulations contained in articles 21, 22, 24, the share of the defaulter or expelled member stands forfeited for failure to fulfil his obligation.
The share of ' Sanyal by express resolution was forfeited.
After applying the, amount realised on sale of the share towards satisfaction of the debts, liabilities and engagements of Sanyal to the Exchange and its members, the balance remaining in the hands of the Exchange had to be held for and on be half of the appellant.
That is expressly provided in article 33.
The expression used in article 29 "The forfeiture shall involve the extinction of all interest" is subject to those rights as by the Articles are saved, and article 33 saves to the defaulting shareholder whose share is forfeited the right to the balance remaining with, the Exchange.
Even assuming that Articles 24 & 31 reserve to the Exchange two distinct powers the power to forfeit and the power to exercise a lien, and that article 33 only applies to sale in enforcement of a lien, and not to a sale under article 27, we are of the view that the balance on hand after satisfying the liability of the defaulter must still be returned to the 494 defaulting shareholder.
The power to forfeit does not imply authority to appropriate the balance, remaining in hand after satisfying the liabilities and obligations of the defaulter to the Exchange and its members.
Any such implication would be contrary to the intendment of section 74 of the Contract Act.
The power of the Exchange to forfeit the shares arises out of the Articles and its source is in contract.
Forfeiture of share is in the nature of imposition of a penalty.
Section 74 of the Indian ,Contract Act provides : "When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding, the amount so named or, as the case may be, the penalty stipulated for.
In Fateh Chand vs Balkishan Das(1) this Court in dealing with a case in which a claim for damages for breach of contract to sell :a lien of immovable property arose, pronounced that the expression " 'the contract contains any other stipulation by way of penalty" comprehensively applies to every covenant involving a penalty whether it is for payment on breach of contract of money, or delivery of property in future, or for forfeiture of right to money or other property already delivered.
Duty not to enforce the penalty clause but only to award reasonable compensation is statutorily imposed upon courts by section 74 of the Indian Contract Act.
In all cases, therefore, where there is a stipulation in the nature of penalty for forfeiture of an amount deposited pursuant to the terms of a contract which expressly provides for forfeiture the Court has jurisdiction to award such sum only as it considers reasonable, but not exceeding the amount specified in the contract as liable to forfeiture.
The same principles, in our judgment, would apply in the ,case in which there is a stipulation in the contract by way of a penalty, and the damages awarded to the party complaining of the breach will not in any case exceed the loss suffered by the complainant party.
It was observed at p. 526 in Fateh Chand 's case(,) : "The section (section 74) is clearly an attempt to eliminate the somewhat elaborate refinements made under the English common law in distinguishing between stipulations providing for payment of liquidated damages and (1) [1964] IS.
C.R. 515.
495 stipulatings in the nature of penalty.
Under the common law a genuine pre estimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties : a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to the aggrieved party only reasonable compensation.
The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty.
" The Court also observed at p. 530 "Section 74 declares the law as to liability upon breach of contract where compensation is by agreement of the parties predetermined, or where there is a stipulation by way of penalty.
But the application of the enactment is not restricted to cases where the aggrieved party claims relief as a plaintiff.
The section does not confer a special benefit upon any party; it merely declares the law that notwithstanding any term in the contract pre determining damages or providing for forfeiture of any property by way of penalty, the Court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated.
" Granting that article 33 deals with those cases in which lien alone is, enforced and not in cases where forfeiture is levied, and the obligation of the defaulting shareholder is determined by article 29, in our judgment, on the principle underlying section 74 of the Contract Act the Exchange had no right to hold out of the sale proceeds of the share any amount in excess of the amount due to it or to its members.
The Exchange may not purchase its own shares.
If it does so, it amounts to reduction of capital.
The legal theory of forfeiture is that a share forfeited is only taken over by the Company with the object of disposing it of to satisfy its claim to enforce which the share was forfeited and all other obligations arising against him out of his membership.
The Company is given this right to recover the loss suffered by it by reason of the breach of contract committed by the shareholder.
If the Company is permitted to retain the balance of the amount after satisfying the debts, liabili ties and engagements of the shareholder, the transaction would not be different from one purchasing the share of the defaulting shareholder for a value equal to the amount of his obligations.
That would be plainly illegal.
We are therefore unable to agree with the 496 High Court that the Exchange was entitled to retain the balance after satisfying the debts, liabilities and engagements of the appellant to the other members or to the Exchange.
The decree passed by the High Court is set aside and the case remanded to the High Court for determining the extent of the liabilities of the appellant to the Exchange not only in respect of the transactions with Johurmull Daga but in respect of all other outstanding liabilities of the appellant to other members of the Exchange and to the Exchange which are enforceable under the Articles.
The appellant is entitled to receive from the Exchange the balance remaining due after deducting the aggregate amount or value of the obligations.
He will be entitled to interest on the balance at the rate of 6% per annum from the date of the institution of the suit.
Parties will bear their own costs throughout.
This appeal was filed in forma pauperis.
The 'appellant will pay the court fee payable on the memorandum of appeal if he had not been permitted to appeal in forma pauperis.
V.P.S. Appeal allowed and case remanded.
| Under the scheme of the articles of association of the Calcutta Stock Exchange Association Ltd., the Committee is authorised under article 21 to expel or suspend a member on the ground inter alia that he refused to abide by the decision of Committee in any matter which is under the articles or under the bye laws referred to the Committee.
Under article 22, a member declared a "defaulter" because he fails to fulfil any engagement between himself and any other member within six months from the date on which he has been declared a defaulter ceases to be a member of the Exchange automatically.
Upon his ceasing to be a member and upon a resolution being passed by the Committee expelling a member his share stands forfeited.
The share so forfeited is deemed to be the property of the Exchange.
Such forfeiture involves the extinction of all interest in and also all claims and demands against the Exchange in respect of the share and all other rights incidental to the share, but, not the liability of the erstwhile member to discharge his liabilities to the Exchange.
But the Committee must sell, reallot or otherwise dispose of the share for the satisfaction of the debts, which may then be due and owing by the defaulter to the Exchange or to any of its members arising out of transactions or dealings in stocks and shares.
The net proceeds of the sale shall be applied towards the satisfaction of the debts, liabilities or engagements of the shareholder and the residue, if any, paid to the member or his legal representatives.
The appellant failed to carry out a direction to pay a certain sum arising out of a share transaction and the Committee after notice, declared him a defaulter.
Six months later, after notice to the appellant, the Committee resolved that the share standing in his name shall be forfeited to the Exchange and that the appellant be expelled from the membership of the Exchange.
The Exchange thereafter disposed of the 'share for Rs. 55,000.
The appellant challenged the action taken by the Exchange but the suit was dismissed.
In appeal to this Court, HELD : (1) It is not necessary that a resolution expelling a member and a resolution declaring him a defaulter should both be passed before his share is forfeited by the Exchange.
The word and is used to indicate an alternative and does not make the two conditions cumulative, because, it would lead to the anomalous result that a member would have to be expelled by the Committee under article 21 and would also automatically cease to be a member under article 22.
[490 A C] Surajmall Mohta vs Ballabhdas Mohta, I.L.R , approved.
484 In any event, in the present case, a resolution declaring the appellant a defaulter was passed and six months later the appellant was expelled from the membership of the Exchange and it was resolved that his share shall stand forfeited.
[490 C D] (2)(a) Regulation 24 in Table A in the First Schedule to the Companies Act, 1913, provides for the exercise of the power to forfeit a share when there is default in paying calls, but no inference follows therefrom that the share of a member could be forfeited only for non payment of a call made in respect of a share which was not fully paid up.
Subject to the provisions of the Companies Act a company and its members are bound by the Provisions contained in its articles of association.
The Articles regulate the internal management of the company and define the powers of its officers.
In the absence of any provision contained in the Act which prohibits a company from forfeiting a share for failure on the part of a member to carry out an undertaking or engagement the articles of a company which provide that in certain events membership rights of a shareholder including his right to the share will be forfeited are binding.
There ' is no provision the Indian Companies Act 1913, which restricts the exercise of the right of the Exchange to forfeit shares for non payment of a call only, and the articles of the Exchange expressly provide that in the event of a member failing to carry out the engagement and in ,the conditions specified therein his share shall stand forfeited.
[492 A E] (b) Under article 27, the terms of which are mandatory, the shares forfeited to the Exchange must be re allotted or otherwise disposed of : it cannot be retained by the Exchange.
A forfeited share is merely a shake available to the company for sale and remains vested in it for that pur pose only.
By forfeiting a share pursuant to the authority of the articles of association no reduction of capital is achieved.
[491 F, H; 492 A] Therefore, articles 22, 24, 26, 27 and 29 relating to forfeiture of shares are valid.
[492 D E] Sri Gopal Jalan & Co. vs Calcutta Stock Exchange Association Ltd., ; , followed.
Calcutta Stock Exchange Association Ltd. vs section N. Nundy & Co. I.L.R. , approved.
(3) There is nothing in the procedure followed which rendered the forfeiture of the appellant 's share illegal.
The appellant had ample notice of the proceedings and the orders were not made against him contrary to rules of natural justice.
[493 C] (4)(a) Under its articles the Exchange has authority to sell the share and to appropriate the sale proceeds towards satisfaction of the debts, liabilities or engagements.
But the balance of the amount remaining due after satisfying the liabilities of the appellant did not remain the property of the Exchange.
The appellant was entitled to the amount.
This is expressly provided for in article 33.
The expression used in article 29 'the forfeiture shall involve extinction of all interest ' is subject to the rights as by the articles saved and article 33 saves the defaulting share holder 's right lo the balance remaining with the Exchange.[493 D G] (b) Even assuming that articles 24 and 31 reserve to the Exchange two distinct powers the power to forfeit and the power to exercise a lien, and that article 33 only applies to a sale in enforcement of a lien and not to a sale after forfeiture, the balance on hand after satisfying the liability 485 of the defaulter must still be returned to the defaulter, under section 74 of the Contract Act.
The power of the Exchange to forfeit the shares arises out of the articles and its source is in contract.
On the principle underlying section 74 of the Contract Act the Exchange had no right to hold, out of the sale proceeds of the share, any amount in excess of the amount due to it or to its members.
[493 H; 494 A B] Fateh Chand vs Balkishan Das, ; , followed.
(c) The legal theory of forfeiture is that a share forfeited is only taken over by the company with the object of disposing of it to satisfy its claims to enforce which the share was forfeited and all other obligations arising against him out of his membership.
If the company is per mitted to retain the balance of the amount after satisfying the debts, liabilities and engagements of the share holder, the transaction would not be different from one purchasing the share of the defaulting shareholder for a value equal to the amount of his obligation and that would be illegal.
[495 E H]
|
of 1949.
Appeal from a judgment of the High Court of Judicature at Calcutta (Harries C.J. and Chakravarthi J. (dated 30th November, 1948, in Civil Revision Case No. 712 of 1948.
N.C. Sen Gupta (Ajit Kumar Dutta, with him) for the Appellant.
Faiyaz Ali, Advocate General of East Bengal (B. Sen and Noor ud din, with him) for the Respondent.
M. C, Setalvad, Attorney General for India, (section M. Sikri and V.N. Sethi, with him) for the Intervener.
Dec. 4.
The judgment of Kania C.J., Patanjali Sastri j. and Chandrasekhara Aiyar J. was delivered by Patanjali Sastri J. Fazl Ali and Mukherjea JJ.
delivered separate judgments.
PATANJALI SASTRI J.
This is an appeal from a judgment of the High Court of Judicature in West Bengal reversing a finding of the Second Subordinate Judge of 24 Parganas at Alipore that he had jurisdiction to proceed with a suit after substituting the Province of East Bengal (in Pakistan)in the place of the old Province of Bengal against which the suit had originally been brought.
The facts leading to the institution of the suit are not in dispute.
The Bengal Agricultural Income tax Act was passed by the Provincial Legislature of Bengal in 1944.
It applied to the whole of Bengal and purported to bring under charge the agricultural income of, inter alia, "every Ruler of an Indian State." Acting under the provisions of that Act, which came into force on 1st April, 1944, the Income tax Officer, Dacca Range, sent by registered post, a notice to the Manager of the Zemindari Estate called Chakla Roshanabad belonging to the Tripura State but situated in Bengal outside the territories of that State, calling upon him to furnish a return of the total income derived in the 5 previous year from lands in the Estate used for agricultural purposes.
The notice was received by the Manager at Agar talla in Tripura State.
Thereupon, the State, by its then Ruler, Maharaja Sir Bir Bikram Bahadur, instituted the suit in question on 12th June, 1945, against the Province of Bengal and the Agricultural Income tax Officer, Dacca Range, in the Court of the First Subordinate Judge, Dacca, contest ing the validity of the notice and the proposed assessment on the grounds that the "Provincial Legislature of Bengal had no authority to impose tax on any income of an Indian State or its Ruler" and that, in any case, "the Income tax Officer, Dacca Range, had no authority or jurisdiction to issue the said notice to the Manager of the Estate outside British India.
" The cause of action of the suit was alleged to have arisen in the town of Dacca within the jurisdiction of the Court on 28th February, 1945, when the notice was issued.
The reliefs sought were a declaration that the Bengal Agricultural Income tax Act: 1944, in so far as it purported to impose a liability to pay agricultural income tax on the plaintiff as a Ruler of an Indian State was ultra vires and void and that, in any case, the notice served by the Agricultural Income tax Officer, Dacca Range, was void and no assessment could be made on the basis of such notice, and a perpetual injunction to restrain the defendants from taking any steps to assess the plaintiff to agricultural income tax.
Before the defendants filed their written state ments the suit was transferred by the High Court to the Court of the District Judge, 24 Parganas, and was again transferred from that Court to the Court of the Subordinate Judge at Alipore.
The ruler who brought the suit having died, the plaint was amended by the substitution in his place of his son and heir in June 1947, and the suit was pending in that Court when the partition of India took effect on the 15th August, 1947 On 9th December, 1947, the Province of East Bengal filed a petition stating that the Province of Bengal, the original defendant No. 1 in the suit, had ceased to exist with effect from 15th August, 1947, and 6 in lieu thereof two new Provinces, namely, the Province of East Bengal and the Province of West Bengal had come into existence and that, inasmuch as the Province of West Bengal was taking no interest in the suit, it was necessary in the interests of East Bengal that the suit should be contested and that a written statement should be put in on its behalf for such contest.
It was accordingly prayed that the ' delay should be condoned and the written statement which was filed with that petition should be accepted.
In the written statement it was pleaded that inasmuch as the Province of East Bengal was a Province of the; Dominion of Pakistan and that defendant No. 2 was a Revenue officer of that Province, the Court had no jurisdiction to hear the suit or make an order of injunction against the defendants.
It was stated that the Province of East Bengal appeared only to contest the jurisdiction of the Court.
By another written statement filed on the same day defendant No. 2 raised also other pleas in defence but his name was struck off the record at the plaintiff 's instance as not being a necessary party to the suit.
On the 10th December, 1947, the Province of East Bengal was substituted as the defendant in the place of the Province of Bengal which had ceased to exist, and the writ ten statement filed on behalf of the former was accepted.
Thereupon the Subordinate Judge framed a preliminary issue on the question of jurisdiction and, as stated al ready, found it for the plaintiff relying on section 9 of the Indian Independence Act and article 4 of the Indian Inde pendence (Legal Proceedings) Order, 1947.
It may be men tioned in passing that the assessment of the plaintiff was proceeded with by the Agricultural Income tax Officer, Comilla Range (East Bengal), who, by his order dated the 22nd December, 1947, imposed on the plaintiff a tax of Rs. 1,79,848 12 0 for 1944 45 and Rs. 1,34,326 7 0 for 1945 46, but the recovery of the amounts has been deferred under orders of the Court pending the decision on the preliminary issue.
As pointed out by the Federal Court in Midnapore 7 Zemindary Co. Ltd. vs The Province of Bengal and ,Others (1), the orders promulgated on the 14th August, 1947, by the Governor General of India before the partition in exercise of the powers conferred under section 9 of the Indian Independ ence Act, 1947, and containing provisions specially designed to remove the difficulties arising in connection with the transition to the new situation created by the partition are binding on both the Dominion of India and the Dominion of Pakistan.
Among such Orders those relevant to the present controversy are the Indian Independence (Legal Proceedings) Order, 1947, and the Indian Independence (Rights, Property and Liabilities)Order, 1947.
By article 4 of the former Order (1) All proceedings pending immediately before the appointed day in any of the special tribunals specified in col. 1 of the Schedule to this Order shall be continued in that tribunal as if the said Act had not been passed, and that tribunal shall continue to have for the purposes of the said proceedings all the jurisdiction and powers which it had immediately before the appointed day; * * * * (3) Effect shall be given within the territories of either of the two Dominions to any order or sentence of any such Special Tribunal as aforesaid and of any High Court in appeal or revision therefrom as if the order or sentence had been passed by a court of competent jurisdiction in that Dominion; * * * * and by article 12 (2) of the latter Order Where any Province from which property, rights or li abilities are transferred by this Order is, immediately before the transfer a party to legal proceedings with re spect to that property or those rights or liabilities the Province which succeeds to the property, rights or liabili ties in accordance with the provisions of this Order shall be deemed to be substituted for the other Province as a party to those proceedings and the proceedings may continue accordingly.
(1) 8 On the effect of these provisions the learned Judges of the High Court observed: "If this provision [i.e., article 12 (2)] applies to the present case, there can be no doubt that the Province of East Bengal was substituted in the suit for the Province of Bengal by operation of law, and by reason of the Legal Proceedings Order the suit shall continue in the Court of the Second Subordinate Judge, 24 Parganas, as a suit against the substituted defendant.
" With that statement of the position we entirely agree.
The learned Judges, however, proceeded to examine, laying stress on the words "by this Order" in article 12 (2), whether any property, rights or liabilities could be said to have been transferred by the Indian Independence (Rights, Property and Liabilities) Order, 1947, from the Province of Bengal to the Province of East Bengal, and they took the view that neither any property, nor rights, nor liabilities were so transferred under that Order and that, therefore, the con tinuation of the proceedings against the Province of East Bengal, which was now part of an Independent Sovereign State, was governed by the principles of international law and comity of nations, and that, according to those princi ples, East Bengal, being a Province of a sovereign state, could not be sued against its will in the municipal courts of India, with the result that the suit pending in the Court at Alipore must abate.
They also negatived a further con tention raised before them, apparently for the first time, to the effect that by reason of the petition filed on behalf of the Province of East Bengal for acceptance of its written statement condoning the delay involved and also by reason of sundry other proceedings for interim relief sought by the plaintiff which were actively resisted by the Province of East Bengal, that Province must be taken to have submitted to the jurisdiction of the Court.
On behalf of the appel lant, Mr. Sen Gupta challenged the correctness of the deci sion on both points.
Before dealing with these contentions, it will be con venient to dispose of two preliminary points raised by Mr. Faiyaz Ali, Advocate General of East Bengal.
9 In the first place, he submitted that the State of Tripura having since been merged in the Dominion of India and a Chief Commissioner having been appointed to administer its territories, the appeal could no longer be prosecuted by the present Maharaja through his mother as his next friend.
It was, however, represented to us on his behalf that under the agreement of merger the Estate of Chakla Roshanabad was left to the Maharaja as his personal property and it no longer formed part of the territories of the Tripura State.
The Attorney General, appearing on behalf of the Dominion of India, the intervener, confirmed that position.
There is thus no substance in the objection as any formal defect in the proceeding could be set right by suitably amending the cause title.
Mr. Faiyaz Ali next drew our attention to the Pakistan (Indian Independence Legal Proceedings) Order, 1948, promul gated by the Governor General of Pakistan on 13th November, 1948, with retrospective effect from the 15th August, 1947, and pointed out that in view of its provisions any decree that might eventually be passed by the Court at Alipore would receive no effect in Pakistan and that, therefore, it was unnecessary for this Court to decide the question of the jurisdiction of the Alipore Court to proceed with the suit.
We are unable to take that view.
The effect of the Order referred to above on any decree that may eventually be passed in the pending suit may have to be taken note of by the Court trying that suit after hearing arguments on the validity of that Order which is challenged but we are at present concerned only with the question of the jurisdic tion of that Court to try the suit and we cannot at this stage refuse to give our ruling on that question merely because any decree that might be passed in favour of the plaintiff might prove ineffectual.
Turning now to the main question, it is clear that article 12 (2) of the Rights, Property and Liabilities Order applies only to property rights or liabilities which were transferred by the Order from a Province which was a party to legal proceedings 2 10 "with respect to" that property or those rights or liabili ties.
As the suit in question cannot be said to have been instituted with respect to the property transferred, namely, Chakla Roshanabad, the appellant cannot rely upon the trans fer of that property from the Province of Bengal to the Province of East Bengal as part of the territories of Pakistan under the scheme of partition.
Nor was there any transfer of "rights"such as was contemplated under that article, for the only right with respect to which the Prov ince of Bengal could be said to have been a party to the pending proceeding on the facts of this case was the right to tax the agricultural income of the plaintiff under the provisions of the Bengal Agricultural Income tax Act, 1944, and that right was not derived by the Province of East Bengal by transfer under the Rights, Property and Liabili ties Order.
As rightly pointed out by the High Court, the right of taxation under the Bengal Act of 1944 passed to the Province of East Bengal as part of the Sovereign Dominion of Pakistan by virtue of the provisions of section 18(3) of the Indian Independence Act, 1947, which provided that "the law of British India and of the several parts thereof immediate ly before the appointed day shall, so far as applicable and with the necessary adaptations, continue as the law of each of the new Dominions and the several parts thereof, until other provision is made by the laws of the legislature of the Dominion in question or by any other legislature or other authority having power in that behalf.
" The question next arises whether there was a transfer of any "liability" by the Order as contemplated in article 12(2).
Mr. Sen Gupta relied in this connection on article 10 (2) (a) which provides that "where immediately before the appointed day the Province of Bengal is subject to any such liability (i.e., "any liability in respect of an actionable wrong other than breach of contract") referred to in sub section (1)that liability shall, where the cause of action arose wholly within the territories which, as from that day, are the territories of the Province of East Bengal, be a liability of that Province.
" It was contended that the Province 11 of Bengal was, according to the plaintiff 's case, liable to be restrained from proceeding with the illegal and unautho rised assessment on the basis of the notice issued under the Bengal Act of 1944, and that liability, in respect of which the cause of action arose wholly in Dacca (where the as sessment proceeding had been initiated) within the territo ries of the Province of East Bengal, became a liability of that Province.
The High Court rejected this contention on the ground "that article 10(2) is concerned with the liabil ity for an actionable wrong other than breach of contract and it is impossible to say that by serving a notice on the plaintiff under the Bengal Agricultural Income tax Act through one of its officers the Province of Bengal had committed an actionable wrong '.
Assuming that it exceeded its power or acted under an invalid provision of law, the plaintiff may have a declaration to that effect but the Act complained of cannot be said to have been a tortious act.
But even assuming that it was, it is to be remembered that the issue of the notice was an exercise of powers conferred by the Act in relation to the sovereign rights of the Crown and it is elementary that the Crown or the State is not answerable for even negligent or tortious acts of its offi cers done in the course of their official duties imposed by a statute, except where the particular act was specifically directed and the Crown profited by performance . .
No liability for an actionable wrong is thus involved in the suit and Dr. Sen Gupta cannot establish a right to proceed against the Province of East Bengal on the basis that the liability was transferred to that Province under article 10(2) of the Order.
" We are unable to share 'this view.
The learned Judges have placed much too narrow a construction on the phrase "liability in respect of an actionable wrong".
They have assumed that the phrase connotes only a liability for dam ages for a completed, tortious act and that the initiation of what according to the plaintiff was an unauthorised and illegal assessment proceeding by purporting to serve a notice requiring the plaintiff to submit a return of his total agricultural income under section 24 (2) of the Bengal Agricultural 12 Income tax Act, 1944, through an appropriate officer func tioning under that Act, the Province of Bengal had not committed an "actionable wrong".
This, in our opinion, is not a correct view of the matter.
Under section 9(1) (b) of the Indian Independence Act, 1947, the Governor General of British India was directed to make provision by order "for dividing between the new Dominions and between the new Provinces to be constituted under this Act, the powers, rights, property, duties and liabilities of the Governor General in Council or as the case may be of the relevant Provinces which under this Act are to cease to exist", and the Indian Independence (Rights, Property and Liabilities) Order is the only Order by which such provision was made.
The intention being thus to provide for the initial distri bution of rights, property and liabilities as between the two Dominions and their Provinces, a wide and liberal con struction, as far as the language used would admit, should be placed upon the terms of the Order, so as to leave no gap or lacuna in relation to the matters sought to be provided for.
There is no reason, accordingly, why the words "li ability in respect of an actionable wrong" should be under stood in the restricted sense of liability for damages for completed tortious acts.
We consider that the words are apt to cover the liability to be restrained by injunction from completing what on the plaintiff 's case was an illegal or unauthorised act already commenced.
The service of the notice on the plaintiff under section 24(2) of the Bengal Act amounts to much more than a mere threat in the abstract to impose an illegal levy.
It is the actual initiation of an illegal assessment proceeding which, in the normal course, will 'in all probability culminate in an illegal levy of tax.
The failure to make a return as required by the notice would result under section 25(5) of the Act in the Income tax Officer making an ex parte assessment to the best of his judgment and determining the sum payable by the assessee on the basis of such assessment.
Such failure would also expose the plaintiff under section 32(1) of the Act to the impo sition of a penalty which may equal the amount of the tax assessed on him or to a prosecution as for an offence 13 before a Magistrate under section 53 (1), at the option of the Income tax authority.
It is thus plain that the service of a notice requiring a return of income to be furnished for assessment under the Act is a step fraught with serious consequences to the assessee, and if the assessment proposed was illegal and unauthorised by reason of the Act itself being ultra vires in so far as it purported to make the Rulers of Indian States liable to taxation thereunder as contended for by the plaintiff, the service of such notice marked the commencement of a wrongful act against the plain tiff by the Bengal Government under colour of the Act and there can be no doubt that such a wrongful act is actionable in the sense that an action would lie in a civil court for an injunction restraining its completion.
That was the liability to which the Province of Bengal was subject ac cording to the plaintiff 's case at the time when he insti tuted the suit, and that liability, in our opinion, passed to the Province of East Bengal by virtue of article 10 (9.) (a) of the Indian Independence (Rights, Property and Liabil ities) Order, 1947.
There is no question here of the li ability of the Crown for damages for the negligent or tor tious act of its officers.
On the allegations in the plaint, which must, for the purpose of deciding the question of jurisdiction as a preliminary issue, be assumed to be well founded, the Province of Bengal was undoubtedly liable to be sued for an injunction restraining it from proceeding with the assessment and none the less so because the notice was served in purported exercise of powers conferred by the Bengal Act.
The name of the Income tax Officer originally impleaded as the second defendant having been struck off the record, no question in regard to his liability arises.
Reference was made to certain text books where a "tort" is spoken of as an "actionable wrong" and it was suggested that the two expressions are synonymous.
Every tort is undoubtedly an actionable wrong but the converse does not necessarily follow.
Indeed, the words "other than breach of contract" used in article 10 (1) make it plain that the expression "actionable wrong" is used in a wider sense 14 which would have included breach of contract but for those limiting words.
It was said that even assuming that the service of the notice calling for a return of income was a wrongful act, it was not "actionable", as section 65 of the Bengal Act barred suits in civil courts "to set aside or modify any assessment made under this Act".
The short answer to this contention is that the suit in question is not a suit "to set aside or modify an assessment" made under the Act, as no assessment had yet been made when it was instituted, and the subsequent completion of the assessment was made by the Pakistan In come tax authorities on terms agreed to between the parties and sanctioned by the Court.
The decision of the Privy Council in Raleigh Investment Co. Ltd. vs Governor General in Council (1) relied on in support of the contention is distinguishable, as the main relief claimed there was repay ment of the tax alleged to have been wrongfully levied under colour of an ultra vires provision in the Indian Income tax Act.
Their Lordships observed: "In form the relief claimed does not profess to modify or set aside the assessment.
In substance it does, for repayment of part of the sum due by virtue of the notice of demand could not be ordered so long as the assessment stood.
Further, the claim for the declaration cannot be rationally regarded as having any relevance except as leading up to the claim for repayment, and the claim for an injunction is merely verbiage.
The cloud of words fails to obscure the point of the suit.
" The position here is entirely different.
The gist of the wrongful act complained of in the present case is sub jecting the plaintiff to the harassment and trouble by commencing against him an illegal and unauthorised assess ment proceeding which may eventually result in an unlawful imposition and levy of tax.
It was suggested, somewhat faintly, that the cause of action for the suit, though stated in the plaint to have arisen in Dacca, now in the Province of East (1) 15 Bengal, did not arise wholly within the territories of the Province of East Bengal within the meaning of Article 10 (2) (a) inasmuch as the notice calling for a return, though issued from Dacca, was received by the Manager of the Estate at Agartalla in Tripura State.
Assuming that the contention has any substance it is of no assistance to the respondent, for article 10 (2) (c) would then be applicable to the case and the Province of East Bengal would still be liable, though jointly with the Province of West Bengal.
We are therefore of opinion that the Province of East Bengal having succeeded to the liability to which the Province of Bengal was subject immediately before the ap pointed day, the former Province is to be deemed to be substituted for the other Province as a party to the suit and the suit must accordingly continue in the Court of the Subordinate Judge at Alipore, which has jurisdiction to proceed with it under article 4 of the Indian Independence (Legal Proceedings) Order, 1947.
In this view it is unnecessary to consider the question of submission to jurisdiction urged in the alternative by the appellant.
In the result the appeal is allowed, the order of the Court below is set aside and the suit now pending in the Court of the Subordinate Judge at Alipore will be heard and determined by it.
The respondent will pay the appellant 's costs throughout.
FAZL ALI J.
The question to be decided in this appeal is whether the Subordinate Judge 's Court at Alipore in the State of West Bengal, has jurisdiction to try a suit in which the Province of East Bengal was impleaded as a defend ant, after the 15th August,1947 In what circumstances this question has arisen will appear from the facts of the case which may be briefly stated.
In 1944, the Bengal Legislature passed an Act called the Bengal Agricultural Income tax Act, 1944 (Bengal Act IV of 1944), which enabled it to impose a tax on the agricul tural income of various classes 16 of persons including "every Ruler of an Indian State," holding lands within the territory of Bengal.
The appel lant, who is the Ruler of the State of Tripura, holds a zamindary called Chakla Roshanabad Estates, which was situ ated in the Province of Bengal and in the District of Sylhet formerly appertaining to the Province of Assam.
On the 28th February, 1945, the Agricultural Income tax Officer, Dacca Range, issued a notice under section 24 (2) of the Bengal Act to the Manager of the Chakla Roshanabad Estates calling upon him to furnish a return of the appellant 's total agri cultural income for the previous year, derived from lands situated within the Province of Bengal.
On the 12th June, 1945, the appellant instituted a suit in the Court of the Subordinate Judge at Dacca, against the Province of Bengal and the Agricultural Income tax Officer, Dacca Range, claim ing the following reliefs: (1) For a declaration that the Bengal Agricultural Income tax Act, 1944, so far as it imposes a liability to pay agricultural income tax on the plaintiff is ultra vires and void and that the plaintiff ' is not bound by the same.
(2) For a declaration that in any case the notice served by the Agricultural Income tax Officer, Dacca Range, above referred to, is void and of no effect and that no assessment can be made on the basis of that notice.
(3) For a perpetual injunction to restrain the defend ants from taking any steps to assess the plaintiff to agricultural income tax.
On the 15th July, 1945, the suit was transferred to the Court of the Subordinate Judge at Alipore in the District of 24 Parganas, by an Order of the Calcutta High Court.
While the suit was still pending, the new Province of East Bengal, which forms part of the territories of the Dominion of Pakistan, came into existence on the 15th August, 1947, as a result of the Indian Independence Act, 1947, and it appears that the whole of Chakla Roshanabad Estates falls within that Province.
After the creation of the new Province, 17 a petition was filed on the 9th December, 1947, on behalf of the Province of East Bengal, drawing the attention of the Court at Alipore to the fact that the Province of West Bengal, which forms part of the territories of the Dominion of India, was taking no interest in the suit and asking the Court to accept a written statement which was also filed along with the petition, and in which the only plea taken was that the Alipore Court had no jurisdiction to hear the suit or make any order of injunction against the Province of East Bengal or defendant No. 2.
The last paragraph of the written statement was to the following effect: "The Province of East Bengal appears only to contest the jurisdiction of the court and it submits that the suit should be dismissed on that ground.
" Later on, the Province of East Bengal was irapleaded as a defendant in the suit and the name of the Income tax Officer of Dacca was removed from the category of defend ants.
The Subordinate Judge then proceeded to try the question of jurisdiction as a preliminary issue, and decided that by virtue of the provisions of the Indian Independence (Legal Proceedings) Order, 1947, read with section 9 of the Indian Independence Act, 1947, the Court had jurisdiction to try the suit against the new Province.
Thereupon, the respondent (the Province of East Bengal) moved the High Court at Calcutta under section 115 of the Code of Civil Procedure, against the order of the Subordinate Judge, and a Bench of the High Court consisting of Harries C.J. and Chakravarthi J. allowed the application and set aside the order of the Subordinate Judge, giving effect to the objec tion of the respondent that the Court at Alipore was not competent to try the suit against the Province of East Bengal.
One of the points raised on behalf of the appellant before the High Court was that the Province of East Bengal had submitted to the jurisdiction ' of the Subordinate Judge 's Court, but this point was negatived.
The appellant was thereafter granted a certificate under section 205 (1) of the Government of India Act, 1935, and on the basis of it he has preferred this appeal.
18 On a reference to the judgments of the learned Subordi nate Judge and the High Court, it appears that three provi sions were relied upon by the appellant in support of his contention that the Court at Alipore had jurisdiction to try the suit, these being section 9 of the Indian Independ ence Act, 1947, article 4 of the Indian Independence (Legal Proceedings) Order, 1947, [hereinafter referred to as 'the Legal Proceedings Order '], and section 12 of the Indian Independence (Rights, Property and Liabilities) Order, 1947, Therein after referred to as ' the Rights, etc., Order '].
These provisions run as follows : Section 9 of the Indian Independence Act : "The Governor General shall by order make such provi sion as appears to him to be necessary or expedient (a) for bringing the provisions of this Act into effective operation; (b) for dividing between the new Dominions, and be tween the new Provinces, to be constituted under this Act, the powers, rights, property, duties and liabilities of the Governor General in Council or, as the case may be, of the relevant Provinces which, under this Act, are to cease to exist . . " Section 4 of the Legal Proceedings Order : "Notwithstanding the creation of certain new Provinces and the transfer of certain territories from the Province of Assam to the Province of East Bengal by the Indian Independ ence Act, 1947, (1) all proceedings pending immediately before the appointed day in any civil or criminal court (other than a High Court) in the Province of Bengal, the Punjab or Assam shall be continued in that court as if the said Act had not been passed, and that court shall continue to have for the purposes of the said proceedings all the jurisdiction and powers which it had immediately before the appointed day; (2) any appeal or application for revision in respect of any proceedings so pending in any such 19 court shall lie in the court which would have appellate, or as the case may be revisional, jurisdiction over that court if the proceedings were instituted in that court after the appointed day; and (3) effect shall be given within the territories either of the two Dominions to any judgment, decree, order, or sentence of any such court in the said proceedings, as if it had been passed by a court of competent jurisdiction within that Dominion.
" Section 12 of the Rights, etc.
Order : "(1) Where immediately before the appointed day, the Governor General in Council is a party to any legal proceed ings with respect to any property, rights or liabilities transferred by this Order, the Dominion which succeeds to the property, rights or liabilities in accordance with the provisions of this Order shall be deemed to be substituted for the Governor General in Council as a party to the pro ceedings, and the proceedings may continue accordingly.
(2) Where any Province from which property, rights or liabilities are transferred by this Order is, immediately before the transfer, a party to legal proceedings with respect to that property or those rights or liabilities, the Province which succeeds to the property, rights or liabili ties of this Order shall be deemed to be substituted for the other Province as a party to those proceedings, and the proceedings may continue accordingly.
(3) Any proceedings which, immediately before the ap pointed day, are pending by or against the Secretary of State elsewhere than in the United King dom in respect of any liability of the Governor General in Council or a Prov ince shall, * * * * (b) in the case of proceedings in respect, of the Prov ince of Bengal, the Province of the Punjab, or the Province of Assam, be continued by or against the Province which suc ceeds to the liability . . " The learned Subordinate Judge based his judgment entire ly upon section 4 of the Legal Proceedings 20 Order, but the High Court has pointed out that that Order standing by itself can be of no help to the appellant.
According to the High Court, that section might have enabled the appellant to prosecute his suit against the Province of Bengal, but it could not enable 'him to continue the suit against the new Province without invoking section 12 (2) of the Rights, etc.
Order, which provides among other things that the Province which succeeds to the rights or liabilities of the old Province of Bengal by virtue of that Order shall be deemed to be substituted for the latter as a party to the pending proceedings.
In my opinion, this is the correct view.
It Was urged before us that a Court which had juris diction to try a suit against a party would, by reason of what is provided in section 4 of the Legal Proceedings Order, naturally have jurisdiction to substitute the heir or legal representative of that party.
Generally speaking, this must be so, but, in the present case, the Province of East Bengal which forms part of another sovereign State could not be automatically substituted for the Province of Bengal, unless the substitution was permitted by some provision of the Indian Independence Act or any of the Orders issued thereun der.
The whole case thus rests on the proper construction of section 12(2) of the Rights, etc.
Order.
In the High Court, it was strenuously urged on behalf of the appellant that section 12(2) is fully applicable to the present case on account of certain rights having been transferred to the Province of East Bengal from the old Province of Bengal.
This argument was reiterated in this Court also, but it is obviously untenable, for the reasons set out in the judgment of the High Court.
As has been pointed out by the High Court, section 12 (2) is of no help to the appellant, unless the rights in question were transferred by the Rights, etc.
Order itself.
The learned counsel for the appellant however failed to point out any provision of this Order, by which any of the rights referred to by him had been transferred.
He had therefore to fall back upon an alternative argu ment based on section 10(2) of the same Order; and the point to be decided by this Court has thus 21 crystallized into one simple issue, namely, whether section 10(2) of the Order can be of any avail to the appellant.
Section 10 (2) must be read with section 10 (1), and the material part of these two sub sections runs as follows : "10 (1) Where immediately before the appointed day the Governor General in Council is subject to any liability in respect of an actionable wrong other than breach of con tract, that liability shall, (a) where the cause of action arose wholly within the territories which, as from that day, are the territories of the Dominion of India, be a liability of that Dominion;. (2) Where immediately before the appointed day the Province of Bengal is subject to any such liability as aforesaid, that liability shall, (a) where the cause of action arose wholly within the territories which, as from that day, are the territories of the Province of East Bengal, be a liability of that Prov ince; (b) where the cause of action arose wholly within the territories which, as from that day, are the territories of the Province of West Bengal, be a liability of that Prov ince; and (c) in any other case, be a joint liability of the Provinces of East and West Bengal." * * * * It is quite clear that for the application of section 10(2), it is necessary to show inter alia that the Province of Bengal was subject to a liability in respect of an ac tionable wrong other than a breach of contract.
A reference to any book on tort will show that the words used in sub section
(1) are commonly used to define a tort.
A tort has been defined in Stroud 's Judicial Dictionary, Second Edition, page 2072, as a wrong independent of contract, and it is also so described in the Common Law Procedure Act, 1852 (15 & 16 Vict., c. 76); in Halsbury 's Laws of England and in many textbooks.
The difference between "a wrong independent of contract" and "a wrong other than a 22 breach of contract" is merely verbal and has little signifi cance.
A tort is also often referred to as "an actionable wrong" and the two expressions have been synonymously used by eminent writers including Sir Fredrick Pollock and Pro fessor Burdick of America, who has designated his well known book on the law of torts as "a concise treatise on civil liability for actionable wrongs to person and property".
Whether the expression can be taken to be a complete defini tion of a tort may be questioned, because as Addison has pointed out in his book on torts, "to say that a tort is an actionable wrong leaves undefined the term 'actionable wrong '.
" But there can be no doubt that in legal parlance, the two expressions are assumed to be interchangeable.
There is also another matter to be borne in mind in construing section 10 (2) of the Rights, etc.
Order, and that is the well recognized fact that the primary and most common remedy for a tort is an action for damages.
That this is an important feature of a tort is shown by the fact that in many textbooks an action for damages has been made an inte gral part of the definition of a tort.
A few examples will make this clear.
A tort is defined by Salmond as "a civil wrong for which the remedy is a common law action for unliq uidated damages and which is not exclusively the breach of a contract or the breach of a trust or other merely equitable obligation." Professor Winfield, who did not see eye to eye with Salmond on many matters connected with the law of torts, gives the following definition of tortious liability : " Tortious liability arises from the breach of a duty primarily fixed by the law; this duty is towards persons generally and its breach is redressible by an action for unliquidated damages.
" In Underhill 's law of torts, the definition runs as follows : "A tort is an act or omission which is unauthorized by law and independently of contract infringes (i) some absolute right of another, etc., and (ii) gives rise to an action for damages at the suit of the injured party.
" The learned author after attempting to define a tort in this way goes on to state: "A tort is described in the Common 23 Law Procedure Act, 1852, as a wrong independent of contract.
If we use the word 'wrong ' as equivalent to violation of a right recognized and enforced by law by means of an action for damages, the definition is sufficiently accurate, but scarcely very lucid;for it gives no clue to what constitutes a wrong or violation of a right recognized and enforced by law.
It does, however, emphasize the fact that an essential characteristic of a tort is that the appropriate remedy for it is an action for damages.
An act or omission which does not give rise to an action for damages is not a tort.
" It must be recognized that an injunction may also be an appropriate remedy in a limited number of cases, but it is not a remedy of universal application, and no one has yet suggested that it may be treated as an incident of tort.
In the light of the foregoing discussion, it seems to me to be permissible to infer, firstly, that section 10 of the Rights, etc.
Order refers to liability for a tort, and secondly, that what is contemplated there is pecuniary liability such as liability to damages.
The word "liabili ty" has a wider meaning and also a narrower meaning, and the latter would appear to be the appropriate meaning where the word is used in contrast to assets or something which corre sponds to or is in the nature of assets, and where it is used in plural or is preceded by an indefinite article, e.g., when the expression "a liability" is used.
We must remember that the purpose of the Rights, etc.
Order was, among other things, to divide or distribute the rights, property and liabilities of the undivided Province of Bengal between the two new Provinces.
Therefore, the view that the liabilities referred to in section 10 are liabilities capable of being ascertained in terms of money and not liabilities in any abstract or academic sense, is in conso nance with the purpose of the Order as well as the well known fact that for a tort the most common and appropriate remedy is an action for pecuniary damages.
This view is further confirmed by reading section 13 (2) of the Rights, etc.
Order, which runs thus : 24 "Where by virtue of the preceding provisions of this Order either of the Dominions or any Province becomes sub ject to any liability, and it is just and equitable that a contribution towards that liability should be made by the other Dominion, or by another Province, as the case may be, the other Dominion shall make to the Dominion or Province primarily subject to the liability such contribution in respect thereof as, in default of an agreement, may be determined by the Arbitral Tribunal.
" It should be noted that the words "becomes subject to any liability" used in the above provision are practically the words which occur in section 10 of the same Order, and the language of section 13 (2) clearly shows that the word "liabili ty" must have been used in the narrower sense of pecuniary liability, because otherwise no question of contribution towards that liability by the Dominion or Province would arise.
It will be also instructive to refer to Part VII, Chapter III of the Government of India Act, 1935, the head ing of which is "Property, Contracts, Liabilities, and Suits," and upon which the Rights, etc.
Order appears tohave been modeled.
In section 179 of the Government of India Act, 1935, which occurs in this Chapter, the clue to the meaning of the word ' liability. ' is furnished by the provision that "any sum ordered to be paid by way of debt, damages or costs in any such proceedings, and any costs or expenses . . shall be paid out of the revenues of the Federation or the Province, as the case may be . . "I think that it will be quite a fair construction to hold that what is contemplated in section 10 of the Rights, etc.
Order is that the liability referred to therein would be met out of the revenues of the Province concerned.
The construction I have suggested appears to me to represent what the framers of the Order must have intended to convey by the words "liability in respect of an action able wrong", but, lest it should be said that it is too narrow a construction, I shall deal with the matter more fully giving to the words "actionable wrong" and "liability" as wide a meaning as they can 25 bear in a legal context.
Proceeding on this footing, the first question to be asked is: What is a wrong other than a breach of contract ? In answering this question, it is neither possible nor helpful to ignore all that has been said in authoritative textbooks and judgments in dealing with the question of a tort, because the foundation of every tort is a wrong or a wrongful act.
It is true that at one time some of the writers were inclined to think that "there was no English law of tort but there was merely an English law of torts, that is, a list of acts and omissions which under certain conditions were actionable." But, now, the view has considerably broadened, and, generally speaking, it is acknowledged that ' 'torts are infinitely various not limited or confined" (see Chapman vs pickersgill), and that wherever there is an injury by the invasion of a right, a wrong or a tort is committed.
This is often conveyed by the expression injuria sine damnum.
The word "wrong" has been used in sections 17, 18 and 19 of the Code of Civil Proce dure, and the following extract from Mulla 's commentary thereon will show how this word has been construed: "Wrong means a tort or actionable wrong, i.e., an act which is legally wrongful as prejudicially affecting a legal right of the plaintiff.
" Underhill also construes "wrong" in the same sense, because a wrong is, according to him, equivalent to viola tion of a right recognised and enforced by law by means of an action for damages.
I think therefore that in view of all that has been written and said on the subject, it may be safely stated that a wrong must consist of the following elements : (1) There must be an act or omission amounting to an infringement of a legal right of a person or a breach of legal duty towards him; and (2) The act or omission must have caused harm or damage to that person in some way, the damage being either actual or presumed.
These two elements are denoted by two Latin expressions, injuria and damnum.
I have to include (1) [1762] 2 Wils.
146, per Pratt C.J. 4 26 presumed damage under the second head, because in certain cases such as trespass, assault, false imprisonment, etc.
the invasion of a right may be so flagrant that "the law conclusively presumes damage." (See observations of Lord Wright M.R. in Nicholls vs Ely Beet Sugar Factory(1 ).
Such cases are often described as cases of absolute liability or cases where a tort is actionable per se without proof of damage.
Let us then see whether the two elements of an action able wrong are present in this case.
For this purpose, we must examine the best and most plausible statement of the appellant 's case which may be put more or less in the fol lowing way : The issue of a notice, which has been referred to in paragraph S of the plaint calling upon the appellant to furnish a return of his total agricultural income derived from lands situated within the Province of Bengal, was the first step in the initiation of an illegal assessment pro ceeding which was likely to lead to an illegal levy of tax, and the commencement of an illegal proceeding in this manner gave a right of action to the appellant and entitled him to claim an injunction restraining the defendants from complet ing the proceeding.
Such being the position, the case is covered by section 10 of the Order under consideration, the words used there being wide enough to cover liability to be restrained by an injunction from completing an illegal or unauthorized act already commenced.
Consequently, the li ability to be so restrained must be deemed to have been transferred to the Province of East Bengal, by virtue of section 10 of the Rights, etc.
Order.
This may appear to be a plausible way of putting the case, but, when we subject it to a close scrutiny, we find that even on the above statement the true requirements of the material provision are not satisfied.
If we confine ourselves to something which has happened, as opposed to something which may happen in future, that is to say, if we look for an act or omission which must be the foundation of every wrong, we find that all that is said to have happened in this (1) 27 case is the issuing of a notice, which is not some unautho rised or prima facie unlawful act but is an act done trader the authority of a statute and enjoined by it.
It has to be borne in mind that the attack in the plaint is not against the whole Act but all that is contended is that only a par ticular provision of it is ultra vires.
The contention comes to this, that the issuing of a notice against every person other than the Ruler of an Indian State would have been a perfectly legitimate act, but the issuing of a notice against a Ruler is ultra vires.
But that is not enough to constitute a wrong.
What has to be shown is that the issu ing of the notice is a wrongful act, i.e., it amounts to an infringement of some right.
What known right of person or property or any other description it infringes is not at all clear; nor has that been stated in the pleadings.
It is conceded that there has been no assessment and no realiza tion of any tax and it could not also be disputed that it was open to the appellant to show to the assessing authority that he was not assessable at all.
To say that a notice is the first step , in the initiation of an illegal assessment proceeding, does not carry the matter further, but it would seem to be merely a piece of verbiage used to obscure the fundamental weakness of the appellant 's case.
Construing "wrong" as it should be construed, the essential thing to find out is in what way a right has been infringed or there has been a breach of duty.
It is the appellant 's own case that the suit is for a threatened or apprehended wrong, but that very expression shows that the suit has been brought before the alleged wrong was committed.
The other element of a wrong, namely, that the person should have sustained some harm or injury, is also wanting in this case.
It is not the case of the appellant that the notice has in any way caused any actual damage to him.
Nor is it suggested that this is one of those cases in which damage should be presumed.
All that is said is that the notice was likely to entail trouble and harassment to the appellant, but that by itself will not constitute a wrong.
28 The matter may be tested in another way.
As Underhill points out," an act or omission which does not give rise to an action for damages is not a tort.
" To the same effect is the following observation in Salmond 's Law of Torts: " No civil injury is to be classed as a tort unless the appropriate remedy for it is an action for damages.
Such an action is an essential characteristic of every true tort.
" Again, Professor Winfield says that an action for unliqui dated damages is the one sure test of tortious liability and has cited cases where this statement has received judicial approval.
I think these statements will be equally true if we drop the word "tort" and substitute the words" actionable wrong" in its place.
It follows that one of the tests of an actionable wrong is that while other remedies also may be open to the plaintiff, an action for damages is the primary remedy for it.
Can the appellant in this case maintain a suit for damages on the allegations made by him in his plaint? As I have already stated, a reference to the plaint shows that no damages has been either alleged or claimed and it has also not been stated that the appellant is entitled to any damage.
In Rogers vs Rajendro Dutt(1)the Privy Council stated that "it is essential to an action in tort that the act complained of should be legally wrongful as regards the party complaining; that is, it must prejudi cially affect him in some legal right.
" Again, it was ob served in Kali Kischen Tagoor vs Jodoo Lal Mullick(2) that"there may be, where a right is interfered within ju ria sine damno sufficient to found an action; but no action can be maintained if there is neither damnum nor injuria.
" It seems to me therefore that in the absence of the two elements to which I have referred, no case for liability in respect of an actionable wrong has been made out, and it is wholly inappropriate to invoke section 10 of the Rights, etc.
Order in the present case.
It appears that the whole of the appellant 's arguments has been woven round the following two matters : (1) 8 Moore 's I.A. 103 at p. 135.
(2) 6 I.A. 190.
29 (1) Injunction is a recognized form of action; and (2) Injunction has been asked for in the present Case, in connection with something which is said to be likely to culminate in a wrong.
The situation as envisaged is however very different from what is contemplated in section 10 of the Rights, etc.
Order, which is liability for an actionable wrong and not liability for something which may become a wrong in future.
It is to be remembered that there are two words used in the section, viz., actionable and wrong.
The mere fact that a matter is actionable will not bring the case within the four corners of ' section 10 of the Order, unless all the elements of a wrong are established.
I think it will be appropriate at this stage to say a few words about the remedy by way of an injunction in cases where an actionable wrong is said to have been committed.
It cannot be disputed that injunction is one of the remedies in certain cases of torts.
As Addison has pointed out, "the origin of ' the remedy by way of an injunction is to be found in the inadequacy of the legal remedy by way of damages in many of the more serious wrongs, such as continuing tres passes and nuisances, where a wrongful act has been done and there was an intention to continue doing it.
(See Addison 's Law of Torts, 8th Edn. 111).
Injunction will also be granted to prevent a threatened injury or wrong, if it can be shown that the threatened act if carried into execution will lead to violation of a right and such will be the inevitable result.
As was pointed out in an English case, the interfer ence of the court in these cases is rounded on its jurisdic tion to give relief in the shape of preventive justice in order to protect properties and rights from that which, if completed, would give a right of action.
These two cases in which an injunction may be issued stand on two different footings, and the liability to an injunction does.
not necessarily and always amount to "liability in respect of an actionable wrong".
The two liabilities may possibly coin cide where there is a continuing wrong and the injunction is intended to stop its 30 continuance.
But, as I have already stated, where no wrong has been committed, it would require considerable straining of the meaning of familiar legal expressions to say that "liability in respect of an actionable wrong" is identical with "liability to an injunction in respect of an apprehend ed wrong".
"Liability in respect of an actionable wrong" means liability when an actionable wrong has been committed.
It cannot mean liability to be prevented from a wrong which is apprehended.
Nor can the liability which is contemplated in section 10 of the Rights, etc.
Order be created by the mere filing of a suit in which an injunction is claimed.
I should like to refer here to section 176 (1) of the Government of India Act, 1935, which provides as follows : "The Federation may sue or be sued by the name of the Federation of India and a Provincial Government may sue or be sued by the name of the Province, and, without prejudice to the subsequent provisions of this chapter, may, subject to any provisions which may be made by Act of the Federal Legislature or a Provincial Legislature enacted by virtue of powers conferred on the Legislature by this Act, sue or be sued in relation to their respective affairs in like cases as the Secretary of State in Council might have sued or been sued if this Act had not been passed.
" This section is divisible into two parts.
The first part states as to which authority should be named as a plaintiff or as a defendant in a suit brought by or against the Crown or the Government, and the second part deals with cases in which the Federal or the Provincial Government may sue or be sued.
To understand the latter provision, the section is to be read with section 65 of the Government of India Act, 1858, and section 32 of the Government of India Act, 1915.
Section 65 of the Act of 1858 enacted that "the Secretary of State in Council shall and may sue and be sued as well in India as in England by the name of the Secretary of State in Council as a body corporate; and all persons and bodies politic shall and 31 may have and take the same suits, remedies and proceedings, legal and equitable, against the Secretary of State in Council of India as they could have done against the said Company." (East India Co.).
The same provision is substantially made in section 32 of the Act of 1915.
Such being the law, the question has been posed in a number of cases from very early days as to whether, and, if so, in what cases, the Secretary of State would be liable for a wrong or a tort committed by the servants of the Crown, and it has now been definitely held that he may be liable in certain cases.
So far as the present discussion is concerned, the following three points which emerge from a careful perusal of a large number of cases bearing on the subject, seem to be material : (1) The principles of the law of torts have been con sistently applied in all cases dealing with the liability of the Secretary of State for wrongs committed by the serv ants or agents of the crown or the Government.
(2) It is settled law that the Secretary of State cannot be held liable for wrongs committed by the servants of the Crown in the performance of duties imposed by the Legisla ture: [See Shivabhajan vs Secretary of State for India(1).
James Evans vs Secretary of State(2).
Tobin vs Reg(3).
Ross vs Secretary of State(4), in which this principle is fully explained and the reasons upon which it is based, are clear ly set out].
(3) It is also well settled that where a statute spe cially authorizes a certain act to be done by a certain person, which would otherwise be unlawful or actionable, no action will lie for the doing of the act.
On these principles, it would appear that neither the Agricultural Income tax Officer, who has now been dismissed out of action, nor the Province of East Bengal, could be said to be subject to a liability in respect of an action able wrong, assuming that an actionable wrong has been committed.
It must (1) I.L.R. (3) ; (2) A.I.R. 1920 Lah. 364.
(4) I.L.R. 32 however be stated that this conclusion rests on the.
as sumption that my construction of an actionable wrong is correct.
It was contended that in deciding the present appeal, we must assume all the facts stated in the plaint to be correct and therefore assume that the Bengal Act is ultra vires and the notice issued was without authority.
I have already pointed out that the whole Act is not attacked, but only one single provision thereof is said to be ultra vires, and I shall show later, when I deal with section 65 of the Bengal Act, that even the assumption we are asked to make will not bring the case within section 10 of the Rights, etc.
Order.
Mr. Setalvad, the learned Attorney General of India, who intervened on behalf of the Union of India in the ap peal, supported the judgment of the High Court on three main grounds, which may be summed up as follows : (1) that the words used in section 10 of the Rights, etc.
Order do not cover this case, because here no wrong has been actually committed and a threatened wrong is different from an actual wrong; (2) that section 65 of the Bengal Agricultural Income tax Act is a bar to the suit; and (3) that the present suit must in any event end in an infructuous decree and should not be allowed to be pursued.
I have already dealt with the first point, and wish simply to add that the point which is now pressed is not specifically raised in the Memorandum of Appeal presented in this Court, nor is there any trace of it in the Statement of Case filed by the appellant.
The point which is mentioned in the Memorandum of Appeal and the Statement of Case is that section 12 of the Rights, etc.
Order is applicable to the present case, because certain rights have been trans ferred from the old Province of Bengal to the Province of East Bengal.
There is however no mention of section 10 of the Order, nor is it stated that liability to an injunction brings the case within that 33 section.
Thus, a notable feature of the case is that almost every argument which was advanced in the courts below is to be discarded, and we are asked to base our decision on a point, which is not urged in the Statement of the Case, and which, in accordance with the rules of practice of this Court, cannot ordinarily be entertained.
The second point urged by Mr. Setalvad is based on section 65 of the Bengal Act, which runs as follows : "No suit shall be brought in any Civil Court to set aside or modify any assessment made under this Act, and no prosecution, suit or other proceeding shall lie against any officer of the Crown for anything in good faith done or intended to be done under this Act." Strictly speaking, this section does not apply to the present case, as there has yet been no assessment and ex facie the appellant 's suit cannot be regarded as a suit to set aside or modify any assessment.
Mr. Setalvad however contends that this section must be read with the decision of the Privy Council in Raleigh Investment Co. vs Governor General in Council(1).
That was a case under the Indian Incometax Act, 1922, the provisions of which are similar to the provisions of the Bengal Act and which contains a sec tion (section67) which is almost identical in terms with section 65 of the latter Act.
In that case, an assessee paid under protest the tax assessed on him and then brought a suit for the following reliefs : (a) a declaration that certain provisions of the Income tax Act on which the assessment was based were ultra vires and so the assessment was illegal; (b) an injunction restraining the.
Income tax Depart ment from making the assessments in future; (c) repayment of the sum assessed.
It was strongly contended upon the facts of the case that section 67 of the Income tax Act had no application, but it was held by the Privy Council that "though in form the relief claimed did not profess to (1) 5 34 modify or set aside the assessment, in substance it did,because the repayment could not be ordered so long as the assessment stood ' '.
It was further held that an as sessment made under the machinery provided by the Act, if based on a provision subsequently held to be ultra vires was not a nullity but a mistake of law in the course of its exercise.
Lastly, it was held that the Act contained machin ery which enabled an assessee to raise the question whether or not a particular provision of the Act bearing on the assessment made upon him was ultra vires and that jurisdic tion to question the assessment otherwise than by use of the machinery expressly provided by the Act appeared to be inconsistent with the statutory obligation to pay 'arising by virtue of the assessment.
The material part of the judgment on the last point runs as follows : "In construing the section it is pertinent in their Lord ships ' opinion, to ascertain whether the Act contains machinery which enables an assessee effectively to raise in the Courts the question whether the particular provision of the Income tax Act bearing on the assessment made is or is not ultra vires.
The presence of such machinery, though by no means conclusive, marches with a construction of the section which denies an alternative jurisdiction to enquire into the same subject matter.
The absence of such machinery would greatly assist the appellant on the question of con struction and, indeed, it may be added that, if there were no such machinery and if the section affected to preclude the High Court in its ordinary civil jurisdiction from considering a point of ultra vires, there would be a serious question whether the opening part of the section, so far as it debarred the question of ultra vires being debated, fell within the competence of the Legislature.
In their Lordships view it is clear that the In come tax Act, 1922, as it stood at the relevant, date,did give the assessee the right effectively to raise inrelation to an assessment made upon him the question whether or not a provision in the Act was ultra vires.
Under section 30, an assessee whose only ground of complaint was that effect had been given in the assessment 35 to a provision which he contended was ultra vires might appeal against the assessment.
If he were dissatisfied with the decision on appeal the details relating to the procedure are immaterial the assessee could ask for a case to be stated on any question of law for the opinion of the High Court and, if his request were refused, he might apply to the High Court for an order requiring a case to be stated and to be referred to the High Court .
It cannot be doubted that included in the questions of law which might be raised by a case stated is any question as to the validity of any taxing provision in the Income tax Act to which effect has been given in the assessment under review.
Any decision of the High Court upon that question of law can be reviewed on appeal.
Effective and appropriate machinery is therefore provided by the Act itself for the review on grounds of law of any assessment.
It is in that setting that section 67 has to be construed.
In conclusion their Lordships would observe that the scheme of the Act is to set up a particular machinery by the use of which alone total income assessable for income tax is to be ascertained.
The income tax exigible is determined by reference to the total income so ascertained and only by reference to such total income.
Under the Act (section 45) there arises a duty to pay the amount of tax demanded on the basis of that assessment of total income.
Jurisdiction to ques tion the assessment otherwise than by use of the machinery expressly provided by the Act would appear to be inconsist ent with the statutory obligation to pay arising by virtue of the assessment.
The only doubt, indeed, in their Lord ships ' mind, is whether an express provision was necessary in order to exclude jurisdiction in a civil Court to set aside or modify an assessment.
" The authority of this decision was not questioned before us, but it was pointed out firstly that the present suit is not hit by the first part of section 65 of the Bengal Act, which refers only to suits to set aside or modify any as sessment, and secondly, that if the case is not covered by section65, the decision of the Privy Council, which was based on the construction of section 36 67 of the Income tax Act, is not applicable.
Mr. Setalvad, replying to the first contention, has urged that we must not look merely to the letter of the section but to the princi ple underlying it, and he has particularly referred us to the fact that, strictly speaking, the reliefs claimed in the above mentioned case do not fall within the letter of sec tion 67 of the Income tax Act and hence the Privy Council observed in that case: "In form the relief claimed does not profess to modify or set aside, the assessment.
In sub stance it does .
The cloud of words fails to obscure the point of the suit.
" However that may be, it seems to me that the Privy Council in arriving at their decision, were influenced not only by the language of section 67 of the Income tax Act but also by the complete machinery furnished by that Act for dealing with all questions arising in regard to the assessment, including the question of ultra vires as would appear from the fact that while laying down that there was no jurisdiction to question the assessment except by use of the machinery expressly provided by the Act, their Lord ships added: "The only doubt, indeed, in their Lordships ' mind, is whether an express provision was necessary in order to exclude jurisdiction in a civil court to set aside or modify an assessment." think that, for the purpose of understanding the full scope of section 65, we must read not only the first part of the section which bars suits to set aside or modify an assessment, but also its latter part which provides that "no suit or other proceeding shall lie against any officer of the Crown for anything in good faith. intended to be done under this Act." The latter part of the section clearly excludes the jurisdiction of the court to prevent the Income tax Officer from proceeding With an assessment which has already been started.
Reference may here be made to Secretary of State vs Meyyappa Chetti ar(1) where it was held that the expression "intended to be done" signified futurity so as to preclude suits for injunction in respect of proceedings 'intended ' to be taken by the Income tax Officer.
It is true that in terms the provision concerns the Income tax Officer only, but it (1) I1946] , at 352.
37 could hardly have been the intention of the Legislature that though that Officer is not liable to be restrained from proceeding with an assessment, the provision which ensures such a result may be rendered nugatory by permitting an injunction to be claimed against the Provincial Government or the State.
In my opinion, it will be a strange construc tion of the section to hold that although it bars suits to modify or set aside an assessment and though it bars all proceedings to restrain the Officer who is making the as sessment from proceeding with it, yet it leaves it open to a party to stop an assessment by claiming an injunction against the Provincial Government or the State instead of the Officer concerned.
There is no reference to the Provincial Government or the State at all in the first or the second part of the section, but the section as a whole concerns only with excluding the jurisdiction of the civil court in regard to certain acts done or intended to be done in connection with the assessment of agricultural income tax, and, on a fair construction, it must be held to bar all suits in connection with such assessment.
In urging his third point, the learned Attorney General relied on an Ordinance passed by the Governor General of Pakistan on the 13th November, 1948, section 2 whereof runs as follows : "No judgment, decree, order or sentence referred to in paragraph (3) of Article 4 of the Indian Independence (Legal Proceedings) Order, 1947, shall affect the legislative or executive right or authority of the Central or any Provin cial Government of Pakistan and where such right or authori ty has been at issue, the judgment, decree, order or sen tence shall be invalid and inoperative subject to any decision that may be obtained from a competent court, of the Province concerned.
" It was pointed out that by reason of this Ordinance, any decree which may be obtained in the present suit would be wholly infructuous and in this view this was a meaningless litigation which should not be allowed to continue.
There is force in this argument, 38 but the point need not be pursued, as, in my opinion, the first two points raised by the Attorney General are suffi cient to meet the principal contention advanced by the appellant.
The question of submission to jurisdiction appears to me to be unarguable upon the facts stated, and it was not seriously argued before us.
The Province of East Bengal did intervene and apply for permission to file a written state ment, but the only statement made by it was that the Court had no jurisdiction to proceed with the suit.
It cannot therefore be held that it had submitted to the jurisdiction of the Court.
I have tried to deal with the question posed in this appeal in all its material aspects, but it can, I think, be disposed of on the simple ground that the mere issuing of a notice under section 4 of the Bengal Agricultural Income tax Act by the Agricultural Income tax Officer cannot be held to be an actionable wrong, because no right known to law can be said to have been infringed thereby.
One of the recognized tests of an actionable wrong is that, while other remedies may also be open to the person to whom the wrong is done, he can always maintain an action for damages, on the principle that every injury imports damage.
I am however certain that no action for damages can be maintained on the allegations made by the appellant in his plaint.
I think that the entire argument urged on behalf of the appellant has been sufficiently answered by the High Court in the following passage, which appears to me to sum up the legal position accurately and concisely : "Nor was Dr. Sen Gupta right in relying on article 10 (2) for the transfer of liabilities.
That Article is con cerned with liability for an actionable wrong other than breach of contract and it is impossible to say that by serving a notice on the plaintiff under the Bengal Agricul tural Income Tax Act through one of its officers, the Prov ince of Bengal had committed an actionable wrong.
Assuming it exceeded its powers or acted under an invalid provision of law, the plaintiff may have a declaration to that effect, but the 39 act complained of cannot be said to have been a tortious act.
But even assuming it was, it is to be remembered that the issue of the notice was in exercise of powers conferred by the Act in relation to the Sovereign rights of the Crown and it is elementary that the Crown or the State is not answerable for even negligent or tortious acts of its offi cers done in the Course of their official duties imposed by statute, except where the particular act was specifically directed and the Crown profited by its performance.
There is no such allegation in the plaint in the present case.
The plaintiff could not therefore have sued the Province of Bengal for an actionable wrong and the suit actually brought is not a suit of that character.
It is a suit for ,certain declarations and an injunction and does not seek to make the Province liable for any actionable wrong in any way.
No liability for an actionable wrong is thus involved in the suit and Dr. Sen Gupta cannot establish a right to proceed against the Province of East Bengal on the basis that the liability was transferred to that Province under article 10 (2) of the Order.
" In the result, I would dismiss this appeal with costs.
MUKHERJEA J I agree with my learned brother Patanjali Sastri J. that this appeal should be allowed and I would desire to indicate briefly the reasons that have weighed with me in coming to a conclusion different from that ar rived at by the learned Judges of the Calcutta High Court.
All the material facts in relation to this case have been set out with elaborate fullness in the judgment of the High Court and I deem it quite unnecessary to state them over again.
The whole controversy centers round the point as to whether the suit which was instituted by the plaintiff appellant against the Province of Bengal, as it was prior to the 15th of August, 1947, and which is still pending in the Court of the Subordinate Judge at Alipore can be continued against the Province of East Bengal which has come into existence, as a part of the Dominion of Pakistan, upon the 40 partition of Bengal under the Indian Independence Act; and whether the court of the Subordinate Judge of Alipore which is a court in the Dominion of India has any jurisdiction to proceed with and try such suit.
The Subordinate JUdge decided these questions in favour of the plaintiff appellant basing his decision entirely upon article 4 (1) of the Indian Independence (Legal proceedings) Order, 1947, read with section 9 of the Indian Independence Act.
The High Court in revision ' set aside the order of the Subordinate Judge holding inter alia that neither article 4 (1) of the Legal Proceedings Order nor article 12 (2) of the Indian Independence (Rights, Property and Liabilities) Order, 1947, could confer upon the plaintiff any right to continue the suit against the Province of East Bengal.
The Alipore Court, it has been held, has no jurisdiction to proceed with the suit and no jurisdiction has been conferred upon it by reason of the Province of East Bengal appearing in the suit and putting in a written statement only for the purpose of challenging the competency of the court to try the same.
It is the propriety of this decision that has been challenged before us in this appeal.
The first point that requires consideration is whether article 4 (11 of the Legal Proceedings Order has any appli cation to the facts of the present case.
In my opinion, the answer to this question must be in the negative and the view taken by the High Court on this point seems to me to be perfectly sound and unassailable.
The Legal Proceedings Order as well as several other orders dealing with various constitutional matters affecting the two Dominions which were to come into being on and from the 15th of August, 1947, were promulgated by the Governor General of India just on the previous day, that is to say, the 14th of August, 1947, in pursuance of section 9 (1) of the Indian Independence Act which made it a duty on the part of the Governor General to make suitable provisions for removing the difficulties arising in connection with the transition to the new constitutional order.
As the two 41 Dominions came into existence under the Indian Independence Act passed by the British Parliament and these orders were made by the Governor General of India in exercise of the authority conferred upon him by the Independence Act, there cannot be any doubt that the provisions of these orders are fully binding on India as well as the Dominion of Pakistan; and they being provisions made to be applicable only for the transitional period, the question does not really arise as to whether or not they are in strict conformity with the principles of International Law which would ordinarily govern the relations between two sovereign States.
Article 4(1) of the Legal Proceedings Order is worded as follows: "Notwithstanding the creation of certain new Provinces and the transfer of certain territories from the Province of Assam to the Province of East Bengal by the Indian Independ ence Act, 1947, (1) all proceedings pending immediately before the appointed day in any civil or criminal court (other than a High Court) in the Province of Bengal, the Punjab or Assam shall be continued in that court as if the said Act had not been passed, and that court shall continue to have for the purposes of the said proceedings all the jurisdiction and powers which it had immediately before the appointed day.
" The clause of the article is couched in very wide lan guage and under it all proceedings pending in any civil or criminal court in the Province of Bengal, the Punjab or Assam immediately before the 15th of August, 1947, would continue as before and be heard and tried by the courts before which they are pending irrespective of the fact that such proceedings might relate to persons or property situat ed in the other Dominion.
I agree with the High Court in holding that comprehensive though the provision is, by itself it can render no assistance to the plaintiff appel lant.
The suit was commenced here by the plaintiff against the old Province of Bengal as the party defendant and against 42 that defendant the suit may be continued if the plaintiff so chooses under article 4(1) of the Legal Proceedings Order mentioned above.
But this would be of no benefit or advan tage to the plaintiff for what he wants is to proceed against the Province of East Bengal which is a part of the Dominion of Pakistan as a substituted defendant in place of the Province of Bengal.
Dr. Sen Gupta argues that if the court has jurisdiction to continue the suit, this would necessarily carry with it the power to make proper orders for substitution as the court considers necessary.
But such substitution could be made only under the ordinary provi sions of law which regulate the conduct of such suits.
There is no provision of any municipal law which contemplates or authorises the substitution of one sovereign state for another in a pending suit.
If, therefore, the plaintiff wants to proceed against the new Province of East Bengal, he must find warrant for it in some of the provisions made by the Governor General of Indian exercise of the powers vested in him under the Indian Independence Act.
Admittedly there is no such provision in the Legal Proceedings Act and reli ance is, therefore, placed by the plaintiff upon article 12 (2) of the Rights, Property and Liabilities Order, 1947, which is in the following terms : "Where any Province from which property, rights or liabilities are transferred by this Order is, immediately before the transfer, a party to legal proceeding with re spect to that property or those rights or liabilities, the Province which succeeds to the property, rights or liabili ties in accordance with the provisions of this Order shall be deemed to be substituted for the other Province as a party to those proceedings, and the proceedings may con tinue accordingly.
It is not disputed that in order to attract the opera tion of this provision, it is incumbent upon the plaintiff to show that the right or liability to which his suit re lates has been transferred from the Province of Bengal, as it existed prior to the 15th of August, 1947, 43 to the Province of East Bengal in Pakistan in accordance with the provisions of this Order.
To establish this, reli ance was placed on behalf of the plaintiff upon several provisions of the Rights, Property and Liabililies Order, 1947, and none of his contentions in this respect were accepted as sound by the learned Judges of the High Court.
In this court Dr. Sen Gupta took his stand on a two fold ground.
He argued in the first place that for the purpose of invoking the aid of article 12(2) of the Rights, Proper ty ' and Liabilities Order it is not necessary that the transfer of the right and liability to which the proceeding relates should take place under any of the specific articles enumerated in the Order.
It would be enough according to him, if there is a transfer by or under any machinery which the Order sets up or authorises What he says is that as the Province of East Bengal is proceeding to assess and levy agricultural income tax upon the plaintiff in respect of a period anterior to 15th of August, 1947, the right to do so can vest in the Province either under an agreement between the two Dominions or the two Provinces or on the basis of an award by an arbitral tribunal as contemplated by article 3 of the Rights, Property and Liabilities Order.
In either case it would amount to transfer of rights under the provi sions of the Order and would attract the operation of arti cle 12(2).
This argument is manifestly unsound and cannot be ac cepted.
If the right referred to by the learned Counsel means the fight to impose tax on agricultural income earned within its territory, the State of Pakistan did not acquire such right by transfer from the Province of Bengal.
It is a right inherent in sovereignty itself which the Dominion of Pakistan got under the Indian Independence Act.
Again if the right has been created by the Bengal Agricultural In come tax Act, the Province of East Bengal would certainly be entitled to avail itself of the provisions of that Act under section 18(3) of the Independence Act.
Apart from this, Dr. Sen Gupta has not referred us to any agreement between the two Dominions or the two Provinces or to the decision of any arbitral tribunal 44 under which the right in dispute in the present case was transferred to the Province of East Bengal.
This contention must therefore fail.
I have now to consider the other argument on this point advanced by the learned Counsel that the liability of the Province of Bengal in respect to the cause of action upon which the plaintiff 's suit had been rounded became a liabil ity of the Province of East Bengal under the provision of article 10(2) of the Rights, Property and Liabilities Order.
It is not disputed that if this contention succeeds, the plaintiff would be entitled to the benefit of clause (2) of article 12 of the Order.
Clause (2) of article 10 has to be read with clause (1) of that article and taking the two clauses together the provision of article 10(2) would stand thus : "Where immediately before the appointed day the Province of Bengal is subject to any liability in respect of an actionable wrong other than a breach of contract, the li ability shall (a) when the cause of action arose wholly within the territory which as from that day are the territories of the Province of East Bengal be a liability of that Province.
" If the allegations made by the plaintiff in the plaint are assumed to be correct, the Province of Bengal was liable to be restrained from proceeding to levy agricultural income tax upon the plaintiff which was illegal, as being imposed by a statute which so far as it affected the plain tiff was unconstitutional and void.
The question is whether this can be said to be a liability in respect of an action able wrong other than a breach of contract within the meaning of that expression occurring in article 10 set out above.
It may be noted here that the rights and liabilities arising out of contracts have been dealt with in articles 8 and 9 of the Order.
The High Court took the view that the expression "actionable wrong other than a breach contract" is synonymous with 'tort '.
It has held that the act com plained of cannot be a tortious act and 45 even if it is so, no action would lie upon it, it being an established proposition of law that the State is not answer able for any tortious acts of its officers done in the course of official duties imposed by a Statute.
It seems to me that the learned Judges have attached a narrow and some what restricted meaning to the words of the Article men tioned above and that the plain language of the provision read in the light of the context would demand and justify a wider and more liberal interpretation.
In my opinion, there can be an actionable wrong which does not arise out of a breach of contract and at the same time does not answer to the description of a 'tort ' as it is understood in English law; and if the plaintiff 's allegations are correct, it is an actionable wrong precisely of that type which we have in the present case.
The word "wrong" in ordinary legal language means and signifies "privation of right".
An act is wrongful it infringes the legal right of another, and "actionable" means nothing else than that it affords grounds for action in law.
Ordinarily, the word "injury" is used in the same sense of actionable wrong, while "damage in contrast with injury means loss or harm occurring in fact whether actionable as injury or not"(1).
In English law "tort" is a species of civil injury and so is a breach of contract; but it is not quite correct to say that the two together exhaust all forms of actionable wrongs known to English law.
It is true that a tort is often described as wrong independent of contract.
As a legal definition this description, as I shall show presently, is not quite accurate and unless taken with certain limitations is apt to be misleading.
It is well known that in England the principles of modern law of contract and tort emerged solely out of the intricacies of the old "Forms of Action '" under which they lay buried for ages.
The injuries which in modern law are described as torts were remedied in early time by certain writs, known as writs of trespass (1) Vide the observation of Viscount Simon in Crofter etc.
Company Ltd vs Vetch ; , 442. 46 and trespass on the case.
The latter was more elastic than the former and was capable of being adapted to new circum stances and to new types of injuries.
There was no clear line of demarcation in those days between contractual and tortious liability and in fact tile aCtiOn of "assumpsit" which was the method of enforcing simple contracts was a variety of action on the case and was made use of for recov ery of compensation from a party who failed to perform his agreement on the ground that such failure amounted to a wrong in the nature of deceit(1).
When the principles of substantive law gradually extri cated themselves from the entanglements of for realistic procedure, a distinction was drawn between liability for breach of contract and that for tort.
In a breach of con tract the right violated owes its origin to the agreement of the parties while in tort the right infringed is one created by tile general law of the land.
From about the middle of the 19th century the assumption current in England was that all civil causes of action must be rounded either on con tract or on tort and all injuries which were not breaches of contract would come under the category of torts.
This as sumption as Sir Frederick Pollock observes has no historical foundation to rest upon(2).
In 1852 the Common Law Proce dure Act was passed and a tort was described in the Act as "a wrong independent of contract".
It cannot be denied that this mode of expression became very common in legal par lance; but as more than one modern writer on the law of torts have pointed out, the words in such description would have to be interpreted in a particular way and with certain limitations; taken literally it would not be a correct statement of law.
It has been observed by Underhill in his "Law of Torts" that a description like this would be accurate in law if the word "wrong" is taken in the restricted and technical sense as equivalent to "violation of a right (1) Vide Pollock on Contract, 12th Edition, p. 111; Winfield on Tort pp, 3 4 (4th Edition).
(2) Vide Pollock 's Article on Tort, Encyc.
Vol.22, p. 307.
47 recognised and enforced by law by means of an action for damages".
Taken in this form, the definition though it gives no clue as to what constitutes a wrong, certainly does lay stress on the essential characteristic of a tort, viz., that the appropriate remedy f9r it is an action for damages(1).
It is really this characteristic that differen tiates a tort from other forms of civil injury or actionable wrong even though the latter are unconnected with any con tract.
There may be other remedies besides damages avail able to the plaintiff against a tortfeasor in the shape of restitution, injunction etc.
, but no "civil injury" as Salmond observes "can be classed as tort unless the appro priate remedy for it is an action for damages.
Such an action is an essential characteristic of every true tort.
"(2) Other remedies like injunction or restitution can be claimed by the plaintiff but it is solely by virtue of a right to damages that the wrong complained of can be regard ed as a tort.
By way of illustration the author points out that a public nuisance is not to be deemed a tort, because the civil remedy by way of injunction may be obtained at the suit of the Attorney General.
A refusal to perform a statu tory duty is not a tort if the remedy is by way of mandamus.
Nor would any wrong be regarded as a tort if the remedy is not an action for unliquidated damages but for a liquidated sum of money.
A breach of trust is certainly an actionable wrong independent of contract and the beneficiaries can claim compensation if the trustee has misappropriated trust property; but as the claim cannot be for unliquidated damages, it is not regarded as a tort(3).
According to Salmond, the reason for this exclusion is purely historical as a breach of trust or any other equitable obligation was considered to be within the special jurisdiction of equity courts.
It is interesting to observe that although the difference between equitable and common law jurisdiction is not existent at the present day, the old rule is still applied (1) Vide Underbill 's Law of Torts.
16th Edn., p. 4.
(2) Vide Salmond 's Law of Torts, 10th Edn., pp. 7 & 8.
(3) Vide Winfield 's Law of Tort, p. 11 48 to demarcate the boundary of the law of torts in English common law.
Thus tort is a civil injury other than a breach of contract which is capable of sustaining an action for unliq uidated damages in a court of law.
If the appropriate remedy is not a claim for unliquidated damages but for injunction or some other relief, it would not rank as a tort though all the same it would be an actionable wrong.
By way of illustration I may refer to the case of Halsey vs Brotherhood(1) which was decided by Sir George Jessel.
Both the plaintiff and defendant in this case were engineers and held patents for the manufacture of certain types of engines.
The plaintiff brought an action against the de fendant alleging that the latter had threatened to bring legal proceedings against several persons who were actual or intending purchasers of engines from the plaintiff assert ing that the engines manufactured by the plaintiff were infringements of the defendant 's patent.
There was a claim for damages and also for injunction.
It was held by Sir George Jessel that the plaintiff could not claim damages on the basis of slander of title, as he nowhere alleged that the defendant 's statements or representations were not bona fide.
But even though the statements had been made in good faith, the plaintiff would be entitled to an injunction against the defendant if he succeeded in proving that the latter 's allegations of infringement were not true.
As no proper case for injunction on this basis was made in the claim, the action was dismissed; but liberty was given to the plaintiff to bring an action in the proper form claiming an injunction to restrain the defendant from threatening the plaintiff 's customers.
This threat to customers was thus held to be an actionable wrong but as the remedy was injunc tion and not damages, it was not a tort in the legal sense of the term.
In the case before us the act of the Province of Bengal complained of by the plaintiff is not a tort according to the technical rules (1) 49 of English law, but is certainly an actionable wrong as it can be sued upon in a court of law and remedied in an effective manner.
The appropriate remedy for the wrong is not unliquidated damages which is essential in a tort but an injunction restraining the defendant from proceeding with the illegal assessment or from realising the amount assessed if assessment has actually taken place.
If, as the plaintiff alleges, the relevant provision of the Bengal Agricultural Income tax Act, under which the plaintiff is sought to be assessed, is illegal and ultra vires, the issuing of the notice by the Income tax Officer is certainly the first and the essential step in the commis sion of the wrongful act which furnishes a sufficient cause of action for the suit.
As this is not a case of tort, the principle of law, according to which a state is not liable to any damages for tortious acts of its servants, cannot be invoked as a bar to the suit.
A remedy by way of injunction can be claimed against a State or Province unless the act complained of amounts to an 'act of State ' in its strict sense and is not purported to be done in exercise of the powers conferred upon the Government by any municipal law.
As the avowed object of the Rights, Property and Liabilities Order is to distribute and adjust as far as possible the rights, properties and liabilities between the two Dominions which were to come into being under the Indian Independence Act, the language of the Order should be construed as liber ally as possible, and there is no warrant for putting an interpretation upon the words used more restricted than they would bear in English law.
It is argued that article 10(2) (a) does not apply to this case as the cause of action did not wholly arise within the territory of the Province of East Bengal.
The argument does not impress me at all.
The notice was issued by the Income tax Officer of Dacca which is in Pakistan territory though it was received by the plaintiff 's manager at Agarta la which was outside British India at that time.
In any event, the Province 50 of East Bengal cannot escape liability on this ground.
It would be jointly liable with the Province of West Bengal under article 10(2) (c) of the Rights, Property and Liabili ties Order.
In view of my decision on this point, the other question raised by Dr. Sen Gupta as to whether the defendant submit ted to the jurisdiction of the Alipore Court or not does not fall for determination.
The learned Attorney General, who intervened on behalf of the Union of India, put forward certain additional grounds in support of the order made by the learned Judges of the High Court.
One of the points raised by him is that section 65 of the Bengal Agricultural Income tax Act con stitutes a bar to the suit which, therefore, should not be allowed to 'continue.
The other material point is that the suit cannot but result in an infructuous decree, and conse quently there is no justification for allowing it to pro ceed.
It is pointed out that an Ordinance has been passed by the GovernorGeneral of Pakistan on the 13th of November, 1948, under which "no judgment, decree or order referred to in paragraph 3 of Article 4 of the Indian Independence (Legal Proceedings) Order, 1947, shall, in any way, affect the legislative or executive right or authority of the Central or any Provincial Government of Pakistan and where such authority or right has been at issue, the judgment, decree or order shall be invalid and inoperative".
The first point has been dealt with by my learned brother Patan jali Sastri J. in his judgment and I concur with him in holding that section 65 of the Bengal Agricultural Income tax Act has no application to the present case.
The second point, I must say, embarrassed me to some extent and if the effect of the Ordinance is, as has been stated by the learned Attorney General, a doubt may legitimately arise whether it would be worthwhile for the plaintiff to proceed with the suit and whether it would not be more to his advan tage to seek relief in the court of Dacca.
But as this point was not raised before the High Court and the question whether an Ordinance of this character could override the provisions of the 51 Orders passed by the Governor General of India under the Indian Independence Act has still to be decided, I refrain from expressing any opinion on this point.
In the result, the appeal, in my opinion, should be allowed and I concur in the order which has been made by my learned brother Patanjali Sastri, J. Appeal allowed.
Agent for the Appellant: R.R. Biswas.
Agent for the Respondent: P.K. Bose.
Agent for the Inervener: P. A, Mehta.
| The Income tax officer, Dacca, acting under the Bengal Agricultural Income tax Act, 1944, sent by registered post a notice to the Manager of an Estate belonging to the Tripu ra State but situated in Bengal, calling upon the latter to furnish a return of the agricultural income derived from the Estate during the previous year.
The notice was received by the Manager in the Tripura State.
The State, by its then Ruler, instituted a suit in June, 1946, against the Province of Bengal and the Income tax Officer, in the court of the Subordinate Judge of Dacca for a declaration that the said Act in so far as it purported to impose a liability to pay agricultural income tax on the plaintiff was ultra vires and void, and for a perpetual injunction to restrain the defend ants from taking any steps to assess the plaintiff.
The suit was subsequently transferred to the Court of the Subor dinate Judge of Alipore.
The partition of India under the Indian Independence Act took place on the 158h August 1947, and the 2 Province of East Bengal in which the Estate was situated, was substituted as a defendant in the place of the Province of Bengal on an application made by it, and in its written statement it contended that the court of Alipore which was situated in West Bengal had no jurisdiction to proceed with the suit.
The High Court of Calcutta, reversing the order of the Subordinate Judge of Alipore held that the provisions of the Indian Independence (Legal Proceedings) Order, 1947, and the Indian Independence (Rights, Property and Liabili ties)Order, 1947, did not apply to the case and, as the matter was accordingly governed by the rules of internation al law, the court of Alipore had no jurisdiction to proceed with the suit: Held per KANIA C.J., PATANJALI SASTRI, MUKHERJEA and CHANDRASEKHARA AIYAR JJ.
(FAZL ALI J. concurrinG) The suit was not one with respect to any property transferred to East Bengal by the Indian Independence (Rights, Property and Liabilities) Order, 1947, nor was it a suit in respect of any "rights" transferred by the said Order, inasmuch as the Province of East Bengal obtained the right to levy income tax not by means of any transfer under the said Order, but by virtue of sovereign rights which were preserved by section 18 (3) of the Indian Independence Act, 1947, and article 12 (2) of the said Order had no application to the case.
Held per KANIA C.J., PATANJALI SASTRI, MUKHERJEA AND CHANDRASEKHARA AIYAR J.J. (FAZL ALI J, dissenting.) (i) Since the object of the Indian Independence (Rights, Property and Liabilities) Order, 1947, was to provide for the initial distribution of rights, properties and liabili ties as between the two Dominions and their Provinces, a wide and liberal construction, as far as the language used would admit, should be placed upon the Order, so as to leave no gap or lacuna in relation to the matters sought to be provided for.
The words "liability in respect of an action able wrong" should not therefore be understood in the re stricted sense of liability for damages for completed acts, but so as to cover the liability to be restrained by injunc tion from completing what on the allegations in the plaint are illegal or unauthorised acts which have been commenced.
As the Province of Bengal was, on the: allegations in the plaint, liable to be restrained from proceeding with an illegal assessment, that liability was, accordingly, a liability in respect of "an actionable wrong other than breach of contract" with in the meaning of article 10 (2) (a) of the above said Order; and, as the cause of action arose wholly in Dacca within the Province of East Bengal, that liability passed to the province of East Bengal under article 10 (2) (a), the latter must be deemed to be substituted as a party to the suit and the suit must continue in the court of the Subordinate Judge of Alipore, under Art.4 of the Indian Independence (Legal Proceedings) Order, 1947.
(ii) Assuming that the cause of action did not wholly arise 3 in Decca, article 10 (9.) (c) would apply and the Province of East Bengal would still be liable, though jointly with the Province of West Bengal.
(iii) As the suit was not one "to set aside or modify any assessment made under the Act", section 65 of the Bengal Agricultural Income tax Act, 1944, had no application and the suit was therefore one in respect of an "actionable" wrong within the moaning of article 10 (2) (a).
Per FAZL ALI J.
The words "liability in respect of an actionable wrong other than breach of contract" in article 10 of the Indian Independence (Rights, Property and Liabili ties) order 1947, refer to liability capable of being ascer tained in terms of money such as liability for damages for tort and not liability in any abstract or academic sense.
Even if a meaning, as wide ' as they can bear in a legal context, is given to the words "actionable wrong" and "liability" two elements are necessary to constitute an actionable wrong, namely, (i) an act or omission amounting to an infringement of a legal right of a person or breach of duty towards him, and (ii) damage or harm resulting there from.
The mere issuing of a notice under section 4 of the Bengal Agricultural Income tax Act, 1944, by the Income tax Officer is not an actionable wrong because no right known to law is infringed thereby and no action for damages can be main tained in respect of such an act, even assuming that the Income tax Officer had exceeded his powers or acted under an invalid provision of law.
No "liability for an action able wrong" was thus involved in the suit and no liability in respect of such a wrong could therefore be said to have been transferred to the Province of East Bengal within the meaning of article 10 (2.) of the said Order so as to entitle the plaintiff to continue the suit against the Province of East Bengal under article 10 (2).
For the purpose of understanding the full scope of section 65 of the Bengal Agricultural Income tax Act, 1944 it is necessary also to read the latter part which provides that no suit or other proceeding shall lie against any officer of the Crown for anything in good faith done or intended to be done under the Act.
" The latter part of the section clearly excludes the jurisdiction of the courts to prevent the Income tax Officer from proceeding with an assessment which has been started and the section must on a fair construction be held to bar all suits in connection with such assessment whether against the State or an Income tax Officer of the State.
If, therefore, no suit or action lies, there cab be no liability for an actionable wrong.
[The nature of actionable wrongs and torts discussed.] Judgment of the Calcutta High Court reversed.
|
Appeal No. 501 of 1964.
Appeal by special leave from the judgment and order dated February 27, 1961 of the Andhra Pradesh High Court in section p. A. No. 137 of 1959.
R. Ganapath Iyer, for the appellant.
P. Ram Reddy and T. V R. Tatachari, for respondent No. 1.
The Judgment of the Court was delivered by Subba Rao, C. J.
This appeal by special leave raises the question, whether the land described as "Vantari Muttah" in Talluru village was included in the assets of Jaggampetta A and D Zamindari estates, in Peddapuram taluk, East Godavari District, Andhra Pradesh, at the time of the Permanent Settlement.
The undisputed facts may be briefly narrated.
The said Muttah comprises an area of 50 puttis, i.e. about 400 acres, and five tanks are situate therein.
The said Muttah was granted to the predecessor in interest of the appellants and respondents 2 to 5 long before the Permanent Settlement in consideration of payment of Kuttubadi of a sum of Rs. 620/ .
At the time of Inam Settlement, it was not enfranchised by the Government.
After the Madras Estates (Abolition and Conversion into Ryotwari) Act XXV] of 1948 was passed, on September 22, 1952, by a notification issued thereunder, the Government took over the Jagganpeta Estate.
In April 1953, when the appellants and respondents 2 to 5 183 tried to effect repairs to the tanks, the village munsif of Talluru tinder instructions from the 1 st respondent, obstructed them from doing so.
Thereupon, the appellants filed O. section No. 269 of 1953 in the Court of the District Munsif, Peddapuram, against the State of Andhra and others for a declaration that the 1st respondent, had no right to the said tanks and for an injunction restraining it and its subordinates from interfering with their rights in the said tanks.
The 1st respondent resisted the suit inter alia on two grounds, namely, (i) the entire Vantari Muttah was included in the assets of the said estate of Jaggampeta at the time of the Permanent Settlement, and (ii) in any view, Linder the grant, the predecessor in interest of the appellants and respondents 2 to 5 was given only the land and not the tanks therein.
The learned District Munsif upheld the claim of the appellants to the said tanks and decreed the suit.
On appeal, the learned Subordinate Judge Kakinada, held that the said land was included in the assets of the Zamindari at the time of the Permanent Settlement and, on that finding, he dismissed the Suit.
On further appeal, Kumarayya, J. of the Andhra Pradesh High Court agreed with the learned District Munsif.
But, on Letters Patent appeal, a Division Bench of the HighCourt,consisting of ChandraReddy,C.J.and ChandrasekharaSastry,J.,agreed with the learned Subordinate Judge.
The result was that the Suit of the appellants was dismissed with costs throughout.
Hence the present appeal.
On the pleadings, two questions arose for consideration, namely, (i) whether the Muttah was included in the assets of the Zamindari at the time of the Permanent Settlement, and (ii) even if the said Muttah was excluded from the assets of the Zamindari, whether the original grant comprised the tanks.
The second point need not detain us, for, though Kumarayya, 1.
held on the said point in favour of the appellants, the Division Bench did not express any opinion thereon, in view of its decision on the first point.
As we are agreeing with the Division Bench on the first point, it is not necessary for us to express our opinion on the second point.
Apropos the first point, Mr. R. Ganapathy Iyer, learned counsel for the appellants, contended that the said Muttah was granted to the prodecessor in interest of the appellants and respondents 2 to 5 long before the Permanent Settlement by the then Zamindar for public services, Subject to a payment of favourable sent, that, subsequently, the services were discontinued, but the grant was continued subject to the payment of favourable rent, that at the time of the Permanent Settlement the said Muttah was excluded from the assets of the Zamindari and that, therefore, the and Muttah was outside the scope of the notification issue by the Government under Madras Act XXVI of 1948.
184 Mr P. Ram Reddy, learned counsel for the 1st respondent, the State of Andhra Pradesh, argued that the grant was subject to the payment of the full I assessment, that the said assessment was paid partly in cash and partly by personal services to the Zamindar, that: at the time of the Permanent Settlement the said Muttah was included in the assets of the Zamindari and that, as it was a part of the Zamindari, the Government, even at the time of the Inam Settlement, did not take any steps to enfranchise the same.
Before we advert to the evidence, it will be convenient to notice briefly, at this stage, the relevant law on the subject.
Under section 3(b) of the Estates Abolition Act, the entire estate, including inter alia the tanks, shall stand transferred to the Government and vest in it free of all encumbrances.
This section would be attracted only if the suit land was part of an estate as defined under the Act.
It cannot be disputed that if the land was included in the assets of the estate at the time of the Permanent Settlement, it would be a part of the estate.
Section 4 of Regulation XXV of 1802 enabled the Government to exclude from the said assets certain items.
Under the relevant part of the said section, the Government was empowered to exclude from the assets of the Zamindari at the time of the Permanent Settlement "lands exempt from the payment of public revenue and of all other lands paying only favourable quit rents".
Besides these two categories of grants of lands, namely, lands exempt from payment of public revenue and lands paying only favourable quit rents, there was another category of lands which were granted subject to the payment of favourable quit rents and also subject to the performance of certain services.
The said services might be public or private services, i.e., services to the community or services to the grantor.
The third category of land was the subject matter of decision in Mahaboob Sarafarajawant Sri Raja Parthasarathy Appa Rao Bahadur Zamindari Garu vs The Secretary of State(1).
Where lands in a zamindari were pre settlement inams granted on condition of rendering personal service to the zamindar and paying a favourable quit rent, the Madras High Court held that as the grant was for services purely personal to the zamindar, prima facie the inams formed part of the assets of the zamindari.
The reason for this rule of presumption was stated by Sankaran Nair, J. thus : According to these cases, therefore, when lands were held on condition that the holders were to render certain services which were purely personal to the Zamindar and in which the Government were not interested, i.e., when such services had nothing to do with police or magisterial duties, or did not concern the community or the villagers, (1) (1913) I.L.R. Madras 620, 632.
185 then the Government were entitled to include in the zamindari assets for setting the peshkash the income from the lands allowed in lieu of such services which were not allowed for in the settlement; there is therefore no presumption they did not do so or treated the land as free from payment.
" If the services were purely personal to the zamindari, there was no reason why the Government would not have included the land in the assets of the zamindari for the purpose for fixing the peshkash.
The same result was arrived at by a different process.
Under section 4 of Regulation XXV of 1802, lands paying only favourable quit rents might be excluded from the assets of the zamindari.
If the grantee paid part of the assessment in cash and part in the shape of personal services to the zamindari, it cannot be said that he held the lands paying only favourable quit rent to the zamindar.
The aspect was brought out with clarity by Venkatasubba Rao, J., in Secretary of State vs Rajah Vasireddy(1).
Therein, the learned Judge said thus : "In the case of personal service inams, was there any reason at the time of the permanent settlement for treating them as "lands exempt from the payment of public revenue ?" The zamindar was receiving income from such lands, though not of course in the shape of cash rent but in the shape of services; for the rendering of services was one mode of paying the rent.
It was reasonable therefore, to treat them at the settlement as revenue paying lands.
" The legal position may therefore put thus; Under section 4 of Regulation XXV of 1802 the Government was empowered to exclude income from lakhiraj lands, i.e., lands exempt from payment of public revenue and of all lands paying only favourable quit rents, from the assets of the zamindari at the time of the permanent settlement.
If the lands fall squarely within the said two categories, there is a presumption that they were excluded from the asse 's of the zamindari.
But if the grant of land was subject to performance of personal services to the zamindar or subject to the payment of favourable rents and also performance of personal service to the zamindar, there is no such presumption.
Indeed, the presumption is that in such a case the income from the land was not excluded from the assets of the zamindari.
The reason for the rule is that in one case the personal services are equated with the full assessment and in the other the favourable rent together with the personal services is equated with full assessment.
If the zamindar in one shape or another was getting the full assessment on the lands, there was no reason why the Government would have fore (1) A.I.R. 1929 Madras 676, 682.
CI/66 13 186 gone its revenue by excluding such lands from the assets of the zamindari.
With this background, let us look at the documentary evidence adduced in the case.
The relevant grant is not produced.
The permanent settlement accounts are not before us.
The sanad is not placed on the evidence.
Indeed, no document of a date prior to the permanent settlement is exhibited.
The question falls to be decided only on the basis of the documents that came into existence subsequent to the permanent settlement.
A 3 is a Kaifat dated April 22,1818 pertaining to 'manyams ' in the village of Jaggampadu.
The relevant part of the document reads : "Thimmaraju Maharajulungaru got debited in the accounts of the said village, and granted towards maintenance of Malireddy Gopalu for his service.
He (Raja) fixed three hundred and fifty varahas and continued it so in the same manner receiving service from him.
Afterwards Ammannagaru settled that cash has to be paid to the aforesaid 'diwanam ' (estate) and that the remaining shall be enjoyed as long as the service is done to the abovementioned people.
In that manner it was enjoyed till last year.
For the current year it was done as 'Amani ' (Government supervision).
" This document shows that the grantee and his heirs were to enjoy the land so long as service was done to the Raja.
The expression "abovementioned people" can only refer to the Raja '.
The service, therefore, was only personal service to the Raja.
A 4 is an order of the District Collector of Rajahmundry to the Estate Amin or Jaggampeta.
This letter is dated September 5, 1829.
This document shows that the agent of the Raja complained to the Collector that the Vantarlu of Thalluri village were granted lands assessed to a kist of Rs. 2140, that for their service the late Raja granted remission of Rs. 620, that they were paying every year the balance amount to the Raja, that after the death of the late Raja they did not present themselves to the minor Raja but were doing service to some other zamindar and that, therefore, an order might be issued directing them to pay to the then Raja the entire assessment.
On the basis of that request, the Collector directed the Amin to make the necessary enquiries.
This document clearly shows that the Zamindar 's agent asserted as early as 1928 that the Vantarlu were given remis 187 sion by the zamindar only for doing personal services to him.
The complaint made by the agent that the Vantarlu, instead of doing services to the minor Raja and attending on him, were doing services to another zamindar is a clear indication that the services mentioned in that order were the personal services to the Raja.
Reliance was placed on the statement in the said order "did not even give a reply to the message sent to them during the time of the dacoities and disturbances occurred recently, asking them to be present before him" and contended that the services mentioned therein were the services for the purpose of putting down dacoities and disturbances, which were services to the community.
The said statement only describes when the notice was sent and not the nature of the services.
Even if it described the nature of the services, their personal attendance on the Raja during the troubled times could not make them any the less personal services to him.
It was also said that the fact that the Collector 's interference was sought was indicative of the public nature of the services.
The Collector in those days was a person of power and prestige in a district and there was nothing unusual in a zamindar seeking his help in the matter of collecting his dues from recalcitrant serviceholders.
exhibit A 5 is an order dated December 11, 1829 issued by the Collector of Rajahmundry to the Amin of Jaggampeta estate in pursuance of a petition filed by the Manager of the estate.
Assertions similar to those found in exhibit A 4 were made by the Manager of the Estate in the petition filed by him to the Collector which is referred to in exhibit A 5. exhibit A 7 is a petition dated April 24, 1830 filed by the Vantarlu of Thalluru village to the Enquiry Collector, Rajahmundry.
In. that petition it was admitted that the Raja granted a land to them assessed to a kist of 310 varahas for their living, that they were doing services to the Samastanam, that after the death of the Raja, his widow told them that she would adopt a boy and that during his minority their services were not required but in view of their past services to her ancestors she would allow them to enjoy the land only on payment of half the assessment.
After narrating all the subsequent events, the petitioners went on to say : "From the time when Lakshminarasayya got the 'nimebadi ' done in that manner, we the sharers by obtaining the goodwill of Sri Raja Vatchavayi Venkatapathigaru, got the present and were paying 155 varahs to the estate and were in enjoyment of 50 putties of land assessed to a kist of Rs. 3101 as 'vasathi '.
This petition also supports the case of the Government that the Vantarlu were doing personal services to the zamindar and that it was the zamindar who gave a remission of assessment in lieu of their services.
The fact that Lakshminarasayya dispensed with 188 the services of the Vantarlu during the minority of the adopted son shows that the services were only personal to the zamindar, for, if they were public services, the fact that the zamindar was a minor would be irrelevant.
The learned counsel for the appellants contended on the basis of this document that whatever might be the conditions of the grant at the time of its origin before the permanent settlement, the zamindar put an end to the services and confirmed the grant subject to the payment of favourable quit rent and, therefore, the grant squarely fell within the scope of section 4.
of the said Regulation (XXV of 1802).
But this document contains only an assertion on the part of the Vantarlu : and even if that assertion be true, it would only show that Lakshminarasayya did not dispense with the services for good but only exempted the Vantarlu from doing the services till the minor zamindar attained majority.
exhibit A 16 dated November 9, dated February 27, 1832 and exhibit A 18 dated March 8, 1833 are similar orders issued by the Collector to the Amin of Jaggampeta.
They contain recitals similar to those contained in Exs.
A 3, A 4 and A 5.
exhibit A 10 is an order dated July 7, 1831 issued by the Collector to the Amin of Jaggampeta.
Therein, when the Manager of the estate resumed the land and gave it to another on the ground that the Vantarlu were not paying the assessments, the Collector directed that they should be put back in possession of the said land.
But, in doing so, the Collector did not say that the Zamindar had no right to resume the land but only observed that it did not do any credit to the estate to dispossess Muttadars of the land and grant it to some one else.
This document does not throw much light on the question raised before us.
Lastly, we have the fact that the Government did not take any steps to enfranchise the land.
For the default of the Government, no doubt the appellants cannot be made to suffer.
But that circumstance probablises the contention of the Government that the Muttah was not included in the assets of the zamindari, for, if included it is not likely that the Government would not have enfranchised it and imposed assessment thereon.
Strong reliance was placed on the expressions "Vantarlu" and "manyam" found in some of the documents and an argument was made that the said expressions indicated that the services were public services.
The expression "manyam" is found in exhibit
In Wilson 's Glossary "manyam" is defined thus : "Land in the south of India, held either at a low assessment, or altogether free, in consideration of services done to the state or community, as in the case of the officers.
189 and servants of a village. . the term is also laxly applied to any free grant or perquisite held in hereditary right by members of a village community.
" The expression "manyam" does not, therefore, necessarily mean a grant for public services.
It is also used in a loose sense to indicate an inam.
That apart, the word "manyam" is only found in a Kaifiat of 1818 and in no other ducument it finds a place.
Be that as it may, such an ambiguous expression in a solitary document which came into existence in 1818 cannot outweigh the other evidence which we have considered in detail.
Nor does the expression "Vantarlu" indicate public servants.
It means "foot servants"; it may also be used to denote a sepoy.
Whatever may be its meaning, the name is not decisive of the nature of the service.
A foot servant or a sepoy could certainly do personal service to a zamindar : he might look after his safety.
The following facts emerge from a consideration of the docu mentary evidence.
The grant was a pre settlement grant.
The land was granted to the Vantarlu subject to the payment of favourable rent and also subject to the performance of personal services to the zamindar.
The Government, either before the permanent settlement or subsequent thereto, never claimed a right to resume the same.
Indeed, it was the zamindar who was giving remissions to the Vantarlu whenever their services were not required.
There is a presumption that such a land was not excluded from the assets of the zamindari and the evidence adduced in the case not only does not rebut that presumption but also, to some extent, supports it.
We, therefore, agree with the Division Bench of the High Court holding that the Vantari Muttah of the appellants was part of the Jaggampeta estate and was, therefore, covered by the notification issued by the Government under the Estates Abolition Act, 1948.
In the result, the appeal fails and is dismissed with costs of the first respondent.
G.C. Appeal dismissed.
| As a result of constitutional changes following the Indian Independence Act, 1947, the ownership of the public properties of the Maharaja of the Mayurbhanj including certain shares in the appellant company passed to the State of Orissa.
Although the State had acquired title to these shares by operation of law, it also obtained from the Maharaja by way of abundant caution, a deed transferring these shares to it.
In 1950, the State Government lodged the share scrip and transfer deed with the company and requested it to make the necessary changes in the share register.
Despite repeated requests.
however, the directors of the company refused to do so.
In 1955 the State filed an application under section 38 of the Indian Companies Act, 1913 in the High Court of Orissa, asking for rectification of the share register by inserting its name as the holder of the share in place of the Maharaja.
The High Court allowed the application and passed a supplemental order directing the filing of the notice of rectification with the Registrar within a fortnight.
The company 's appeal before the Division Bench failed, whereupon it appealed to this Court by special leave.
It was urged on behalf of the appellant company, inter alia, that under article 11 of its Articles of Association as well as under cl. 22 of Table A read with article 1 A the directors has power to refuse registration of the transfer.
HELD: (i) In Table A which was attracted by article 1 A of the company 's Articles of Association, the word transmission is put in contradistinction to the word 'transfer '.
One means a transfer by the act of the parties, the other a transmission by devolution of law.
article If refers to transfers.
A devolution of title by operation of law is not within its purview.
Being a restrictive provision the article must be strictly construed.
In the instant case, the title to the shares vested in the State of Orissa by operation of law and the State did not require an instrument of transfer from the Maharaja to complete its title.
Article 11 does not confer upon the Board of directors a power to refuse recognition of such a devolution of title.
r383G 384C].
In re Bentham Mills Spinning Company, , referred to.
(ii)Clause 22 of the regulations in Table A read with article 1 A confers power on the Board of directors to decline registration of transmission of title in consequence of the death or insolvency of a 381 member.
In the instant case, there was no transmission of title in consequence of death or insolvency and clause 22 had, therefore no application, [384 D] (iii)In so far as the claim of the State was based on the transfer deed it fell within the purview of article 11.
But the refusal of the board of directors to register the transfer under that article was mala fide.
The power under that article was a discretionary power.
The directors must exercise that power reasonably and in good faith.
The Court can control this discretion if they act capriciously or in bad faith.
[384 E F; 385 C D] (iv)The name of the State of Orissa had without sufficient reason, been omitted from the register, and there was default in not entering on the register the fact of the Maharaja having ceased to be a member.
The Court 's jurisdiction under section 38 was, there fore, attracted.
The High Court rightly ordered the rectification in the exercise of its summary powers under section 38.
The jurisdiction created by section 38 is very beneficial and should be liberally exercised.
[385G]
|
minal Appeal No. 193 of 1961.
Appeal by special leave from the judgment and order dated February 9 and 10, 1961, of the Gujarat High Court in Criminal Appeal No. 367 of 1960.
D.R. Prem, K.L. Hathi and R.H. Dhebar.
for the appellant.
The respondent did not appear.
December 6, 1963.
The Judgment of the Court was delivered by 1/SC1/64 51 802 SARKAR J.
This appeal raises a question under the .
It was unfortunate that there was no appearance on behalf of the respondent but Mr. Prem appearing in support of the appeal has placed the matter very fairly before us with all the relevant reported decisions from the point of view of both the appellant and the respondent.
We are much beholden to him for this assistance.
The respondent is the Manager of an oil mill.
The mill had a spur gear wheel.
A workman of the mill while greasing the spur gear wheel which was then in motion had one of his hands caught in it.
Eventually that hand had to be amputated.
It appeared that the spur gear wheel bad a cover which had bolts for fixing it to the base but at the time of the accident the cover was not there, having apparently been removed earlier.
There is no evidence to show when it was last in position.
The respondent was prosecuted under section 92 of the Act for having failed to, comply with section 21(1) (iv) (c).
The relevant part of this section is as follows: section 21.
(1) In every factory the following namely, . . . . . . . . . . . . (iv) unless they are in such position or of such construction as to be safe to every person employed in the factory as they would be if they were securely fenced, the following, namely . . . . . . (c) every dangerous part of any other machinery, shall be securely fenced by safeguards of substantial construction which shall be kept in position while the parts of machinery they are fencing are in motion or in use: Section 92 of the Act provides as follows: 803 section 92.
Save as is otherwise expressly provided in this Act if in, or in respect of, any factory there is any contravention of any of the provisions of this Act the occupier or manager of the factory shall be guilty of an offence and punishable with imprisonment or with fine There is no dispute that a guard had been put over the spur gear wheel and it was a proper guard.
It is not contended that if it had been there, then the respondent could be said.
to have committed any offence, but it was not there.
The workman said that it had been removed by the respondent for repairs while the case of the respondent was that the workman had himself removed it.
The learned trial Judge was unable to accept either version and he acquitted the respondent observing that he could not be held liable if the cover was removed by someone without his consent or knowledge.
The learned Judges of the High Court when the matter came to them in appeal, referred to a very large number of cases, mostly of the English Courts under the English and a few of our High Courts and from them they deduced the two following principles: (1) Though the obligation to safeguard is absolute under section 21(1)(iv)(c) of the Indian Act, yet it is qualified by the test of foreseeability, and (2) If the 'Safeguard provided by the employer or manager is rendered nugatory by an unreasonable or perverted act on the part of the workman, there is no liability of the employer or manager.
With great respect to the learned Judges of the High Court we are unable to appreciate the relevancy of these two principles to the decision of the case in hand.
Nor does it seem to us that the learned Judges of the High Court rested their judgment on any of these principles.
We, therefore, think it unnecessary to notice the cases mentioned in the judgment of the High Court or discuss the principles to be deduced from them.
804 As the High Court stated, there is no dispute that the spur gear wheel was a dangerous machine within the meaning of section 21(1)(iv)(c).
That being so, clearly, there was an obligation to securely fence it and to see that the fence was "kept in position while the parts of machinery they are fencing are in motion or in use".
Indeed the fact that the respondent had provided the guard over the machine puts it beyond doubt, as the High Court observed, that the machine was dangerous within the meaning of the section.
It was not contended that the risk from the unguarded machine was not a foreseeable risk.
No question of the risk not being foreseeable, therefore, arises in this case nor is this put up by way of a defence.
The High Court proceeded on the assumption that it had not been proved that the workman had himself removed the guard.
We will also proceed on that assumption.
The High Court held that in a criminal case an accused was not bound to offer any explanation and if he did and that explanation was not established, that would not justify his conviction for the offence with which he was charged.
This is a proposition which it is unnecessary to dispute in the present case.
The High Court then observed that section 21(1)(iv)(c) of the Act contemplated a default and that default had to be established by the prosecution.
It lastly said that there was nothing in the Act to indicate that the legislature intended that an occupier or manager must always be on the look out to bring to book every offender who removed the safeguard furnished by him or that a failure on his part to do so must entail his conviction.
It also observed that the statute did not require that where the occupier or manager had carried out his obligation under the section by providing a proper safeguard, he would be liable if someone else, not known to him, removed it without his knowledge, consent or connivance.
It, therefore, held that as in the present case it could not be said that either he or the workman had removed the guard, it followed that someone whom the occupier or the manager could not fix 805 upon had removed it and that was something which the occupier or manager could not reasonably be expected to anticipate and he could not be made liable for such removal.
We are unable to accept this view of the matter.
No doubt the default on the part of the person accused has to be established by the prosecution before there can be a conviction.
It has to be observed that section 21 (1)(iv)(c) requires not only that the dangerous part of a machine shall be securely fenced by safeguards but also that the safeguards "shall be kept in position while the parts of the machinery they are fencing are in motion or in use".
We should have thought that the words "shall be securely fenced" suggest that the fencing should always be there.
The statute has however put the matter beyond doubt by expressly saying that the fencing shall be kept in position while the machine is working.
That is the default that has happened here; the fencing was not there when the machine had been made to work.
This is an admitted fact and no question of establishing it arises.
Does the mere fact that someone else had removed the safeguard without the knowledge, consent of connivance of the occupier or manager always provide a defence to him? We do not think so.
When the statute says that it will be his duty to keep the guard in position when the machine is working and when it appears that he has not done so, it will be for him to establish that notwithstanding this tie was not liable.
It is not necessary for us to say that in every case where it is proved that the manager or occupier had provided the necessary fence or guard but at a particular moment it appeared that the fence or guard had been removed, he must be held liable.
Suppose the fence for some reason for which the manager or occupier is not responsible, suddenly breaks down and the machine remains unfenced for sometime before the owner or occupier found that out and replaced the fence.
It may be that in such a case he cannot be made liable.
A statute does 806 not, of course, require an impossibility of a person.
But there is nothing to show that is the case here.
The respondent has given no evidence whatever to show what he had done to carry out his duty to see that the guard was kept in position when the machine was working.
The onus to prove that was on him because his defence depended on it.
He has completely failed to discharge that onus.
We, therefore, think that he is liable under section 92 of the Act for having failed to carry out the terms of section 21(1)(iv).
Section 101 of the Act was referred to as supporting the contention that the liability of an occupier or manager for failure to observe the terms of the Act was absolute and the only defence available to him was that provided by it.
In our view, it is unnecessary to deal with that question.
It does not arise in the present case, for we find that the respondent had offered no defence whatever, whether under section 101 or otherwise.
His only point was that he did not know what happened to the guard and that, in our opinion, is no defence at all.
We wish, however, to refer to the section for another purpose.
The section states that where an occupier or manager of a factory is charged with an offence punishable under this Act, he shall be entitled to have any other person whom he charges as the actual offender brought before the Court and if he proves to the satisfaction of the Court (a) that he used due diligence to enforce the execution of the Act, and (b) that the said other person committed the offence in question without his knowledge, consent or connivance, then that other person shall be convicted of the offence and the occupier or the manager shall be discharged.
It will appear, therefore, that even where the occupier or manager proves that somebody else has removed the fencing without his knowledge, consent or connivance, that alone would not exempt him from liability but he has further to prove that he had used due diligence to enforce the execution of the Act which can only mean, in a case like the present, that he exercised due diligence 807 to see that the fence which under the Act it was his duty to see was kept in position all along had not been removed.
It seems to us clear that if it was his duty to exercise due diligence for the purpose in a case where he could establish that somebody else had removed the fence, it would be equally his duty to exercise that diligence where be could not prove who had removed it.
If it were not so, the intention of the Act to give protection to workmen would be wholly defeated.
For these reasons we are unable to agree with the view of the High Court or the learned trial magistrate.
Accordingly we allow the appeal and set aside the judgment of the Courts below and convict the respondent under section 92 for contravening the terms of section 21(1)(iv)(c).
We impose on him a fine of Rs.200.
In default he shall undergo one week 's simple imprisonment.
Appeal allowed.
| In 1869 the British Government and the State of Tonk entered into a treaty which provided for the extradition of offenders in respect of certain offences specified therein called "heinous offences," which did not include the of fences of cheating and extortion.
In 1903 the Indian Extradition Act was passed which provided for extradition in respect of cheating and extortion also, but section 18 of the Act provided that nothing contained in the Act "shall derogate from the provisions of any treaty for the extradition of offenders.
" Under the Independence of India Act, 1947, the suzerainty of His Majesty over the Indian States lapsed and with it all treaties and agreements in force; but under a "standstill agreement," between the Indian Dominion and the States (including Tonk) all agreements between His Majesty and the States were continued, including agreements in respect of extradition.
Tonk acceded to the Dominion of India in 1947 and became a member State of the United State of Rajasthan.
The appellant was a member of the Uttar Pradesh Civil Service and his services were lent to the State of Tonk in 1948.
After he had reverted to the Uttar Pradesh he was charged with the offences of cheating and extortion alleged to have been committed while he was in Tonk and was arrested under an extradition warrant issued under section 7 of the Extradition Act, 1903.
He applied under es.
4=91 and 561 A of the Code of Criminal Procedure for his release, contending that in view of the provisions of section 18 of the Extradition Act and the Treaty of Extradition of 1869, his arrest was illegal: Held per KANIA O. J. and PATANJALI SASTRI J. (FAZL, ALI.
J. concurring), Even assuming that the Extradition Treaty of 1869 subsisted after the merger of the Tonk State, by providing for extradition for additional offences the Extradition Act of 1903 did not derogate from the provisions of the Treaty of 5869 or the rights of Indian citizens thereunder, and the arrest and surrender of the appellant under section 7 of the Act was not, therefore, rendered unlawful by anything contained in the said Treaty.
574 Per MUKHERJEA J. (FAZL ALI, MAHAJAN and DAS JJ.
concur ring).
The Extradition Treaty of 1869 was not capable of being given effect to in view of the merger of the Tonk State in the United State of Rajasthan, and, as no enforce able treaty right existed, section 18 of the Extradition Act of 1903 had no application; and inasmuch as the conditions of section 7 of the said Act had been complied with, the warrant of arrest issued under section 7 of the Act was not illegal.
|
Civil Appeals Nos.
415 418 of 1960.
Appeals from the judgments and orders dated September 23, 1958, of the Bombay High Court in Special Civil Applications Nos. 205 and 214 of 1958.
383 A. V. Viswanatha Sastri, section P. Verma, section N. Andley, Rameshwar Nath and P. L. Vohra, for the appellants (in C. A. No. 415 of 1960).
A. section Bodde and Ganapat Rai, for the appellants (in C. A. No. 417 of 1960) and respondents (in C. A. No. 418/60).
H. R. Khanna and R. H. Dhebar, for the appellants (in C. As.
Nos. 416 and 418 of 1960) and respondent No. 1 (in C. As.
Nos. 415 and 417 of 1960).
A. G. Ratnaparkhi, for respondent No. 3 (in C. A. No. 415 of 1960).
1961 November 15.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
These four appeals consist of two sets of cross appeals each and they arise from two petitions filed in the High Court of Bombay at Nagpur challenging the validity of the notification dated June 11, 1958, issued by the State of Bombay, now represented by the State of Maharashtra, under section 5 of the , ( 11 of 1948) (hereafter called the Act.) The petitioners in Special Civil Application No. 205 of 1958 are the Bidi, Bidi Leaves and Tobacco Merchants ' Association, Gondia and two others, whereas the petitioners in Special Civil Application No. 214 of 1958 are Haji latif Ghani Kachhi and five others.
The impugned notification consists of seven clauses.
By the majority decision of the High Court cls.
1 to 5 and the first part of cl. 6 are held to be intra vires, whereas the latter part of cl. 6 and cl. 7 as well as the explanation added to it are held to be ultra vires.
The first part of the finding is Challenged by the petitioners in the two writ petitions by their Civil Appeals Nos. 415 and 417 respectively, while the latter part of the finding is challenged by the State of Maharashtra in its Civil Appeals Nos. 416 and 418 respectively.
Thus, Civil Appeals Nos. 415 and 416 are cross 384 appeals and Civil Appeals Nos. 417 and 418 are cross appeals.
These appeals have been brought to this Court with a certificate granted by the High Court under article 132(1) of the Constitution.
As will presently appear the only point which calls for our decision in these appeals is one relating to the validity of the impugned notification; and so the certificate might well have been given under article 133 (1)(c) and not under article 132 (1) because the case does not involve a substantial question of law as to the interpretation of the Constitution.
For convenience we will refer to the petitioners in the writ petitions as petitioners and the State of Maharashtra as the respondent in these appeals.
The petitioners are bidi manufacturers in different parts of the Vidarbha region and they employ a large number of persons for the purpose of making bidis for them.
It appears that the Government of the State of Madhya Pradesh within whose jurisdiction Vidarbha was then situated had fixed the minimum rates of wages in respect of employment in tobacco (including bidi making) manufactories by issuing a notification on January 11, 1951.
This notification had purported to fix the minimum rates of wages per 1000 bidis by reference to different localities in the State.
The rates thus fixed were inclusive of dearness allowance or compensatory cost of living allowance and they varied from place to place as specified in columns 2 to 4 of the notification respectively.
An Advisory Board was thereafter constituted by the said State in exercise of the powers conferred on it by section 7 of the Act.
Subsequently, in 1956 the said minimum rates of wages were revised by a notification issued on February 23, 1956.
As a result of the State Reorganisation Act, 1956 (37 of 1956) the Vidarbha region became part of the State of Bombay.
After Vidarbha thus became a part of the State of Bombay the Government of Bombay notified that the Advisory Board appointed by the said Government 385 under section 7 shall be the Advisory Board for Vidarbha.
This notification was issued on November 1, 1956.
The Government of Bombay then issued a notification publishing the draft of the notification which was proposed to be issued under section 5, sub section
(2) read with cl.
(b) of sub section
(1) of section 5, and notice was thereby given to all the bidi manufacturers that the said draft would be taken into consideration on or after March 1, 1957.
Thereafter the procedure prescribed by section 5 was followed, an enquiry was held, a report of the Advisory Board was received and finally the impugned notification was issued on June 11, 1958.
It is the validity of the several clauses contained in this notification that is challenged before us in the present appeals.
In their petitions the petitioners alleged that cls.
3 to 7 of the notification were invalid and ultra vires the powers of the respondent under sections 3, 4 and 5 of the Act.
According to them the respondent had no power to make provision for deciding as to the extent to which "chhat" will be permitted or directing the action to be taken by the employer and employee relating to bad bidis.
Their contention was that the said clauses purported to make provisions for the settlement of disputes between the employer and the employee concerning an Industrial matter and were outside the purview of the respondent 's power under the relevant sections.
They urged that the different provisions of the notification were so interrelated that it was difficult to dissociate one from the other and so it was necessary that the notification as a whole should be quashed.
The respondent disputed the correctness of the contentions raised by the petitioners.
It urged that there were constant disputes among bidi manufacturers and bidi workers regarding the minimum wages fixed in the Vidarbha region and so the respondent thought it necessary to institute 386 an enquiry into these complaints in order to decide whether it was necessary to revise the minimum wages prescribed by the earlier notification and the mode of determining those wages.
It was only after a comprehensive enquiry was held at which all parties were heard that the respondent issued the notification in question.
Its case was that the minimum rates of wages had been fixed on industry cum regionwise basis and that cls.
3 to 7 were intended to make the fixation of minimum rates of wages effective.
According to the respondent, the absence of any rules regarding the exercise of the right of "chhat" by the employers tends to deprive the bidi workers of their right of getting minimum rates of wages, and so cls.
3 to 7 were deliberately introduced to make the material provisions of the Act effective in their implementation.
These petitions were first heard by Mudholkar and Kotval, JJ.
Mudholkar, J. held that all the clauses in the impugned notification were valid for, according to him, though the Act had not conferred express powers on the respondent to prescribe the impugned clauses of the notification yet the respondent could prescribe the said rules under the doctorine of implied powers.
Kotval, J., agreed that cls.
1 and 2 were valid but he thought that even under the doctrine of implied powers the remaining cls.
3 to 7 could not be sustained.
According to him the said clauses were, however, severable from cls.
1 and 2 and so they should be struck down leaving cls. 1 and 2 in tact.
Since there was a difference of opinion between the two learned judges the matter was referred to Tambe, J. He held that cls.
1 to 5 and the first part of cl. 6 were intra vires where as the latter part of cl. 6 and cl. 7 as well as the explanation added to it were ultra vires.
After Mr. Justice Tambe pronounced his judgment the matter was again referred to a Division Bench, and the Division Bench, in accordance with the majority opinion, has upheld the validity of cls.
1 to 5 and 387 the first part of cl. 6 and has struck down the latter part of cl. 6 as well as cl. 7 and its explanation.
It is against this decision that the petitioners and the respondent have come to this Court with a certificate granted by the High Court in that behalf.
Before dealing with the merits of the controversy between the parties it would be relevant to refer to the material provisions of the Act.
The Act was passed in 1948 in order to provide for fixing minimum rates of wages in certain employments.
Its provisions apply to the scheduled employment which expression under section 2 (g) means an employment specified in the schedule, or any process or branch of work forming part of such employment.
It is common ground that employment in any tobacco (including bidi making) manufactory is a scheduled employment under the schedule of the Act.
Section 2(h) defines wages and it prescribes inter alia, that wages means all, remuneration capable of being expressed in terms of money which would, if the terms of the contract of employment, express or implied, were fulfilled be payable to a person employed in respect of his employment or of work done in such employment, and includes house rent allowance, but does not include the items specified by cls.(i) to (v) of the said definition.
Section 3 authorises the appropriate Government to prescribe different minimum rates of wages for different scheduled employments, different classes of work in the same scheduled employments, adults, adolescents, children and apprentices and different localities.
Under section 4 are prescribed the components of the minimum rates of wages.
Section 5 provides for the procedure for fixing and revising minimum wages.
Section 7 provides, inter alia, that minimum wages payable under the Act shall be paid in cash.
Under section 12 an obligation is imposed on the employer to pay every one of his employees engaged in the scheduled employment wages at a rate 388 not less than the minimum rate of wages fixed by the notification issued in that behalf.
Section 12 (2) saves the application of the provisions of the payment of wages Act.
Section 20 authorises the appropriate Government to appoint an authority to hear and decide for any specified area all claims arising out of the payment of less than the minimum rates of wages and other claims specified therein.
The remaining sub sections of the said section prescribe the procedure for determining such claims.
Under section 21 a single application can be made in respect of a number of employees who wish to prefer a claim for the decision of the authority under section 20.
Section 22 prescribes penalties for the offences therein specified.
Section 22A provides that if any employer contravenes any of the provisions of the Act or any rule or order made thereunder he shall, if no other penalty is provided for such contravention, be punishable with fine which may extend to five hundred rupees.
Section 22B provides, inter alia the manner in which Courts may take cognizance of a complaint against any person for an offence committed under the Act.
That in brief is the scheme of the material provisions of the Act.
At this stage it would be necessary to read the several clauses of the impugned notification : "No. MWA.
1557 J.
In exercise of the powers conferred by sub section (2) of section 5 read with clause (b) of sub section (1) of that section of the (XI of 1948) and after consulting the Advisory Board and in supersession of the former Government of Madhya Pradesh Labour Department Notification No. 564 451 XXIII, dated 23rd February, 1956, the Government of Bombay hereby revise the minimum rates of wages in respect of the employment in any tobacco (including bidi making) manufactory in the Vidarbha region of the State of Bombay 389 as mentioned in the Schedule hereto annexed and directs that this notification shall come into force with effect from 1st July, 1958.
SCHEDULE Subject to the other provisions of this Schedule, the revised minimum rates of wages payable to employees per thousand bidis (when leaves are supplied by the employer) shall be as follows: Area Revised rates in Rs. (i) Nagpur District . 1.69 (ii) Bhandara District . 1.62 (iii) Chanda, Akola, Buldana, Yeotmal, Amravati and Wardha District . 1.56 2.
For all bidis in which 7 chhataks or more of tobacco mixture is used and for those bidis which are known as "Hatnakun" bidis, there shall be an increase of 12 Naye Paise per 1000 bidis in the rates mentioned above in all the areas.
It shall be within the discretion of the employer to decide which are "chhat" bidis or bad bidis, up to 5 per cent of the bidis prepared by the employee.
If the employer decided that any bidis are "chhat" or bad, the "chhat" or bad bidis up to 5 per cent shall be destroyed forthwith by the employee and whatever tobacco is recovered from them shall be retained by the employer.
If, however the employer wants to retain these "chhat" or bad bidis, he shall pay full wages for the same to the employee.
If "chhat" or bad bidis are more than 5 per cent, but less than 10 per cent, and if there is any dispute between the employer 390 and the employee as to whether the '"chhat" or bad bidis is done properly or not, equal number of representatives of the employer and the employees shall inspect the "chhat" is done properly or not.
If there is any difference of opinion among the representatives of the two sides, the majority opinion shall prevail.
If the opinion is equally divided and the employer wants to retain the "chhat" bidis, he shall pay wages for "chhat" bidis between 5 per cent to 10 per cent at half the rates fixed above.
If the employee does not want to retain these bidis the employee shall destroy them forthwith.
The employer shall nominate his representatives and the employees shall elect their representatives.
In the case of "chhat" above 10 per cent., the employee shall be entitled to full wages.
It shall, however, be open to the employer to take suitable action against the employee if the "chhat" is more than 10 per cent for 6 continuous working days in a calendar month.
The "chhat" shall be made once in a day only, at any premises within a distance of not more than 2 miles from the premises where bidis are manufactured.
Explanation: For the purpose of this Schedule the expression "employer" includes his thekedar, contractor or agent as the case may be. ' The validity of cls.
1 and 2 is not in dispute.
The petitioners, however, contend that cls.
3 to 7 are outside the powers conferred on the respondent by the relevant provisions of the Act and as such are invalid.
It is common ground that even if the impugned clauses are held to be ultra vires they are 391 severable from cls.
1 and 2 so that the invalidity of the impugned clauses will not affect the validity of the said two clauses and they will stand even if the other clauses are struck down.
In determining the question about the validity of the impugned clauses it is necessary to refer to two material facts.
The nature and scope of the terms of contract between the petitioners and their employees are really not in dispute.
It is alleged by the petitioners that they employ a large number of persons for the purpose of making bidis for them, that these persons are supplied with tendu leaves, tobacco and other necessary materials, they take the said articles to their respective places where they work and brings back the bidis prepared by them to the employer.
The employer then examines the bidis ' accepts such of them as are found to have been prepared according to the terms of the contract rejects such of them as are found to be of poor quality and not prepared according to the terms of the contract and pays for the bidis actually accepted.
The respondent has not traversed these allegations made by the petitioners.
It admitted that the workers are paid on piece rate basis and the payment is made "on the basis of bidis selected and accepted by the employer after rejecting certain portions of bidis prepared by the workers".
In fact the respondent has expressly stated that "there is a recognised practice of making payment on the basis of bidis accepted by employers as coming up to a certain standard of skill".
It is further admitted that the employers have insisted on their right in principle of rejecting the sub normal or sub standard bidis prepared by the employees.
Thus, there is no doubt that under the terms of the contract the workers are entitled to receive payment only for the bidis accepted by the employers, and not for those 392 which are rejected.
It is also not disputed that the bidis which are rejected by the employers otherwise known as "chhats" are retained by the employer though he refuses to take them into account in the matter of payment to the workers on the ground that they do not come up to the standard of skill or quality prescribed by the contract.
It also appears to be true that the employees in this region have been protesting against improper rejection of the bidis by the employers.
They have contended that the employers reject an unreasonably high proportion of bidis falsely dubbing them as of sub normal quality without paying anything to the workers for their labour spent in rolling such rejected bidis.
In its affidavit the respondent has emphasised that as a result of to is method of discarding bidis on the ground that they are of sub standard quality bidis workers were deprived of the labour charges for bidis which are rejected by their employers; and so it was urged that the question of fixing maximum rates of wages for bidi workers necessarily involved the question as to the quantum or percentage of such rejection which should be permissible to the employer.
According to the respondent the impugned notification has purported to fix the minimum rates of wages after taking into consideration the problem presented by the practice of discarding bidis and paying wages to the workers only for such bidis as are accepted.
In support of the validity of the notification the respondent also relied on the fact that the formula prescribed by the notification had been evolved after taking into account the representations made both by the employers and the employees.
In fact, according to the respondent, this said formula represented a substantial degree of agreement between the parties on this point.
It would thus be seen that on the two material facts there is really no serious dispute between the 393 parties.
The respondent agrees that under the practice which must be taken to be consistent with the implied terms of contract between the bidi manufacturer and his employee, after the bidis are prepared by the employees and brought back to the employer the employer has a right to examine the quality of the bidis, accept only such as have come up to the standard prescribed by the contract and reject the rest.
The practice further justifies the payment of wages to the employees only for the bidis actually accepted and not for those which are rejected though the rejected bidis may be retained by the employer.
On the other hand, it is not, and cannot be seriously disputed by the petitioners that in some cases this practice may work great hardship on the workers, and in every case the workers do not get wages for the labour put by them in rolling the rejected bidis.
The main question which arises for our decision in the present appeals is whether the injustice resulting from the practice of discarding bidis and not making any payment for them to the workers can be checked, controlled and regulated by the respondent by issuing a notification under the powers conferred on it by section 5 of the Act.
If the relevant provisions of the Act confer upon the respondent the power to check the evil against which the workers complain then of course the validity of the impugned clauses would be beyond challenge.
If, on the other hand, the power to prescribe or revise minimum rates of wages does not either expressly or by necessary implication include the power to provide for the machinery to check the evil in question, then the impugned clauses would be ultra vires however necessary it may be to check and control the said evil in question.
In this connection let us broadly examine the scope and effect of the impugned clauses.
Clauses 1 and 2 prescribe the revived minimum rates districtwise and provide for the payment of higher 394 Price for the bidis known as Hatnakhun bidis in all and the said districts.
These two clauses are obviously valid and the petitioners have not disputed the conclusion of the High Court in that behalf.
Clauses 3 to 6 deal with the problem of the that bidis or bidis which are rejected because they are bad.
Clause 3 leaves it to the discretion of the employer to decide which are chhat bidis up to 5 percent of the bidis prepared by the employees.
This clause provides that the bidis to rejected would be destroyed and tobacco recovered from them retained by the employer; and it adds that if the employer wants to retain the rejected bidis he shall pay full wages for the same to the employee.
In other words this, clause means that the employer may discard bidis up to 5 percent but if he does not want to pay the workers for the said bidis he must destroy them.
That would show that the discretion exercised by him is honest and fair.
If, on the other hand, he wants to retain the said bidis that would mean that he thinks that the bidis would find a market and in that case he must pay for them on the basis that they are good bidis.
On principle this provision may perhaps not be open to any serious criticism and it is not unlikely that if the notification had not made further detailed provisions by cls.
4 to 6 the present dispute would not have been brought before the High Court.
The employers probably do not have a serious grievance against cl. 3 on the merits.
Clause 4 deals with cases where the rejection may be more than 5 per cent but less than 10 per cent of total work produced by the worker.
In regard to this class of cases cl. 4 provides for a machinery to deal with cases falling under it.
Representatives of the employers and employees have to be appointed and they have to decide whether the work have been properly done or not.
The decision would be according to the opinion of the majority.
If the opinion is equally divided 395 and the employer wants to retain the chhat bidis, between 5 per cent to 10 per cent he shall pay at half the rates fixed in cl. 1.
If the employer does not want to retain them the employees shall destroy them, The clause does not seem to provide for 3 7 case where the majority opinion may support the rejection between 5 per cent and 10 percent; that is a lacuna in the clause.
The only comment which can be legitimately made against the clause on its merits is that the setting up of the machinery for a kind of adjudication of the dispute between the employer and the employee may, instead of solving the difficulties in actual working, add to them.
That takes us to cl. 6.
This clause has been very severely criticised by the petitioners.
It provides that in case of chhat about 10 per cent the employees shall be entitled to full wages which means that even if chhat above 10 per cent is made reasonably and for a proper cause the employer has to pay for the discarded work as therein prescribed; the only right given to the employer in such a case is to take suitable action against the employee if the chhat is more than 10 per cent and that too for six continuous working days in a calendar month.
Prima facie this clause appears to be unreasonable and unjust.
The explanation to cl. 7 is also criticised by the petitioners because the thekedar, contractor or agent, who is appointed by the employer would, if the explanation is valid, be liable to perform all the obligations imposed on the employer by the relevant provisions of the Act such as sections 12 and 18.
We have examined the broad features of the notification and indicated the comment made on it by the petitioners for the purpose of showing that on the merits some of the clauses do not appear to be fair and just, but that is not the ground on which their validity can be or has been challenged before us.
The main argument in support of the challenge 396 rests on the assumption that cls.
3 to 7 are all beyond the powers conferred on the respondent by the relevant provisions of the Act; and it is this argument which needs to be examined.
It is well settled that industrial adjudication under the provisions of the Industrial Disputes Act, 1947(14 of 1947) is given wide powers and jurisdiction to make appropriate awards in determining in industrial disputes brought before it.
An award made in an industrial adjudication may impose new obligations on the employer in the interest of social justice and with a view to secure peace and harmony between the employer and his workmen and full co operation between them.
Such an award may even alter the terms of employment if it is thought fit and necessary to do so.
In deciding industrial disputes the jurisdiction of the tribunal is not confined to the administration of justice in accordance with the law of contract.
Mukherjee, J., as he then was, has observed in The Bharat Bank Ltd., Delhi vs Employees of the Bharat Bank Ltd., Delhi the tribunal "can confer rights and privileges on either party which it considers reasonable and proper, though they may not be within the terms of any existing agreement.
It has not merely to interpret or given effect to the contractual rights and obligations between them which it considers essential for keeping industrial peace." since the decision of the Federal Court in Western India Automobile Association vs Industrial Tribunal, Bombay, it has been repeatedly held that the jurisdiction of industrial tribunals if much wider and can be reasonably exercised in deciding industrial disputes with the object of keeping industrial peace and progress (Vide: Rohtas Industries, Ltd., vs Brijnandan Pandey; The Patna Electric Supply Co. Ltd., Patna vs The Patna Electric Supply Workers Union.
Indeed, during the last ten years and more 397 industrial adjudication in this country has made so much progress in determining industrial disputes arising between industrial of different kind and their employee that the jurisdiction and authority of industrial tribunals to deal with such disputes with the object of ensuring social justice is no longer seriously disputed.
But, it is necessary to remember that no claim can be made for such broad jurisdictional power by the respondent when it purports to issue a notification under the provisions of the Act.
These powers and authority would necessarily be conditioned by the relevant provisions under which it purports to act, and the validity of the impugned notification must therefore be judged not by general considerations of social justice or even considerations for introducing industrial peace; they must be judged solely and exclusively by the test prescribed by the provisions of the statute itself.
It appears that in 1956 before Vidarbha became a part of the state of Bombay the State Government of Madhdya Pradesh had made a comprehensive reference for the arbitration by the State Industrial Court between the bidi manufacturers of Bhandara District and their employee.
In this dispute all the material issues arising from the prevailing practice which authorised employers to reject chhat bidis had been expressly referred for adjudication.
Subsequently, when the impugned notification was issued the respondent apparently took the view that what could have been achieved by reference to the arbitration of state Industrial Court may well be accomplished by issuing a notification under section 5 of the Act.
It may be that there is substance in the grievance made by the employees that the practice of rejecting chhat bidis often leads to the injustice and deprives them of the wages legitimately earned by them by rolling the said bidis and there can be no doubt that if a comprehensive reference is made for the decision of 398 this industrial dispute between the bidi manufacturers and their employees an award may well be passed which will resolve this dispute; but the question which falls for our decision is whether the relevant provisions of the Act authorised the State Government to make rules for the decision of the dispute in that behalf and for the payment of minimum rate of wages on the basis of such decision? In our opinion, the answer to this question has to be in the negative.
What is the extent of the authority conferred on the respondent in fixing or revising minimum rates of the wages under the relevant provisions of the Acts In dealing with this question we must necessarily bear in mind the definition of the term "wages" prescribed by section 2(h).
As we have already been the term "wages" includes remuneration which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment.
In other words, the terms "wages" refers to remuneration payable to the employee as a result of the terms of employment.
What would be the amount to which the employee is entitled if the other terms of the contract are preferred ? That the question which has to be asked in determining what the term "wages" means under (h).
No doubt sections 3, 4 and 5 authorised the appropriate Government to fix the minimum rates of wages.
In other words, if the wages fixed by a contract which is either express or implied are found to be low authority is conferred on the appropriate Government to increase them so as to bring them to the level of what the said Government regards as the minimum wages in the particular scheduled employment in the particular area concerned.
This means that power is conferred on the appropriate Government to modify one term of the contract express or implied between the employer and the 399 employee and that is a term which has reference to the payment of wages.
If for a certain piece of work done by the employee the employer has agreed to pay him either expressly or by implication a certain amount of wages the appropriate Government can issue a notification and prescribe that for the said work done under the contract the employer must pay his employee a much higher rate of wages and the higher rate of wages thus prescribed would be deemed to be the minimum rate of wages between the parties.
It would, however, be noticed that in defining "wages" cl. 2(h) postulates that they would be payable if the other terms of the contract of employment are fulfilled.
That is to say, authorising the fixation of minimum rates of wages the other terms of the contract of employment have always to be fulfilled.
The fulfillment of the other terms of the contract is a condition precedent for the payment of wages as defined under section 2 (h) and it continues to be such a condition precedent even for the payment of the minimum rates of wages fixed and prescribed by the appropriate Government.
The significance of the definition contained in section 2(h) lies in the fact that the, rate of wage may be increased but no change can be made in the other terms of the contract.
In other words, the Act operated on the other terms of the Contract on the other terms of the contract between the employer and the employee.
That is the basic approach which must be adopted in determining the scope and effect of the powers conferred on the appropriate Government by the relevant provisions of the statute authorising it to prescribe fix or minimum rates of wages or to revise them.
What the appropriate Government is authorised to do is to proscribe, fix or revise wages and wages are defined to be remuneration payable to the employees if the terms of the contract of employment, express or implied, were fulfilled.
400 This definition runs, as it inevitably must, through the and the material provisions of the Act and its importance cannot therefore be ignored.
Bearing this fact in mind let us examine the impugned clauses of the notification.
Clauses 1 and 2 clearly fall within the purview of the power conferred on the respondent because they do no more than prescribe the minimum rates of rates as therein specified; out cls.
3 to 7 clearly and unambiguously purport to deal with the terms of the contract between the parties other than that relating to the remuneration.
These clause are obviously intended to deal with the dispute between the employers and their employees as to how bidis should be discarded and in that proportion and what should be the procedure to be followed in regard to the? payment for such discarded bidis.
In appreciating the true effect of these clauses it is necessary to recall that the parties are agreed about the practice at present prevailing which must be taken to represent the terms of the contract either express or implied.
According to the said practice the employer decides which bidis should he discarded, he retains the discarded bidis and pays only for such bidis as are accepted be him.
It if plain that the impugned clauses of the notification purport to modify these terms in material particulars and that and be plainly outside the jurisdiction of the authority of the respondent.
It may well form the subject matter of reference for industrial adjudication but it cannot form the subject matter of a notification prescribing minimum rates of wages under sections 3, 4 or 5.
It is conceded by the respondent that there is no express provision in the act, which authorised the setting up of the machinery as prescribed by cls.
3 and 4 or for laying down the manner in which the employer should make payment for the discarded bidis.
It is, however, strenuously urged that the validity of these clauses should be upheld on the ground of the 401 implied power of the respondent; and that takes us to the question as to the true scope and effect of the doctrine of implied power.
"One of the first principles of law with regal to the effect of an enabling act", observes Craies, "is that if a Legislature enables something to be done, it gives power at the same time by necessary implication to do everything which is indispensable for the purpose of carrying out the purposes in view(1)".
The principle on which the doctrine is based is contained in the legal maxim 'Quando lex aliquid concedit concedere videtur et illud sine quo res ibsa ease non potest '.
This maxim has been thus translated by Broom thus: "whoever grants a thing is deemed also to grant that without which the grant itself would be of no effect".
Dealing with this doctrine Pollock, C.B., observed in Michaely Fenton and James Fraser vs John Stephen, Hempton "It becomes therefore all important to consider the true import of this maxim, and the extent to which it has been applied.
After the fullest research which I have been able to bastow, I take the matter to stand thus : Whenever anything is authorised, and especially if, as matter of duty, required to be done by law, and it is found impossible to do that thing unless something else not authorised in express terms be else done, then that something will be supplied by necessary intendment." This doctrine can be invoked in cases "where an Act confers a jurisdiction it also confers by implication the power of doing all such acts, or employing such means as are essentially necessary to its execution (3).
" In other words, the doctrine of implied powers can be legitimately invoked when it is found that a duty has been imposed or a power conferred on an authority by a statute and it is further found that the duty cannot be discharged or the power cannot be exercised at all unless some 402 auxiliary or incidental power is assumed to exist.
In such a case, in the absence of an implied power the statute itself would become impossible of compliance.
The impossibility in question must be of a general nature as that the performance of duty or the exercise of power is rendered impossible in all cases.
It really means that the statutory provision would become a dead letter and cannot be enforced unless a subsidiary power is implied.
This position in regard to the scope and effect of doctrine of implied powers is not seriously in dispute before us.
The parties are at issue, however, on the question as to whether the doctrine of implied powers can help to validate the impugned clauses in the notification.
The respondent strenuously contends that cls.
1 and 2 of the notification which have prescribed the minimum rates of wages per 1000 bidis would become ineffective unless cls.
3 to 7 supplement them.
The argument is that by improper or dishonest exercise of the power conferred on the employer by the contract of employment to discard chhat bidis the employees would be cheated of their legitimate due wages under cls.
1 and 2 and so, in order to make the provisions of cls. 1 and 2 effective some subsidiary provisions had to be made for settling the dispute between the employer and his workmen in regard to chhat bidis.
As we have already observed, the grievance made by the employees on the score of improper rejection of bidis may in many cases be well founded; but the seriousness of the said grievance and the urgent necessity to meet it would hardly be a proper basis for invoking the doctrine of implied power where the provisions of the statute are quite clearly against the assumption of such implied power.
The definition of the term "wheres" postulates the binding character of the other terms of the contract and brings within the purview of the Act only one 403 term and that relates to wages and no other.
That being so, it is difficult to hold that by implication the very basic concept of the term "wages" can be ignored and the other terms of the contract can be dealt with by the notification issued under the relevant provisions of the Act.
When the said other terms of the contract are outside the scope of the Act altogether how could they be affected by the notification under the Act under the doctrine of implied powers Besides, in this connection it is also necessary to bear in mind the provisions of sections 20 and 21 of the Act.
These two sections provide for the settlement of claims made by employees in regard to the payment of minimum rates of wages.
If for instance, good bidis are rejected by the employer as chhat bidis improperly and without justification the employees can make a claim in that behalf and the same would be tried under sections 20 and 21.
Therefore the Act has made a specific provision for the enforcement and implementation of the minimum rates of wages prescribed by notifications.
The present notification purports to ignore the said provisions and sets up a machinery to settle the said disputes.
Clauses 1 and 2 of the notification have prescribed the revised minimum rates of wages.
If, in the matter of payment of the said wages, any disputes arise they must be left for adjudication by the authority prescribed by section 20.
That is another reason why the doctrine of implied powers cannot be invoked in support of the validity of the impugned clauses in the notification.
There is yet another consideration which is relevant in dealing with the question about the implied powers.
The doctrine of implied power can be invoked where without the said power the material provision of the Act would become impossible of enforcement.
In the present 404 case all that section 5 requires is the fixation of minimum rates of wages, and that has been done by the notification by cls. 1 and 2.
What the subsidiary clauses purport to do is to make the enforcement of the fixed rate effective by providing for a machinery to deal with the possible disputes arising between the parties as a result of the practice of discarding chhat bidis.
In other words, cls. 1 and 2 fix the minimum rates of wages and thus section 5 has been complied with and enforced.
The remaining clauses purport to make the implementation of the provisions of cls. 1 and 2 effective.
That is very different from giving effect to section 5 itself.
The enforcement of the notification is clearly not the same thing as exercising the power of fixing or revising the minimum rates of wages under section 5.
A Power may be implied, if necessary, in discharging the duty imposed upon the appropriate Government or in exercising the power conferred on the State Government in the matter of fixing or revising the minimum rates of wages; but surely no power can be implied for making effective the implementation of the notification issued under the said power or in the discharge of the said duty.
The purpose of the Act cannot be said to have failed after the minimum rates of wages are prescribed and notified.
What may turn out to be ineffective is the provision for payment of the said wages by reason of the rejection of good bidis; but that is a matter of an industrial dispute which has to be adjudicated upon under sections 20 and 21 or under other provisions of the law.
It is true that a large section of the workers in the bidi trade is illiterate, uneducated and unorganised; and there can be no doubt that their grievance on the ground of improper rejection of the bidis deserves to be redressed, but, in our opinion, the procedure adopted by the respondent in redressing the said grievance is outside the scope of the Act, and therefore beyond the powers conferred on it by section 5.
The proper remedy 405 in such a case may be to make a comprehensive reference of the dispute to the competent industrial tribunal and invite the tribunal to make a proper award in that behalf.
We are, therefore, inclined to take the view that cls.
3 to 7 which form an integral scheme are outside the purview of the powers conferred on the respondent by section 5 of the Act and must therefore be declared to be ultra vires.
It is common ground that these clauses are severable from cls.
1 and 2 and that their invalidity does not affect the validity of the said two clauses.
In the result Civil Appeals Nos. 415 and 417 are allowed and Civil Appeals Nos. 416 and 418 are dismissed.
Respondent to pay the costs of the petitioners in Civil Appeals Nos. 415 and 417.
One set of hearing cost.
C.A. Nos. 415, 417, allowed.
C.A. Nos. 416, 418 dismissed.
| The respondent purchased at a revenue auction sale eight anna share of and obtained formal possession of that share on September 23, 1938.
relinquished his share in Khudkasht lands and they were recorded as the occupancy lands of his wife and sons.
In 1940 the appellant got a lease of those fields.
The respondent instituted a suit for possession of the lands against the appellant basing his claim on his proprietary right to recover possession, and obtained a decree on July 12, 1944.
The trial court 's decree was confirmed on April 20, 1951, by the High Court which held that the respondent was entitled to the lands as they were originally Khudkasht fields as part and parcel of the eight anna share purchased by him.
In the meantime on March 31, 1951, the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950, had come into force but the High Court did not consider the effect of the Act on the appeal before it.
Under section 3 of the Act the proprietory rights in an estate specified in the notification passed from the proprietor and became vested in the State free from all encumbrances, rand by section 4, after the issue of the notification under section 3 124 notwithstanding anything contained in any contract, grant or document or any other law for the time being in force, all rights, title and interest which a proprietor possessed on account of his proprietorship of the land within the estate became vested in the State, except, inter alia, His home farm land and occupied land.
Under section 2(g) of the Act home farm lands were those which were recorded as Sir and Khudkasht in the name of a proprietor in the annual papers for the year 1948 49, but in the present case the lands in respect of which a decree had been passed in favour of the respondent, were not so recorded.
On the other hand, the lands were declared Malik Makbuza of the appellant under section 41 of the Act.
In the execution application for the recovery of possession filed by the respondent the appellant raised objections that the respondent was not entitled to execute the decree for possession as his proprietary rights except his home farm lands, ceased to exist on March 1, 1951, by virtue of sections 3 and 4 of the Act and became vested in the State thereafter, and that the State had, after the date of vesting recognized the lands in suit to be tenancy land of the appellant.
The respondent 's plea was that The appellant was not entitled to raise such objections ill the executing court, that the executing court could not go behind the decree and, therefore, must execute it and deliver possession to the respondent.
The executing court dismissed the objections raised by the appellant, and the High Court took the view, relying upon Rahmatullah Khan vs Mahabirsingh, I. L. R. , that the lands in suit must be treated as home farm as it was the duty of revenue authorities to make correct entries in the village papers.
^ Held, that: (1) the principle that the executing court cannot question the decree and has to execute the decree has no operation on the facts of the present case because the objection of the appellant was based not with respect to the invalidity of the decree but on the effect of the provisions of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950, which deprive the respondent of his proprietary rights including the right to recover possession over the lands in suit; (2) the word "document" ill section 4(1) of the Act includes a decree of the court; (3) the lands in suit could not be the home farm of the respondent as they were not recorded as his khudkasht in the annual papers of 1948 49, and consequently, his proprietary right was lost and got vested in the State on the coming into force of the Act; Rahmatullah Khan vs Mahabir Singh, I. I,.
R. , disapproved.
125 Chhote Khan vs Mohammad Obedullakhan, I. L. R. , distinguished.
(4) since the Act did not provide for the outgoing proprietor to recover possession of land by any process of law if he had become entitled to the possession of that land before the date of vesting, his right to get possession by executing his decree got lost to him after the date of vesting; and (5) the executing court should, therefore, have refused to execute the decree holding that it became inexecutable on account of the change in law and its effect.
|
Appeal No. 21.
of 1962.
Appeal by special leave from the judgment and order dated September 23, 1958, of the Bombay High Court in I.T. Reference No. 87 of 1957.
H.N. Sanyal, Additional Solicitor General of India, N. D. Karkhanis and R. N. Sachthey, for the appellant.
A.V. Viswanatha sastri, J. B. Dadwhanji, O. C. Mathur and Ravindra Narain, for the, respondent, 768 1962.
October 25.
The judgment of the Court was delivered by SHAH, J.
For the year of account ending March 31, 1955, Afco Private Ltd. a private limited company earned a total income which was finally computed in assessment proceedings by order of the Income tax Tribunal, at Rs. 49,843/ .
The company declared a dividend of Rs. 11,7121 on July 13, 1955, and before the close of the year of assessment 1955 56 declared an additional dividend of Rs.5,612/ , thereby distributing in the aggregate dividend which was not less than 60% of the total income, reduced by the income tax and super tax payable by it.
The company then claimed rebate at the rate of one anna in the rupee on the amount computed according to Schedule 1, Part 1, Item B read with section 2 of the Finance Act 15 of 1955.
The Income tax Officer and the Appellate Assistant Commissioner rejected the claim because in their view the claimant was a company to which the provisions of section 23A of the Income tax Act could not be made applicable.
In appeal, the Income tax Appellate Tribunal, Bombay ', reversed the order of the Income tax authorities.
The Tribunal opined that the expression "cannot be made applicable" in Item B of Part 1 of Schedule 1 of Finance Act 15 of 1955 must be read in conjunction with section 23A of the Income tax Act, and the benefit of rebate provided by the Finance Act, 1955, cannot be denied to a Private Company if the conditions prescribed in section 23A(1) are fulfilled.
The following question referred by the Tribunal to the High Court of judicature at Bombay was answered in the affirmative : "Whether on the facts and in the circumstances of the case, the assessee company having distributed dividends of over 60% of the company 's total income less income tax and super tax payable thereon is entitled to the rebate of 769 1 anna per rupee on the undistributed balance of profits as provided in clause (1) of the proviso to item B of Part 1 of the 1st Schedule to the Finance Act of 1955 ?" By the Finance Act 15 of 1955 Schedule 1 Item B read with section 2 of the Act rates of tax were prescribed in the case of companies.
Item B providedthat "in the case of every company Rate surcharge on the whole of total income Four annas one twen in the tieth of rupee the rate specified in the pre ceeding column.
Provided that in the case of a company which, in respect of its profits liable to tax under the Income tax Act for the year ending on the 31st day of March, 1956, has made the prescribed arrangements for the declaration and payment within the territory of India, of the dividends payable out of such profits., and has deducted super tax from the dividends in accordance with the provisions of sub section (31) of section 18 of that Act (i) where the total income, as reduced by seven annas in the rupee and by the amount, if any, exempt from income tax, exceeds the amount of any dividends (including dividends payable at a fixed rate) declared in respect of the whole or part of the previous year for the assessment for the year ending on the 31st day of March, 1956, and the company is a corn any to which the provisions of section 23A of the Income tax Act cannot be made applicable, a rebate 770 shall be allowed at the rate of one anna per rupee on the amount of such excess ; (ii)x x x x" By section 23A(1) of the Income tax Act at the material time the Income tax Officer was authorised to order a company to pay super tax, at the rate of eight annas in the rupee in the case of a company whose business consisted wholly or mainly in the dealings in or holding of investments, and at the rate of four annas in he rupee in the case of any other company, on the undistributed balance of the total income of the previous year, that is to say, on the total income reduced by the amounts of income tax and super tax and any other tax payable under any law in excess of the amounts allowed in computing the income, and in the case of Banking companies in addition to the taxes, funds actually transferred to a reserve fund, and the dividends actually distributed, if any, where in respect of any previous year the profits and gains distributed as dividend by the company within the twelve months immediately following the expiry of that previous year were less than 60% of the total income of the company of that year as reduced by the amounts aforesaid, unless the Income tax Officer was satisfied that having regard to losses incurred by the company in earlier years or to the smallness of the profits made in the previous year, the payment of a dividend or a larger dividend than that declared would be unreasonable.
It is manifest that the order under section 23A(1) would (excluding certain procedural conditions) be ordinarily made if the company has distributed by way of dividend within the twelve months immediately following the expiry of the accounting year less than the prescribed percentage of the total income as reduced by the, amount of taxes paid in the case of non Banking Companies and reserve fund in addition thereto in the case of Banking Companies 771 By the first paragraph of sub section
(9) of section 23 A it is provided that "Nothing contained in this section shall apply to any company in which the public are substantially interested or to a subsidiary company of such company if the whole of the share capital of such subsidiary company has been held by the parent company or by its nominees throughout the previous year.
" This clause is followed by two explanations.
Explanation 1, in so far as it is material to this case, provides : "Explanation 1 For the purposes of this section, a company shall be deemed to be a company in which the public are substantially interested (a) x x x x (b) if it is not a private company as defined in the Indian Companies Act, 1913 (VII of 1913), and (i) x x x x (ii) x x x x (iii) x x x x Explanation 2. x x x x" Section 23A was enacted to prevent evasion of liability to pay super tax by shareholders of certain classes of companies taking advantage of the disparity between the rates of super tax payable by individuals and by the companies.
The rates of super tax applicable to companies being lower than the highest rates applicable to individual assessees, to prevent individual assessees from avoiding the higher incidence of super tax by the expedient of transferring to companies the sources of their income, and thereby securing instead of dividends the benefit of the profits of the company, the Legislature had by Act XXI of 1930, as modified by Act VII of 1939, enacted a special 772 provision in section 23A investing the Income tax Officer with power, in certain contingencies prescribed in the section to order that the undistributed balance of the assessable income reduced by the amount of taxes and the dividends shall be deemed to have been distributed at the date of the general meeting.
By the Finance Act 15 of 1955 section 23A (1) was amended and the Income tax Officer was directed to make an order that the Company shall be liable to pay super tax oil the undistributed balance at the rates prescribed under the section.
But by virtue of sub.
section (9) of section 23A the or der can be made only in respect of a company in which the public are not substantially interested or of a subsidiary company of such company if the whole of the share capital of such subsidiary company has been held by the parent company or by its nominees throughout the previous year, and by cl.
(b) of the first explanation thereto a private company as defined in the Indian Companies Act, 1913, is not a company in which the ' public are substantially interested.
It is, therefore, competent to the Income tax Officer to pass an order under section 23A (1) if the conditions thereof are fulfilled directing payment of super tax by a private company at the rates prescribed by the Finance Act 15 of 1.955 on its undistributed balance.
To reduce the rigour of this provision the Legislature has provided for inducement in the form of rebate on the difference between nine annas in every rupee of the total net income, and the amount of dividend declared, to companies which have declared dividends so as not to attract the application of an order under section 23A.
But that benefit is admissible only in favour of companies to which the provisions of section 23A of the Act cannot be made applicable.
The Income tax authorities held that the expression company to which the provisions of section 23A of the Income tax Act cannot be made applicable ' is descriptive of a class of companies against which in no circumstances can an order under section 23A of the 773 Indian Income tax Act be made, and private limited companies being companies in respect of which an order under section 23A of the Income tax Act can be made if the conditions prescribed relating to distribution of dividend are fulfilled, the benefit of rebate is not admissible in their favour.
The Tribunal and the High Court held that the expression " 'cannot be made applicable" only refers to a state of affairs in which having regard to the circumstances an order under section 23k of the Indian Income tax Act cannot be made.
In our judgment the Income tax Appellate Tribunal and the High Court were right in so holding.
The Legislature has used the expression "cannot be made applicable" which clearly means that the applicability of section 23A depends upon an order to be made by the Income tax Officer, and not upon any exclusion by the provisions of the Act.
Before an order can be made under section 23A of the Income tax Act, the Income tax Officer has to ascertain (i) whether the company conforms to the description in sub section
(9) of section 23A; if it does ' the lncome tax Officer has no power to make an order ; and (ii) if the company is not one which falls within cl.
(9) of section 23A whether having regard to inadequacy of the declaration of dividend, an order for payment of super tax should not, because of the losses incurred by the company in the earlier years, or to the smallness of the profits in the previous year, be made.
Satisfaction of the Income tax Officer as to the existence of several conditions prescribed thereby even if the company is one which does not fall within sub section
(9) of section 23A is a condition of the making of the order.
The language used by the Legislature clearly indicates that it is only when an order under section 23A will not, having regard to the circumstances ' be justified that the right to obtain rebate under the Finance Act 15 of 1955 is claimable.
The Legislature has not enacted that the benefit of rebate is admissible only to companies against which the order under sub section
(1) of section 23A can never be made.
774 The Legislative history as disclosed by the earlier Finance Acts supports this interpretation of the relevant provision.
In the Finance Acts prior to 1955 rebate under Part I of the 1st Schedule Item B was admissible if the company had in respect of profits liable to tax under the Indian Income tax Act made the prescribed arrangements for declaration and payment of dividends payable out of the profits and had deducted super tax from the dividends in accordance with section 18(3D) & (3E), where the total income reduced by seven annas in the rupee ' and the amount exempt from income tax exceeded the amount of any dividends declared and no order had been made under sub section
(1) of section 23A of the Income tax Act.
The right to rebate arose under those Finance Acts if no order under section 23A was made.
The Income tax Officer had therefore to decide even before completing the assessment of the company whether the circumstances justified the making of an order under section 23A, and unless an order under section 23A was made the assessee became entitled automatically to the rebate of one anna in the rupee.
Such a provision led to delay in the disposal of assessment proceedings and caused administrative inconvenience.
It appears that the Legislature modified the scheme of granting rebate in enacting the Finance Act of 1955 with a view to simplify the procedure and avoid delays, and not with the object of depriving the private limited companies as a class, of the benefit of rebate which was permissible under the earlier Acts.
Counsel for the Income tax Commissioner invited our attention to the Finance Acts of 1956 and 1957 and contended that the Legislature in dealing with the right to rebate under Part II relating to the rates of super tax used phraseology which restricted the right of rebate only to public companies.
Ie must be noticed that even under the Finance Act of 1955 by Part II of Schedule 1, item D, a rebate of three annas per rupee of the total income was to bf 775 allowed to companies in respect of profits liable to tax under the Income tax Act for the year ending March 31, 1956, if the company had made prescribed arrangements for payment of dividend payable out of profits and for reduction of super tax from dividends in accordance with the provisions of sub section
3D of section 18 of the Act and the company was a public company with a total income not exceeding Rs. 25,000/ .
This provision was slightly modified in the Finance Act of 1956 where the rebate admissible was at the rate of five annas in the rupee, (other condition being fulfilled) if the company was a public company with total income not exceeding Rs. 25,000/to which the provisions of section 23A could not be made applicable.
Under the Finance Act of 1957 rebate was admissible in favour of companies "referred to in sub section
(9) of section 23A of the income tax Act with total income not exceeding Rs. 25,000/ .
" All these provisions about rebate were enacted in prescribing the rates of super tax.
In the Finance Act of 1955 the Legislature in dealing with the right of rebate under Part I prescribing rates of income tax, made it admissible in respect of companies to which provisions of section 23A of the Income tax Act could not be made applicable, whereas under Part II prescribing rates of super tax, rebate was made admissible in respect of public companies having income not exceeding the prescribed amount and rebate at a lower rate where the income exceeded the prescribed limit.
If it was intended by the Legislature to exclude private limited companies from the benefit of rebate the Legislature would have adopted the same phraseology as was used in that Act in dealing with the rebates in prescribing rates of super tax.
The legislative history instead of supporting the case of the Income tax Department yields inference against their interpretation.
We are therefore of the view that the High Court was right in holding that the company was 776 entitled to the rebate claimed by it.
The appeal therefore fails and is dismissed with costs.
Appeal dismissed.
| Chellsons Ltd., a private Ltd. Company, declared dividends without taking into account the company 's liability for taxation, including Extra Profits Tax.
The dividends so declared were credited in the books of the company to the accounts of each of the share holders.
Share holders in their return for the relevant assessment year included the amounts credited to them in the company 's books of account.
Payment of dividends otherwise than out of profits of the year, or other undistributed profits was at the material time prohibited, by article 97 of Table A of the Indian Companies Act, 1913, as amended by Act XXXII of 1936 read with section 17 (2) of the Act; therefore such payment could not be regarded as lawful, the company having failed to provide for payment of tax before declaring dividend.
On discovering its mistake at an Extra Ordinary General Meeting another revolution purporting to reverse the earlier resolutions declaring the dividends was moved, and the shareholders unanimously resolved inter alia that all the shareholders having been fully apprised of the bonafide mistake, the dividends inadvertently paid be considered as loans to such individual shareholders.
Before the Income Tax Officer the assessee who was a shareholder did not file a revised return, nor did he claim that the amount received by him was not liable to tax.
But on appeal before the Appellate Assistant Commissioner the assessee contended that amount credited by the company to his account was not in view of the subsequent resolution, liable to be taxed as dividend income.
The plea was rejected.
Before the Tribunal the assessee contended that the dividends were declared out of capital and such declaration was invalid under the Companies Act.
The tribunal held that what was paid and received as dividend could not by a subsequent resolution of the company be treated as paid otherwise than as dividend.
The High 269 Court agreed with the Tribunal observing that assessment for each year is self contained and subsequent events cannot justify modification of the assessment.
The assessee came up in appeal to the Supreme Court.
Held, that if the directors of the company have deliberately paid or negligently been instrumental in paying dividends out of capital they may have, in an action by the company or if the company is being wound up at the instance of the liquidator, to compensate the company for loss occasioned by their wrongful or negligent conduct.
In Matter of The Union Bank, Allahabad Ltd. (1925) I.L. R. 47 All.
669 approved.
Held, further, in ascertaining whether liability to pay income tax on dividend arose, a resolution of the company whereby payments made to the shareholders as dividends are to be treated as loans cannot retrospectively alter the character of the payment and thereby exempt it from liability which has already attached thereto.
Held, also, the payment made as dividend by a company to its share holders does not lose the character, of dividend merely because it is paid out of capital.
Under the Income Tax Act, liability to pay tax attaches as soon as dividend is paid, credited or distributed or is declared.
The Act does not contemplate an enquiry whether the dividend is properly paid, credited or distributed before liability to pay tax attaches thereto.
|
Appeal No. 2 of 1968.
Appeal under section 116 A of the Representation of the People Act 1951 from the judgment and order dated November 30, 1967 of the Madhya Pradesh High Court, Indore Bench in Election Petition No. 5 of 1967.
S.V. Gupte, R.K. Vijayavargiya and S.S. Khanduja, for the appellant.
V.K. Sanghi, G.L. Sanghi and/1.
G. Ratnaparkhi, for respondent No. 1.
The Judgment of the Court was delivered by Hidayatullah, C.J.
This is an appeal against the judgment, November 30, 1967, of a learned Single Judge of the High Court of Madhya Pradesh at Indore setting aside the election of the appellant to the Khategaon Legislative Assembly Constituency No. 259.
The facts on which the petition was based and the judgment of the High Court has been rested, may now be stated.
At the last General Election to the Madhya Pradesh Legislative Assembly from the Khategaon Constituency there were five contesting candidates.
They were the appellant and respondents 2 to 5.
The appellant received 9622 votes as against the second respondent who obtained 8030 votes.
The other contesting candidates received fewer votes in comparison.
The present election petition was filed, not by any of the defeated candidates, but by an elector to the Legislative Assembly Constituency.
In the array of the respondents in the High Court one Ram Kishen s/o Lakshmi Narain Deswali was also joined because his nomination paper was rejected by the Returning Officer.
A point was made about this rejection in the High Court and we shall come to it in due course.
The election petition was based on two broad facts.
The first was that the nomination paper of Ram Kishen was wrongly rejected and the other fact comprised allegations of corrupt practices on the part of the returned candidate and his election agent.
These corrupt practices consisted of oral speeches connected with the Manifesto of the Jan Sangh relating to cow slaughter in India.
During the course of the speeches, it was alleged the returned candidate, who belongs to the Jan Sangh and his election agent Ram Niwas Somani made speeches at 19 villages in which they referred to this election manifesto and claimed that the Congress had not abolished cow slaughter in India and on the other hand was promoting it and that the Jan Sangh would stop cow slaughter.
They added to these statements, which might have been quite innocuous, two other statements, namely, that to vote for the Congress was to commit the sin of gohatya and that the Congress candidate 501 Shrimati Manjulabai herself ate beef.
There were other allegations regarding exhibition of posters which depicted the Congress as a butcher intent upon slaughtering a cow.
This part of the case however, was not accepted in the High Court and we need not say anything about it.
The petition therefore succeeded on the two grounds which we have mentioned, namely, that the nomination paper of Ram Kishen was wrongly rejected and that the corrupt practice attributed to the Jan Sangh candidate and his election agent was established.
In this appeal we are only required to consider these two points and we shall take them in the same order.
In so far as the rejection of the nomination paper is concerned it may be pointed out that Ram Kishen s/o Lakshmi Narain Deswali was registered as a voter, not in the Electoral Roll relating to Khategaon Tehsil but in the Harda Tehsil.
Along with this nomination paper Ram Kishen produced a certificate from the Tehsildar of Harda which reads as follows : "I certify that there is an entry of the name of Ram Kishan son of Laxmichand, village Dholgaon, at Anukaran No. Harda 217, Electoral roll of 1966, part of Anukaran No. 177, District Hoshangabad, Tehsil Harda, under the heading Ra Ni Ma, Serali, Serial No. 196, House No. 91/2, with particulars Ramkishen Laxmi Chand, male, aged 45 years.
16 1 1967 Sd/ 16 1 1967 Tehsildar Harda.
" He did not produce the kind of evidence which section 33(5) of the Representation of the People Act, 1951, requires to be produced when a candidate is registered as a voter in some other constituency.
Section 33(5) of the Representation of the People Act requires that where the candidate is an elector of a different constituency, a copy of the electoral roll of that constituency or of the relevant part thereof or a certified copy of the relevant entries in such roll shall, unless it has been filed along with the nomination paper, be produced before the returning officer at the time of scrutiny.
The nomination paper of Ram Kishen was filed on February 20, 1967.
The date of scrutiny was 21st of the same month.
Ram Kishen had two alternatives before him.
One was to produce any of the documents mentioned before the returning officer or to have filed it earlier with his nomination paper.
He did neither.
He produced a certificate from an officer who it is not proved to our satisfaction had the authority to issue a certified copy of the electoral roll.
He also added an affidavit on his own part in which the gist of the entry was given.
Indeed the certi 502 ficate of the Tehsildar was based on the affidavit which was annexed to the certificate.
There was no compliance with the provisions of section 33(5) of the Representation of the People Act and there was no power in the court to dispense with this requirement.
It is a well understood rule of law that if a thing is to be done in a particular manner it must be done in that manner or not at all, Other modes of compliance are excluded.
Even the certificate of the Tehsildar was not a certified or a true copy of the entry.
It only gave the gist of the entry taken from the affidavit.
It contains a mistake because the village "Dholgaon" is mentioned without the addition of the word 'Kalan '.
It appears that there are two villages, Dholgaon Kalan and Dholgaon Khurd.
The entry in the electoral roll clearly shows that it is Dhalgaon Kalan.
In other words the certificate was inaccurate.
The affidavit of Ram Kishen was also inaccurate inasmuch as it described the house as No. 91 whereas in Electoral Roll the house is given the. number 91/2.
We, however, do not go by these small inaccuracies because again the law is that which can be made certain is certain, but the fact is clear that the requirements of section 33(5) had to be and were not complied with.
The rejection of the nomination paper of Ram Kishen by the Returning Officer was ' thus justified.
Ram Kishen explained that he was running about trying to get the other evidence and indeed he did arrive at 5 p.m. having earlier sent a telegram that he was coming with the required evidence.
Unfortunately both the telegram and Ram Kishen arrived after the rejection of the nomination paper and therefore the Returning Officer could not recall what he had ordered.
We are satisfied that the learned Single Judge erred in holding that the nomination paper of Ram Kishen was wrongly rejected.
It was rightly rejected.
If the matter had rested there the appellant would have been entitled to succeed, but there remains still the question of corrupt practice.
A great deal of argument was addressed to us on this subject and we were taken through the evidence of all the witnesses who have deposed to the corrupt practice on the part of the returned candidate and his election agent.
We are satisfied that the reading of this evidence by the learned Judge, although some times strained, was clearly right and that the corrupt practice had been brought home to the candidate and his election agent.
Without going too much into the details we shall scan that evidence once again to show that this fact stood duly proved.
Out of the 19 villages at which speeches were made the learned Judge selected two, for basing his conclusion and we shall therefore confine ourselves to evidence relating to those villages.
They are Khategaon and Kannod.
The speeches at Khategaon took place on the 11 th and at Kannod on the 16th February.
It appears that February 11, was a day of many speeches.
Earlier in the day the Congress held its own session to persuade the voters to 503 vote for that party.
The Chief Minister (D. P. Misra) addressed a gathering of about 2000 persons.
The speeches made at that meeting need not be referred to here because they do not bear upon the present matter.
The Jansangh then followed and held its own meeting.
Many spoke at that meeting including the returned candidate, Narbada Prasad who also goes under the name of Kinkarji.
The election petitioner examined in this connection three witnesses and also examined himself.
These witnesses are Bulchand (P.W. 2), Babulal (P.W. 7) & Chandragopal (P.W. 15).
The election petitioner is P.W. 17.
It is argued by the learned counsel for the appellant that the testimony of PWs.
2, 7 and 15 should not have been accepted because there were many discrepancies in the versions of these witnesses as to what was said at the meeting.
There are also some arguments regarding the credibility of each of these witnesses and we shall briefly refer to these two points now.
P.W. 2 Balchand stated that he had not gone specifically to the meeting but that the meeting was thrust upon him.
He had gone on the 11th to the house of an ailing relative and was with him in the evening when the meeting took place.
This meeting was held right opposite the residence of his relative and he was therefore in a position to hear what was said.
He did say that he attended the meeting but he might well have being so close to it although his explanation of how he happened to be there is acceptable.
He stated that Kinkarji was one of the speakers.
Kinkarji complained of the division of Kashmir and also that the Congress 'had increased price level. ' He stated further that to bring Hindu Raj, the voters must not vote for Congress but cast their votes for the Jansangh.
He added: "In the Congress Raj thousands of cows are cut every day.
To vote to Congress is to take on your heads the sin of gohatya.
Manjula Bai the Congress candidate herself eats cow flesh.
You ' should go away from here after swearing to yourselves that you would not vote congress and bring on yourself the sin of gohatya.
" It is convenient to compare what the other two witnesses said in this behalf P.W. 7 's (Babulal) version was that Kinkarji "spoke of Kashmir, Pakistan and said that 'the Congress walas ' did not get sugar or grain for them".
He concluded: "The congress men get thousands of cows killed.
Manjula Bai Wagle who stands on the congress ticket eats cow 's flesh.
It is necessary to bring the Hindu Raj and so give vote to the deepak and make it victorious.
You better swear by the cow that you will not vote congress but vote Jan Sangh.
If you do not vote Jan Sangh you will be getting the sin of cow killing.
" 504 The version of P.W. 15 (Chandergopal) was to this effect.
When he went there Kinkarji was speaking and said: "The congress party is a hatyara party.
It gets thousands of cows and bulls killed.
The candidate who stands against me in this election is Manjula Bai set up by the congress and she eats cow 's flesh.
I have been set up by the Jansangh for bringing the Hindu Rajya.
To bring it please vote on my deepak mark.
" A point is made by the learned counsel for the appellant that since P.W. 15 does not speak of the sin of gohatya, we should discount the evidence of the other two witnesses who have exaggerated the whole story.
He also contends that even if the words were used about the sin of gohatya we should not give too much meaning to the word 'sin ' which bears different shades of meanings and the strongest meaning need not necessarily be chosen.
He also contends that this speech, even if it is accepted from the version of P.W.s 2 and 7 did not amount to the kind of corrupt practice which is made a ground for setting aside elections under section 123(2)(ii).
Whether we should believe the witnesses or not involves how far we should enter into facts.
No doubt, an appeal before this Court under section 116A is an appeal as of right and is open both on facts and law; still the practice of the courts has uniformly been to give the greatest assurance to the assessment of evidence made by the Judge who hears the witnesses and watches their demeanour and judges of their credibility in the first instance.
In an appeal the burden is on the appellant to prove how the judgment under appeal is wrong.
To establish this he must do something more than merely ask for a re assessment of the evidence.
He must show wherein the assessment has gone wrong.
Where the court of first instance relies upon probabilities alone, the appellate court may be in as good position as the court of trail in judging of the probabilities; but where the court of trial relies upon its own sense of the credibility of a witness the appellate court is certainly at a disadvantage, because it has not before it the witness but the dead record of the deposition as recorded.
If it was a question only of the probabilities of the case, we would have undoubtedly gone into the matter more closely.
The matter has however been put before us strictly on the ground of credibility of the witnesses and it is there we feel that the appellate court is at a disadvantage.
This has been laid down both by this Court and the Privy Council in cases which are quite familiar and need not be quoted.
Applying these tests, we go once again into the submissions of the learned counsel for the appellant to see how far he has been 505 able to prove to our satisfaction that the appraisal of the evidence of these witnesses is such that we must reject the conclusion of ' the learned High Court Judge and substitute for it another conclusion.
It is said about P.W. 2 (Balchand) that he claimed that he was not interested in the Congress but P.W. 11 Parasram stated that Balchand worked for the Congress.
Learned counsel submits that here at the very start we have a lie from the witness and we should not therefore believe him.
He further comments that P.W.2.
(Balchand) did not attend the meeting that he only heard what was being said at the meeting, that he was an unsummoned witness and did not go to Manjula Bai but went to Chaganlal the elector who had no connection with the election and thus has shown considerable interest in the success of the election petition.
All these things were before the learned Judge who tried the case.
In spite of them he hag chosen to draw an inference from the testimony of these witnesses taken with the other material on the record.
In this connection it is pertinent to point out that the learned Judge referred to the evidence of Tiwari P.W. 10 and Ramchandra Agrawal P.W. 13 (particularly the former) about whom he said that he was considerably impressed by the way in which he deposed and it appeared to him that that witness was speaking the truth.
Where there is evidence which the Judge considers truthful not on the probabilities of the case but because the Judge on his observation of the manner in which the witness deposed, the appellate Court should be slow to depart from the conclusion of the trial Judge.
In this case Kunjilal Tiwari P.W. 10 admitted that he was a member of the Jansangh.
He further said that he did not approve of the methods of the Jansangh in making such speeches and had therefore come forward to depose truthfully as to what had happened.
This witness no doubt spoke ' about Kannod but he lent assurance to the statements of P.W.2 (Balchand), P.W. 7 (Babulal) and P.W. 15 (Chandergopal) about Khategaon.
The learned Judge although he examined the two, incidents separately, seemed to have viewed the entire propaganda of Kinkarji as integrated and has drawn the conclusion from both aspects of the case taken together.
Therefore the case comes to this, that the witnesses who spoke about the speech at Khategaon were not unanimous as to the version of the speech, but that in our opinion is not a circumstance of vital importance, because.
speeches were also made at Kannod in which the returned candidate made similar observation about the sin of gohatya.
The witnesses here are P.W. 4.
(Narsingh Dass), P.W. 8 (Mazharul Haq) and P.W. 10 (K. L. Tiwari).
We shall now refer to what they stated.
P.W 4 (Narsingh Das) stated that on February 16, 967 there was a meeting in his village in front of Ramniwas Somani 's house.
This Somani was the election agent of the returned candidate.
At this meeting both Somani and Kinkarji spoke.
When he went there Kinkarji was speaking.
This is the ' version which he gave of the speech.
506 "The congress gets cows killed so you should not vote for congress, but you should put your stamp on the deepak our emblem.
If you still vote for Congress you shall get the sin of killing a cow.
" P.W. 8 (Mazharul Haq) also said that Kinkarji recited some slokas and when he came to the end of the speech he said: "Congress gets cows killed.
The congress candidate Manjula Bai Wagle eats cow 's flesh.
We have to bring Hindu Raj; put the seal on the deepak mark.
" P.W. 10 's (Kunji Lal Tiwari) version was that Kinkarji said that the Congress was getting the cows killed.
Manjula Bai should not be given any votes.
If she was voted for there would be a sin.
He also spoke that the congressmen were doing blackmarketing.
It thus appears that at Kannod also there was a repetition of the same kind of speech which the other witnesses stated had been made at Khategaon.
The question is do we believe these witnesses or not ? In our judgment there is ample evidence in this case that there was a reference to cow slaughter and the campaign of the Jan Sangh that cow slaughter should be abolished in India.
One cannot say that it is wrong to make such a propaganda.
It would be perfectly legitimate for any party to promise that if it came into power it would abolish cow slaughter.
That is not the gravamen of the charge.
The gravamen of the charge is that it was added that if the voters voted for the Congress candidate, they would be guilty of the sin of gohatya and here the law of election steps in.
Section 123 provides that it is an election offence of undue influence, that is to say, any 'direct or indirect interference or attempt to interfere on the part of the candidate or his agent or of any other person with the consent of the candidate or his election agent with the free exercise of any electoral right when any such person, as is referred to therein, induces or attempts to induce a candidate or an elector to believe that he or any person in whom he is interested, will become or will be rendered an object of divine displeasure or spiritual censure.
The question is whether in stating that if they voted for the Congress or a Congress candidate, they would be committing the sin of gohatya amounted to an attempt to induce the voters to believe that they would become or would be rendered an object divine displeasure or spiritual censure.
In our opinion a statement of this kind falls within this provision of the section.
It is not necessary to enlarge upon the fact that cow is venerated in our country by the vast majority of the people and that they believe not only in its utility but its holiness.
It is also believed that of the cardinal sins is that of gohatya.
Therefore it is quite obvious that to remind the voters that they would be committing the sin of gohatya would be to.
remind them that they would be 507 objects of divine displeasure or spiritual censure, Kinkarji went beyond the permitted limits of canvassing and exhortation when he added to the legitimate manifesto of his party this observation that by voting for the congress or the congress candidate the voters would be objects of divine displeasure or spiritual censure.
In our opinion both spiritual censure and divine displeasure are implicit in the speeches as made.
The case, therefore, falls clearly within section 123 (2)(ii) of the Representation of the People Act, 1951.
It will be encumbering this judgment if we record the incidents which relate to the election agent, except to say that the election agent Somani made similar speeches and the fact has been well established by reliable evidence.
We are accordingly satisfied that the returned candidate was guilty of corrupt practice and the High Court was right in holding that the election of the returned candidate should be avoided.
We may point out that ,there was a further statement that the congress candidate Manjula Bai ate beef.
Manjula Bai did not appear in the witness box to deny this.
In fact she showed little interest in the election petition and is reported to have left the matter to the elector who filed this petition.
No one on her behalf appeared to deny this fact and therefore we leave the matter there.
We do not express any opinion that any corrupt practice in relation to that statement was committed either in fact or in law.
In the result the appeal must fail.
It will be dismissed with costs.
V.P.E. Appeal dismissed.
| The petitioners were granted in January, 1948, Jagirs and Muafis by the Ruler of Sarila State in one village and by the Ruler of Charkhari State in three villages.
In March, 1948, a Union of 35 States including the States of Sarila and Charkhari was formed into the United State of Vindhya Pradesh.
The Vindhya Pradesh Government confirmed these grants in December, 1948, when its Revenue Officers interfered with them questioning their validity.
The integration of States however did not work well and the same 35 Rulers entered into an agreement in December, 1949, and dissolved the newly created State as from 1st January, 1950, each Ruler acceding to the Government of India all authority and jurisdiction in relation to the Government of that State, the Instrument being called the Vindhya Pradesh Merger agreement.
Article VIII of the Instrument stated: "No enquiry shall be made by or under the authority of the Government of India, and no proceeding shall be taken in ' any Court against the Ruler of any covenanting State, whether in a personal capacity or otherwise in respect of anything done or omitted to be done by him or under his authority during the period of his administration of that State." The States which formed Vindhya Pradesh were transformed into a Chief Commissioner 's Province on 23rd January, 1950.
The four villages (called enclaves) were taken out of this Province on 25th January, 1950, and absorbed into the United Provinces (now Uttar Pradesh) by an Order of the Governor General under the provisions of the Government of India Act, 1935.
The grant of the four villages made in favour of the petitioners in January, 1948, was revoked in August, 1952, by the Government of Uttar Pradesh in consultation with the Government of India, the operative part of the revocation order being made by the Governor of Uttar Pradesh.
Held (i) that the petitioners were entitled to a writ under article 32(2) of the Constitution inasmuch as the order revoking the grant of Jagirs and Muafis in the four villages violated article 31(1) and article 19(f) of the Constitution.
(ii) No State Government has the right to do anything in the nature of an act of State.
(iii) The accessions by the Rulers of States and their acceptance by the Dominion of India were acts of State and no Municipal Court could question their competency.
Article 363 and the proviso to article 131 of the Constitution bars the jurisdiction of Courts in India after the Constitutional to settle any dispute arising out of the accessions and their acceptance.
All that the Courts can do is to register the factum of such accessions.
(iv)The properties in question were properties over which the Rulers had absolute right of disposition at the date of the grants.
The grants were absolute in character and would under any civilised system of law pass an absolute and indefeasible title to the grantees.
Assuming (but not deciding) that they were defeasible at the were will of the sovereign the fact remained that 417 they were neither resumed by the Former Rulers nor confiscated by the Dominion of India as an act of State and up to the 26th of January, 1950, the right and title of the petitioners to continue in possession was good.
The Constitution by reason of the authority derived from and conferred by the people of India destroyed all vestiges of arbitrary and despotic power in the territories of India and over its citizens and lands and prohibited just such acts of arbitrary power as the State in the present case was seeking to uphold.
The Dominion of India and all those who were invited there sat in the Constituent Assembly not as conquerors and conquered, not as those who ceded and as those who absorbed but as the sovereign peoples of India, free democratic equals.
Every vestige of sovereignty was abandoned by the Dominion of India and the States and surrendered to the peoples of the land who framed the new Constitution of India.
(v) Under article 5 of the Constitution all the residents of the then Indian States including the Rulers and people of Sarila and Charkhari, viz., those who made the grants and those who received them and those who were seeking to make the confiscation as an act of State, became citizens of India.
(vi) No sovereign can exercise an act of State against its own subjects and an act of State can never be exercised against one who has always been a citizen from the beginning in territory which has from its inception belonged to the State seeking to exercise that right.
Case law reviewed.
|
vil Appeal Nos.
2050(N) of 1974 and 1026 (N) of 1975.
From the Judgment and order dated 10.10.1969 of the Calcutta High Court in Appeal from Original Decree No. 303 of 1961.
P.K. Chatterjee, and Rathindas for the Appellants in C.A. No. 2050 of 1974.
1113 S.C. Majumdar, P.B. Chatterjee, A.K. Sen and N.R. Choudhary for the Appellants in C.A. NO. 2026 of 1975.
P.K. Banerjee and N.R. Choudhary for the Respondents in C.A. No. 2050 of 1974.
Sukumar Basu for the ReSpondent in C.A. No. 1026 of 1975.
The Judgment of the Court was delivered.by SINGH, J.
These two appeals are directed against the judgment of the High Court of Calcutta dated 10.10.1969 awarding a sum of Rs.18,74,089.75 aS compensation to the claimants.
During the second World War the property in dispute which consisted of an area of 199.04 acres of land situate in village Brindabanpur, District Burdwan in West Bengal was requisitioned by the Collector for the purpose of cohstruc tion of a military aerodrome.
As there was extreme urgency, the authorities took possession of the property on 1, 10.1942 and to regularise the possession the Collector of District Burdwan, West Bengal issued order on 8.6.1943 under subrules (1) (2) and (5) of Rules 75A of the Defence of India Rules 1939 framed under the Defence of India Act 1939 requisitioning the property.
Nirode Kanta Sen the owner of the property, predecessor ininterest of the claimants sub mitted a claim petition to the Collector.
Burdwan, claiming a sum of Rs.1,83,432 as compensation for the property requi sitioned from him.
Later he made another petition claiming further compensation.
and the total claim raised by him amounted to Rs.2,40,720.
The Special Land Acquisition Col lector, Burdwan after making inquiry and local inspection, awarded a sum of Rs.11,878.50 as recurring compensation to the claimant for 1349 to 1359 B.S.i.e.
(1942 to 1952).
The claimant was not satisfied with the amount offered to him he applied for reference, at his instance District Judge, Burdwan was appointed Arbitrator to determine the compensa tion, Nirode Kanta Sen and the State both produced evidence before the Arbitrator.
It appears that Nirode Kanta Sen died, thereafter his two sons, namely, Mihar Kanta Sen and Nirmal Kanta Sen and his widow Smt.
Hiranmoyee Debi were brought on record.
The Arbitrator by his order dated Septem ber 10, 1950 awarded a sum of Rs.444,591 as compensation to the claimants.
The Union of India preferred appeal before the High Court against the Arbitrator 's award, the claimants also preferred cross objection to the appeal.
A Division Bench of the High Court of Calcutta by its order dated 1114 10.10.1969 dismissed the appeal preferred by the Union of India and allowed the claimants ' cross objection by enhanc ing the compensation to a sum of Rs. 18,74,089.75 for the period 1.10.1942 to 1.10.1969.
Aggrieved the Union of India has preferred this appeal (C.A. No. 2050 of 1974) and the claimants have also filed appeal before this Court by spe cial leave being (Civil Appeal No. 1026 of 1975).
Both the appeals were consolidated, heard and are being disposed of by this Judgment.
The requisitioned land was continued in the occupation of the State and it has not been acquired under the provi sions of the Land Acquisition Act, 1894.
The Defence of India Act 1939 and the Rules framed thereunder expired on September 30, 1946, but the requisition of the property continued under the provisions of the Requisition Land (Continuance of Powers) Act 1947.
Subsequently, the 1947 Act was replaced by the Requisitioning and Acquisition of Immov able Property Act, 1952 which continued the requisition of property, made before the commencement of the Act.
Initially the period of requisition was to expire after three years from the date of commencement of the 1952 Act but by subse quent amendments the period of requisition was extended.
The Parliament enacted the Requisitioning and Acquisition of Immovable Property (Amendment) Act 1975 fixing the maximum period for which property could be retained under requisi tion.
It is not necessary to refer to the provisions of this Act, suffice it to notice that the property in dispute which had been requisitioned in 1942 continued to be under requi sition during the relevant period of respect of which the dispute with regard to compensation is involved.
The total area of the requisitioned land was 199.04 acres, out of which an area of about 176.91 acres was full of jungle and forest containing various kinds of trees including Sal trees.
The remaining area was occupied by tank, homestead, road danga and about 50 bighas was culti vated area.
There was a building standing on the land, some quantity of extracted gravels and building material was stacked near the building.
In their statement of claim the claimants stated that they had Patni right in respect of 8 annas and 12 annas share in Mouza Brindabanpur, under a deed of lease in respect of Patni taluk which conferred right to excavate and prospect minerals including stone chips and clay and moorams.
The claimants stated that they had been extracting and selling minerals and Nirode Kanta Sen had built a homestead and also kutcheary on a portion of the land, and building being one storeyed three roomed bungalow made of brick walls and cemented floors.
It was further stated that Wirode Kanta Sen intended 1115 to build a farm house on the land and a factory for the purpose of developing the business of manufacture of bricks from the sub soil clay of very good quality available in the area in dispute.
They further asserted that the entire land had Sal trees which contained valuable timber and forest yielded fuel wood.
Nirode Kanta Sen used to sell sal, murgas as timber and also used to sell fuel wood as produce of the forest.
On these allegations compensation was claimed for cultivated land including land cultivated after reclamation, trees, timber wood and fuel wood, homestead including build ing and fixtures; furniture and other movables within the homestead area; and mooram and other underground deposits including coloured clay.
The claimants further claimed terminal compensation for the destruction of the property which included the homesteads, the building furniture, building material and the mooram which had been taken into possession by the military authorities and for the rest of the items they claimed recurring compensation.
For determin ing fair compensation the Arbitrator categorised the claims so raised under six different heads; 1) Homestead 2)Trees timber, wood and fuel 3) Culturable land including lands cultivated after reclamation 4) Furniture and other movables within the homestead area, 5) Morams excavated from the land and 6) other underground deposits like coloured clay etc.
Before the Arbitrator the State urged that the claimants were not entitled to any recurring compensation as their right, title and interest in the property vested in the State of West Bengal on 15.4.1955 under the provisions of the Bengal Estates Acquisition Act, 1953.
The Arbitrator rejected the State 's plea and determined compensation on the assumption that claimants continued to be owners of the property.
Terminal claim for the building, furniture etc.
was rejected by the Arbitrator on the ground that the claim ants were denied use of the bungalow, so he awarded as recurring compensation on rental basis.
The Arbitrator awarded compensation in respect of other items also, it is not necessary to enter into details, however, in all the Arbitrator awarded a sum of Rs.4,44,581 as compensation to the claimants.
In appeal High Court held that claimants were entitled to terminal compensation as well as to recurring 'compensa tion.
As regards terminal compensation it held that the claimants suffered total loss on account of the destruction of property which included bungalow (Rs.15,000) furniture in bungalow (Rs.500), building material stacked on the ground (Rs.14,500), Sal timber destroyed(Rs:l,60,000), moorams kept on surface (Rs.3,000) and fuel wood destroyed (Rs.7,300).
Thus in all a sum of Rs.2,00,000 was awarded as terminal compensation to the claimants in respect of the aforesaid items.
The 1116 High Court awarded interest on the aforesaid amount at the rate of 4.5 per cent per annum for 27 years with effect from October 1, 1942 to October 1, 1969.
While determining the recurring compensation the High Court held that the claim ants would have derived income from the forest and minerals to the extent of Rs.50,000 per year, In addition to that the High Court further held that the claimants were put to a loss of Rs.650 per annum on account of the requisition of the cultivable land and crop compensation tank and mango trees.
Thus in all the High Court held that the claimants were entitled to a sum of Rs.13,67,550 as recurring compen sation.
It further awarded interest at the rate of 4.5 per cent per annum on the aforesaid amount for a period of 27 years.
Thus in all the High Court awarded a sum of Rs. 18,74,089.75 as compensation to the claimants.
Learned counsel for the appellant urged that the High Court committed error in awarding recurring compensation to the claimants for the period beyond 15.4.1955 as the claim ants ceased to have any right, title or interest in the property in dispute, as the same vested in the State with effect from 15.4.1955 under the provisions of the West Bengal Estates Acquisition Act, 1953.
We find merit in the submission.
Agrarian reform was initiated in the State of West Bengal and with that end in view the West Bengal Es tates Acquisition Act, 1953 (hereinafter referred to as the 1953 Act) was enacted to provide for the acquisition of estates, rights of intermediaries therein and certain rights of raiyat and under raiyat in the land comprised in the estates.
Section 4 lays down that the State Government may by notification declare that with effect from the date mentioned in the notification, all estates and the rights of every intermediary in each such estate situated in any district or part of a district specified in the notifica tion, shall vest in the State free from all incumbrances.
Section 5 provides for publication of notification in the official gazette, in addition to its being published in the newspapers.
Section 5 provides that on publication of noti fication under Section 4 the estate and the rights of inter mediaries in the estate shall vest in the State free from all incumbrances, and all lands in any estate comprised in a forest together with all rights in the trees therein or to the produce thereof, held by an intermediary or any other person shall vest in the State.
Though Section 4(1) con ferred power on the State Government to issue notifications from time to time in respect of any district or part of a district but the legislative intent is evidenced by sub section (2) of Section 4 which ordained that the State shall issue notifications so as to ensure that the entire area to which the Act applies shall be notified, enabling the vest ing of the interest of all intermediaries in the State on or before the 1117 1st day of Baisakh of the Bengali year 1352 e.g. 15.4.1955.
The legislative mandate made it imperative to ensure that right, title and interest of all intermediaries in the State of West Bengal shall be acquired by 15.4.1955.
Intermediary as defined by Section 2(1) includes a proprietor, tenure holder, under tenure holder or any other intermediary above a Raiyat.
An intermediaries ' right, title and interest in the land stood acquired by the State on the issue of notification under section 4 of 1953 Act.
Thereaf ter no intermediary could claim any right, title and inter est in the property.
There is no dispute that Nirode kanta Sen the predecessor in interest of the claimants held a Patnidar interest ' in respect of the property in dispute as is evident from the sale deed dated 20.1.1925 executed, by Senode Behari Roy in favour of Nirode Kanta Sen exhibit 7(b) and sale deed dated 27.10.1921 executed by K.C. Dumaine in favour of Jogendra Kumar Sen (exhibit 7) who executed release deed in favour of Nirode Kanta Sen on 16.12.1927 (exhibit l(a)).
These documents evidenced transfer of Patnidar rights in the property in favour of Nirode Kanta Sen. Under the provisions of the Bengal Patni Regulations VIII of 18 19, holder of a patni deed enjoyed the right of the zamindar unless some limitation was expressly mentioned in the deed.
The interest of a Patnidar was capable of being transferred by sale in the same manner as any other real property.
A patni right holder is a proprietor therefore included within the meaning of intermediary under the Act.
Since Nirode Kanta Sen had patni rights in the property, he was an intermediary and his right, title and interest in the property vested in the S:ate with effect from 15.4.1955 and thereafter Nirode Kanta Sen and his heirs could not claim any right of interest in the property except that they were entitled to receive compensation for the property so acquired in accordance with the provisions of the 1953 Act.
The High Court refused to consider this question on the ground that copies of relevant notifications issued under Section 4 were not on record.
The State had filed copies of relevant notifications before the High Court as additional evidence but the High Court refused to accept the same.
The notifications issued are published in the Gazette, the High Court should have taken judicial notice of the same.
Even though the claimants ceased to have any right or title in the requisitioned property after 15.4.1955 the High Court proceeded to award compensation to the claimants on the assumption that they continued to hold right, title and interest in the property even after 15.4.1955, this was apparently in utter disregard of the legislative mandate contained in Section .4(2) of the 1953 Act.
1118 Learned counsel for the claimants contended that the provisions of the 1953 Act do not apply to the property in dispute which was under requisition in view of the second proviso to Section 3 of the Act.
This is a totally mis conceived submission.
Section 3 provided that the provisions of the Act shall have over riding effect notwithstanding anything to the contrary contained in any other law, con tract, usage or custom to the contrary.
There are two excep tions to this which is contained in the two proviso.
The first proviso lays down that the provisions of the Act shall not apply to any land held by a Corporation, while the second proviso lays down that the Act shall not affect any land possession of which may have been taken by the State Government before issue of notification under Section 4 of the Act e.g. 15.4.1955, in furtherance of any proposal for acquiring the land irrespective of the fact whether any formal proceedings for such acquisition were started or not before the commencement of the Act.
The second proviso is intended to protect the rights of those tenure holders whose land may have been the subject matter of acquisition pro ceedings under any law with a view to protect their right to get compensation.
Since the property in dispute was not under acquisition and the possession of the same had been taken by the State in requisition proceedings, the second proviso has no application.
Learned counsel for the claimants urged that under SeCtion 6 of the 1953 Act the claimants were entitled to retain an area of 75 acres of land with them and therefore they are entitled to recurring compensation with regard to that area even after 15th April 1955.
He placed reliance on the provisions of Section 6(1)(k) which provides for retain ing requisitioned land by intermediary.
Section 6 provides that notwithstanding anything contained in Sections 4 and 5, an intermediary shall be entitled to retain land with effect from the date of vesting, as specified in various sub clauses, which include; land comprised in homestead; land comprised in or appertaining to a building and structure owned by the intermediary; non agricultural land in interme diary 's khas possession not exceeding fifteen acres; agri cultural land in khas possession of the intermediary not exceeding twenty five acres in area, as may be chosen by him; tank fisheries; land comprised in tea gardens or or chards or land used for the purpose of livestock breeding, poultry farming or dairy; land comprised in mills, facto ries, or workshops.
Section 6(1)(k) entities an intermediary to retain so much of requisitioned land as the intermediary may be entitled to retain after taking into consideration may any other land which may be entitled to retain under other clauses of the Section.
These provisions confer right on an intermediary to 'retain land to the extent specified in 1119 the various sub clauses of Section 6(1) even though his right, title and interest in the estate may have vested in the State.
An intermediary is entitled to retain land, only if it falls within one of the various sub clauses of Section 6(1) of the Act.
The claimants ' contention that they are entitled to retain 75 acres of land is rounded on the provi sion of Section 6(1)(d) which relates to agricultural land in the khas possession of intermediary, under that provision an intermediary is entitled to retain twenty five acres of agricultural land which may be in his khas possession.
Since there are three claimants, they are claiming right to retain 75 acres of land.
It is noteworthy that Section 6(1)(d) relates to agricultural land in khas possession of interme diary and not to any other land including forest land.
There is no evidence on record to show that 75 acres of agricul tural land was in the khas possession of the claimants on the date of vesting.
There is further no evidence that the claimants did not possess any other agricultural land apart from that which is the subject matter of the requisition.
In the absence of any such evidence it is not possible to determine the question raised by the claimants in the present proceedings.
If the claimants were entitled to retain any part of the requisitioned land they should have taken proceedings before the appropriate authorities under the provisions of the 1953 Act.
This question cannot be raised for the first time before the Court.
Section 6(1)(k) merely provides that an intermediary is entitled to retain land which may be under requisition to the extent he is entitled to retain, under the various sub clauses of Section 6(1).
Therefore merely because the land is under requisition the claimants being intermediaries are not entitled to retain the same unless they are able to make out their case by leading cogent evidence to show that they were entitled to retain 75 acres of land or any other area under Section 6(1) of the Act.
In the absence of any evidence on record it is not possible to determine the question raised by the claimants in the present proceedings, their contention therefore must fail.
Another submission made for claimants was that the requisitioned land contained minerals, the claimants had been excavating moorams and coloured clay, they are there fore entitled to retain the entire land with them under Section 6 read with Section 23 of the Act.
Section 28 pro vides that so much of an area as was being used by an inter mediary as mine immediately before the date of vesting shall with effect from such date shall be deemed to have been leased by the State Government to such intermediary on such terms and conditions as may be determined by the State Government.
This provision confers right on an intermediary to retain that much of area which may be comprised in a mine provided the mine was being directly worked by him 1120 immediately before the date of vesting.
Before an intermedi ary can claim this right he must first establish that he was directly working mine immediately before the date of vest ing.
If this condition is not fulfilled the intermediary has no right to retain the land or to continue the mining opera tion.
If the mine was operated by a licensee or by some other person the intermediatry would not be entitled to the benefit of Section 28 of the Act.
In Tarkeshwar Sio Thakur Jiu vs Bar Dass Dey & Co. & Ors., this court held that an intermediary can claim benefit of Section 28 of the 1953 Act only if he was himself carrying on the mining operations directly and not through any licensee.
In the instant case there is no evidence on record to show that the claimants were carrying on any mining operations immediately before the date of vesting.
The only evidence which is available on record shows that in some area mooram had been excavated.
But there is no evidence to show as to whether the claimants had themselves excavated the Mooram directly or they had got the same excavated through some other agen cy.
Similarly there is no evidence on record to show that the coloured clay which is a mineral was being prospected or excavated by the claimants themselves directly.
There is further no evidence to show that the claimants were carrying on mining operations directly immediately before the date of vesting.
In this view that claimants are not entitled to any benefit under Section 28 of the Act.
Now reverting to the amount of compensation awarded to the claimants, we find that the High Court has awarded terminal compensation of Rs.2,00,000 to the claimants in respect of bungalow, furniture, factory material, building material, gravel stacked on the ground, sal timbers, on the premise that these were completely destroyed by the military authorities as a result of which the claimants suffered loss.
On the basis of the material available on record the High Court assessed the total loss suffered by the claimants in respect of the aforesaid items and in thereupon held that the claimants were entitled to terminal compensation of Rs.2.00,000.
Learned counsel for the appellant did not challenge the findings of the High Court in this respect, we accordingly uphold the award of Rs.2,00,000 as terminal compensation payable to the Claimants.
The High Court has awarded a sum of Rs.25,000 as recur ring annual compensation on rental basis for sal trees standing over an area of 150 acres of the requisitioned land.
There is no dispute that the sal trees were standing on the aforesaid land at the time of requisition.
The sal trees contain valuable timber its matured trees are sold at good 1121 price.
The High Court has assessed the annual rental value of the sal trees at the rate of Rs.25,000 per year falling to the share of the claimants and has awarded recurring compensation to the claimants on that basis.
We find no good reason to take a different view.
In fact the learned counsel for the appellant did not seriously challenge the finding of the High ' Court in this respect.
There is another item in respect of which the High Court has further awarded recur ring compensation in respect of 50 bighas of cultivable land and crop compensation for50 bighas, tank having an area of 3.96 acres and 22 mango trees.
The High Court has recorded finding that 50 bighas of cultivable land was being used for cultivation and there was another 50 bighas of dang land where paddy crop was being cultivated.
In addition to that there was a tank having an area of 3.96 acres.
The land contained 22 mango trees also.
The High Court has determined total compensation for the aforesaid items at the rate of Rs.650 per annum.
We find no infirmity in the High Court 's order warranting interference.
Thus the claimants are enti tled to recurring compensation of Rs.25,650 per year in respect of sal forest, agricultural land, tank and mango trees.
with effect from October, 1,1942 to April 15, 1955.
The High Court has awarded recurring annual compensation to the claimants for the underground deposits of Mooram and coloured Clay.
The claimants did not produce any evidence to show that Moorams and Coloured Clay was available in the entire area or in a particular area of the requisitioned land.
No evidence was produced to indicate the quality of Moorams and Coloured Clay or the actual loss which the claimants sustained.
In the absence of any evidence the High Court on conjuncture held that 50 cft of Mooram could be extracted in one acre and on that basis Mooram could be extracted over.
a period of 10 years from 160 acres.
On this assumption it held that the claimants could have exca vated 10,00,000 cft of Mooram per year and the same could be sold at the rate of Rs.1 per 100 cft.
On that basis of claimants could have derived income of Rs.10,000 each year.
The High Court then proceeded that land could be settled for Mooram extraction to a willing party at an annual rent payable to the claimants at the rate of Rs.5,000.
On these findings the High Court awarded a sum of Rs.5,000 as recur ring annual compensation to the claimants.
There is no evidence on record to show that Mooram was available over the entire area of 160 acres.
There is further no evidence to show that claimants had let out right to excavate Mooram to any one or that they had been deriving any recurring income each year.
In the absence of any such evidence.
no recurring compensation could be granted to the claimants.
Recurring compensation is granted to make good the loss which 1122 the owner may suffer.
If the owner fails to prove recurring annual loss.
he could not be entitled to recurring compensa tion for the requisitioned property.
The High Court commit ted error in awarding recurring compensation of Rs.5,000 per year for the Moorams.
The High Court has held that the Coloured Clay was available in the requisitioned land, which could be used for industrial purposes and for which Nirode Babu intended to set up a factory.
The High Court proceeded on the assumption that the claimants would have extracted at least 200 cft Coloured Clay per every 500 cft of excavation which would have been utilised for manufacturing bricks, mercilised tiles and potteries which would have brought net annual income to the claimants to the extent of Rs.20,000 per year.
The High Court had no evidence before it with regard either to the area or the quality, or the quantity of the coloured clay available in the requisitioned land.
The claimants led no evidence with regard to the loss of income which they may have suffered.
Learned counsel for the claimants failed to point out any evidence on record to support the findings of the High Court with regard to the coloured clay.
In this view, the High Court committed error in awarding a sum of Rs.20,000 per annum as recurring compensation for the co loured clay.
In their appeal the claimants have raised a grievance that the High Court has awarded interest only at the rate of Rs.4.1/2 per cent which is wholly illusory.
In their objec tion the claimants had raised a claim for interest at the rate of 6 per cent per annum.
Having regard to the facts and circumstances of the case we are of the opinion that the claimants are entitled to interest on the amount of compen sation payable to them at the rate of 6 per cent per annum, from the date of taking over possession 1.10.1942 till the date of payment.
For the reasons stated above we allow both the appeals partly and modify the order of the High Court to the extent that the claimants are entitled to a sum of Rs.2,00,000 as terminal compensation and also to a sum of Rs.25,650 as recurring compensation, in respect of the sal trees and agricultural land etc., per annum with effect from 1.10.1942 to 15.4.1955.
The claimants are also entitled to interest on the aforesaid amount at the rate of 6 per cent per annum from the date of requisition till the date of payment.
In the circumstances of the case parties shall bear their own costs.
A.P.J. Appeals partly allowed.
| During the Second WOrld War the property in dispute was requisitioned by the Collector for the purpose of construc tion of a military aerodrome.
As there was extreme urgency, the possession of the property was taken on 1 10 1942 and to regularise the possession the Collector issued an order on 8 6 1943 under sub rules (1), (2) and (5) of Rule 75A of the Defence of India Rules, 1939 framed under the Defence of India Act, 1939 requisitioning the property.
The owner of the property, predecessor in interest of the claimants, submitted claim petitions claiming a total sum of Rs.2,40,720 as compensation.
The Special Land Acquisition Collector awarded a sum Of Rs.11,878.50 as recurring compe nation for 1349 to 1359 B.S. i.e. (1942 to 1952).
The Dis trict Judge acted as Arbitrator to determine the compensa tion and he awarded a sum of Rs.4,44,691 as compensation, The Union of India preferred appeal and the claimants pre ferred cross objection to the appeal in the High Court against the Arbitrator 's award.
The Division Bench dismissed the appeal and allowed the cross objection by enhancing compensation to Rs.18,74,089.75 for the period 1 10 1942 to 1 10 1969.
In the appeal to this Court on behalf of the appellant Union it was contended that the High Court committed error in awarding recurring compensation to the claimants for the period beyond 15 4 1955 as the claimants ceased to have any right, title or interest in the property in dispute, as the same vested in the State with effect from 15 4 1955 under the provisions of the West Bengal Estates Acquisition Act, 1953.
1109 On behalf of the claimants respondents it contended: (i) that the provisions of the 19S3 Act do not apply to the property in dispute which was under requisition in view of the second proviso to section 3 of the Act; (ii) that under section 6 of the 19S3 Act the claimants were entitled to retain an area of 75 acres of land with them and, therefore, they are entitled to recurring compensation with regard to that area even after 15th April,1955 (iii) that the requisitioned land contained minerals, the claimants had been excavating moo rams and coloured clay, they are, therefore.
entitled to retain the entire land with them under section 6 read with section 28 of the Act and (iv) that they should get interest at the rate of 6% per annum.
Allowing the Appeals partly.
HELD: 1.
The claimants are entitled to a sum of Rs.2.00,000 as terminal compensation and also a sum of Rs.25,650 as recurring compensation.
in respect of the Sal trees and agricultural land etc. per annum with effect from 1 10 1942 to 15 4 1955.
The claimants are also entitled to interest on the aforesaid amount at the rate of 6% per annum from the date of requisition till the date of payment.
[1122G H] 2.
Agrarian reform was initiated in the State of West Bengal and with that end in view the West Bengal Estates Acquisition Act, 1953 was g.acted to provide for the acqui sition of estates.
rights of intermediaries theresa and certain rights of raiyat and under raiyat in the land com prised, the estates.
Though section 4(1) of the Act conferred power on the State Government to issue notifications from time to time in respect of any district or part of a dis trict but the legislative intent is evidenced by sub section
(2) of section 4 which ordained that the State shall issue notifica tions so as to ensure that the entire area to which the Act applies shall be notified.
enabling the vesting of the interest of all intermediaries in the State on or before the first day of Baisakh of the Bengali year 1362 e.g. 15 4 1955.
The legislative mandate made it imperative to ensure that right.
title and interest of all intermediaries in the State of West Bengal shall be acquired by 15 4 1955.
[1116D Es G H; 1117A] 3.
In the instant case.
since the predecessor in inter est of the claimants had patni rights in the property.
he was an intermediary as defined by section 2(1) of the Act and his right, title and interest in the property vested in the State with effect from 15 4 1955 and thereafter he and his heirs could not claim any right or interest in the property except that they were entitled to receive compensation for the property so acquired in accordance with the provisions of the 1953 Act.
[1117E F] 1110 4.
Even though the claimants ceased to have any right or title in the requisitioned property after 15 4 1955 the High Court proceeded to award compensation to the claimants on the assumption that they continued to hold right.
title and interest in the property even after 15 41955.
this was apparently in utter disregard of the legislative mandate contained in section 4(2)of the 1953 Act.
[1117G H] 5.
Section 3 provides that the provision Of the Act shall have over riding effect notwithstanding anything to the contrary contained in any other law contract usage or custom to the contrary.
There are two exceptions to this which are contained in the two provisos.
The first proviso lays down that the provisions of the Act shall not apply to any land held by a Corporation.
while the second proviso lays down that the Act shall not affect any land possession Of which may have been taken by the State Government before issue of notification Under section 4 of the Act e.g. 5 4 1955, in fur therance of any proposal for acquiring the land irrespective of the fact whether any formal proceedings for such acquisi tion were started or not before the Commencement of the Act.
The second proviso is intended to protect the rights of those tenure holders whose land may have been the subject matter of acquisition proceedings under any law with a view to protect their right to get compensation.
Since the property in dispute was not under acquisition and the pos session of the same had been taken by the State in requisi tion proceedings, the second proviso has no application, [1118B D] 6.
Sections 4 to 6 of the Act confer right on an inter mediary to retain land to the extent specified in the var ious sub clauses of section 6(1) even though his right.
title and interest in the estate may have vested in the state.
An intermediary is entitled to retain land.
only if it fails within one of the various sub clauses of section 6(1) of the Act.
The claimants ' contention that they are entitled to retain 75 acres of land is rounded on the provisions of section 6(1)(d) which relates to agricultural land in the khas possession of intermediary.
under that provision as intermediary is enti tled to retain 25 acres of agricultural land which may be in his khas possession.
Since there are three claimants, they are claiming rights to retain 75 acres of land.
It is note worthy that section 6(1)(d) relates to agricultural land in khas possession of intermediary and not to any other land includ ing forest land.
There is no evidence on record to show that 75 acres of agricultural land was in the khas possession of the claimants on the date of vesting.
There is further no evidence that the claimants did not possess any other agri cultural land apart from that which is the subject matter of the requisition.
In the absence of any such evidence it is not possible to determine the question raised by the claim 1111 ants in the present proceedings.
If the .claimants were entitled to retain any part of the requisitioned land they should have taken proceedings before the appropriate author ities under the provisions of the 1953 Act.
This question cannot be raised for the first time before this Court.
Section 6(1)(k) merely provides that an intermediary is entitled to retain land which may be under requisition to the extent he is entitled to retain, under the various sub clauses of section 6(1).
Therefore, merely because the land is under requisition the claimants being intermediaries are not entitled to retain the same unless they are able to make out their case by leading cogent evidence to show that they were entitled to retain 75 acres of land or any other area under s, 6(1) of the Act.
[1118H; 1119A F] 7(i) Section 28 provides that so much of an area as was being used by an intermediary as mine immediately before the date of vesting shall with effect from such date be deemed to have been leased by the State Government to such interme diary on such terms and conditions as may be determined by the State Government.
This provision confers right on an intermediary to retain that much of area which may be com prised in a mine provided the mine was being directly worked by him immediately before the date of vesting.
Before an intermediary can claim this right he must first establish that he was directly working mine immediately before the date of vesting.
If this condition is not fulfilled the intermediary has no right to retain the land or to continue the mining operation.
If the mine was operated by a licensee or by some other person the intermediary would not be enti tled to the benefit of section 28 of the Act.
[1119G H; 1120A B] Tarkeshwar Sio Thakur Jiu vs Bar Dass Dey & Co. & Ors.
, referred to.
7(ii) In the instant case, there is no evidence on record to show that the claimants were carrying on any mining operations immediately before the date of vesting.
The only evidence which is available on record shows that in some area mooram had been excavated, But there is no evi dence to show as to whether the claimants had themselves excavated the Mooram directly or they had got the same excavated through some other agency.
Similary there is no evidence on record to show that the coloured clay which is a mineral was being prospected or excavated by the claimants themselves directly.
There is further no evidence to show that the claimants were carrying on mining operations di rectly immediately before the date of vesting.
In this view that claimants are not entitled to any benefit under section 28 of the Act.
[1120C E] 1112 8.
The finding of the High Court with regard to the award of Rs.2,00,000 as terminal compensation payable to the claimants is upheld [1120G] 9.
The High Court has recorded finding that 50 bighas of cultivable land was being used for cultivation and there was another 50 bighas of dang land where paddy crop was being cultivated.
In addition to that then was a tank having an area of 3.96 acres.
The land contained 22 mango trees also.
The High Court has determined total compensation for the aforesaid items at the rate of Rs.650 per annum.
There is no infirmity in the High Court 's Order.
Thus the claimants are entitled to recurring compensation of Rs.25,650 per acre in respect of Sal forest, agricultural land, tank and mango trees.
with effect from October, 1, 1942 to April 15. 1955.
[1121B D] 10(i) Recurring compensation i6 granted to make good the loss which the owner may suffer.
If the owner fails to prove recurring annual loss.
he could not he entitled to recurring compensation for the requisitioned property.
[112 1H; 1122A] 10(ii).
The High Court has awarded recurring annual compensation to the claimants for the underground deposits of mooram and coloured clay.
The claimants did not produce any evidence to show that moorams and coloured clay was available in the entire area or in a particular area of the requisitioned land.
No evidence was produced to indicate the quality of moorams and coloured clay or the actual loss which the claimants sustained.
In the absence of any such evidence, no recurring compensation could be granted to the claimants.
The High Court committed error in awarding annual recurring compensation of Rs.5,000 for the moorams and Rs.20,000 for the coloured clay.
[112 1D E; 1122D] 11.
Having regard to the facts and circumstances of the case it is held that the claimants are entitled to interest on the amount of compensation payable to them at the rate of 6% per annum from the date of taking over possession 1 10 1942 till the date of payment.
[1122G]
|
Civil Appeal No. 732 of 1975.
Appeal by Special Leave from the Judgment and Order dated the 19th March, 1975 of the Allahabad High Court in Civil Misc.
Writ No. 5935 of 1974.
R. K. Garg, section C. Agarwala, V. J. Francis, T. M. Ansari for the Appellants.
M. C. Bhandare, R. Nagarathnam, section Bhandare, for Respondent No. 1.
The Judgment of the Court was delivered by ALAGRISWAMI, J.
To fill up a casual vacancy in the office of the President of the Municipal Board, Soron in the district of Etah in Uttar Pradesh, the District Magistrate issued notices to he members of the Board informing them that nomination papers should be filed in his of lice by 26th of September, 1974 and if necessary the election will take place on 1st October, 1974.
The 1st respondent thereupon filed a petition under Article 226 of the Constitution challenging the validity of the procedure adopted by the District Magistrate for holding the election and prayed for an order to the District Magistrate not to hold the election on 1st October, 1974.
The election programme had been notified in the U.P. Gazette dated 21 9 74 but it was published in the Gazette dated 24 9 74.
The objection to the procedure for election was based on the allegation that it did not conform to the provisions of Rule 6 of the U.P. Municipalities (Conduct of Election of Presidents and Election Petitions) Order, 1964, which reads as follows: "6.
Appointment of date for nomination, etc. (1) As soon as may be after the election of members of a board is completed at a general election within the meaning of section 43 of the Act or a equal vacancy occurs in the office of President of a board.
the District Magistrate shall, by notification in the official Gazette, appoint for the election to the office of President of the Board.
(a) the date for making nominations which shall be a date at least four days after the date of notification; and (b) the date for scrutiny of nominations which shall be me date next following the date fixed under clause (a); and (c) the last date for withdrawal of candidatures which shall be the third day after the date fixed for scrutiny of nominations; and 811 (d) the date on which and the hours during which a poll shall, if necessary, be taken: Provided that the date for taking the poll shall be a date not more than five days after the last date fixed under clause (c) .
(2) on the issue of notification under sub para (1), the Returning Officer shall give public notice of the election in Hindi in form I by affixing a copy of the notice at his office and another copy at the office of the Board and in such other manner, if any, as he may think fit and shall also cause to be dispatched by post under certificate of posting a copy of the notice to the last known address of each member.
" Though there was a prayer in the writ petition for all order to the District Magistrate not to hold the election on 1 10 74 the learned Judges who admitted the writ petition directed that the election would be subject to ultimate decision in the writ petition.
Consequently the election took place on the 1st of October and the 1st Appellant was declared elected.
Thereafter the 1st respondent filed an application for impleading the 1st appellant and the Municipal Board as parties and also claimed a further relief for quashing the election proceedings that took place on the 1st of October, 1974.
The learned Judges allowed the petition and set aside the entire election proceedings relating to the election of the 1st Appellant as the President of the Municipal Board.
We are of the opinion that the whole approach of the learned .
Judges of the High Court to this problem was mistaken.
After the decision of this Court in N. P. Ponnuswami vs Returning Officer, Namakkal Constituency & Ors.(1), there is hardly any room for Courts to entertain applications under Article 226 of the Constitution in matters relating to elections.
Before dealing with this question we may set out section 43 B of the U.P. Municipalities Act, which is the provision of law dealing with cases where the election of the President is questioned: "43 B. Judicial officer to decide the question of validity of election to the office of President. (1) No election of the President shall be called in question except by any election petition presented in accordance with the provisions of this Act.
(2) An election petition may be presented by any member entitled to vote at the election or by a candidate who has been defeated at the election on one or more of the following 'grounds, that is to say (a) that the returned candidate has committed any corrupt practice within the meaning of section 28; (1) ; 812 (b) that the nomination of, any candidate has been wrongly rejected, or the nomination of the successful candidate or any other candidate who has not withdrawn his candidature has been wrongly included; (c) that the result of the election has been materially affected by (i) the improper rejection or refusal of a vote, or (ii) any non compliant with the provisions of this Act or of any rules or orders made under this Act.
(3) An election petition shall be presented to the District Judge, or in a district where there is no headquarters of the District Judge, to the Civil Judge, within whose jurisdiction the municipality to which the election petition relates is situate: Thus the only way by which the election of a President can be called in question is by means of an election petition Presented in accordance with the provisions of this Act.
The election itself can be questioned only on one of the three grounds mentioned above.
The only ground in the present case on the basis of which the election of the appellant was questioned is that there was a non compliance with the provisions of rule 6, already referred to.
Under the Act the non compliance with any rule or order made under the Act or any provision of the Act does not ipso facto result in the election being set aside.
That result can be set aside only if the election Tribunal comes to the conclusion that the result of the election has been materially affected by such noncompliance.
The jurisdiction to decide the validity of the election of a President is an exclusive one conferred on the District Judge.
In the circumstances there was no room for the High Court exercising its powers under Article 226 in order to set aside the election.
In keeping aside the election the High Court plainly erred because it did not consider whether the result of the election had been materially affected by non compliance with the rule in question.
In any case that is a matter within the exclusive jurisdiction of the District Judge.
As early as 1928 in its decision in Desi Chettiar vs Chinnasami Chettiar(1) the Madras High Court observed: "It is clear that there is another side of the question to be considered, namely, the inconvenience to the public administration of having elections and the business of Local Boards held up while individuals prosecute their individual grievances.
We understand the election for the elective seats in this Union has been held up since 31st May because of this petition, the result being that the electors have been unable since then to have any representation on the Board, and the Board is functioning, if indeed it is functioning, with a mere (1) A. 1.
R. 813 nomination fraction of its total strength; and this state of affairs the petitioner proposes to have continued until his own personal grievance is satisfied".
These observations were quoted with approval by this court in Ponnuswami 's case (supra) In that decision this Court arrived (supra).
In that decision this Court arrived at the following conclusions: "(1) Having regard to the important functions which the legislatures have to perform in democratic countries, it has always been recognised to be a matter of first importance that elections should be concluded as early as possible according to time schedule and all controversial matters and all disputes arising out of elections should be postponed till, after the elections are over, so that the election proceedings may not be unduly retarded or protracted.
(2) In conformity with this principle, the scheme of the election law in this country as well as in England is that no significance should be attached to anything which does not affect the "election"; and if any irregularities are committed while it is in progress and they belong to the category or class which, under the law by which elections are governed, would have the effect of vitiating the "election" and enable the per son affect ed to call it in question, they should be brought up before a special tribunal by means of an election petition and not be made the subject of a dispute before any court while the election is in progress.
" In absence of any express provisions in the Act to the contrary these principles are applicable equally to cases of elections to local bodies also.
This Court also pointed out that the right to vote or stand as a candidate for election is not a civil right but is a creature of statute or special law and must be subject to the limitations imposed by it.
It referred to the decision in Wolverhampton New Water Works Co. vs Hawkesford(1) where it had been held: "There are three classes of cases in which a liability may be established founded upon statute.
One is, where there was a liability existing at common law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law; there, unless the statute contains words which expressly or by necessary implication exclude the common law remedy, the party suing has his election to pursue either that or the statutory remedy.
The second class o cases is, where the statute gives the right to sue merely, but provides not particular form of remedy: there, the party can only proceed by action at common law.
But there is a third class, viz., where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy (1) 814 for enforcing it.
The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class.
The form given by the statute must be adopted and adhered to." and after referring to the provisions of the Representation of the People Act pointed out that it will be a fair inference that the Act provides for only one remedy, that remedy being by an election petition to be presented after the election is over, and there is no remedy provided at any intermediate stage.
This Court also held that the word 'election ' connotes the entire procedure to be gone through to return a candidate whenever we talk of elections in a democratic country.
It follows that the right to vote or stand for election to the office of the President of the Municipal Board is a creature of the statute, that is, the U.P. Municipalities Act and it must be subject to the limitations imposed by it.
Therefore, the election to the office of the President could be challenged only according to the procedure prescribed by that Act and that is by means of an election petition presented in accordance with the provisions of the Act and in no other way.
The Act provides only for one remedy, that remedy being an election petition to be presented after of the election is over and there is no remedy provided at any intermediate stage.
These conclusions follow from the decision of this Court in Ponnuswami 's case (supra) in its application to the facts of this case.
But the conclusions above stated were arrived at without taking the.
provisions of Article 329 into account.
The provisions of Article 329 are relevant only to the extent that even the remedy under Article 226 of the Constitution is barred as a result of the provisions.
But once the legal effect above set forth of the provision of law which we are concerned with is taken into account there is no room for the High Courts to interfere in exercise of their powers under Article 226 of the Constitution.
Whether there can be any extraordinary circumstances in which the High courts could exercise their power under Article 226 in relation to elections it is not now necessary to consider.
All the considerations applied in coming to the conclusion that elections to the legislatures should not be delayed or protracted by the interference of Courts at any intermediate stage before the results of the election are over apply with equal force to elections to local bodies.
| By an order dated 31st December, 1968, the sales tax officer found from the turnover of the respondent firm as revealed from the quarterly returns filed by the assessee that is disclosed an assessable income.
He proceeded to make a provisional assessment in respect of the portion of the assessment year 1968 concerned purporting to act under section 7A of ' the U.P. Sales Tax Act.
The respondent challenged the same before the High Court praying that the sales tax officer had no jurisdiction to make a provisional assessment, because the assessee had in fact filed a return.
The High Court of Allahabad accepted the contention and quashed the order of the sales tax officer.
The High Court hold that as conditions mentioned in section 7(3) did not apply to the facts of the case in as much as it was not a case in which the assessee had not filed a return at all, no assessment could have been made by the sales tax officer.
Allowing the appeal by special leave, ^ HELD: Section 7A clearly authorises the assessing authority to make provisional assessment in respect of the assessment year to the best of his judgment, and does not contain any pre conditions at all.
On the other hand it applies the provisions of the Act which includes the provisions of section 7(3) which is the provision that confers power on the assessing authority to make an assessment to the best of his judgment.
It is true that sub rule (3) of rule 41 contains a provision that the provisional assessment to the best of the judgment can be made where no return is submitted, but this rule has to be read as supplemental to the provisions of the parent Act.
What this rule implies is that whether the return is filed by the assessee or not, the assessing authority will have the power to make provisional assessment.
There is no inconsistency between section 7A and rule 41(3) of the Rules framed under the Act.
[778 A B, D F]
|
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]
|
Appeal No. 13 of 1966.
Appeal from the judgment and order dated January 13, 1964 of the Punjab High Court, Circuit Bench at Delhi in Civil Writ No. 557 D of 1961.
M.P. Vashi, Dalip K. Kapur,, S.V. Tambwekar and A. G. Ramaparkhi, ,for the appellant.
D. Narsaraju, R.M. Mehta and S.P. Nayar, for the respondents.
The Judgment of the Court was delivered by Hegde, J.
In this appeal by certificate though.
several contentions were raised in the memo of appeal only two of them were pressed at the time of hearing.
They are: (1) under the circumstances of the case the confiscation ordered by the Collector, Central Excise is illegal and (2) under any circumstance he could not have confiscated the entire quantity of tobacco used in the mixture.
The appellants are tobacco merchants in Dashrath village near Baroda in Gujarat State.
At the relevant time they were holding Central Excise licence in form L 2 and L 5 for the purpose of storing, selling and processing duty paid and non duty paid tobacco.
They had their own duty paid and non duty paid godowns.
In about December 1958 according to their books they possessed the following lots of different varieties of tobacco.
variety of tobacco Quantity Rate of duty Veriety of tobacco Quantity Rate of duty Bmds.
Rs. Biri Patti " 251.8 1.20 np per Ib Stems Kandi " 287.20 0.50 Do.
Rava " 1326.14 0.50 Do.
Stalk Kandi " 57.20 0.06 Do.
582 On December 13, 1958 the appellants obtained permission from the Local Central Excise authorities to mix the above lots of tobacco.
The percentage of different varieties of tobacco when mixed would have been as under: Rava 68.97 % Stems Kandi 14.86 % Biri Patti 13.07 % Stalk Kandi 3.00% On December 23, 1958 when the process of mixing was still going on the Superintendent of Central Excise, Preventive Headquarters, Baroda and his party raided the duty paid premises of the appellants.
There he seized the entire mixture tobacco weighing Mds.
2004.3 srs.
i.e. 1,64,834.50 lbs.
of tobacco.
According to that Superintendent when experiments were conducted he found in the above mixture percentage of different varieties as under: Rava 44 % Biri Patti 51.50 % Stems Kandi 3 .74 % From this he concluded that 'considerable quantity of non duty paid Biri Patti tobacco had been utilised in the manufacture of the mixture.
Hence notice was issued to the appellants on January 6, 1959 to show cause why action should not be taken against them under rule 40 of the Central Excise Rules 1944 inasmuch as they brought into duty paid premises 60,770 lbs.
of Biri Patti tobacco without payment of duty.
It was also alleged in that notice that the appellants had removed certain quantity of Rava tobacco from L 2 premises.
The appellants submitted their reply on March 13, 1959.
At the hearing before the Collector as the appellants challenged the correctness of the experiments conducted by the Superintendent, Central Excise, the Collector himself in the presence of the appellants conducted a fresh experiment.
On the basis of that experiment he came to the conclusion that the results obtained by the experiment conducted by the Superintendent, Central Excise are by and large correct.
By his order dated April 13, 1959, the Collector, Central Excise held the appellants guilty of contravening rule 40 and consequently levied on them a penalty of Rs. 2,000 as well as the duty payable under law.
He also ordered the confiscation of the seized tobacco weighing 1,64,834.50 lbs.
But he gave an option to the appellants of redeeming the same on payment.
of a fine of Rs. 1 lac.
The appellants paid the amount of fine.
under protest and got the goods released.
Thereafter they moved the High Court of Bombay under article 226 of the Constitution for quashing the order of the Collector but that application was withdrawn as the appellants first 583 wanted to exhaust their remedy under the Central Excise Act.
The appellants unsuccessfully went up in appeal and thereafter in revision under the Central Excise and Salt Act, 1944 against the order of the Collector.
After the 3rd respondent dismissed their revision petition they filed in the High Court of Punjab at Delhi Civil Writ No. 557 D of 1961 challenging the legality of the order made by the Collector of Central Excise on April 13, 1959.
That petition was dismissed by a Division Bench of that Court on January 13, 1964.
This appeal is brought against that decision.
in this Court the finding of the Collector of Central Excise that the appellants were guilty of mixing the duty paid tobacco with non duty paid tobacco and thereby they contravened rule 40 was not challenged.
Nor was there any dispute about the quantity of non duty paid tobacco used in the mixture.
The main contention of Mr. M.P. Vaish, learned Counsel for the appellants was that under rule 40, the Collector could not have confiscated the tobacco mixture as it consisted of both duty paid tobacco as well as tobacco on which duty had not been paid.
His alternative contention was that under any circumstance the Collector could not have confiscated anything more than 60,770 ' lbs.
of the mixture which can be said to represent Biri Patti tobacco on which duty had not been paid.
In support of his first contention he heavily relied on the decision of K.T. Desai, J. in Messrs. Valitmahomed Gulamhusain Sonavala & Co. vs C.T. A. Pillai (1).
The seized tobacco mixture weighed 1,64,834.50 lbs.
That included 60,770 lbs.
of Biri Patti tobacco on which duty had not been paid.
But on the remaining quantity duty had been paid.
The tobacco seized was found in the godown licenced to store duty paid tobacco.
Hence the appellants were clearly guilty of contravening rule 40 of the Central Excise Rules which reads: "Except as provided in the proviso to sub rule (1) of rule 32 and in rule 171 no wholesale purchaser of unmanufactured tobacco for the purpose of trade or manufacture and no wholesale purchaser of other unmanufactured products from a curer shall receive into any part of his premises or into his custody or possession, any unmanufactured tobacco or other unmanufactured products, other than tobacco or other unmanufactured products imported from a foreign country otherwise than under a valid permit granted by an officer showing that the proper duty has been paid; and every such wholesale purchaser who receives or has in his custody or possession any such goods, in contravention of this rule shall, in respect of every such offence, be liable to pay the duty leviable on such (1) (1960) 42 B.L.R., p. 634.
584 goods, and to a penalty which may extend to two thousand rupees, and the goods shall also be liable to confiscation." .lm0
In view of this rule the legality of the order made by the Collector in so far as he levied duty as well as penalty cannot be challenged and was not challenged before us.
But so far as the confiscation is concerned ' it was urged that under the rule in question only tobacco on which duty had not been paid could alone have been confiscated.
In the instant case even according ,to the finding of the Collector only on 66,770 lbs.
of Biri Patti tobacco the duty had not been paid; but on the remaining tobacco seized duty had been paid, it was not possible to separate the duty paid tobacco from the non duty paid tobacco; hence it was impermissible for the Collector to confiscate the said tobacco under Rule 40 as that rule permitted the confiscation of only non duty paid tobacco.
In Sonavala 's case(1) referred to earlier Desai, J. had held that the right to confiscate smuggled goods under section 167(8) of the does not carry with it the right to confiscate unsmuggled goods.
The words "such goods ' appearing in section 167(8) of the Act cannot be interpreted .to mean similar goods.
It is not open to the Customs authorities to confiscate similar goods even though they may be of the same quality, bulk and value.
The words 'such goods ' mean the very goods which have been smuggled.
If the smuggled goods lose their identity, it would not be open to the Customs officers to confiscate any part of those goodS.
Where, therefore, gold that has been smuggled has in the melting process got so mixed up with gold that is unsmuggled that it is impossible to separate the smuggled gold from the unsmuggled one, the right to confiscate smuggled gold ceases when the two get inextricably mixed up.
The broad proposition laid down by Desai, J. undoubtedly supports the contention advanced on behalf of the appellants.
We shall presently show that this statement of the law is not correct but it is necessary to mention at this juncture that in the Sonavala 's case(1) an innocent third party had purchased the smuggled gold for proper value and mixed the same with unsmuggled gold, which circumstance had an important bearing on the decision of the case.
In Institutes of Justinian at page 104 dealing with the topic commixtio it is observed: "If the things mixed, still remaining the property of their former owners, were easy to separate again, as for instance, cattle united in one herd, when one owner brought his claim by vindicatio 'his property was restored to him without difficulty but if there was difficulty in separating the materials from each other, as in dividing the grains of wheat in a heap, the obvious (1960) 42 B.L.R.p.
585 mode would be to distribute the whole heap in shares proportionate to the quantity of wheat belonging to the respective owners.
But it might happen that the wheat mixed together was not all of the same quality, and therefore the owner of the better kind of wheat would lose by having a share determined in amount only by the quantity of his wheat; and the judge therefore was permitted to exercise his judgment how great an addition ought to be made to his share to compensate for the superior quality of the wheat originally belonging to him.
" In Williams on Personal Property (18th Edn.) at p. 50, it is observed: "The acquisition of ownership by accession or confusion of substances also presupposes a previous title.
Thus the young of a domestic animal belong to the owner of the mother.
If any substances, for instance tallow, belonging to.
various owners be mixed by consent or accidentally, the mass appears to belong to the owners of its parts in common.
And if the confusion be made wilfully by one without the other 's leave, the mass belongs to the latter, whose ownership is thus unlawfully invaded." Dealing with the same topic it is observed in Halsbury 's Laws of England 3rd Edn.
(Vol. 29) at p. 378.
"Ownership of goods may be acquired by confusion or intermixture, if the goods, when mixed, are indistinguishable.
If the goods are mixed by agreement or consent the proprietors have an interest in common in proportion to their respective shares; if mixed by accident or the act of a third party, or which neither owner is responsible, the proprietors become owners in common of the mixed property in proportion to the amounts contributed.
Where, however, one man wilfully mixes his goods with those of another without the approbation or knowledge of the other, the whole be longs to the latter.
" The law on this topic was stated by Bovill, C.J. as early as 1868 ' in Spence and Anr.
vs The Union Marine Insurance Co. Ltd.(1) thus: "In our own law there are not many authorities to be found upon this subject but, as far as they go, they are in favour of the view, that, when goods of diffe (1) Law Reports (Common Pleas) 3, 1867 68.
586 rent owners become by accident so mixed together as to be undistinguishable, the owners of the goods so mixed become tenants in common of the whole, in the proportions which they have severally contributed to it.
The passage cited from the judgment of Blackburn, J., in the case of the tallow which was melted and flowed into the sewers, is to that effect: Buckley vs Gross.
And a similar view was adopted by Lord Abinger in the case of the mixture of oil by leakage on board ship in Jones vs Moore. ' "It has been long settled in our law, that where goods are mixed so as to become undistinguishable, by the wrongful act or default of one owner, he cannot recover, and will not be entitled to his proportion, or any part of the property, from the other owner, but no authority has been cited to shew that any such principle has ever been applied, nor indeed could it be applied, to the case of an accidental mixing of the goods of the two owners; and there is no authority nor sound reason for saying that the goods of several persons be the property of their several owners, and become bona vacantia.
" The same principle was again reiterated by the House of Lords in Smurthwaite and Ors.
vs Hannay and Ors.(1) The rules enunciated above are of assistance in finding out a solution to the problem before us though they do not govern the same.
In the instant case there is no doubt that the appellants were guilty of an unlawful act in mixing duty paid tobacco with the non duty paid tobacco but the fact remains that they were the owners of both those lots at the time they mixed them and hence the legal principles set out earlier do not cover such a case.
It must also be remembered that in dealing with a provision relating to forfeiture we are dealing with a penal provision.
It would not be proper for us to extent the scope of that provision by reading into it words which are not there and thereby widen the scope of the provision relating to confiscation.
Rule 40 permits the Central Excise authorities to confiscate only those goods on which duty has not been paid.
It does not permit them either specifically or by necessary implication to confiscate other goods.
Therefore it was not permissible for the Collector to confiscate the entire tobacco mixture.
At the same time no person can be permitted to benefit by his wrongful act.
No rule of law should be so interpreted as to permit or encourage its circumvention.
If by the wrongful act of a party he renders it impossible for the authorities to confiscate under rule 40 the non (1) [1894] A.C.p.
587 duty paid goods it is in our opinion open to those authorities to confiscate from out of the goods seized, goods of the value reasonably representing the value of the non duty paid goods mixed in the goods seized.
Applying that rule to the facts of this it follows that the Collector, Central Excise could have confiscated out of the tobacco seized,.
much of it as can be held to reasonably represent the value of the tobacco on which the duty had not been paid.
As noticed earlier the tobacco confiscated had been returned to the appellants after realising from them a sum of Rs 1 lac as fine.
The Counsel for the parties agreed at the hearing that the ' value of the Biri Patti tobacco used in the mixture for which no duty had been paid could be fixed at Rs. 35,000.
In view of this agreement it is not necessary for us to remit the case back to the Collector of Central Excise for assessing the value of the tobacco on which duty had not been paid.
In view of our earlier findings the fine to be levied on the appellants in lieu of the confiscation that could have been ordered has to be fixed at Rs. 35,000.
From this it follows that the Collector has to refund to the appellants a sum of Rs. 65,000 which he has collected from them in excess of the aforementioned Rs. 35,000.
The appeal is allowed to that extent.
In the circumstances of the case we direct the parties to bear their own costs both in this Court as well as before the High Court.
R.K.P.S. Appeal allowed in part.
| The appellants were tobacco merchants in Baroda in Gujarat State and were holding Central Excise licence in Forms L 2 and L 5 for the purpose of storing, selling and processing duty paid and non duty paid tobacco.
On December 23, 1958 while the process of mixing some tobacco was going on in a godown where duty paid tobacco was.
kept, the Superintendent of Central Excise., Preventive Headquarters, Baroda and his party raided the premises of the appellants and seized a mixture of tobacco weighing 1,64,834.50 lbs.
tobacco This mixture included 60,770 lbs.
of tobacco on which duty had not been paid.
After the 'appellants were issued a show cause notice why action should not be taken against them under rule 40 of the Central Excise Rules, 1944, and after they had filed their reply, the Collector, Central Excise, by his order dated April 13, 1959 held the appellants guilty of contravening rule 40 levied on them a penalty of Rs. 2,000 as well as the duty payable under the law, and also ordered the confiscation of the entire quantity of the tobacco seized.
As he gave the appellants the option of redeeming the same on payment of a fine of Rs. 1 lakh, they paid the fine under protest and secured release of the tobacco.
The appellant 's appeal as well as revision against the Collector 's order under the provisions of the Central Excise and Salt Act, 1944, were both dismissed.
The appellants then filed a writ petition under article 226 of the Constitution challenging the legality of the Collector 's order but this was dismissed by the High Court.
In appeal to this Court the only challenge was to the Collector 's order of confiscation.
It was contended, relying on the decision in Messrs. Valimahomed Gulamhusain Sonavala & Co. vs
C.T.A. Pillai, (1960) 42, B.L.R., p. 634, that the Collector could not have confiscated the tobacco mixture as it consisted of both duty paid tobacco as well as tobacco on which duty had not been paid, the alternative contention was that the Collector could not in any extent have.
confiscated more than 60,770 lbs.
of mixture which could be said to represent tobacco on which duty had not been paid.
HELD: Rule 40 permits the Central Excise.
authorities to confiscate only those goods on which duty had not been paid.
It does not permit them either specifically or by necessary implication to confiscate other goods.
Therefore it was not permissible for the Collector to confiscate the entire tobacco mixture.
At the same time no person can be permitted to benefit by his wrongful act.
No rule of law should be so interpreted as to permit or encourage its circumvention.
If by the wrongful act of a party he renders it impossible for the authorities to confiscate under 581 rule 40 the non duty paid goods, it is open to those authorities to confiscate from out of the goods seized, goods of the 'value reasonably representing the value of the non duty paid goods mixed in the goods seized.
Applying that rule to the facts of the present case it follows that although the appellants were guilty under Rule 40 of an unlawful act in mixing duty paid tobacco with non duty paid tobacco, the Collector could have confiscated out of the tobacco seized so much of it as can be held to reasonably represent the value of the tobacco on which the duty had not been paid.
[586 G 581 B] As the parties were agreed that the value of the tobacco used in the mixture for which no duty had been paid could be fixed at Rs. 35,000,.
the fine to be levied on the appellant in lieu of the confiscation that could have been ordered had to.
be fixed at Rs. 35,000.
The Collector therefore had to refund to the appellant a sum of Rs. 65,000.
Institutes of Justinian, p. 104; Williams on Personal Property (18th edition) p. 50; Spence and Ant.
vs The Union Marine Insurance Co. Ltd., Law Reports (Common Pleas) 3, 1867 68 and Smurthwaite and Ors.
vs Hannay and Ors.
, [1894] A.C.p. 494; referred to.
|
No. 110 of 1964.
Petition under article 32 of the Constitution of India for the enforcement of fundamental rights.
B. Sen and B. N. Kirpal, for the petitioner.
422 C. K. Daphtary, Solicitor General and B. R. G. K. Achar, for the respondent Nos. 1 and 2.
The Judgment of the Court was delivered by Wanchoo, J.
This petition under article 32 of the Constitution is a sequel to the judgment of this Court in T. Devadasan vs Union of India(1).
The petitioner was Assistant in Grade IV of the Central Secretariat Service.
The next post which the petitioner could expect to get was of Section Officer (Assistant Superintendent).
Recruitment to the post of Section Officer is made in the following manner : (i)50% by direct recruitment from those who obtain lower ranks in the Indian Administrative Service etc.
examinations.
(ii)25 % by promotion from Grade IV on the basis of a departmental examination held at intervals by the Union Public Service Commission, and (iii) 25 % by promotion from Grade IV on the basis of seniority cum fitness.
In February 1960 the Union Public Service Commission issued a notification to the effect that a limited competitive examination for promotion to the post of Section Officers would be held in June 1960.
The notification further stated that reservation of 121% of the available vacancies would be made for members of scheduled castes and 5% for the members of scheduled tribes.
The number of vacancies to be filled was to be announced later.
The petitioner sat for this examination and he is said to have secured the 37th position in order of merit.
Later, a press communique was issued by the Union Public Service Commission in the which it was stated that the number of vacancies expected to be filled was 48 out of which 32 were reserved for schedule castes and scheduled tribes and 16 were unreserved.
Eventually however the Union Public Service Commission recommended 45 names for appointment, 16 of which were unreserved and 29 were reserved against vacancies for scheduled castes and scheduled tribes.
Finally, however, the Government made only 43 appointments, 15 in the unreserved quota and 28 in the reserved quota.
This heavy reservation for scheduled castes and scheduled tribes was made on the basis of the "carry forward" rule which was put into force from 1955.
According to the resolution of the Ministry of Home Affairs dated September 13, 1950 reservation for scheduled castes and (1) ; 423 scheduled tribes was fixed at 121% and 5% respectively without anything like the 'carry forward" rule.
In 1952 however supplementary instructions were issued in this connection in the following terms : "5(3).
If a sufficient number of candidates of the communities for whom the reservations are made, who are eligible for appointment to the post in question and are considered by the recruiting authorities as suitable in all respects for appointment to the reserved quota of vacancies, are not available the vacancies that remain unfilled will be treated as unre served and filled by the best available candidates; but a corresponding number of vacancies will be reserved in the following year for the communities whose vacancies are thus filled up in addition to such number as would originally be reserved for them under the,orders contained in the.
Resolution.
"5(4).
If suitably qualified candidates of the communities for whom the reservations have been made are again not available to fill the vacancies carried forward from the previous year under clause (3) above, the vacancies not filled by them will be treated as unreserved and the reservations made in those vacancies will lapse.
As a result of these instructions reserved vacancies for scheduled castes and scheduled tribes which could not be filled in one examination would be carried forward to the next examination.
But if sufficient number of scheduled caste and scheduled tribe candidates were not available to fill the vacancies carried forward plus vacancies of the next year the vacancies were to be treatd as unreserved and the reservation made in those vacancies would lapse.
Thus according to 1952 instructions the carry forward was only for two years and thereafter there was no carry forward in 1955 however.
Government made further change in the carry forward rule and paras.
5 (3 ) and 5 (4) of the instructions of 1952 were substituted thus '5 (3 ) (a).
If a sufficient number of candidates, considered suitable, by the recruiting authorities, are not available from the communities for whom reservations are made, in a particular year, the unfilled vacancies should be Mated as unreserved and filled by the best available candidates.
The number of reserved vacancies thus treated as unreserved will be added as an additional quota to the number that would be reserved in the L3 Sup./65 11 424 following year in the normal course; and to the extent to which approved candidates are not available in that year against this additional quota, a corresponding addition should be made to the number of reserved vacancies in the second following year. "Thus the number of reserved vacancies of 1954 which were treated as unreserved for want of suitable candidates in that year will be added to the normal number of reserved vacancies in 1955.
Any recruitment against these vacancies in 1955 will first be counted against the additional quota carried forward from 1954.
If however suitable candidates are not available in 1955 also and a certain number of vacancies are treated accordingly as 'unreserved ' in that year, the total number of vacancies to be reserved in 1956 will be un utilised balance of the quota carried forward from 1954 and 1955 plus the normal percentage of vacancies to be reserved in 1956.
The un utilised quota will not, however, be carried forward in this manner for more than two years. "An annual report of reserved vacancies which were treated as unreserved for want of suitable candidates from scheduled castes or scheduled tribes as the case may be should be forwarded to the Ministry of Home Affairs in the form enclosed as Annexure I along with the annual communal returns already prescribed.
In addition Ministries themselves will take adequate steps to ensure that any lapse on the part of subordinate authorities in observing the reservation rules cannot go unnoticed by a reviewing authority within the Ministry itself at a sufficiently early date. " (b) In the event of a suitable scheduled caste candidate not being available, a scheduled tribe candidate can be appointed to the reserved vacancy and vice versa subject to adjustment in the subsequent point.% of the roster.
" The result of this change was to carry forward the unfilled vacancies for two years and thus in the third year the vacancies to be filled by scheduled caste and scheduled tribe candidates would be the un utilised balance from the previous two years plus the normal percentage of the vacancies reserved in the third year.
Unlike the rule of 1952, this rule did not provide for any lapse 425 but said that the un utilised quota will not however be carried forward in this manner for more than two years.
The result of the substitution of the 1955 rule was that paras.
5(3) and 5(4) of the 1952 rule ceased to exist and it was in pursuance of the 1955 rule that the Union Public Service Commission announced as already indicated that out of 48 expected vacancies, 16 would be unreserved and 32 would be reserved for scheduled caste and scheduled tribe candidate& Ibis reservation was attacked in the, case of Devadasan(1) and this Court struck down the carry forward rule of 1955 (in place of paras 5(3) and 5(4) of the 1952rule) on the ground that the carry forward rule as modified in 1955 was unconstitutional.
No other relief besides the declaration that the 1955 carry forward rule was unconstitutional was granted in Devadasan 's case(1).
It was however hoped that the department concerned would implement the decision of this Court in an appropriate manner.
The petitioner contends that the effect of this Court 's judgment in Devadasan 's case(1) is that there is no carry forward rule in existence as the 1955 carry forward rule was struck down by this Court and the 1952 rule had ceased to exist by the substitution made by the Government of India in 1955.
The petitioner further contends that in view of there being no carry forward rule either of 1952 or of 1955 after the judgment of this Court in Devadasan 's case(1) all that the Government of India could do in the matter of reservation for the examination conducted in 1960 was to reserve 12 1/2% of the vacancies for scheduled castes and for scheduled tribes.
In the alternative it is submitted that if the carry forward rule of 1952 is still deemed to exist that rule is also bad being violative of article 16 of the Constitution.
The petitioner finally contends that the carry forward rules of 1952 and 1955 being out of this way and the only reservation that was possible in the examination of 1960 being 12 1/2% for scheduled castes and 5 % for scheduled tribes, he was entitled to be appointed ' on that basis.
He therefore prays that a direction should be issued setting aside appointments of certain candidates belonging to scheduled castes and scheduled tribes over and above the reserved quota of 171 % and the Union Public Service Commission should be directed to announce the result of the said examination afresh after receiving 12 1/2 % of the vacancies for scheduled castes and 5% for scheduled tribes.
The application is opposed on behalf of the Union of India and the main contention urged is that even if the carry forward rule (1) ; 426 of 1952 is deemed to be non existent because it was substituted by the carry forward rule of 1955, the petitioner would not be entitled to be appointed in any case in view of the position he had secured in the examination.
The first question therefore that arises is whether the carry forward rule of 1952 can still be said to exist.
The next question is whether the carry forward rule of 1952, if it still exists is bad for the same reasons as the carry forward rule of 1955, as held by this Court in Devadasan 's case(1).
The last question is whether the petitioner would be entitled to appointment even if the carry forward rule of 1952 does not exist.
We shall first consider the question whether the carry forward rule of 1952 still exists.
It is true that in Devadasan 's case(1), the final order of this Court wag in these terms : "In the result the petition succeeds partially and the carry forward rule as modified in 1955 is declared invalid.
" That however does not mean that this Court held that the 1952rule must be deemed to exist because this Court said that the carry forward rule as modified in 1955 was declared invalid.
The carry forward rule of 1952 was substituted by the carry forward rule of 1955.
On this substitution the carry forward rule of 1952 clearly ,Ceased 'to exist because its place was taken by the carry forward rule of 1955.
Thus by promulgating the new carry forward rule in 1915, the government of India itself cancelled the carry forward rule,of 1952.
When therefore this Court struck down the carry forward rule as modified in 1955 that did not mean that the carry forward rule of 1952 which had already ceased to exist, because the Government of India itself cancelled it and had substituted a modified rule in 1955 in its place, could revive.
We are therefore of opinion that after the judgment of this Court in Devadasan 's case(1) there is no carry forward rule at all, for the carry forward rule of 1955 was struck down by this Court while the carry forward rule of 1952 had ceased to exist when the Government of India substituted the carry forward rule of 1955 in its place.
But it must be made clear that the judgment of this Court in Devadasan 's case(2) is only concerned with that part of the instructions of the Government of India which deal with the carry forward rule; it does not in any Way touch the reservation for scheduled castes and scheduled tribes at 12 1/2% and 5% respectively; nor does it touch the filing up of scheduled tribes vacancies by scheduled ; 427 caste candidates where sufficient number of scheduled tribes are not available in a particular year or vice versa, The effect of the judgment in Devadasan 's case(1) therefore is only to strike down, the carry forward rule and it does not affect the year to year reservation for scheduled castes and sheduled tribes or filling up of scheduled tribe vacancies by a member of scheduled castes in a particular year if a sufficient number of scheduled tribe candidates are not available in that year or vice versa.
This adjustment in the reservation between scheduled castes and tribes has nothing to do with the carry forward rule from year to year either of 1952 which, had ceased to exist or of 1955 which was struck down by this Court.
In this view of the matter it is unnecessary to consider whether the carry forward rule of 1952 would be unconstitutional, for that rule no longer exists.
This brings us to the last question whether the petitioner would be entitled to appointment on the basis that there was no carry forward rule in existence in 1960.
Originally it was notified that the number of vacancies expected were 48.
On that basis the reservation for scheduled castes would be 6 and for scheduled tribes would be 2.4.
But as it is impossible to get 2.4 individuals and the reservation for scheduled tribes is a minimum of 5%, they would be entitled to three vacancies.
Thus out of 48 expected vacancies, 9 would be reserved vacancies and 39 would be unreserved.
Actually however the Public Service Commission recommended only 45 names.
On the basis of 45, scheduled castes would be entitled to 5.625 vacancies (i.e. 6 vacancies) while scheduled tribes would be entitled to 2.25 vacancies (i.e. 3 vacancies).
In actual effect however because one of the candidates recommended in the reserved quota died and one of the candidates out of the unreserved quota was appointed to another service, the Government of India made only 43 appointments.
On this basis, the scheduled castes would be entitled to 5.375 vacancies (i.e. 6 vacancies) and the scheduled tribes to 2.15 vacancies (i.e. 3 vacancies).
Thus on the actual appointments made the total reservation for scheduled castes and scheduled tribes would be 9 while 34 would be available for the unreserved quota.
The petitioner secured 37th place in the unreserved quota.
Out of these 37, one unreserved candidate was recruited to another service and thus the petitioner 's position may conceivably be said to have bettered and become 36th.
According to the calculation which we have already indicated, 9 out of 43 vacancies actually filled will go to scheduled castes and scheduled tribes together and 34 (1) ; 428 would go to the unreserved quota.
The petitioner however was 36th on the unreserved quota and therefore even on the basis of there being no carry forward rule only 34 candidates would be appointed from the unreserved quota and the petitioner being 36th on his own showing can not claim appointment.
The petition therefore fails.
In the circumstances we make no order as to costs.
Petition dismissed.
| In 1951, several State legislative measures passed for giving effect to a policy of agrarian reform faced a serious challenge in the Courts.
In order to assist the State Legislatures to give effect to the policy, articles 31A and 31B were added to the Constitution by the Constitution (First.
Amendment) Act, 1951.
Article 31B provided that none of the Acts specified in the Ninth Schedule to the Constitution shall be deemed to be void or ever to have become void.
In 1.955, by the Constitution (Fourth Amend ment) Act, article 31A was amended.
Notwithstanding those amendments some legislative measures adopted by different States for giving effect to the policy were effectively challenged.
In order to save the validity of those Acts as well as of other Acts which were likely to be struck down, Parliament enacted the Constitution (Seventeenth Amendment), Act 1964, by which article 31A was again amended and 44 Acts, were added to the Ninth Schedule.
The petitioners in the Writ Petitions in Supreme Court, and interveners, were persons affected by one or other of those Acts.
They contended that none of the Act by which they were affected could be saved because the Constitution (Seventeenth Amendment) Act was constitutionally invalid.
It was urged that : (i) Since the powers prescribed by article 226, which is in Chapter V, Part VI of the Constitution, were likely to be affected by Seventeenth Amendment, the special procedure laid down in the proviso to article 368, namely ' requiring the ratification by not less half the number of States, should be followed; (ii) The decision in Sri Sankari Prasad Singh Deo vs Union of India and State of Bihar, ; , which negatived such a contention when dealing with the First Amendment, should be reconsidered; (iii) The Seventeenth Amendment Act was a legislative measure in respect of land and since Parliament had no right to make a law in respect of land, the Act was invalid and (iv) Since the Act purported to set aside decisions of Court of competent jurisdiction, it was unconstitutional.
HELD (by P. B. Gajendragadkar C. J., Wanchoo, and Raghubar Dayal JJ.) : (i) The main part of article 368 and its proviso 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.
Such a construction requires that if amendment of the fundamental rights is to make a substantial inroad on the High Court 's powers under article 226, it would become necessary to consider whether the proviso to article 368 would cover such a case.
If the effect is indirect, incidental or otherwise of an insignificant order the proviso may not apply.
In dealing With such a question, the test to be adopted is to find the pith and substance of the impugned Act.
So tested it is clear that the Constitution (Seventeenth Amendment) Act amends the fundamental rights solely with the object of removing obstacles in the fulfilment of a socioeconomic policy.
Its effect 934 on article 226 is incidental and insignificant.
The Act therefore falls under the substantive part of article 368 and does not attract the proviso.
[940 D E; 941 B E; 944 D F] (ii) On the contentions urged there was no justification for reconsidering Shankari Prasad case.
[947 G H] Though the Constitution is an organic document intended to serve as a guide to the solution of changing problems the Court should be reluctant to accede to the suggestion that its earlier decisions should be lightheartedly reviewed and departed from.
In such a case the test is : Is it absolutely and essential that the question already decided should be reopened.
The answer to the question would depend on the nature of the infirmity alleged in the earlier decision, its import on public good and the validity and compelling character of the considerations urged in support of the contrary view.
It is therefore relevant and material to note that if the argument urged by the petitioners were to prevail, it would lead to the inevitable consequence that the amendments of 1951 and 1955 and a large number of decisions dealing with the validity of the Acts in the Ninth Schedule would be exposed to serious jeopardy.
[948 E H; 949 A B] (iii) Parliament in enacting the impugned Act was not making any provision of land Legislation but was merely validating land Legislation already passed by the State Legislatures in that behalf.
[945 C] (iv) The power conferred by article 368 on Parliament can be exercised both prospectively and retrospectively.
It is open to Parliament to validate laws which have been declared invalid by courts.
[945 E F] (v) The power conferred by article 368, includes the power to take away the fundamental rights guaranteed by Part III.
In the context of the constitution it includes the power of modification, or changing the provisions, or even an amendment which makes the said provisions inapplicable in certain cases.
The power to amend is a very wide power and cannot be controlled by the literal dictionary meaning of the word "amend".
The expression "amendment of the Constitution" plainly and unambiguously means amendment of all the provisions of the Constitution.
The words used in the proviso unambiguously indicate that the substantive part of the Article applies to all the provisions of the Constitution.
A B; 951 B] The word "law" in article 13(2) does not include a law passed by Parliament by virtue of its constituent power to amend the Constitution.
if the Constitution makers had intended that any future amendment of the provisions in regard to fundamental rights should be subject to article 13(2), they would have taken the precaution of making a clear provision in that behalf.
It would not be reasonable to proceed on the basis that the fundamental rights in Part III were intended to be finally and immutably settled and determined once for all and were beyond the reach of any future amendment.
The Constitution makers must have anticipated that in dealing With the socioeconomic problems which the legislatures may have to face from time to time, the concepts of public interest and other important considerations may change and expand, and so, it is legitimate to assume that the Constitution makers knew that Parliament should be competent to make amendments in those rights so as to meet the challenge of the problems which may arise.
The fundamental rights guaranteed by Part III could not have been intended to be eternal, inviolate and beyond the reach of article 368 for, even if the powers to amend the fundamental 'rights were not included in the Article, Parliament ran by a suitable amendment of the Article take those powers.
[951 F H; 954 F H; 955 E G] Article 226 which confers on High Court the power to issue writs falls under the proviso to article 368, while article 32 which is itself a guaranteed fundamental right and enables a citizen to move the Supreme Court to 935 issue writs, fall under the main part of the section.
Parliament may consider whether the anamoly which is apparent in the different modes prescribed by article 368 for amending articles 226 and 32 respectively, should not be remedied by including Part III itself in the proviso.
[956 E G] Sri Sankari Prasad Singh Deo vs Union of India and State of Bihar, ; , followed.
A. K. Gopalan vs State of Madras, ; and In re: The Delhi Laws Act; , , referred to.
(vi) It is not reasonable to suggest that, since the impugned Act amends only articles 31A and 31B and adds several Acts to the Ninth Schedule it does not amend the provisions of Part III but makes an independent provision, and so, comes within the scope of the proviso to article 368.
If Parliament thought that instead of adopting the cumbersome process of amending each relevant Article in Part III, it would be more appropriate to add articles 31A and 31B, then what Parliament did in 1951 has afforded a valid basis for further amendments in 1955 and in 1964.
[946 B E] (vii) The fact that the Acts have been included in the Ninth Schedule with a view to making them valid, does not mean that the Legislatures which passed the Acts have lost their competence to repeal or amend them.
Also, if a legislature amends any provision of any such Act, the amended provision would not receive the protection of article 3 1B and its validity will be liable to be examined on the merits.
[956 A C] Per Hidayatullah and Mudholkar JJ.
Quaere (i) Whether the word "law" in article 13(2) of the Constitution excludes an Act of Parliament amending the Constitution.
[959 E F; 968 G] (ii) Whether it is competent to Parliament to make any amendment at all to Part III of the Constitution.
[961 F G; 968 G] Per Mudholkar J. An amendment made by resort to the first part of article 368 could be struck down upon a ground such as taking away the jurisdiction of High Courts under article 226 or of the Supreme Court under article 136 or that the effect of the amendment is to curtail substantially, though indirectly, the jurisdiction of the High Courts under article 226 or the Supreme Court under article 136, and recourse had not been had to the proviso to article 368.
The question whether the amendment was a colorable exercise of power by Parliament may be relevant for consideration in the latter kind of case.
[969 D F] The attack on the Seventeenth Amendment Act was based on grounds most of which were the same as those urged and rejected in the earlier case of Sankari Prasad Singh Deo vs Union of India and State of Bihar, ; , and on some grounds which are unsubstantial.
No case has therefore been made out by the petitioners either for the reconsi deration of that decision or for striking down the Seventeenth Amendment.
[963 FG] The following matters however were not considered in Sankari Prasad 's case and merit consideration : (i) Where Legislation deals with the amendment of a provision of the Constitution, does it cease to be law within the meaning of article 13(2) merely because it has to be passed by a special majority ? [964 B C] (ii) Where a challenge is made before the Court on the ground that no amendment to the Constitution had in fact been made or on the ground that it was not a valid amendment, would it not be the duty of the Court and within its power to examine the question and to pronounce upon it since this is precisely what a Court is competent to do in regard to any other law? (iii) Is the statement in A. K. Gopalan vs State of Madras, ; that the fundamental rights are the minimum rights reserved by the people to themselves, and therefore unalterable, inconsistent with the statement in In re ; , that Parliament has plenary powers of legislation ? [965 D E] (iv) Whether making a change in the basic features of the Constitution can be regarded merely as an amendment or would it be, in effect, rewriting a part of the Constitution, and if it is the latter, would it be within the purview of article 368 ? [966 H, 967 A] (v) Upon the assumption that Parliament can amend Part III of the Constitution and was therefore competent to enact articles 31A and 31B, as also to amend the definition of "estate", can Parliament validate a State law dealing with land ? [968 H, 969 A] (vi) Could Parliament go to the extent it went when it enacted the First Amendment and the Ninth Schedule and now when it added 44 more agrarian laws to it ? Or, was Parliament incompetent to go, beyond enacting article 31A in 1950, and now, beyond amending the definition of "Estate" ? [969 B C]
|
Civil Appeal No. 358 of 1973 Appeal by special leave from the Judgment and order dated the 6th February, 1967 of the High Court of Judicature at Bombay in Special Civil Application No. 1967 of 1965.
M. C. Bhandare, P. H. Parekh, section Bhandare, Manju Jaitley, for Respondents Nos.
1 4, 12, 15" 17, 24, 27 30, 35, 36, 47, 49, 54 63, 75, 80, 82, 86, 87, 89, 90, 94, 96 107.
The Judgment of the Court was delivered by ALAGIRISWAMI, J.
This appeal arises out of the judgment of the Bombay High Court in Special Civil Application No. 1967 of 1965.
The 118 respondents are workmen of the appellant company working in different departments of the company 's works.
Respondent I to 14 are Syphon Pumpers.
They filed 14 applications before the Additional Authority under section 15 of the Payment of Wages Act claiming overtime wages for the period February 1957 to January 1958 Respondents 15 to 80 are Mains workers.
They filed 66 applications before the same authority claiming overtime wages for the period December 1956 to November 1957.
Respondents 81 to 118 filed 38 applications before the Third Additional Authority claiming wages for weekly off days.
They belonged to the Mains, Heating Appliances and Fitting Departments.
They had joined the appellant company 1 after 1948.
The relevance of the reference to their having become workers of the company after 1948 will become clear when we deal with the facts of this case later.
293 Before the Authority under the Payment of Wages Act the company contended that all the claims were barred under an award of the Industrial Tribunal in Ref.
No. 54 of 1949, which was made on 30 3 1950 and published on 11 5 1950.
The Authority held that (1) the claims of the Booster Attendants for wages for overtime work and weekly off days were covered by the award, (2) the clams of applicants other than Booster Attendants were not covered by the award, and (3) the Bombay Shops & Establishments Act was not applicable to them, and dismissed the applications of respondents 1 to 80.
The applications made by respondents 81 to 113 were allowed by the Third Additional Authority holding that the award was no bar to those applications and that the provisions of the Bombay Shops & Establishments Act were applicable.
Appeals were filed by respondents 1 to 88 in the Court of Small Causes, Bombay.
The appellant company filed an appeal against the judgment in the applications of respondents 81 to 118.
The Court of Small Causes dealt with the appeals filed by the workmen as well as the appeal filed by the company and by a common judgment held that the claims of workers for overtime wages and wages for weekly off days were barred by the award.
The workmen appeals were therefore dismissed and the company 's appeal was allowed.
It was.
however, held that the appellant company was a commercial establishment within the meaning of that term under the Bombay Shops & Establishments Act.
All the workmen filed a writ petition, out of which this appeal arises, challenging the judgment of the Court of Small Causes.
High Court held that the claims of the respondents were not barred by the award and remanded the applications of respondents 1 to 80 to the Authority under the Payment of Wages Act for ascertaining and decreeing the Amount.
As regards respondents 81 to 118 the judgment of the Third Additional Authority under the Payment of Wages Act was restored.
As the award of the Industrial Tribunal, Bombay in Ref No. 54 of 1949 is the most important factor that has to be taken into account in considering this appeal it would be proper to refer to portions of that award which relate to this appeal.
About 23 demands covering variety of subjects were referred to the Tribunal.
The demands out of which this appeal arises were No. 11 and 12 dealt with in paragraphs 113 to 126 of the award.
Demand No. 11 was as follows: (a) Workers should get a paid weekly off.
(b) Workers of Mains, Services and District fittings departments and lamp repairers, who have been adversely affected in the matter of their earnings on account of closing down of the overtime and Sunday work should be compensated for the loss suffered by them.
compensation being the amount lost by them since e scheme was introduced.
" 294 Demand No 12 was as follows A All work extending beyond the scheduled hours of work should be paid for at overtime rate (i.e., double the rate of wages).
" In discussing demand No. 11 the Tribunal pointed out that what the workers were asking for was paid weekly day off for those workers who were actually getting a weekly day off, though without pay.
It appears that in this company prior to 1946 most of the workers used to work for all the seven days of the week.
By about August 1946, however, weekly days off were enforced upon the major section of the workmen.
The company and the union had entered into an agreement about June 1946 as regards wage scales of various categories of workers.
The Tribunal, therefore, assumed that in respect of most of the daily rated workers the wages must have been fixed on the basis of what their monthly income would be for 26 working days In the cases of the classes of workers specifically mentioned in demand 11(b) a weekly day off was enforced some time in the year 1949, while in the case of lamp repairers the weekly day off was enforced from 1st April 1949.
Those categories of workers, therefore, used to .
work for all the 7 days of the week and earn wages for all the days till a short time before the reference.
The Tribunal, therefore, proceeded on the basis that in their case it cannot be said that daily rates of wages were fixed with reference to a month of 26 working days and therefore with the introduction of the weekly day off the wages of these workers were reduced, and that the concession of a weekly off would be a very doubtful benefit if as a result the monthly income of these E, workers was to go down.
The Tribunal granted the demand under demand No. 11 (b) in respect of workers who had been working on Sundays also till 1948.
Some doubts having arisen in respect of this portion of the award a reference was made to the Tribunal under rule 20A of the Industrial Disputes (Bombay) Rules for clarification.
The doubt raised was whether the company was bound to give a paid weekly day off to the workers of the Mains Department and to pay them compensation for the loss suffered by them.
It appears that the company gave a paid weekly day off to all personal mentioned in demand No. 11 except workers of the Mains on the ground that they were not persons who were till 1948 required to work on Sundays and in respect of whom a weekly day off was introduced thereafter.
The Tribunal pointed out that the paid weekly day off was given only to people who till recently used to work on all the seven days of the week and that it was unfortunate that the company had not at the hearing of the main adjudication specifically drawn attention to the fact that the workers of the Mains were not till recently required to work for all the seven days of the week.
The Tribunal, however, held that it was clearly a condition laid down for the grant of this benefit that the person concerned must be one who till 1948 was required to work on Sundays and in respect of whom a weekly day off was introduced thereafter.
295 The importance of the year 1948, to which we have referred m earlier part of the judgment, would now become apparent.
Respondents 81 to 118 who joined the company after 1948 contended that the award did not bind them.
In this they are manifestly wrong.
An award of an Industrial Tribunal in a reference under section 10 of the industrial Disputes Act binds not only persons who were the workmen of the employer at the time the award was made but also workmen who came to work under the employer after the award.
it would not be correct, therefore, to hold that they would be entitled to be paid separately for the weekly day off.
It must be presumed that their scales of pay were the same as for the workmen who were working before 1948 also.
There was no averment to the contrary.
They cannot, therefore, be allowed an extra benefit which would not be available to the same category of workmen who were working under the employer since before 1948.
The High Court seems to have been of the impression that these workmen were entitled to be paid for the days off either under the award or under s 18(3) of the Bombay Shops and Establishments Act.
It seems to have assumed that there was a scale of wages for weekly off days under the award.
That this is an obvious mistake would be apparent from a reading of paragraphs 114 and 115 of the award to the following effect: "114.
It must be remembered that the wages of daily rated workers are ordinarily fixed with reference to what their monthly income would be on the basis of a month consisting of 26 working days.
This undoubtedly secures to them the benefit of holidays with pay.
The company and the union have entered into an agreement about June 1946 as regards wage scales of various categories of workers that in respect of most of the daily rated workers the wages must have been fixed on the basis of what their monthly income would be for 26 working days.
Some difference must however be made in the case of the classes of workers specifically mentioned in demand 11(b).
Until recently these categories of workers used to work for all the 7 days of the week and earn wages for all the days.
Certainly it cannot be said in their case that their daily rates of wages were fixed with reference to a month of 26 working days.
Time demand in respect of workers of the Mains Services and District Fittings Departments and lamp repairers and others who were till l 948 required to work on Sundays and in respect of whom a weekly day of was introduced thereafter without any corresponding increase in their wages is granted.
" The matter would be further clear when paragraph 14 of the award is read, wherein the Tribunal has observed: "While therefore, I approve of Rs. 30 as the minimum wage for male mazdoors (coolies) which is at present given 296 to the workers in this Company, I think both the maximum and the increments provided are rather low when compared to what is now a days awarded even in the case of some of the smaller concerns in the engineering industry.
I, therefore, award to the unskilled workers (male coolies) a wage scale of Rs. 1 2 6 to Rs. 1 10 6.
If they are monthly paid their monthly wages should be arrived at by multiplying the daily wages by 26.
" The total wages for 26 days at Rs. 1 2 6 a day is Rs. 30/ .
it is not said that the categories of workers mentioned in demand No. 11(b), who were covered by the award, are paid separately for the days off.
it is not contended that their wage scales have not been refixed in pursuance of the direction given in the award, except of course in the case of persons who even before 1948 were not working on Sundays also Nor is it alleged that pre 1948 and post,l948 workers arc paid differently.
The reasoning of the High Court cannot, therefore, be supported and the company is entitled to succeed on this part of the case.
Coming now to the question of overtime, the demand before the Tribunal was that overtime rates should be double the rate of wages.
That demand was rejected in the general form.
The demand seems to have been made on the analogy of the provisions of the Factories Act.
The Tribunal pointed out that there would be no justification in making a distinction between workers covered by the Factories Act and workers not covered by that Act in respect of overtime payment if the workers were doing the same or similar work but that the same cannot be applied in respect of all types of work particularly where the work was of a very intermittent nature, and that where the nature of the work itself was such that.
regular overtime becomes necessary the deterrent element must not enter in determining the rate of overtime.
The union pointed out several specific categories in respect of whom injustice was done.
One of these instances was that of booster attendants and their case was specifically dealt with and provided for.
The grievance of the workers of the Mains department was that they were made to work till 1.30 p.m.
On Saturdays while factory workers were let off at 1 p.m. and that 47 1/2 hours a week has bean a very long standing privilege of the workmen of this company and that if they are required to work for half an hour more on Saturdays the should be paid overtime at double the rate.
After discussing this question the Tribunal specifically came to the conclusion that no directions in that respect were necessary.
We cannot therefore agree with the respondents that the sentences at the end of paragraph 126 to the following effect: "I however recommend that where overtime work is given to workers not covered by the Factories Act, the rate should at least be the single basic wage plus dearness allowance.
I do not however desire to give any general directions without knowing the nature of the work.
" 297 would cover these cases.
Demand No. 12 is in respect of all workers of the company.
The specific case of workers in the Mains department has been dealt with and rejected; so also in the case of coke supply coolies and motor drivers.
The workmen concerned here being all workmen of the Mains department, the question of their being paid overtime wages under the provisions of the award does not arise.
The question however remains whether they are entitled to be paid overtime wages under the provisions of section 12(3) of the Bombay Shops & Establishments Act.
That Act was in force when the award under consideration was given.
It is not correct to say that the workers are entitled to overtime payment by virtue of an amendment made to the Act in 1970.
The 1970 amendment had nothing to do with the right of payment of overtime wages.
The contention on behalf of the company is that the right to overtime wages based on any ground what soever should he deemed to have been dealt with and rejected by the Tribunal which gave the award in 1 950.
Though the demand for overtime wages was in general terms it could have been or it ought to have been supported either as one of the items of industrial dispute or as flowing from out of the provisions of the Factories Act or flowing from the provisions of the Bombay Shops and Establishments Act.
It was the duty of the party making the demand, who tried to justify the demand, to support it on any one of the alternative basis.
They could not have been ignorant of the provisions of the Bombay Shops & Establishments Act.
(Incidentally, though in this case it seems to have been conceded on behalf of the company that the workers are governed by the Bombay Shops & Establishments Act, it is contended on behalf of the. company that the concession should be deemed to have been made only for the purpose of this case and not for all purposes).
It is further contender that the demand for overtime were under the provisions of the Bombay Shops & Establishments Act should be deemed to be barred on principles analogous to those of the rejudicata.
Reliance is placed upon the decision of this Court in Bombay Gas Co. vs Shridhar Bhau(1).
But in that case the question whether the workmen should get overtime wages in the same way as the workmen governed by the Factories Act had been considered in the reference which resulted in the award of 1953 and before the Tribunal it was conceded by the workmen that they were not governed by the Factories Act and the claim for the same overtime wages as those Payable to workers under the Factories Act was based on the ground that there was no reason for any distinction between the two sets of workmen.
It was.
therefore, held that 'so long as the award remains in force it must be held that these workmen are not governed by the Factories Act and are not entitled to the benefits thereof '.
In the present case also the question under the Factories Act had been considered but not the question whether they are entitled to overtime 298 wages under the provisions of the Bombay Shops & Establishments Act.
We consider that the workmen could and ought to have raised the question that even if they were not entitled to claim overtime wages at the same rate as payable to workers governed by the Factories Act, they should at least be paid the same rate as those payable to persons governed by the Bombay Shops & Establishments Act.
The workers neither put forward the contention that they were entitled to the benefit of the Bombay Shops & Establishments Act nor even that on considerations similar to those applicable to the persons governed by the Bombay Shops & Establishments Act they should also be paid overtime wages under the provisions of that Act.
Incidentally it shows that the question as to whether the Bombay Shops & Establishments Act is applicable to those workmen has been raised for the first time in these proceedings.
The doctrine of res judicata is a wholesome one which is applicable not merely to matters governed by the provisions of the Code of Civil Procedure but to all litigations.
It proceeds on the principle that there should be no unnecessary litigation and whatever claims and defences are open to parties should all be put forward it the same time provided so confusion is likely to arise by so putting forward all such claims.
It was observed by this Court in Devilal Modi vs Sales Tax Officer: "The general principle underlying the doctrine of res judicata is ultimately based on considerations of public policy.
One important consideration of public policy is that the decisions pronounced by courts of competent jurisdiction should be final, unless they are modified or reversed by appellate authorities; and the other principle is that no one should be made to face the same kind of litigation twice .
over, because such a process would be contrary to considerations of fair play and justice, vide: Daryao and Others vs The State of U.P & Others v The State of U.P & Others ; We are therefore of opinion that the question of overtime wages should be deemed to have been dealt with and disposed of by the Tribunal on whatever the basis of the claim for overtime wages may be.
The disputes between this company and its workers quite often come to this Court.
The case in Bombay Gas Co. v Shridhar Bhau (supra) is one such.
The other cases are found in Bombay Gas Co. Ltd vs Gopal Bhiva (2) and Ramlanshan Jageshwar vs Bombay Gas Co. (3) 299 If the workers are dissatisfied with any of the items in respect of which their claim has been rejected it is open to them to raise a fresh industrial dispute.
The award has stood the test of time for 25 years a very rare occurrence indeed these days.
| Rule 3(1)(ii) of the Orissa Industries Service Rules, 1971, provided that the junior grade of the service shall include the posts of Deputy Directors, Senior lecturers in Engineering, Schools etc.
besides the posts of Principal, Engineering Schools (except Mining Engineering) and Polytechnics which carry a special scale of pay.
The 1st respondent was appointed a lecturer in a Mining Engineering School.
In 1960, the School was brought under the administrative Control of the Industries Department of the State Government, and the respondent became an officer of the Industries Department.
Later.
he was appointed Principal of the School.
In 1964, there was a bifurcation of the common cadre of the Department, and a separate cadre for teaching posts of Engineering Schools in the State was created.
In 1967, the two cadres were again merged forming a combined cadre for the officers of the Industries Department.
The reason given for the merger was that the separate cadre for teachers was not beneficial to them because, promotion prospects for them were bleak in view of the limited posts available for promotion.
After the merger, in 1969, even though the 1st respondent was senior to the 2nd respondent, the latter was promoted as Joint Director superseding the former.
The High Court quashed the order and struck down r. 3(1)(ii) as violative of article 16.
Dismissing the appeal to this Court, ^ HELD: (1) In the resolution of 1967 merging the two cadres it was stated that the conditions of service of all the officers will be governed by a set of cadre rules to be framed later, but no such rules were framed at the time of promotion of the 2nd respondent.
The 1971 rules were framed during the pendency of the writ application, filed by the 1st respondent, in the High Court.
There was, therefore, at the time of promotion of the 2nd respondent, nothing to show that the post of a teacher or the Principal of a Mining Engineering School WAS treated as an ex cadre post and on a separate footing for the purpose of promotion to the administrative posts.
[303G H] (2) Rule 3(1)(ii) when it says in the first part Senior lecturers in Engineering Schools, it includes senior lecturers of Mining Engineering School also.
Even when the two cadres were separated, all Engineering Schools including Mining Engineering Schools were placed on the SAME Footing.
But, in the last part of the rule when referring to the post of Principal, the Principal of a Mining Engineering School is excluded.
The exclusion is without any justification or reasonable basis.
[304E H] Therefore, the rule is violative of articles 14 and 16 and the non consideration of the case of the 1st respondent at the time of promotion of the 2nd respondent was wholly arbitrary and illegal.
[33H; 304H] (3) It is however not necessary to strike down the entire rule 3(1)(ii).
It is sufficient if the words 'except Mining Engineering ' are struck down and deleted.
[304H]
|
been clearly mentioned that they shall be deemed to have been made ap plicable from 1st April, 1974.
The Board had set up 280 their case in the reply to the writ petition on the basis of these Regulations and it was the duty of the Division Bench of the High Court to have looked into the reply filed by the Board and to decide the effect of such statutory regulations in the present case.
[291D E] (5) The High Court committed a serious error in ignoring clause IX of the First Settlement dated 22.2.1972 as well as the Regulations made by the Board in 1978.
[291H] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2917 of 1985.
WITH Civil Appeal Nos.
2900 2901, 2903 2916 of 1985 and 2918 21 of 1985.
From the Judgment and Order dated 21.5.1984 (Judgment pronounced on 2.7. 1984) of the Rajasthan High Court in D.B. Civil Special Appeal No. 172 of 1984.
Dr. L.M. Singhvi, Sushil Kumar Jain, Shahid Rizvi, Dr. D.K. Singh, Pradeep Agarwal, Pratibha Jain and Sudhanshu Atreya for the Appellants.
Rajinder Singhvi, M.R. Singhvi and Surya Kant for the Respondents.
The Judgment of the Court was delivered by KASLIWAL, J.
All these civil appeals by special leave are directed against the Judgments of the Rajasthan High Court dated May 11, 1984, May 21, 1984 and the reasons whereof pronounced on 2.7.
Controversy raised in all these cases is whether the respondents are entitled to pay scale No. 2 or pay scale No. 3.
The Government of India vide its Resolution dated 20th May, 1966 constituted a General Wage Board for electricity undertakings for evolving wage structure, specialisation of nomenclature and job description.
The recommendations of the said Wage Board were accepted by the Government of India in July, 1970.
The Prantiya Vidyut Mandal Mazdoor Federation (in short the Federation) recognised trade union of the employees of the Rajasthan State Electricity Board presented their demands before the Labour Department of the 281 Government of Rajasthan for implementation of the recommen dations of the Wage Board.
While the said industrial dispute between the management of the Board and its employees was pending before the Conciliation Officer, a settlement was arrived at on February 22.
By this agreement the parties agreed that the existing scale of pay of various categories of posts would be revised w.e.f.
1st April, 1969.
The schedule of the said agreement set out various catego ries of posts under different pay scales.
At St. No. 21 Meter Reader/Meter Checker was mentioned under scale No. 3 i.e. Rs. 126 8 150 10 250.
In pursuance to the above settle ment the Board issued a notification dated 22nd March, 1972 revising the pay scales of its employees w.e.f. 1st April, 1969.
Subsequent to this agreement the Board entered into another agreement with the Federation on December 2, 1972 (hereinafter referred to as the Second Settlement).
In the second settlement.
it was mentioned that this was done in view of some anomalies and difficulties which had cropped up in the course of implementation of previous agreements dated January 26, 1970; April 27, 1971; and July 28, 1972.
It was also mentioned in the said settlement that it was considered desirable to remove the anomalies and clarify certain points by mutual negotiations.
The settlement was made effective w.e.f.
1st April, 1968.
In the second settlement it was agreed to have two categories for Meter Readers i.e. Meter Reader I/Meter Checker I and Meter Reader II/Meter Checker II.
The relevant Clause in this regard reads as under: "II.
Under pay scale No. 3 technical read 21" Meter Reader I/Meter Checker I and under pay scale No. 2 technical, insert "7 Meter Reader /I/Meter Checker II" and insert the following Note below pay scale No. 2: "Meter Reader II/Meter Checker II appointed/fixed, pro moted/adjusted on or before 31.3.
1968 will be fixed in pay scale No. 3 instead of pay scale No.2.
The Board in accordance with the second settlement issued another Notification dated 6.12.
1972 whereby the previous Notification dated March 22, 1972 was amended.
Some of the employees, namely, Jagdish Prasad, Brij Mohan, Madho Singh, Prakash Chander, section Samuel, Brij Lal and Chander Bhan filed writ petitions in the High Court of Judicature for Rajasthan at Jodhpur and challenged the Notification dated 6th December, 1972.
It may be noted that all these employees were appointees before 6.12.
Learned Single Judge of the High Court by Judgment dated 21st March, 1979 allowed the write 282 petitions and quashed the Notification dated 6th December, 1972 mainly on the ground that the second settlement could not have been made as no conciliation proceedings were pending before such settlement and that the date 1.4.1968 mentioned in the notification for making the settlement effective was arbitrary and without basis.
The Board filed on appeal before the Division Bench which by their judgment dated 19th December, 1979 dismissed the same and upheld the judgment of the Learned Single Judge.
The Board implemented the judgment of the High Court in respect of Jagdish Prasad & Ors.
and issued orders to provide scale No. 3 to all Meter Readers appointed upto 6.12.
After 6th December, 1972 some more persons were appoint ed on the post of Meter Reader/Meter Checker Grade II i.e. in the pay scale of Rs.80 5 110 6 152 7 194 between the period 1972 1979.
Some of the employees again filed writ petitions in the High Court.
The High Court vide its judg ment dated 29th March, 1982 allowed the writ petitions on the ground that the second settlement had already been quashed by the earlier judgment given in Brij Lal vs Rajas than State Electricity Board, [1979] WEN UC 221.
The High Court inter alia held and observed as under: "Once the second settlement dated December 6, 1972, no longer exists in view of non compliance with Section 19(2) of the aforesaid Act and in view of the decision of this Court in Brijlal 's case (supra), the only settlement which can be said to be in existence is the first settlement dated February 22, 1972.
The aforesaid settlement only provides one grade (scale No. 3 item No. 21) for Meter Reader/ Check er, and, therefore, the petitioner is entitled to be fixed in that grade.
Merely because the post of Meter Reader II/Checker II was advertised with pay scale No. 2 and the petitioner applied and was selected, it cannot be said that the petitioner is estopped now from challenging his fixation in the aforesaid pay scale.
There can be no estoppel against statute.
The petitioner was not knowing and could not know that it is the first settlement dated February 22, 1972 which was in force and the settlement dated December 6, 1972 was invalid, and, therefore, no case of estoppel is made out against the petitioner.
Once this Court had quashed the second settlement dated December 6, 1972 and held that the first settlement 283 dated 22,2, 1972 Was in force, it Was necessary for the Board to have fixed the Meter Reader/Meter Checker in scale No. 3 item No. 21 of Schedule 'A ' to the first settlement.
The Board in spite of demand made to it by the petitioner in this behalf refused to do it".
A bunch of 35 identical writ petitions directing the Board to fix the petitioners in the pay scale No. 3 (Rs. 126 250) as revised from time to time were allowed by learned Single Judge of the High Court by a common order dated November 15, 1983.
The Board filed special appeals before the Division Bench.
The Division Bench dismissed the special appeals by orders dated 11.5.1984, 21.5.1984 and observed that the reasons will be recorded later on.
The Division Bench thereafter pronounced the reasons by order dated 2.7.
The Board has now filed these appeals restricted to such employees who were appointed as Meter Readers/Checkers grade II after 1.4.1974.
It may also be mentioned at this stage that under Clause IX of the first settlement dated 22nd February, 1972 it was mentioned as under: "(IX) This agreement shall remain in force upto 31st March, 1974 and the Federation agrees not to raise any demand in respect of any of the matters covered by this agreement during the period of the operation of the agreement".
It may also be mentioned that in exercise of the powers conferred by Section 79, sub sec.
(c) and (k) of the Elec tricity (Supply) Act, 1948, the Board after obtaining con currence of the Government of Rajasthan and directives issued under Sec.
70(A) of the said Act and taking into consideration the suggestions made by the representatives of the employees, made regulations which are called Rajasthan State Electricity Board Employees (emoluments) Regulations, 1978.
These regulations were made applicable retrospectively from 1st April, 1974.
Under these regulations post of Meter Reader II/Meter Checker I1 was mentioned in scale No. 2 as revised in the pay sclae of Rs.260 8 324 10 464.
Dr. L.M. Singhvi, St. Advocate appearing on behalf of the Board contended that irrespective of the earlier judg ment given by the High Court in Brij Lal vs R.S.E.B. (supra) quashing the second notification dated 6.12.1972 the present appeals having been filed against the Meter Readers appoint ed on or after 1.4.1974, they are not entitled to scale 284 No. 3 as the first settlement dated 22.2.
1972 was to remain in force upto 31st March, 1974.
It was also argued that in the appointment orders of the respondent employees appointed after 1.4.1974, it was clearly mentioned that they were appointed as Meter Reader/Meter Checker II in pay scale No. 2 i.e. Rs.80 194.
Dr. Singhvi further argued that the Board had also made regulations which had statutory force and were made applica ble retrospectively from 1st April, 1974.
Under these regu lations also the post of Meter Reader II/Meter Checker II was mentioned in Scale No. 2.
It was thus contended that considering the matter from any angle, the respondents were not entitled to scale No. 3 but were only entitled to scale No. 2 as revised from time to time.
It was also pointed out by Dr. Singhvi that without prejudice to the above submis sions so far as respondents Laxman Lal, Sita Ram and Madhay Lal are concerned, they were otherwise also not entitled to get any relief in as much as they were appointed Meter Readers II after the notification of the Regulations of 1978.
The Regulations were notified vide notification No. RSEB.
F. RRBS/D.41 dated 4th May, 1978 whereas Laxman Lal, Sita Ram and Madhay Lal were appointed respectively on 19th August, 1978.8th October, 1979 and 9th April, 1979.
Learned counsel for the respondent employees on the other hand submitted that in the settlement dated February 22, 1972 no distinction was made of Meter Reader Gr.
I or II and the post of Meter Reader/ Meter Checker was placed in pay scale No. 3.
It was submitted that validity of second settlement and the notification dated December, 6, 1972 was challenged in Brij Lal 's case and a Division Bench of the High Court had quashed the aforesaid settlement and the said judgment was not challenged by the Board before this Hon 'ble Court and the same had become final.
Thereafter an arbitra tion award was given in 1979 between the Board and the Federation under which two categories of Meter Readers/Meter Checkers were again made.
According to this award Meter Reader/Meter Checker II was placed in the pay scale No. 2 of Rs.80 194 and Meter Reader/Meter Checker I was placed in the pay scale of No. 3 of Rs. 126 250.
It was thus submitted that all the Meter Readers appointed upto 1979 were entitled to scale No. 3.
It was further submitted that the first settlement dated February 22, 1972 and the notification issued thereafter on March 22, 1972 continued to operate and there was only one pay scale of Rs. 126 250 for all Meter Readers and there being no classification of Gr.
I or II, the pay scale of Rs. 126 250 remained in force, till the arbitration award was given on June 15, 1979.
It was submit ted that all the respondents having been 285 appointed prior to June 15, 1979, they were entitled to pay scale No. 3.
As regards the stand taken by the Board that it had framed Regulations regarding the fixation of pay scales it was contended that no such plea was taken in reply to the writ petitions filed by the employees.
It was pointed out that the contention with regard to the first settlement having come to an end on March 31, 1974 as well as the contention raised on the basis of regulations was rightly negatived by the Division Bench of the High Court in the following manner: "It was contended by the learned counsel for the appellants that the learned Single Judge did not take into considera tion the fact that first settlement came to an end on March 31, 1974 and was not in force after that date.
He submitted that the Board had powers under Sec.
79(c) and (k) of the to frame Regulations regard ing the fixation of pay scales.
Learned counsel for the appellants was asked to show from the writ petitions whether this point was taken in the writ petitions or not.
Learned counsel for the appellants candidly admitted that it was not raised in the writ petitions filed by the petitioners.
It was, then.
put to the learned counsel whether this point was argued before the learned Single Judge.
Mr. S.N. Deedwania submitted that in the absence of the affidavit of the coun sel who argued on behalf of the appellants before the learned Single Judge positive assertion to that effect cannot be made.
In the memo of appeal this ground, of course, has been taken but not in the manner in which it has been stated hereinabove.
As this point was not taken in the writ peti tions and it was not argued before the learned Single Judge, we do not consider it necessary to examine it.
We shall examine the validity of the order under appeal on the basis of the grounds that were argued on behalf of the petitioners before the learned Single Judge".
It was further contended that during the pendency of these appeals additional affidavit was filed on behalf of Laxman Lal respondent.
It was pointed out in the additional affidavit that Sh.
Udai Lal and Sh.
Shyam Lal were appointed as Meter Readers vide order dated 6.9.1974.
These persons filed writ petitions Nos.
1191/81 and 1181/81 respectively.
The aforesaid writ petitions were allowed by the High Court vide judgment dated 28.3.1982.
One Sh.
Prem Shankar who was appointed as Meter Reader vide order dated 16.5.
1974 also filed a writ petition 286 No. 120/81 in the High Court and it was also allowed by order dated 28th March, 1982.
The Board did not challenge the aforesaid orders and issued order on 23.8.1982 imple menting the judgment of the High Court.
The above examples were given in order to show that these persons were also appointed after 1.4.1974 and in their cases also relief was granted by the High Court and the Board never challenged the aforesaid judgments given in favour of Udai Lal, Shyam Lal and Prem Shankar.
It has also been submitted that the Board has also published a revised revenue manual on 1.9. 1986 in which vide para 124 duties of Meter Readers have been laid down.
It is contended that in the manual no dif ferent duties have been prescribed for Meter Reader II and Meter Reader I and thus in the discharge of duties there is no difference.
A supplementary affidavit has been filed by Shri R.C. Harit, Deputy Director, Rajasthan State Electricity Board.
It has been submitted in the supplementary affidavit as under: "That is so happened that after the aforesaid judgment dated 19th December, 1979 in the matter of R.S.E.B. vs Jagdish Prasad Brij Lal D.B. Appeal No. 179 of 1979 some other Meter Readers on the basis of this judgment filed various other writ petitions.
In these writ petitions the question above the applicability of Regulations or the question as to whether the Respondent can challenge his own appointment by which they were appointed to Meter Reader II post were not at all raised or decided by the High Court.
The High Court decided the said writ petitions only on the basis of the earlier judgment in the matter of R.S.E.B. vs Jagdish Prasad (Brij Lal).
The Appellant Board implemented the said order.
The respondent is trying to raise the said question which was neither been decided by the High Court and has been raised for the first time in this supplementary affidavit.
On account of lapse of time, the appellant is finding it difficult to give reply.
The Deponent has tried his best to locate the records but in such a short period he could not get the file of the case which was decided about eight years back as it appears to have been mixed up in the old record.
That the order passed in the matter of Shanti Lal was a Judgment inter parties and, therefore, simply because the Board did not challenge the said order, it does not mean that the respondent can also take advantage of the same and can raise the question of equal pay for equal work.
In this the 287 Appellants further state that all the persons except re spondent Shri Lehar Singh and Gharsi Lal (Geharial) in civil appeal in the present case were appointed after 7th Septem ber, 1974 and 16th May,1974 i.e. the date on which three persons whose matters were decided alongwith Shanti Lal 's case were appointed" We have thoroughly examined the record and have consid ered the arguments advanced b.y Learned counsel for the parties.
It may be noted that all the above appeals are in respect of such employees who were appointed after 1.4.1974.
In the appointment orders of all the respondents it was specifically mentioned that they were appointed as Meter Reader Gr.
II in the pay scale of Rs. 80 194 (subsequently revised to Rs. 260 464).
In Clause (ix) of the First Settle ment dated 22nd February, 1972 it was clearly mentioned that this agreement shall remain in force upto 31st March, 1974.
The stand taken by the Board all along was that this settle ment was subsequently amended by another agreement (Second Settlement) on December 2, 1972.
In this second Settlement certain anomalies and difficulties had cropped up in the course of implementation of earlier settlements and hence some clarifications were made by mutual negotiations.
The clarifications relevant for our purpose were that the First Settlement was made effective w.e.f.
1st April, 1968 instead of 1st April, 1969 and two categories were fixed for Meter Readers i.e. Meter Reader I/Meter Checker I and Meter Read er II/Meter Checker II.
Necessary amendments were made in the Schedules annexed to the Settlement according to which under pay scale No. 3 at Item No. 21 Meter Reader I/ Meter Checker I and under pay scale No. 2 at Item No. 7 Meter Reader II/Meter Checker II were inserted.
This Second Set tlement was subsequently notified by a Notification dated 6.12.
According to the Board this Second Settlement was merely a clarification settlement and not a new settle ment in as much as it sought to make clear the ambiguity which had cropped up in the First Settlement in the matter of fixing the grades and pay scales of the Meter Readers/Meter Checkers.
The Notification dated 6.12.1972 which related to the Second Settlement dated 2.12.1972 was challenged by some of the employees by filing writ petitions in the High Court and Learned Single Judge by Judgment dated 21st March, 1979 allowed the writ petitions and quashed the notification dated 6th December, 1972.
It may be noted that the Second Settlement was quashed on the ground that the Second Settlement could not have been made as no concilia tion proceedings were pending before such settlement and the date 1.4.1968 mentioned in the Notification was arbitrary and without any 288 basis.
An appeal filed by the Board against the aforesaid decision was dismissed by the Division Bench of the High Court on 19th December, 1979.
This litigation was commenced by such employees who were appointed prior to 6.12.1972.
Subsequently employees appointed between the period 1972 1979 filed writ petitions in the High Court.
The stand taken by these employees was that the Notification dated 6.12.
1972 had already been quashed by the High Court and as such they were to be governed by the First Settlement dated February 22, 1972 in which there was only one category Of Meter Reader/Meter Checker to whom pay scale No. 3 had been given and as such they were also entitled to pay scale No. 3.
The High Court allowed the writ petitions and granted pay scale No. 3 to all the 35 petitioners.
the Board has now come before this Court against such employees who were appointed after 1.4.1974.
The contention of the Board is that even if for arguments ' sake the earlier decision given by the High Court may be considered as final, that was in respect of employees who were appointed before 6th December, 1972.
As regards the present employees it has been submitted that no benefit can be granted in their case as the First Settlement itself was to remain in force upto 31st March, 1974 and in any case in the appointment orders of the re spondents it was clearly mentioned that they were appointed as Meter Reader/Meter Checker Gr.
II in the pay scale No. 2.
It has also been urged before us that the Board had made Rajasthan State Electricity Employees (emoluments) Regula tions 1978 published on 4.5.
1978 but the same were deemed to have been made applicable from 1st April, 1974.
Under these regulations post of Meter Reader II/Meter Checker II in pay scale No. 2 and Meter Reader I/Meter Checker I have been placed in pay scale No. 3.
Learned counsel for the employees respondents contended that though according to Clause IX of the First Settlement dated 22.2.
1972, it was mentioned that the same will remain in force till 31st March, 1974 yet the same would remain in operation until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement as provided under Sub section
(2) of Section 19 of the (hereinafter referred to as the Act).
It has been submitted that no such notice was given by the Board and the Second Settlement dated 2.12.
1972 and Notification dated 6.12.
1972 had already been quashed by the High Court in Brij Lal 's case (supra) and the same having become final, the first settle ment Would govern the parties.
Reliance in support of the above contention is placed on The Life Insurance Corporation of India vs D.J. 289 Bahadur and Ors., [1980] Lab.
I.C. Vol.
2 1218.
Our attention was drawn to para 33 of the above case which reads as under: "The core question that first fails for consideration is as to whether the settlements of 1974 are still in force.
There are three stages or phases with different legal effects in the life of an award or settlement.
There is a specific period contractually or statutorily fixed as the period of operation.
Thereafter, the award or settlement does not become honest but continues to be binding.
This is the second chapter of legal efficacy but qualitatively different as we will presently show.
Then comes the last phase.
If notice of intention to terminate is given under Section 19(2) or 19(6) then the third stage opens where the award or the settlement does survive and is in force between the parties as a contract which has superseded the earlier contract and subsists until a new award or negotiated set tlement takes its place.
Like Nature, Law abhors a vacuum and even on the notice of termination under Sections 19(2) or (6) the sequence and consequence cannot be just void but a continuance of the earlier terms, but with liberty to both sides to raise disputes, negotiates settlements or seek a reference and award.
Until such a new contract or award replaces the previous one, the former settlement or award will regulate the relations between the parties.
Such is the understanding of industrial law at least for 30 years as precedents of the High Courts and of this court bear testi mony.
To hold to the contrary is to invite industrial chaos by an interpretation of the ID Act whose primary purpose is to obviate such a situation and to provide for industrial peace.
To distil from the provisions of Sec. 19 a conclusion diametrically opposite of the objective, intendment and effect of the Section is an interpretative, stultification of the statutory ethos and purpose.
Industrial law frowns upon a lawless void and under general law the contract of service created by an award or settlement lives so long as a new lawful contract is brought into being.
To argue other wise i, to frustrate the rule of law.
If law is a means to an end order is society can it commit functional harakiri by leaving a conflict situation to lawless void"? In our view the above Sections 19(2) and 19(6) of the Act cannot give any benefit to the respondents in the fact of the present case.
It is not 290 in dispute that the period of the First Settlement was agreed upto 31st March, 1974.
The question which calls for our consideration is not the applicability of the First Settlement, but the real question to be considered is wheth er the Board could have appointed or not the respondents on the post of Meter Reader/Meter Checker Gr.
II in pay scale No. 2 after 1.4.
The respondents/employees in the present case want to take advantage of the First Settlement simply on the ground that it did not make any mention of Meter Reader/Meter Checker Gr.
I or II and it simply made mention of Meter Reader/Meter Checker to whom pay scale No. 3 was given.
The above ambiguity was clarified by an agree ment between the Board and the Union representing the em ployees as early as on 2.12.
1972 itself to the effect that Meter Reader/Meter Checker can be placed in two different grades.
After this there was no restriction on the Board to make appointment of the Meter Reader/Meter Checker in Grade II after 1.4.
That apart there was clear mention in the appointment orders of the respondents that they were appointed as Meter Reader/Meter Checker Gr.
II in pay scale No. 2.
Learned counsel for the respondents/employees were unable to place any law, Rule or Regulation of the Board to show that the Board had no power to make such appointments of the Meter Reader/Meter Checker in Gr.
The Board had already taken the stand the first settlement was clarified by the second settlement and as such even if the High Court had quashed the second settlement, it was at least a suffi cient notice within the meaning of Section 19(2) of the Act that the Board had terminated the first settlement after 31.3.
The Regulations deemed to have come into force from 1.4.1974 also clearly provided for pay scale No. 2 for Meter Reader/Meter Checker Gr.
The Division Bench of the High Court refused to consider the above argument placed on behalf of the Board on the ground that learned counsel for the appellants was asked to show from the writ petitions whether this point was taken in the writ petitions or not and the learned counsel candidly admitted that it was not raised in the writ petitions filed by the petitioners.
The High Court further observed in this regard that as this point was not taken in the writ peti tions and it was not argued before the Learned Single Judge, they did not consider it necessary to examine it.
We have already extracted in extenso the observations of the High Court in this regard in the earlier part of the Judgment.
There is a complete fallacy, in the above order in as much as the Board was not the petitioner before the High Court and there was no question of taking any such ground in the writ petitions.
In one of the above appeals No. 2901 of 1985 Rajasthan State Electricity 291 Board & Ors.
vs Sharad Chander Nagar reply to the writ petition filed by the Board has been placed on record as Annexure 'C '.
In the said reply in Para (8) it has been stated as under: "That the contents of Para No. 8 of the writ petition are wrong and denied.
The petitioner was not appointed at the time of settlement date 22.2.1972.
The Wage Board set tlement dated 22.2.1972, which was in force upto 31.3.
1974, and thereafter the Rajasthan State Electricity Board Employ ees (Emoluments) Regulation 1978 was (sic) come into force with effect from 1.4.1974 and wages of all the employees were revised in pursuance of the Rajasthan State Electricity Board (Emoluments) Regulation 1978.
The copy of the Board (Emoluments) Regulation 1978 is submitted herewith as Annex ure "B".
Apart from the above circumstances of the case the Board in its reply to the writ petition also took the stand that the post of the Meter Reader Gr.
I is a promotion post while the post of Meter Reader Gr.
II is filled by direct recruit ment.
The Rajasthan State Electricity Board (Emoluments) Regulation 1978 made in exercise of the powers conferred by Sec.
79 Sub sections (c) & (k) of the have Statutory force and it has been clearly mentioned that they 'shall be deemed to have been made applicable from 1st April, 1974.
The Board had set up their case in the reply to the writ petition on the basis of these Regulations and it was the duty of the Division Bench of the High Court to have looked into the reply filed by the Board and to decide the effect of such statutory regulations in the present case.
The Board under Clause (C) of Regulation 79 was fully empowered to provide for the duties of officers and other employees of the Board, and their salaries, allowances and other conditions of service or under the residuary clause (k) for any other matter arising out of the Board 's function under this Act for which it is necessary or expedient to make regulations.
We have gone through the regulations which have been brought into force from 1st April, 1974 and in Schedule II group 'B ' at Item No. 7 Meter Reader II/Meter Checker II has been fixed in the revised pay scale of Rs.260 464 (original scale Rs.80 194) and in group 'C ' at Item No. 21 Meter Reader I/Meter Checker I in scale No. 3 revised pay scale Rs.370 570 (original scale Rs. 126 250).
The High Court committed a serious error in ignoring Clause IX of the First Settlement dated 22.2.1972 as well as the Regulations made by the Board in 1978.
292 So far as the cases of Udai Lal, Shyam Lal and Prem Shankar are concerned even if the Board did not challenge the order of the High Court dated 28.3.1982 in their cases, it cannot act as res judicata or as estoppel against the Board in challenging the present order of the High Court before this Court.
There is no question of applying the principle of equal pay for equal work in the facts and circumstances of this case and to allow Meter Readers II/Meter Checker Gr.
II, the pay scale of Meter Reader/Meter Checker Gr.
I. Apart from that, these controversies have been raised by the respondents for the first time by filing affidavits before this Court at the fag end of arguments, and these questions being mixed questions of fact and law, cannot be permitted to be raised now.
In the result, we allow all these appeals, set aside the Judgment of the High Court, and dismiss all the writ peti tions.
In the facts and circumstances of the case we direct the parties to bear their own costs.
R.S.S. Appeals al lowed.
| The appellant, a company resident in British India, had a cotton mill.
The cloth manufactured in the mill was sold in British India as well as native States.
For the assess ment years 194546, 194647 and 1947 48, the company was assessed under Section 14(2)(c) of the Income Tax Act, 1922, in respect of certain sums remitted to British India from native States, in addition to the assessment under Section 42(3), deeming 1/3rd of the profit from the sales effected in native States, as having accrued from the manufacturing part of business in British India.
The assessee 's contention that 1/3rd of income having been assessed under Section 42(3), as income deemed to have accrued in British India, no further assessment should be made under Section 14(2)(c) was rejected by the Income Tax Officer, the Appellate Assistant Commissioner and the Income Tax Appellate Tribunal.
The Tribunal also rejected the assessee 's additional contention that if the remittances made to British India in any year exceeded the amount taxed under Section 42(3), then it was only so much of the excess which could be taxed under Section 14(2)(c).
However, it reduced the additions made by the Income Tax Officer and affirmed by the appellate authority, by 1/3rd of such remit tances.
On a reference made under Section 66(1), the High Court confirmed the Tribunal 's decision.
In the appeal before this Court, on behalf of the appel lantassessee R was contended that where there was a mixed fund, as in the instant case, consisting partly of taxed and partly of untaxed monies, any remittance made should he deemed to have been paid out of that 294 part of the money which had suffered tax and that it was the right of the tax payer to attribute the payment to the taxed money so as to obtain the benefit allowed by the law.
Dismissing the appeals, this Court, HELD: 1.1 If there were two funds at the disposal of the assessee one upon which tax had been already levied and another which was liable to be brought to tax a presump tion, in the absence of evidence to the contrary might arise that the remittance made by the assessee in the course of its business was made out of the fund that was already taxed and not out of the fund that remained to be taxed.
[297F] Meyyappa Chettiar vs The Commissioner of Income Tax, , 45, referred to. 1.2 The tax payer is given the right of attribution in the way most favourable to himself.
In the absence of evi dence to the contrary, it is presumed that payments are made out of income.
This abstract principle of attribution is applicable in certain circumstances.
Whether it is applica ble in a particular case depends upon the facts of that case and the provisions of the statute.
It can be adopted only to the extent that it is consistent with the law and facts.
[298E F] Paton (As Penton 's Trustee) vs Commissioners of Inland Revenue, 21 Tax Cases 626 and The Cape Brandy Syndicate vs The Commissioners of Inland Revenue, 12 Tax Cases 359, 366, referred to.
In the instant case, on the facts found the assessee did not have two funds, but only one fund composed of taxed and non taxed amounts.
As one third of this amount had already been taxed under section 42(3) of the Act, 1/3rd of the remittances to British India in a particular year was held to be exempted from levy.
The Tribunal having excluded 1/3rd of the remittances to British India from taxation during a particular year, the High Court was justified in refusing to grant any further relief to the assessee.
[297G; 299B]
|
ivil Appeal No. 1387 of 1987.
From the Judgment and Order dated 25.9.1986 of the Andhra Pradesh High Court in C.W. Appeal No. 1027 of 1986.
A.K. Sen, K. Srinivasamurthy and Kailash Vasdev for the Appellants.
M.K. Ramamurthi and M.A. Krishna Murthy, for the Re spondent.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The State Bank of India and two of its officers have filed this appeal by special leave against the judgment of a Division Bench of the High Court of Andhra Pradesh in Writ Appeal No. 1027 of 1986 dated 25.9.1986 affirming the judgment dated 28.3.
1986 of the learned Single Judge in Writ Petition No. 5133 of 1984 issuing a direction to the appellants to promote the respondent, Mohd. Mynuddin to the Middle Management Grade Scale III.
The respondent who was holding the post of the Manager, S.I.B. Division, State Bank of India, Vijayawada (Andhra Pradesh) which was a post in Middle Management Grade Scale II filed the above writ petition before the High Court in the year 1984 complaining that he had been wrongly denied promotion to the Middle Management Grade Scale III along with some others who belonged to his batch 535 without any reasonable ground, even though he was fully eligible for such promotion.
On the above basis he prayed for the issue of a direction to the management to promote him to the higher post with effect from 1979.
According to the appellants his case was not considered in the year 1979 on account of inadequacy of material regarding his eligibil ity but when it was brought to the notice of the management that he had necessary eligibility for the post, his case was considered in 1982 for the vacancies of 1980 and 1981 but he was not selected.
Again his case for promotion was consid ered on 13.8.1983.
Then again he was found not fit for promotion and, therefore, he was not promoted.
The main contention of the respondent before the High Court was that since there were no adverse remarks in any of his confidential reports, he should have been promoted to the higher post.
The learned Single Judge noticed that in the confidential reports relating to the respondent it had been recorded that his service was 'satisfactory ' in the years 1977 78, 1979 80 and 1980 81 and that there were no adverse remarks against the respondent.
The learned Single Judge, therefore.
found that on the material placed before the Court there was nothing which disentitled the respondent to the promotion in question and that the action of the management in not promoting him was arbitrary.
The learned Single Judge accordingly allowed the writ petition and issued a direction to the appellants to promote the respond ent to the post of Middle Management Grade Scale III with effect from 1.8.
1979 when his batch mates were promoted and that he should be given all consequential benefits.
Ag grieved by the judgment of the learned Single Judge the appellants filed an appeal before the Division Bench of the High Court which, as stated earlier.
dismissed the appeal affirming the judgment of the learned Single Judge by its order dated 25.9.
against which this appeal by special leave is filed.
It is admitted that the posts in the Middle Management Grade Scale III in the State Bank of India are posts to which appointments are made by selection.
The State Bank of India stated before the High Court that the promotion to Middle Management Grade Scale I11 posts depended not merely upon the eligibility but on merit and such promotion was accorded only after a proper evaluation of the service records, performance appraisal and potentiality of the officer concerned to assume higher responsibilities.
The evaluation was done by the Selection Committee.
which was expected to go into several aspects including the merits and demerits or all the candidates who were eligible.
It was further pleaded that the mere absence of adverse remarks did not entitle an employee to promotion to the next higher 536 grade automatically when promotion was by selection.
It was further pleaded that after applying the relevant tests laid down by several circulars issued by the Management embodying the guidelines in respect of the selection of officers for promotion to the Middle Management Grade Scale III it was found from time to time that the respondent was not entitled to be promoted.
It was further pleaded before us that in any event the High Court was not right in issuing a direction to the management to promote the respondent to the higher post particularly in the absence of any plea of mala fides.
The learned counsel for the appellants, however, has very fairly stated that even now the management is willing to consider the case of the respondent for promotion on a proper ap praisal of the relevant material by the Selection Committee.
Whenever promotion to a higher post is to be made on the basis of merit no officer can claim promotion to the higher post as a matter of right by virtue of seniority alone with effect from the date on which his juniors are promoted.
It is not sufficient that in his confidential reports it is recorded that his services are 'satisfactory '.
An officer may be capable of discharging the duties of the post held by him satisfactorily but he may not be fit for the higher post.
Before any such promotion can be effected it is the duty of the management to consider the case of the officer concerned on the basis of the relevant materials.
If promo tion has been denied arbitrarily or without any reason ordinarily the Court can issue a direction to the management to consider the case of the officer concerned for promotion but it cannot issue a direction to promote the officer concerned to the higher post without giving an opportunity to the management to consider the question of promotion.
There is good reason for taking this view.
The Court is not by its very nature competent to appreciate the abilities, qualities or attributes necessary for the task, office or duty of every kind of post in the modern world and it would be hazardous for it to undertake the responsibility of assessing whether a person is fit for being promoted to a higher post which is to be filled up by selection.
The duties of such posts may need skills of different kinds scientific, technical, financial, industrial.
commer cial, administrative, educational etc.
The methods of evalu ation of the abilities or the competence of persons to be selected for such posts have also become nowadays very much refined and sophisticated and such evaluation should, there fore, in the public interest ordinarily be left to be done by the individual or a committee consisting of persons who have the knowledge of the requirements of a given post, to be nominated by the employer.
Of course.
the process of selection adopted by them should always be 537 honest and fair.
It is only when the process of selection is vitiated on the ground of bias, mala fides or any other similar vitiating circumstance other considerations will arise.
The nature of the writ that can be issued in cases like the one before us has been considered by this Court in the State of Mysore and Anr.
vs Syed Mahmood and Ors.
, [ ; In that case rule 43(b) of the Mysore State Civil Services General Recruitment Rules, 1957 re quired promotion to be made by selection on the basis of seniority cum merit, that is seniority subject to the fit ness of the candidate to discharge the duties of the post from among persons eligible for promotion.
While making selections for promotions to the posts of senior statistical assistants from the cadre of junior statistical assistants, the State Government did not consider the case of the re spondents therein who were junior statistical assistants, and published a list promoting persons ranking below them in point of seniority.
The respondents therein filed writ petition before the High Court.
The High Court while refus ing to quash the seniority list directed the appellant State to promote the respondents as from the dates on which their juniors were promoted and treat their promotion as effective from that date.
In the appeal filed against the judgment of the High Court this Court observed that while making selec tions for promotion to the posts of senior statistical assistants from the cadre of junior statistical assistants, in 1959, the State Government was under a duty to consider whether having regard to their seniority and fitness they should be promoted.
Since the promotions were irregularly made the respondents therein were entitled to ask the State Government to reconsider their case.
In the circumstances.
this Court observed, that the High Court could only issue a writ to the State Government compelling it to perform its duty and to consider whether having regard to their seniori ty and fitness, the respondents should have been promoted on the relevant dates when officers junior to them were promot ed and that instead of issuing such a writ the High Court had wrongly issued a writ directing the State Government to promote them with retrospective effect.
This Court further observed that the High Court ought not to have issued such a writ without giving the State Government an opportunity in the first instance to consider their fitness for promotion in 1959.
The ratio of the above decision is that where the State Government or a statutory authority is under an obli gation to promote an employee to a higher post which has to be filled up by selection the State Government or the statu tory authority alone should be directed to consider the question whether the employee is entitled to be so promoted and that the Court should not ordinarily issue a writ to the Government or the statutory authority to promote an officer straightaway.
The principle enunciated in the above decision 538 is equally applicable to the case on hand.
It is seen that the Selection Committee constituted by the State Bank of India has considered the case of the respondent for promotion to the vacancies of the years 1980 and 1981 and for the subsequent period from time to time.
The Selection Committee did not find the respondent fit for promotion on all such occasions.
There is no allegation of bias or mala fides urged against the members of the Selec tion Committee or the management.
On the material placed before us we hold that at all relevant times the case of the promotion of respondent has been considered in accordance with law.
No other contention is urged before us.
On the facts and in the circumstances of the case we do not find any error committed by the appellants.
The High Court was not.
therefore, right in directing the appellants to promote the respondent with effect from 1979.
As mentioned earlier.
the learned counsel for the appellants has submitted that the Selection Committee constituted by the appellants would again consider the case of the respondent for promotion on a proper appraisal of the relevant material.
In the circumstances, we feel that the direction issued by the High Court should be set aside and we accordingly do so.
The appellants are, however, directed to consider the case of the respondent for promotion within four months from today and if on an assessment of the relevant material the State Bank of India finds that the respondent is fit to be promoted, he shall be promoted forthwith.
This appeal is accordingly disposed of.
There will.
however be no order as to costs.
P.S.S. Appeal allowed.
| Sub section (1) of section 40 of the Andhra Pradesh Shops and Establishments Act, 1966 interdicts the employer governed by the Act from terminating the services of an employee without complying with the conditions laid therein.
Section 25F of the lays down conditions precedent to retrenchment of workmen noncompliance with which will be fatal to any order of retrenchment.
The petitioner society retrenched the respondents on the ground that the business of the management did not warrant the continuance of its heavy establishment.
In an appeal under section 41(1) of the Act the appellate authority set aside the orders and directed reinstatement of the respondents.
The Labour Court set aside the orders of the appellate authority in respect of some of the respondents.
A Single Judge of the High Court found that the respond ents were 'workmen ' and the management was an 'industry ' as defined in the but dismissed the writ petition holding that they could not claim the benefit of section 25F of the in a proceeding under section 41 of the State Act, being of the view that there was no scope either in the language of section 40 of the State Act or its implication making it obligatory to read the condition of section 25F of the Central Act as 729 part of section 40 of the State Act, that the statutory authori ties, created under section 41(1) and section 41(3) of the State Act being creatures of the statute, had no right to apply the provisions of section 25F of the Central Act to proceedings before them and that whereas the rights under the Central Act could be agitated by a reference to a Labour Court the right agitated under section 41(1) and section 41(3) was a personal right.
The Division Bench on appeal by the respondents held that the orders of termination were unsustainable.
It took the view that the question of their retrenchment was gov erned by section 25F.
In the special leave petition it was contended on behalf of the management that the provisions of section 40, which deal with termination of service in a shop or establishment contained in the State Act, which is a later Act, being repugnant to the provisions contained in Chapter V A of the Central Act, which is an earlier law, should prevail as the assent of the President has been given to the State Act.
Dismissing the special leave petition, HELD: 1.1 The High Court was right in holding that section 25F of the having not been complied with, all the terminations were illegal.
The respondents were, therefore.
entitled to be reinstated in service with full back wages.
[743A] 1.2 If the employees are 'workmen ' and the management is an 'industry ' as defined in the and the action taken by the management amounts to 'retrench ment ', then the rights and liabilities of the parties are governed by provisions of Chapter V A of that Act and the said rights and liabilities may be adjudicated upon and enforced in proceedings before the authorities under section 41(1) and section 41(3) of the Andhra Pradesh Shops and Estab lishments Act.
In the instant case the Single Judge of the High Court had found that the respondents were 'workmen ' and the management was an 'industry ' as defined in the Central Act.
[741H 742A, 738C] 1.3 Sub section (1) of section 25J of the lays down that Chapter V A shall have effect notwith standing anything inconsistent therewith contained in any other law.
The proviso to that sub section, however, saves any higher benefit available to a workman under any law, agreement or settlement or award.
Sub section (2) of section 25J, which makes a distinction between any machinery provided by any State law for settlement of industrial disputes and the substantive 730 rights and liabilities arising under Chapter V A of the Central Act, provides that while that section would not effect the provisions in a State law relating to settlement of industrial disputes, the rights and liabilities of em ployers and workmen insofar as they relate to lay off and retrenchment shall be determined in accordance with Chapter V A of the Central Act.
It is thus apparent that section 41(1) and section 41(3) of the State Act prescribe alternative authori ties to settle a dispute arising out of a retrenchment.
Those authorities may exercise their jurisdiction under the State Act but they have to decide the rights and liabilities arising out of retrenchment in accordance with the provi sions of Chapter V A.
The said rights can be enforced by a workman personally by himself filing an appeal under section 41(1) of the State Act.
It is not necessary that a reference should be sought under the Central Act by collective action of workers.
[739A E] Sawatram Ramprasad Mills Co. Ltd. vs Baliram Ukandaji and Another, ; and Pest Control India Pvt. Ltd. vs The Labour Court, Guntur and Another, [1984] 1 Andhra Weekly Reporter 277, referred to.
2.1 There is no repugnancy between the two Acts.
The State Act, which is a later law, does not contain any ex press provision making the provisions relating to retrench ment in the Central Act ineffective insofar as Andhra Pra desh is concerned.
[740E] 2.2 Where there is a conflict between the special provi sions contained in an earlier law dealing with retrenchment and the general provisions contained in a later law general ly dealing with terminations of service, the existence of repugnancy between the two laws cannot easily be presumed.
[740H] Chapter V A of the Central Act, which is the earlier law, deals with rights and liabilities arising out of lay off and retrenchment.
Section 25J of that Act deals with the effect of the provisions of Chapter V A on other laws incon sistent with that Chapter.
Sub section (2) of section 25J is quite emphatic about the provisions relating to the rights and liabilities arising out of lay off and retrenchment.
By enacting that provision Parliament intended that such rights and liabilities should be uniform throughout India where the Central Act was in force and did not wish that the States should have their own laws inconsistent with the Central law.
These are special provisions and they do not apply to all kinds of termination of services.
If the State Legisla ture intended that it should have a law of its own regarding the rights and liabilities arising 731 out of retrenchment it would have expressly provided for It.
The State Legislature had not done so in the instant case.
Section 40 of the State Act deals with termination of serv ice generally.
In such a situation it cannot be said that there was any implied repugnancy between the Central law and the State law.
[740F, 741F, 740G, 741FG] Maxwell on the Interpretation of Statutes, 12th Edn.
p. 196 referred to.
[The Act should be suitably amended making it possible to an individual workman to seek redress in an appropriate forum regarding illegal termination of service which may take the form of dismissal, discharge, retrenchment etc.
or modification of punishment imposed in a domestic enquiry.
There is also a great need to review and to bring into existence an all India Labour Appellate Tribunal with powers to hear appeals against the decisions of all Labour Courts, industrial Tribunals and even of authorities constituted under several labour laws enacted by the States so that a body of uniform and sound principles of labour law may be evolved for the benefit of both industry and labour through out India.] [742B G]
|
Civil Appeal No. 8491 of 1983.
From the Judgment and Order dated 5th October, 1982 of the Patna High Court at Patna in C.W.J.C. No. 1420 of 1982.
P.R. Mridul, and M.P. Jha, for the Appellant.
B.B. Singh, for the Respondents The Judgment of the Court was delivered by VENKATARAMIAH, J.
This is an appeal by special leave against the order dated October 5,1982 in C.W.J.C. No.1420 of 1982 on the file of the High Court of Patna dismissing the petition filed by the appellant under Article 226 of the Constitution.
The facts of the case are these: The appellant was directly recruited and appointed as a Deputy Superintendent of Police in the Police Department of the State of Bihar in the year 1964.
In 1973 he was eligible to be considered for appointment as a member of the Indian Police Service under the provisions of the Indian Police Service 301 (Recruitment) Rules, 1954 (hereinafter referred to as 'the Rules ') read with the Indian Police Service (Appointment by Promotion) Regulations, 1955 (hereinafter referred to as 'the Regulations ') framed under sub rule (1) of Rule 9 of the Rules.
His case was placed before the Committee constituted under Regulation 4 of the Regulations for the purpose of preparation of the list of suitable officers for promotion to the Indian Police Service Cadre of the State of Bihar in 1973, 1974, 1975 and 1976.
In the years 1973, 1974 and 1975, he could not be included in the select list as he was junior to those who were included in the select list.
In the year 1976 his name was not included in the select list as there was an adverse entry in his confidential roll of 1973 74.
The reasons given by the Committee for superseding the appellant based on the confidential roll were these: "Delayed disposal of pending papers and supervision notes.
Inadequate control over office, judgment, initiative, sense of responsibility and management reported to be just fair.
Censured by State Govt.
order dt.
20th Oct., 1975.
" The Selection Committee took the decision to supersede the appellant at its meeting held on December 22, 1976 in view of the above entry in the confidential roll of the appellant.
It is not disputed that the said adverse entry was communicated to the appellant in the year 1977 after the above meeting was over.
It appears that there were also adverse entries in the annual confidential roll of the appellant for the year 1974 75.
They were communicated to the appellant in the year 1976.
The appellant made representations in respect of both the adverse entries in time.
His main grievance was that they had been made by his official superior who was biased against him.
The adverse entry made in the confidential roll for the year 1973 74 was expunged by the State Government on December 3, 1980 and the adverse entries in the confidential roll for the year 1974 75 were expunged by two orders dated February 21, 1978 and October 7, 1980.
There was no meeting of the Selection Committee from 1977 to 1980.
It, however, met on March 11/12, 1981.
On this occasion the appellant represented to the Committee that the adverse entries in his confidential rolls had been removed by the State Government by various orders and requested them to consider his case for promotion to the Indian Police Service Cadre.
On this occasion the Committee did not look into the confidential rolls of the appellant for the years 1979 80 and 1980 81 which contained entries very favourable to the appellant for no fault of the appellant.
The Committee, however, 302 classified him as 'good ' but did not include him in the select list while some of his juniors were included.
The appellant represented to the Committee and the State Government against the decision taken by the Committee.
The Committee again met on October 14, 1981.
When nothing came out of the representations made by him, the appellant filed a writ petition questioning the validity of the decisions of the Selection Committee before the High Court of Patna.
The petition was dismissed at the stage of admission.
This appeal is filed by special leave against the order of the High Court.
The main point urged before us is that the Selection Committee had committed an illegality in rejecting the claim of the appellant for being included in the select list in the year 1976 by relying upon the adverse entries which had been made in his confidential rolls which had not been either communicated to him or against which he had made representation which had remained undisposed of and which had been subsequently expunged.
The true legal position governing such cases is laid down by this Court in Gurdial Singh Fijji vs State of Punjab & Ors,( ') which was a case arising under the Indian Administrative Service (Appointment by Promotion) Regulations, 1955 which more or less correspond to the Regulations applicable to the Indian Police Service.
In the above case Chandrachud, C.J. has observed thus: "The principle is well settled that in accordance with the rules of natural justice, an adverse report in a confidential roll cannot be acted upon to deny promotional opportunities unless it is communicated to the person concerned so that he has an opportunity to improve his work and conduct or to explain the circumstances leading to the report.
Such an opportunity is not an empty formality, its object, partially, being to enable the superior authorities to decide on a consideration of the explanation offered by the person concerned, whether the adverse report is justified.
Unfortunately, for one reason or another, not arising out of any fault on the part of the appellant, though the adverse report was communicated to him, the Government has not been able to consider his explanation and decide whether the report was justified.
In these circumstances it is difficult to support the non issuance of the integrity certificate to 303 the appellant.
The chain of reaction began with the adverse report and the infirmity in the link of causation is that no one has yet decided whether that report was justified.
We cannot speculate, in the absence of a proper pleading, whether the appellant was not found suitable otherwise, that is to say, for reasons other than those connected with the nonissuance of an integrity certificate to him.
" It is not disputed that the classification of officers whose cases are taken up for consideration into 'outstanding ', 'very good ', 'good ' or 'bad ' etc.
for purposes of promotion to the Indian Police Service Cadre is mainly based upon the remarks in the confidential rolls.
On December 22, 1976, when the Selection Committee met, the adverse remarks in the confidential roll for 1973 74 had not been communicated and the appellant 's representation regarding adverse remarks in the confidential roll for the year 1974 75 and censure against him had not been disposed of although it is alleged that one Shri Yamuna Ram against whom also adverse remarks had been made was included provisionally in the select list.
When the Selection Committee met on March 11 and 12, 1981 despite State Government 's suo motu decision not to retain adverse remarks for the year 1976 77 on records, the same had not been removed from the confidential roll.
This must have influenced the decision of the Selection Committee.
It is also seen that the confidential rolls of the appellant for the year 1979 80 and 1980 81 which contained entries favourable to the appellant were not placed before the Selection Committee.
On October 14,1981 when the Selection Committee met, it does not appear to have considered the representation made by the appellant against his non selection.
In addition to all these, the State Government has expunged the adverse remarks by its orders made from time to time.
These facts are not controverted by the respondents.
The facts of this case are distinguishable from the facts involved in the decision of this Court in R.L. Butail vs Union of India & Ors.
which is relied on by the respondents.
In that case the confidential report of the appellant therein for the year 1964 contained an adverse entry and he had made a representation regarding it, When the Departmental Promotion Committee met in March, 1966, the appellant 's representation regarding the adverse entry of 1964 was not placed before it and a decision adverse to the appellant was taken by the Committee without reference to the said representation.
The 304 appellant contended before this Court that the omission to consider his representation before the date of meeting of the Committee vitiated its decision.
The Court held that the omission either to place the said representation before the Committee or its non consideration before the date of the meeting had no effect on the decision of the Committee as the representation had actually been rejected subsequently with the result that the confidential report for the year 1964 remained unchanged.
The position in the case before us is different.
Here the adverse entries in question have in fact been expunged by the State Government subsequently.
It may be pertinent to state here that the practice of the Departmental Promotion Committee referred to in Butail 's case (supra) was that if in such a case a representation were to be accepted and in consequence the confidential report was altered or the adverse entries were expunged the Committee would have to review its recommendations in the light of such a result.
The appellant in the present case has pressed before us for a similar relief as the adverse entries made against him have been since expunged.
After giving our anxious consideration to the uncontroverted material placed before us we have reached the conclusion that the case of the appellant for promotion to the Indian Police Service Cadre has not been considered by the Committee in a just and fair way and his case has been disposed of contrary to the principles laid down in Gurdial Singh Fijji 's case (supra).
The decisions of the Selection Committee recorded at its meetings in which the case of the appellant was considered are vitiated by reason of reliance being placed on the adverse remarks which were later on expunged.
The High Court committed an error in dismissing the petition of the appellant and its order is, therefore, liable to be set aside.
We accordingly set aside the order of the High Court.
We hold that the appellant has made out a case for reconsideration of the question of his promotion to the Indian Police Service Cadre of the State of Bihar as on December 22, 1976 and if he is not selected as on that date for being considered again as on March 12, 1981.
If he is not selected as on March 12, 1981 his case has to be considered as on October 14, 1981.
The Selection Committee has now to reconsider the case of the appellant accordingly after taking into consideration the orders passed by the State Government subsequently on any adverse entry that may have been made earlier and any other order of similar nature pertaining to the service of the appellant.
If on such reconsideration the appellant is selected he shall be entitled to the seniority and all other consequential benefits flowing therefrom.
We issue a direction to the respondents to reconsider the case of the 305 appellant as stated above.
We hope that the above direction will be complied with expeditiously but not later than four months from today.
Before concluding we wish to state that the Central Government and the State Governments should now examine whether the present system of maintenance of confidential rolls should be continued.
Under the present system, entries are first made in the confidential roll of an officer behind his back and then he is given an opportunity to make a representation against any entry that may have been made against him by communicating the adverse entry after considerable delay.
Any representation made by him would be considered by a higher authority or the State Government or the Central Government, as the case may be, some years later, as it has happened in this case, by which time any evidence that may be there to show that the entries made were baseless may have vanished.
The predicament in which the officer against whom adverse remarks are made is then placed can easily be visualised.
Even the authority which has got to pass orders on the representation of the officer will find it difficult to deal with the matter satisfactorily after a long interval of time.
In the meanwhile the officer concerned would have missed many opportunities which would have advanced his prospects in the service.
In order to avoid such a contingency, the Government may consider the introduction of a system in which the officer who has to make entries in the confidential roll may be required to record his remarks in the presence of the officer against whom remarks are proposed to be made after giving him an opportunity to explain any circumstance that may appear to be against him with the right to make representation to higher authorities against any adverse remarks.
This course may obviate many times totally baseless remarks being made in the confidential roll and would minimise the unnecessary suffering to which the officer concerned will be exposed.
Another system which may be introduced is to ask the officer who records the confidential remarks to serve a copy of such remarks on the officer concerned before the confidential roll is submitted to the higher authorities so that his representation against the remarks may also reach the higher authority shortly after the confidential roll is received.
This would curtail the delay in taking action on the representation.
Suspensions, adverse remarks in confidential rolls and frequent transfers from one place to another are ordered or made many a time without justification and without giving a reasonable opportunity to the officer concerned and such actions surely result in the demoralisation of the services.
Courts can give very little relief in such cases.
The 306 Executive itself should, therefore, devise effective means to mitigate the hardship caused to the officers who are subjected to such treatment.
These questions require to be examined afresh in the light of the experience gained in recent years and solutions should be found to eliminate as far as possible complaints against misuse of these powers by official superiors who may not be well disposed towards the officer against whom such action is taken.
It is needless to state that a non disgruntled bureaucracy adds to the efficiency of administration.
The appeal is accordingly allowed with costs.
H.S.K. Appeal allowed.
| The appellant, a directly recruited Deputy Superintendent of Police in the Police Department of the Respondent State was considered in 1976 for appointment as a member of the India Police Service under the provisions of the Indian Police Service (Recruitment) Rules, 1954 read with the Indian Police Service (Appointment by promotion) Regulations, 1955.
The Selection Committee did not include the appellant in the select list because of an adverse entry in his confidential roll of 1973 74.
The appellant was communicated the said adverse entry only in 1977 which was later on expunged by the State Government in December 1980.
There were also adverse entries in the confidential roll of the appellant for the year 1974 75 which were communicated to him in 1976 and which were also later on expunged by the State Government in February, 1978 and October 1980.
The Selection Committee met again in March 1981, but this time also did not include the appellant in the select list while some of his juniors were included.
The appellant questioned the validity of the decision of the Selection Committee in a writ petition before the High Court.
The High Court dismissed the writ petition at the stage of admission.
Hence this appeal.
In this appeal the appellant urged that the Selection Committee was wrong in relying upon the adverse entries which had been made in his confidential rolls which had not been either communicated to him or against which he had made representation which had remained undisposed of and which had been subsequently expunged.
Allowing the appeal, ^ HELD: The principle is well settled that in accordance with the rules of natural justice, an adverse report in a confidential roll cannot be acted upon to deny promotional opportunities unless it is communicated to the person concerned so that he has an opportunity to improve his work and conduct or to explain the circumstances leading to the report.
Such an opportunity is not an empty formality, its object, partially, being to enable the superior authorities to decide on a consideration of the explanation offered by the person concerned, whether the adverse report is justified.
[302 F] Gurdial Singh Fijji vs State of Punjab & Ors., ; referred to.
In the instant case, the case of the appellant for promotion to the Indian 300 Police Service Cadre had not been considered by the committee in a just and fair way and his case has been disposed of contrary to the principles laid down in the Gurdial Singh Fijji 's case.
The decisions of the Selection Committee recorded at its meetings in which the case of the appellant was considered are vitiated by reason of reliance being placed on the adverse remarks which were later on expunged.
The High Court committed an error in dismissing the petition of the appellant.
The appellant has made out a case for reconsideration of the question of his promotion to the Indian Police Service Cadre of the State of Bihar as on December 22, 1976.
The Selection Committee has now to reconsider the case of the appellant accordingly.
[104 E G] R.L. Butail vs Union of India & Ors., [1971] 2 S.C.R. 55.
distinguished.
In order to avoid a contingency, as arose in this case, the Government may consider the introduction of a system in which the officer who has to make entries in the confidential roll may be required to record his remarks in the presence of the Officer against whom remarks are proposed to be made after giving him an opportunity to explain any circumstance that may appear to be against him with the right to make representation to higher authorities against any adverse remarks.
Another system which may be introduced is to ask the officer who records the confidential remarks to serve a copy of such remarks on the officer concerned before the confidential roll is submitted to the higher authorities so that his representation against the remarks may also reach the higher authority shortly after the confidential roll is received.
This would curtail the delay in taking action on the representation.
[105 E G]
|
Appeal No. 2162 of 1966.
Appeal from the judgment and order dated September 6, 9, 1963 of the Gujarat High Court in Income tax Reference No. 9 of 1963.
B. Sen, A. N. Kirpal, R. N. Sachthey and section P. Nayar, for the appellant.
I. N. Shroff, for the respondent.
The Judgment of the Court was delivered by Shah, J.
By an agreement dated October 29, 1928 Ciba (India) Ltd. hereinafter called 'the principals ' appointed one Tejaji Farasram Kharawalla selling agent for the District of Ahmedabad in respect of certain kinds of dyes and dye stuffs, and agreed to pay him commission at the rate of 12 1/2% on sales by him of dyes and dye stuffs of the principals.
The commission was to include " all charges in connection with the upkeep of offices and godown, turnover rebates and contingency expenses etc.
" The terms relating to commission were modified by agreement dated August 20, 1935 and out of the commission agreed to be paid, 71% was to be treated as the selling commission and 5% was to be treated as compensation in lieu of the contingency expenses which the selling agent had to meet, "such as commission to Dyeing Masters, agents etc.".
The rights of the selling agent were assigned with the consent of the principals to the respondent Company with effect from October 27, 1947.
In assessing the income of the Company for the assessment year 1949 50, the Income tax Officer included in the taxable income Rs. 58,025/ being the difference between Rs. 1,90,538/ received by the Company as "5% commission" and Rs. 1,32,512/ spent by the Company for meeting the charges which the selling agent was to meet.
The Income tax Appellate Tribunal, however, upheld the contention of the Company that in the computation of the income of the Company, the "5% commission" was wholly exempt by virtue of section 4 (3)(vi) of the Income tax Act, 1922.
The Commissioner then moved the Tribunal to draw up a statement of the case and to refer the following question to the High Court of Judicature at Bombay: "Whether on the facts of the case, a portion viz. 5 of the selling agency commission of 12 1/2% received by the assessee company from M/s Ciba Ltd. in the course of carrying on the selling agency business is exempt from tax under section 413(vi) of the Act?" But the Tribunal only referred the following question: "Whether the assessee company held an office or employment of profit within the meaning of section 4(3)(vi) of the Indian Income tax Act?" 39 The application preferred by the Commissioner to the High Court for calling upon the tribunal to submit a statement on the question originally submitted was rejected, and the High Court answered the question referred by the Tribunal in the affirmative, observing that it had been conclusively determined by their earlier decision in Tejaji Farasram Kharawalla vs Commissioner of Income tax, Bombay (Mofussil)(1) which arose out of a proceeding for assessment to tax of the income of the original selling agent under the same agency agreement.
It appears that in so observing the Court was under some misapprehension, for the question referred by the Tribunal had not been decided in the earlier judgment.
Against the order passed by the High Court recording an answer in the affirmative on the question referred by the Tribunal and against the order dismissing the notice of motion, the Commissioner appealed to this Court.
This Court set aside the order passed by the High Court dismissing the application of the Commissioner and without expressing any opinion on the correctness or otherwise of the answer recorded by the High Court on the question referred by the Tribunal, remanded the case to the High Court with a direction that the Tribunal be called upon to state a case on the question raised in the application of the Commis sioner.
The case was then heard by the High Court of Gujarat to which it stood transferred because of the reorganisation of the State of Bombay.
The High Court of Gujarat held that the "5% commission" received by the Company represented a special allowance to meet expenditure "such as commission to Dyeing Masters, agents etc.", and was on that account exempt from tax.
The High Court also held that the Company held an office or employment of profit.
The Commissioner has again appealed to this Court against the answers recorded by the High Court on the original and supplementary question.
Section 4(3)(vi) of the Indian Income tax Act, 1922, as it stood in the year of assessment read as follows: "Any income, profits or gains failing within the following classes shall not be included in the total income of the person receiving them: (vi) Any special allowance, benefit or perquisite specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit.
" The clause grants exemption in respect of expenses "incurred": but on that account an allowance granted to meet expenses to be incurred in future in the performance of the duties of an (1) 40 office or employment of profit is not outside the exemption claimed.
In the context in which the expression "incurred" occurs, it undoubtedly, means "incurred or to be incurred".
To qualify for exemption the allowance must it is clear be granted to meet expenses incurred or to be incurred wholly and necessarily in the performance of the duties of an office or employment of profit.
But the purpose for which the allowance is granted, in our judgment, is alone not determinative of the claim to exemption.
An allowance though made to a person holding an office or employment of profit intended for appropriation towards expenditure incurred or to be incurred in the discharge of the duties, does not constitute any real income of the grantee.
It is in truth expenditure incurred by the employer through the agency of the grantee.
The intention of the framers of the Act was to grant exemption in respect of amounts received by the assessee, not for his own benefit, but for the specific purpose of meeting the expenses wholly and necessarily incurred or to be incurred in the performance of his duties as an agent.
It would, therefore, be reasonable to hold that the allowance granted to meet the expenses wholly and necessarily incurred or to be incurred in the performance of the duties of the office or employment of the grantee alone qualifies for exemption under the Act, and any surplus remaining in the hands of the grantee after meeting the expenses does not bear the character of the allowance for meeting expenses but for performing the duties of the office or employment.
This would be so even if the employer has disabled himself from demanding refund of the amount not expended for meeting the expenses incurred or to be incurred in the performance of the duties of an office or employment of profit, and the surplus remaining in the hands of the grantee acquires for the purpose of the Incometax Act the character of additional remuneration.
We are unable to agree with the decision of the Bombay High Court in Tejaji Farasram Kharawalla 's case(1) that the object with which the grant is made by the employer determines the claim to exemption under section 4(3)(vi) of the Income tax Act.
The observations made by Chagla, C.J., at p. 267 that "what is emphasized in this sub clause section 4(3)(vi) is the purpose of the grant, the object with which the grant was made.
Once it is established that the grant was for that particular purpose, it is no longer necessary for the assessee to prove that in fact he expended that grant for the purpose for which it was given.
He may spend more, or he may spend less, but qua that grant which is given.
for a particular purpose, he is entitled to the exemption", do not, in our judgment, give due effect to the key words "to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit.
" What is exempted is not the consideration paid for meeting the expenditure incurred ' or to be incurred in the performance of the duties of an office or (1) 41 employment:the exemption operates only in respect of a special allowance or benefit specifically granted to meet expenses wholly and necessarily incurred in the discharge of the duties of the office or employment.
The judgment of the Allahabad High Court in Commissioner of Income tax, U. P. vs Sharma & Company(1) and especially the observations of Pathak, J., on which reliance was placed by counsel, for the Company may also be referred to.
In Sharma & Company 's case(1) the assessee firm which was the sole selling agent of a "cotton mill", received a sum exceeding Rs. 67,000/ from the owners of the mills for the purpose of meeting the expenses in connection with the management of a retail cloth shop on behalf of the mill and actually spent only Rs. 12,641/ .
The claim of the firm that it was entitled to exemption from liability to pay tax under section 44(3)(vi) of the Act (before it was amended in 1955) even in respect of the balance retained by it was upheld by the High Court of Allahabad.
Pathak, J., observed that section 4(3)(vi), as it then stood, required the Income tax Officer to enquire whether the purpose of the grant was covered by the language of the clause, and he was not concerned to determine whether the amount granted was actually expended by the recipient.
The learned Judge in so holding was impressed by two considerations: that the expression "incurred" means incurred already, or to be incurred in future; and that income tax being an annual tax in a case where the allowance is an ad hoc allowance which is to cover a period longer than or ending after the year of account, or is a periodical allowance, the Income tax Officer may under the Act exempt expenditure incurred in the year of account and no more, and thereby the intention of the employer would be wholly frustrated and the employee may be called upon to pay tax on a receipt which is not his income.
The expression "incurred" means for reasons already set out incurred or to be incurred.
But that has no bearing on the question whether the unexpended surplus in the hands of the employee is taxable.
And we do not feel impressed by the second consideration.
The allowance may be in respect of a period longer than the accounting year or which runs into the succeeding accounting year or years.
But on that account the whole receipt reduced by the expenses actually incurred in the year of account is not liable to be brought to tax.
If it appears from a review of the circumstances that a special allowance is made for a period longer than the year of account, or that the period covered by the grant of a special allowance extends beyond the close of the account year, it would, in our judgment, be the duty of the income tax Officer to determine the amount allowed in respect of the year of account in which the expenditure has been incurred, and the difference between the amount so determined and the amount actually expended would alone be brought to tax.
(1) 42 It may be noted that the Parliament has by the Finance Act, 1955, with effect from April 1, 1955, recast cl.
(vi) of section 4(3) of the Income tax Act, 1922 and has expressly provided that the special allowance granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit to the extent to which such expenses are actually incurred for that purpose, was exempt from tax.
The Legislature, by the amendment made it clear that only the expenses actually incurred by the assessee will be exempted under section 4(3)(vi).
But the principle that an amount granted to cover expenses to be incurred for a period which extends beyond the year of account in which the grant is received will be allocated between the year of account and the period outside the year of account will apply to the Act as amended.
There is no doubt that the selling agent under the agreement with the principals holds an employment for profit.
No argument to the contrary was advanced before us.
It is unnecessary therefore to consider the elaborate judgment of the High Court on the question whether the selling agent holds an office within the meaning of section 4(3) (vi) of the Act.
The appeal is therefore allowed and the answer recorded by the High Court to the supplementary question is discharged, and the following answer to the supplementary question is recorded: "That portion of 5 per cent of the selling agency commission received by the assessee company is exempt under section 4 (3) (vi) of the Income tax Act, 1922, which is wholly and necessarily incurred in the year of account in the performance of the duties of the company as selling agent.
" There will be no order as to costs in this appeal in this Court and in the High Court.
G.C. Appeal allowed.
| The respondent was a Sales tax Officer under the Uttar Pradesh Government.
Inquiries against him in respect of some charges of corruption were first made by the Assistant Commissioner of Sales tax who examined some witnesses.
The enquiry was then passed on to the Commissioner who neither examined the witnesses against the respondent himself nor gave an opportunity to the respondent, despite the latter 's repeated 'requests to produce his defence witnesses.
On orders of dismissal being passed after the enquiry the respondent filed a writ petition before the High Court which succeeded.
The State appealed.
It was conceded on behalf of the State that the enquiry was under sub (1) or r. 55 of the Civil Services (Classification Control and Appeal) Rules.
The distinction between 'sub:ft. (1) and (3) was considered.
HELD: The third sub rule deals with the unsuitability of an officer for the service or with a charge for any specific fault.
This fault means a fault in the execution of his duties and not a misconduct such as taking scribe etc.
which are charges of a more serious nature affecting the character of the individual concerned.
The collocation of the words any specific fault ' or 'on account of unsuitability for service ' give the clue to the distinction between the third sub rule and the first sub rule.
[852B C] Sub rule (1) of r. 55 is the general rule for enquiries when the conduct of a person is inquired into for misconduct.
A person cannot the charged with criminal conduct without affording him adequate opportunity to clear his character.
If therefore the procedure under the first sub rule had to be followed adequate opportunity had to be given to the respondent to lead evidence on his own behalf to clear himself.
No such opportunity having been given the enquiry could not be said to comply with the elementary principles of natural justice and the High Court rightly held that the enquiry was vitiated.
[851 F G; 852 853 F G]
|
Appeal No. 638 of 1952.
Appeal by special leave from the judgment and decree dated May 21, 1957 of the Assam High Court in First Appeal No. 7, of 1962.
N.C. Chatterjee and D.N. Mukherjee, for the appellants.
S.C. Nath, P.K. Chatterjee for R. Gopalakrishnan, for the respondent.
The Judgment of RAGHUBAR DAYAL, BACHAWAT and RAMASWAMI JJ.
was delivered by BACHWAT J. MUDHOLKAR J. delivered a separate Judgment.
Bachawat .1.
The appellants carrying on business at Raha in Nowgong District had dealings with the respondents, carrying on business at Gauhati.
As a result of the said dealings, the appellants were indebted to the respondents in a sum of Rs. 9,447 4 9.
In order to satisfy the dues of the respondents, the appellants sent to the respondents a cheque for Rs. 9,461 4 0 dated August 31, 1948.
The cheque was drawn by a third party, Messrs. Nathuram Jaidayal of Sibsagar on the Tripura Modern Bank, Sibsagar Branch, in favour of the appellants, who endorsed it to the respondents.
On September 4, 1948, the respondents sent the cheque to their bankers, the Calcutta Commercial Bank, Gauhati for collection.
On the same day, the Calcutta Commercial Bank, Gauhati sent the cheque to the Tripura Modern Bank, Sibsagar for encashment.
The Tripura Modern Bank, Sibsagar debited the accounts of their constituents.
Messrs Nahuram Jaidayal with the sum of Rs. 9,461 4 0, and after deducting Rs. 6 4 0 on account of commission charges, sent to the Calcutta Commercial Bank, Gauhati a draft for Rs. 9,435/ dated September 14, 1948 towards payment of the cheque.
The draft was drawn by the Tripura Modern Bank, Sibsagar on its Calcutta Head Office, and was marked current for three months from the date of the issue.
On receipt of the draft, the Calcutta Commercial Bank, Gauhati sent it to their Head Office at Calcutta for collection.
But the Calcutta Commercial Bank never presented the draft to the Tripura Modern Bank, and made no attempts to collect the amount of the draft.
105 In the meantime, the respondents wrote to the appellants informing them that cash payment for the cheque has not been received, and on September 18, 1948 the appellants replied asking the respondents to get back the cheque.
But the cheque was never returned to the respondents.
On September 17, 1948, the Calcutta Commercial Bank closed its business, and subsequently, it was ordered to be wound up.
On October 16, 1948, the Tripura Modern Bank also closed its business.
and in view of its inability to pay its dues, was compelled to enter into a scheme of arrangement with its creditors.
On November 19, 1948, the respondents requested the Tripura Modern Bank to pay the amount of the draft to them and not 10 the Calcutta Commercial Bank.
But no payment was made by the Tripura Modern Bank either to the respondents or to the Calcutta Commercial Bank.
On March 8, 1949, the respondents instituted the suit, out of which the appeal arises, claiming payment of their dues from the appellants on the footing that the cheque dated August 31, 1948 was received by the respondents as a conditional payment, and as the cheque was not cashed, the respondents were entitled to enforce their original claim.
The Subordinate Judge, Lower Assam District, dismissed the suit.
On appeal, the High Court reversed the judgment appealed from, and decreed the suit.
The appellants now appeal to this Court by special leave.
The High Court rightly held that the respondents originally received the cheque dated August 31, 1948 as a conditional payment of their dues, and if nothing else happened, the original debt Would have revived on non payment of the cheque.
But we think that having regard to the laches of the respondents in the collection of the draft and the consequential prejudice to the appellants, the respondents must be deemed to have retained the draft as absolute payment of the cheque, and on the payment of the cheque, the original debt stood discharged.
In Chitty on Contracts, 22nd Edn., article 1079, the law is stated thus: "Where a negotiable instrument, upon which the debtor is not primarily liable, is accepted by the creditor as conditional payment, he is bound to do all that a holder of such an instrument may do in order to get payment; thus it is his duty to present a cheque within a reasonable time, and if he fails to do.
so, and the debtor is thereby prejudiced, the creditor is guilty of laches and makes the cheque his own, so that it amounts to payment of the debt.
" In Addison 's Treatise on the Law of Contracts, 11th Edn., p. 156, it is stated: "If the debtor makes an order upon his banker for payment of the amount of the debt, and the creditor accepts it, and keeps it in his hands an unreasonable time before 106 presenting it for payment, and the banker becomes insolvent, the debtor is discharged on account of the laches of the creditor." In Hobkins vs Ware(1), it was held that a creditor who takes from his debtor 's agent on account of the debt the cheque of the agent, is bound to present it for payment within a reasonable time; and if he fails to do so and by his delay alters for the worse the position of the debtor, the debtor is discharged, although he was not a party to the cheque.
In the old case of Chamblerlyn vs Delarive(2) it was held that if a creditor accepting a note or draft of his debtor upon a third person holds it an unreasonable time before he demands the money, and the person upon whom it is drawn becomes insolvent, it is the creditor 's own loss, though the draft be not a bill of exchange or negotiable.
Now, in the instant case, the respondents accepted from their debtors, the appellants, a cheque drawn by a third party on the Tripura Modern Bank and endorsed by the appellants.
The respondents through their collecting agents, the Calcutta Commercial Bank, presented the cheque for collection to the Tripura Modern Bank, and instead of obtaining cash payment, received a draft drawn by the Sibsagar Branch of the Tripura Modern Bank on its Head Office.
Having accepted this draft in course of collection of the cheque, the respondents vis a vis the appellants were in no better position than they would have been, if they had accepted the draft from the appellants directly as conditional payment of the cheque.
In the circumstances, the respondents owed a duty to the appellants to present the draft for payment within a reasonable time.
The draft could be presented for payment at any time during the period of three months from the date of its issue.
Instead of presenting the draft for payment, the respondents collecting agents kept it in their hands, and made no attempts to cash it.
P.W. 3, an employee of the Calcutta Commercial Bank, said that the draft, was sent by the Gauhati Office of the Bank to its head office by registered post, but the head office had closed its business and the draft came back to the Gauhati office undelivered.
The closure of the business of the collecting agents was not a lawful excuse for not obtaining delivery of the draft and not presenting it for payment within a reasonable time.
P.W. 3 admitted that had the draft been presented for payment to the Tripura Modern Bank before October 16, 1948, it would have been paid on presentation, and the money could not be realised only because the Calcutta Commercial Bank had closed in the meantime.
The Tripura Modern Bank closed its ,business on October 16, 1948.
Because of its inability to pay its debts, the Tripura Modern Bank is now working under a scheme of arrangement.
The failure of the respondents and their agents to cash the draft within a reasonable time altered the position of the appellants for the worse, and caused prejudice to them.
In the circumstances, the respondents must be regarded as having kept the (1)L.R. (2) ; ; 107 draft in absolute payment of the cheque.
The cheque must be treated as duly paid and consequently, the original debt stood discharged.
The High Court was on error in holding that the failure to obtain payment of the draft was not due to the laches of the respondents ' collecting agents.
In one part of the judgment, the High Court wrongly assumed.
contrary to fact, that the Tripura Modern Bank had stopped business on September 16, 1948 and therefore the draft could not be cashed on presentation, whereas, in fact, the Tripura Modern Bank had stopped business a month later on October 16, 1948.
Moreover, the High Court wrongly assumed that the appellants did not suffer any loss on account of the delay in the presentation of the draft.
There is clear evidence on the record that the draft would have been cashed, if it had been presented for payment before October 16, 1948.
Mr. Chatterjee also contended that the respondents ' collecting agents must be deemed to have accepted the demand draft on September 14, 1948 as absolute payment of the cheque, and that the cheque was, in the eye of law, paid and discharged on that date.
There is a lengthy discussion on this point in the judgment of the High Court, but we do not think it necessary to decide this, question.
In the result.
the appeal is allowed, the judgment and decree passed by the High Court are set aside, and those of the trial Court are restored.
The respondents shall pay to the appellants the costs in this Court.
The parties will pay and bear their own costs in the Courts below.
Mudholkar, j. I agree with my brother Bachawat that this appeal should be allowed; but I would prefer to rest my decision upon a different ground.
It is not necessary to repeat here the .facts which have been set out in my learned brother 's judgment.
Mr. N.C. Chatterjee, appearing for the defendants appellants, urged two grounds, the first of which was that the plaintiffs respondents had accepted the draft for Rs. 9,455/ dated September 14, 1948 drawn by the Tristan Modern Bank, Sibsagar on its Head Office at Calcutta in payment of the cheque for Rs. 9,461 4 0 drawn on the Tripura Modern Bank, Sibsagar which the appellants had endorsed, in favour of the respondents in satisfaction of the amount due upon that cheque and that, therefore, the subsequent dishonor of the draft would not revive the appellants ' liability to pay Rs. 9,455/to the respondents.
The other ground was that the appellants were discharged from liability because of the laches of the respondents in not presenting the draft for encashment within reasonable time of the drawing of that draft.
My learned brother has rested his decision on the second ground.
In my view, however, it is not necessary to express any opinion upon the second ground as the first ground urged by Mr. Chatterjee is a good answer to the respondent 's claim.
108 It is a well accepted rule of English law, which has been applied in this country also, that when a debt becomes due the debtor must tender to the creditor the exact amount of the debt in cash or other legal tender and that where a cheque is tendered by the debtor to the creditor the payment may be absolute or conditional, the strong presumption being in favour of conditional payment.
(see Chalmers on Bills of Exchange, p. 301, 12th ed.).
Therefore, when the respondents accepted the cheque drawn by Messrs Nathuram Jaidayal of Sibsagar in favour of the appellants and endorsed by the appellants in their favour and sent it to the Calcutta Commercial Bank Ltd., Gauhati Branch for collection they must have accepted it as conditional payment.
The respondents ' bank, instead of collecting cash from the Tripura Modern Bank Ltd., Sibsagar, sought to collect the amount by draft.
The reason for this given by Debendra Chandra Mazumdar, P.W. 3, who was Assistant Accountant at the Gauhati Branch of the Calcutta Commercial Bank Ltd. at the relevant time was that the Bank usually collected money from other banks by draft.
There is nothing to indicate in his evidence that this was the prevailing practice in the Banks carrying on business in Assam.
According to him, the respondents ' bank asked for a draft payable at Gauhati but the Tripura Modern Bank Ltd. sent one payable at Calcutta.
The respondents ' bank, however, accepted the draft and sent it by registered post to Calcutta for collection.
Some time thereafter the respondents ' bank closed business and the demand draft was returned undelivered.
The respondents ' Bank made over the draft to the respondents.
It may be mentioned that though the Tripura Modern Bank Ltd., had branch at Gauhati the respondents ' Bank did not object to a draft payable at Calcutta thinking that the money due thereunder could be collected earlier from the Calcutta branch of the Tripura Modern Bank.
The matter, however, did not rest there.
After the respondents ' Bank went into liquidation the respondents wrote a letter on November 19, 1948 to the Agent of the Tripura Modern Bank Ltd., Calcutta saying that the demand draft belonged to them and not to the Calcutta Commercial Bank Ltd., who were only acting as their agents for collection purposes and that the amount for which the draft was drawn should be paid to them and not to the Calcutta Commercial Bank or any one on its behalf.
This letter clearly shows that the respondents accepted the draft in full payment of the amount due to them under the cheque which the appellants had endorsed in their favour.
Thus, though the cheque endorsed by the appellants in favour of the respondents was only a conditional payment of the amount for which the cheque was drawn the respondents by accepting the demand draft drawn by the Tripura Modern Bank, Sibsagar on its Calcutta Branch must be deemed to have accepted that draft as a legal tender or as absolute payment of the amount payable order the cheque endorsed in their favour by the appellant.
Thehrights thereafter would rest only upon the demand draft and not upon the original debt which the appellant owed to them.
It may be mentioned that the 109 Tripura Modern Bank had not gone into liquidation till a month later and would, as stated by Debendra Chandra Mazumdar, P.W3, have been able to meet the draft had it been presented to its Calcutta Branch within reasonable time from the date on which it was drawn.
It is because the respondents ' Bank went into liquidation just about the time the registered letter containing the draft was sent to Calcutta and no one took .delivery of it that the draft could not be presented to the Calcutta Branch of the Tripura Modern Bank.
The remedy of the respondents, therefore, could be against their own bank, that is, the Calcutta Commercial Bank or against the Tripura Modern Bank but certainly not against the appellants.
Reliance, however, was placed by Mr. S.C. Nath for the respondents upon the letter dated September 10, 1949 written by the appellant to the respondents in which the appellant wrote as follows. " . . and received your letter.
You wrote that the payment of Rs. 9,461 4 0 had not been received.
Please get the cheque back.
We have written to the drawer, which please note.
" According to learned counsel, therefore, the appellant must be deemed to have accepted its liability upon the cheque which it had endorsed in favour of the respondents.
There is no reference in this letter to the demand draft and it is quite clear therefore what the appellant said was in ignorance of the fact that the respondents bank had accepted a demand draft in payment of the cheque.
It may be mentioned that the Tripura Modern Bank, Sibsagar had actually debited the account of the drawer of the cheque with the amount for which the cheque had been drawn.
The cheque had thus been honoured by them.
But instead of paying cash they issued a demand draft at the instance of the respondents bank.
This letter, therefore, does not improve matters for the respondents.
For these reasons the appeal is allowed, the decree of the High Court is set aside and that of the trial court restored.
The respondents will pay the appellants costs in this Court and in the Courts below and bear their own costs.
Appeal allowed.
| In payment of an amount due from them to the respondents, the appellants sent to the respondents on August 31, 1948 a cheque which had been drawn on the Sibsagar branch of a Tripura Bank in favour of the appellants by a third party and thereafter endorsed by the appellants to the respondents.
On September, 4, 1948, the respondents forwarded the cheque to their bankers, a Gauhati Bank who.
in turn, sent the cheque to the Tripura Bank at Sibsagar for encashment.
That bank debited the amount of the cheque to the account of the third party and sent to the respondent 's Gauhati Bank a draft which was payable at its own Head Office at Calcutta.
Thereafter the respondents ' Gauhati Bank forwarded the. draft to their Head Office at Calcutta for collection but the latter never presented the draft and made no attempt to collect the amount of the draft.
In the meantime, the respondents bank closed its business on September 17, 1948 and was ordered to be wound up.
About a month later, the Tripura Bank also closed its business and was compelled to enter into a scheme of arrangement with its creditors.
Upon the failure of their attempts to obtain payment of the draft amount from the Tripura Bank, the respondents instituted a suit against the appellants claiming payment of their dues on the ground that the cheque dated August 31, 1948 was received by the respondents as a conditional payment, and as the cheque had not been cashed, the respondents were entitled to enforce their original claim.
The sub Judge dismissed the suit but the High Court in appeal reversed the decision and decree the suit.
On appeal to the Supreme Court, HELD: (per Raghubar Dayal, Bachawat and Ramaswami, J J)Although the respondents originally received the cheque as a conditional payment of their dues, and if nothing else had happened, the original debt would have revived on non payment of the cheque, having regard to the laches of the respondents in the collection of the draft and the consequential prejudice to the appellants, the respondents must be deemed to have retained the draft as absolute payment of the cheque and on the payment of the cheque, the original debt stood discharged.
[105 E F] Chetty on Contracts, 22nd Edn. article 1079; Addison 's Treating on the Law of Contracts, 11th Edn.
p. 156; Hobkins vs Ware, ; Chamberlyn vs Delarive, ; , referred to.
(per Mudholkar.
J.): There was evidence to show that respondents ' bank, instead of collecting cash from the Tripura Bank at Sibsagar, sought, for reasons 0 their own, to collect the amount by draft.
Furthermore, after the respondent bank went into liquidation, the respondents wrote to the Tripura Bank stating that the 104 amount of the demand draft belonged to them and not to their bankers who were only acting as their agents for collection purposes and that accordingly the draft amount should be paid to them.
Thus, though the cheque endorsed by the appellants in favour of the respondents was only a conditional payment of the amount for which the cheque was drawn, the respondents, by accepting the demand draft drawn by the Tripura Bank must be deemed to have accepted the draft as a legal tender or as absolute payment of the amount payable under the cheque endorsed in their favour by the appellant.
Their rights thereafter would rest only upon the demand draft and not upon the original debt which the appellant owed to them.
The remedy of the respondents, therefore, could be against their own bank, or against the Tripura Bank, but not against the appellants.
[108 E, 109 C]
|
ivil Appeal No. 500 of 1985.
From the Judgment and Order dated 25.7.1984 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 923/81 A in Order No. 559/84 A. Soli J. Sorabjee, A.N. Haksar, Sanjay Grover and K.J. John for the Appellant.
G. Ramaswamy, Additional Solicitor General, Mrs. Indira Sawhney, Miss A. Subhashini and Mrs. Sushma Suri for the Respondent.
The Judgment of the Court was delivered by OZA, J.
This appeal involves the determination of the only question as to whether the appellant is entitled to refund of Rs.22,42,002.09 paid as excise duty on the price of packing material used for packing of superfine cement which according to the appellant was paid under protest whereas according to the respondent, it was not 717 paid under protest and therefore, the claim of refund is barred by time.
The brief facts necessary for determination are.
The appellant company is a manufacturer of superfine cement.
The company preferred the claim for refund of Rs.22,43,002.09 alleged to be duty on price of packing material of the aforesaid product paid during July 4, 1974 to March 1, 1975.
This claim of refund was rejected by Assistant Collector of Central Excise Tirunelveli on the ground that Rule 11 of the Central Excise Rules 1944 was applicable as duty was not paid under protest and the claim was barred by time.
On appeal, the Appellate Collector of Custom and Central Excise by the judgment dated February 7, 1981 maintained the order passed by the Assistant Collector on the same ground of limitation, as the merits of the claim was not disputed by the department.
This is clear from the following observa tions in the Appellate Collector 's order: "They based their claim on the Trade Notice No. 232/79 dated 29.10.79 of Madras Collector ate declaring that the said cement is not the variety of cement requiting packing to prevent deterioration, and the cost of packing of such cement is not liable to be included in the assessable value.
The ground on which the claim was made are not disputed in this ap peal.
" Thereafter, the appellant unsuccessful ly approached the Customs, Excise and Gold (Control) Appellate Tribunal.
Before the Tribunal also, only the question of limitation was put against the appellant.
The Tribunal by its order dated July 25, 1984 has stated: "Before us, the only question argued was the question of limitation.
It was urged that the letter dated 11.6.74 amounted to a protest so that the period of limitation prescribed in Rule 11 of the Rules ceased to be applicable.
" The Tribunal also took the view that the letter dated June 11, 1974 was not a protest to save the period of limi tation.
Hence this appeal.
718 We heard learned counsel for parties.
It is not in dispute that the duty was paid for the period from July 4, 1974 to March 1, 1975.
If it was paid under protest, the orders of the authorities cannot be sustained.
It is, there fore, necessary to refer to the contents of the letter dated June 11, 1974.
The letter raised many objections against the levy of packing charges.
It was stated that the duty on packing charges on superfine cement was not leviable.
The appellant finally said: "If the department feels that the duty is leviable on packing charges, we have no op tion, but to suggest the rates fixed by the Government of India from quarter to quarter, as packing charges.
" The counsel also referred to us the decision of the Central Government in the case of Birla Cement Works where a similar claim was allowed by order dated December 31, 1980.
Counsel further referred to us the Trade Notice dated Octo ber 29, 1979 issued by the Collectorate, Madras wherein it was clearly indicated that the costs of packing was not liable to be included in the assessable value.
Learned Additional Solicitor General frankly conceded that at the material time, there was no particular form prescribed for protesting against the levy or paying under protest.
He also contended that if the letter is treated as a protest and the payments are held to be payments under protest then the limitation prescribed under Rule 11 admit tedly would not be applicable, but the Trade Notice issued by the Madras Collectorate on October 29, 1979 could not be given retrospective effect and, therefore, the matter should go back to the Tribunal for disposal on other questions.
We gave our anxious considerations to the rival submis sions.
A perusal of the letter dated June 11, 1974 clearly shows that all possible contentions which could be raised against the levy of duty on the value of packing material were raised.
If this could not be said to be a protest one fails to understand what else it could be.
It does not require much time to analyse the contents of the letter.
An ordinary reading with common sense will reveal to anybody that the appellant was not accepting the liability without protest.
We have no hesitation to hold that the letter was in the nature of protest.
That being the position, the question of limitation does not arise for refund of the duty.
719 It is rather strange that learned Additional Solicitor General wants the matter to go back to the Tribunal for considering the effect of Trade Notice.
The Central Govern ment in their revisional order dated December 31, 1980 in the case of Birla Cement Works gave the benefit without any Trade Notice.
There it was observed: "In the circumstances Government accepted the petitioner 's pleas and observe that superfine cement is nothing other than ordinary portland which is grounded to a very high fineness of not less than 3500 CM 2/gm and that this higher fineness does not lead ' to its deterio ration without packing.
The Government, there fore, accept the contention of the petitioners and hold that the impugned good being capable of being sold without packing like ordinary gray portland cement the cost of packing for superfine cement should not be added to the assessable value.
" The authorities ought to have extended the view taken by the Central Government in the case of Birla Cement Works to all similar cases.
Moreover, the Appellate Collector and the Tribunal clearly stated that the only question agitated before them was the question of limitation.
The order does not indicate that the counsel for the Department or the departmental representative raised any other question on merits.
Indeed no objection could have been raised on the merits of the matter in view of the order of the Central Government in the Birla Cement Works.
In these circumstances, the appeal is allowed, the orders passed by the Tribunal and Other authorities are set aside.
It is declared that the appellant is entitled to refund of the amount.
The appellant shall be paid interest at the rate of six per cent from the date of refusal of refund with costs of this appeal quantified at Rs. 10,000.
N.P.V. Appeal al lowed.
| The Income tax Officer, by his order dated October 9, 1952, assessed the respondent for the assessment year 1952 53 and gave him credit for Rs. 50,603 15 0 as representing interest on tax paid in advance under section 18 A(5) of the Income tax Act.
On May 24, 1953, the Indian Income tax (Amendment) Act, 1953, came into force adding a proviso to s.18 A(5) of the Act to the effect that the assessee was entitled to interest not on the whole of the advance tax paid by him but only on the difference between the payment made and the amount assessed.
The Amendment Act provided that it shall be deemed to have come into force on April 1, 1952.
The Income tax Officer, acting under section 35 of the Act, rectified the assessment order holding that the assessee was entitled to a credit of only Rs. 21,157 6 0 by way of interest on tax paid in advance as a result of the retrospective operation of the amendment in section 18 A(5), and issued a notice of demand against the assessee for the balance of Rs. 29,446 9 0.
The assessee filed a petition in the High Court of Bombay.
under article 226 of the Constitution praying for a writ prohibiting the appellants from enforcing the rectified order and notice of demand.
The High Court issued the writ holding that section 35 was not applicable to the case as the mistake mentioned in section 35 had to be apparent on the face of the order and the question could only be judged in the light of the law as it stood on the day when the order was, passed: Held, that the Income tax Officer was justified in exercising his powers under section 35 and rectifying the mistake.
As a result of, the legal fiction about the retrospective operation of the Amendment Act, the subsequently inserted proviso must be read as.
forming part of section 18 A(5) of the principal Act as from April 1, 1952, and consequently the order of the income tax Officer dated October 9, 1952, was inconsistent with the provisions of the proviso, and suffered from a mistake apparent from the record.
Commissioner of Income tax, Bombay Presidency and Aden vs 704 Khemchand Ramdas, (1938) L.R. 65 I.A. 236 and Moka Venkatap paiah vs Additional Income tax Officer, Bapatla, (1957)32 I.T.R. 274, referred to.
The order passed by the Income tax Officer under section 18 A was not final in the literal sense of the word; it was and con tinued to be liable to be modified under section 35.
It is also not correct to say that the retrospective operation of the amended s.18 A(5) was not intended to affect concluded transactions.
|
Appeals Nos. 448 and 449 of 1957.
Appeals from the judgment and order dated September 27, 1956, of the Mysore High Court in Writ Petitions Nos. 44 and 45 of 1955.
N. C. Chatterjee, D. N. Mukherjee and B. N. Ghose, for the appellant in C. A. No. 448 of 1957.
V. L. Narasimhamoorthy, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant in C. A. No. 449 of 1957.
G. R. Ethiraiulu Naidu, Advocate General, Mysore,, B. R. G. K. Achar and K. R. Choudhuri, for the respondent.
February 3.
The Judgment of the Court was delivered by KAPUR, J.
These are two appeals brought against two judgments and orders of the High Court of Mysore which arise out of two petitions filed by the appellants under article 226 challenging the legality of the imposition of octroi on wool and cotton under section 98 of the City of Bangalore Municipal Corporation Act (Act LXIX of 1949), which for the sake of convenience, will be termed the " Act ".
On March 31, 1954, a resolution was passed purporting to be under section 98(1) of the Act by which it was 700 resolved to levy an octroi on cotton and wool as follows : Name of the Articles Rate of duty 1.
Raw cotton and wool (this includes both loose Rs. 1/9/ per and compressed, made in cent.
ad valorem India or foreign) 2. .
This was notified in the Mysore Gazette on April 3, 1954, and was also published as required by section 98(1) of the Act.
Objections were invited and it is admitted that both the appellants filed their objections.
Final resolution under section 98(2) was passed on December 21, 1954, and the resolution in regard to octroi came into force as from January 1, 1955.
It may be mentioned that the final resolution passed under section 98 (2) of the Act was not published in the Official Gazette but was published in the local newspapers and a notice dated December 23,1954, was also sent to the appellants to the effect that after considering their objections the Municipality had decided to levy an octroi on the goods at the rate already notified.
The appellant in C.A. 448/57, filed a petition in the High Court on March 15, 1955, under article 226 challenging the validity of the imposition of the octroi on the grounds: (1) that the tax was in contravention of section 98(2) of the Act in so far as a notice was not published in the Official Gazette; (2) that the tax was in contravention of section 130 of the Act and (3) that there was excessive delegation.
The appellant in C. A. 449/57, filed its petition on March 17, 1955, in which besides challenging the validity of the imposition of the tax on grounds above set out, it also challenged the vires of the imposition on the grounds : , 1.
that the levy of the octroi was in contravention of article 276(2) of the Constitution by which a tax on trade exceeding Rs. 250/ per annum could not be imposed 701 2.
that it was a contravention of article 301 which guaranteed freedom of inter State trade and commerce, and 3.
that it was in contravention of article 19(1)(g) of the Constitution.
The High Court rejected all these objections and the appellant has come to this court on a certificate of the High Court under article 133(1) of the Constitution.
In order to decide the question of the legality of the tax it is necessary to refer to the relevant provisions of the Act.
Section 97 enumerates the taxes and duties which the Corporation is empowered to levy under the Act.
Section 97(e) provides: " 97.
The Corporation may levy (e)an octroi on animals or goods or both brought within the octroi limits for consumption or use therein.
" Section 98 which deals with the powers.
of control of Government and the procedure for the levying of the Municipal taxes provides: Section 98 (1).
" Before the Corporation passes any resolution imposing a tax or duty for the first time it shall direct the Commissioner to publish a notice in the Official Gazette and in the local news.
papers of its intention and fix a reasonable period not being less than one month from the date of publication of such notice in the Official Gazette for submission of objections.
The Corporation, may, after considering the objections, if any, received within the period specified, determine by resolution to levy the tax or duty.
Such resolution shall specify the rate at which, the date from which and the period of levy, if any, for which such tax or duty shall be levied.
(2) When the Corporation shall have determined to levy any tax or duty for the first time or at a new rate, the Commissioner shall forthwith publish a notice in the manner laid down in sub section (1) specifying the date from which, the rate at which and the period of levy, if any, for which such tax or duty shall be levied.
" 702 It was argued that instead of passing a resolution Imposing the octroi duty, the Corporation should have 'first published its " resolution " to impose the tax and that the Corporation could not at once pass " a resolution " by which it imposed the tax.
It published that resolution in the Official Gazette and also in accordance with other provisions of section 98(1) and invited objections which were filed.
The only defect, if defect it can be called at all, was that instead of saying that it " intended " to impose a tax, the notice which was published said the tax "had been resolved to be levied.
" This is a technicality and is of no substance.
The next objection raised was that after the Corporation adopted the resolution imposing the tax which was after considering all the objections the publication was only in local newspapers and there was no publication in the Government Gazette and this, it was submitted, was such a serious defect as to make the imposition illegal and ultra vires.
In support counsel for the appellants relied on certain judgments where publication in the Official Gazette was held to be a condition precedent to the legality of the imposition of the tax.
These cases are Krishna Jute & Cotton Mills vs The Municipal Council, Vizianagram (1); Municipal Council, Rajamundry vs Nidamarti Jaladurga Prasadarayudu (2).
Reference was made also to The Municipal Council, Anantapur vs Sangali Vasudeva Rao (3) ; Manak Chand vs Municipal Council(4) and State of Kerala vs P. J. Joseph (5 ).
This question we are not considering as we are referring this case to a larger Bench on certain constitutional points and shall refer this question also in the sequel.
The second objection raised was that there was no compliance with section 130 of the Act.
That section is as follows : Section 130.
" If the corporation by a resolution determines that an octroi should be levied on animals or goods brought within the octroi limits of (1) A.I.R. 1926 Mad.
(2) A.I.R. 1926 Mad.
(3) Mad.
(4) A.I.R. 1951 Raj.
(5) A.I.R. 1958 S.C. 296, 299.
703 the city, such octroi shall be levied on such articles or goods specified in Part V Schedule III at such rates not exceeding those laid down in the said ' Part in such manner as may be determined by the corporation.
" That is not a charging section but it imposes a limitation on the power of the Municipality as to the rate at which a tax can be imposed.
It was further argued that before a resolution under section 98(1) could be passed the goods sought to be taxed had to be specified under section 130 read with Schedule 111, Part V of the Act.
Clause 18 of that Schedule provides that octroi on animals and goods shall be levied at the rates not exceeding the following.
Classes I to VII specify articles on which octroi can be levied at the maximum rate.
Class VIII was as follows: Octroi Maximum rate "Other articles which are not speci fied above and which may be Rs.2 0 0 per cent.
approved by the Corporation ad valorem" by an order in this behalf That class empowers the Municipal Council to impose octroi duty on other articles which are not specified but which may be approved by the Corporation.
In other words the Corporation can choose other articles upon which tax can be imposed and the respondent Corporation in the present case did resolve to impose tax on raw cotton and wool and also fixed the rate at Rs. 1 9 0 per cent.
ad valorem.
The submission that as a result of the operation of section 130 first a resolution had to be passed specifying raw cotton and wool as goods on which octroi duty would be levied and then the procedure under section 98(1) and (2) had to be gone through is without substance.
What the Corporation did was that it passed a resolution choosing these goods to be goods on which octroi duty was to be levied and by the same resolution it resolved that the goods therein specified be taxed at the rate therein specified.
There is no contravention of section 130 even if the contention of the appellants was to be taken most strictly, The goods were specified; the 704 rate of tax to be levied on the goods was also specified; the resolution was passed to that effect and the other procedure laid down in section 98(1) was then followed.
In our opinion it is not necessary that first a resolution should be passed specifying the goods and then another resolution should be passed showing the intention of the Municipality to tax those goods.
What has been done substantially complies with the provisions of the Act.
It was next argued that the words of Class VIII in Part V of Schedule III where the ' words used are " other articles which are not specified above " and which may be approved by the Corporation by order in this behalf meant that the goods must be precisely defined and included by name in the Schedule and that the use of the word in this behalf " meant adding to the list of articles in Schedule III.
Reliance was placed on the interpretation of the word " in this behalf " as given by this Court in Bijay Cotton Mills Ltd. vs Their Workmen (1).
But that case has no application to the facts of the present case because the resolution was, as a matter of fact, passed for the purpose of imposing an octroi duty on the goods in dispute.
The words used in Bijay Cotton Mills Ltd. vs Their Workmen(2) were in another context and ' even there all that was said was that a notification had to issue making the Central Government the appropriate Government.
As we have said above in the present case there was a resolution which sought to include these goods in the Schedule for the purpose of imposing the tax.
The excessive nature of delegation under Class VIII in Part V of Schedule III was also urged but this was not a question which was raised in the High Court nor is there any substance in the matter.
The argument raised was that the power of the Municipal Corporation to specify goods under Class VIII was excessive delegation which was both uncanalised and uncontrolled and reliance was placed on a judgment of this Court in Hamdard Dawakhana vs Union of India("); but that case has no application to the facts (1) ; (2) ; , 705 of the present case.
In the present case the Legislature has laid down the powers of the Municipality to tax various goods.
It has enumerated certain articles and animals and Class VIII read with section 97(e) of the Act has authorised the Municipality to impose tax on other articles and goods.
This power is more in the nature of conditional delegation as was held in Baxter vs Ah Way(1) where it was hold that under a. 52 (g) of the (Australian) Customs Act, 1901, a power given to prohibit by proclamation the importation of certain articles was not a delegation of legislative power but conditional legislation because the prohibition of importation was a legislative abet of Parliament itself and the effect of sub section
(g) of section 52 was only to confer upon the Governor General in Council the discretion to determine to which class of goods other than those specified in the section and under what conditions the prohibition shall apply.
All that the Legislature has done in the present case is that it has specified certain articles on which octroi duty can be imposed and it has also given to the Municipal Corporation the discretion to determine on what other goods and under what conditions the tax should be levied.
That, in our opinion, is not a case which falls under the rule laid down by this Court in Hamdard Dawakhana vs Union of India (2).
It was contended in C. A. 449/57 that the imposition of duty on raw cotton could not cover processed cotton that is cotton which had been ginned, combed and pressed.
The High Court held that the cotton by being ginned or pressed in bales does not cease to be raw cotton and was to be regarded as raw for the purpose of the Act.
The same would apply to wool.
The notification levying the tax specifically stated that raw cotton and wool included both loose and compressed, i.e., compressed cotton and wool whether it was Indian cotton or foreign cotton.
It will not, in our opinion, be a correct meaning to give to the notification if it were " interpreted to apply only to cotton which had been gathered from the fields and had neither been ginned nor pressed.
" We agree with (1) ; (2) ; 706 the High Court that this resolution covers the articles which the appellants in the two cases were importing into the limits of the Corporation of Bangalore.
I The learned Advocate General appearing for the respondent also relied on section 38 of the Act which provides : Section 38 (1).
" No act done, or proceeding taken under this Act shall be questioned merely on the ground (a) . . . . . . . . (b) of any defect or irregularity in such act or proceeding, not affecting the merit of the case.
" This section validates all defects and irregularities in in any act or proceedings which do not affect the merit; of the case.
It was submitted that this section is in another chapter, i.e., chapter 2 dealing with provisions common to the Corporation and the Standing Committees.
It may be that it is in another chapter but the language of the section is wide and applies to all defects or irregularities in any act or proceeding done not affecting the merits of the case.
In our opinion the following points should be heard by the Constitution Bench*: (1) Whether the imposition in the present case offends article 276 or 301 of the Constitution ? (2) Whether the failure to notify the final resolution of the imposition of the tax in the Government Gazette is fatal to the tax ? If the answer to these questions or any of them is in the affirmative the appeal will have to be allowed.
But if the two questions are answered against the appellants the appeals will fail as all other points have been decided by us against the appellants.
The costs will follow the event unless the Bench hearing the reference makes other order.
Referred to Constitution Bench final disposal.
*The decision of the Constitution Bench is reported infra.
| Under a scheme a Board of Trustees was appointed for administration of the Durga and a Masjid for the maintenance of which the Nawab of Carnatic had granted two villages in Inam.
The income of the institution after disbursing the expenses had since long been shared by the descendants in four families in equal shares.
The scheme also provided that the surplus income was to be distributed amongst the members of the said four families.
One of the descendants died leaving him surviving his wife and two daughters who were obstructed in the performance of the "Urs" by the appellant 's father.
The said Muslim female members filed a suit for declaration that they were entitled to enjoy the properties and to manage the Durga, perform the "Urs" festival and receive all incomes, endowments and perquisites thereof once in every eight years according to their turn.
The right to a share in the income was denied by the appellant contending that by custom in the family, females were excluded from inheritance and that the claim was barred by the law of limitation and that, in any event, the suit for mere declaration was not maintainable.
Held, that a suit for declaration of rights with a consequential relief for injunction was not a suit for declaration simpliciter; it was a suit for declaration with further relief and was not barred under article 120 Of the Indian Limitation Act merely because the contesting defendant did not recognise the right.
The period of six years prescribed by article 120 is to be computed from the date when the right to sue accrued and there could be no right to sue until there was an accrual of the right asserted in the suit and its infringement or at least a clear and unequi vocal threat to infringe that right.
If under the law a person was entitled to any legitimate right, the mere denial of the right will not set the period of limitation running against the person entitled to such right.
68 Held, further, that on the enactment of the Shariat Act 26 Of 1937, as amended by the ' Madras Act r8 Of 1949, the Muslim Personal Law applies in all cases relating to the matters specified notwithstanding any customer usage to the contrary even at the stage of appeals, if other conditions prescribed under the Act are fulfilled.
Kunj Behari Prasadji Purshottam Prasadji vs Keshavld Hiralal.
567, discussed.
Syed Roshan Ali vs Mt. Rehmat Bibi and Others, A.I.R. 1943 Lah.
219, disapproved.
|
vl Appeal Nos. 17 and 18 of 1989.
From the Judgment and Order dated 3.10.1988 of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal Nos.
E/2 123 of 1987 C and E/2 124 of 1987 C in Order Nos. 738 and 739 of 1988 C, K. Parasaran, V. Balachandran and M.V. Madhava Rao for the Appellant.
Ashok H. Desai, Solicitor General, Ms. Indu Malhotra and P. Parmeshwaran for the Respondents.
These are two appeals under section 35 L of the (hereinafter referred to as 'the Act ') They arise out of the claim of M/s Rohit Pulp and Paper Mills Ltd. (hereinafter referred to as 'the assessee ') for partial exemption from excise duty in respect of the art paper and chromo paper manufactured by it.
The assessee is having a factory at Khadki in which different varieties of paper and paper boards are manufac tured.
The factory does not have a bamboo pulp plant.
It uses waste paper and cereal straw which are considered to be unconventional raw materials for the manufacture of paper and paper board.
The pulp used by the assessee contains more than 50% by weight of pulp made from these unconventional raw materials. 'Paper and paper board ' are goods falling under item 17(1) of the first schedule to the Act.
Two notifications were issued on 1st March, 1984 under rule 8(1) of the Cen tral Excises Rules, 1944 in respect of the above item.
The first of them, being notification No. 24 of 1984, restricted the excise duty on items falling under the aforesaid item in the manner following: 802 section No. Description Rate 1.
Printing and writing paper.
Ten per cent ad valorem paper plus one thousand rupees per metric tonnes.
All sorts of paper commonly Ten per cent ad valorem known as kraft paper (inclu plus one thousand three ding paper and paper boards hundred and eighty five of the type known as kraft rupees per metric tonne.
liner or corrugating medium) of a substance equal to or exceeding 65 grammes per sq. metre 3.
Paper board of the following Ten per cent ad valorem varieties, namely, pulp board plus one thousand eight duplex board and triplex board.
hundred and ten rupees per metric tonne.
Paper and paper boards, other Ten per cent ad valorem than those specified in S.Nos.
plus one thousand four 1 to 3. hundred and thirty rupees per metric tonne.
The second notification, notification No. 25 of 1984, is the one with which we are directly concerned here.
It pro vides for a concession in respect of paper and paper boards falling under item 17(1) of the Schedule, manufactured out of pulp containing not less than 50 per cent by weight of pulp made from materials (other than bamboo, hardwoods, softwoods, reeds or rags) and cleared on or after the 1st day of April in any financial year.
The concessional rates prescribed were as below: section No. Description Rate Conditions 1.
(i) Printing and wri Rs.450 per provided that the ting paper metric tonne total quantity of clearances, if any, of all vari (ii) All sorts of paper Rs.450 per eties of paper and commonly known as metric tonne paper boards in the kraft paper (inclu preceding financial ding paper & paper year, by or on be boards of the type half of a manufac known as kraft liners turer, from one or or corrugating medium) more factories, or of a substance equal to from a factory by or exceeding 65 grammes or on behalf of one per square metre.
or more manufactu rers did not exce ed 3,000 metric tonnes.
803 (iii) Others Rs.560 per metric tonne.
(i) Printing and writing Rs.730 per Provided that the writing paper metric tonne.
total quantity of clearances of all varieties of paper (ii) All sorts of papers Rs.730 per & paper boards in commonly known as metric tonne.
the preceding fin kraft paper (including ancial year, by or paper and paper boards on behalf of a ma of the type known as nufacture, from kraft liners or corru one or more facto gating medium) of a ries or from a substance equal to or factory by or on exceeding 65 grammes behalf of one or per square metre.
more manufacturers , exceedings 3,000 metric tonnes but did not exceed 7,500 metric ton nes.
(iii) Others Rs.900 per metric tonne.
(i) Printing and Rs.900 per Provided that the writing paper metric tonne.
total quantity of clearances of all (ii) All sorts of Rs.900 per varieties of paper paper common metric tonne.
& paper boards in ly known as the preceding fin Kraft paper & nancial year, by (including pa or on behalf of a per & paper manufacturer, from boards of the one or more facto type known as kraft ries or from a fa liners or corruga ctory or on behalf ting medium) of a of one or more substance equal to manufacturers, ex or exceeding 65 gram ceeding 7,500 met mes per square metre.
tric tonne but did not exceed 16,500 metric tonnes: (iii) Others Rs.1.120 per metric tonne.
804 4.
[This para, added by notification No. 92/84 dated 18.4.84 added another concessional rate where the clearances exceed ed 10,500 but did not exceed 24,000 metric tonnes on the same lines as above but this does not need to be set out here]" The grant of the above concessional rates were, however, subject to certain important conditions set out in the provisoes to the notification.
These provisoes read: "Provided that the factory does not have a plant attached thereto for making bamboo or wood pulp.
Provided further that the exemption contained in this notification shall not apply to cigarette tissue, glassing paper, grease proof paper, coated paper (including waxed paper) and paper of a substance not exceeding 25 grammes per square metre.
" Another notification No. 45 of 1985 dated 17.3.1985 has been relied upon in support of the contention of the Union of India and hence this may also be set out here.
It pre scribed rates on paper and paper board falling under item 17(1) in the following manner: section No. Description Rate 1.
Printing and writing paper (i) coated paper Ten percent ad valorem plus one thousand five hundred and five rupees per metric tonne.
(ii) of a substance not ex Ten percent ad valorem ceeding 25 grammes per plus one thousand five square metre hundred and five rupees per metric tonne.
(iii) Others Ten percent ad valorem plus one thousand five hundred and five rupees per metric tonne.
All sorts of paper com Ten percent ad valorem monly known as kraft plus one thousand five paper (including paper hundred and eighty five and paper boards of the rupees per metric type known as kraft liner tonne.
or corrugating medium) of a substance equal to or exceeding 65 grammes per square metre.
805 3.
Coated paper (including Ten percent ad valorem waxed paper) and paper of plus one thousand nine a substance not exceeding hundred and thirty 25 grammes per square rupees per metric metre (other than those tonne.
specified in Sl.
No.1) 4.
Glassine paper, cigarette Ten percent ad valorem tissue and grease proof plus one thousand nine paper.
hundred and thirty rupees per metric tonne 5.
Paper board of the follow Ten percent ad valorem ing varieties, namely, pulp plus one thousand eight board, duplex board and hundred and ten rupees triplex board.
per metric tonne.
Paper and boards, other Ten percent ad valorem than those specified in plus one thousand four Sl.
No.1 to 5.
hundred and thirty rupees per metric tonne The assessee seems initially to have paid excise duty on the goods manufactured by it in terms of notification No. 24/84 but later seems to have thought of claiming the con cessional rates prescribed by notification No. 25/84.
The company was manufacturing art paper and chromo paper.
It is common ground that these two types of paper fall under category "printing and writing paper".
It is also common ground that these two articles also fall under the descrip tion "coated paper" used in the second proviso.
Since coated paper is taken by the proviso out of the purview of the notification No. 25 of 1984, the Excise Department refused to permit the assessee to avail of this concession in re spect of its manufactured goods.
This treatment by the Excise Department has also been confirmed by the Central Excise and Gold Control Appellate Tribunal (CEGAT).
The Tribunal disposed of the matter very briefly.
It observed: 806 "37.
That brings us to the second question whether art paper and chromo paper were eligible for the exemption granted under notification No. 25 of 1984.
We have carefully consid ered arguments of the appellants.
We have perused the noti fication No. 24 of 1984 as amended and note that the second proviso excludes from the exemption, among others, coated paper (including waxed paper).
There is no denial that art paper and chromo paper are coated papers.
It may be correct that these are not, like other papers mentioned in second proviso, industrial varieties of papers and are writing and printing varieties.
All the same when the proviso, as it is worded, is clear there is no warrant for us to supply words to the proviso to the notification.
We, therefore, find against the appellants in this regard and hold that art and chromo paper would not be eligible for exemption under notification No. 25 of 1984." (emphasis added) The assessee is aggrieved by this order of the Tribunal and hence the present appeals.
Sri K. Parasaran, appearing for the appellant, raises an ingenious contention.
He urges that though the expression 'coated paper ' has generally a wide connotation and includes coated papers of all varieties, it should be given a re stricted meaning in the context in which it appears in the proviso.
It is submitted that in the paper business, paper is broadly of two varieties, "industrial paper" and "cultur al paper".
Paper used for printing or writing is treated as cultural paper.
On the other hand, industrial paper is paper which is used for various purposes which may be broadly described as industrial purposes, such as wrapping, packing sanitary use and the like.
It is submitted that though the notification intended to grant a concession.
to small facto ries manufacturing paper out of unconventional raw material.
it was decided to deny the concession to certain kinds of paper.
These exceptions have been set out in the proviso.
They are: (1) cigarette tissue, (2) glassing paper, (3)grease proof paper, (4) coated paper (including waxed paper), and (5) paper of substance not exceeding 25 gm.
per square metre in weight (which may be compendiously described as light paper).
It is argued that a common strain runs through all these five categories.
The first three varie ties, namely, cigarette tissue, glassing paper and grease proof paper admittedly fall under the category of industrial paper.
Likewise, paper of a substance not exceeding 25 gm.
per square metre in weight is invariably used for 807 industrial purposes and this is so found by the Tribunal.
The word 'coated paper ', it is urged, must be read in this context.
Since the other items set out in the proviso are items of industrial paper, it stands to reason that though 'coated paper ', in a wider sense, may include all categories of coated paper, the denial of concession by the proviso is to be restricted only to coated paper falling under the industrial variety.
In other words, it is submitted that the word 'coated paper ' should be interpreted by applying the principle of "Noscitur A Sociis" or on the analogy of the "Ejusdem generis" principle.
This contention, it is submit ted, is re inforced by two considerations.
The first is that the Government must have had some idea or principle in putting together the exceptions and there is no conveivable principle other than the one enunciated.
The second consid eration is the addition of the words used in parenthesis along with 'coated paper ' viz. "(including waxed paper)".
It is pointed out that waxed paper obviously means coated paper because waxed paper is nothing but paper coated with wax and would have anyhow been covered by the exception.
Neverthe less, it was considered necessary, it is said, to specifi cally include it in order to make it clear by this illustra tion that only industrial paper like waxed paper is taken out from the concession.
The words in parenthesis are, in other words, the words illustrative of the limitation to be read into the expression 'coated paper '.
It is finally argued that, even if the words of the proviso are capable of being construed in a wider manner so as to deny exemption to all kinds of coated paper, the Court should apply the well established principle of construction of taxing statutes that an ambiguous provision should be interpreted in favour of the subject.
On the other hand, the learned Solicitor General submits that if there are two possible views of the proviso, the Court should not interfere with the conclusion reached by the Tribunal which reflects one of two possible and plausi ble views.
On the interpretation of the proviso, the Solici tor General submits that there is no principle of interpre tation by which the plain and natural meaning of the word 'coated paper ' can be abridged nor, he says, is there any thing in the context to warrant such a limitation.
He re futes the suggestion that, in commercial parlance, there is a clear cut distinction between industrial and cultural paper.
He does not agree that light paper can only be indus trial paper and refers to the terms of the 1985 notification in support.
He points out that if coated paper meant only industrial paper, as contended for by the assessee, the expression in parenthesis was totally unnecessary.
He submits that there is a distinction between coated paper and impregnated paper.
As waxed paper could fall under 808 either of these categories, there was a possibility of some one contending that paper impregnated with wax is not 'coated paper '; that is why it became necessary to add the parenthesis to clarify that both kinds will be 'coated paper ' for the purposes of the proviso.
He submits for these reasons that the view taken by the Tribunal was the correct one and that the appeals should be dismissed.
We have considered the contentions urged on both sides and we have come to the conclusion that there is force in the appellant 's contentions.
All the three notifications we have extracted above draw a distinction between printing and writing paper on the one hand and other types of paper on the other.
They also show that the duty on printing and writing paper is generally less than that on the other varieties of paper.
Though paper can be classified into various varieties, it does appear that one such classifica tion is between industrial paper and cultural paper.
"The Dictionary of Paper" published by the American Paper and Pulp Association (Second Edition) contains the following definition: Industrial Papers A very general term which is used for to indicate papers manufactured for industrial uses as opposed to those for cultural purposes.
Thus, building papers, insulative papers, matching paper etc. would be considered industrial papers whereas writing and printing papers would be cultural papers.
Now the proviso denies the concession extended by notifica tion No. 25/84 to certain types of papers.
It is true that no meticulous reasons can always be made available or dis covered for variations in rates of duty as between various types of goods and the absence of some common thread in relation to a set of goods treated alike may not necessarily render the classification irrational or arbitrary.
But, at the same time, one can legitimately postulate that the denial of a concession to a group proceeds on the basis of some aspect or feature common to all items in the group.
If such a principle can be conceived of which would rationalise the inclusion of all the items, it would be quite reasonable and proper to give effect to a construction of the notifica tion as will accord with that principle.
It is this which the appellant has attempted to do and we are reclined to think that the ratiocination of the exceptions suggested, far from being artificial or far fetched, is a plausible and likely one that the Government could have had in mind and that it should be accepted.
809 As mentioned earlier, the concession of the notification is denied to five kinds of paper.
Three of them, undoubtedly and indisputably, are varieties of industrial paper.
This is indeed common ground and it has also been supported by reference to the definitions in the Dictionary of Paper and elsewhere which it is unnecessary to set out here.
The fourth is what we have referred to as 'light paper ' not exceeding a particular weight.
On behalf of the assessee, it is contended that this is also only industrial paper.
In support of this contention, reference is invited to the tables appended to the Dictionary of Paper which indicate that there cannot be printing and writing paper of weight less than 26 gms per sq.
metre.
It is also pointed out that the Tribunal has also given a finding to this effect in para 37 of its order.
The learned Solicitor General, on the other hand, points out that section No. 1 (ii) of the 1985 notification itself clearly shows that there can be "printing and writing paper of a substance not exceeding 25 gramms per sq. metre".
On behalf of the assessee, on instructions, it is submitted that this classification proceeds on a totally unreal basis and that there is no such printing and writing paper in existence.
We cannot, however, assume that the 1985 notifi cation proceeds on an erroneous basis.
1t is sufficient for our purposes to take it, on the basis of the record in this case, that light paper is, by and large, industrial paper without altogether excluding all possibility that it is used occasionally for cultural purposes also.
The classification set out in the 1985 notifications also lends some support to the contentions urged.
The five varieties of paper we are concerned with are found in serial Nos. 3 and 4 of this notification and serial Nos. 1 and 3 reflect a contrast between coated paper and light paper used for cultural purposes (item No. 1) and that used for other (industrial) purposes (item No. 4).
On this basis, then, it is clear that tour out of the five varieties of paper which are denied the benefit of the concession seem to constitute industrial paper.
In fact even if, as urged for the Union of India, only three of ' these items are of the industrial variety while the other two could be either, it will not still be unreasonable (though, may be, a little less plausible) to draw an inference that only industrial paper failing in those two categories are intended to be comprehended in the classification rather than assume, for no detectable reason, that all paper of these two varieties alone are excluded from the concession.
We think, therefore, that the appel lants are on firm ground in submitting that the expression 'coated paper ' in the proviso should draw colour from the context in which it is employed and receive an interpreta tion consistent therewith than its literal one, which in its widest sense, may be comprehensive enough to include all coated paper, industrial or otherwise.
810 The principle of statutory interpretation by which a generic word receives a limited interpretation by reason of its context is well established.
In the context with which we are concerned, we can legitimately draw upon the "nosci tur a sociis" principle.
This expression simply means that "the meaning of a word is to be judged by the company it keeps.
" Gajendragadkar, J. explained the scope of the rule in State vs Hospital Mazdoor Sabha, ; in the following words: "This rule, according to Maxwell, means that, when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense.
They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general.
The same rule is thus inter preted in "Words and Phrases" (Vo.
XIV, p. 207): "Associated words take their meaning from one another under the doctrine of nosciture a sociis, the philosophy of which is that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it; such doctrine is broader than the maxim Ejusdem Generis.
" In fact the letter maxim "is only an illustration or specific application of the broader maxim noscitur a sociis".
The argument is that certain essential features or attributes are invariably associated with the words "business and trade" as understood in the popular and conventional sense, and it is the colour of these attributes which is taken by the other words used in the definition though their normal import may be much wider.
We are not impressed by this argument.
It must be borne in mind that noscitur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider.
It is only where the intention of the Legislature in associating wider words with words of narrower significance is doubtful, or otherwise not clear that the present rule of construction can be usefully applied.
It can also be applied where the meaning of the words of wider import is doubtful; but, where the object of the Legislature in using wider words is clear and free of ambiguity, the rule of construc tion in question cannot be pressed into service.
" 811 This principle has been applied in a number of contexts in judicial decisions where the Court is clear in its mind that the larger meaning of the word in question could not have been intended in the context in which it has been used.
The cases are too numerous to need discussion here.
It should be sufficient to refer to one of them by way of illustration.
In Rainbow Steels Ltd. vs C.S.T., ; this Court had to understand the meaning of the word 'old ' in the context of an entry in a taxing tariff which read thus: "Old, discarded, unserviceable or absolute machinery, stores or vehicles including waste products . . " Though the tariff item started with the use of the wide word 'old ', the Court came to the conclusion that "in order to fall within the expression 'old machinery ' occurring in the entry, the machinery must be old machinery in the sense that it has become non functional or nonusable".
In other words, not the mere age of the machinery, which would be relevant in the wider sense, but the condition of the machinery analogous to that indicated by the words following it, was considered relevant for the purposes of the statute.
The maxim of noscitur a sociis has been described by Diplock, C.J. as a "treacherous one unless one knows "the socictas to which the socii belong" (vide: Letang vs Coopex, ; The learned Solicitor General also warns that one should not be carried away by labels and Latin maxims when the word to be interpreted is clear and has a wide meaning.
We entirely agree that these maxims and prece dents are not to be mechanically applied; they are of as sistance only in so far as they furnish guidance by compen diously summing up principles based on rules of common sense and logic.
As explained in Collector of Central Excise vs Parle Exports (P) Ltd.; , at p. 357 and Tata Oil Mills Co. Ltd. vs
C.C.E.; , at p. 545 6 in interpreting the scope of any notification, the Court has first to keep in mind the object and purpose of the notifi cation.
All parts of it should be read harmoniously in aid of, and not in derogation, of that purpose.
In this case, the aim and object of the notification is to grant a conces sion to small scale factories which manufacture paper with unconventional raw materials.
The question naturally arises: Could there have been any particular object intended to be achieved by introducing the exceptions set out in the provi so? Instead of proceeding on the premise that it is not necessary to look for any reason in a taxing statute, it is necessary to have a closer look at the wording of the provi so.
If the proviso had referred only to 'coated paper ', no special object or 812 purpose would have been discernible and perhaps there would have been no justification to look beyond it and enter into a speculation as to why the notification should have thought of exempting only 'coated paper ' manufactured by these factories from the purview of the exemption.
But the notifi cation excepts not one but a group of items.
If the items mentioned in the group were totally dissimilar and it were impossible to see any common thread running through them again, it may be permissible to give the exceptions their widest latitude.
But when tour of them undoubtedly, at least three of them can be brought under an intelligible classification and it is also conceivable that the Govern ment might well have thought that these small scale facto ries should not be eligible for the concession contemplated by the notification where they manufacture paper catering to industrial purposes, there is a purpose in the limitation prescribed and there is no reason why the rationally logical restriction should not be placed on the proviso based on this classification.
In our view, the only reason .
able way of interpreting the proviso is by understanding the words 'coated paper ' in a narrower sense consistent with the other expressions used therein.
In the view we have taken it is unnecessary to consider the other contentions urged before us: (i) whether the words "(including waxed paper)" are words indicative of the limi tation sought to be placed on the words "coated paper" or they are only intended to make it clear that even paper impregnated with wax will not be entitled to exemption; and (ii) whether, if the notification is capable of two equally plausible interpretations, the one in favour of the subject should be upheld or the one taken by the Tribunal should be confirmed.
For the reasons discussed above, we accept the appel lant 's submission that 'coated paper ' in the second proviso refers,only to coated paper used for industrial purposes and not to coated varieties of printing and writing paper.
The Tribunal 's order is set aside and the appellant held enti tled to the concessional rates specified in notification No. 25184.
The appeals are allowed.
But we make no order as to costs.
| The respondents were holding class III civil posts in the Research Laboratories attached to the Ministry of De fence.
Under the Central Civil Services (Classification, Control and Appeal) Rules, 1965, their 'appointing authori ty ' was the Scientific Adviser.
But the appointing authori ty, the Scientific Adviser, delegated his power of appoint ment to the Director under Proviso to Rule 9(1).
Pursuant to the delegated power.
the Director appointed the respondents.
Subsequently, the Director initiated disciplinary proceed ings against the respondents.
Similarly for the respondents, in the connected appeals, belonging to Group C and D employees of the Railways the competent authority, prescribed under the Railway Establish ment Code.
to make appointments was the General Manager.
But the General Manager delegated his power of appointment to Zonal Officers/Divisional Superintendents.
Pursuant to the delegated power the Divisional Superintendents appointed the respondents.
Subsequently, disciplinary proceedings were initiated against the respondents by the Divisional Superin tendents.
The respondents challenged the disciplinary proceedings before the Central Administrative Tribunal contending that they were without jurisdiction since the Director and the Divisional Superintending were not competent to initiate the disciplinary proceedings.
The Central Administrative Tribu nal accepted the plea and quashed the proceedings.
In appeals to this Court it was contended on behalf of the respondents (i) that the Director was not competent to initiate disciplinary proceedings against them and only the Scientific Adviser, a higher authority, could do so; the expression "whichever authority is the high 442 est authority" in Rule 2(a) governs only sub clause (iv) of Rule and this expression seeks to ensure that though the power to appoint may have been delegated under the Proviso to Rule 9(1), such delegation does not extend to the exer cise of disciplinary powers; (ii) that appointments made by the Scientific Adviser should be treated as .appointments made by the Scientific Adviser himself with the result that a subordinate authority could not initiate disciplinary action against the respondent.
Also, in the connected railway cases, it was contended on behalf of the respondents that notwithstanding the delegation of powers of appointment by the General Manag er, he, being the highest amongst the various appointing authorities, was alone competent to institute disciplinary proceedings.
On behalf of the appellant, Union of India, it was contended: (i) that on a proper interpretation of the rules, the Director Zonal Officer/Divisional Superintendents were competent to initiate the proceedings and (ii) that, irre spective of the provisions in the rules, a person who makes an appointment has always an implied power of suspending or dismissing the appointee under section 16 of the .
Disposing of the appeals, this Court, HELD: 1.
The delegation of the power of appointment under the Proviso to rule 9(1) does not necessarily deprive the disciplinary authority specified in the main part of the rule from exercising the delegated power of appointment in any case or class of cases.
[459B] Godawari section Parulekar vs State of Maharashtra, ; ; followed.
Ramachandra Rao vs State, ; Hals bury 's Laws of England, 4th Edn., pare 32; Wade on Adminis trative Law, 6th Edn., P. 365, referred to.
King Emperor vs Shibnath Banerjee, 72 I.A. 241; Huth vs Clarke, , cited.
A proper and harmonious reading of rules 2(a) and rule 9 shows that sub rule (a) of rule 2 only envisages the authority to whom the power of appointment has been delegat ed under rule 9 and not both the delegator and the delega tee.
Rule 2(a) directs the ascertainment of the authorities specified, in such of clauses (i) to (iv) of the rule as may be applicable to a particular case and designates the high est of them as the 'appointing authority '.
It envisages only one authority as failing under each of these clauses and not more.
An inter pretation of clause 443 (i) or (ii) as contemplating more than one authority runs counter to the tenor of the rule.
The said rule does not contemplate any authority other than the one empowered to appoint a person belonging to the post or grade which the concerned government employees holds.
In that sense the two parts of clause (i) and clause (ii) are not to be read disjunctively to ascertain the authority empowered to make appointments (a) to the service (b) to the grade and (c) to the post and consider the highest of them.
One has to re strict oneself to the post or grade of the government serv ant concerned and invoke clause (i) or (ii) as the case may be.
[459F H; 460C D] Dharma Dey vs Union of India, ; ; Om Prakash Gupta vs Union of India, A.I.R. 1975 S.C. 1265, explained and held inapplicable.
Murishwar vs Union, ; Union vs Choud hary, ; Choudhary vs Union, , cited.
2.1 In Rule 2(a), not only do the words "whichever is the highest authority" occur in the Rules separately from the four sub clauses but the terms thereof also clearly envisage a determination of one who, among several authori ties, is the highest.
It, therefore, clearly means that the 'authorities ' falling under the definition in sub clauses (i) to (iv) have to be ascertained and the highest among them taken as the disciplinary authority for purposes of rule 12(2)(b).
[449B] 3.
The appointing authority under the Schedule is a high ranking authority and, in an organisation like the Railways for instance, it will be virtually impossible for him to consider each and every case of appointment of, or disciplinary action against, all the Class III or Class IV employees in the organisation.
It is indeed this realisation that has rendered necessary a delegation of the power of appointment and cannot be ignored, in the absence of compel ling reasons, in the matter of disciplinary powers.
[461C D] 4.
In the context of rules 2(a) and 12(2) which outline a contrast between the person who is empowered to appoint and the person who actually appoints, it is impossible to treat the Scientific Adviser/General Manager as the person who appointed the respondents.
[456H; 457A] Roop Chand vs State, [1963] Supp. 1 S.C.R. 539, held inapplicable.
444 B. Daniel & Ors.
vs Union of India, , referred to.
4.1 A delegation of power does not enhance or improve the hierarchical status of the delegate.
[456G] Krishna Kumar vs Electrical Engineer Central Railway & Ors., , referred to.
It is doubtful how far, in the context of the service rules which make a clear distinction between the power to appoint and the power to take disciplinary proceedings, the latter can be said to be adjunct or ancillary to the former.
[457D E] Daluram Pannalal Modi vs Commissioner, [1964] 2 S.C.R. 286, held inapplicable.
Section 16 of the confers on the factual appointing authority, in terms, only a power to suspend or dismiss and not a power to conduct disciplinary proceedings or impose the various other kinds of penalties envisaged in the rules.
To say that the latter power also comes within section 16, one would need to make a further assump tion that the power to suspend or dismiss is a more compre hensive power which would include the power to impose small er penalties too and this assumption is said to run counter to the rules which deal with the two powers separately.
The said section applies only "unless a different intention appears".
It applies only where a general power of appoint ment is conferred under an Act or Regulation.
Here the Act or Regulation i.e. the Rules envisage the power of appoint ment conferred by them on certain authorities being delegat ed.
The power conferred on the delegatees is circumscribed by the instrument of such delegation and cannot be extended beyond its ambit.
[454B E] Heckett Engineering Co. vs Workmen, ; ; Gafoor Mia and Ors.
vs Director, DMRL, , referred to.
The dismissal in limine of the Special Leave Petition cannot preclude the Tribunal or Court from considering the issue in the appeals on merits.[452H; 453A]
|
Appeal No. 139 of 1953.
Appeal by special leave from the judgment and order dated the 22nd day of August 1950 of the Nagpur High Court in Miscellaneous Petition No. 67 of 1950.
Radhey Lal Agarwala and B. P. Maheshwari, for the appellant.
C. K. Daphtary, Solicitor General of India (G. N. Joshi and R. H. Dhebar, with him) for the respondents.
February 15.
VENKATARAMA AYYAR J.
The firm of Bhagat Ram Mohanlal, which is the appellant before us, was constituted on 23 8 1940, and registered under section 26 A of the Indian Income tax Act, The partners of 146 the firm, according to the registration certificate, were (1) Bhagat Ram Mohanlal, Hindu undivided family, (2) Richpal and (3) Gajadhar, their shares being respectively 8 annas, 4 annas and 4 annas Mohan lal was the, karta of the aforesaid joint family, which consisted of himself and his two brothers, Chhotelal and Bansilal, and he entered into the partnership as such karta.
The firm carried on business at Drug in Madhya Pradesh as the agent of the Government for the purchase of foodgrains, and during the accounting years ending 1943 and 1944, it made profits on which it was assessed to excess profits tax respectively of Rs. 10,023 5 0 and Rs. 13,005 5 0.
During the year 1944 1945 it sustained a loss of Rs. 15,771, and adding it to the sum of Rs. 37,800 which was the standard profits for the business, the Excess Profits Tax Officer determined the deficiency of profits for the year at Rs. 53,571.
Section 7 of the Excess Profits Tax Act, hereinafter referred to as the Act, provides that when there is a deficiency of profits in any chargeable accounting period in any business, the profits of that business during the previous years shall be deemed to be reduced eo extanti, and that the relief necessary to give effect to the reduction shall be given by repayment of the tax paid or otherwise.
Acting under this section, the Excess Profits Tax Officer passed an order on 23 12 1946 whereby after setting off the profits of the firm for the years ending 1943 and 1944 against the deficiency of profits during the year ending 1945, he directed a refund of Rs. 23,028 10 0 which had been paid by the appellant as excess profits tax for those years.
It should be mentioned that at the commencement of the assessment year 1944 1945 there was a partition in the joint family of which Mohanlal was the erstwhile karta, as a result of which he and his brothers, Chhotelal and Bansilal, became divided in status.
Consequent on this disruption of the joint family, the appellant firm was reconstituted under an agreement dated 17 10 1944.
Under this agreement, the partners of the firm were five in number, Richpal .Gajadhar Mohanlal, Chhotelal and Bansilal, the two 147 former being entitled to 5 annas share each and the latter three to 2 annas each.
There was thus a reconstitution of the firm both with reference to the persons who were its partners and the shares which were allotted to them.
Now, section 8(1) provides, omitting what is not material, that "as from the date of any change in the persons carrying on a business, the business shall be deemed to have been discontinued and a new business commenced".
If this section applied, then no relief could have been granted to the appellant under section 7 of the Act.
The facts relating to the reconstitution of the firm having come to the knowledge of the Commissioner of Excess Profits Tax on examination of the record, he issued a notice on 19 2 1948 calling upon the appellant to show cause why the order of the Excess Profits Tax Officer dated 23 12 1946 should not be set aside on the ground of mistake.
This notice was issued under section 20 of the Act, which confers on the Commissioner authority to rectify "any mistake apparent from the record".
The mistake, according to the Commissioner, consisted in the Excess Profits Tax Officer failing "to take into consideration the change in the constitution of the firm which took place on 17 10 1944, consequent on the disruption of the joint Hindu family of one of the partners".
The appellant appeared in response to the notice, and contended that on the facts the proceedings under section 20 were misconceived.
The facts on which the proceedings were taken were not themselves disputed.
By his order dated 15 3 1950 the Commissioner held that on the facts disclosed on the record, there was a change in the persons carrying on the business, and that the award of relief under section 7 by the Excess Profits Tax Officer was a mistake.
He, however, maintained the order dated 23 12 1946 with reference to Richpal and Gajadhar, and set it aside only so far as "Bhagat Ram Mohanlal, Hindu.
undivided family" which was registered as partner on 23 8 1940, was concerned.
He further directed that Rs. 11,514 5 0 which had been refunded to it should be collected.
148 The appellant thereupon moved the High Court of Nagpur under article 226 for a writ of certiorari quashing the order of the Commissioner dated 15 3 1950 and for a writ of prohibition restraining the authorities from collecting Rs. 11,514 5 0 under that order.
By their judgment dated 22nd August 1950, the learned Judges agreed with the Commissioner that by reason of the partition there was a change in the persons who carried on the business, and that the order dated 23 12 1946 was contrary to section 8(1) of the Act.
They also held that as the mistake appeared on the face of the record, the Commissioner had jurisdiction under section 20 of the Act to pass the order which he did.
In the result, the writs were refused.
Against this judgment, the appellant prefers this appeal by special leave.
Two questions have been raised for our determination in this appeal: (1) whether by reason of the partition of the joint family and the reconstitution of the firm under the deed dated 17 10 1944 there was a change in the persons carrying on business within section 8(1) of the Act; and (2) whether the order of the Commissioner dated 15 3 1950 is bad on the ground that there was no mistake apparent from the record, as required by section 20 of the Act.
On the first question, the contention of the appellant is that when Mohanlal entered into partnership with Richpal and Gajadhar on 23 8 1940 as karta of the joint family, the other members of that family, Chhotelal and Bansilal, also became in substance partners of the firm, and that when they were mentioned eo nominee as partners in the deed dated 17 10 1944 the change was more formal than substantial, and that further the fact that there was a re allotment of shares among the partners would not amount to a change in the persons who carried on the business.
We agree that if all the five persons who were mentioned as partners in the deed of 1944 were partners of the old firm, there would be no change in the persons carrying on the business within section 8(1) of the Act by the mere fact of reshuffling of shares among them.
But the real question that has to be decided 149 is whether Chhotelal and Bansilal were partners in the firm, which was constituted on 23 8 1940.
The appellant contends that they were, both according to the Hindu law and even apart from it, under the general law relating to partnerships.
It is not in dispute that Mohanlal was the karta of the joint family, and that he entered into the partnership on 23 8 1940 as such karta.
It is well settled that when the karta of a joint Hindu family enters into a partnership with strangers, the members of the family do not ipso facto become partners in that firm.
They have no right to take part in its management or to sue for its dissolution.
The creditors of the firm would no doubt be entitled to proceed against the joint family assets including the shares of the nonpartner co parceners for realisation of their debts.
But that is because under the Hindu law, the karta has the right when properly carrying on business to pledge the credit of the joint family to the extent of its assets, and not because the junior members become partners in the business.
In short, the liability of the latter arises by reason of their status as copartners and not by reason of any contract of partnership by them.
It would therefore follow that when Mohanlal became a partner of the firm on 23 8 1940, Chhotelal and Bansilal could not be held by reason of that fact alone, to have become partners therein.
It is argued that when that firm was constituted on 23 8 1940 the persons who entered into the contract of partnership were not merely Mohanlal as karta of the joint family but also Chhotelal and Bansilal in their individual capacity, and that therefore they became partners under the ordinary partnership law.
But the registration certificate of the firm while showing "Bhagat Ram Mohanlal, Hindu undivided family" as a partner, makes no mention of either Chotelal or Bansilal as partners.
The contention that they also became in their individual capacity partners appears therefore to be an afterthought, and is opposed to the findings of the learned Judges of the High Court.
This is sufficient, without more, to dispose of this contention.
But even apart from this, 20 150 it is difficult to visualise the situation which the ap pellant contends for, of a Hindu joint family entering into a partnership with strangers through its karta and the junior members of the family also becoming at the same time its partners in their personal capacity.
In Lachhman Das vs COmmissioner of Incometax(1), it was held by the Judicial Committee that the karta of a joint Hindu family could enter into partnership with an individual member of the coparcenary quoad his separate property.
It was also held by the Privy Council in Sundar Singh Majithia vs Commiss ioner of Income tax(2) that there was nothing in the Income tax Act to prohibit the members of a joint Hindu family from dividing some properties, while electing to retain their joint status, and carrying on business as partners in respect of those properties.
treating them as its capital.
But in the present case, the basis of the partnership agreement of 1940 is that the family was joint and that Mohanlal was its karta and that he entered into the partnership as karta on behalf of the joint family.
It is difficult to reconcile this position with that of Chhotelal and Bansilal being also partners in the firm in their individual capacity, which can only be in respect of their separate or divided property.
If members of a coparcenary are to be regarded as having become partners in a firm with strangers, they would also become under the partnership law partners inter se, and it would cut at the very root of the notion of a joint undivided family to hold that with reference to coparcenary properties the members can at the same time be both coparceners and partners.
To get over this difficulty, it was suggested that all the three coparceners might be regarded as having entered into the contract of partnership as kartas of the joint family.
But even if that could be done consistently with the principles of Hindu law, the very pleadings of the appellant are against such a supposition being made, affirming as they do that it was only Mohanlal that was the karta, not the others.
(1) [1948]16 I.T.R 35.
(2) 151 The contention, therefore, that Chhotelal and Bansilal should be held to have become partners in the old firm under the agreement dated 23 8 1940 cannot be maintained.
The question whether there was a change in the persons carrying on the business may now be considered independently of the principles of Hindu Law or the general law of Partnership and with special reference to the provisions of the Indian Excess Profits Tax Act.
Section 2(17) of the Act defines a 'person ' as including a joint family.
Applying this definition.
, who were the members of the firm when it was constituted on 23 8 1940? Richpal, Gajadhar and "Bhagat Ram Mohanlal, Hindu undivided family" consisting of three coparceners, Mohanlal, Chhotelal and Bansilal, it being immaterial for the present purpose whether the karta of the family was only Mohanlal, or all the three of them.
Then, the family became divided in 1944, and the result of it was that one of the three persons who were partners in the old firm, "Bhagat Ram Mohanlal" ceased to exist.
On 17 10 1944, the two surviving partners of the old firm, Richpal and Gajadhar, entered into a contract of partnership with Mohanlal, Chhotelal and Bansilal.
The erstwhile joint family of which they were members not being a partner in the new firm, it having ceased to exist by reason of the partition, there was, having regard to the definition in section 2(17) of the Act, a change in the persons who carried on the business.
That was the view taken in Shanmugavel Nadar and Sons V. Commissioner of Income tax(1), and we agree with it.
Whether the question is considered on the principles of Hindu law or on the provisions of the Excess Profits Tax Act, there was a change in the personnel of the firm on 17 10 1944, and the matter falls within section 8(1) of the Act.
(2) The next question for determination is whether the order of the Commissioner dated 153 1950 is not justified by the provisions of section 20 of the Act for the reason that there was no mistake apparent from the record.
The argument in support of this conten (1) [1948]16 I.T.R. 355, 152 tion is that the record in the Excess Profits Tax pro ceedings consisted in the present case of only the order dated 23 12 1946, that the facts on which the proceedings were taken under section 20, namely, the constitution of the firm on 23 8 1940 and the changes effected therein on 17 10 1944 were not recited therein, and that, in consequence, there were no materials on which an order could have been passed under that section.
It is true that the order of the Excess Profits Tax Officer dated 23 12 1946 does not mention these facts, but they appear from the record of the income tax proceedings which included the registration certificates of the firm under section 26 A of the Income tax Act and the returns made by the firm disclosing the names of the partners and their respective shares.
It is argued for the appellant that these records were inadmissible for the purpose of proceedings under section 20 of the Act, because the record referred to and contemplated by that section must be the record of the excess profits tax proceedings, and that the records of the income tax proceedings could not be used under that section.
We are unable to agree with this contention.
Section 22(1) of the Act provides that: "Notwithstanding anything contained in the Indian Income tax Act, 1922, all information contained in any statement or return made or furnished under the provisions of that Act or obtained or collected for the purposes of that Act may be used for the purposes of this Act".
Section 22(2) similarly makes the record of the excess profits tax proceedings admissible in proceedings under the Indian Income tax Act.
The fact is that the proceedings under the two Acts are interdependent.
Assessments under the Excess Profits Tax Act are, subject to the special provisions of that Act, made on the basis of the assessments made under the provisions of the Indian Income tax Act.
The same officers are in chargev of the proceedings under both the enactments.
The order of the Excess Profits Tax Officer dated 23 12 1946 refers in terms to the order dated 28 9 1946 passed in the proceedings for assess 153 ment of income tax on the appellant, and the deficiency of profits is worked out on the basis of the loss of Rs. 15,771 as ascertained therein.
We see no substance in this contention, which must accordingly be rejected.
It was finally contended that the particulars recited in the registration certificate as to who were all partners of the firm were not conclusive, and that the appellant was not estopped from proving that even on 23 8 1940 the real partners were all the five persons mentioned in the deed dated 17 10 1944, and the decision in Shapurji Pellonji vs Commissioner of Income tax(1) was relied on in support of the position.
It is undoubted law that the income tax authorities are not estopped by the fact of registration from going behind the certificate, and deciding who the real partners of the firm are.
But can the assessee whose statement is the basis on which the registration is made and who has possibly been benefited thereby deny its correctness, when the facts mentioned therein turn out to his disadvantage? It is unnecessary to consider this point, in view of our decision that on the facts as pleaded by the appellant, Chhotelal and Bansilal could not be regarded as partners in the old firm.
We may add that this contention does not appear to have been put forward before the Commissioner when notice was issued to the appellant under section 20 of the Act.
If any such contention had been raised, it would have been open to the Commissioner to have taken action under section 19 of the Act.
In the result, the appeal fails, and is dismissed with costs.
| The appellant, an accounts officer, was promoted and appointed by the Comptroller and Auditor General of India.
He was compulsorily retired on 27th August, 1975 in the public interest under F. R. Rule 56(j)(i) by the Accountant General.
The appellant challenged his pre mature retirement in the High Court by a Writ Petition which was dismissed in limine.
In his appeal by Special Leave, the appellant challenged the order of retirement and argued that (i) the Accountant General is not "appropriate authority" within the meaning of the rule and (ii) the retirement was not in the public interest.
The respondent contended that (i) the power of the appropriate authority in respect of accounts officers like the appellant was vested in the Auditor General by Notification of the Ministry of Finance dated 19 1 1972 and (ii) the impugned order of compulsory retirement was made by the Accountant General on the basis of the recommendations dated 23 8 1975 of the Reviewing Committee.
Allowing the appeal.
^ HELD: An officer with continuous service for 14 years crossing the efficiency bar and reaching the maximum salary in the scale and with no adverse entries at least for five years immediately before the compulsory retirement cannot be cashiered on the score that long years ago, his performance had been poor, although his superiors had allowed him to cross the efficiency bar without qualms.
The order of compulsory retirement fails because vital material, relevant to the decision, has been ignored and obsolete material, less relevant to the decision, has influenced the decision.
[439D E] Any order which materially suffers from the blemish of overlooking or ignoring wilfully or otherwise vital facts bearing on the decision is bad in law.
Likewise, any action which irrationally digs up obsolete circumstances and obsessively reaches a decision based thereon, cannot be sustained.
[429 F] The Fundamental Rules govern the Central Civil Services and ensure the career security which is the sine qua non of contended service.
But potential compulsory retirement under F. R. 56 (j) (i) haunting the afternoon of official life injects an awesome uncertainty which makes even the honest afraid.
the efficient tremble and almost everyone genuflect, and is not a happy prospect for a Civil Servant too young to sit idle and too old to get a new job.
A jetsam has no option but to become driftwood or join the other profession where everyone, desirable and undesirable, has a chance.
This deleterious latency 431 of F.R. 56(j)(i) is stressed to underscore the unwitting harm to public interest it does in the name of public interest.
Judicial monitoring becomes an unpleasant necessity where power may be humour and a career may be a victim.
[432 E G] The order to retire must be passed only by the appropriate authority.
That authority must form the requisite opinion not subjective satisfaction hut objective and bona fide and based on relevant material.
The requisite opinion is that the retirement of the victim is in public interest not personal political or other interest but solely governed by the interest of public service.
The right to retire is not absolutely, though so worded.
[433 C D] Since the A.G. has been clothed, from 29 11 1972 with power to appoint substantively Accounts officers, he has become the appropriate authority for compulsory retirement even though the appellant had been appointed by the C & AG prior to 29 11 1972.
In the light of the note which is part of the rule, read with the notification delegating the power to the A.G., there is no flaw in the order impugned.
[434 A B] Ordinarily the appointing authority is also the dismissing authority but the position may be different where retirement alone is ordered.
The specific provision in the Note to FR 56 must hold good and article 311 is not violated either.
Nor is there any discrimination, because retirement is a category different from the punishment covered by article 311.
[434C] Security of tenure is the condition of efficiency of service.
The Administration, to be competent, must have servants who are not plagued by uncertainty about tomorrow At the age of 50, your experience, accomplishment and fulness of fitness become an asset to the Administration, if any only if you are not harried or worried.
These considerations become all the more important in departments where functional independence, fearless scrutiny, and freedom to expose evil or error in high places is the task.
And the Ombudsmanic tasks of the office of audit vested in the C & AG and the entire army of monitors and minions under him are too strategic for the nation 's financial health and discipline that immunity from subtle threats and oblique overawing is very much in public interest.
Under the guise of public interest if unlimited discretion is regarded acceptable for making an order of premature retirement, it will be the surest menace of public interest and must fail for unreasonableness, arbitrariness and disguised dismissal.
The exercise of power must be bona fide and promote public interest.
[434 F H, 435 A B] Judges cannot substitute their judgment for that of the Administrator but they are not absolved from the minimal review well settled in administrative law and founded on constitutional obligations.
Administration, to be efficient, must not be manned by drones, do nothings, incompetents and unworthies.
It is in public interest to retire a never do well, but to juggle with confidential reports when a man 's career is at stake is a confidence trick contrary to public interest.
Confidential reports are often subjective, impressionistic and must receive sedulous checking as basis for decision making.
[435D, E G]
|
Criminal Appeal No. 129 of 1966.
Appeal by special leave from the judgment and order dated March 21, 1966 of the Calcutta High Court in Criminal Revision No. 309 of 1966.
521 A. K. Sen, P.K. Chatterjee, M.M. Kshatriya and G.S. Chatterjee, for the appellants.
B. Sen and P.K. Chakravarti, for the respondent.
The Judgment of the Court was delivered by Shah, J.
Mahendra Lal and Probhat Kumar Sarkar were the promoters, and Almohan Das was the first Chairman of the Board of Directors of the Great Indian Steam Navigation Company Ltd. Messrs. Das Brothers of which Almohan Das was the sole proprietor became the managing agents ' of the Company in 1945.
On July 2, 1951, Das Group Ltd. of which also Almohan Das was the principal Director took over the managing agency.
The Registrar of Companies, West Bengal filed a complaint in the Court of the Chief Presidency Magistrate alleging that sometime between March 1, 1945 and December 31, 1947 a sum of .Rs.
7,23,031 9 6 was advanced by the.
Company to the managing agents Messrs Das Brothers; that on July 2, 1951 Messrs Das Brothers resigned from the managing agency and Messrs Das Group Ltd. took over the managing agency; that Almohan Das was at all material times a director of the company and also a director of Messrs Das Group Ltd. and the sole proprietor of Messrs Das Brothers; and that the complainant had reason to believe that Almohan Das with other directors of the company had committed offences under sections 86 D and 87 D of the Indian Companies Act, 1913.
The complainant requested that a through investigation .be made in the matter.
The Chief Presidency Magistrate, Calcutta, referred the case to the police for investigation.
In the course of investigation of the complaint referred to him, Sub Inspector J.N. Mukherjee filed a First Information against eight persons (including the five appellants in this appeal) charging them with having, conspired to commit criminal breach of trust in respect of the company 's funds, falsification of accounts and making false returns, balance sheets and accounts, and in furtherance of the object of the conspiracy with committing offences punishable under sections 409 and 477A I.P. Code and under section 282 of the Indian Companies Act, 1913.
After investigation, Sub Inspector Mukherjee submitted on February 29, 1958, a report under section 173 of the Code of Criminal Procedure in the Court of the Chief Presidency Magistrate for those offences against seven persons including the five appellants.
The Presidency Magistrate, 9th Court, to whom the case was transferred for trial, rejected the contention raised by counsel for the defence that to a charge made against a director in relation to 522 the affairs of the company, the Indian Penal Code can have no application, and the prosecution, if any, may be instituted under the provisions of the Indian Companies Act alone.
The Magistrate also held that it was open to the police officer to whom the case was referred for investigation to submit a charge sheet of his own initiative and that the Court had jurisdiction to enquire into the charge so made without the sanction of the High Court.
A revision application was filed in the High Court of Calcutta against that order, but the application was rejected.
Proceedings were then resumed by the Magistrate on December 5, 1961, and a large number of witnesses were examined before him and several documents were tendered in evidence.
On December 3, 1965, the Presidency Magistrate committed the accused to stand trial for offences under sections 120B read with 409 & 477A I.P. Code before the Court of Session.
He observed: ". having regard to the entire evidence on record and facts and circumstances of the case, I am convinced prima facie that good grounds exist for framing charge under section 409 I.P.C. against accused Almohan Das with charge under section 120B read with section 409 I.P. Code aaginst (1) Almohan Das, (2) Sisir K. Das, (3) Nara Singha Pal, (4) Mohendra Lal Kundu and (5) Provat Kumar Sarkar, another charge under section 467 read with section 34 I.P. Code against (1) Almohan Das, (2) Nara Singha Pal, and (3) Mohendra L. Kundu for forging Ext.
5, and last under section 477A against (1) Aimoban Das, (2) Nara Singha Pal, (3) Mohendra Lal Kundu,(4) Provat Kumar Sarkar and (5) Sisir Kumar Das in respect of falsification of shareholders minute book (Ext. 18) purporting to ratify the action of Almohan Das regarding the funds of the G.I.S.N. & Co. Ltd." Against this order, a revision application was filed in the High Court of Calcutta which was 'rejected in limine.
Against the order passed by the High Court, this appeal has been filed with special leave.
In the present case the order of commitment was made under section 207A of the Code of Criminal Procedure.
Normally the High Court in a revision application filed against the order of commitment under section 207A will not enter upon a reappraisal of the evidence on which the order of commitment is made.
The High Court would be justified in exercising its revisional jurisdiction where a substantial question of law arises on which the correctness of the order of commitment may be effectively challenged, where there is no evidence on which the order of commitment could be made, where there has been denial of a right to fair 523 trial, where there is reason to think because of failure to comply with the rules of procedure or conditions precedent to initiation of criminal proceedings, where by ignoring the substantive law which constitutes the offence, or misconception of evidence on matters of importance grave injustice has resulted, and on similar other grounds.
But in other cases, interference with the order of the Magistrate committing the accused for trial may not be justified and the trial before the Court of Session should be allowed to run its course.
Counsel for the appellants submitted that there was no evi dence on which the order of commitment could be made.
We do not think that there is any ground for so holding.
It was the prosecution case that in order to commit criminal breach of trust in respect of an amount exceeding Rs. 5 lakhs by allowing it to remain with Messrs Das Brothers the previous managing agents of the company of which Almohan Das was the sole proprietor and from whom Messrs Das Group Ltd. took over the managing agency a conspiracy was entered into between the seven named persons, and the minutes book of the meetings of the Board of Directors and the shareholders ' minutes book were fabricated and criminal breach of trust was committed in respect of the funds belonging to the Company.
It is true that in the balance sheet Ext.
137 for the year ending December 31, 1952, on the assets side is an item 'Sundry Advances (Unsecured) ' inclusive of Rs. 5,78,941 7 0 due by a firm in which a director of the Company was a partner.
But this, it is the case of the prosecution, was not supported by any resolution passed by the Board of Directors.
By letter dated June 21, 1956, the Additional Registrar of Companies asked the Company to furnish a certified copy of the minutes of the Board of Directors .in which the loan had been made to the managing agents of the Company.
In reply thereto by letter dated July 12, 1956, the Managing Agents wrote that as the money was held by the managing agents and was not given or treated as a loan, there was no resolution of the Board of Directors in that connection.
On September 29, 1956, the Additional Registrar of Companies again wrote a letter .to the Company enquiring whether the amount of Rs. 5,78,941 7 0 which was lying with the previous managing agents of the Company Messrs Das Brothers had since been realised, and if so, the evidence adjusting the liability,.
and if not, to intimate with material evidence whether any steps had since been taken by the Company for the realization of the dues and how the matter stood.
in the course of the investigation the officer in charge attached a directors ' minutes book Ext.
5 which contains the minutes of a resolution authorising Almohan Das to retain the funds of the Company.
Therefore, there was some evidence on which the 524 charge for fabrication of the Director 's Minutes Book may be sustained.
In dealing with the charge for fabricating the Shareholders ' Minutes Book the learned Magistrate has observed that the materials on the record made out a strong prima facie case that the Shareholders ' Minutes Book Ext.
18 is also a forged document.
The circumstances which lent colour to the prosecution, in the view of the learned Magistrate were (1) that Ext.
18 starts from February 28, 1945, although the Company was incorporated in 1942, (2) in many meetings the signatures of the shareholders were not taken although in some meetings the shareholders signed the minutes book, (3) resolutions of Amaresh Pramanick and Sudhir Kanti Sarkar are not incorporated in the minutes book, (4) some portions in the last page in the agreement (Ext. 20) with the managing agency firm Das Group appear to have been erased out and the agreement was thus tampered with, (5) the minute book Ext.
18 does not incorporate 'the relevant questions, and there appeared tampering with pagination, (6) the evidence of P.Ws. 6 & 16 regarding their presence or absence, and (7) the testimony of P.Ws. 15 & 24 suggested that most of the persons shown to have attended meetings were at the "back and call of the accused Almohan Das".
Whether this evidence may justify a conviction cannot be enquired into at this stage.
The evidence was prima facie sufficient to frame a charge.
The Presidency Magistrate was of the view that a case for framing a charge for committing the case to the Court of Session was made out and the High Court has summarily dismissed the revision application in exercise of its jurisdiction.
It was contended before us that under section 209(1) of the Code of Criminal Procedure, a charge may be framed only if in the view of the committing Magistrate the evidence on record is sufficient to justify conviction of the accused.
Section 209 of the Code provides: "When the evidence referred to in section 208, subsections (1) and (3), has been taken, and he has (if necessary) examined the accused for the purpose of enabling him to explain any circumstances appearing in the evidence against him, such Magistrate shall, if he finds that there are not sufficient grounds for committing the accused person for trial, record his reasons and discharge him, unless it appears to the Magistrate that such person should be tried before himself or some other Magistrate, in which case he shall proceed accordingly." 525 In terms section 209 applies to cases which are instituted otherwise than on a police report.
But the principle underlying that section applies to cases which are instituted on a police report.
A Magistrate holding an enquiry is not intended to act.
merely as a recording machine.
He is entitled to sift and weigh the materials on record, but only for seeing whether there is sufficient evidence for commitment, and not whether there is sufficient evidence for conviction.
If there is no prima facie evidence or the evidence is totally unworthy of credit, it is his duty to discharge the accused: if there is some evidence on which a conviction may reasonably be based, he must commit the case.
The Magistrate at that stage has no power to evaluate the evidence for satisfying himself of the guilt of the accused.
The question before the Magistrate at that stage is whether there is some credible evidence which would sustain a conviction.
We do not agree with counsel for the appellants that there was no evidence on which a charge could be framed against the appellants or that the evidence was so totally unworthy of credit ' that an order recording the conviction against the accused could not be made thereon.
The appeal fails and is dismissed.
We trust that the case which has been held up for a very long time will be taken up by the Court of Session for trial with the least practicable delay.
R.K.P.S. Appeal dismissed.
| The St. Xavier 's College was established by the Jesuits of Ranchi and was affiliated to Patna University in 1944.
The management of the College was in the hands of a governing body consisting of 11 members.
The terms of service of the religious staff of the College were determined by the Jesuit Mission authorities and those of the lay staff, including their appointment, were determined by the governing body of the College.
The object of rounding the college inter alia was "to give Catholic youth .a full course of moral and liberal education, by imparting a thorough religious instruction and by maintaining a Catholic atmosphere in the Institution".
However, the college was open to non Catholics and all non catholic students received a course of moral science.
The petitioners in the present petition under Article 32 contended that the college was rounded by a Christian minority and claimed the right to administer it as a constitutional right guaranteed to minorities by article 30.
The petitioner 's complaint was that the Bihar Legislature, by introducing section 48 A in the Bihar Universities Act with effect .from
March 1, 1962, deprived them of the right under article 30 in that Its provisions required, inter alia: that appointments, dismissals, reduction in rank, etc.
, of staff must be made by the Governing body on the recommendation of the University Service Commission for affiliated colleges; in no case could the Governing body appoint a person not recommended by the Commission; the Commission had to be consulted in all disciplinary matters and any punishment imposed on a teacher only in accordance with the findings of the Commission, etc.
Subsequent to the introduction of section 48 A, in view of differences arising between the University and the college, the University withdrew the affiliation of the college on September 26, 1967 for violating the provisions of the Act and the statute of the University.
While the present petition under article 32 of the Constitution was pending section 48 B was inserted into the Bihar Universities Act whereby it was provided that the Governing body of affiliated colleges established by a minority based on religion or language which .the minority had a right to administer, would be entitled to make appointments, dismissals, termination of service or reduction in rank of teachers or take other disciplinary measures subject only to the approval of the Commission and the Syndicate of the.
University.
The petitioners therefore also claimed the protection of section 48 B.
On behalf of the respondents it was conceded that the Jesuits answered the description of a minority based on religion; but it was contended that as the protection to minorities in article 29(1) is only a right to conserve a distinct language, script or culture of its own, the college did not qualify for the protection of article 30(1) because (i) it was not bounded Sup.
CI/69 6 74 to conserve them and (ii) it was open to all sections of the people.
The question therefore was whether the college: could only claim protection of section 48 B of the Act read with article 30(1) of the Constitution if it proved.
that it was furthering the rights mentioned in article 29(1).
HELD: The protection claimed by the petitioners clearly flowed from the words of Article 30(1).
The width of article 30(1) cannot be cut down by introducing in it considerations on which article 29(1) is based.
The latter article is a general protection which is given to.
minorities to, conserve their language, script or culture.
The former is a special right to minorities to establish educational institutions of their choice.
This choice is not limited to institutions seeking W conserve language, script or culture and the choice is not taken away if the minority community having established an educational institution of its choice also admits members of other communities.
This is a circumstance irrelevant for the application of article 30(1) since no such limitation is expressed and none can be implied.
The two.
articles create two separate rights, although it is possible that they may meet in a given case.
[80 G, H] In re the Kerala Education Bill, 1957, [1959] S.C.R. 995, Rev. Sidhajbhai Sabhai and Ors.
vs State of Bombay and Anr.
; , 850; considered.
|
os. 67, 87 and 130 of 1959.
Petitions under article 32 of the Constitution of India for enforcement of Fundamental Rights.
R. section Narula and section section Chadha, for the petitioners.
M. C. Setalvad, Attorney General of India, B. Sen and T. M. Sen, for Respondents Nos. 1, 2 and 5 (In 128 petition No. 83 of 1959) 1, 2 and 12 (In Petition No. 67 of 1959) and 1, 2 and 4 (In Petition No. 130 of 1959).
W. section Barlingay and A. G. Ratnaparkhi, for respondent No. 3 (In Petn.
No. 83 of 1959).
Sardari Lal Bhatia, for respondents Nos.
3a, 4, 5, 6 (a, b, c,) and 7 10.
J. D. Jain and K. L. Mehta, for the Intervener in Petition No. 67 of 1959 (Phool Chand).
April 21.
The Judgment of the Court was delivered by AYYANGAR, J.
These three petitions have been filed invoking the jurisdiction of this Court under article 32 of the Constitution challenging the constitutionality of section 19 and particularly sub section 3, of the (Central Act 96 of 1956), on the ground that it offends the fundamental right of the petitioners guaranteed to them by articles 14 and 19(1)(f).
To appreciate the grounds on which this contention is sought to be sustained it is necessary to set out briefly a few facts.
We might however mention that though the constitutional objection, adverted to is common to all the three petitions, it is sufficient to refer to the facts of the case in Writ Petition No. 67 of 1959 which is typical of the cases before us.
The petitioner Jyoti Pershad is the owner of a house in Delhi in which respondents 3 to 11 were tenants.
Each of these nine individuals occupied a single room in this house.
As the petitioner considered the house to be old and required to be demolished and reconstructed, he submitted a plan to the Council of the Delhi Municipal Committee and applied for sanction for the reconstruction of the house.
The plan was sanctioned and thereafter the petitioner filed suits against these nine tenants under section 13(1)(g) of the Delhi and Ajmer Rent Control Act 38 of 1952 (which will hereafter be referred to as the Rent Control Act).
The suits were resisted by the tenants.
Two matters had to be proved under section 13(1)(g) of the Rent Control Act by a plaintiff before he could obtain an order of 129 eviction:(i) that there was a plan which had been sanctioned by the municipal authorities which made, provision for the tenants then in occupation of the house being accommodated in the house as reconstructed, and (ii) that the plaintiff had the necessary funds to carry out the reconstruction.
The plan which had been approved by the Delhi Municipal Committee made provision for the construction of a double storeyed building with twelve rooms which was, therefore, more than ample for the nine tenants for whom accommodation had to be provided.
The plaintiff also established that he had deposited cash in the State Bank of India sufficient for reconstructing the house as sanctioned in the plan.
On December 8, 1956 the Civil Court in Delhi passed decrees in favour of the petitioner for the eviction of respondents 3 to 11.
Section 15 of the Rent Control Act enacted: "15.
(1) The Court shall, when passing any decree or order on the grounds specified in clause (f) or clause (g) of the proviso to sub section (1) of section 13, ascertain from the tenant whether he elects to be placed in occupation of the promises or part thereof from which he is to be evicted and if the tenant so elects, shall record the fact of the election in the decree or order and specify therein the date on or before which he shall deliver possession so as to enable the landlord to commence the work of repairs or building or re building as the case may be.
(2)If the tenant delivers possession on or before the date specified in the decree or order, the landlord, shall, on the completion of the work of repairs or building or re building place the tenant in occupation of the premises or part thereof (3)If, after the tenant has delivered possession on or before the date specified in the decree or order the landlord fails to commence the work of repairs or building or re building, within one month of the specified date or fails to complete the work in a reasonable time or having completed the work, fails to place the tenant in occupation of the premises in 17 130 accordance with sub section (2), the Court may, on the application of the tenant made within one year from the specified date, order the landlord to place the tenant in occupation of the premises or part thereof on the original terms and conditions or to pay to such tenant such compensation as may be fixed by the Court.
" The tenants, however, refused to give up possessession within the three months time granted to them by the decrees to vacate the premises but went up in appeal against the orders of eviction under section 34 of the Rent Control Act to the Senior Sub Judge, Delhi.
These appeals were finally disposed of against the tenant appellants, some on the merits and some by reason of abatement, by the end of October, 1957.
Under the rules governing the construction of houses on plans sanctioned by the Delhi Municipal Com mittee, the sanctioned building had to be completed within a period of one year from the date of sanction.
As a result of this rule the sanction obtained by the petitioner lapsed and he had, therefore, to obtain fresh sanction if in consequence of his success in the appeals before the Senior Sub Judge he still desired to demolish and reconstruct the building.
Meanwhile, two changes came about in the law governing matters relevant to the present case: The first was that the 96 of 1956, which will be hereafter referred to as the Act, was enacted by Parliament and came into force in the Delhi area.
Section 19 of that Act which is impugned in these petitions runs: "19.
(1) Notwithstanding anything contained in any other law for the time being in force, no person who has obtained any decree or order for the eviction of a tenant from any building in a slum area shall be entitled to execute such decree or order except with the previous permission in writing of the competent authority.
(2) Every person desiring to obtain the permission referred to in sub section (1) shall make an application in writing to the competent authority in such form and containing such particulars as may be prescribed.
131 (3) On receipt of such application the competent authority, after giving an opportunity to the tenant of being heard and after making such summary inquiry into the circumstances of the case as it thinks fit, shall by order in writing either grant ' such permission or refuse to grant such permission.
(4) Where the competent authority refuses to grant the permission it shall record a brief statement of the reasons for such refusal and furnish a copy thereof to the applicant.
" The other change in the law was that due to the enactment of rules and regulations providing for a coordinated development and planning of buildings in the Delhi Area the type of constructions that could be sanctioned by the Delhi Municipal Committee underwent a radical alteration as a result of which in the area now in question double storeyed buildings were not permitted to be constructed and that if the petitioner 's house had to be reconstructed it could only have three living rooms making allowance for the size of the rooms and the free space that had to be left on either side of the building in accordance with the revised municipal regulations.
It would have been noticed that the right of the tenants to insist on the landlord providing accommodation for them in the reconstructed building guaranteed to them by section 15 of the Rent Control Act, had ceased by reason of their failure to quit and deliver vacant possession of the tenements occupied by them within 3 months fixed by the order of the Civil Court (vide section 15) and hence they had no statutory right under the Rent Control Act to be provided with accommodation by the landlord.
Thus freed from obligation to the tenants the petitioner filed on the strength of these decrees for eviction nine applications under section 19 of the Act before the competent authority for the eviction of the tenants from the nine rooms in the building on the ground that the building had to be reconstructed as it was in a dilapidated condition.
These petitions were dismissed by the competent authority by his order dated January 13, 1958 on the ground that the sanction to 132 reconstruct the building which the petitioner had obtained from the municipality in 1956 had expired.
The order recited: "since it may take some time for the petitioner to obtain fresh sanction for reconstruction and there is also the possibility of sanction not being given at all, it would be no use continuing with these proceedings until it is definitely known that the landlord has obtained sanction for reconstruction.
These nine applications are accordingly filed with the option to the petitioner to have them revived without payment of extra fee in case he is able to obtain sanction.
" Thereafter the petitioner applied to the municipal authorities for sanctioning a building plan.
As stated earlier, the building plan approved by the municipality could permit only a building consisting of one floor in which there were three living rooms and sanction for the construction of a building with such accommodation was granted.
With this sanctioned plan, the petitioner renewed his application under section 19 for permission to execute the decree of the Civil Court and evict the tenants.
By order dated July 30, 1958 all these applications were dismissed.
The reason assigned for the order was stated in these terms: "If the decree is allowed to be executed they will be thrown out and it will be impossible for them to get accommodation in the reconstructed building.
They are old tenants and as stated above also very poor.
The execution of the decree will involve very real hardship to them.
They are all occupying only one Kothri each and paying rent at Rs. 3 per mensem, and they have no complaint to make about the condition of their Kothries.
The landlord has four or five other houses which he has let out on rent.
The case has a human aspect and I disallow the execution of the decree against the tenants.
" The petitioner preferred appeals against this order to the Administrator of the Union Territory, Delhi to whom appeals lay under section 20 of the Act.
The appeals were dismissed, the appellate authority saying : 133 "I would have allowed the appellant permission to evict the tenants, if the property itself was dilapidated and declared unfit for human habitation by a competent authority.
This is not so.
The land lord naturally desires to get a better return from land in the congested areas of the city by rebuilding on it to better specifications, so that he can get higher rent from it.
But if this tendency is permitted to have an unrestricted play, then the result will be the eviction of a large number of poor people from slum areas.
In the circumstances, the appellant should wait until either his property is declared dangerous by the Municipal Corporation, or under a Slum Clearance Scheme he is asked by the competent authority itself to demolish it or rebuild it in a particular manner.
" In these circumstances the petitioner has moved this Court for the issue of a writ of certiorari to quash these orders on the ground already adverted to, viz., that section 19 of the Act is invalid and unconstitutional as violative of the petitioner 's rights guaranteed by articles 14 and 19(1)(f) of the Constitution.
In passing we may observe that we are not concerned with the validity of the particular orders passed in the case but only with the general question as to the constitutionality of the impugned section 19 of the Act.
Before setting out the points urged by Mr. Narula learned Counsel for the petitioners in support of his submission that section 19 of the Act" was, in so far as it enabled the competent authority to withhold permission to those who had obtained decrees for eviction from executing their decrees, unconstitutional, it would be necessary to read the material provisions of the Rent Control Act, 1952, which imposes a restriction on the right of landlords, inter alia to evict tenants from the premises occupied by them.
Chapter III of that Act imposes a control over the eviction of tenants.
A tenant is defined (Vide section 2(j)) as meaning "any person by whom or on whose account rent is payable for any premises including such sub tenants or others who have derived title under the tenant 134 under the provisions of any law before the commencement of the Act.
" Section 13(1) enacts: "Notwithstanding anything to the contrary con tained in any other law or any contract, no decree or order for the recovery of possession of any premises shall be passed by any Court in favour of the landlord against any tenant (including a tenant whose tenancy is terminated):".
This blanket protection is, however, subject to the conditions enumerated in the proviso which reads: "Provided that nothing in this sub section shall apply to any suit or other proceeding for such recovery of possession if the Court is satisfied " Then follow ten grounds the existence of one or other of which enables a landlord to obtain a decree from a Civil Court for the recovery of possession from tenants.
Among the grounds thus enumerated it is sufficient to refer to grounds (f), (g) and (1), ground (g) being the ground upon which the petitioner in the present case obtained the decrees for eviction and these run: " (f) that the premises have become unsafe or unfit for human habitation and are bona fide required by the landlord for carrying out repairs which cannot be carried out without the premises being vacated; or (g) that the premises are bona fide required by the landlord for the purpose of re building the premises or for the replacement of the promises by any building or for the erection of other buildings, and that such building or rebuilding cannot be carried out without the premises being vacated; or (1) that the landlord requires the premises in order to carry out any building work at the instance of the Government or the Delhi Improvement Trust in pursuance of any improvement scheme or development scheme.
" The right of the landlord, however, who obtains an order for eviction under either cl.
(f) or (g) above set out is subject to the provisions of section 15 whose terms have already been set out, The result, therefore, 135 would be that in the cases covered by these two clauses the tenants would be entitled, if they conform to the terms of these provisions, to be reinstated in the newly constructed premises after the reconstruction.
It might be pointed out that under section 38 of the Rent Control Act the provisions of the Act and the Rules made thereunder are to have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.
The argument of the learned Counsel was that the restriction upon the rights of landlords to the enjoyment of the property imposed by section 13 of the Rent Control Act could not be open to any objection, legal or constitutional because the Legislature has set out with precision the grounds upon which possession could be recovered, the defenses that might be set up by the tenants and the conditions subject to which the rights either of the landlord or of the tenant could be exercised.
It is the super imposition of the provisions of section 19 of the Act on the rights of a landlord decreeholder who had satisfied the requirements of the Rent Control Act before obtaining his decree that was stated as amounting to an unreasonable restriction on the right to hold property guaranteed by article 19(1)(f).
This will be a convenient stage at which we might set out in brief outline the argument urged by learned Counsel for the petitioner.
They were mainly three: (1) Section 19(3) of the Act vests an unguided, unfettered and uncontrolled power in an executive officer to withhold permission to execute a decree which a landlord has obtained after satisfying the reasonable requirements of the law as enacted in the Rent Control Act.
Neither section 19 of the Act nor any other provision of the Act indicates the grounds on which the competent authority might grant or withhold permission to execute decrees and the power conferred is, therefore, arbitrary and offends article 14 of the Constitution.
(2) The same point was urged in a slightly different form by saying that the Power conferred on the "competent authority" by section 19(3) of the Act was an excessive delegation of legislative power and was, therefore, unconstitutional.
(3) The 136 vesting of a power in an executive authority to override at his sweet will and pleasure rights to property without any guidance from the Legislature con stituted an unreasonable restraint on the petitioner 's right to hold property, a right which in the case of the property of the type now in question would include a right to obtain possession from the tenant in order either to improve it by reconstruction or for the purpose of his own use.
Apart from the objection regarding the vesting of an unguided power in an executive authority which is, the common ground of objection urged in regard to points (1) and (2), learned Counsel submitted that the right vested in an executive authority to prevent for an indefinite and indeterminate period of time the right to enjoy his property was for this further reason excessive and an unreasonable restraint which could not be justified under article 19(5) of the Constitution.
We shall proceed to consider these points in that order.
The first ground alleged is that section 19 of the Act is constitutionally invalid as violative of the equal protection of the laws conferred under article 14 of the Constitution, in that an unguided and arbitrary discretion is vested in the "competent authority".
The import, content and scope of article 14 of the Constitution has been elaborately considered and explained in numerous decisions of this Court and it is, therefore, unnecessary for us to embark on any fresh investigation of the topic, but it would be sufficient to summarise the principles, or rather the rules of guidance for the interpretation of the Article which have already been established, and then consider the application of those rules to the provisions of the enactment now impugned.
It is only necessary to add that the decisions of this Court laying down the proper construction of article 14 rendered up to 1959 have been summarised in the form of 5 propositions by Das C. J. in Ramakrishna Dalmia vs Justice Tendolkar (1), but we are making a summary on slightly different lines more relevant to the enquiry regarding the provision with which we are concerned in the present case.
(1) ; , 299, 301 137 (1) If the statute itself or the rule made under it applies unequally to persons or things similarly situated, it would be an instance of a direct violation of the Constitutional guarantee and the provision of the statute or the rule in question would have to be struck down.
(2) The enactment or the rule might not in terms enact a discriminatory rule of law but might enable an unequal or discriminatory treatment to be accorded to persons or things similarly situated.
This would happen when the legislature vests a discretion in an authority, be it the Government or an administrative official acting either as an executive officer or even in a quasi judicial capacity by a legislation which does not lay down any policy or disclose any tangible or intelligible purpose, thus clothing the authority with unguided and arbitrary powers enabling it to discriminate.
"The legislature must declare the policy of the law and the legal principles which are to control any given cases and must provide a standard to guide the officials or the body in power to execute the law.
The essential legislative function consists in the determination or choice of the legislative policy and of formally enacting that policy into a binding rule of conduct." [Harishankar Bagla vs The State of Madhya Pradesh (1)]. "No rules have been framed and no directions given on these matters to regulate or guide the discretion of the licensing officer.
Practically the Order commits to the unrestrained will of a single individual the power to grant, withhold or cancel licences in any way he chooses and there is nothing in the Order which could ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same".
[Messrs. Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh (2)].
(1) , 388.
(2) ; 813. 18 138 In such circumstances the very provision of the law which enables or permits the authority to discriminate, offends the guarantee of equal protection afforded, by article 14.
possibly the best instance of this type of case is afforded by the legislation under consideration in The State of West Bengal vs Anwar Ali Sarkar (1), the ratio underlying which was thus explained in Kathi Raning Rawat vs The State of Saurashtra (2): "If it depends entirely upon the pleasure of the State Government to make any classification it likes, without any guiding principle at all, it cannot certainly be a proper classification, which requires that a reasonable relation must exist between the classification and the objective that the legislation has in view.
On the other hand, if the legislature indicates a definite objective and the discretion has been vested in the State Government as a means of achieving that object, the law itself cannot be held to be discriminatory, though the action of the State Government may be condemned if it offends against the equal protection clause, by making an arbitrary selection.
" (3) It is manifest that the above rule would not apply to cases where the legislature lays down the policy and indicates the rule or the line of action which should serve as a guidance to the authority.
Where such guidance is expressed in the statutory provision conferring the power, no question of violation of article 14 could arise, unless it be that the rules themselves or the policy indicated lay down different rules to be applied to persons or things similarly situated.
Even where such is not the case, there might be a transgression by the authority of the limits laid down or an abuse of power, but the actual order would be set aside in appropriate proceedings not so much on the ground of a violation of article 14, but as really being beyond its power.
(4) It is not, however, essential for the legislation to comply with the rule as to equal protection, that the rules for the guidance of the designated authority, (1) ; (2) ; , 461, 462.
139 which is to exercise the power or which is vested with the discretion, should be laid down in express terms in the statutory provision itself.
"The Saurashtra case would seem to lay down the A principle that if the impugned legislation indicates the policy which inspired it and the object which it seeks to attain, the mere fact that the legislation does not itself make a complete and precise classification of the persons or things to which it is to be applied, but leaves tile selective application of the law to be made by the standard indicated or the underlying policy and object disclosed is not a suffi cient ground for condemning it as arbitrary and, therefore, obnoxious to article 14." [Kedar Nath Bajoria vs The State of West Bengal (1) ].
"So long as the policy is laid down and a standard established by a statute, no unconstitutional delegation of legislative power is involved in leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the deter mination of facts to which the policy as declared by the Legislature is to apply." [Harishankar Bagla and another vs The State of Madhya Pradesh (1) ].
Such guidance may thus be obtained from or afforded by (a) the preamble read in the light of the surrounding circumstances which necessitated the legislation, taken in conjunction with well known facts of which the Court might take judicial notice or of which it is appraised by evidence before it in the form of affidavits, Kathi Raning Rawat vs The State of Saurashtra (3) being an instance where the guidance was gathered in the manner above indicated, (b) or even from the policy and purpose of the enactment which may be gathered from other operative provisions applicable to analogous or comparable situations or generally from the object sought to be achieved by the enactment.
"The policy underlying the Order is to regulate the (1) , 46.
(2) , 388.
(3) [1052] S.C.R. 435, 461, 462.
140 transport of cotton textile in a manner that will ensure an even distribution of the commodity in the country and make it available at a fair price to all.
The grant or refusal of a permit is thus to be govern ed by this policy and the discretion given to the Textile Commissioner is to be exercised in such a way as to effectuate this policy.
The conferment of such a discretion cannot be called invalid and if there is an abuse of the power there is ample power in the Courts to undo the mischief." Harishankar Bagla vs The State of Madhya Pradesh (1).
In Pannalal Binjraj vs Union of India 's case (2) the purpose of the provision which was administrative convenience for enabling assessments to be made in the manner indicated by the Income tax Act was held to afford a sufficient guidance so as to render the provision immune from attack on the ground of violation of article 14.
In the circumstances indicated under the fourth head, just as in the third, the law enacted would be valid being neither a case of excessive delegation or abdication of legislative authority viewed from one aspect, nor open to objection on the ground of violation of article 14 as authorising or permitting discriminatory treatment of persons similarly situated.
The particular executive or quasi judicial act would, however, be open to challenge as already stated on the ground not so much that it is in violation of the equal protection of the laws guaranteed by article 14, because ex concessis that was not permitted by the statute but on the ground of the same being ultra vires as not being sanctioned or authorized by the enactment itself.
The situation in such cases would be parallel to the tests to be applied for determining the validity of rules made under statutes which enable the rule making authority to enact subsidiary legislation "to carry out the purposes of the Act".
The criteria to be applied to determine the validity of such rules could, in our opinion, be appropriately applied to determine the validity of the action under the provisions like the one dealt with under the last two heads.
(1) , 388.
(2) ; 141 In the light of what we have stated above we have now to consider the point urged by the learned Counsel for the petitioner that the Act has vested in the competent authority the power to withhold eviction in pursuance of orders or decrees of Courts with out affording any guidance or laying down any principles for his guidance on the basis of which he could exercise his discretion.
In other words, that the Act lays no fetters and has vested in him an arbitrary and unguided power to pick and choose the decree holders to whom he would permit execution and those to whom he would refuse such relief.
On the other hand, the learned Attorney General submitted that the discretion vested in the competent authority was not unguided and that though section 19 of the Act did not in terms lay down any rules for his guidance, the same could be gathered from the policy and purpose of the Act as set out in the preamble and in the operative provisions of the Act itself.
We consider that there is considerable force in this submission of the learned Attorney General.
The preamble describes the Act as one enacted for two purposes: (1) the improvement and clearance of slum areas in certain Union Territories, and (2) for the protection of tenants in such areas from eviction.
These twin objects are sought to be carried out by Chapters II to VI of the enactment.
Chapter 11 which consists of one sections.
3 provides a definition of what are "slum areas" and their declaration as such.
The tests for determining whether the area could be declared a "slum area" or not briefly are whether the buildings in the area are (a) unfit for human habitation, or (b) are by reason of dilapidation, overcrowding etc.
detrimental to safety, health or morals.
It is in areas so declared as "slum areas" that the rest of the enactment is to operate.
The provisions, however, make it clear that in order that an area may be declared a " slum area" every building in that area need not be unfit for human habitation or that human habitation in every building in such area should be detrimental to the safety, health or morals of the dwellers.
We are making this observation because of a suggestion 142 made, that the declared purpose of protecting the tenants from eviction was inconsistent with the policy underlying the declaration of an area as a "slum area" and that thus the Act manifested two contrary or con flicting ideas or principles which would negative each other and thus leave no fixed policy to guide " the competent authority" when exercising his powers to grant or refuse eviction when an application was made to him in that behalf under section 19 of the Act.
Chapter III is headed 'Slum Improvement ' and makes provision for two types of orders: (1) to require the improvement of buildings where repairs major or minor would make them reasonably habitable for the slum dwellers (vide sections 4 6), and (2) cases where mere repairs or adjustments would not suffice but what is required is the demolition of the entire building.
In the latter case certainly the occupants of the building would have to be evicted and the building vacated and power is conferred for effectuating this purpose vide section 7 (1) and 7 (3).
It might be that the whole area might consist of dwellings of the type which require demolition and it is Chapter IV that makes provision for this category of cases which is headed "Slum Clearance and Re development".
In such cases the buildings in the entire area are to be ordered to be demolished, and in that event the dwellers would, of course, have to vacate, but it is presumed that alternative accommodation would necessarily have to be provided before any such order is made.
The process would have to be carried out in an orderly fashion if the purpose of the Act is to be fulfilled and the policy behind it, viz., the establishment of slum dwellers in healthier and more comfortable tenements so as to improve the health and morals of the community, is to be achieved.
Chapter V makes provision for the acquisition of land in order to compass the re development of slum areas into healthy parts of the city, by providing amenities and more substantial and better accommodation for the previous inhabitants.
It is after this that we have Chapter VI whose terms we have already set out.
This Chapter is headed "Protection of tenants in Slum Areas 143 from Eviction".
Obviously, if the protection that is afforded is read in the context of the rest of the Act, it is clear that it is to enable the poor who have no other place to go to, and who if they were compelled, to go out, would necessarily create other slums in the a process and live perhaps in less commodious and more unhealthy surroundings than those from which they were evicted, to remain in their dwellings until provision is made for a better life for them elsewhere.
Though therefore the Act fixes no time limit during which alone the restraint on eviction is to operate, it is clear from the policy and purpose of the enactment and the object which it seeks to achieve that this restriction would only be for a period which would be determined by the speed with which the authorities are able to make other provisions for affording the slum dweller tenants better living conditions.
The Act, no doubt, looks at the problem not from the point of view of the landlord, his needs, the money he has sunk in the house and the possible profit that he might make if the house were either let to other tenants or was reconstructed and let out, but rather from the point of view of the tenants who have no alternative accommodation and who would be stranded in the open if an order for eviction were passed.
The Act itself contemplates eviction in cases where on the ground of the house being unfit for human habitation it has to be demolished either singly under section 7 or as one of a block of buildings under Ch.
So long therefore as a building can, without great detriment to health or safety, permit accommodation, the policy of the enactment would seem to suggest that the slum dweller should not be evicted unless alternative accommodation could be obtained for him.
In this connection the learned Attorney General brought to our attention the provisions of the Delhi Development Act, 1957 (LXI of 1957) which makes provision for the design of a Master Plan for the city which, if executed, is likely to greatly reduce, if not to eliminate, slums altogether.
It was suggested that taken in conjunction with this enactment it would be seen that the power to restrain eviction under section 19 of the 144 Act is one which would not last for ever but to a limited period, though this could not naturally be defined by reference to fixed dates.
We see force in this submission as well.
In view of the foregoing we consider that there is enough guidance to the competent authority in the use of his discretion under section 19(1) of the Act and we, therefore, reject the contention that section 19 is obnoxious to the equal protection of laws guaranteed by article 14 of the Constitution.
We need only add that it was not, and could not be, disputed that the guidance which we have hold could be derived from the enactment, and that it bears a reasonable and rational relationship to the object to be attained by the Act and, in fact, would fulfil the purpose which the law seeks to achieve, viz., the orderly elimination of slums, with interim protection for the slum dwellers until they were moved into better dwellings.
We are further of the opinion that the order of the competent authority in the present case is not open to challenge either, because it would be seen that the grounds upon which he has rejected the petitioner 's application for execution is in line with what we have stated to be the policy and purpose of the Act.
Before leaving this topic it is necessary to consider a submission of learned Counsel for the petitioner which is of immediate relevance to point under examination.
He said that, no doubt, the decisions of this Court had pointed out that it was not reasonable to expect the legislature to lay down expressly precise criteria for the guidance of the authorities who have to administer the law because of the difficulty, if not impossibility, of contemplating every single circumstance and prescribing rules so as to apply to such varying situations, and that was the raison d 'etre of vesting a large discretion in the hands of the administering authorities after indicating the general principles that ought to guide them.
He however urged that in the present case there was no such insuperable difficulty, because the restriction provided for by section 19 of the Act was superimposed on those which were 145 enacted by section 13 of the Rent Control Act, and Parliament when enacting the Act, could easily have indicated with reference to the several grounds on which eviction could be had under the Rent Control Act, the additional restrictions, or further conditions which would be taken into account by "the competent authority".
If learned Counsel meant by this submission that it was a possible mode of legislation, there is nothing to be said against it, but if he desired us to infer therefrom that because of the failure to adopt that mode, the power conferred by section 19 of the Slum Act contravened the guarantee under article 14, we cannot agree.
In regard to this matter we desire to make two observations.
In the context of modern conditions and the variety and complexity of the situations which present themselves for solution, it is not possible for the Legislature to envisage in detail every possibility and make provision for them.
The Legislature therefore is forced to leave the authorities created by it an ample discretion limited, however, by the guidance afforded by the Act.
This is the ratio of delegated legislation, and is a process which has come to stay, and which one may be permitted to observe is not without its advantages.
So long therefore as the Legislature indicates, in the operative provisions of the statute with certainty, the policy and purpose of the enactment, the mere fact that the legislation is skeletal, or the fact that a discretion is left to those entrusted with administering the law, affords no basis either for the contention that there has been an excessive delegation of legislative power as to amount to an abdication of its functions, or that the discretion vested is uncanalised and unguided as to amount to a carte blanche to discriminate.
The second is that if the power or discretion has been conferred in a manner which is legal and constitutional, the fact that Parliament could possibly have made more detailed provisions, could obviously not be a ground for invalidating the law.
The next point argued by learned Counsel for the 19 146 petitioner was that the power conferred on the competent authority by section 19(3) of the Act was an excessive delegation of legislative power.
As we have pointed out earlier, this submission is really another form, or rather another aspect of the objection based on the grant of an unfettered discretion or power which we have just now dealt with.
It is needless to repeat, that so long as the legislature indicates its purpose and lays down the policy it is not necessary that every detail of the application of the law to particular cases should be laid down in the enactment itself.
The reasons assigned for repelling the attack based on article 14 would suffice to reject this ground of objection as well.
The last major objection urged by learned Counsel was that the power vested in the competent authority "at its sweet will and pleasure" to refuse permission to execute a decree for eviction violated the right to hold property under article 19(1)(f) of the Constitution and that the same was not saved by article 19(5) of the Constitution for the reason that the restriction imposed on the exercise of the right was not reasonable.
If Counsel were right in his submission that the petitioner 's right to obtain possession of his building rested on the "sweet will and pleasure of the competent authority" there could be some substance in the argument.
But as we had already had occasion to point out, it is not at the "sweet will and pleasure" of the competent authority that permission to evict could be granted or refused, but on principles gather able from the enactment, as explained earlier.
Learned Counsel further urged that the right to hold property under article 19( 1)(f) included the right in the owner of a building to evict a tenant and enter into actual or physical occupation of the property.
Counsel is, no doubt, right in this submission but the 'freedom ' to 'hold property ' is not absolute but that, as he himself admitted, is subject, under article 19(5), to treasonable restrictions" being placed upon it "in the interests of the general public".
It was not suggested that slum dwellers would not constitute "the general public" and that if a legislation was designed to grant 147 them protection, it could not be justified as one in the interests of the "general public", because obviously the interests of such a vast number of the population in the country, their health, well being and morals, would, apart even from themselves, necessarily impinge upon and influence, for good or evil, the health, safety, well being and morality of the rest of the community as well.
The only question that is capable of argument is whether the restriction is reasonable.
A considerable part of learned Counsel 's argument on the reasonableness of the restriction was devoted to showing that the vesting of an unfettered or unguided power in the competent authority to permit or not to permit eviction rendered the restriction unreasonable.
This, as would be seen, is really a different form of presenting the case of the objection under article 14, and what we have said in dealing with the first point of the learned Counsel would answer this portion of the objection.
There are, however, a few more matters which have relevance about the objection on the score of the restriction not being reasonable within article 19(5) and the tests to be applied to determining its reasonableness to which we should refer.
It has already been pointed out that the restrictions imposed on the right of the landlord to evict have a reasonable and rational connection with the object sought to be achieved by the Act, viz., the ultimate elimination of slums with protection to the slum dwellers from being meanwhile thrown out on the streets.
The question might still remain whether this restriction on the rights of the landlords is excessive in the sense that it invades and trenches on their rights in a manner or to an extent not really or strictly necessary to afford protection to the reasonable needs of the slum dwellers which it is the aim and object of the legislation to subserve.
The criteria for determining the degree of restriction on the right to hold property which would be considered reasonable, are by no means fixed or static, but must obviously vary from age to age and be related to the adjustments necessary to solve the problems which communities face from time to time.
The tests, therefore, evolved by communities living in sheltered or 148 placid times, or laid down in decisions applicable to them can hardly serve as a guide for the solution of the problems of post partition India with its stresses and strains arising out of movements of populations which have had few parallels in history.
If law failed to take account of unusual situations of pressing urgency arising in the country, and of the social urges generated by the patterns of thought evolution and of social consciousness which we witness in the second half of this century, it would have to be written down as having failed in the very purpose of its existence.
Where the legislature fulfils its purpose and enacts laws, which in its wisdom, is considered necessary for the solution of what after all is a very human problem the tests of "reasonableness" have to be viewed in the context of the issues which faced the legislature.
In the construction of such laws and particularly in judging of their validity the Courts have necessarily to approach it from the point of view of furthering the social interest which it is the purpose of the legislation to promote, for the Courts are not, in these matters, functioning as it were in vacuo, but as parts of a society which is trying, by, enacted law, to solve its problems and achieve social concord and peaceful adjustment and thus furthering the moral and material progress of the community as a whole.
Judged in the light of the above, we consider that the restrictions imposed cannot be said to be unreasonable.
As we have already pointed out, the ban imposed on evictions is temporary, though learned Counsel is right in saying that its duration is not definite.
In the very nature of things the period when slums would have ceased to exist or restrictions placed upon owners of property could be completely lifted must, obviously, be indefinite and therefore the indefiniteness cannot be a ground for invalidity a ground upon which the restriction could be held to be unreasonable.
Again, there is an appeal provided from the orders of the competent authority to the Chief Administrator.
If learned Counsel is right in his submission that the power of the "competent authority" is unguided and that he had an unfettered 149 and arbitrary authority to exercise his discretion "at his sweet will and pleasure" the existence of a provision for appeals might not impart validity to such legislation.
The reason for this is that the appellate power would be subject to the same vice as the power of the original authority and the imposition of one " sweet will and pleasure" over another of a lower authority, would not prevent discrimination or render the restriction reasonable.
But if, as we have held earlier, the Act by its preamble and by its provisions does afford a guidance to the "competent authority" by pointing out the manner in which the discretion vested in him should be exercised, the provision as to an appeal assumes a different significance.
In such cases, if the "competent authority" oversteps the limits of his powers or ignores the policy behind the Act and acts contrary to its declared intention, the appellate authority could be invoked to step in and correct the error.
It would, therefore, be a provision for doubly safeguarding that the policy of the Act is carried out and not ignored in each and every case that comes up before "the competent authority".
The procedure laid down by the Act for the hearing by the "competent authority" and the provisions for enquiry, renders the "competent authority" a quasi judicial functionary bound to follow fixed rules of procedure and its orders passed after such an enquiry are to be subject to appeals to the Administrator.
We consider these safeguards very relevant for_judging about the reasonableness of the restriction.
In considering these matters one has to take into account the fact a fact of which judicial notice has to be taken that there has been an unprecedented influx of population into the capital, and in such a short interval, that there has not been time for natural processes of expansion of the city to adjust itself to the increased needs.
Remedies which in normal times might be considered an unreasonable restriction on the right to hold property would not bear that aspect or be so considered when viewed in a situation of emergency brought about by exceptional and unprecedented circumstances.
Just as pulling down a building to prevent the 150 spread of flames would be reasonable in the event of a fire, the reasonableness of the restrictions imposed by the impugned legislation has to be judged in the light of actual facts and not on a priori reasoning based on the dicta in decisions rendered in situations bearing not even the remotest resemblance to that which presented itself to Parliament when the legislation now impugned was enacted.
Before concluding it is necessary to advert to a few points which were also urged by learned Counsel for the petitioner.
First it was said that the impugned section 19 of the Act imposed a double restriction, a restriction super imposed on a restriction already existing by virtue of the provisions of the Rent Control Act, and that this rendered it unreasonable.
If by this submission learned Counsel meant that different results as to constitutional validity flowed from whether the impugned section was part of the provisions of the Rent Control Act, or was a section in an independent enactment, the argument is clearly untenable.
If, however, that was not meant, but that in the context of the restrictions already imposed by the Rent Control Act section 19 of the Act was really unnecessary and therefore.
an unreasonable restraint on the freedom of the landlord, what we have said earlier ought to suffice to repel the argument.
Learned Counsel next drew our attention to section 38 of the Rent Control Act which reads: "The provisions of this Act and of the rules made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any such law.
" If this section stood alone, the argument of learned Counsel that by reason of the width and sweep of its language, even a special legislation, such as the Act was comprehended within the non obstante provision would have required serious consideration, but that has been rendered unnecessary, because even apart from section 19 of the Act which opens with the words: "Notwithstanding anything contained in any other law for tile time being in force", section 39 of the Act also 151 contains a non obstante clause on the same lines as section 38 of the Rent Control Act.
The result therefore would be that the provisions of the special enactment, as the Act is, will in respect of the buildings in areas declared slum areas operate in addition to the Rent Control Act.
The argument therefore that the Act is inapplicable to buildings covered by the Rent Control Act is without substance, particularly when it is seen that it is only when a decree for eviction is obtained that section 19 of the Act comes into play.
We therefore consider that none of the points urged in support of the petition has any substance.
The petitions fail and are dismissed.
In the circumstances of the case there will be no order as to costs.
Petitions dismissed.
| The Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act of 1950 put an end to all proprietary rights in estates, mahals and alienated villages situated in the State and vested them in the State for the purposes of the State, free from all encumbrances.
The petitioners, who had entered into various contracts and agreements with the proprietors of the estates before the date on which the estates vested in the State under the Act (and,some of them even before the 16th March, 1950) under which they were entitled to pluck, collect and carry away tendu leaves, to cultivate, culture and acquire lac, and to out and carry away teak and timber and other species of trees, applied for writs under art 32 of the Constitution prohibiting the State from interfering with the rights they had, acquired under the contracts with the proprietors: Held, (i) On construction of the contracts in a question, that the contracts were in essence and effect licenses granted to the petitioners to cut, gather and carry away produce in the shape of tendu leaves, lac, timber, or wood and the petitioners were neither proprietors nor persons having any interest in the proprietary rights through the proprietors, within the meaning of the Act; (ii) The rights of the petitioners were not encumbrances within the meaning of the expression "free from encumbrances in section 3 . 1) of the Act and the petitioners were entitled to a writ against the State prohibiting the State from interfering with the rights of the petitioners under the contracts which they had entered into with the proprietors.
Mohanlal Hargovind vs Commissioner of Income tax, C.P,& Berar (I.L.R. [19491 Nag. 892) referred to.
Held also, that section 4 (3) of the Indian Sale of Goods Act which lays flown that in the case of sale of future goods the contract 477 amounts only to an agreement to sell did not apply to the contracts in the present case as "future goods" are defined in the Act as meaning goods to be manufactured or produced or acquired by the seller after making the contract of sale.
|
Appeal No. 231 of 1956.
Appeal from the judgment and order dated September 11, 1953, of the Rajasthan High Court (Jaipur Bench) at Jaipur in Writ Application No. 141 of 1952.
M. section K. Sastri and T. M. Sen, for the appellants.
The respondent did not appear.
August 18.
The Judgment of the Court was delivered by RAJAGOPALA AYYANGAR, J.
This appeal raises for consideration the constitutional validity of one paragraph of a notification issued by the State of Rajasthan under section 15 of the (V of 1861), under which " the Harijan " and " Muslim " inhabitants of the villages, in which an additional police force was stationed, were exempted from the obligation to bear any portion of the cost of that force.
It is stated that the inhabitants of certain villages 223 in the district of Jhunjhunu in the State of Rajasthan, harboured dacoits and receivers of stolen property, and were besides creating trouble between landlords and tenants as a result of which there were serious riots in the locality in the course of which some persons lost their lives.
The State Government therefore took action under section 15 of the .
This Section provides : " Quartering of additional police in disturbed or dangerous districts (1) It shall be lawful for the State Government, by proclamation to be notified in the official Gazette, and in such other manner as the State Government shall direct, to declare that any area subject to its authority has been found to be in a disturbed or dangerous state, or that, from the conduct of the inhabitants of such area, or of any class or section of them, it is expedient to increase the number of police.
(2) It shall thereupon be lawful for the Inspector General of Police, or other officer authorised by the State Government in this behalf, with the sanction of the State Government, to employ any police force in addition to the ordinary fixed complement to be quartered in the areas specified in such proclamation as aforesaid.
(3) Subject to the provisions of sub section (5) of this section, the cost of such additional police force shall be borne by the inhabitants of such area described in the proclamation.
(4) The Magistrate of the district, after such enquiry as he may deem necessary, shall apportion such cost among the inhabitants who are, as aforesaid, liable to bear the same and who shall not have been exempted under the next succeeding sub section.
Such apportionment shall be made according to the Magistrate 's judgment of the respective means within such area of such inhabitants.
(5) It shall be lawful for the State Government by order to exempt any persons or class or section of such inhabitants from liability to bear any portion of such cost.
" Sub section (6) is omitted as not relevant.
224 The notification by which these provisions were invoked and which is impugned in these proceedings was in these terms: " Whereas the Rajpramukh is satisfied that the area shown in the schedule annexed hereto has been found to be in a disturbed and dangerous state; Now, therefore, in the exercise of the authority vested in him under Section 15(1) of the (V of 1861), the Rajpramukh is pleased to declare that the 24 villages included in the said schedule shall be deemed to be disturbed area for a period of six months from the date of this notification.
Under sub section 2 of the said section 15 of the (V of 1861), the Rajpramukh is pleased to authorise the Inspector General of Police to employ, at the cost of the inhabitants of the said area any Police force in addition to the ordinary fixed complement quartered therein.
Under sub section 5 of section 15 of the said Act the Rajpramukh is further pleased to exempt the Harijan and Muslim inhabitants of these villages from liability to bear any portion of the cost on account of the posting of the additional Police force.
" Then followed the names of the 24 villages.
The respondent Thakur Pratap Singh being an inhabitant of Baragaon one of these 24 villages, moved the High Court of Rajasthan for the issue of a writ or direction under Act.
226 of the Constitution impugning the validity of section 15 of the and in particular of sub section
5 thereof and of the notification and praying for appropriate reliefs.
The High Court repelled the wider contentions urged regarding the invalidity of section 15 of the in general as also of the powers conferred on the State Government to order the exemption of " any person or classes or sections of such inhabitants " from liability to bear the cost of the additional police force.
But the learned Judges hold that Para 4 of the notification which exempted " Harijan and Muslim inhabitants of the villages " from the levy, was violative of the guarantee in article 15(1) of the Constitution against discrimination on the ground of caste or religion etc.
which reads.
225 " The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them." and struck it down as unconstitutional.
The State of Rajasthan who felt aggrieved by this order applied to the High Court for a certificate under article 132(1) to enable it to file an appeal to this court and this having been granted, the appeal is now before us.
Learned Counsel for the State made a strenuous effort to show that the exemption of the Harijan & Muslim inhabitants of the villages, was, in the impugned notification, not based " only " on the ground of 'caste or religion ' or the other criteria set out in article 15(1), but on the ground that persons belonging to these two communities were found by the State not to have been guilty of the conduct which necessitated the stationing of the additional police force.
It was the same argument as was addressed to the High Court and was rejected by the learned Judges who observed : " Now this is a very strange argument that only persons of a certain community or caste were law abiding citizens, while the members of other communities were not.
Disturbing elements may be found among members of any community or religion just as much as there may be saner elements among members of that community or religion.
" The view here expressed by the learned Judges is, in our opinion, correct.
Even if it be that the bulk of the members of the communities exempted or even all of them were law abiding, it was not contended on behalf of the State that there were no peaceful and law abiding persons in these 24 villages belonging to the other communities on whom the punitive levy had been directed to be made.
In para 5(f) of the petition filed before the High Court the respondent had averred : " That the aforesaid Notification is ultra vires of the Constitution of India as it discriminates amongst the Citizens of a village on the basis of religion, race or caste, in as much as it makes a distinction between 29 226 persons professing the Mohammadan religion and others and also between persons who are Muslims and Harijans by caste and the rest.
It, therefore, contravenes the provisions of Article 15 of the Constitution of India.
" The answer to this by the State was in these terms: " The Harijan and Muslim inhabitants of these villages have been exempted from liability to bear any portion of the cost of the additional force not because of their religion, race or caste but because they were found to be peace loving and law abiding citizens, in the 24 villages additional force has been posted.
" It would be seen that it is not the case of the State, even at the stage of the petition before the High Court that there were no persons belonging to the other communities who were peace loving and law abiding, though it might very well be, that according to the State, a great majority of these other communities were inclined the other way.
If so, it follows that the notification has discriminated against the law abiding members of the other communities and in favour of the Muslim and Harijan communities, (assuming that every one of them was "peace loving and law abiding") on the basis only of " caste " or "religion ".
If there were other grounds they ought to have been stated in the notification.
It is plain that the notification is directly contrary to the terms of article 15(1) and that para 4 of the notification has incurred condemnation as violating a specific constitu tional prohibition.
In our opinion, the learned Judges of the High Court were clearly right in striking down this paragraph of the notification.
The appeal fails and is dismissed.
As the respondent has not appeared there will be no order as to costs.
Appeal dismissed.
| N borrowed rupees one lakh from D on mortgage of a house and Zamindari interest on March 1, 1924.
Interest was 8% per annum compoundable with six monthly rests.
In 1932 the mortgagee filed a suit on the mortgage and a decree was passed for the recovery of Rs. 1,83,781/5/9 principal and interest upto the date of the suit and Rs. 49,280/ 2/6 interest from date of the suit upto the date fixed for payment, with future interest at 6% per annum simple on the principal sum.
On the failure of the mortgagor to pay by the date fixed a final decree was passed on May 9, 1935 for sale of the property for recovery of a sum of Rs. 2,37,503/5/6 which had become due.
On October 26, 1936, N made an application under section 4 of the U. P. Encumbered Estates Act, 1934, requesting that the provisions of the Act be applied to him.
Section 14(4)(a) of the Act provided that " the amount of interest held to be due on the date of application shall not exceed that portion of the principal which may still be found to be due on the date of the application ".
N contended that in view of section 14(4)(a), D was not entitled to recover any sum as interest in excess of the principal sum of rupees one lakh.
D contended that it was not necessary to reopen the decree as the principle of section 14(4)(a) had not been violated in passing the decree.
Held, that the proper decree that should have been passed on the application was for rupees two lakhs for the principal and interest plus costs and interest pendente lite and future interest at 4% per annum.
The words " on the date of the application " in section 14(4)(a) of the Act had been deliberately used to benefit the applicant by reducing the interest to the amount of the principal found still due on the date of the application, whatever amount of interest may be due under the contract.
The fact that there had been a decree did not make any difference in giving the benefit of the section to the applicant.
Pandit Ramsagar Prasad vs Mst.
Shayama, A.I.R. 1939 Oudh 75, disapproved.
Rukun uddin vs Lachhmi Narain, I.L.R. 1945 All.
307, referred to. 119
|
Criminal Appeal No. 669 of 1989.
From the Judgment and Order dated 18.5.1989 of the Designated Court, Poona in Crl.
Bail Application No. 11 of 1989.
G. Ramaswamy, Additional Solicitor General, S.V. Tar kunde and A.M. Khanwilkar for the Appellant.
U.R. Lalit and V.N. Ganpule for the Respondent.
The Judgment of the Court was delivered by FATHIMA BEEVI, J.
By the impugned order dated the 18th May, 1989 the Designated Court, Pune directed the respondent to be released on bail.
The respondent was accused of having committed offence under Section 3(1) of the Terrorist and Disruptive Activities (Prevention) Act, 1987 (hereinafter referred to as 'the Act ') besides the offences punishable under Sections 148, 149, 120 B and 302 of the Indian Penal Code.
The respondent was the member of the Shiv Sena Party and the Chief of the Thane District Unit.
In consequence of the defeat of the party in Mayoral election held on 20th March, 1989 the party felt that 75 there was cross voting and there were traitors among them.
There had been a declaration by the respondent that such traitors would not be spared.
The respondent was arrested in connection with the murder of one of the Corporators Shrid har Khopkar on 21.4.
1989 on registering Crime No. 1348/89.
In releasing the respondent on bail while investigation was pending, the Designated Court appears to have been influenced by the fact that respondent was the leader of Political Party.
The court assumed that as a leader, he would not be involved in such crimes and that there are reasonable grounds for believing that the respondent is not guilty of any offence under the Act.
Having heard both the sides, we feel that the whole approach by the learned Judge was misconceived and the order is unsustainable.
We have been taken through the entire proceedings.
We find that the learned Judge has not noticed the relevant provisions of the Act which restrict the powers of the Court in granting bail.
The learned Judge had also refused to consider the materials placed before it for the purpose of satisfying himself whether there are no reasona ble grounds to believe that the respondent has committed the offence.
In the course of the investigation witnesses have been questioned and their statements have been reduced to writing.
The learned Judge refused to consider the state ments recorded in the course of the investigation for the simple reason that such statements had not been read out in open Court though the Court was empowered to peruse the case diary for the purpose of satisfying itself as to the stage of investigation and the nature of the evidence that had been collected.
Sub Section (8) of Section 20 of the Act clearly pro vides that unless the Court is satisfied for the reasons to be recorded that there are reasonable grounds to believe that the respondent is not involved in disruptive activi ties, bail shall ordinarily be refused.
Even under the provisions of Sections 437 and 438 of the Code of Criminal Procedure, the powers of the Sessions Judge are not unfet tered.
The salient principles in granting bail in grave crimes have not been taken note of.
This Court would not ordinarily interfere with the discretion of the lower court in granting or refusing bail but in cases where bail has been granted on irrelevant considerations, such as the status or influence of the person accused and regardless of the nature of the accusa tion and relevancy of materials on record, this Court would not 76 hesitate to interfere for the ends of justice.
There are no hard and fast rules regarding grant or refusal of bail, each case has to be considered on its own merits.
The matter always calls for judicious exercise of discretion by the Court.
Where the offence is of serious nature the Court has to decide the question of grant of bail in the light of such considerations as the nature and seri ousness of offence, character of the evidence, circumstances which are peculiar to the accused, a reasonable possibility of presence of the accused not being secured at the trial and the reasonable apprehension of witness being tampered with, the larger interest of the public or such similar other considerations.
In the present case the learned Judge observed that it is a case of respectable person of a big political organisa tion, his freedom cannot be curtailed if he is entitled to bail.
His liberty cannot be curbed if enlarged on bail and, therefore, no kind of condition is required to be imposed.
The Court also observed that being a leader of the big political organisation one cannot expect that the respondent will commit any offence if enlarged on bail and he cannot be called to be a criminal.
The learned Judge was obsessed by the fact that the respondent was associated with a political party and was oblivious of the nature of the allegations made against him and the relevant materials indicating that the respondent had been making utterances inciting violence.
The respondent gave repeated statements to the Press saying that the traitors ' life will be made difficult and probably they will be killed.
This was published in Marathi Daily 'Navakal ' on 22.3.89.
He repeated his threat and this ap peared in an interview given to the reporter of the Weekly Magazine 'Lokprabha ' in its issue of 9.4.1989.
In an inter view in daily 'Urdu Times ' dated 16.4.1989 the respondent asserted that he knew the names of the traitors but could not disclose the same.
He also asserted that the punishment for traitors is death and they would be killed and this decision has not been taken by him in anger.
In the backdrop of such assertions, it was necessary for the Court to consider the further materials collected by the investigating agency by recording statements of witness es.
The court below misdirected itself in refusing to look into such statements and concluding that it is a case for granting bail taking into account only the position held by the respondent in the party.
The court clearly erred in disposing of the application for bail.
77 In view of what has been stated above, we set aside the order of the Designated Court and allow the appeal and cancel the bail granted to the respondent, without prejudice to his right to move the Designated Court at any subsequent stage.
G.N. Appeal allowed.
| The respondent was a member of a political party.
Conse quent upon the defeat of the party in Mayoral elections held in March, 1989, the party felt that there was cross voting and there were traitors among them and the respondent made a declaration that such traitors would not be spared.
Thereaf ter the respondent was arrested in connection with the murder of one of the Corporators.
He was accused of having committed offence under Section 3(1) of the Terrorist and Disruptive Activities (Prevention) Act, 1987, besides of fences punishable under Sections 148, 149, 120 B and 302 of the Indian Penal Code.
The designated court released the respondent on bail while the investigation was pending.
This appeal by the State is against the order of the designated court.
Allowing the appeal, this Court, HELD: 1.
Sub Section (8) of SeCtion 20 of the Act clear ly provides that unless the court is satisfied for the reasons to be recorded that there are reasonable grounds to believe that the respondent is not involved in disruptive activities bail shall ordinarily be refused.
Even under the provisions of Section 437 and 438 of the Code of ' Criminal Procedure, the powers of the Sessions Judge are not unfet tered.
[75F] 2.
Where the offence is of serious nature the Court has to decide the question of grant of bail in the light of such considerations as the nature and seriousness of offence, character of the evidence, circums 74 tances which are peculiar to the accused, a reasonable possibility of presence of the accused not being secured at the trial and the reasonable apprehension of witness being tampered with, the larger interest of the public or such similar other consideration.
[76B C] 3.
In the instant case, the salient principles in grant ing bail in grave crimes have not been taken note of.
The Court was obsessed by the fact that the respondent was associated with a political party and was oblivious of the nature of the allegations made against him and the relevant materials indicating that the respondent had been making utterances inciting violence.
[76D] 4.
This court would not ordinarily interfere with the discretion of the lower court in granting or refusing bail but in cases where bail has been granted on irrelevant considerations, such as the status or influence of the person accused and regardless of the nature of the accusa tion and relevancy of materials on record, this Court would not hesitate to interfere for the ends of justice.
[75G H; 76A]
|
ON: Civil Appeal No. 1529 of 197 1.
From the Judgment and Order dated 31.7.70 of the Calcut ta High Court in Appeal No. 29 of 1969.
G. Ramaswamy, Additional Solicitor general, A.K. Gan guli, P. Parmeshwaran and A.K. Srivastava for the Appel lants.
D.N. Mukharjee and P.K. Ghosh for the respondents.
The judgment of the Court was delivered by PATHAK, CJ.
This appeal by certificate granted by the High Court of Calcutta is directed against the judgment dated 31 July, 1970 of that High Court partly allowing a writ petition arising out of proceedings under the .
On 5 May, 1966.
noticing an advertisement in a newspaper offering imported manual and electric typewriters, adding and calculating machines, the Customs authorities raided the premises of Messrs. Typewriters and Stationery Operation Private Limited, Calcutta, on the same day and recovered fifteen typewriters, adding and calculating machines.
The machines had been sold to the company by R.N. Bagh, who in turn disclosed that he had purchased them from the crew members of some vessels.
On 7 May, 1966, the Customs Offi cers searched the residence and business premises of Messrs. Central Typewriter Company and recovered several typewriters and calculating and adding machines.
From some documents seized during the raid and statements recorded, it appeared that there was a conspiracy between the respondents and some of the crew members of certain vessels where it was agreed that the respondents would look after and maintain the families of the crew members in India while they were abroad, would advance them money and the crew members would draw their wages abroad in foreign currency and purchase with those moneys second hand typewriters, adding and calcu lating machines and then bring them to India and deliver them to the respondents after clearance under the conces sions provided in the Baggage Rules in order to circumvent the restrictions imposed under the Import Trade Control 286 Regulations.
It appeared that during the period 1961 to 1965 about 200 pieces of typewriters, adding and calculating machines had been acquired by the respondents for a sum of about Rupees one lakh and out of which forty six had been sold.
The goods were seized on 5/7 May, 1966 and notices were due to issue under section 124(a) of the within six months from that date.
Meanwhile, the Subordinate Offi cers, Customs Department, showed cause to the Additional Collector of Customs, Calcutta (who had the same powers under the Act as the Collector) for granting an extension of time for serving the show cause notice.
On 3 November, 1966, the Additional Collector granted an extension of time for a further six months in terms of the proviso to section 110(2) of the .
On 6 December, 1966 the Assistant Collector of Customs issued notice to each of the respondents calling upon him to show cause why the said seized machines should not be con fiscated under section 111(d) and section 111(o) of the read with s.3(2) of the Import and Export Control Act, 1947 and why penal action should not be taken against the respondents under section 112 of the .
On 18 April, 1967, the respondents filed a writ petition in the High Court at Calcutta challenging the proceedings initiated against them by the customs authorities including the seizure of the machines.
On 11 December, 1968 a learned Single Judge of the High Court repelled the contention of the appellants that the proceeding was administrative in nature and held that the order of extension to be made under section 110(2) of the was a quasi judicial order and as the order had been made ex parte and without notice to the owner of the goods it was in breach of the principles of Natural justice and therefore void.
He observed that as the order, moreover, was not communicated to the respondents before the expiry of six months from the date of seizure, the order of extension was invalid and the respondents had become entitled as of right to the return of the goods.
The writ petition was allowed, and the proceedings initiated by the respondents against the appellants were quashed by the learned Single Judge by his judgment and order dated 11 December, 1969.
The appellants appealed to the Appellate Bench and the Appellate Bench of the High Court by judgment dated 31 July, 1970 allowed the appeal in part, quashing the order of extension dated 3 November, 1966 and directing the appel lants to restore the machines and docu 287 ments seized from the respondents.
The Customs authorities were permitted to initiate and complete such other proceed ings against the, respondents as were open to them in law.
The appellants now appeal to this Court in so far as the judgment and order of the Appellate Bench proceeds against them.
Section 110(1) of the provides that if the proper officer has reason to believe that any goods are liable to confiscation under that Act he may seize such goods.
Section 110(2) provides: "Where any goods are seized under sub section (1) and no notice in respect thereof is given under clause (a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Collector of Customs for a period not exceeding six months." Section 124(a), to which reference has been made in section 110(2), provides that no order confiscating any goods or imposing any penalty on any person shall be made under Chapter XIV unless the owner of the goods or such person is given notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty and is given an opportunity of making a representa tion in writing, and is also given a reasonable opportunity of being heard in the matter.
It is apparent that goods liable to confiscation may be seized by virtue of section 110(1) but that those goods cannot be confiscated or penalty imposed without notice, opportunity to represent and to be heard to the owner of the goods or the person on whom penalty is proposed.
This notice must be given within six months of the seizure of the goods, as envisaged by section 110(2) of the Act, and if it is not, the goods must be returned to the person from whom the goods were seized.
The proviso to section 110(2) of the Act allows the period of six months to be extended by the Collector of Customs for a period not exceeding six months on sufficient cause being shown to him in that behalf.
The Appellate Bench of the High Court is of opinion that the 288 decision of the High Court in Assistant Collector of Customs vs Charan Das Malhotra, ; lays down the correct law and applies to the facts of this case, that there is a duty on the part of the Collector of Customs to act judicially in exercising the power conferred under the proviso to section 110(2) of the Act and that, therefore, notice should have gone to the owner of the goods before the exten sion was ordered under the proviso.
It has been held further that the order of extension should have been communicated to the owner and as that was not done the order was ineffec tive.
When this appeal came up for hearing before a Bench of this Court, reliance was placed by learned counsel for the respondents on Charan Das Malhotra, (supra).
That decision was rendered by two learned Judges of this Court.
Reference was also made in M/s Lokenath Tolaram etc.
B.N. Rangwani and Others, ; which was a decision rendered by four learned Judges of this Court, and in which reference was made to Charan Das Malhotra, (supra).
The learned Judges hearing this appeal were of the opinion that the view taken in the two cases required reconsideration, and therefore this appeal was referred to a larger Bench for a decision on the question whether the Collector is bound to issue notice to the persons from whose possession the goods are seized and to give him an opportunity to make his representation on the point whether the time for issuing notice under section 124(a) of the Act should be extended beyond six months.
That is how the appeal has come before us.
In Charan Das Malhotra, (supra) the Court referred to the consideration that seizure was authorised under section 110(1) on the mere "reasonable belief" of the concerned officer, that it was an extraordinary power and that there fore Parliament had envisaged a period of six months from the date of seizure for completing an enquiry on whether the goods should be confiscated and that if the enquiry was not completed within that period the goods must be returned.
In some cases it is possible that the enquiry requires longer than six months, and accordingly power was conferred on the Collector, an officer superior in rank and also an Appellate Authority under section 128, to extend the time subject to two conditions, that it did not exceed one year, and that suffi cient cause must be shown for such extension.
The Court observed that the Collector was not expected to propose the extension mechanically or as a matter of routine but only on being satisfied that facts exist which indicate that the investigation could not be completed for bona fide reasons within the time provided in section 110(2), and that therefore extension of the period has become neces 289 sary.
The Collector, the Court emphasized cannot extend the time unless he is satisfied on facts placed before him that there is sufficient cause necessitating extension, in which case the burden of proof would clearly lie on the Customs authorities applying for extension to show that such exten sion was necessary.
Taking these consideration into record the Court held that the words "sufficient cause being shown" required an objective examination of the matter by the Collector.
It was pointed out that ordinarily on the expiry of the period of six months from the date of seizure the owner of the goods would be entitled as of right to restora tion of the seized goods, and that right could not be de feated without notice to him that an extension was proposed.
The Court rejected the contention that the continuing inves tigation would be jeopardised if such notice was given.
The Court held that the power under the proviso to section 110(2) was quasi judicial, at any rate one requiring a judicial ap proach, and consequently the person from whom the goods were seized was entitled to notice before the period of six months envisaged by section 110(2) was extended.
The point was considered again in M/s. Lokenath Tolaram etc.
B.N. Rang wani and Others, (supra) by a Bench of four Judges of this Court and the Court referred to the view taken in Charan Das Malhotra, (supra) but it declined to interfere because the appellants in that case had themselves waived notice con cerning extension of the time.
The Court did not specifical ly give the stamp of approval to the law laid down in Charan Das Malhotra, (supra).
There is no doubt that the words "on sufficient cause being shown" in the proviso to section 110(2) of the Act indi cates that the Collector of Customs must apply his mind to the point whether a case for extending the period of six months is made out.
What is envisaged is an objective con sideration of the case and a decision to be rendered after considering the material placed before him to justify the request for extension.
The Customs Officer concerned who seeks the extension must show good reason for seeking the extension, and in this behalf he would probably want to establish that the investigation is not complete and it cannot yet be said whether a final order confiscating the goods should be made or not.
As more time is required for investigation, he applies for extension of time.
The Collec tor must be satisfied that the investigation is being pur sued seriously and that there is need for more time for taking it to its conclusion.
The question is whether the person claiming restoration of goods is entitled to notice before time is extended.
The right to notice flows not from the mere circumstance that there is a proceeding of a judi cial nature, but indeed it goes beyond to the basic reason which gives to the proceeding its character, and that 290 reason is that a right of a person may be effected and there may.
be prejudice to that right if he is not accorded an opportunity to put forward his case in the proceeding.
In the other words, the issue is whether there is a right in a person from whose possession goods are seized and which right may be prejudiced or placed in jeopardy unless he is heard in the matter.
It cannot be disputed that section 110 sub section (2) contemplates either notice (within six months from the date of seizure) to the person from whose possession the goods have been seized in order to determine whether the goods should be confiscated or the restoration of the goods to such person on the expiry of that period.
If the notice is not issued in the confiscation proceedings within six months from the date of seizure the person from whose pos session the goods have been seized becomes immediately entitled to the return of the goods.
It is that right to the immediate restoration of the goods upon the expiry of six months from the date of seizure that is defeated by the extension of time under the proviso to section 110(2).
When we speak of the right of the person being prejudiced or placed in jeopardy we necessarily envisage some damage or injury or hardship to that right and it becomes necessary to inquire into the nature of such damage or injury or hardship for any case to be set up by such person must indicate the damage or injury or hardship apprehended by such person.
In the present case, one possibility is that the person from whose possession the goods have been seized may want to establish the need for immediate possession, having regard to the nature of the goods and the critical conditions then pre vailing in the market or that the goods are such as are required urgently to meet an emergency in relation to a vocational or private need, and that any delay in restora tion would cause material damage or injury or hardship either by reason of some circumstance special to the person or of market conditions or of any particular quality of requirement for the preservation of the goods.
But it will not be open to him to question whether the stage of the investigation, and the need for further investigation, call for an extension of time.
It is impossible to conceive that a person from whose possession the goods have been seized with a view to confiscation should be entitled to know and to monitor, how the investigation against him is proceeding, the material collected against him at that stage, and what is the utility of pursuing the investigation further.
These are matters of a confidential nature, knowledge of which such person is entitled to only upon the investigation being completed and a decision being taken to issue notice to show cause why the goods should not be confiscated.
There can be no right in any person to be informed midway, during an investigation, of the material collected in the case against him.
Consequently, while notice may be necessary to such person to show why 291 time should not be extended he is not entitled to informa tion as to the investigation which is in process.
In such circumstances, the right of a person, from whose possession the goods have been seized, to notice of the proposed exten sion must be conceded, but the opportunity open to him on such notice cannot extend to information concerning the nature and course of the investigation.
In that sense, the opportunity which the law can contemplate upon notice to him of the application for extension must be limited by the pragmatic necessities of the case.
If these considerations are kept in mind, we have no doubt that notice must issue to the person from whose possession the goods have been seized of the proposal to extend the period of six months.
In the normal course, notice must go to such person before the expiry of the original period of six months.
It is true that the further period of six months contemplated as the maximum period of extension is a short period, but Parliament has contemplated an original period of six months only and when it has fixed upon such period it must be assumed to have taken into consideration that the further detention of the goods can produce damage or injury or hardship to the person from whose possession the goods are seized.
We have said that notice must go to the person, from whose possession the goods have been seized, before the expiry of the original period of six months.
It is possible that while notice is issued before the expiry of that peri od, service of such notice may not be effected on the person concerned in sufficient time to enable the Collector to make the order of extension before that period expires.
Service of the notice may be postponed or delayed or rendered inef fective by reason of the person sought to be served attempt ing to avoid service of notice or for any other reason beyond the control of the Customs authorities.
In that event, it would be open to the Collector, if he finds that sufficient cause has been made out before him in that behalf to extend the time beyond the original period of six months, and thereafter, after notice has been served on the person concerned, to afford a postdecisional hearing to him in order to determine whether the order of extension should be cancelled or not.
Having regard to the seriousness and the magnitude of injury to the public interest in the case of the illicit importation of goods, and having regard to considerations of the damage to economic policy underlying the formulation of import and export planning, it seems necessary to reconcile the need to afford an opportunity to the person effected with the larger considerations of public interest.
Our attention has been drawn to Ganeshmul Channilal Gandhi 292 and another vs Collector of Central Excise and Asstt.
Col lector, Bangalore, A.I.R. where the High Court of Mysore has held that no notice is necessary to the person from whose possession the goods are seized when the Collector proceeds to consider whether the original period of six months should be extended.
Reliance has also been placed on Sheikh Mohammed Sayeed vs Assistant Collector of Customs for Preventive and others, A.I.R. 1970 Calcutta 134 which proceeds on the view that the Collector has to satisfy himself only subjectively on the point whether extension is called for.
In Karsandas Pepatlal Dhineja & Others vs Union of India and Another, the High Court de fined the implications of the use of the words "on suffi cient cause being shown" in a statutory proceeding.
None of these cases convince us that the person from whose posses sion the goods have been seized is not entitled to notice of the proposal to extend the period.
In our opinion, the person from whose possession the goods have been seized is entitled to notice of the proposal before the Collector of Customs for the extension of the original period of six months mentioned in section 110(2) of the , and he is entitled to be heard upon such pro posal but subject to the restrictions referred to earlier in regard to the need for maintaining confidentiality of the investigation proceedings.
The appeal is allowed accordingly and to the extent set forth in our judgment the orders of the High Court are modified, but there is no order as to costs.
Y. Lal Appeal al lowed.
| Acting on the basis of the information contained in an advertisement in a newspapers offering the sale of imported manual and electric typewriters, adding and calculating machines, the customs authorities raided the premises of M/s Typewriters and Stationary Operation Private Ltd., Calcutta on 5th May, 1966 and recovered fifteen typewriters, adding & calculating machines.
On inquiry it was learnt that the said machines had been sold to the Company by R.N. Bagh, who in turn disclosed that the machines in question had been pur chased from crew members of the vessels.
On 7.5.66 the customs authorities searched the business premises of the Company and found several machines from the documents seized during the search it came to light that there was a conspir acy between the Respondents and some of the crew members of certain vessels whereunder it had been agreed that the Respondents would look after the families of the crew mem bers in India and the crew personnel would draw their wages abroad in foreign currency and after purchasing the said machines.
would supply to the Respondents after clearance under the concessions provided under the Baggage Rules.
The goods in question were seized on 5/7th May, 1966 and as required by Rule 124(a) of the Customs Act, notices as to why the goods should not be confiscated were due to issue within six months thereof.
Section 110(2) of the Customs Act provided that if a notice as contemplated by Section 124(a) is not issued within a period of six months as provided thereunder, the goods shall have to be returned to the person from whose possession, they were seized.
However a proviso to Sec.
110(2) makes a provision that the period of six months can be extended, 283 on sufficient cause being shown, by the Collector for a period not exceeding six months.
The officers of the Customs Department showed cause to the Additional Collector of Customs, Calcutta for extension of time to serve a show cause notice on Respondents and extension of six months was granted for the purpose under the proviso to Section 110(2) of the Customs Act.
No notice of the proceedings relating to the said extension was given to the persons from whose custody the goods were seized.
On 6th December 1966, the Assistant Collector of Customs issued a notice to each of the Respondents calling upon them to show cause why the goods should not be confiscated.
On April 18, 1967, the Respondents filed a Writ Petition in the High Court at Calcutta challenging the proceedings initiated against them by Customs Authorities.
The learned Single Judge of the High Court who heard the Writ Petition held that the Order of extension to be made under Section 110(2) of the Customs Act is not an administrative order but a quasi judicial order and as the order has been passed ex parte without notice to the owner of the goods, it was in breach of principle of Natural Justice.
The order of exten sion was accordingly quashed and it was held that the owner was entitled to the return of his goods.
The appellants appealed to the Appellate Bench.
The appellate Bench allowed the appeal in part, quashed the order of extension dated 3rd November, 1966 directed the appellants to restore the machines and documents seized from the Respondents.
However the Customs Authorities were per mitted to initiate and complete such other proceedings against the Respondents as were open to them in law.
The appellate Bench was of the opinion that the decision in Assistant Collector of Customs vs Charan Das, ; lays down the correct law and notice of extension should have been given to the owner of the goods before the Order of extension had been passed.
Hence this appeal by the Customs Department.
At the hearing of the appeal Respondents placed reliance upon Charan Das Malhotra, (supra).
Reference was also made to the decision in M/s Lokenath Tolaram etc.
B.N. Rangwani appeal were of the opinion that the view taken in the said two cases required reconsideration and the 284 appeal has been referred to a larger Bench for a decision on the question whether the Collector is bound to issue notice to the persons from whose possession the goods were seized and to give him an opportunity to make his representation on the point whether the time for issuing notice under Section 124(a) of the Act should be extended beyond six months.
Partly allowing the appeal this Court, HELD: The words "on sufficient cause being shown" in the proviso to Section 110(2) of the Customs Act indicates that the Collector of Customs must apply his mind to the point whether a case for extending the period of six months is made out.
[289E F] The right to notice flows not from the mere circumstance that there is a proceeding of a judicial nature, but indeed it goes beyond to the basic reason which gives to the pro ceeding its character, and that reason is that a right of a person may be affected and there may be prejudice to that right if he is not afforded an opportunity to put forward his case in the proceeding.
If the notice is not issued in the confiscation proceedings within six months from the date of the seizure the person from whose possession the goods have been seized becomes immediately entitled to the return of goods.
It is that right to the immediate restoration of goods upon the expiry of six months from the date of the seizure that is defeated by the extension of time under the provio to Section 110(2).
[289H; 290B C] There can be no right in any person to be informed midway, during an investigation, of the material collected in the case against him.
While notice may be necessary to such person to show why time should not be extended, he is not entitled to information as to the investigation which is in process.
[290H; 291A] The person from whose possession the goods have been seized is, therefore, entitled to notice of the proposal before the Collector of Customs for the extension of the original period of six months mentioned in Section 110(2) of the Customs Act and he is entitled to be heard upon such proposal but subject to the restrictions in regard to the need for maintaining confidentiality of the investigation proceedings.
[292D E] Ganeshmul Channilal Gandhi & Anr., vs Collector of Central Excise and Asstt.
Collector, Bangalore, A.I.R. , Sheikh 285 Mohammed Sayeed vs Assistant Collector of Customs for Pre ventive & Others, A.I.R. 1970 Calcutta 134 and Karsandas Pepatlal Dhineja & Ors., vs Union of India & Anr., not applicable.
|
Appeal No. 214 of 1962.
Appeal from the judgment dated July 8, 1960 of the Kerala High Court, Emakulam, in Income tax Referred Case No. 10 of 1957.
section T. Desai and Sardar Bahadur, for the appellant.
K. N. Rajagopal Sastry, R. N. Sahthey and P. D. Menon, for the respondent.
October 25.
The judgment of the Court was delivered by HIDAYATULLAH, J.
The assessee, A.V. Thomas & Co., Ltd., Alleppey, claimed a deduction of Rs. 4,05,072 8 6 in the assessment year 1952 53 as a bad debt which was written off in its books of account on December 31, 1951.
This claim was disallowed.
After sundry procedure, the following question was considered by the High Court of Kerala and answered against the assessee company : "Whether on the facts and the circumstances of the case, the Tribunal was correct in holding 778 that the amount of Rs. 4,05,071 8 6 claimed by the assessee Co. as a deduction was not admis sible either under section 10(2) (xi) or 10(2) (xv) ?" The High Court certified the case as fit for appeal to this Court and this appeal has been filed by the assessee company.
The Commissioner of Income tax (Bangalore) Kerala, is the respondent.
The assessee company was incorporated in 1935 and, as is usual with companies, its Memorandum of Association, authorised it to do multifarious businesses.
According to clauses 1, 5, 18 and 23, it was authorised "to be interested in, to promote, and to undertake the formation and establishment of other companies", to make investments and to assist any company financially or otherwise.
At the material time the assessee company had three directors, whose names are given below 1.
A. V. Thomas 2. section Sankaranarayana lyer and 3.
J. Thomas.
There was another private limited company known as the Southern Agencies Limited, Pondicherry, and its directors were : 1.
A. V. Thomas 2.
section section Natarajan, and 3.
C, section Ramakrishna Karayalar.
There was a mill in Pondicherry known as Rodier Textile Mill belonging to the Anglo French Textiles Limited, Pondicherry.
The assessee company averred that the Southern Agencies Ltd., took up in 1948 the promotion of a limited company to be known as Rodier Textile Mills Ltd., Pondicherry, with 779 a view to buying and developing the Rodier Textile Mill.
The assessee company, so it was stated, financed the Southern Agencies Ltd., Pondicherry, by making over funds aggregating to the sum of Rs. 6,05,071 8 6.
This amount was not given directly by the assessee company but at its instance by India Coffee and Tea Distributors Ltd., Madras.
The assessee company further stated that though an entry in its own books dated December 31, 1948, showed this amount as an advance for purchase of 6,000 shares of Rs. 100 each in the Rodier Textile Mills Ltd., the main intention of the assessee company was to assist and finance the Southern Agencies Ltd. within the terms of the assessee company 's Memorandum.
The subscription list for the Rodier Textile Mills Ltd. remained open from January 5 to January 20, 1949.
No application for shares was made on behalf of the assessee company and the shares were not acquired.
The public took no interest in the new company which was being promoted and the whole project tailed.
On September 1, 1950, the assessee company approved of the action of Mr. A. V. Thomas in making the said advance and on September 18, 1950, a resolution was passed by the Board of Directors of The assessee company that the amount of Rs. 6,00,000 should be shown as an advance for purchase of shares in the Rodier Textile Mills Ltd. (in formation) and the balance of Rs. 5,072 8 5 be shown under sundry advances due from the promoters of the new company.
The Southern Agencies Ltd. however, did not return the ' entire amount.
On December 7, 1951, it paid back Rs. 2,00,000 which appears to have been received in full satisfaction.
Though as late as June 12, 1951, the advance was considered to be good and recoverable, the balance was written off on December 31, 1951, which was the close of the year of account of the assessee company.
It was this amount which was claimed in the assessment year 1952 53 as a bad 780 debt actually written off, or alternatively as an expenditure, not of a capital nature, laid out or expended wholly and exclusively for the purpose of the assessee company 's business.
The Income tax Officer, Alleppey, held that the debt was written off at a time when it was neither bad nor doubtful and the claim to write it off was premature.
He, therefore, disallowed it.
An appeal was taken to the Appellate Assistant Commissioner and he upheld the order of the Income tax Officer though on a different ground.
He held that the advance was made for the purpose of purchasing shares of the new company then in formation and it was thus made for the acquisition of a capital asset, which was either the control of the new company or ""to gain its good will likely to result in the grant of agency rights" to the assessee company.
According to the Commissioner, the loss, if any, was of a capital nature and the question whether the claim of bad debt was premature or otherwise did not arise for consideration.
The Appellate Assistant Commissioner also held that the deduction could not be claimed as an allowance under section 10(2)(xv) of the Income tax Act.
The assessee company appealed to the Tribunal.
The Tribunal upheld the order of the Appellate Assistant Commissioner but on a third ground.
The Tribunal accepted that one of the objects of the assessee company was the promotion and financing of other companies for gain but this advance of Rs. 6,00,000 was not made by the assessee company in the normal course of its business.
It was rather a transaction "actuated only by personal motives".
In reaching this conclusion the Tribunal observed that the advance was made to Southern Agencies Ltd. which was not a company promoted by the assessee company, that between these two companies there was no previous business connection and at the assessee company had no expectancy of a financial benefit.
The Tribunal held that the 781 Rodier Textile Mills Ltd.,, Pondicherry, was not being financed or promoted by the assessee company and that the statement by the assessee company that it would have received some agency right was not supported by evidence.
The Tribunal was of the opinion that this advance was probably due to the " substantially common ownership of the assessee company and the Southern Agencies Ltd., of two individuals, namely, A. V. Thomas and section section Natarajan." The Tribunal thus held that this deduction could not be claimed as it was given out of " 'personal motives" and not as a part of the business of the assessee company.
The assessee company demanded a case but it was refused by the Tribunal.
The assessee company in its application for the case had propounded three questions as under : "(i) Whether on the facts and in the circums tances of the case, the sum of Rs. 4,05,072 8 5 can be claimed by the assessee as a bad debt written off under the provisions of Section 10(2) (xi) of the Act, (ii) Whether on the facts and in the circums tances of the case, the assessee can claim the sum of Rs. 4 '.05,072 8 5 as permissible deduction under Section 10(2) (xv) of the Act, and (iii) Whether co the facts and in the circums tances of the case, the assessee is permitted to claim the deduction of the said sum of Rs. 4,05,072 8 5 as a proper debit and charge it to the Profit and Loss account of the assessee company.
" These questions show that the deduction was claimed (i) as a loss in the doing of the business under 782 section 10(1); (ii) as a bad debt actually written off under section 10(2)(xi); and (iii) as an expenditure laid out wholly and exclusively for the purpose of the business under section 10(2)(xv) of the Income tax Act.
The assessee company applied to the High Court and the High Court directed a reference on the single question which has been quoted.
That question shows that the High Court did not direct the case under section 10(1) of the Act.
The Tribunal had considered the case from the point of view of the business and had held that this was not an advance in the normal course of business but one out of ""personal motives".
The High Court apparently had not accepted that the matter could be considered under section 10(1) and framed the question under cls.
(xi) and (xv) of section 10(2).
The question as propounded and considered by the High Court related to the two clauses only.
An attempt was made before us to raise the issue under section 10(1) and to claim the deduction as an ordinary business loss.
We disallowed the argument because in our opinion the question as considered in the High Court does not embrace it.
The assessee company should have requested the High Court at some stage to frame a question that there was no material for the Tribunal to reach the conclusion that this was not a business transaction but a case of an advance out of personal motives.
It was contended before us that the High Court in calling for a reference on the single question had stated that that question would cover three matters.
The first two 'here mentioned in the question and the third which was said to be implicit was whether the Tribunal was competent to decide a case which had not been made out by the Department at an earlier stage.
But this was not the same thing as saying that the Tribunal had no material before it on which it could reach the conclusion that this was not an advance in the ordinary course of business by the assessee company.
No doubt, the High Court in its order calling for a statement of the case has observed that there was no dispute at any 783 earlier stage that this was not in the ordinary course of business, but that conclusion of the High Court in the order it made under section 66(2) can have no relevance or binding force.
Indeed, the High Court was in error in giving a finding of its own and it is not surprising that the Tribunal protested against this finding.
It was open to the High Court to frame a question whether there was any material to support the finding of the Tribunal and to ask the Tribunal to state a case thereon.
Not having done so, the question as framed drives the assessee company to prove its case either under section 10(2)(xi) or under section 10(2)(xv) and it is from these two angles that the case will be considered by us.
Clauses (xi) and (xv) of section 10(2) read as follows : "(2) Such profits or gains shall be computed after making the following allowances, namely x x x a (xi) when the assessee 's accounts in respect of any part of his business, profession or vocation are not kept on the cash basis, such sum, in respect of bad and doubtful debts, due to the assessee in respect of that part of his business, profession or vocation, and in the case of an assessee carrying on a banking or money lending business, such sum in respect of loans made in the ordinary course of such business as the Income tax Officer may estimate to be irrecoverable but not exceeding the amount actually written off as irrecoverable in the books of the assessee : (Proviso omitted) (xv) any expenditure (not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or 784 personal expenses) laid out or expended wholly and exclusively for the purpose of such business, profession or vocations".
In support of its case, the assessee company stated that as there was no dispute about the facts that this was an advance in the ordinary course of business it should be treated as a trading loss or alternatively as a bad debt or an expenditure claimable under section 10(2)(xv).
The assesses company relied strongly upon certain Ledger entries of the Rodier Textile Mills Ltd. in the books of the assessee company.
These have been marked as Annexures A. 1 to A. 3.
The High Court also referred to these accounts and they have been construed as showing, that there was an attempt by the assessee company to acquire a capital asset.
These accounts began in 1948 and ended on December 31, 1951.
The accounts are headed "Personal Ledger.
" In December, 1948, sundry amounts totalling Rs. 6,05,071 8 5 are shown as amounts "paid to you by Indian Coffee and Tea Distributors Ltd., Madras, towards purchase of shares.
" On January 1, 1949, the account opened with a debit balance of Rs. 6,05,071 8 5.
Nothing appears from the accounts who this " 'you" was.
A number of reversing entries were made in respect of certain amounts and then on December 31, 1949, the amount was shown as follows : By advance for sundry expenses due from the promoters of new company debited to this trans ferred 5,071 8 5 By balance 6,00,000 0 0 1950 opened with entry on January I To Balance 6,00,000 0 0 and closed with an entry By Amount paid to Southern Agencies Ltd, 6,00,000 0 0 785 This was shown as an opening balance on January 1, 1951.
On December 7, a payment of Rs. 2,00,000 was shown and Rs. 4,00,000 were transferred for writing off.
On December 31., 1951, Rs. 4,00,000 were written off and so also the amount of Rs. 5,072 8 5.
The last amount included a sum of Rupee 1, hire for carriage which was also written off after the entry had been reversed.
From these accounts it is quite clear that to begin with the amount was shown as an advance for purchase of shares of the Rodier Textile Mills Ltd. If this was the purpose, it was not an expenditure on the revenue side.
The High Court correctly pointed out that it was not the business of the assessee company to buy agencies and sell them.
The shares were being acquired by the assessee company so that it might have the lucrative business of selling agency and similar other agencies from the Rodier Textile Mills Limited.
As late as December 15, 1952, the Chairman of the assessee company stated in his speech as follows : "You are aware that an advance was made to the Southern Agencies (Pondicherry) Ltd. to acquire for us shares in Rodier Textile Mills Ltd. It was felt that when the promotion and working of Rodier Textile Mills Ltd., became a fait ac compli, our company stood considerably to gain by securing their agency for handling their goods.
" This clearly shows that the assessee company intended to acquire a capital asset for itself This purpose takes the case of the assessee company out of section 10(2)(xv) of the Income tax Act, because no expenditure can be claimed under that clause which 'is of a capital nature.
By the declaration of the Chairman of the assessee company the case under section 10(2)(xv) becomes completely untenable.
In any event, the 786 amount was not expended in the year of account ending with December 31, 1951 : it was expended in 1948.
It remains to consider the case under section 10(2)(xi).
In this connection, we were referred to the Memorandum of Association to show that it was one of the objects of the assessee company to promote other companies and this amount was paid to Southern Agencies Ltd. to promote the Rodier Textile Mills Ltd. There is no doubt that the objects mentioned in the Memorandum of Association of the assessee company include the promotion and financing of other companies.
A Memorandum, however, is not conclusive as to the real nature of a transaction.
That nature has to be deduced not from the Memorandum but from the circumstances in which the transaction took place.
Here, the different versions given in the books of account of the assessee company belie the assertion that this was an amount paid to promote the Rodier Textile Mills Ltd.
Even though this money was available on December 31, 194 8, and the subscription list for the shares remained open from January 5 to 20, 1949, no application for a single share was made on behalf of the assessee company.
The entry till the end of 1949 was that the amount was laid out for purchase of shares.
It was only subsequently that it was shown to be an advance to the Southern Agencies Ltd. In fact, the entry comes only at the end of 1950 when it is set down "By Amount paid to Southern Agencies Ltd." The assessee company raised three contentions in support of the case that this became a bad and doubtful debt which was actually written off : (a.) that the High Court was wrong in saying that before the assessee could claim the deduction under section 10(2)(xi) it must prove that it had in the past purchased and sold agencies, (b) that the object of the assessee company was to apply for shares but as it did not 787 apply for shares the transaction between it and the Southern Agencies remained an advance in the ordinary course of business, and (c) Southern Agencies having failed to give back the money the assessee company was within its rights to write off this bad and doubtful debt.
Now, a question under section 10(2)(xi) can only arise if there is a bad or doubtful debt.
Before a debt can become bad or doubtful it must first be a debt.
What is meant by debt in this connection was laid down by Rowlatt, J., in Curtis v.1.
& G. Oldfield Ltd.,(1) at p. 330 as follows : "When the Rule speaks of a bad debt it means a debt which is a debt that would have come into the balance sheet as a trading debt 'in the trade that is in question and that it is bad.
It does not really mean any debt which, when it was a good debt, would not have come in to swell the profits.
" A debt in such cases is an outstanding which if recovered would have swelled the profits.
It is not money handed over to someone for purchasing a thing which that person has failed to return even though no purchase was made.
In the section a debt means something more than a mere advance.
It means something which is related to business or results from it.
To be claimable as a bad or doubtful debt it must first be shown as a proper debt.
The observations of Rowlatt, J., were applied by the Privy Council in Arunachalam Chettiar vs Commissioner of income tax(2), at p. 245, where their Lordships observed as follows: "Their Lordships moreover can give no countenance to a suggestion that upon a dissolution of partnership a partner 's share of the losses for several preceding years can be accumulated and thrown into the scale against (1) , 330.
(2) (1936) L. R. 63 I. A. 233, 245 788 the income of another partner for a particular year.
No principle of writing off a bad debt could justify such a course, whether in the year following the dissolution or., as logic would permit, in some subsequent year in which the partner 's insolvency has crystallised.
The ; 'bad debt" would not, if good, have come in to swell the taxable profits of the other partner.
" This Court also approved the dictum of Rowlatt, J., in COMMissioner of Income tax vs Abdullabhai Abdulkadar (1) at p. 550 and referred to the observations of Venkatarama Ayyar, J., in Badridas Daga, vs Commissioner of Income, tax, (2) where the learned judge speaking for this Court said that a business debt "springs directly from the carrying on of the business and is incidental to it and not any loss sustained by the assessee, even if it has some connection with his business." Section 10(2)(xi) is in two parts.
One part deals with an assessee who carries on the business of a banker or money lender.
Another part deals with business other than the aforesaid.
Since this was not a loan by a banker or money lender, the debt to be a debt proper had to be one which if good would have swelled the taxable profits.
Applying these tests, it is quite obvious that an advance paid by the assessee company to another to purchase the shares cannot be said to be incidental to the trading activities of the assessee company.
It was more in the nature of a price paid in advance for the shares which the Southern Agencies had a right to allot in the Rodier Textile Mills Ltd. This cannot, therefore, be described as a debt and indeed the changes in the books of account of the assessee company clearly show that the assessee company itself was altering the entries to convert the advance into a debt so as to be able to write it off and claim (1) ; , 954.
(2) ; 789 the benefit of section 10 (2) (xi).
In our opinion, section 10(2)(xi) was inapplicable to the facts of this case.
In the result the appeal must fail and it is dismissed.
The assessee company shall pay the costs of the respondent.
Appeal dismissed.
| The appellant municipality imposed octroi duty on certain,goods brought within the octroi limits.
The by laws fixed the octroi limits to be the same as the Municipal District.
Section 4 of the Bombay District Municipal Act 1901, under which the municipality was constituted, empowered the Government to declare any local area to be 1 municipal district.
At the time of the 'imposition of the octroi (duty the respondent 's factory was situated outside the municipal district and was not subject to the octroi duty.
Subsequently, the Government extended the municipal district so that the factory came to be included within that district.
The appellant contended that upon such extension its octroi limits also stood extended to include the factory and the respondent became liable to pay octroi duty in respect of goods brought into, the factory.
711 Held (per Das, Kapur and Sarkar, jj., Hidayatullah and Dayal, jj., dissenting), that octroi duty was not leviable on the respondent.
The expression 'municipal district" in the by.
law referred to the municipal district as existing when the, bylaw was framed.
The context prevented the definition of "municipal district" in the Act, namely, the municipal district as from time to time existing, from being applied under s.20 of the Bombay General Clauses Act, to interpret the by law.
The by law had been made without being published to the respondent, and if it was so read referring to the municipal district from time to time existing it would be invalid for non compliance with the provisions of section 48 of the Act.
Per Hidayatullah and Dayal, JJ.
The octroi limits fixed under the by laws included the area newly added to the municipal district and the respondent was liable to pay octroi duty on the goods entering its premises.
In view of section 20 of the Bombay General Clauses Act, the expression "municipal district" in the by law will have the same mean ing as that expression has in the Act.
There is nothing repugnant in the subject or context which would make this definition inapplicable.
At the time when the municipal district was extended notice was published to the respondent and it could have objected to the inclusion of the area on the ground that the bye law imposing the octroi duty would affect it adversely.
There is no express provision in the Act that no rule or 'by law shall be applicable to the newly added area till it is freshly enacted.
Rajnarain Singh vs The Chairman, Patna Administration Committee, Patna, , referred to.
|
Criminal Appeal No. 227 of 1983.
From the Judgment and Order dated 19.8.1982 of the Allahabad High Court in Crl.
Appeal No. 680 of 1976.
R.L. Kohli and Shakil Ahmed Syed for the Appellants.
Prithvi Raj and Dalveer Bhandari for the Respondent.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
This appeal by special leave is from the judgment of the High Court of judicature at Allahabad in Criminal Appeal No. 680 of 1976 dismissing the appeal of the four instant appellants namely, Lalji, Mansa, Milkhi and Bhagwati and upholding their conviction and sentence of life imprisonment under Sections 302/149 and also the conviction of Milkhi with sentence of two years R.I. under section 148 I.P.C and of the other three appellants under Section 147 I.P.C. with sentence of one year R.I. 133 The facts are simple.
On 24.6.1975 at noon Manju, son of Girdhaft Lal, man handled Chhotey Lal and Mansa, nephews of Minister Lal, after they gave him (Manju) a push.
The prose cution version was that Minister Lal with a cane in hand, Chhotey Lal with a Kanta, Milkhi and Chainu with spears and others with lathis arrived near Girdhaft Lal 's house and after an altercation started assaulting Girdhaft and Siddhu.
The alarm attracted Ram Avtar and Manju who came there.
The appellants party started assaulting them also whereupon they retreated to their house but were followed by Minister Lal, Lalji and others of the party.
Girdhaft Lal and Siddhu died in consequence of the assault.
Ram Avtar picked up the loaded gun of his father Girdhaft and fired a shot at Minis ter Lal who fell down dead and by another shot he injured Lalji.
The defence version was that Girdhaft Lal summoned Minister Lal to his house and the accused persons came with or after Minister Lal.
This resulted in a cross case on Lalji 's F.I.R. (exhibit Ka 19).
It has admittedly resulted in acquittal.
The present case was registered under F.I.R. (exhibit Ka l) upon the information lodged by Babu Ram son of Siddhu at P.S. Maigalganj.
Altogether eleven persons, including the appellants herein faced trial.
The learned trial court relying on the evidence of the three eye witnesses convicted eight and acquitted three of them, namely, Ram Lotan, Kripa Dayal and Barkau.
The eight convicted persons were appel lants before the High Court in Criminal Appeal No. 680 of 1976.
Out of them conviction of four appellants was upheld, while the other four, namely, Shiv Kumar, Chottey Lal, Munna and Chainu were acquitted by the High Court.
The learned counsel for the appellants Mr. R.L. Kohli, Sr.
Advocate submits that as out of the eleven persons three were acquitted by the trial court and four were acquitted by the High Court as there was no corroboration in their cases, the position of two of the appellants, namely, Milkhi and Bhagwati remains the same and they must also be similarly acquitted for want of corroboration.
The learned counsel for the State Mr. Prithvi Raj, Sr.
Advocate counters submitting that when the appellants have been convicted under section 302/149 I.P.C the question of corroboration in case of individual appellants would not arise; and there is enough corrobora 134 tion in the evidence including medical evidence on record to prove that they were members of the unlawful assembly when the offence was committed.
The precise question to be decided in this appeal, therefore, is whether in view of death caused to Girdhaft and Siddhu by the unlawful assembly which is punishable under section 302 with the aid of Section 149 I.P.C. the corroboration as to participation of each individual member of the assembly would be necessary, and if so, whether in the instant case there is such corroboration.
Section 149 I.P.C. provides that if an offence is com mitted by any member of an unlawful assembly in prosecution of the common object of that assembly, or such as the mem bers of the assembly knew to be likely to be committed in prosecution of that object, every person, who at the time of committing of that offence is a member of the same assembly, is guilty of that offence.
As has been defined in Section 141 I.P.C., an assembly of five or more persons is designat ed an 'Unlawful Assembly ', if the common object of the persons composing that assembly is to do any act or acts stated in clauses 'First ', 'Second ', 'Third ', 'Fourth ', and 'Fifth ' of that section.
An assembly, as the explanation to the section says, which was not unlawful when it assembled, may subsequently become an unlawful assembly.
Whoever being aware of facts which render any assembly an unlawful assem bly intentionally joins that assembly, or continues in it, is said to be a member of an unlawful assembly.
Thus, when ever so many as five or more persons meet together to sup port each other, even against opposition, in carrying out the common object which is likely to involve violence or to produce in the minds of rational and firm men any reasonable apprehension of violence, then even though they ultimately depart without doing anything whatever towards carrying out their common object, the mere fact of their having thus met will constitute an offence.
Of course, the alarm must not be merely such as would frighten any foolish or timid person, but must be such as would alarm person of reasonable firm ness and courage.
The two essentials of the section are the commission of an offence by any member of an unlawful assem bly and that such offence must have been committed in prose cution of the common object of that assembly or must be such as the members of that assembly knew to be likely to be committed.
Not every person is necessarily guilty but only those who share in the common object.
The common object of the assembly must be one of the five objects mentioned in Section 141 I.P.C. Common object of the unlawful assembly can be gathered from the nature of the assembly, 135 arms used by them and the behaviour of the assembly at or before scene of occurrence.
It is an inference to be deduced from the facts and circumstances of each case.
Section 149 makes every member of an unlawful assembly at the time of committing of the offence guilty of that offence.
Thus this section created a specific and distinct offence.
In other words, it created a constructive or vicar ious liability of the members of the unlawful assembly for the unlawful acts committed pursuant to the common object by any other member of that assembly.
However, the vicarious liability of the members of the unlawful assembly extends only to the acts done in pursuance of the common object of the unlawful assembly, or to such offences as the members of the unlawful assembly knew to be likely to be committed in prosecution of that object.
Once the case of a person fails within the ingredients of the section the question that he did nothing with his own hands would be immaterial.
He cannot put forward the defence that he did not with his own hands commit the offence committed in prosecution of the common object of the unlawful assembly or such as the mem bers of the assembly knew to be likely to be committed in prosecution of that object.
Everyone must be taken to have intended the probable and natural results of the combination of the acts in which he joined.
It is not necessary that all the persons forming an unlawful assembly must do some overt act.
When the accused persons assembled together, armed with lathis, and were parties to the assault on the complainant party, the prosecution is not obliged to prove which specif ic overt act was done by which of the accused.
This section makes a member of the unlawful assembly responsible as a principal for the acts of each, and all, merely because he is a member of an unlawful assembly.
While overt act and active participation may indicate common intention of the person perpetrating the crime, the mere presence in the unlawful assembly may fasten vicariously criminal liability under section 149.
It must be noted that the basis of the constructive guilt under section 149 is mere membership of the unlawful assembly, with the requisite common object or knowledge.
Thus, once the Court hold that certain accused persons formed in unlawful assembly and an offence is committed by any member of that assembly in prosecution of the common object of that assembly, or such as the members of the assembly knew to be likely to be committed in prosecution of that object, every person who at the time of committing of that offence was a member of the same assembly is to be held guilty of that offence.
After such a finding it would not be open to 136 the Court to see as to who actually did the offensive act or require the prosecution to prove which of the members did which of the offensive acts.
The prosecution would have no obligation to prove it.
In the instant case after having held that the appel lants formed an unlawful assembly carrying dangerous weapons with the common object of resorting to violence (as de scribed in the charge) it was not open to the High Court to acquit some of the members on the ground that they them selves did not perform any violent act, or that there was no corroboration of their participation.
In other words, having held that they formed an unlawful assembly and committed an offence punishable with the aid of section 149 I.P.C., the High Court erred in examining which of the members only did actively participate and in acquitting those who, according to the Court, did not so participate.
Doing so would amount to forgetting the very nature and essence of the offence created by section 149 I.P.C The Court in undeserving cases cannot afford to be charitable in the administration of criminal justice which is so vital for peace and order in the society.
On the basis of the evidence on record Milkhi and Bhag wati 's membership of the unlawful assembly at the relevant time has been satisfactorily established.
Both the courts below having held them to have been members of the unlawful assembly, the mere fact that they were not active partici pants, would be of no avail.
It is not open to the court to scrutinise as to whether any member of the unlawful assembly actively participated.
In an appeal by persons convicted under Section 302 with the aid of 149 I.P.C., the question whether a particular person was a member of that unlawful assembly at the rele vant time may of course be examined; and if it is found from the evidence on record that he was not a member of the unlawful assembly, he could not be convicted with the aid of section 149.
The question to be examined by us in the in stant case is whether Milkhi and Bhagwati were members of the unlawful assembly at the relevant time and not whether there was enough corroboration for their individual partici pation in the commission of the offence.
It has not been denied that the names of Milkhi and Bhagwati were mentioned in the F.I.R. (exhibit Ka l).
P.W. 2 Manju son of Girdhari, whose presence at the place of occur rence has not been challenged, mentioned Milkhi and Bhagwati among the accused persons with their relationship.
He cate gorically stated that the two, amongst others, 137 were present at his house beating his father and uncle and chasing him and Ram Avtar.
Milkhi according to him had a spear in his hand.
Manju denied the suggestion that Milkhi and Bhagwati were standing there on the side of the witness es.
P.W. 3 Smt.
Ram Devi clearly corroborated Milkhi 's participation.
P.W. 1 Babu Ram while giving vivid descrip tion of the occurrence stated that Milkhi was there in the assembly with spear and Bhagwati with a lathi and that all the persons present beat Girdhaft and Siddhu.
Milkhi also assisted in carrying Minister Lal after he was shot.
In reply to the question who beat Manju he clearly stated that Mansa and Bhagwati beat him with lathi when he was entering the house.
D.W. 2 Lalji stated that at the time of the occurrence Puran, Bhagwati, Kripal etc. had also come.
In the F.I.R. (exhibit Ka 19/C.I) lodged by Lalji on the same occurrence presence of Milkhi and Bhagwati was admitted by him.
The submission that they were mere spectators could not be believed.
From the above evidence on record it could not be held that Milkhi and Bhagwati were not members of the unlawful assembly at the the relevant time.
Whether any specific injury could individually be attributed to them or not could not at all be material.
The submission that the two be acquitted on ground of lack of corroboration has, therefore, to be rejected.
In the facts and circumstances of the case it is not open to this Court to apply the reasoning of the High Court to acquit members of the unlawful assembly for lack of corroboration as to their participation.
No other submission was made for the other appellants.
In the result, we do not find any merit in this appeal and hence it is dismissed.
Appellant Mansa is on bail.
He shall surrender to serve out his sentence.
T.N.A. Appeal dismissed.
| This was an appeal by the defendants in a suit for possession on redemption of certain mortgages instituted in the Court of the Special judge exercising jurisdiction under the Sangli State Agriculturists Protection Act (1 of 1936).
Their case was that the mortgaged properties had been sold at auction and purchased by their father who had sold most of them to other persons more than 12 years before the institution of the suit and as such the suit was barred by limitation.
The trial Court dismissed the suit.
On appeal the High Court of Sangli permitted the plaintiff to amend the plaint originally filed so as to include the relief for redemption and remanded the suit.
The trial court, thereafter, decreed the suit in part, holding that the claim in respect of portions only of the mortgaged properties was barred by limitation.
Both the parties appealed to the High Court of Bombay and the appeals were heard together.
The High Court dismissed the defendant 's appeal and allowed the plaintiff 's appeal holding that article 148 and not article I34 Of the Limitation Act applied.
In the result, the plaintiff 's suit was decreed in its entirety.
Held, that the preliminary objection that the Special judge had no jurisdiction under the Sangli State Agriculturists Protection Act to entertain the suit must be overruled.
The fixing of ,915 as the date line by the Act had reference to such reliefs as could be had only by way of reopening of closed transactions and could not, therefore, preclude the Special Judge from granting other reliefs in respect of transactions entered into prior to 1915.
Nor could it be contended in bar that the plaintiff was bound in the first instance to set aside an auction sale of the mortgaged properties in execution of a money decree in which she was not substituted in place of her deceased father as his true heir and legal representative nor made a party and no controversy was raised by the parties nor decided by the Court as to who was the true legal representative.
The plaintiff was entitled to ignore the sale and the suit was not barred under article 12 of the Limi tation Act.
480 Malkarjun Bin Shidramappa Pasare vs Narhari Bin Shivappa, (1900) L.R. 27 I.A. 216, doubted and distinguished.
In order that article I34 of the Limitation Act might be attracted to a suit for possession on redemption, it was necessary for the defendant to prove affirmatively that the mortgagee or his succesor in interest had transferred a larger interest than was justified by the mortgage.
Where, as in the present case, this was not done, article 134 could not apply and the only other article which could apply was article 148 Of the Limitation Act.
Under the Mitakshara School of Hindu Law partition may be either (1) a severance of the joint status of the coparcenary by mere defining of shares but without specific allotments or (2) partition by allotment of specific properties by metes and bounds according to shares.
The latter, if reduced to writing becomes compulsorily registrable under section I7(1)(b) of the Indian Registration Act but the former does not.
Consequently, in the present case such unregistered docu ments as were adduced by the plaintiff for the limited purpose of proving partition in the former sense did not fall within the mischief Of section 49 of the Indian Registration Act and were admissible in evidence.
|
Civil Appeals Nos. 622 & 623 of 1971.
Appeals by special leave from the judgment and order dated the 20 1 1970 of the Punjab and Haryana High Court at Chandigarh in I.T. Reference No. 2 of 1965.
B. B. Ahuja and section P. Nayar, for the appellants.
A. N. Goyal, for the respondent The Judgment of the Court was delivered by FAZAL ALI, J.
These are appeals by the Revenue by special leave against the order of the High Court of Punjab & Haryana dated 189 January 20, 1970 answering the questions referred to the High Court by the Tribunal in favour of the assessees/respondents and against the Revenue.
The appeal arises in the following circumstances.
M/s. Panipat Woollen & General Mills Co. Ltd. hereafter referred to as 'the assessee Company ' had two Departments (1) for spinning of yarn from raw and waste wool and (2) for spinning of yarn from imported wool tops.
The second Department which carried on the operations of spinning of yarn from imported wool tops was started some time in the year 1952.
Weaving operations were, how ever carried on in both these Departments.
One of the Departments was known as M/s. PaniPat Woollen Mills, Kharar while the other one was known as M/s. Navin Woollen Mills.
It is said that the assessee Company was running at a constant loss as a result of which in 1952 the assessee Company decided to instal a plant for manufacture of worsted yarn from imported wool tops by raising a loan of Rs. 7 lakhs from the Industrial Finance Corporation.
The plant went into production in September 1952.
The assessee Company appointed M/s. Murlidhar Chiranjilal as the sole selling agents for the worsted yarn on payment of 2% commission.
Subsequently on December 15, 1953 the assessee Company entered into an agreement with Mis Saligram Premnath under which the latter were appointed as the sole selling agents on certain specified conditions, the important of which being that the agents were to finance the assessee Company to the extent of Rs. 2,50,000/ and the assessee Company agreed to pay 6% interest on the advances to be made by the agents and further agreed to pay 2% commission on the net proceeds of sales of goods in India.
Before expiry of this agreement, another agreement was entered into by the assessee Company with the agents on October 20, 1955 under which the agents were to get 6% interest on all the advances made by them, 1% commission on net sales and 50% commission on net sales of the worsted plant. ' What is more was that the agents agreed to a deduction of 50% of the loss incurred by the assessee Company from their remuneration.
There were a number of other conditions with which we shall deal later.
The selling agents M/s. Saligram Premnath advanced a sum of Rs. 6,26,847/ and Rs. 8,71,873/ and received Rs. 37,157/ and Rs. 73,787/ as 50% commission on the net profits of the worsted plant in the course of two years, namely, assessment years 195 57 ending on March 31, 1956 and 1957 58 ending on March, 31, 1957.
The assessee Company accordingly in its return for the year 1956 57 claimed the amount of Rs. 37,157/ and Rs. 73,787/ for the assessment year 1957 58 as a deduction under the provisions of section 10(2) (xv) of the Income tax Act, 1922.
The case of the assessee was that the two amounts mentioned above being in the nature of commission paid to the selling agents would be deemed expenses incurred by the Company in order to earn profits and would, therefore, fall within the ambit of section 10(2) (xv) of the Income tax Act, 1922 hereafter referred to as 'the Act '.
The Income tax officer, however, disallowed the deduction and held that the deduction claimed was actually a division of profits after the profits had come into existence and had been ascertained, and therefore could not he claimed as a valid deduction under the provisions of the Act.
190 The assessee Company went up in appeal to the Appellate Assistant Commissioner who accepted the plea of the assessee Company and held that the payment was a permissible deduction as it was incurred for the purpose of the assessee 's trade in order to facilitate the business ' of the assessee.
The Revenue then went up in appeal before the Tribunal which after considering the facts and the law on the subject upheld the contention of the Revenue and held that the sums in question were not legal deductions as contemplated under section 10(2)(xv) of the Act but amounted to application of profits after they were earned.
The Tribunal further held that the agreement dated October 20, 1955 amounted to a joint venture for the distribution of profit, between the assessee Company and the selling agents after the profits were ascertained.
The assessee Company then approached the Tribunal for making a reference to the High Court and the Tribunal accordingly referred the following two questions to the High Court for its opinion: "1.
Whether on the facts and in the circumstances of the case, the Tribunal rightly held that the sums of Rs. 37,157/ and Rs. 73,787/ were chargeable to tax in the hands of the assessee Company in the assessment years 1956 57 and 1957 58 respectively? 2.
Whether on the facts and in the circumstances of the case, the Tribunal rightly disallowed the assessee Company`s claim for deduction of the payment of Rs. 37,157/ and Rs. 73,787/ , under sec.
10(l) and Sec.
10(2)(xv) of the Income tax Act, 1922, in the assessment years 1956 57 and 1957 58 respectively?" The High Court by its judgment dated January 20, 1970, answered both the questions in favour of the assessee Company and held that the payments in question amounted to a legitimate deduction under i. 10(2)(xv) of the Act, and the Tribunal was wrong in disallowing the same.
Thereafter the appellant moved the High Court for grant of leave to appeal to the Supreme Court which having been rejected the appellant filed a petition for special leave.
The special leave having been granted, the appeal is now before us.
The High Court in reversing the order of the Tribunal mainly relied on what it described as the surrounding circumstances under which the alleged payments were made to the selling agents by the assessee Company as spelt out from the agreement entered into by the assessee Company with the selling agents.
The main point which was argued before the Tribunal as also before the High Court was that the cumulative effect of the interpretation of the various clauses of the agreement dated October 20, 1955 unmistakably revealed that in the garb of an agency the parties entered into a joint venture for distributing the net profits, after being ascertained between themselves and that is why there was an express provision in the agreement by which the agents agreed to share the losses to the extent of 50% which were to be deducted from the remuneration payable to the agents.
The Tribunal held that the agreement amounted to a joint venture resulting in division of net profits and therefore the amount paid to the agents could not be claimed by the assessee Company as a deduction under 191 section 10(2)(xv) of the Act, as it was not incurred for the purpose of the business or for earning profits.
The High Court held that the mere fact that the agents agreed to share the profits and the losses would not take the case of the assessee beyond the ambit of section 10(2)(xv) of the Act in order to show that the payments made to the agents were not expenses incurred for the purpose of the business.
The High Court laid special emphasis on the fact that the Revenue could not examine the question of the commercial expediency of the businessman to incur expenses or earn profits in a particular manner.
The High Court accordingly found that the agreement per se was a contract of agency and not a joint venture and accordingly the High Court accepted the plea of the assessee Company.
In support of the appeal Mr. Ahuja, the learned standing counsel for the Revenue submitted the following two points before us: C (1) In the first place it was submitted that there being an express provision in the agreement dated October 20, 1955 by which the agents agreed to share losses which was a provision peculiar to the present transaction and was not at all covered by any authority cited before the Tribunal or the High Court, that itself was proof positive of the fact that the transaction amounted to a joint venture with a view to division of profits; and (2) It was argued that the High Court had exceeded its jurisdiction in travelling beyond the agreed statement of the case framed by the Tribunal and had relied on certain materials which were not at all found by the Tribunal in its order nor were those materials mentioned in the statement of the case.
Mr. A. N. Goyal counsel for the assessee Company has, however.
submitted that the view taken by the High Court is absolutely correct and the facts of the present case are clearly covered by the decision of this Court in Dharamvir Dhir vs Commissioner of Income tax Bihar & Orissa(1).
A number of other cases have also been cited at the Bar and we shall refer to the same after marshalling the facts found in the present case.
Before coming to the facts it may be necessary to mention that there can be no dispute with respect to the two important propositions: (1) that in order to fall within section 10(2)(xv) of the Act the deduction claimed must amount to an expenditure which was laid out or expended wholly and exclusively for the purpose of the business, profession or vocation.
This will naturally depend upon the facts of each case.
(2) that in order to determine the question of reason ableness of the expenditure, the test of commercial expediency would have to be adjudged from the point of view of the businessman and not of the Income tax Depart (1)42 I.T.R.7.
192 ment.
With this preface we now proceed to deal with the facts of the present case on the basis of which the questions of law referred to the High Court and answered in favour of the assessee Company arise.
To begin with, it is conceded by the learned standing counsel for the Revenue that the assessee Company was running at a loss as a result of which it had to raise a lorn of several lakhs of rupees from.
the Industrial Finance Corporation.
It was perhaps for this reason that the assessee Company entered into an agreement with the new selling agents M/s Saligram Premnath who were prepared to.
give to the assessee Company better and more profitable terms.
The main question to be determined is as to whether or not the agreement dated October 20, 1955 read as a whole amounts to a joint venture for the purpose of division of profits.
In order to decide this question it may be necessary to refer to some important portions of the second agreement which alone is relevant for the purpose of deciding this point.
We might mention, however, that so far as the first agreement is concerned the terms thereof do not make out a case of joint venture but appear to be in consonance with the agreement being one of an agency simpliciter.
It is the second agreement that in our opinion appears to change the entire complexion of the case.
This agreement is set out at p. 17 of the Paper Book and consists of ten main clauses.
The agreement was to enure for a period of two years to commence from January 1, 1956 or the date on which manufacturing actually starts under the agreement whichever is later.
This is provided in clause 2 of the agreement.
It was further provided that the period of the agency could be extended further by mutual consent.
Clause 3(ii) runs thus: "Program for the manufacture of goods will be made from time to time by the Company in consultation and with the consent of the Agents.
" It may be noticed that this clause requires not only consultation with the agents for the programme of manufacture of goods but a tacit consent of the agents.
In other words, if the agents withheld their consent, they could veto the programme of manufacture.
Such a limitation placed on the power of the assessee Company does not appear to us to be in consonance with a pure and simple contract of agency.
Clause 6 which deals with financial arrangements may be extracted thus: "(i) The Agents shall invest full amount for the working of the Worsted Plant to the full possible capacity beginning from the purchase of tops to the completion of the yarn sales including wages, power, stores, and repairs and maintenance etc.
Such investments and expenses incurred on tops, manufacturing, bank charges, transport, insurance and octroi will be debited to the account of the Company.
193 (ii) Before the beginning of the arrangements under this Agreement, the Machinery of the Worsted Plant will be overhauled and similarly before this arrangement ends the Machinery will be overhauled.
x x x x x (viii) In case of any loss or damage to the tops or goods in transit or in godowns, the same will be debited to the account of the Worsted Plant.
(ix) The accounts of the Worsted Plant will be maintained separately in an office situated near the Worsted Plant and the Agents will have free access to the account books.
x x x x x Sub clause (i) clearly contemplates that the agents would have to make full and complete investment for the working of the worsted plant to the fullest possible capacity including wages, power, stores, repairs and maintenance etc.
This provision appears to be more in consonance with the terms of a person who is a partner in a venture rather than one who is a mere agent.
Further more, sub clause (ii) provides that before the agreement starts the machinery of the worsted plant would be overhauled and would be again overhauled before the agreement ends.
This provision also has its own importance and appears to be beyond the role of the selling agents simpliciter.
Sub clauses (viii) and (ix) extracted above clearly show that the damage to the tops or goods in transit would have to be debited to the account of the worsted plant and such accounts would have to be maintained separately.
The obvious object is that the agents should be in a position to ascertain tile net profits and control the working of the worsted plant.
Clause 7 is the most important clause of this agreement, which, in our opinion, clearly shows that the agreement in essence and in purport is a sort of a partnership or a joint venture rather than a contract of agency.
Sub clause (i) of clause 7 p runs thus: "7.
Commission (i) The Agents shall be allowed a commission at 1 1/4% (one and a quarter per cent) on the net proceeds of sales of all goods.
Such commission shall be chargeable upon money actually credited to the Company, and not on out standing debts, if any.
Besides, Agents will get 50% (fifty per cent) commission on the net profits of the Worsted Plant.
The net profits will be ascertained after deducting all the manufacturing expenses, interest, insurance, depreciation and selling commission etc.
For allowing annual depreciation in the value of the machinery and buildings and interest on the value of machinery, buildings and commencing from the date on which manufacturing actually starts under this Agreement, a lump sum of Rs. 50,000/ has been agreed to be deducted for determining the net profits or loss 194 position.
In case of net loss, if any, there will be a deduction of 50% (fifty per cent) of such loss from the Agent 's Account.
" Analysing the terms of this sub clause it would appear that the agents have been able to secure most liberal and profitable terms.
To begin with they were to get a commission at the rate of one and a quarter per cent on the net proceeds of sales of all goods There can be no objection to this.
Secondly, the agents will get 50% commission on the net profits of the worsted plant.
The net profits would have to be ascertained after deducing all the manufacturing costs, interest, insurance etc.
The conduct of the agents in sharing half of the net profits does not appear to us to be consistent with the payments made to the agents for services rendered.
It is difficult to lay down any rule of universal application as to what percentage of profit would be consistent with the payment in lieu of services but taking the totality of the provisions of the agreement it seems to us that the percentage of profits and the manner in which it is to be determined is more consistent with the position of a partner than that of an Agent.
Finally the provision for sharing the loss incurred by the Company and for a lump sum deduction of Rs. 50,000/ is totally inconsistent with a contract of agency.
Further more, sub clause (iv) of clause 7 provides as under: "(iv) The commission account will be maintained separately by the Agents and the commission will be payable to the Agents by the Company every six months.
In the same way, the amount of Rs. 25,000/ for six months as provided in sub clause (i) above, will be paid to the Company every half year within ten days.
The profit and loss account of the Worsted Plant will be made every six months within ten days and the adjustments will be made accordingly by actual payments, as the case may be, within ten days.
" The above sub clause clearly provides for a separate commission ac count to be maintained by the agents and the commission to be paid every six months.
Consequently the agents agreed to pay a sum of Rs. 25,000/ for six months every half year within ten days.
We might further mention here that the provision in the agreement regarding sharing of the loss is absolutely peculiar to this particular agreement and there is not a single authority, which has, in spite of such a provision, held that the transaction does not amount to a joint venture or a division of profits.
The provision regarding the consent of the agents to the sales and the programme of manufacture is also pertinent in order to determine whether the transaction amount ted to a joint venture in the garb of a contract of agency.
It is well settled that the Court in order to construe an agreement has to look to the substance or the essence of it rather than to its form.
A party cannot escape the consequences of law merely by describing an agreement in a particular form though in essence and in substance IT H may be a different transaction.
In these circumstances, therefore, if we construe the agreement as a sort of a joint venture or a transaction like a partnership which has been given the form and appearance of a contract of agency, the law must have its course.
195 Our attention has been drawn by the learned counsel for the Re venue to a decision in British Sugar Manufacturers Ltd. vs Harris (Inspector of Taxes)(1), where Greene, M. R. clearly observed that where a person contributes to some sort of joint adventure which ultimately results in division of profits, it could not be construed as.
a remuneration for services.
In this connection, Greene, M. R. Ob served as follows: "It is not cash that passes in exchange for these profits, it is services; and the badge of such a contract is remuneration for services, and therefore the first thing that this remuneration would certainly not be is a share of profits purchased by the employee.
x x x I can conceive of a case where a person contributes to some sort of joint adventure services, while others contribute perhaps capital, land, plant, and goods, arranging between themselves (it may be something short of a partnership) that nobody shall get anything until the pool of profits is ascertained, and then they shall divide it up between them in specified proportions.
That, it seems to me would be a real agreement for division of profits, because there would be D ' one profit fund only.
There would not be two 'profit ' funds to be ascertained for different purposes.
" These observations seem to us to cover the facts of the instant case.
Having regard to the terms and conditions of the agreement detailed and analysed above, there can be no doubt that the agents by contributing to the investments and by sharing the profits as also the E. losses have actually contributed to a joint venture and ultimate division of the profits with the principals and the agreement must be construed as an agreement for division of the profits in specified pro portions as mentioned therein.
It is true that in the aforesaid case on the facts found the Court held that the transaction did not amount to a joint venture but it was clearly pointed out in the judgment that there is a very thin line of distinction between a contract for payment of a share of profits simpliciter and a payment of remuneration which is deductible in truth from the profits divisible.
We, therefore, find ourselves in complete agreement with the observations made by Greene, M. R., which aptly apply to the facts of the present case on the basis of the various clauses of the agreement dated October 20, 1955.
The High Court, however, appears to have relied upon the decision in Dharamvir Dhir 's case (supra).
The facts of that case appear to be clearly distinguishable from those of the present case.
What had happened in Dharamvir Dhir 's case was that the assessee was an employee of the firm earning a particular salary.
The employee entered into a coal raising contract with a coal company and as he did not have the necessary funds he persuaded a public charitable trust to advance to him sums upto 1 1/2 lakhs on payment of (1) 7 I.T.R.101.
196 interest at 6 per cent.
and share 11/16ths of the profits of the business.
The assessee agreed that the coal raising contract would be carried on in accordance with the policy settled between him and the trust and the trust could withdraw its money at any time.
It is, there fore, clear that in the first place the agent, namely, the trust, agreed to finance the assessee by giving him a loan of Rs. 1 1/2 lakhs at 6 percent interest.
This was undoubtedly permissible.
The trust was also b to get 11/16th of the profits of the business.
It was, however, not agreed between the parties that the profits would be ascertained after .
" deducting the net expenses as mentioned in the agreement before us.
It is true that the contract was to be carried on in accordance with the policy settled between the assessee and the trust but that did not give any veto power to the trust to tarpedo the contract.
In the instant case the agreement clearly provided for the consent of the agents not only at the beginning of the manufacture of the yarn by the plant to be installed by the assessee Company but at every stage in the pro gramme of manufacture.
Even at the stage of the sale of the products the consent of the agents was necessary.
In other words the agents were given a complete controlling power so far as the manufacture and sale of the products of the assessee Company were concerned.
No such stipulation is to be found in Dharamvir Dhir 's case (supra).
Finally, not only there was no provision in Dharamvir Dhir 's case under which the trust was to share the losses but there was an ex press provision to the contrary, namely, that the trust was not liable for any loss.
Thus the mere payment of interest at the rate of 6 per cent.
On the loan advanced to the assessee and a percentage in the profits of the business would be quite consistent with a remuneration in lieu of services lent and would certainly amount to an expenditure incurred by the assessee wholly and exclusively for the purpose of the business which was conducted by the assessee.
The same, however, " cannot be said of the present case.
It was on the peculiar facts of the Dharamvir Dhir 's case that this Court observed as follows: r "on the facts proved in the present case the trust agreed to finance the business of the appellant on the terms set out in the agreement and there is nothing to show that he could have made any better arrangements or would not have last the contract if he had failed to enter into the agreement, i.e. the agreement to pay the amounts in dispute.
There fore, in a commercial sense, the payments were an expenditure wholly and exclusively laid out for the purpose of the " business.
" It may be mentioned that this Court had considered the decision in the British Sugar Manufactures Ltd. 's case (supra) and had approved of the same.
Great stress was laid by counsel for the assessee Company on the fact that this Court could not go behind the commercial expediency which had to be determined from the point of view of a businessman.
Even so whatever be the commercial considerations, it is difficult to hold that the commercial expediency dictated the assessee Company to allow itself to be completely overshadowed by its selling agents so as to pay them not only for the services rendered but also allow them 197 to share profits, control the manufacture of the goods and the programme thereof and also to share the losses.
The test of commercial expediency cannot be reduced in the shape of a ritualistic formula, nor can it be put in a water tight compartment so as to be confined in a strait jacket.
The test merely means that the Court will place itself in the position of a businessman and find out whether the expenses incurred could be said to have been laid out for the purpose of the business or the transaction was merely a subterfuge for the ' purpose of sharing or dividing the profits ascertained in a particular manner.
It seems to us that in ultimate analysis the matter would .
depend on the intention of the parties as spelt out from the terms of the agreement or the surrounding circumstances, the nature or character of the trade or venture, the purpose for which the expenses are incurred and the object which is sought to be achieved for incurring those expenses.
If the expenses incurred amount to a profit of an enduring nature they may be treated as capital expenditure, whereas if the expenses merely serve to promote or increase the commercial activity they may amount to an expenditure which is incurred for the purpose of the business.
Reliance was also placed by counsel for the assessee Company on the decision in J. K. Woollen Manufacturers vs Commissioner of Income Tax, U.P.(1), where this Court observed as follows: "The question as to whether an amount claimed as expenditure was laid out or expended wholly or exclusively for the purpose of business, profession or vocation as required under Section 10(2) (xv) of the Income Tax Act .
has to be decided on the facts and in the light of the circumstances of each particular case.
x x x x In our opinion, neither the High Court nor the Appellate Tribunal has applied the proper legal test in this case.
As pointed out by this Court in C.I.T. Bombay vs Walchand and Co. Private Ltd., 1967 65 ITR 381= (AIR 1967 SC 1435) in applying the test of commercial expediency for determining whether an expenditure was wholly and exclusively laid out for the purpose of the business, reasonableness of the expenditure has to be adjudged from the point of r view of the businessman and not of the Income Tax Department.
It is, of course, open to the Appellate Tribunal to come to a conclusion either that the alleged payment is not real or that it is not incurred by the assessee in the character of trader or it is not laid out wholly and exclusively for the purpose of the business of the assessee and to disallow it.
But it is not the function of the Tribunal to determine the remuneration which in their view should be paid to an employee of the assessee.
" It would appear that in the aforesaid case the only question was regarding the quantum of remuneration to be given to the General , Manager and this Court observed that the businessman must be given complete freedom to fix the terms of his employees after taking an (1) ; 198 overall view of the situation.
This was not at all a case where an agreement like the present one was entered into between the assessee Company and its agents.
On the other hand in Commissioner of Income tax, Kerala vs Travancore Sugars and Chemicals Ltd.(l), this Court added` a word of caution that the test of commercial expediency should not be applied in a mechanical manner and observed as follows: "In considering the nature of the expenditure incurred in the discharge of an obligation under a contract or a statute or a decree or some similar binding covenant, one must avoid r being caught in the maze of judicial decisions rendered on different facts and which always present distinguishing features for a comparison with the facts and circumstances of the case in hand.
Nor would it be conducive for clarity or for reaching a logical result if we were to concentrate on the facts of the decided cases with a view to match the colour of that case with that of the case which requires determination.
The surer way of arriving at a just conclusion would be to first ascertain by reference to the document under which the obligation for incurring the expenditure is created and thereafter to apply the principle embalmed in the decisions of those facts.
Judicial statements on the facts of a particular case can never assist courts in the construction , of an agreement or a statute which was not considered in i those judgments or to ascertain what the intention of the legislature was.
What we must look at is the contract or the statute or the decree, in relation to its terms, the obligation imposed and the purpose for which the transaction was , entered into.
" The learned counsel for the assessee Company relied on the aforesaid case because the question whether the transaction amounted to a joint venture appears to have been raised but it appears that this point had been given up when the case was sent on remand and was therefore not decided.
In these circumstances, the decision in the aforesaid case does not appear to be of any assistance to the assessee Company.
The Tribunal had interpreted the agreement keeping into account J the tests of commercial expediency and we find ourselves in complete agreement with the view taken by the Tribunal.
The High Court on the other hand relied upon what it called the surrounding circumstances that the assessee Company was a losing concern from its inception and had to get rid of the previous selling agents M/s Murlidhar Chiranjilal because they caused considerable embarrassment to the assessee Company.
While the standing counsel for the Revenue has admitted that the Company was running at some loss there was no evidence that the Company was in such a bad shape that it had to get rid of the first selling agents because the selling agents were l causing embarrassment to it.
The High Court then relied on the fact that the first agency which was entered into with M/s Murlidhar (1)881.T.R.1,10.
199 Chiranjilal in 1953 also resulted in loss as a result of which the A second agreement dated October 20, 1955 was entered into.
This does not appear to be of much consequence.
The High Court then relied on the fact that the agents had no other connection with the assessee Company except that of the business connection.
The High Court further found that the promoter of the assessee Company Mr. Desh Bandhu Gupta had a stature which enabled him to borrow loans from the Banks on personal security and as he died in an air crash the credit of the Company went down and it was not abl to raise money from the Banks.
There is absolutely no warrant for these facts referred to by the High Court which are neither mentioned in the agreed statement of the case submitted by the Tribunal to the High Court nor in the order of the Tribunal.
It is well settled that the High Court is not entitled to go behind the statement of the case.
In Commissioner of Income tax, Poona vs Manna Ramji and Company(1) this Court observed as follows: "In this respect we are of the view that the Tribunal is the final fact Finding authority.
It is for the Tribunal to find facts and it is for the High Court and this Court to lay down the law applicable to the facts found.
Neither the High Court nor this Court has jurisdiction to go behind or to question the statement of facts made by the Tribunal.
The statement of case is binding on the parties and they are Dot entitled to go behind the facts of the Tribunal in the statement.
When the question referred to the High Court speaks of 'on the facts and circumstances of the case ', it means on the facts and circumstances found by the Tribunal and not on the facts and circumstances as may be found by the High Court." In Commissioner of Income tax, Bombay vs Poona Electric Supply Co. Ltd.(2) the Bombay High Court observed as follows: "It is true that the Electricity act exercises control on the business of the licensee, but the control that is exercised by reason of the aforesaid proviso is to compel the assessee to distribute part of its clear profits if it is found that 'clear profits ' are in excess of the reasonable return as contemplated under the Act.
That, in our opinion, would only amount to apportionment or distribution of the profits after they have been earned.
It cannot, therefore, be said that the amount set apart for the purpose of distribution amongst the consumers is not chargeable to tax on the ground that it represents over charge.
" This case however was decided on its own facts and has no application to the facts in the instant case.
Reliance was also placed by counsel for the assessee Company on a Division Bench decision of the Patna High Court in Jamshedpur (1)86I.T.R.29, 37.
(2)49 I.T.R.913 924.
14 L390SCI/76 200 Motor Accessories Stores vs Commissioner of Income tax, Bihar & Orissa(1) where Untwalia, C.J., as he then was, observed as follows: "That position being accepted the matter as to what amount was payable to Parikh ought to have been adjudged from the assessee 's point of view and not from the department or Tribunal 's point of view.
It has to he emphasised that unless there is, a limitation put by the law on the amount , of expenditure a lesser amount than the amount expended cannot be allowed merely because the assessing authority c thinks that the assessee could have managed by paying a 201 application of the profits In this connection the Privy Council observed as follows.
"It is claimed for the company that when it makes over to the Colonial Government their half of the net profits it is making an expenditure incurred solely for the purpose of " earning its own profits.
The Court below has unanimously negatived this contention and in their Lordships ' opinion has rightly done so.
A payment out of profits and conditional on profits being, earned cannot accurately be described as a payment made to earn profits.
It assumes that profits have first come into existence.
But profits on their coming into existence attract tax at that point and the revenue is not concerned with the subsequent application of the profits.
* * * But the principle laid down by Lord Chancellor Halsbury in Gresham Life Assurance Society vs Styles p. 315, is of general application unaffected by the specialities of the English tax system: '.
But when once an individual or a company has in that proper sense ascertained what are the profits of his business or his trade, the destination of those profits or the charge which has been made on those profits by previous agreement or otherwise is perfectly immaterial.
The tax is payable upon the profits realised and the meaning to my mind is rendered plain by the words payable out of profits '.
Thus in short by controlling the manufacturing programme, sharing to the extent of 50% in the net profits ascertained in the manner stipulated in the agreement and above all for sharing 50% of the losses which are to be deducted from the commission of the agents the agents become completely equated with the proprietors of the firm itself and therefore the contract of agency is really a sort of a partner ship and has been given the cloak and colour of an agency to conceal the real intent and purpose the commercial venture.
In view of the decisions referred to above and the peculiar facts of the present case we are satisfied that the view taken by the Tribunal that the payments in question were not legally deductible under section 10(2)(xv) of the Act was correct.
The view taken by the High Court that the amounts in question were deductible under section 10(2) (xv) appears to be legally erroneous cannot be upheld.
For the reasons given above, the appeals are allowed and the : judgment of the High Court is set aside and that of the Tribunal is restored and the two questions referred to the High Court are answer ed against the assessee Company and in favour of the Revenue.
In view of the peculiar acts af the present case, we leave the parties to bear their own costs in this Court.
V.P.S. Appeals allowed.
| In 1952, the assessee company installed a new plant by raising a loan from the Industrial Finance Corporation, and appointed a sole selling agent of its product.
ln 1953, the assessee changed the selling agent, and entered into an agreement with another selling agent.
Under the agreement, the agent was to make advances and finance the assessee.
Under cl.
7(1 ) of the agreement, the agent was to get a commission at the rate of 11% on the net proceeds of the sales of all its goods and 50% commission on the net profits of the new plant (the net profits being ascertained after deducting all the manufacturing costs, interest, insurance, etc.).
The selling agent advanced 2 sums of money in the assessment years 1956 57 and 1957 58 respectively, and received, during those 2 years, two sums as their 50% commission on the net profits of the new plant.
The assessee claimed, in its returns for those 2 years, that the amounts paid as commission to the selling agent were expenses incurred to earn profit and could, therefore, be deducted under section lO(2)(xv) lncome Tax Act, 1922; but the Income Tax officer disallowed the claim.
On appeal, the Appellate Assistant Commissioner held in favour of the assessee, but the Tribunal, on further appeal held that the agreement between the assessee and the selling agent amounted to a joint venture for the distribution of profits between the two, after the profits were ascertained, and upheld the contention of the Revenue that the two sums were not legal deductions within section 1O(2)(xv).
On reference, the High Court held in favour of the assessee.
Allowing the appeal to this Court, ^ HELD: (I)(a) In order to fall within section 10(2)(xv) the deduction claimed must amount to an expenditure which was laid out or expended wholly and exclusively for the purpose of the business profession or vocation; and this depends upon the facts of each case; and [191 G H] (b) In order to determine the reasonableness of the expenditure, the test of commercial expediency would have to be adjudged from the point of view of the businessman and not of the Income Tax Department.
[191H 192A] (2) It is well settled that the Court, in order to construe an agreement has to look to the substance or the essence of it rather than to its form.
A party cannot escape the consequences of law merely by describing an agreement in a particular form, though, in essence and substance, it may be a different transaction.
[l94 G H] (a) Clause 3 of the agreement requires not only consultation by the assessee with the selling agent, but also the consent, for me programme of manufacture of the product.
that is, if the agent withholds its consent, it could veto the programme of manufacture.
Such a limitation placed on the power of the assessee is not in consonance with a pure and simple contract of agency.
[192 F G] (b) Under cl.
6(1) the selling agent would have to make a full and complete investment for the working of the new plant to the fullest possible capacity 187 including wages, power, stores, repairs etc.
This is more in consonance with a partnership than an agency.
[193 C D] (c) Clause 6(ii) provides that the plant should be overhauled before tho commencement and the termination of the agreement.
This is also beyond the role of a simple selling agent.
[193 D E] (d) Sub clauses (Viii) and (ix) of cl. 6 show that any damage to the goods in transit would have to be debited to the account of the new plant and that such accounts would have to be maintained separately.
The object of these sub clauses is that the selling agent should be in a position to ascertain the net profits and control the working of the new plant.[193E] (e) An analysis of the terms of cl. 7(i) shows that the selling agent was agent to secure most liberal and profitable terms.
While it is difficult to lay down any rule of universal application as to what percentage of profit would be consistent with the payment in lieu of services, the conduct of the selling agent, in the present case.
in sharing half of the net profits is not consistent with payments made to agents for services rendered.
Taking the totality of the provisions of c the agreement, the percentage of profits and the manner in which it is to be deter mined is more consistent with the position of the selling agent as a partner than as an agent.
1194 A Cl (f) In cl. 7 there is also provision for the selling agent sharing the loss incurred by the assessee, by deducting 50% of the loss from its remuneration, and for a lump sum deduction of Rs. 50,000/ towards depreciation etc., for deter mining the net profit or loss position.
Clause 7(iv) provides for a separate commission account to be maintained by the selling agent and for payment of commission every 6 months.
Having regard to the terms and conditions of the agreement, the view taken by the Tribunal that the two sums were not legally deductible under section 10(2)(xv) was correct.
By contributing to the investments by controlling the manufacturing programme, by sharing to the extent of 50 per cent in the net profits ascertained in the manner stipulated in the agreement, and above all, by agreeing to share SO per cent of the losses which are to be deducted from the commission of the agent, the selling agent has actually contributed to a joint venture and became completely equated with the assessee, and therefore, the agreement between the two is really a sort of a partnership and has been given the cloak and colour of an agency to conceal the real intent and purpose of the commercial venture; and it must be construed as an agreement for division of profits in specified proportions.
[194 C D, F; 195 E G; 201 E F] British Sugar Manufacturers Ltd. vs Harris (Inspector of Taxes), , applied.
(3) The decision in Dharamvir 's case is distinguishable.
[195, G H] (a) In that case it was not agreed between the assessee and the trust, which agreed to advance a loan to him, that the profits would be ascertained after deducting the net expenses as in the agreement in the present case.
[196 B C] (b) While the contract was to be carried on in accordance with the policy settled between the assessee and the trust, in that case, it did not give any veto power to the trust to torpedo the contract.
In the present case, the agreement gave to the selling agents controlling power at every stage in the programme of manufacture and even at the stage of the sale of the products, by requiring the consent of the selling agent.
[196 C D] (c) Not only was there no provision in Dharamvir 's case under which the trust was to share the loss, but there was an express provision to the contrary.
Therefore, the payment of interest at the rate of 6 per cent on the loan advanced to the assessee by the trust and a percentage in the profits, in that case, is quite consistent with a remuneration in lieu of services lent and would amount to an expenditure incurred by the assessee, wholly and exclusively for the purpose of the business which was conducted by the assessee.
[196 D E] (4) In the present case, it is difficult to hold that commercial expediency dictated the assessee to allow itself to be completely overshadowed by its selling 188 agent, so as to pay them not only for the services rendered but allow them to share profits, control the manufacture of goods and to share the losses.
The test of commercial expediency cannot be reduced to the shape of a ritualistic formula.
The test merely means that the Court will place itself in the position of a businessman and find out whether the expenses incurred could be said to have been laid out for the purpose of the business, or whether the transaction was merely a subterfuge for the purpose of sharing or dividing the profits ascertained in a particular manner.
In the ultimate analysis, the matter would depend on the intention of the parties as spelt out from the terms for the agreement or the surrounding circumstances, the nature or character of the trade or venture, the purpose for which the expenses are incurred and the object which is sought to be achieved for incurring those expenses.
If the expenses incurred amount o a profit of an enduring nature, they may be treated as capital expenditure; whereas, if the expenses merely serve to promote or increase the commercial activity, they may amount to an expenditure which is incurred for the purpose of the business.
[196H 197D] J. K. Woollen Manufacturers vs Commissioner of Income Tax, V.P. [1969]1 S.C.R. 525, distinguished.
Commissioner of Income Tax, Kerala vs Travancore Sugar and Chemicals Ltd., , 10; Commissioner of income Tax, Bombay vs Poona Electric Supply Co. Ltd., 49 I.T.R. 913, 924 and Jamshedpur Motor Accessories Stores vs Commissioner of Income Tax, Bihar & Orissa, , 672 referred to.
(5) The High Court is not entitled to go behind the Statement of the case submitted by the Tribunal.
But, in the present case, in interpreting the agreement, the High Court relied upon what it called surrounding circumstances, namely, that the assessee was a losing concern from its inception, that it was in such a bad shape that it had to get rid of its first selling agent.
BECAUSE, it caused considerable embarrassment to the assessee while the second selling agent was prepared to give the assessee advantageous terms.
that the selling agent had no other connection than a business connection with the assessee; and that because of the death of one of the promoters of the assessee, who commanded credit in the money market, the assessee was not able to raise money from the banks.
But, these facts were not found by the Tribunal nor was there any warrant for any of the assumptions.
[198G 199C] Commissioner of Income Tax, Poona vs Manna Ramji and Company, , 37, followed.
(6) The facts found by the Tribunal and those mentioned in its Statement of the case to the High Court, lead to the inescapable conclusion that the agreement is nothing but a joint venture to divide the profits after they are ascertained, and hence, the payments to the selling agent cannot, in any sense be deemed to be expenses incurred by the assessee for the purpose of its business or for earning profits.
Pondicherry Railway Co. Ltd. vs Commissioner of Income Tax madras, A.I.R. 1931 P.C. 165, 170, referred to.
|
Civil Appeal No. 1639 of 1985 etc.
From the Judgment and Order 15.1.1985 of the Kerala High Court in O.P. 760 of 1981 M. M. Abdul Khader, G. Viswa Natha Iyer, M.A. Firoz, C.S. Vaidyanathan, P. Chowdhary, S.R. Setia and K.D. Namboodiry for the Appellant.
P. Subramanium Poti, F.S. Nariman, S.B. Saharya, V.B. Saharya, Vijay Bahuguna, M.L. Lahoty, S.P. Singh, Rakesh Dwivedi, Raj Kumar Singh, Miss Helen Marc, V.B. Joshi, K.R. Nambiar, Vinoo Bhagat, B.R. Kurup, K. Dileep Kumar, Ramesh C. Kohli, G.N. Rao, A.S. Nambiar, P Kesava Pillai, T. Sridharan, N Sudhakaran, E.M.S Anam and T.G.N. Nair for the Respondents.
The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
These appeals preferred by the Kerala State Electricity Board raise the question of the extent of the authority of the Board to increase the Electricity Tariff under the Electricity Supply Act.
The upward revision of tariff made by the Board in 1980, 1982 and 1984 was successfully challenged in the Kerala High Court.
The first two revisions were struck down by a Full Bench of three judges by a majority of two to one and, later, all three revisions were struck down by a Full Bench of Five judges by majority of four to one.
The principal ground of challenge and that which was accepted by the High Court was that the Kerala State Electricity Board acted outside its statutory authority by formulating a price structure intended to yield sufficient revenue to off set not merely the expenditure properly chargeable to the revenue account for the year as contemplated by section 59 of the Act but also expenditure not so properly chargeable.
Had section 636 59 been strictly followed and had items of expenditure not chargeable to the revenue account for the year been excluded, the revised tariff would have resulted in the generation of a surplus far beyond the contemplation of section 59 of the Act.
According to the High Court, in the absence of a specification by the Government the Board was not entitled to generate a surplus at all and it acted entirely outside its authority in generating a surplus to be adjusted against items of expenditure not authorised to be met from the revenue receipts.
The notifications prescribing revised tariffs were therefore, struck down.
The view of the High Court, as might be seen, was based primarily on their construction of s.59 of the Electricity Supply Act.
In order to understand the questions at issue, it is necessary to set out section 59 as it stood prior to 1978, as amended by Act No. 23 of 1978, and finally as amended by Act No. 16 of 1983: ____________________________________________________________ Section 59 prior Section 59 as Section 59 as further to 1978 amended by Act amended by Act No. 23 of 1978 No. 16 of 1983 (1) (2) (3) ____________________________________________________________ General principles General principles General Principles for Board 's for Board 's for Board 's finance finance finance The Board shall not, (1) The Board shall (1) The Board as far as practicable after taking credit shall after taking and after taking for any subvention credit for any credit for any from the State subvention from subventions from the government under section the State Govern State Government 63, carry on its ment under s.63 under s.63, carry on operations under carry on its oper its operations under this Act and adjust ations under this this Act at a loss, its tariffs so as Act and adjust its and shall adjust its to ensure that the its tarrifs so as charges accordingly total revenues in to ensure that the from time to time.
any year of account total revenues provided that shall after meeting in any year of where necessary any all expenses prope account shall, amounts due for mee rly chargeable to after meeting all ting the operating, revenues, including expences properly maintenance and operating maintena chargeable to nance and manageme revenues,including nt expences, taxes operating, mainte (if any on in nance and 637 management expenses come and profits, management ex of the Board or for depreciation and penses.
taxes (if the purposes of interest payable on any) on income and clauses (i) and (ii) debentures, bonds profits, deprecia of s.67 may, to such and loans, leave tion and interest extent as may be san such surplus as the payable on all ctioned by the State State Government debentures, bonds Government, be paid may, from time to and loans leave out of capital.
time, specify.
such surplus as is (2) In specifying not less than the surplus under three per cent or sub section (1), such higher perce the State Governmentntage, as the shall have due reg State Government ard to the may be notifica availibility of tion in the offi amounts accrued by cial Gazette, way of depreciation specify in this and the liability behalf, of the for loan amortiza value of the fixed tion and leave assets of the (a) a reasonable Board in service sum to contribute at the beginning towards the cost of of such years.
capital works; and Explanation: For (b) where in res the purposes of pect of the Board this sub section a notification has "Value of the fix been issued under ed assets of the sub section(1) of Board,in service section 12A,a reasonable at the begining sum by way return of the year" mean on the capital pro the original cost vided by the state of such fixed as Goverment under sub sets as reduced section(3) of that by the aggregate section and the am of the cumulative ount of the loans depreciation in (if any) converted respect of such by the state Govern assets calculated ment into capital in accordance with under sub section(1)the provisions of of section 66A. this Act and consumers contributions for service lines.
(2) In specifying any higher percentage 638 under sub section(1), the State Government shall have due regard to the availability of mounts accrued by way of depreciation and the liability for loan amortiza ation and leave (a) a reasonable sum to contribute towards the cost of capital works; and (b) where in respect of the Board, a notification has been issued under sub sec.(1) of section 12A, a reasonable sum by way of return on the capital pro vided by the State Government under sub sec.(3) of that section and the amount of the loans (if any) converted by the State Government into capital under sub section(1) of section 66A. We may mention here that we are not really concerned with section 59 as amended by Act No. 16 of 1983 since that came into effect from April 1, 1985 only.
We have, however, extracted that provision also for a better understanding of section 59 as it stood before the 1983 amendment.
We consider that for the purpose of understanding and construing section 59, as it stood before the 1983 amendment, we are entitled to take into consideration the Parliamentary exposition contained in the 1983 amendment.
(See we will come back to the question of proper construction of s.59 later).
639 We think that it is necessary at this stage itself to refer to some of the other important provisions of the Electricity Supply Act.
Section 18 prescribes the general duties of the Board and, it is as follows: "18.
General Duties of the Board Subject to the provisions of this Act, the Board shall be charged with the following general duties, namely: (a) to arrange, in co ordination with the Generating Company or Generating Companies, if any, operating in the State, for the supply of electricity that may be required within the State and for the transmission and distribution of the same, in the most efficient and economical manner with particular reference to those areas which are not for the time being supplied or adequately supplied with electricity; (b) to supply electricity as soon as practicable to a lincensee or other person requiring such supply if the Board is competent under this Act so to do; (c) to exercise such control in relation to the generation, distribution and utilisation of electricity within the State as is provided for by or under this Act; (d) to collect data on the demand for, and the use of, electricity and to formulate perspective plans in co ordination with the Generating Company or Generating Companies, if any, operating in the State, for the generation, transmission and supply of electricity within the State; (e) to prepare and carry out schemes for transmission, distribution and generally for promoting the use of electricity within the State; and (f) to operate the generating stations under its control in co ordination with the Generating Company or Generating Companies, if any, operating in the State and with the Government or any other Board or agency having control over a power system.
" Section 49 was not amended either in 1978 or in 1983 and it is as follows: 640 "49.
Provision for the sale of electricity by the Board to persons other than licensees (1) Subject to the provisions of this Act and of regulation, 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.
(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 standardization 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 terms and conditions for the supply of electricity, the Board shall not show undue preference to any person.
" Section 63 enables the State Government, with the approval of the State legislature, to make subventions to the Board for the purposes of the act.
Section 64 empowers the State Government to advance loans to the Board and Section 65 empowers the Board, with the 641 previous sanction of the State Government.
to borrow any sum required for the purposes of the Act by the issue of debentures or bonds or otherwise.
Section 66 empowers the government to guarantee the loans proposed to be raised by the Board Section 66A authorises the State Government to convert any loan obtained from the Government by the Board capital provided by the Board.
Section 67 was amended in 1978 and again 1983.
It is useful to set out the section as it stood originally and as amended by the two amendments of 1978 and 1983: Section 67 prior Section 67 as amen Section 67 as to 1978 ded by Act No. 23 further amended of 1978 by Act No. 16 of 1983 (1) (2) (3) Priority of Priority of liabi Priority of liab liabilities of the lities of Board ilities of the Board The revenues (1)If in any year, Board The Board of the Board shall, the revenue receipt shall distribute the after meeting its are not adequate to surplus, reffered to operating, mainte to enable complianc in sub section(1) of nance and manage with the requirment s.59 to the extent ment expenses and of section 59, the Board extent available in after provision shall,after meeting a particular year in has been made for its operating, mai in the following or the payment of tenance and manage der namely: taxes on its income ment expences and (i) repayment of and profits be dis after provision has principal of any as far as they are been made for the loan raised available in the payment of taxes(if (including following order any) on income and redemption of deb namely: profits, distribute entures or bonds (i) interest on the revenue receipt issued) under s.65 bonds not guranteed as far as they are whichs becomes due under s.66; available, in the for payment in the (ii) interest on following order, year or which became stock not so guara namely: due for payment in nteed; (i) payment of int any previous year (iii) credits to erest on loans not and has remaind un guaranteed under paid; (ii) repayment of principal of any loan advanced to the 642 depreciation s.66; Board by the State reserve under section 68 (ii) repayment of Government under (iv) interest on principal of any section 64 which becomes bond guaranteed un loan raised (incl due for payment in der s.66; uding redemption of the year or which (v) interest on st debentures or bonds became due for pay ock so guaranteed; issued) under section 65 ment in any previous (vi)interest on sum which become due for year and remained paid by the State payment in the year (iii) payment for Government under (iii) payment of purposes specified guarantees under interest on loans in sub section (2) section 66; guaranteed under of section 59 in such (vii)the write down s.66; manner as the Board amounts paid from (iv)payment of in may decide.
" capital under the terest on sums paid proviso to section by the State Govern 59; ment in pursuance of (viia) the write guarantees under down of amounts in s.66; respect of intangi ble assets to the (v) payment of in to which they are terest on loans actually appropria advanced to the ted in any year for the Board by the State for the purpose in Government under the books of the section 64 or deemed to be Board; advanced under sub (viii) contribution section (2) of to general reserve section 60; of an amount not (vi) repayment of exceeding one half principal of any loan of one percentum guaranteed by the per annum of the State Government original cost of under section 66 which be fixed assets empl come due for payment oyed by the Board in the year or which be so however that the come due for payment total standing to in any previous year the credit such and has remained reserve shall not unpaid; exceed fifteen per centum of the orig inal cost of such (vii) repayment of fixed assets; principal of any loan (ix) interest on advanced to the Board loans 643 advanced or deemed under section 64 which be to be advanced to comes due for payment the Board under section in the year or which be 64 including arrear came due for payment of such interest; in any previous year (x) the balance to and has remained be appropriated to unpaid; and if any fund be called the balance amount is left Development Fund thereafter, the same to be utilised for shall be utilised for (a) purposes bene the other purposes ficial, in the opi specified in section 59 nion of the Board, in such manner as the to electrical deve Board may decide.
lopment in the (2) If for any reason State; beyond the control of (b) repayment of the Board, the revenue loans advanced to receipts in any year the Board under section are not adequate to 64 and required to meet its operating, be repaid; maintenance and Provided that where management expenses, no such loan is out taxes (if any) on in standing, one half comes and profits and of the balance the liabilities referred aforesaid shall be to in clauses (i) and credited to the (ii)of sub section(1), Consolidated Fund the shortfall shall, of the State.
with the previous sanction of the State Government, be paid out of its capital receipts.
Section 67B which was introduced by Act 16 of 1983 defers payment of interest on loans advanced by the State Government until after all other expenses are met.
It is in the following terms: "67A Interest on loans advanced by State Govt.
to be paid only after other Expenses.
Any interest which is payable on loans advanced under section 64 or deemed to have been advanced under section 60 to the Board by the State Government and which is charged to revenues in any year may 644 be paid only out of the balance of the revenues, if any, of that year which is left after meeting all the other expenses referred to in sub section (1) of section 59 and so much of such interest as is not paid in any year by reason of the provisions of this section shall be deemed to be deferred liability and shall be discharged in accordance with the provisions of this section in the subsequent year or years, as the case may be.
" Now, a State Electricity Board created under the provisions of the Electricity Supply Act is an instrumentality of the State subject to the same constitutional and public law limitations as are applicable to the government including the Principle of law which inhibits arbitrary action by the Government.
(see Rohtas Industries vs Bihar State Electricity Board, ; It is a public utility monopoly undertaking which may not be driven by pure profit motive not that profit is to be shunned but that service and not profit should inform its actions.
It is not the function of the Board to so manage its affairs as to earn the maximum profit even as a private corporate body may be inspired to earn huge profits with a view to paying large dividends to its shareholders.
But it does not follow that the Board may not and need not earn profits for the purpose of performing its duties and discharging its obligations under the statute.
It stands to common sense that the Board must manage its affairs on sound economic principles.
Having ventured into the field of Commerce, no public service undertaking can afford to say it will ignore business principles which are as essential to public service undertakings as to Commercial ventures.
(see Lord Scarman in Bromely vs Greater London Council, ; If the Board borrows sums either from the Government or from other sources or by the issue of debentures and bonds, surely the Board must of necessity make provision year after year for the payment of interest on the loans taken by it and for the repayment of the capital amounts of the loans.
If the Board is unable to pay interest in any year for want of sufficient revenue receipts, the Board must make provision for payment of such arrear of interest in succeeding years.
The Board is not expected to run on a bare year to year survival basis.
It must have its feet firmly planted on the earth.
It must be able to pay the interest on the loans taken by it; it must be able to discharge its debts; it must be able to give efficient and economic service; it must be able to continue the due performance of its services by providing for depreciation etc; it must provide for the expansion of its services, for no one can pretend the country is already well supplied with electricity.
Sufficient surplus has to be generated for this purpose.
That we 645 take it is what the Board would necessarily do it was an ordinary commercial undertaking properly and prudently managed on sound commercial lines.
Is the position any different because the Board is the public utility undertaking or because of the provisions of the Electricity Supply Act? We do not think that either the character of Electricity Board as a Public Utility Undertaking or the provisions of the Electricity Supply Act preclude the Board from managing its affairs on sound commercial lines though not with a profit thirst.
It may be noticed here that section 18(a) prescribes it as one of the duties of the Board to arrange for the supply of electricity that may be required within the State and for the transmission and distribution of the same, in the most efficient and economical manner and section 49(2) (b) requires the Board to have regard, in fixing uniform tariffs, the coordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, both with particular reference to those areas which are not for the time being served or adequately supplied with electricity.
The principles of efficiency and economy are, therefore, not forsaken but resolutely emphasised.
Now if we turn to section 59, what do we find? Though at one time it appears to have been thought that it was enough if the Board did not carry on its operations at a loss it was realised that the statutory admonition to the Board should be positive and not negative and that the Board should be given an affirmative and self assuring direction.
So section 59 was amended in 1978.
The Statement of Objects and Reasons says.
Section 59 of the Electricity (Supply) Act is proposed to be amended by clause 8 of the Bill to give a positive direction to the Electricity Boards that after meeting all their expenses, there should be provision for a surplus for contribution towards immediate investment needs.
A similar amendment is also proposed to be made in regard to the Generating Companies by inserting a new sub section (3A) in section 75A by clause 18 of the Bill.
" It was found that the 1978 amendment did not effectively improve matters as many State Government did not specify the quantum of surplus.
Parliament had, therefore, to intervene once again to fix a statutory minimum surplus.
The Statement of Objects and Reasons relating to the 1983 amendment may also be extracted and it is as follows: "Though section 59 of the Act, as amended in 1978, casts an obligation on the State Government has so far specied the quantum of any surplus.
At present there is no uni 646 formity in the manner of classification and presentation of accounts of the Boards and this renders inter Board comparison of financial performance difficult.
It is also considered necessary to re arrange the priorities with regard to distribution revenues of the Boards.
It is, therefore, proposed to amend the Act (a) to provide that each Board shall have a surplus which shall not be less than three per cent, or such higher percentage as the State Government may specify, of the value of the fixed assets of the Board in service at the beginning of the year; (b) to re arrange the priorities for distribution of revenues of the Boards; (c) to bring the financial reporting system of the Boards in line with commercial accounting practice; and (d) to empower with a view to securing uniformity in the manner of classification and presentation of accounts, the Central Government to prescribe the forms in which the accounts of the Board and other records in relation thereto may be maintained." A plain reading of sec.
59 (as amended in 1978) plainly indicates that it is the mandate of Parliament that the Board should adjust its tariffs so that after meeting the various expenses properly required to be met a surplus is left.
The original negative approach of functioning so as not to suffer a loss is replaced by the positive approach of requiring a surplus to be created.
The quantum of surplus is to be specified by the State Government.
What the State Government is to specify is the minimum surplus.
This is made clear by the 1983 amendment which stipulates a minimum of 3 per cent surplus in the absence of specification by the State Government which has the liberty to specify a higher percentage than three.
That section 59, as it stood before 1983 contemplated a minimum surplus was also the view expressed by this court in Rohtas Industries vs Bihar State Electricity Board (supra) where it was said, "Under the above provisions, the Board is under a statutory obligation to carry on its operations and adjust its 647 tariffs in such a way to ensure that the total revenues earned in any year of account shall after meeting all expenses chargeable to revenue, leave such surplus as the State Government may, from time to time, specify.
The tariff fixation has, therefore, to be so made as to raise sufficient revenue which will not merely avoid any net loss being incurred during the financial year but will ensure a profit being earned, the rate of minimum profit to be earned being such as may be specified by the State Government." Shri Potti, learned Counsel for the consumers placed great reliance on the observations of this Court in Kerala State Electricity Board vs Indian Aluminium Co., [1976] 1 SCR 552; Bihar State Electricity Board vs Workmen, ; and Dr. P. Nalla Thamby Thera vs Union of India & Ors., ; to contend that the Electricity Board was barred from conducting its operations on commercial lines so as to earn a profit.
In the first case, the observations relied upon were. "Furthermore, Electricity Boards are not trading corporations.
They are public service corporations.
They have to function without any profit motive.
Their duty is to promote co ordinated development of the generation, supply and distribution of electricity 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 any licensee (section 18).
The only injunction is that as far as practicable they shall not carry on their operations at a loss (section 59).
They get subventions from the State Governments (Section 63).
In the discharge of their functions they are guided by directions on questions of policy given by the State Governments (Section 78A).
There are no shareholders and there is no distribution of profits.
" In the second case the court observed, "The Electricity Board is not an ordinary commercial concern.
It is a public service institution.
It is not expected to make any profit.
It is expected to extend the supply of electricity to unserved areas without reference to considerations of loss that might be incurred as a result of such extension.
" 648 In the third case where the court was considering the position of the Indian Railways it was observed, "The Indian Railways are a socialised public utility under taking.
There is at present a general agreement among writers of repute that the price policy of such a Public Corporation should neither make a loss nor a profit after meeting all capital charges and this is expressed by covering all costs or breaking even; and secondly, the price it charges for the services should correspond to relative costs.
Keeping the history of the growth of the Railways and their functioning in view, the commendable view to accept may be that the rates and fares should cover the total cost of service which would be equal to operational expenses, interest on investment, depreciation and payment of public obligations, if any.
We need not, however, express any opinion about it." . . . . . . . . . . . . . . . . . "We have said earlier that the Railways are a public utility service run on monopoly basis.
Since it is a public utility, there is no justification to run it merely as a commercial venture with a view to making profits.
We do not know at any rate it does not fall for consideration here if a monopoly based public utility should ever be a commercial venture geared to support the general revenue of the State but there is not an iota of hestitation in us to say that the common man 's mode of transport closely connected with the free play of this fundamental right should not be.
We agree that the Union Government should be free to collect the entire operational cost which would include the interest on the capital outlay out of the national exchequer.
Small marginal profits cannot be ruled out.
The massive operation will require a margin of adjustment and, therefore, marginal profits should be admissible.
" We do not think that any of these observations is in conflict with what we have said.
Pure profit motive, unjustifiable according to us even in the case of a private trading concern, can never be the sole guiding factor in the case of a public enterprise.
If profit is made not for 649 profit 's sake but for the purpose of fulfilling, better and more extensively, the obligation of the services expected of it, it cannot be said that the public enterprise acted beyond its authority.
The observations in the first case which were referred to us merely emphasised the fact that the Electricity Board is not an ordinary trading Corporation and that as a public utility undertaking its emphasis should be on service and not profit.
In the second case, for example, the court said that it is not expected to make any profit and proceeded to explain why it is not expected to make a profit by saying that it is expected to extend the supply of Electricity to unserved areas without reference to considerations of loss.
It is of interest that in the second case, dealing with the question whether interest cannot be taken into account in working out profits, the court observed, "The facile assumption by the Tribunal that the interest should not be taken into account in working out the profits is not borne out by the provisions of the statute.
" In the third case, the court appeared to take the view that the railway rates and fares should cover operational expenses, interest on investment, depreciation and payment of public obligations.
It was stated more than once that the total operational cost would include the interest on the capital outlay out of the national exchequer.
While the court expressed the view that there was no justification to run a public utility monopoly service undertaking merely as a commercial venture with a view to make profits, the court did not rule out but refrained from expressing any opinion on the question whether a public utility monopoly service undertaking should ever be geared to earn profits to support the general revenue of the State.
One of the submissions which found favour with the High Court and which was seriously pressed before us was that in the absence of specification by the State Government the position would be as it was before the 1978 amendment, that is, the Board was carry on its affairs and adjust the tariffs in such a manner as not to incur a loss and no more.
We do not agree with the submission for the reasons already mentioned.
We may also refer here to the decision of the Privy Council in Madras and Southern Mahratta Railway Company Ltd. vs Bezwada Municipality, which affirmed the Judgment of the Madras High Court in Madras and Southern Maharatta Railway Com 650 pany Limited vs The Municipal Council Bezwada, ILR 1941 Madras 897.
One of the questions there raised was whether in the absence of rules made by the State Government, the Municipal Council was entitled to determine the capital value of property in the face of a provision which stated, "Provided that such percentage or rates shall not exceed the maxima, if any, fixed by the Local Government and that the capital value of such lands shall be determined in such manner as may be prescribed." The High Court, in that case had observed, and we agree with what had been said, "We cannot accept the contention of the appellant that, merely because the Local Government has not prescribed the manner in which the capital value should be determined, the municipal council is deprived of the power of levying the tax under section 81(3) . the omission of the rule making authority to frame rules cannot take away the right of the municipal council to levy tax at the rate mentioned in the notification issued under clause 3.
If, for instance, the Local Government refrained from prescribing the manner in which the value of such lands should be determined, it cannot, we think, be said that the municipal council has no power at all to levy the tax at a percentage of the capital value merely because the method of determining the capital value has not been prescribed by the Local Government.
If the Local Government does not prescribe it, then the municipal authority is free in our opinion to fix it in any manner it chooses.
" We are of the view that the failure of the Government to specify the surplus which may be generated by the Board cannot prevent the Board from generating a surplus after meeting the expenses required to be met.
Perhaps, the quantum of surplus may not exceed what a prudent public service undertaking may be expected to generate with out sacrificing the interests it is expected to serve and without being obsessed by the pure profit motive of the private enterpreneur.
The Board may not allow its character as a public utility undertaking to be changed into that of a profit motivated private trading or manufacturing house.
Neither the tariffs nor the resulting surplus may reach such 651 heights as to lead to the inevitable conclusion that the Board has shed A its public utility character.
When that happens the Court may strike down the revision of tariffs as plainly arbitrary.
But not until then.
Not, merely because a surplus has been generated, a surplus which can by no means be said to be extravagant.
The court will then refrain from touching the tariffs.
After all, as has been said by this court often enough 'price fixation ' is neither the forte nor the function of the court.
The occasional excursions that have been made into that field were at the request and by the agreement of the parties.
This was made clear by a Constitution Bench of seven judges of this Court in Prag Ice and oil Mills vs Union of India; , where it was said, "It is customary in price fixation cases to cite the oft quoted decision in Premier Automobiles Ltd. & Anr.
vs Union of India which concerned the fixation of price of motor cars.
It is time that it was realized that the decision constitutes no precedent in matters of price fixation and was rendered for reasons peculiar to the particular case.
At page 535 of the Report Grover, J., who spoke for the , Court, stated at the outset of the judgment. "Counsel for all the parties and the learned Attorney General are agreed that irrespective of the technical or legal points that may be involved, we should base our judgment on examination of correct and rational principles and should direct deviation from the report of the Commission which was an expert t body presided over by a former judge of a High Court only when it is shown that there has been a departure from established principles or the conclusions of the Commission are shown to be demonstrably wrong or erroneous.
" By an agreement of parties the court was thus converted into a Tribunal for considering every minute detail relating to price fixation of motor cars.
Secondly, as regards the escalation clause the Court recorded at page 543 that it was not ,,, disputed on behalf of the Government and the Attorney General accepted the position, that a proper method should be devised for escalation or de escalation.
Thirdly, it is clear from page 544 of the Report that the Learned Attorney General also agreed that a reasonable return must be allowed to the manufacturers on their investment.
The decision thus proceeded partly on an agreement bet 652 ween the parties and partly on concessions made at the Bar.
That is the person why the judgment in Premier Auto mobiles (supra) cannot be treated as a precedent and can not afford any appreciable assistance in the decision of price fixation cases.
" The position was again clarified in Rohtas Industries vs Bihar State Electricity Board (supra): "As pointed out by this Court in Prag Ice & oil Mills and another vs Union of India, in the ultimate analysis, the mechanics of price fixation is necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of person, the processual basis of price fixation is to be accepted in the generality of cases as valid.
" On the question of appropriate pricing policy we may conveniently refer, at this juncture to what the Planning Commission had to say in the Seventh Five Year Plan.
At page 128 of Vol.
II in para 6.31 it was said, "6.31 The Sixth Plan had emphasised the need to give high priority to the evolution of a structure of energy prices which reflect true costs, curb excessive energy use and pro mote conservation of scarce fuels.
Except in the case of oil, timely adjustments have not been made in the prices of coal and electricity to reflect the real costs.
Energy pricing has not promoted, to the desired extent, inter fuel substitution.
Energy users have generally not adopted conservation measures already identified.
While action is being taken to L promote technologically energy efficient equipment and processes on the one hand, appropriate energy pricing policy would have to be followed, on the other hand, in order to induce economics in the use of energy in all sectors and encourage desired forms of inter fuel substitution, including renewable energy wherever viable.
The pricing of energy should not only reflect the true costs to the economy but also help to ensure the financial viability of the energy industries.
This is particularly relevant in respect of coal and power industry.
As we have said in the past, it is wrong to think that an adjustment in the prices of 653 a basic input like energy would aggrevate the inflationary A situation; the costs to the economy are not reduced by not reflecting them in proper pricing.
Indeed the continuance of wrong pricing policy has a far more deleterious effect on the health of the economy than is often realised.
The formulation of an integrated energy pricing structure on the above lines should receive the highest priority in the beginning of the Plan period.
" Turning back to sec.
59 and reading it along with sections 49, 67, 67A etc.
we notice that the Electricity Supply Act requires the Electricity Board to follow a particular method of accounting and it is on the basis of that method of accounting that the Board is required to gene rate a surplus.
Broadly, sec.
59 requires that a surplus should be left from the total revenues, in any year of account, after meeting all expenses properly chargeable to revenues.
It has to be remembered that apart from subventions which may be received from the State Government, which depend entirely on the bounty of the Government, the only revenues available to the Board are the charges leviable by it from consumers.
Bearing this in mind, we may now consider what expenses are properly chargeable to revenues under the Electricity Supply Act.
For this purpose, we may not be justified in having recourse to the principles of corporate accounting or the rules which determine what is revenue expenditure under the Indian Income tax Act.
It appears to us that the Electricity Supply Act prescribes its own special principles of accounting to be followed by the Board.
To begin with section 59(1) specifies 'operating maintenance and management expenses ' 'taxes (if any) on income and profits ', 'depreciation and interest payable on all debentures, bonds and loans ', as included in 'expenses properly chargeable to revenues '.
Section 59(2) further stipulates that in specifying the surplus, the Government shall have due regard to the availability of amounts accrued by way of depreciation and the liability for loan amortization.
It also stipulates that a reasonable sum to contribute towards the cost of capital works and a reasonable sum by way of return on the capital provided by the State Government should be left in the surplus.
This sub section, therefore makes it clear that the Board is to provide for (1) loan amortization (2) contribution towards the cost of capital works; (3) return on the capital.
We may now turn to section 67 which prescribes the priority to be observed by the Board in the matter of discharging the liabilities enumerated therein out of its revenues.
First the operating maintenance and management expenses have to be met, next provision has to be 654 made for payment of taxes on Income and Profits and thereafter various items of expenditure are mentioned in order of priority.
If any amount is left after the discharge of the liabilities enumerated in section 67 it is further provided that the balance shall be utilised for the other purposes specified in section 59 in such manner as the Board may decide.
Payment of interest is expressely mentioned among the liabilities to be discharged, as also repayment of principal of loans becoming due for payment in the year.
Clause (vi) of sub section (1) of sec.
67 makes it clear that repayment of principal of any loan guaranteed by the State Government will include loans which became due for payment in the year as well as loans which became due for payment in any previous year and had remained unpaid.
The submission strenuously urged on behalf of the consumers before the High Court and before us was that while interest which accrued during the year might be properly considered to be revenue expenditure, arrears of interest which accrued during the previous years and had not been paid could not be so considered.
We fail to see why that should be so.
Under the scheme of the Act principal amount falling due in any year has to be met from the revenue receipts of the year.
It is difficult to understand how any payment towards principal could be made or accepted.
If interest of previous years continued to be outstanding.
The very provision for repayment of capital necessarily implies payment of all interest accrued upto the date of repayment of the capital.
If as argued on behalf of the consumers arrears of interest cannot be paid from revenue receipts, how then may such arrears be paid? Not from the capital receipts.
What may be paid out of capital receipts and the circumstances under which the payment may be made are expressly provided in s.67(2) which says that if for any reason beyond the control of the Board the revenue receipts in any year are not adequate to meet the operating, maintenance and management expenses, taxes on income and profits, and the liabilities referred to in clauses (i) and (ii) of section 67(1), then the shortfall shall be paid out of its capital receipts with the sanction of the State Government.
We do not therefore, have any doubt that arrears of interest are, under the scheme of accounting contemplated by the Act, required to be paid out of revenue receipts of the Board and are expense properly chargeable to revenues within the meaning of that expression in section 59 of the Act.
The Legislature has presently clarified the position by the amending Act 16 of 1983 which came into force from April 1, 1985.
By this Act a separate section, section 67A has been introduced along with a consequential amendment of section 67 providing that interest on loans advanced under section 64 or deemed to have been advanced under section 60, which is charged to revenues in any 655 year may be paid out of revenue receipts of a year only after all other A expenses referred to in section 59(1) are met and further providing that so much of interest as is not paid in any year by reason of the priority mentioned in section 67A shall be deemed to be a deferred liability to be discharged in accordance with provision of section 67A in the subsequent year or years.
In our view these provisions show beyond doubt that payment of arrears of interest is an expense properly chargeable to the revenues under the scheme of the Act.
We may now assess the factual situation, Shri Abdul Khader, learned counsel for the Kerala State Electricity Board has placed before us statements containing details of interest payable in each year of accounting, the arrears of interest due and payable, the total revenue receipts and some other relevant particulars.
The statements have been prepared, taking the figures from the published annual accounts of the Kerala State Electricity Board.
In the year of account 1978 79, the total revenue receipts were Rs.8421.75 lakhs out of which the revenue earned by sale of energy to neighbouring States was Rs.2926.73 lakhs.
After meeting operation and maintenance expenses and depreciation the balance of revenue receipts was Rs.4161. 60 lakhs.
The amount of interest payable in the year of account was Rs.1946.37 lakhs.
The revenue surplus left after payment of interest in the year of account was therefore, Rs.2215.23 lakhs.
The arrears of interest accrued in previous years and not paid was Rs.4270.58 lakhs, since the revenue surplus available after meeting the current interest was Rs.2215.23 lakhs only there was a deficit of Rs.2055.35 lakhs.
In the year of account 1979 80 the total revenue receipts were Rs.9124.90 lakhs which included revenue of Rs.3856.15 lakhs from sale of energy to neighbouring States.
After meeting operation and maintenance expenses and depreciation the revenue surplus left was Rs.3253.94 lakhs.
The interest which became payable in the year of account was Rs.2107.85 lakhs and after meeting it, the revenue surplus left was Rs.l146.09 lakhs.
The old arrears of interest which could not be met fully in the previous year was Rs.2055.35 lakhs.
Thus in the year of account year 1979 80, there was a deficit of Rs.909.27 lakhs.
In the year of account 1980 81 the total revenue receipts were Rs.10,686.54 lakhs and this included a sum of Rs.4326.92 lakhs earned by sale of energy to neighbouring States.
After meeting the operation and maintenance expenses and depreciation the revenue surplus left was Rs.3615.90 lakhs and after meeting interest of Rs.2369.42 lakhs which had become payable in the year of account a revenue surplus of Rs.1246.48 lakhs was left.
The unpaid interest of previous years was Rs.909.27 lakhs 656 and after meeting it we find for the first time a net surplus of RS.337.21 lakhs.
In the year of account 1981 82 the total revenue receipts were RS.12,144.02 lakhs which included revenue of RS.4532.42 lakhs from sale of energy to neighbouring States.
After meeting operation and maintenance expenses and depreciation; there was a revenue surplus of RS.3183.77 lakhs.
The total interest payable in the year of account was RS.3105.15 lakhs, this left a revenue surplus of RS.78.62 lakhs and since there was no arrears of interest what was payable the net revenue surplus was 78.62 lakhs.
In the year of account 1982 83 the total revenue receipts were RS.11,228.40 lakhs which included revenue of RS.1948.63 lakhs from sale of energy to neighbouring States.
After meeting operation and maintenance expenses and depreciation the revenue surplus left was RS.2810.60 lakhs.
The interest which was payable in the year of account was RS.3187.62 lakhs and thus left a net revenue deficit of RS.376.76 lakhs.
In the year of account 1983 84, the total revenue receipts were RS.10,518.35 lakhs including revenue of RS.175.76 lakhs from sale of energy to neighbouring States.
The revenue surplus after meeting operation maintenance expenses and depreciation was RS.2246.30 lakhs.
The amount of interest which had become payable was RS.3426.53 lakhs, the arrears of interest was RS.376.76 lakhs leaving a total deficit of RS.1556.99 lakhs.
We may mention here that the annual account for the year 1978 79 to 1983 84 have been certified by the Accountant General and the annual accounts for the year 1984 85 are awaiting certification.
The accounts awaiting certification show that in the year of account 1984 85, the revenue receipts after meeting operation and maintenance expenses and depreciation were 4692.92 lakhs, while the interest which had become payable during the year was RS.3719 and the interest of the previous year Rs. 1556.99 lakhs this left a deficit of RS.584.OO lakhs.
The revised estimates for the year 1985 86 show a revenue surplus of RS.5567.00 lakhs after meeting operation and maintenance expenses and depreciation.
The interest payable during the year was RS.4574.80 lakhs and the interest of previous year was RS.584 lakhs.
The left a surplus of RS.409.00 lakhs.
These figures show that 1978 79,1979 80, 1980 81 & 1981 82 were extraordinary years when there was a boom in the sale of energy to neighbouring States consequent on the conditions prevailing there.
In those years also it would be seen from the accounts that but for the boom in the sale of energy to neighbouring States there would have been a serious deficit in every one of those years.
It is clear that the Electricity Board has not been earning huge profits and generating large surpluses, as suggested by the consumers.
Once we arrive at this position that there is hardly any revenue surplus left after 657 meeting the expenses required to be met by section 59, the complaint of the A consumers that there was no justification for the tariff increase because of large surpluses earned by the Board loses all force.
We have examined the two reports of the Tariff Committees of the years 1980 and 1982 and the revised tariffs based on those reports in the light of the legal and factual position explained by us.
Before the 1980 revision, the prevailing rates were, Extra High Tension: 8.81 ps per unit, High Tension Industrial: 14.98 ps per unit, Low Tension Domestic: 38 ps per unit, Low Tension Industrial: 14.15 ps per unit, Low Tension Commercial: 38 ps per unit, Low Tension Agricultural 14.15 ps per unit, Low Tension Commercial worked out the cost per unit at 10.9, 18.6, 57.5, 43.5, 56.5 and 53.5 ps per unit respectively in that order, but recommended, in the same order, 11.55, 21.4, 38,27.5, 74 and 18 ps per unit respectively.
However, the actual tariff rates as introduced in 1980 were l0.8, 18.24, 38, 24.5, 66 and 15 ps per unit.
The 1982 Tariff Committee recommended rates of 24.5, 37.3, 47.5, 48, 55 70 and 34 ps per unit.
The actual tariff introduced in 1982 was 17.65, 27.24, 42.5, 24.5, 50 70 and 15 ps per unit.
We notice that in the case of Low Tension Domestic and Agricultural consumers, the change is minimal.
In the case of Extra High Tension and High Tension Industrial Consumers, the change effected by the 1980 revision was minimal but on the higher side in 1982.
In the case of Low Tension Industrial and Commercial Consumers, the change effected in 1980 was very steep but tended to come down in 1982.
On the whole, it cannot possibly be said that the rates have been so fixed by the Electricity Board as to throw a heavy burden on any section of the consumers without regard to their ability to pay without regard to the nature of the supply and purpose for which the supply is required.
Now do we find that the principle of uniformity of tariffs has in any way been l: sacrificed.
But, as we mentioned a little earlier the Low Tension Industrial and Commercial Tariff was subjected to a very steep rise in 1980 and brought down again in 1982 apparently in recognition of the fact that the raise had been too steep in regard to them in 1980.
In the case of Low Tension Industrial Consumers, the tariff was increased from 14.5 ps per unit to 24.5 ps per unit in 1980 and maintained at the rate of 24.5 ps per unit in 1982.
In the case of Low Tension Commercial Consumers, the tariff was increased from 38 ps per unit to 66 ps per unit in 1980 but brought down again considerably in 1982 to 50.70 ps per unit.
The very circumstance that the tariff was either brought down or maintained at the same level in 1982 when compared with the 1980 tariff appears to be an indication that the increase in 1980 was 658 thought by the Board itself to be rather steep.
We have already noticed that 1980 81 and 1981 82 were the years when the accounts of the Electricity Board recorded a net surplus after meeting all expenses including interest charges.
In the circumstances, we think that it is desirable that the Board may re consider the 1980 tariff for Low Tension Commercial and Low Tension Industrial Consumers.
Shri Potti submitted that the 1980 Committee took place consideration the anticipated augmentation of the generating capacity from the proposed new power stations of Idukki, Saharigiri and Idamalyar, whereas these projects were not commissioned till 1984 and thus the cost structure arrived at by the Committee was vitiated.
We do not think so.
From the figures supplied to us we find that notwithstanding the failure to commission the new projects, there was no shortfall in the production of energy.
A large part of expenditure involved in the setting up of the new projects had to be met in the several years preceding the actual commissioning of the projects.
Therefore, it is not correct to say that the cost structure arrived at by the Committee was in any way affected by the non commissioning of the new projects between 1980 and 1982.
Another submission made by Shri Potti was that the Committee erred in not taking into account the financial position of the Board as brought out by the year 1978 79 which showed that the Board had already turned the corner and that there was therefore no need for enhancing the rates.
This submission is again without substance.
As we mentioned earlier, the rise in revenue receipts in the year 1978 79 due to the unprecedented sale of energy to neighbouring states, a special situation which was the result of peculiar circumstances which prevailed that year and continued to prevail for a few years thereafter.
The sale of energy to neighbouring States was not to l be taken as a permanent phenomenon to every year.
Yet another submission of Shri Potti was that the 1980 Committee having taken as the basis the 1982 projected cost so as to maintain price stability for a period of five years, it was not proper to revise the tariff again in 1982 But we find that the actual cost of producing energy in 1981 82 and 1982 83 had risen much above the projected 1982 cost and therefore the 1982 Committee has no option but to again consider further revision of the tariff.
We are not delving into more details as we are satisfied that it is not within our province to examine the price structure in minute detail if we are satisfied that the revision of tariff is not arbitrary and is not the result of the application of any wrong principle.
Relying upon the observation, "It would have been manifestly unjust and discriminatory that one consumer should benefit at 659 the cost of other consumers or general tax payers;" made in D.C.M. vs Rajasthan State Electricity Board, [1986]2 SCC 431 it was argued by Shri Potti that it was not open to the Board to give favoured treatment to Low Tension Domestic and Agricultural Consumers at the cost of the rest of the consumers.
We do not find any force in this submission.
Section 49 (3) expressly reserves the power of the Board, if it considers it necessary or expedient, to fix different tariff for the supply of electricity to any person having regard to the geographical l,, position of any area, the nature of the supply and purpose for which supply is required and other relevant factor.
Different tariffs for High and Low Tension Consumers and for different classes of consumers, such as, Industrial, Commercial, Agricultural and Domestic have been prescribed and the differention appears to us to be reasonable and far from arbitrary and to be based on intelligent and intelligible criteria.
In the result, we allow the appeals filed by the Kerala State Electricity Board, set aside the judgments of the High Court, uphold the validity of the notifications revising the tariffs and dismiss the writ petitions filed in the High Court, subject to direction that the Kerala State Electricity Board will reconsider the revised tariff introduced in 1980 in regard to Low Tension Industrial and Low Tension Commercial Consumers only, with liberty to fix separate rates, if necessary for the years 1980 and 1981.
This direction will not affect the 1982 and 1984 tariff revisions.
There will be no order regarding costs.
A.P.J. Appeals allowed.
| The petitioner filed the present petition under Article 32 of the Constitution for release of children below the age of 16 years detained in jails within different States of the country, production of complete information of children in jails and existence of juvenile Courts, homes and schools in the country.
The petitioner also asked for a direction to the State Legal Aid Boards to appoint duty counsel to ensure availability of legal protection for children as and when they are involved in criminal cases.
The Supreme Court while directing the State Legal Aid and Advice Board in each State or any other Legal Aid organisation existing in the State concerned, to send two lawyers to each jail within the State once a week for the purpose of providing legal assistance to children below the age of 16 years who are confined in the jails, called for information from the District Judges about the children below the age of 16 years detained in various jails.
However several District Judges did not comply with the direction within the time granted.
While showing concern and surprise that a direction given by the apex Court has not been properly carried out by the District Judges who are an effective instrumentality in the hierarchy of the judicial system, the Court, 444 ^ HELD: (1) Every defaulting District Judge who had not submit ted his report shall unfailingly comply with the direction and furnish the report by August 31, 1986 through his High Court, and the Registrar of every High Court shall ensure that compliance of the present direction is made.
It is surprising that the High Courts have remained aloof and indifferent and have never endeavored to ensure submission of the reports by the District Judges within the time indicated in the order of this Court.
[447G H] (2)(I) Enough the Children 's Acts are on the statute book, in some States the Act has not been brought into force.
This piece of legislation is for the fulfilment of a constitutional obligation and is a beneficial statute.
There is hardly any justification for not enforcing the statute.
Ordinarily it is a matter for the State Government to decide as to when a particular statute should be brought into force but in the present setting, it is appropriate that without delay every State should ensure that the Act is brought into force and administered in accordance with the provisions contained therein.
[448B E] (2)(II) Such of the States where the Act exists but has not been brought into force should indicate by filing a proper affidavit as to why the Act is not being brought into force in case the Act is still not in force.
[448E] (3)(I) The safeguards which are provided in Jail Manuals prevalent in different States should be strictly complied with and the prisoners should have the full benefit of the provisions contained in the Manual.
It is also the obligation of the High Court to ensure that all persons in judicial custody within its jurisdiction are assured of acceptable living conditions.
[448F; 449A] (3)(II) Every District and Session Judge should visit the district jail at least once in two months, and in the course of his visit, he should take particular care about child prisoners, both convicts and under trials and as and when he sees any infraction in regard to the children in the prison he should draw the attention of the Administration as also of his High Court.
[448G H]
|
Civil Appeal No. 853 of 1981.
Appeal by special leave from the judgment and order dated 4.11.1980 of the Madhya Pradesh High Court in Case Misc.
Petition No. 167 of 1980.
Shiv Dayal, P.S. Das Gupta and J.B. Dadachanji for the Appellant.
Gopal Subramaniam and S.A. Shroff for the Respondents.
The Judgment of the Court was delivered by VARADARAJAN, J.
This appeal by special leave is directed against the judgment of K.K. Dube, J. of the Madhya Pradesh High Court in Writ Petition No. 167 of 1980, with whom the learned Chief Justice of that High Court had agreed on a difference of opinion between the learned Judge and A. R. Navkar, J.
The petition filed under Article 226 of the Constitution was for the issue of a writ, order or direction for the writ petitioner 's admission into one of the medical colleges in Madhya Pradesh for the M.B.B.S. course, commencing in the academic year 1979 80.
After hearing the learned counsel for the parties we allowed the appeal by a brief order on 14.1.1982 without any order as to costs, on account of the urgency of the matter, reserving our reasons to be given later, and directed the respondents to admit the appellant to the M.B.B.S course for the academic year 1981 82 for which admissions are admittedly going on even now.
We are presently giving reasons.
The Government of Madhya Pradesh, Public Health and Family Welfare Department, have framed Rules on 17.4.1979 for 188 admission into the Medical, Dentistry and Ayurvedic Colleges in the State.
In this appeal we are not concerned with the Dentistry and Ayurvedic Colleges.
There are six Medical Colleges in the State of Madhya Pradesh affiliated to different universities.
There are 720 seats for admission into the first year course in those six colleges.
Rule 5(1) of the aforesaid Rules, hereinafter refer to as the Rules, lays down that no candidate shall be admitted to the M.B.B.S. course unless he has passed the B.Sc.
Part I (three years degree course Medical Group) examination of the recognised universities of the State with Physics, Chemistry, Biology (Zoology and Botany) or any examination of any other university or board recognised as equivalent thereto with practical tests in each subject provided the candidate has passed in each of those subjects in theory and practical separately.
Under rule 6 of the Rules no candidate shall be admitted to the medical college unless he completes the age of 17 years on the 31st December of the year of admission to the college.
Rule 1(3) provides for the pre medical examination being held every year for selection of candidates for admission to the medical colleges in the State and says that all admissions to those colleges have to be made only from the merit list prepared on the basis of the result of that examination except in the case of seats placed at the disposal of the Government of India or other States.
Under Rule 7 certain number of seats have to be reserved for specific categories of candidates passing the pre medical examination as below : 1.
Fifteen percent shall be reserved for women candidates; 2.
Fifteen percent shall be reserved for each of the categories of Scheduled Caste and Scheduled Tribes candidates; 3.
Seats not exceeding 3 percent may be reserved for children of military personnel who have to produce the necessary certificates.
Apart from those reservations, under Rule 8 seats not exceeding 3 per cent are reserved for nominees of the Government of India and three seats are reserved for candidates nominated by the Government of Jammu and Kashmir in consideration of three seats reserved in the medical colleges in that State for candidates of the State of Madhya Pradesh.
189 Under Rule 20, selection of candidates from amongst those who had appeared and qualified in the written examination shall be made strictly on merit as disclosed by the total number of marks obtained by a candidate in the pre medical examination.
The qualifying marks for admission shall be 50 per cent in the aggregate and 33 percent in each of the subjects.
For Scheduled Castes and Scheduled Tribes candidates the minimum qualifying marks shall be 45 per cent in aggregate and 30 per cent in each of the subject.
In case the required number of candidate for admission are not available according to the above percentage of qualifying marks the Board conducting the pre medical examination under Rule 2 shall have power to lower the marks up to S per cent in the aggregate for all categories of candidates.
If even with the relaxation granted by the Board, as above, required number of candidates in the categories of Scheduled Castes and Scheduled Tribes are not available for admission the Government has power to grant special relaxation in the maximum qualifying marks to the extent considered necessary.
Under Rule 9, in case sufficient number of candidates do not qualify for admission under any reserved category and any seats remain vacant, such vacant seals shall be fined by preparing a combined merit list of all the remaining categories of candidates on the waiting list and the candidates shall be admitted according to merit in the list so prepared.
It is not necessary to refer to any of the other rules for the purpose of this appeal.
Indisputably, the appellant belongs to the third category of seats reserved under Rule 7 as he is a son of a military personnel settled in Madhya Pradesh.
Sons and daughters of military personnel of Madhya Pradesh are entitled to 21 seats in all out of 720 seats available in the six medical colleges in the State.
As per the minimum number of qualifying marks prescribed in Rule 20, namely, 50 per cent in the aggregate and 33 per cent in each of the subjects, children of military personnel secured only 8 seats, and 13 seats in that category remained vacant and all other categories secured only 361 seats and 338 seats of those categories remained vacant.
The appellant did not qualify for admission on the basis of the marks specified in Rule 20 for the academic year 1979 80.
Then the Board applied Note (1) to Rule 20 which provides for lowering the minimum qualifying marks upto 5 per cent in the aggregate for all categories of candidates.
After that was done 6 more candidates 190 belonging to the category of sons and daughters of military personnel and 274 more candidates belonging to all other categories secured admission and 7 seats belonging to the category of children of military personnel and 64 seats of all other categories remained vacant.
Even then the appellant could not secure admission as he had secured only 43.6 per cent of marks in the aggregate and 33 per cent in each of the subjects in the pre medical examination and in the merit list prepared according to rule 9 he ranked 74 and only 71 candidates in that list could be admitted on the basis of merit.
Then the Madhya Pradesh Government issued an executive notification dated 10 March, 1980 regarding relaxation of qualifying marks for the purpose of admission to the medical colleges.
That notification is to the effect that for the year 1979 80 candidates who have obtained at least 43 per cent of marks in the aggregate in the pre medical examination shall be admitted to the medical colleges in the unfilled seats on the basis of merit according to the rules.
ordinarily, the appellant who had secured 43.6 per cent of marks in the aggregate in the pre medical examination and another candidate in the category of children of military personnel should have got admission after the lowering of the minimum qualifying marks to 43 per cent in the aggregate, leaving 5 seats in that category still vacant.
But Rule 9 was applied and a combined list of all the remaining categories on the waiting list was prepared and the candidates were admitted according to merit in the list so prepared and consequently the appellant who belongs to the category of children of military personnel and had secured 43.6 percent of marks in the aggregate in the pre medical examination could not secure admission.
These facts are not in dispute.
The appellant filed a writ petition for the aforesaid relief contending that as minimum qualifying marks have been reduced by the Notification dated 10 3.1980 to 43 percent in the aggregate and as he had secured 43.6 percent marks he should have been given admission in the category to which he belongs.
The writ petition was at first heard by K. K. Dube and A.R. Navkar, JJ.
A.R. Navkar, J, who decided in favour of the appellant, had observed in his judgment thus: "The reduction of percentage of marks for admission by the Government on 10.3.1980 (Annexure II) clearly shows that the candidates who got 43 per cent of marks 191 will be eligible for admission.
There is no dispute that the petitioner got 43.6 per cent of marks in the pre medical examination.
Therefore, applying this order of reduction of qualifying marks (Annexure II), I am of the opinion that the right of the petitioner for admission in the medical college cannot be defeated by resorting to Rule 9 of the Rules.
As mentioned above, Rule 9 of the Rules, in my opinion, is a mandatory one.
It says, if any seats remain vacant, such vacant seats shall be filled in by preparing a combined merit list of all the remaining categories of candidates on waiting list.
This was not done when the percentage of marks for admission was reduced from 50 per cent to 45 per cent for all categories.
Therefore, in my opinion, it cannot be done to defeat the right of the petitioner. `I am of the opinion that the present petitioner cannot be denied his right of admission to the medical college if he is otherwise eligible to get admission.
Denial of admission to him by purporting to act on the strength of Rule 9 of the Rules, in my opinion, will not be justified and will amount to denial to him the protection given to him by Article 14 of the Constitution.
The result, therefore, is that the petition deserves to be allowed. " But K.K. Dube, J. who took the opposite view has, after extracting notification dated 10.3.1980, observed in his judgment thus : "The reduced qualifying marks limit is only for filling up the vacant seats and the notification does not seek to amend Rule 20 or substitute 43 per cent for 50 per cent marks in the aggregate as minimum qualifying marks limit laid down under Rule 20.
Indeed, the notification does not state that the reduced qualifying marks limit is in substitution of the one provided in Rule 20.
That being the position, Rule 9 would necessarily operate, and it is for selecting from amongst the candidates for the number of seats remaining vacant by operation of Rule 9.
The petitioner 's contention would have some substance if Rule 9 was not there.
The effect of Rule 9 is to wipe out the reservation for admission to any of the reserved categories.
The main idea is that the best candidates be given admission to the medical colleges.
The reservation is for the purpose of securing a concession and must operate in a like manner 192 as provided in the Rules.
The reservation is not absolute, and, therefore, when the minimum qualifying marks were reduced to 43 per cent it was only for filling up the vacant seats as obtained by operation of Rule 9 of the Rules, according to the merit in the combined merit list.
We are unable to agree with the contention that the reduction in the eligibility to 43 per cent in the Government notification dated March 10, 1980 could be availed of by the petitioner and other similar candidates for filling up the 7 vacant seats in the reserved quota of the children of military personnel".
The learned Chief Justice before whom the matter came up on account of the difference of opinion between the two learned Judges who originally heard the writ petition, as mentioned above, while agreeing with K.K. Dube, J, has observed in his judgment thus : "When even on reduction of qualifying marks under Note (i) the required number of candidates do not qualify for admission under any reserved category and seats remain vacant, Rule 9 begins to apply and as directed by that Rule "such vacant seats shall be filled in by preparing a combined merit list of all the remaining categories of candidates in the waiting list and the candidates shall be admitted according to the merit in the list so prepared".
At this stage there is no further scope for reservation.
In other words, the reservation comes to an end after the required number of candidates in a reserved category do not become available on reduction of qualifying marks in the aggregate by the Board in exercise of its power under Note (i) to Rule 20.
It is generally expected that there would be a long waiting list of qualified candidates in the general category who would be available for filling in the seats transferred from a reserve category to general category.
In 1979, however, it so happened that there were vacancies in the general category, that is, there were not sufficient number of qualified candidates who could have exhausted the general category under Rule 9.
It is at this stage that the Government issued the order dated 10th March, 1980.
It is in the interpretation and application of this order that difference of opinion has arisen.
The 193 Order has not been issued under the Rules.
It is an independent order.
The order does not expressly refer to any reservation.
The order directs selection of candidates for vacant seats on the basis of merit from those who had secured aggregate marks up to 43 per cent.
The order was passed at a stage when the reserved categories had come to an end under Rule 20 read with Rule 9 as sufficient number of candidates were not available.
In my opinion, therefore, Dube, J. was right in holding that the order dated 10th March, 1980 did not bring back the reservation and selection had to be made on the basis of a combined merit list for all the vacant seats irrespective of whether they originally belong to any reserved category. .
There is yet another important factor to be taken notice of.
Not only the vacancies in the reserved category of children of military personnel but there were also vacancies in the category of women to be filled in on the basis of a combined merit list and no reservation was at all allowed in working out the order of 10th March, 1980.
The way in which this order was applied by the Board had apparently the approval of the Government and no other candidate excepting the petitioner has come forward to challenge its application.
As already pointed out, the order is not a statutory order.
It is an order passed by the State Government in the exercise of its executive power.
The Government 's approval of the manner in which the Board has applied the order goes to show that that was the intention of the Government in passing the order.
Although the approval of the Government of a particular mode of application of an order is not decisive of its meaning and it is for the Court to decide the correct meaning, still when the meaning of an order which is purely executive is in doubt the way in which it has been applied by all concerned is a relevant factor to be taken into account in deciding its true meaning.
The uniform application of the order by the Board with apparent approval of the Government for filling in all the vacant seats, goes a long way to show that the Government intended that the order should be applied by preparing a common merit list without continuing the reservations.
In these circumstances, even if the interpretation put forward by the learned counsel for 194 the petitioner and accepted by Navkar, J. can be accepted as a possible interpretation of the order, it would not be right for me to hold that it conveys the true meaning" We are inclined to agree with the conclusion reached by A.R. Navkar, J., though for different reasons.
The matter is simple.
Under Rule 20, the minimum number of marks prescribed for admission into the Medical Colleges in the State is 50 per cent in the aggregate and 33 per cent in each of the subjects.
On that basis, out of the total of 720 seats available in all the six medical colleges in the State only 8 out of 21 of the category of sons and daughters of military personnel, and only 361 out of 699 available for all other categories could be and were admitted in the academic year 1979 80.
Rule 9, which has been relied upon by the respondents as well as by K. K. Dube, J. and the Chief Justice says that in case sufficient number of candidates do not qualify for admission under any reserved category, barring, of course, the category of Scheduled Castes and Scheduled Tribes candidates, and any seats remain vacant, such vacant seats shall be filled by preparing a combined merit list of all the remaining categories of candidates on the waiting list and the candidates shall be admitted according to merit in the list so prepared.
But that Rule was not applied by the respondents and could not be applied under the circumstances of the case when 338 seats in all other categories and 13 seats of the category of sons and daughters of military personnel could not be filled in 1979 80 on the basis of the said minimum number of qualifying marks, namely, 50 per cent in the aggregate and 33 per cent in each of the subjects.
Then Note (1) to Rule 20 providing for lowering of the qualifying marks upto 5 per cent in the aggregate for all categories was applied.
Even then 64 seats of all other categories and 7 seats of the category of sons and daughters of military personnel could not be filled and remained vacant.
Then the Government by an executive order issued the notification dated 10th March, 1980 reducing the minimum qualifying marks to 43 per cent in the aggregate, and it is only at this stage Rule 9 was applied with the result that in the category of sons and daughters of military personnel only 2 more candidates could secure admission and 7 seats of that category had to be filled by other categories.
We are of the opinion that since the minimum qualifying marks were reduced to 43 per cent by an executive order without any provision therefor in the statutory rules, Rule 9 of the statutory rules could not be applied at that stage, and that the appellant who had secured 195 43.6 per cent of marks in the aggregate should have been admitted in the category to which he belongs.
We think that the difference between 45 per cent in the aggregate, to which the minimum qualifying marks were reduced under Note (1) to Rule 20 and 43.6 per cent of marks in the aggregate secured by the appellant is so little that it could not be a valid or sufficient reason for giving a go bye, on the ground of merit, to the reservation provided for in Rule 7 of the Rules.
The appellant deserves to be admitted even for this reason.
In these circumstances we are unable to agree with the view taken by K.K. Dube, J. and the Chief Justice, and we agree with the conclusion reached by A.R. Navkar, J.
The appeal is accordingly allowed without any order as to costs.
As already directed the appellant shall be admitted to the M.B.B.S. course for the academic year 1981 82 in the category mentioned in Rule 7 (3) (c) of the Rules.
S.R. Appeal allowed.
| The prosecution case against the appellant was that on the night of occurrence between 11 and 11.30 the informer and two of his friends were standing on a road when suddenly the three accused emerged out of the car and the appellant assaulted and stabbed the injured person with a dagger.
The prosecution alleged that there was enemity between the assailants and the injured person; that the informer lodged a F.I.R. at 00.50 hrs.
and that the injured man was picked up by a Police Wireless Van and admitted in the hospital.
The trial court convicted the accused under section 326/34 I.P.C. and sentenced them variously.
The High Court acquitted two of the three accused.
In regard to the appellant, disbelieving the evidence of the doctor on the ground that the name of the assailant was first written by her as "Tony" but later changed to read as "Tiny" and that secondly there was no particular column in the register where the name of the assailant could be written, the High Court altered the conviction to one under section 326 I.P.C. and sentenced him to rigorous imprisonment for three years.
On appeal to this Court it was contended on behalf of the appellant that (1) the F.I.R. was not lodged at 00.50 hrs.
as claimed by the prosecution; (2) the injured did not know the appellant before the occurrence; (3) the version of the injured that the name of the assailant was disclosed to him by a friend of the informer should not be accepted and (4) the discrepancy in the name of the assailant recorded by the doctor was not such as to completely discredit her evidence.
Allowing the appeal, ^ HELD: (a) The change of name "Tony" into "Tiny" in the hospital register might be due to mis hearing of the name in the first instance and correcting it later.
Much could not be made of this circumstance.
The doctor had initialled the alteration.
The prosecution has not made any attempt to declare 278 the doctor a hostile witness and to cross examine her.
Therefore the change in the name could be a bona fide mistake.
That apart, the injured was fully conscious at the time he made the statement to the doctor.
[282 A C] (b) The High Court was in error in stating that there was no particular column in the hospital register in which the name of the assailant could be mentioned.
The entire part of the register where the statement had been recorded by the doctor is described as the "Registrar 's note" which comprehends everything including the nature of injuries to the injured, any statement made by him or similar other matters.
[281 E F] (c) There is no evidence on record to show that the doctor was in any way friendly with the appellant or inimical towards the injured man; she was an absolutely disinterested and independent witness.
[281 G] 2 (a) The High Court had erred in holding that the doctor 's evidence was inadmissible in that the provisions of section 145 of the Evidence Act had not been complied with.
[282 F] (b) Section 145 applies only to cases where the same person makes two contradictory statements either in different proceedings or in two different stages of a proceeding.
If the maker of a statement is sought to be contradicted, his attention should be drawn to his previous statements under section 145, that is to say, where the statements made by a person or a witness is contradicted not by his own statement but by the statement of another prosecution witness the question of application of section 145 does not arise.
[283 A C] (c) The doctor 's statement was an admission of a prosecution witness.
If it was inconsistent with the statement made by another prosecution witness there was no question of application of section 145 of the Evidence Act.
[283 C] In the instant case the statement of the injured to the doctor being first in point of time it must be preferred to any subsequent statement made by the injured.
There is much evidence to show that the injured did not know the appellant before the date of the incident.
No test identification parade had been held.
The appellant was shown by the police before he identified him.
If the accused was not known to the injured and his friends before the incident and was identified for the first time in the court, this evidence has no value and cannot be relied upon in the absence of a test identification parade.
[285 E,C,F] V.C. Shukla vs State (Delhi Administration), ; and Sahdeo Gosain & Anr.
vs The King Emperor , referred to.
|
Appeal No. 481 of 1958.
Appeal by special leave from the Award dated June 29, 1957, of the State Industrial, Tribunal U.P. Allahabad, in Ref.
No. 98 of 1956.
M.C. Setalvad, Attorney General for India, section N. Andley, J. B. Dadachanji, Rameshuar Nath and P. L. Vohra, for the, appellants.
A. D. Mathur, for respondent No. 1.
G. C. Mathur and C. P. Lat, for respondent No. 2.
G. N. Dikshit and C. P. Lal, for the intervener.
March, 8.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave against the order of the Industrial Tribunal, Allahabad.
The appellant is the U. P. Electric Supply Co. Ltd., Lucknow, (hereinafter called the company).
It appears that the company used to employ Messrs. s M. Choudhary (hereinafter referred to as the contractors) as its contractors for doing certain work for it.
The contractors in their turn used to employ a number of persons to carry out the work which they had taken on contract.
A dispute arose between the contractors and their workmen in 1956 and an application was made on June 6, 1956, by the workmen before the conciliation board.
To this application both the company as well as the contractors were parties and four matters were referred by the workmen to the conciliation board, namely, (i) non grant of bonus for the years 1953 54 and 1954 55; (ii) nongrant of festival holidays; (iii) non fixation of minimum wages of these workmen at par with the 191 workmen employed by the company; and (iv) nonabolition of the contract system.
Efforts at conciliation failed and thereupon the Government of Uttar Pradesh made a reference to the Industrial Tribunal under the U. P. Industrial Disputes Act, No. XXVIII of 1947, (hereinafter called the Act).
In this reference only three points were referred out of the four which were before the conciliation board, namely, those relating to bonus, festival holidays and payment of wages to these workmen at par with the workmen of the company.
The fourth point which was raised before the conciliation board (namely, non abolition of the contract system) was not referred.
The parties to this reference were two, namely (i) the contractors and (ii) their workmen.
The appellant was not a party to this reference.
On August 13, 1956, another notification was issued by the U. P. Government under sections 3, 5 and 8 of the Act by which the company was impleaded as a party to the dispute referred by the notification of July 31, 1956.
It is remarkable, however, that the matters of dispute which were specified in the reference dated July 31, 1956, were not amended as they could have been under the proviso to section 4 of the Act, by adding the fourth point 'of dispute before the conciliation board, namely, the non abolition of the contract system.
When the matter came up before the industrial court it framed a number of issues; and the first and most important issue ran thus: "Are the workmen concerned employees of the U. P. Electric Supply Co. Ltd., Lucknow or of Messrs. section M. Chaudhary, contractors ? " The main objection of the company was that the dispute, if any was between the contractors and their employees and that there was no dispute between the company and its workmen.
It was further objected that there was no valid or legal order of the Government referring any dispute between the company and its workmen to the tribunal and therefore the tribunal had no jurisdiction.
On the merits it was urged that the workmen concerned were not the workmen of the company and there was no relationship of employer and employee between the company and these workmen and therefore the company could not be regarded 192 as a party to the dispute between the contractors and their workmen.
It is therefore clear that the main question which was considered by the tribunal was whether the workmen concerned were the workmen of the company or of the contractors.
As the tribunal itself says, " the crux of the whole case was whether the workmen concerned were the employees of the company ".
The tribunal went into the evidence in this connection and came to the conclusion that these workmen were in fact and in reality the employees of the company.
The main contention on behalf of the company before us is that even assuming that the Government had power under section 5 read with cl. 12 of G. O. No. U 464 (LL)XXXVI B 257(LL)/1954, dated July 14, 1954, to implied the company as a party, the main issue decided by the tribunal was not referred to it and the tribunal could only decide the three matters of dispute included in the order of reference of July 31, 1956.
Therefore, in so far as the tribunal went beyond the, three matters of dispute specified in the reference and decided the question whether the workmen concerned were in the employ of the company or of the contractors it was acting without jurisdiction as this matter was never referred to it.
We are of opinion that this contention must prevail.
As we have already pointed out, there were four matters before the conciliation board including the question of non abolition of the contract system.
Further before the conciliation board not only the contractors but the company was also a party, for obviously the question of non abolition of the contract system would necessitate the presence of the company as a party to the proceedings.
When however the Government referred the dispute to the tribunal on July 31, it did not include the fourth item which was before the conciliation board relating to the non abolition of the contract system among the matters in dispute.
It also did not include the company as one of the parties to the dispute, for the reference order refers only to two parties to the dispute, namely, the contractors and their workmen.
On such a reference there could be no jurisdiction in 193 the tribunal to decide the question whether these workmen were the workmen of the company or of the contractors, for such a question was not referred to the tribunal.
It is true that on August 13, 1956, the company was impleaded as a party to the dispute referred by the notification of July 31 ; but the matters in dispute remained unmended, and the question of non abolition of the contract system or the question whether these workmen were the employees of the company in fact and in reality was not included in the matters of dispute by amendment under the proviso to section 4 of the Act.
In these circumstances it is immaterial to consider whether the impleading of the company as a party on August 13, 1956, was legal and valid or not.
Assuming that it was legal and valid, the fact remains that issue No. 1 set out above by us which is undoubtedly the crux of the question in this case was not referred to the tribunal at all and did not arise out of the three matters of dispute specified in the reference order of July 31, 1956.
In these circumstances the order of the tribunal by which it held that these workmen were the workmen of the company was beyond its jurisdiction.
The entire order of the tribunal is directed against the company and must therefore be set aside in whole as without jurisdiction and we need not express any opinion on the merits.
We therefore allow the appeal and set aside the order of the tribunal against the appellant.
In the circumstances we pass no order as to costs.
Appeal allowed.
| The unskilled seasonal workmen of the Bihar Sugar Industry, bulk of whom belonged to the landless labourer class, who ceased to have any contractual relation with the employers once the 990 season was over and on the commencement of the next season might or might not rejoin their employment) raised disputes over the question whether retaining allowances should be paid to them during the off season.
The Labour Appellate Tribunal inter alia awarded a retaining allowance to unskilled workmen, at a rate of 5% of the basic wage for the period of the off season to be paid every year at the beginning of the season, when they reported for duty.
The main contentions on behalf of the employer were that.
agriculture was the primary occupation of these persons and the employment in the Sugar Factory Was merely a subsidiary occupation, that claim for retaining allowance was really in the nature of unemployment relief which it was the duty of the State and not the industry to give, that the relationship of employer and employee did not exist in the off season and so no payment of anything in the character of wages could possibly be claimed by the labour.
Held, that the relief of unemployment by arranging suitable alternative employment or an alleviation of the distress of employment insurance benefits or by other modes though is primarily the function of the Government of the country, yet the industry where these workmen are seasonally employed cannot look unconcerned and play no part in alleviating the distress of the people who have contributed to the prosperity of the industry by their labour though only for a part of the year.
In deciding whether the principle of social justice which it is the aim of industrial adjudication to apply to justify the payment of retaining allowance to unskilled workmen in these sugar industries it is necessary to take into account.
(a) opportunities of alternative employment in the off season that will be available to such workmen; (b) the degree in which such workmen can be said to have become attached to the particular factory where they work; (c) the likely benefit to the industry if such workmen are induced to return to the factory by the incentive of retaining allowance to be paid when the season commences; (d) the capacity of the industry to bear the burden of retaining allowance.
Held, further, that for alleviating the distress of unskilled workmen in these Sugar Factories, a much better course will be to raise the wage structure with an eye to this fact that for a part of the off season at least when they remain unemployed than to pay retaining allowance for the entire off season.
In the instant case the interests of both the employers and labour will be best served if the question of raising their wages in view of the seasonal nature of their employment be raised before the wage board which has been entrusted with the task of fixing the wages of the workmen concerned in the present dispute, which will be considered sympathetically, specially as the employers have recognised the reasonableness of the claim, 991
|
Civil Appeal No. 2520 of 1980.
Appeal by Special Leave from the Judgment and order dated 3 12 1979 of the Allahabad High Court in Civil Misc.
Writ No, NIL of 1979.
Yogeshwar Prasad and Mrs. Rani Chhabra for the Appellants.
O. P. Rana and P. K. Pillai for the Respondents, The Judgment of the Court was delivered by DESAI, J.
The appellants applied for temporary permits under section 68 F (1 C) for plying the passenger vehicles on Khurja Pahasu Chhatari Dabai Rajghat Ramghat Atrauli route (route for short) which applications came to be rejected by the State Transport Authority and their appeal to the State Transport Appellate Tribunal and writ petition to the High Court, of Allahabad did not meet with success.
It is a common ground that in respect of the route a scheme has been prepared and published under section 68C of Chapter IV A of .
The route in question is an inter regional route and therefore an application for temporary permit for the period intervening between the date of publication of the scheme and the date of publication of the approved or modified scheme has to be made to the State Transport Authority under sec.
68(1 C).
Ignoring the previous history of the litigation for the present, it may be noticed that the appellants made applications to the State Trans port Authority for grants of temporary permits to ply their vehicles on the route.
The U.P. State Road Transport Corporation (Corporation for short) also made an application for grant of three temporary 983 permits for the same purpose and the application of the Corporation for three permits was granted while the application made by each of the appellants was rejected on The ground that once a scheme has been published in view of the provision contained in Sec.
68 F(1 A) the Corporation alone to the exclusion of others, is entitled to apply for temporary permit and if such application is made by the Corporation and granted no one else is entitled to obtain a temporary permit.
This decision of the State Transport Authority has been upheld both by the State Transport Appellate Tribunal and the High Court Section 68 F(1) makes it obligatory upon the State Transport Authority or Regional Transport Authority as the case may be to grant permit of the nature envisaged in the section to the Corporation to the exclusion of any other applicant.
Section 68 F (1 A) confers power on the State Transport Authority or the Regional Transport Authority as the case may be, for the period intervening between the date of publication of the scheme and the date of publication of the approved or modified scheme to increase in public interest the number of vehicles operating on the route or the area in respect of which the scheme has been published by State Transport Corporation under section 68C and further enables the Corporation to apply for temporary permits to ply the vehicles during the interregnum.
On such applications being made it is obligatory upon the State Transport Authority or the Regional Transport Authority as the case may be to grant such temporary permits.
Section 68 F (1 B) is not relevant for the present purpose.
Section 68 F(1 C) reads as under: "If no application for a temporary permit is made under sub section (l A), the State Transport Authority or the Regional Transport Authority, as the case may be, may grant, subject to such conditions as it may think fit, temporary permit to any person in respect of the area or route or portion thereof specified in the scheme and the permit so granted shall cease to be effective on the issue of a permit to the State Transport Undertaking in respect of that area or route or portion thereof.
" Section 68 F (1D) takes away the power of permit granting authority to grant or renew any permit during the period intervening between the date of publication, under section 68 C of any scheme and the date of publication of the approved or modified scheme, in favour of any person for any class of road transport service in relation to an area or route or portion thereof covered by such scheme except as provided in sub section ((1 A) and sub section (1 C).
984 The Corporation has published a scheme in respect of the route.
Even when a scheme is published it is open to the State Transport Authority or the Regional Transport Authority as the case may be to fix or increase the number of vehicles that may operate on the route.
But the power to increase the number must be exercised in public interest.
It is common ground that the strength of vehicles on the route in question was raised from 13 to 20.
Hence in view of this raising of the strength, 7 temporary permits could be granted.
However, in view of the provision contained in section 68 F(1 A) consequent upon the scheme being published by the Corporation under section 68 C in respect of the route the Corporation will be entitled to all the temporary permits to the exclusion of any other operator.
But Legislature was aware of a possible situation where the Corporation though entitled to temporary permits to the exclusion of other operators may not be in a position to avail of this statutory right.
Section 68 F(1 C) appears to have been introduced to meet with the situation arising out of the inability of the Corporation to obtain all available temporary permits.
Section 68 F(1 C) caters to such a situation where a scheme has been published and, therefore, the Corporation would be entitled, to temporary permits till the approved scheme is published, yet if the Corporation is unable to provide service by obtaining all requisite temporary permits, the State Transport Authority or the Regional Transport Authority as the case may be, in exercise of power conferred specifically upon it by section 68 F(1 C) can grant temporary permits to persons other than the Corporation to operate vehicles on the route for which the scheme is published till modified or approved scheme is published.
It is not in dispute that there are 7 vacancies for temporary permits.
It is an admitted position that the Corporation applied for only 3 permits.
The State Transport Authority has not recorded finding that in public interest remaining 4 permits were not required to be issued.
Undoubtedly, therefore, there were 4 vacancies for which 4 temporary permits could be issued by the State Transport Authority on this inter regional route.
Undoubtedly the permits will have to be temporary permits because the scheme has been published in respect of the route under section 68C.
The State Transport Authority, the State Transport Appellate Tribunal and, the High Court fell into an error by interpreting section 68 F(1 C) only to mean that even though there are 7 vacancies and the Corporation applied for only 3 temporary permits, once the Corporation made an application for temporary permits not for the full strength but something short of it there was no power left in 985 the State Transport Authority to grant temporary permits to any one else.
Obviously section 68 F(1 C) does not admit of such a construction.
The State Transport Authority has power under sub section (1 C) to grant temporary permit to any person in respect of the area or the route or part thereof specified in the scheme.
The expression 'any person ' would comprehend any person even other than the Corporation.
One has to read section 68 F (1 A) and section 68 F (1 C) harmoniously.
If the Corporation applies for temporary permits undoubtedly the State Transport Authority cannot grant permit to any one else if the Corporation has applied for all the permits.
But section 68 F(1 C) clearly envisaged a situation where application for a temporary permit is not made under section 68 F(1 A) by the Corporation.
And there is felt need for providing transport service on the route in question.
Now it cannot be gain said that there were 7 vacancies for temporary permits because the strength was increased from 13 to 20.
The State Transport Authority is the proper authority lo decide the strength of vehicles to be plied on a route.
If the Corporation is willing to operate vehicles to the maximum strength undoubtedly the State Transport Authority will have to grant permit to the Corporation under section 68 F(1 A) to the exclusion of others.
But if the Corporation was unable to provide vehicles for the optimum strength fixed by the State Transport Authority the remaining permits will have to be granted to any other person willing Jo obtain temporary permit and ply vehicle because in respect of the remaining strength there would be no application by the Corporation and section 68 F(1 C) would be squarely attracted.
In interpreting the provisions of Chapter IV A of it is undoubtedly true that the Corporation enjoys a preferential treatment in the matter of obtaining permits.
The authority under the Act must not ever lose sight of the fact that the primary consideration must be the service available to the travelling public.
While interpreting the provisions of the undoubtedly the competing claims between the Corporation and the other private operators may be examined with reference to the provisions of the Act.
But the overall consideration namely the service is for the benefit of the travelling public should never be overlooked for a moment.
Reverting to the facts of this case if the approach of the High Court is accepted it would lead to a startling result.
Assuming there were 10 vacancies for temporary permits and the Corporation was able to provide only one vehicle and therefore applied for only one permit, according to the State Transport Appellate Tribunal as well as the High Court no temporary permit can be granted to any one else 986 for the remaining 9 vacancies.
Such is not the position emerging from a combined reading of section 68 F(1 A) and Section 68 F(1 C).
The correct approach would be that keeping in view the strength of the vehicles fixed by the competent authority, the authority should first examine the application for number of temporary permits made by the Corporation.
If the Corporation has made application for temporary permits covering all the vacancies the matter ends there.
But if the Corporation does not apply for all the permits but only for some, the inescapable conclusion is that for the remaining strength the Corporation has made no application for the temporary permits and section 68 F(1 C) would be squarely attracted.
In That event the State Transport Authority or the Regional Transport Authority as the case may be will have to examine the application for temporary permits made by persons other than the Corporation and if they are found to be competent, eligible and qualified they may have to be granted permits for the benefit of the large travelling public.
That is why power to increase strength of fleet operating on the route is conferred and has to be exercised in public interest meaning transport facility to travelling public.
In this case there were 7 vacancies for temporary permits.
The Corporation applied for only 3.
It was incumbent upon the State Transport Authority to consider the applications of the present appellants for the remaining 4 vacancies and grant four permits according to law.
Accordingly this appeal is allowed and the orders of the State Transport Authority, the State Transport Appellate Tribunal and the High Court are set aside and the matter is remitted to the State Transport Authority to consider the applications of the present appellants for the remaining 4 vacancies and pass orders according to law.
In the circumstances of this case, there will be no order as to costs.
S.R Appeal allowed.
| The appellants terminated the lease of the suit lands by a notice dated 26th February, 1944 and allowed the lessee company "Narain Das Lachman Das Oil Mill" time till 30th June, 1944 for the removal of machinery, stores, buildings and other constructions in terms of clause (6) of the lease deed dated 2nd June, 1941.
The company not only secured an order from a Civil Court forbidding the appellants from ejecting it, but applied to the State Government for compulsory acquisition of the suit land.
In the land acquisition proceedings, the claim of the appellants "for the machinery, stores, buildings and other constructions made by the lessee" by virtue of automatic vesting in the appellants in terms of clause (6) of the lease deed dated 2nd June, 1941 and also, pursuant to notice of termination, was negatived.
Having failed before the District Court and the High Court to obtain the relief, the appellants obtained special leave of the Supreme Court.
Allowing the appeal, the Court ^ HELD: (1) Although the lessee continued to remain in the premises after the expiry of the notice terminating the lease, yet by force of the express recitals in clause (6) of the lease deed dated 2nd June, 1941, the buildings, etc., became the property of the lessors.
Therefore, after the Government acquired the property it was bound to pay compensation to the appellants not only for the land but also for the buildings and structures thereon.
[821H; 822A] (2) There was no waiver of the notice by the appellants.
There is no reliable evidence at all in the instant case to show the exact date when the rent was accepted or, at any rate, the fact that the rent was accepted between the 26th February, 1944, when the notice was sent, and the 30th June, 1944, when the Company was asked to vacate the premises.
Besides there is a finding of fact that the Company was treated as a trespasser ever since 26th February, 1944, namely, the date when the notice was given and that any rent which the appellants accepted was really not rent but mere compensation for wrongful use and occupation of the land.
[819C E] (3) It is no doubt true that section 114A of the Transfer of Property Act requires two conditions to be fulfilled before a suit for ejectment could lie (i) that a notice should be given to the lessee specifying the particular breach complained of, and (ii) that the lessee should be called upon to remedy the 816 breach.
If these conditions are fulfilled, then alone the lessor would be entitled to bring a suit for ejectment of the lessee.
Section 114A merely bars a suit for ejectment of the lessee in the instant case as the land had been acquired for the purpose of the lessee, namely, the Company, the question of filing a suit for ejectment did not arise at all.
In fact, the lessees themselves filed a suit and obtained injunction restraining the appellants from ejecting them before the land acquisition proceedings were taken in respect of the land in dispute.
Thus, the non compliance of sub section
(b) of section 114A is of no consequence so far as this particular case is concerned.
In the lease dated 2nd June, 1941, clause (6) clearly lays down that within four months after the expiry of the period of the lease the lessee would be entitled to remove the stocks and machinery.
The last part of that clause also empowers the lessor to re enter possession and acquire title to the buildings etc., that may be constructed by the lessee.
[819H; 820B D] (4) A construction of clause (h) of section 108 of the Transfer of Property Act clearly reveals that where there is a contract contrary to the provisions of that section would not apply.
In the lease dated June 2, 1941, there is not only an express clause under which the lessee was entitled to remove the stocks and materials within four months after the termination of the lease but thereafter there was another stipulation that in case the lessee failed to do so, all the buildings etc.
would become the property of the lessor.
[821A B]
|
Appeal No. 300 of 60.
Appeal from the judgment and order dated November 13, 1958, of the Rajasthan High Court in D.B.C. Writ Application No. 58 of 1957.
Chand Mal Lodha and Brijbans Kishore, for the appellant.
section K. Kapur and D. Gupta, for the respondent.
April 19.
The Judgment of the Court.
was delivered by GAJENDRAGADKAR, J.
The appellant, Firm Ghulam Hussain Haji Yakoob &.
Sons, moved the Rajasthan High Court by a petition under article 226 of the Constitution for the issue of a writ in the nature of prohibition or other writ or appropriate order, declaring that it was not liable to pay the customs duty sought to be levied on it by the Controller of Sirohi by his order of the 9th Feb., 1956.
It appears that one Mohammad Sagir had taken a contract for cutting forest of Haranj Amrapura from the Thakur of Nibaj on the 12th July, 1946.
The duration of this contract was five years and the purpose of the contract was to enable the contractor to prepare charcoal.
This contract was subsequently transferred to the appellant by the said Sagir on the 13th September, 1948.
In due course, the contract was extended by the Thakur of Nibaj by two years and on endorsement was made on it to that effect on the 15th April, 1950.
Under this contract, the appellant prepared charcoal and exported it out of the State of Sirohi.
The Assistant Commissioner, Customs and Excise, Sirohi, took the view that the appellant was liable to pay 257 customs duty @ As.
/8/ per maund on the quantity of charcoal exported by it.
The Asstt.
Commissioner found that the charcoal thus exported by the appellant was 2 7, 003 mds.
Accordingly, the said Asstt.
Commissioner made a report to the Commissioner on the 11th February, 1954.
The matter was then dealt with by the Dy.
Commissioner, Customs & Excise, and he passed on order that the appellant had exported charcoal without payment of duty.
This order was made on the 17th December, 1954.
According to the finding made by the Dy.
Commissioner, the charcoal exported by the appellant after the 30th November, 1948, amounted to 48,650 maunds.
On this basis, the appellant was asked to pay Rs. 24,325 / on account of the duty on export of charcoal @ As. /8/ a maund.
The appellant challenged the correctness of this order by preferring an appeal to the Government, but its appeal was rejected on the 24th May, 1956.
The appellant came to know about this order on the 5th April, 1957, when it was asked by the Tehsildar 'to deposit the duty assessed on it along with interest.
Since the appellant did not deposit the amount, the Customs authorities had, in the meanwhile, made a requisition to the Collector of Sirohi for recovery of the said amount, and the Collector had issued a notice on the appellant under the Public Demand Recovery Act on the 9th February, 1956.
It is the validity of this notice that the appellant challenged by its present writ petition.
The appellant 's case was that the order purported to have been passed by the State Council of Sirohi by which the customs duty @ As.
/8/ was levied on charcoal was invalid and ultra vires and so, it was not competent to the Customs authorities to levy any duty on the charcoal exported by the appellant and it was not competent to the Collector to issue a demand notice for the recovery of the said duty under the Public Demand Recovery Act.
On the other hand, the respondent, the State 258 of Rajasthan, disputed the correctness of, the appellant 's allegation that the duty had been illegally levied.
It was urged by the respondent that the said duty had been levied validly by the resolution passed by the State Council which had been approved by Her Highness Shri Rajmata Saheba, Since the said resolution had been duly passed by a competent authority, the levy of the duty imposed on the appellant was valid and the Collector was justified in issuing the notice of demand under the Public Demand Recovery Act.
The High Court has upheld the plea made by the respondent, with the result that the writ petition filed by the appellant has been dismissed with costs.
The appellant then applied for and obtained a certificate from the High Court and it is with the said certificate that it has come to this Court by its present appeal.
The customs tariff had been prescribed in the State of Sirohi by the Sirohi Customs Act of 1944 Section 14 of the said Act lays down that : " 'except as hereinafter ' provided, customs duties shall be levied at such rates as are prescribed in the Sirohi Customs Tariff on all goods mentioned therein, at the time of import or export of goods (including those belonging to the State) into or out of Sirohi State by rail, road or air".
It would thus be seen that section 14 which is the charging section provides that customs duties shall be levied on the goods mentioned in the Tariff at the rates prescribed by it.
The result is that it is only in respect of goods mentioned in the Tariff and at the rates.
specified therein that customs duties could be leived.
Section 15 of the said Act conferred upon the Darbar power to fix and alter tariff rates.
It says that the Darbar may, from time to time, by 259 notification in the Sirohi State Gazette, save in emergency cases, alter the rates prescribed in the Tariff and such altered rates shall come into force from the date mentioned in the notification or, in the event of the notification not reaching any customs post concerned, on a subsequent date from such date.
" The effect of this section is that the power to fix and alter tariff rates has been conferred on the Darbar which is required ordinarily to issue a notification in that behalf.
The High Court thought that as a result of reading sections 14 and 15 together, it was open to the Darbar not only to alter rates at which customs could be levied but, also to include new items under the taxable articles mentioned in the Tariff.
This view is clearly erroneous.
The power conferred on the Darbar by s 15 is to fix and alter tariff rates.
No ,power has been conferred on the Darbar to add to the list of taxable commodities in the Tariff itself The goods on which customs duties could be levied have been specified in the Tariff attached to the Act and no addition could be made to the said Tariff in that behalf by the Darbar by virtue of the authority conferred on it by section 15.
There is no doubt about this position.
At this stage, it is relevant to add that in the Tariff prescribed by the Act of 1944, charcoal is included in the list of commodities, the import of which is liable to pay the customs duty.
It is however, not included in the list of commodities the export of which is liable to pay customs duty.
This position is not disputed.
Therefore, in order that export of charcoal should be made liable to pay the customs duty, the respondent ought to be able to rely upon some legislative enactment in that behalf.
It appears that in 1940, the Ruler of the Sirohi State brought into existence the Council of 260 State and its functions and duties and its rights were duly notified in the State Gazette.
The Council which was designated as the Council of State, Sirohi, was to consist of His Highness as President, the Chief Minister as Vice President and such other member as His Highness may appoint from time to time.
The general working of the Council had to be under the control of the President who, under rule 9, was empowered, if the matter was urgent, to act on behalf of the Council, provided that the Council was duly informed about the action taken by the President as soon as possible.
Rule I I of the notification provided that all cases of the kind enumerated in Schedule I shall be referred to the Council for decision before final orders are passed, save as provided in rule 9.
Now, amongst the matters specified in Schedule I is included the topic of any new taxation, or alteration or abolition of taxation.
This is entry 7 in the said Schedule.
It would thus appear that it was within the competence of the Council to consider the proposal for any new taxation or alteration or abolition under rule 11 and it was for the Ruler to pass final orders in the light of the decision by the Council on that point.
Rule 11 makes it clear that though it wag competent to the Council to reach a decision on topics covered by entry 7 in Schedule 1, it was for the Ruler to pass final orders which would make the decision effective.
In other words, there can belittle doubt that the power of the Council in respect of the matters covered by Schedule I were no more than advisory ; it was always for the Ruler to decide what final orders should be passed in respect of the matters referred to the Council for its decision.
That is the nature and scope of the power conferred on the Council.
Since the Ruler of the State, His Highness Maharajadhiraja Maharao Taj Singhji Bahadur, was 261 a minor in 1947, His Excellency the Crown Representative was pleased to sanction the passing of the Regency Act for the Sirohi Minority Administration on the 14th August, 1947.
This Act provided that it was to come into force on the 14th August, 1947 and was to continue until the Ruler attained the age of 18 years.
Section 3 of the Act prescribes that for the purpose of the Constitution of the Sirohi State, the word "Ruler" wherever occurring in the Constitution shall be deemed to be the Board of Regency.
Section 4 provided for the constitution of the Board of Regency.
It was to consist of Her Highness the Dowager Maharani Saheba of Sirohi, Maharana Shri Sir Bhawani Singhji Bahadur of Danta and Raj Saheban Shri Bhopalsinghji of Mandar.
Section 6 of the Act provided that the Board of Regency shall be legal guardian of the Ruler.
After this Act was passed, the functions of the Ruler were discharged by the Board of Regency which, for all constitutional and legal purposes, represented the Ruler during his minority.
In pursuance of the material provisions of this Act, notification was issued on the same clay constituting the Board of Regency.
Thus, it would be clear that when the impugned order levying a duty on coal was passed on the 31st May, 1948, the constitutional position was that the governance of the State was entrusted to the Board of Regency; and under the Board of Regency was functioning the State Council which had been constituted by the previous Ruler in 1940.
It is in the light of this constitutional position that the question about the validity of the impugned levy of customs duty on the appellant has to be judged, On the 31st May, 1948, an order was passed which purports to have been issued in pursuance of the Council Resolution dated 15th May, 1948, for which approval had: been obtained from Her Highness Shri; Raj Mata Saheba.
As a result of this Order, the duties imposed on goods specified 262 in the Tariff attached to the earlier Act were enhanced in respect of bones, wool, timber and fire wood, and a fresh duty was imposed in respect of export of charcoal.
This duty was imposed @ As.
/8/ per maund.
As we have already soon, it is common ground that according to the Tariff prescribed by the Act of 1944, charcoal was not included in the list of articles, the export of which was liable to customs duty.
The question which calls for decision in the present appeal is whether the order thus issued is valid; and the answer to this question depends upon whether or not the imposition of the customs duty on charcoal has been levied by an authority which was legislatively competent to issue such an order.
If the levy has been ordered only by the State Council without the approval of the Board of Regency, then it would be invalid because it was not competent to the State Council to pass a law.
It was open to the State Council to reach a decision on the question about the imposition of customs duty on any new article, but that decision had to be approved and accepted by the Board of Regency which alone was clothed with the requisite legislative power.
Therefore, the validity of the order can be sustained only if it is shown that it has been passed with the approval of the Board of Regency of which Shri Raj Mata Saheba was the President.
In dealing with this question, it is necessary to bear in mind that the order does not formally recite that Shri Raj Mata Saheba had approved of the order as the President of the Board of Regency.
The order has been issued by the Secretary of the State Council and does not purport to have been issued by the executive officer of the Board of Regency.
The order does not refer to the Board of Regency at all and does not purport to say that Shri Rajmata Saheba, when she gave her approval, was acting on behalf of the Board.
If the order had formally been passed as on behalf 263 of the Board of Regency, it would have been open to the respondent to contend that the assumption should be that it was duly passed by the Board of Regency and has been promulgated according to the rules of business prescribed by the said Board.
But since the order does not purport to have been issued either on behalf of the Board of Regency or on behalf of Shri Raj Mata Saheba acting for the Board of Regency, it is necessary to enquire whether, in fact, the Board of Regency has approved of this order, and it appears that so far as this enquiry is concerned, the respondent has placed no material before the Court which would assist it in coming to the conclusion in favour of the validity of the impost.
Indeed, the plea taken by the respondent is disputing the correctness of the appellants claim before the High Court, was that Shri Raj Mata Saheba was the President of the Board of Regency and that whenever she acted, she did so on behalf of the Board and it was for her to take counsel from the other members.
It was, therefore, urged that in the circumstances, it would be presumed that she has passed the orders in consultation with other members till the contrary is proved.
It is significant that this plea proceeds on the assumption that it was at the option of Shri Raj Mata Saheba either to consult the Board of Regency or not.
The respondent 's case appears to be that the Raj Mata being the President of the Board of Regency could act on her own in matters relating to the government of the State either executively or legislatively and that it was for her to decide whether she should consult the other members of the Board or not.
The case set out by the respondent is not that the Raj Mata as the President of the Board always consulted the Board before she acted on its behalf.
On the contrary, the plea taken seems to suggest that the Raj Mata was not bound 264 to consult the Board and could have acted independently of the Board in passing orders either executive or legislative.
That being the plea, it is difficult for us to accept the argument that the approval of the Raj Mata to which the impugned order makes a reference, can be safely taken to be the approval of the Raj Mata after she had consulted the Board in that behalf.
There is no doubt that as a result of the Sirohi Regency Act, the governance of the State was left in the hands of the Board of Regency and it was the Board of Regency alone acting collectively that could legislate or pass executive orders.
If the Raj Mata took the view that she could act on her own without consulting the Board.
that was clearly inconsistent with the material provisions of the Act.
Therefore, we are not inclined to accept the conclusion of the High Court that the impugned order can be said to have been passed as a result of the decision of the Board of Regency, since the Board of Regency alone was clothed with the necessary legislative authority, Unless the Board passed the resolution, it could not take effect as a law in the State of Sirohi.
The approval of the Raj Mata to the resolution passed by the State Council cannot cure infirmity arising from the fact that the State Council had no legislative power.
The High Court seems to have taken the view that since the Raj Mata entered into the agreement of merger, she can be treated at the de facto Ruler of the State and as such, she was competent to exercise the necessary legislative power to pass the impugned order.
we are not inclined to accept this view.
It is clear that the document of merger has been signed by the Raj Mata describing herself as the President of the Regency Board; but the High Court thought that since the document had not been signed by the Board itself, the Raj Mata could be treated as the de facto Ruler of the State.
265 This view is clearly erroneous.
Since the Raj Mata was the President of the Board of Regency, it was competent to her to sign the document on behalf ' of the Board and she purported to sign it as the; President of the Board of Regency obviously because she had consulted the Board and it was as a result of the decision of the Board that she proceeded to execute the document and sign it as the Board 's President, Therefore, there is no substance in the contention that, the Raj Mata alone, without the concurrence of the Board, could have validly given sanction to the passing of the impugned order.
In the result, we must hold that the impugned order has not been validly passed and no levy of customs duty can be legally imposed on the appellant in regard to the charcoal which it has exported out of the State of Sirohi.
It is, however, urged that the duty levied against the appellant for the export of charcoal can be sustained under the provisions of Rajasthan Ordinance (No.16 of 1949).
Section 4(2) of the said Ordinance authorised the Government to issue any revised tariff and in exercise of this power, the Government of Rajasthan has issued a notification No. 211/SRD on the 10th August, 1949, whereby a revised tariff was imposed and it was directed that the duties of customs shall be levied and collected in accordance with the said revised Tariff.
According to item No.367 in the said Tariff, export duty on charcoal was As. /8/ per maund.
The respondent 's argument was that when Sirohi became a part of Rajasthan, the Ordinance in question applied to Sirohi and so, the claim for the customs duty made against the appellant was justified under the relevant provisions of the said Ordinance.
This Ordinance came into force on the 4th August, 1949.
In our opinion, this argument is not well founded.
When Ordinance XVI was passed and 266 same into force, it no doubt applied to the whole of Rajasthan as it was then constituted, but the State of Sirohi was at the relevant time not a part of Rajasthan and it became a part of Rajasthan as from the 25th January, 1950.
It appears that the Ministry of States issued a notification on the 24th January, 1950, in exercise of the powers conferred on the Government of India by subsection (2) of section 3 of the Extra Provincial Jurisdiction Act 1947 (47 of 1947) and it was as a result of this notification that the Central Government delegated to the Government of the United States of Rajasthan the extra provincial jurisdiction including the power conferred by section 4 of the said Act to make orders for the effective exercise of that jurisdiction.
It is thus clear that until the 25th, January, 1950, Sirohi was not a part of Rajasthan and was not amenable to the application of the Ordinance in question.
The respondent attempted to suggest that as soon as Sirohi became a part of Rajasthan, the Ordinance in question applied to it.
This argument is obviously falla cious.
When Sirohi became a part of Rajasthan, the laws applicable to Rajasthan prior to the merger of Sirohi could be made applicable to Sirohi only after an appropriate legislation had been passed in that behalf.
In fact, in 1953, the Rajasthan Laws (Application to Sirohi) Act (No.III of 1953) was passed to declare that certain Rajasthan laws applied to Sirohi.
Section 3 of this Act provided that the Rajasthan laws specified in the Schedule to the Act shall, in so far as they relate to any of the matters enumerated in Lists II and III in the Seventh Schedule to the Constitution of India, apply, and as from the appointed day, be deemed to have applied to Sirohi not withstanding any thing to the contrary contained in the Sirohi Administration Order, 1948, or in any other law, or instrument.
There is a proviso to this 267 section with which we are not concerned for the purposes of the present appeal.
The Ordinace in question is not included in the Schedule and so, it is clear that the said Ordinance was not intended to apply to Sirohi.
It is not suggested that any other law passed by the Rajasthan State or any other instrument executed in that behalf made the Ordinance in question applicable to Sirohi.
Therefore, we are satisfied that the respondent cannot rely upon the relevant provisions of the Rajasthan Ordinance 1949 to support the demand for customs duty against the State of Sirohi.
In the result, the appeal must be allowed and the writ issued in favour of the appellant declaring that the appellant is not liable to pay the customs duty in question and quashing the orders passed by the Dy.
Commissioner, Customs & Excise as well as the Minister of Excise & Taxation and the demand notice issued by the Collector at the instance of the excise authorities.
The appellant would entitled to its cost throughout.
Appeal allowed.
| Disputes which arose between the parties with respect to carrying out a contract were referred to the arbitration of the Bengal Chamber of Commerce in accordance with an agreement to refer disputes as and when they arose to the arbitration of the Chamber.
The award of the Tribunal of Arbitration was set aside by the High Court.
On an application for referring the matter for arbitration de novo another tribunal was constituted which made a fresh award.
The questions which arose for decision were whether after the first award was set aside the reference to arbitration was exhausted and the arbitrator had become functus offcio and whether without a fresh arbitration agreement it was not possible to have the same dispute decided again by the arbitrator.
^ HELD, that the arbitrator became functus officio after he gave the award but that did not mean that in no circumstances could there be further arbitration proceedings where an award was set aside or that the same arbitrator could never have anything to do with the award with respect to the same dispute.
Section 19 of the Arbitration Act empowered the Court not to supersede the reference and to leave the arbitration agreement effective even when it set aside the award and thereupon it would depend upon the terms of the arbitration agreement whether the arbitration proceedings could go on with respect to the same dispute or with respect to some other dispute arising under the arbitration agreement.
Barangore Jute Factory vs Hulas Chand Rupchand. , Rallis India Ltd. vs B. V. Manickam Chetty, A.I.R. 1956 Mad.
369, and Firm Gulab Rai Girdhari Lal vs Firm Bansi Lal Hansraj, A.I.R. 1959 Punj.
102, approved.
Morder vs Paimer, and Sutherland and Co .
vs Hannevig Bros. Ltd. , referred to.
In the present case the first award was set aside but as the reference had not been superseded and the arbitration 102 agreement subsisted it was open to the Chamber to appoint another tribunal under r. X of the Chamber Rules.
|
iminal Appeal No. 64 of 1955.
26 of 1952.
V. N. Sethi, for the appellant.
R. Ganapathy Iyer and R. H. Dhebar, for the respondent.
December 22.
BOSE J.
The only question in this appeal is whether the High Court bad in mind the principles 1287 we have enunciated about interference under section 417 of the Criminal Procedure Code when it allowed the appeal filed by the State against the acquittal of the appellant.
It is, in our opinion, well settled that it is not enough for the High Court to take a different view of the evidence; there must also be substantial and compelling reasons for holding that the trial Court was wrong: Amar Singh vs State of Punjab(1) and if the trial Court takes a reasonable view of the facts of the case, interference under section 417 is not justifiable unless there are really strong reasons for reversing that view: Surajpal Singh vs State(2).
The appellant was prosecuted under sections 302 and 447 of the Indian Penal Code for the murder of Aher Jetha Sida.
It is not necessary at the moment to set out the facts.
It is enough to say that the High Court based its conviction on a retracted confession plus certain circumstances which the learned Judges regarded as corroborative.
The learned Sessions Judge excluded the confession on the ground that it was neither voluntary nor true.
The learned Judge 's reasoning about its falsity is weak.
We do not think there is material on which a positive finding about its falsity can be reached but *hen he says that he is not satisfied that it was made voluntarily we find it impossible to hold that is a view which a judicial mind acting fairly could not reasonably reach.
The facts about that are as follows.
The offence was committed during the night of the 18th/19th May 1952.
The police were informed on the 19th morning at 9 30.
The police station was only 4 miles distant and they started investigation immediately.
The appellant was arrested on the 20th.
They are Bhura, Dewayat and Kana.
The investigating officer was not examined, so he could not be asked about this and the point could not be developed further.
But the appellant did cross examine some of the prosecution witnesses (1) ; , 423.
(2) ; , 201, 1288 about this and elicited contradictory replies.
Kana, P.W. 4, said "I was not arrested.
Dewayat, Barat Lakhmansingh was arrested first. .
All the three of us were released the same evening.
Dewayat, P.W. 5, denied that either he or any of the others were arrested and Maya, P.W. 15, said the same thing but Meraman, P.W. 11, insisted that Dewayat was arrested.
In the absence of the SubInspector it is difficult to say definitely that the appellant is wrong.
It is evident that the others were at least suspected, especially as one of the points made against the appellant is that he was seen sharpening an axe on the evening of the murder and Meraman, P.W. II, says that not only was the appellant sharpening an axe but so was Dewayat.
If this was a matter of suspicion against the appellant it must equally have been so against Dewayat and accordingly there is nothing improbable in the appellant 's statement about these other arrests; and as the SubInspector was not there to clear up the matter it is only fair to accept what the appellant says.
The appellant was sent to a Magistrate at 8 p.m. on the 21st for the recording of a confession but the Magistrate did not record it till the 3rd of June.
He was examined as P.W. 21 and explained that be gave the appellant ten days for reflection.
The length of time is unusual but no objection about its fairness to the accused could reasonably have been raised bad it not been for the fact that the judicial lock up is in charge of a police guard which is under the direct control, orders and supervision of the very SubInspector who had conducted the investigation and had earlier suspected and, according to the accused, actually arrested three other persons; and two of them are now called as prosecution witnesses to depose against the appellant about a matter on which the prosecution lay great importance, namely the sharpening of an axe.
The danger that they might exaggerate their stories or give false evidence in their anxiety to avert further suspicion from themselves is 1289 one that cannot be overlooked.
But apart from that.
This is the description of the judicial look up which the Magistrate who recorded the confession (P.W. 21) gives us: "A police guard is on 24 hours duty at the Bhanwad Judicial lock UP.
The prisoner is so placed within the compound wall that he can see the police all the 24 hours through the bars and can talk.
These police officers are under the police Sub Inspector.
A peon is working as warder.
He stays there on duty by day.
At night he is not there.
Clerk Jailor does not remain present there.
The police lock up is within the ail itself.
Inside the jail gate is the police lock up.
The police can go into the police lock up when they choose".
Now the appellant repudiated his confession at the earliest opportunity.
He told the Committing Court on 12 12 1952 in a written statement that "After my arrest by the police I was sent to jail.
At night time the police, having arrived at the jail, threatened me to make confession before Court as they directed.
The police frightened me with beating if I did not confess.
As a result of which, through fright, I have made a false confession as directed by the police and which I now deny".
And in his examination under section 342, Criminal Procedure Code, he said "I have made the confession because the police were threatening to beat me in the jail.
He repeated these statements in the Sessions Court.
He said he was beaten at the time of his arrest and then after he had been sent to the jail he said "I was daily threatened.
They said 'confess the offence of murder.
We shall get you on remand.
You will live as an impotent man '.
On the morning of the 3rd date, they took me to a big police officer after administering extraordinary threats.
Only now I come to know that he is the Magistrate". , Now it may be possible to take two views of this statement but there are two important factors in every criminal trial that weigh heavily in favour of an accused person,: I one is that the accused is entitled 1290 to the benefit of every reasonable doubt and the other.
, an off shoot of the same principle, that when an accused person offers a reasonable explanation of his conduct, then, even though be cannot prove his assertions, they should ordinarily be accepted unless the circumstances indicate that they are false.
What the appellant said in this case is not impossible; such things do happen and it is understandable that the police, frustrated in their endeavour to find the culprit among three other persons, should make an all out endeavour to make sure of the fourth.
We do not say that happened here.
But that it might have happened is obvious, and when the police absent themselves from the witness box and forestall attempts at cross examination, we find it impossible to hold that a judge acting judicially, and hearing in mind the important principles that we have outlined above, can be said to have reached an unreasonable or an unfair conclusion when he deduces from these circumstances that there is a reasonable probability that the appellant 's story is true and that therefore the confession was not voluntary.
The only reason that the learned High Court Judges give for displacing this conclusion is that "in Saurashtra. . though judicial and police lock ups are placed under a common guard the judicial lock ups are in charge of Magistrates and are looked after by their clerks and peons, who are assigned the duties of jailors and warders respectively" and they conclude "It is therefore difficult to say that the police could have effectively threatened him".
But what the learned Judges overlook is the fact that this control is only effective during the day and that at night neither the peon nor the clerk is there; and even during the day the "clerk cum jailor does not remain present there".
The appellant said in his written statement that "at night time the police, having arrived at the jail, threatened me, etc".
There is nothing on the record to displace this statement.
Had the Sub Inspector or some policeman been examined as a witness and had the appellant omitted to 1291 cross examine him about this, that might have raised an inference that what the accused said was only an afterthought.
But here we find that this defence about the involuntary nature of the confession due to threats by the police was raised at the outset, even in the Committing Magistrate 's Court, and was persisted in throughout and the appellant did what he could to build up this part of his case by cross examining the only official witness who did appear, namely the Magistrate who recorded the confession; and he succeeded in establishing that there was ample opportunity for coercion and threat.
The fact that this defence was raised in the Committal Court should have put the prosecution on its guard and the absence of refutation in the Sessions Court is a matter that can legitimately be used in the appellant 's favour.
In the circumstances, we do not think the High Court has squarely met the learned Sessions Judge 's reasoning and shown that there are compel ling reasons for holding that he was wrong; on the contrary, the learned Sessions Judge 's hesitation is grounded on well established judicial principles.
Now the law is clear that a confession cannot be used against an accused person unless the Court is satisfied that it was voluntary and at that stage the question whether it is true or false does not arise.
It is abhorrent to our notions of justice and fair play, and is also dangerous, to allow a man to be convicted on the strength of a confession unless it is made voluntarily and unless he realises that anything he says may be used against him; and any attempt by a person in authority to bully a person into making a confession or any threat or coercion would it once invalidate it if the fear was still operating on his mind at the time he makes the confession and if it "would appear to him reasonable for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him": section 24 of the Indian Evidence Act.
That is why the recording of a confession is hedged around with so many safeguards and is the 163 1292 reason why magistrates ordinarily allow a period for reflection and why an accused person is remanded to jail custody and is put out of the reach of the investigating police before he is asked to make his confession.
But the force of these precautions is destroyed when, instead of isolating the accused from the investigating police, he is for all practical purposes sent back to them for a period of ten days.
It can be accepted that this was done in good faith and we also think that the police acted properly in sending the appellant up for the recording of his confession on the 21st; they could not have anticipated this long remand to so called "jail custody".
But that is hardly the point.
The fact remains that the remand was made and that opened up the very kind of opportunities which the rules and prudence say should be guarded against; and, as the police are as human as others, a reasonable apprehension can be entertained that they would be less than human if they did not avail themselves of such a chance.
It will now be necessary to set out the facts.
The murdered man is one Jetha.
He married Sunder, P.W. 3, about three years before he was killed, but we gather that she had not gone to live with her husband; anyway, she was living in the appellant 's village Shiva with her people at the time of the occurrence and this afforded the pair opportunities for a long continued course of illicit amours, chances which it seems they were not slow to seize.
The husband lived in a village Kalawad which is three miles distant.
At the time of the murder arrangements were being made for Sunder to go to her husband and preparations for the ceremonial appropriate to such occasions were in the course of progress.
Both Courts hold that the motive is proved; and that can be accepted.
Next comes the evidence about the sharpening of the axe on the evening of the 18th at Kana 's house in the village Shiva.
The axe was produced in Court and Dewayat (P.W. 5) tells us that it was blunt.
Now there is nothing suspicious or unusual in a villager sharpening a blunt axe and, as we have pointed out, Meraman (P.W. 11) says that Dewayat was also sharpening an axe at the same time and place; and Dewayat is one of the other three against whom suspicion was directed; also, the fact that the axe was sharpened in this open way in the presence of a number of persons, including two strangers to the village, (the two Satwara witnesses, P.Ws. 9 and 10), points to innocence rather than guilt.
But the prosecution do not rely on this alone.
Their witnesses say that when the appellant was asked why he was sharpening his axe (Dewayat does not seem to have been put a similar question though he was doing the same thing) he replied that he wanted to offer a green coconut to Lord Shanker.
All the witnesses are agreed that this has no special significance and that they attributed no sinister meaning to it at the time.
It has acquired significance only in the light of after events.
Even here, there seems to us to be some danger that what the appellant really said has got mixed up, with what these witnesses say and, no doubt, honestly believe he said.
We say this because Sunder, P.W. 3, and her mother Vali, P.W. 2 tell us that the appellant came to the mother that evening and offered her eight annas in lieu of a coconut.
It seems that this is a customary offering given by relatives when a daughter leaves her parents ' home for her father in law 's place.
A reasonable doubt arises and the appellant is entitled to its benefit.
Next comes the evidence of Samant, P.W. 16, who says that be saw the appellant that night on the outskirts of Kalawad where the murder was committed.
He was wearing a false beard and a mask.
But that is the very question that the Court has to decide.
The only fact that this witness can be said to prove is that be saw a man that night wearing a false beard and mask who looked like the appellant.
Then we come to the recoveries.
The false beard and mask were found buried in the grounds of Dewayat 's house and the appellant is said to have recovered them in the presence of panchas.
But those discoveries are inadmissible in evidence because the police already knew where they were hidden.
Their information was not derived from the appellant but from Dewayat (one of the other suspects).
The way the police came to find this out was this.
Dewayat says that the appellant confessed the murder to him and told him that he had gone there wearing a false beard and a mask and that he had buried these articles 1295 under the Shami tree in the grounds of Dewayat 's bada.
Dewayat says "Next the police called me to go to Kalawad.
At that time Raja had been arrested. .
I was interrogated.
I spoke about the beard at that time.
Then the police came to my field with Raja".
If Meraman (P. W. 11), read with the Confused statement of Kana (P.W. 4), is to be believed, Dewayat was also under arrest either at the time or on the day before.
As the Sub Inspector was not examined, we are unable to clear this up and so are bound to give weight to the criticism of the Sessions Judge where he says "However, Dewayat confesses that his statement was not recorded on the 19th of May 1952 but was recorded on 20 5 1952 only after he was questioned by the police".
In our opinion, not only is this evidence about recovery not admissible but the danger that Samant (P.W. 16) mistook Dewayat, who was also under strong suspicion, or someone else who looked like the appellant, for the appellant, has not been excluded.
Lastly, there is the recovery of the axe.
But this was not hidden.
It was kept behind an earthen jar in the appellant 's house just as an axe might be normally kept in any average household.
The only point of suspicion is that the axe had stains of human blood on it.
But the difficulty we are faced with there is that the extent of the stains and their position is not disclosed.
We have had occasion to comment before on the very slovenly and ineffective way in which some Chemical Analysers do their duty.
This is another case in which what might otherwise have been a valuable piece of evidence has to be disregarded.
The axe was not recovered till the 21st and was standing where it could have been handled by other members of the household.
In any case, villagers frequently have slight cuts or scratches or a prick from a thorn on their persons and a few drops of blood could easily be transferred to an article like an axe without anybody noticing or knowing.
The important thing in a case like this, where everything 1296 is now seen to hang on this one fact, would be the extent of the blood and its position.
The postmortem reveals that the injuries were incised and that the bleeding was profuse.
When everything hangs on this one point, we cannot assume without proof that stains which might be compatible with either guilt or innocence must have been of what we might term the guilty kind.
On a careful examination of the evidence in this case, we are not satisfied that the circumstances disclose "strong and compelling reasons" to set aside the acquittal.
The appeal is allowed.
The conviction and sentence are set aside and the appellant is acquitted.
VENKATARAMA AYYAR J.
I regret I am unable to agree with the judgment just delivered.
The appellant belonged to the village of Katkora, and developed intimacy with an unmarried woman called Sunder in the neighboring village of Shiva.
Subsequently, Sunder was married to one Jetha of Kalawad, a village about 3 miles distant from Shiva.
It had been arranged to take Sunder to her husband 's house on the 19th May 1952, and for that purpose, Sida, the father of Jetha, had come to Shiva on the 18th.
The case of the prosecution was that the appellant was determined to prevent Sunder from joining her husband, and with that object he went to Kalawad on the night of the 18th, and killed Jetha with his axe, when be was asleep.
The murder came to light next morning, and the matter was reported to the police.
The appellant was arrested on 20 5 1952.
On his information the police recovered from his house at Katkora an axe, and the panchnama discloses that it then bad stains of blood which was subsequently found by the Chemical Analyst to be human.
The appellant next showed to the police 1297 a false beard, which was buried under a tree in the village of Shiva.
It is alleged that this was worn by the appellant at the time of the murder.
The Magistrate, however, decided to give him time "to cool down", and put him in judicial lock up.
He then went on duty to another place, and on his return, recorded the confession of the appellant, which is as follows: " I, having gone to his Wadi, have killed him.
I have killed him with axe.
I have killed him for the sake of Sunderbai.
Sunderbai is the wife of Jetha.
I had illicit connection with her.
I have murdered Jetha Sida with the idea of marrying Sunderbai.
I gave him an axe blow on the neck.
At that time I had put on a tunic and a pair of trousers.
I bad a turban on my head.
I had worn artificial beard.
After the murder, the artificial beard buried in the field of Dewanand Mope.
I took the axe to my house".
The appellant retracted this confession before the Committing Magistrate, as made under police beatings and threats.
He was then sent up to the Sessions Court, Halar, to take his trial, which took place with the aid of four assessors.
There was no direct evidence that the appellant had committed the murder.
The circumstantial evidence on which the prosecution sought to establish his guilt consisted of a confession made by him to the Magistrate, the recovery of the axe and the false beard, and the existence of strong motive.
There was, besides, a considerable body of evidence that on the 18th May the appellant was haunting the village of Shiva where Sunder was residing, with an axe in his hand and threats in his tongue.
The assessors were unanimously of the opinion that the appellant was guilty, but the Sessions Judge disagreed with them, and held that the confession was neither true nor voluntary, and that though there were strong grounds for suspecting him, the evidence was not sufficient to convict him, and so acquitted him.
There was an appeal against this judgment by the 1298 State to the High Court of Saurashtra.
The learned Judges, differing from the Sessions Judge, held that the confession was true and voluntary, that there was ample corroboration thereof in the evidence, and that even apart from it, the other facts proved by 'the prosecution were sufficient to establish the guilt of the appellant.
They accordingly set aside the order of acquittal passed by the Sessions Judge, convicted the appellant under section 302 and sentenced him to transportation for life.
It is against this judgment that the present appeal by special leave has been brought.
The question is whether having regard to the principles on which this Court exercises its jurisdiction under article 136, there are grounds for interference in this appeal.
Those principles are well settled and may briefly be recapitulated.
Prior to the abolition of the jurisdiction of the Privy Council, the law of this country did not in general provide for appeals against judgments of the High Courts in criminal matters.
Indeed, the policy of the legislature as expressed in sections 404 and 430 of the Code of Criminal Procedure and departing in this respect from that adopted in the Civil Procedure Code, has been that decisions of courts passed in criminal appeals should be final and subject to specified exceptions, not open to a further appeal on facts.
So far as judgments of the High Courts are concerned, the limitation on further appeal imposed by the Indian statutes could not affect the jurisdiction of the Privy Council to entertain appeals against them in the exercise of the prerogative of the Crown.
That was a power which the Privy Council possessed in respect of orders passed by the courts all over the Dominions, and the limits within which the Judicial Committee exercised that power were thus stated by Lord Watson in In re Abraham Mallory Dillett(1): "The rule has been repeatedly laid down, and has been invariably followed, that Her Majesty will not review or interfere with the course of criminal proceedings, unless it is shown that, by a disregard of (1) [1887] 12 A.G. 459, 467. 1299 the forms of legal process, or by some violation of the principles of natural justice, or otherwise,substantial and grave injustice has been done".
These principles were followed in quite a number of appeals against judgments of Indian courts in criminal matters.
In Dal Singh vs King Emperor(1), the Privy Council, stating the practice of the Judicial Committee in dealing with an appeal in a criminal case., observed: "The general principle is established that the Sovereign in Council does not act, in the exercise of the prerogative right to review the course of justice in criminal cases, in the free fashion of a fully constituted Court of criminal appeal.
A mere mistake on the part of the Court below.
Such questions are, as a general rule, treated as being for the final decision of the Courts below".
In Taba Singh vs Emperor(2) , Lord Buckmaster observed that the responsibility for the administration of criminal justice rested with the courts in India, and that the Board would not interfere "unless there has been some violation of the principles of justice or some disregard of legal principles".
In George Gfeller vs The King(3), which was an appeal from the Supreme Court of Nigeria, Sir George Rankin observed: "Their Lordships have repeated ad nauseam the statement that they do not sit as a Court of Criminal Appeal.
For them to interfere with a criminal sentence there must be something so irregular or so outrageous as to shock the very basis of justice: per Lord Dunedin in Mohindar Singh vs Emperor(4).
Muhammad Nawaz vs Emperor(5) (1) [1917] L.R. 44 I.A. 187, 140.
(2) [1924] I.L.R. (3) A.I.R. 1943 P.C. 211.
(4) [1932] L.R. 59 I.A. 233, 235.
(5) [1941] L.R. 68 I.A. 126, 129.
164 1300 On these principles, the Privy council refused in Macrea, Ex parts(1) leave to appeal on the ground of misdirection to the jury and in Mohindar Singh vs Emperor '(2)on the ground that a wrong view had been taken of the law.
Thus, the law was well settled that the Privy Council would not entertain appeals against judgments in criminal cases, unless there was an error of .
procedure or disregard of legal principles amounting to a denial of fair trial and resulting in grave injustice.
Under the Constitution, the position of the Supreme Court which has taken t he place of the Privy Council is this.
Its jurisdiction as that of the Privy Council in respect of criminal appeals may be classed under two categories, cases where a right of appeal is expressly granted by the Constitution or by the statutes, as for example, articles 132(1) and 134 (1) of the Constitution or section 411 A(4) of the Code of Criminal Procedure, in which the scope of the appeal would depend upon the terms of the enactments which confer the right; and cases ' where it is called upon to exercise its powers under article 136, which corresponds substantially to the prerogative jurisdiction exercised by the Privy Council with reference to which the practice of the Judicial Committee might usefully be referred to for indicating the area of interference.
The question was considered by this Court in Pritam Singh vs The State(3), where the law was thus laid down: "On a careful examination of article 136 along with the preceding article, it seems clear that the wide discretionary power with which this Court is invested under it is to be exercised sparingly and in exceptional cases only .
The Privy Council have tried to lay down from time to time certain principles for granting special leave in criminal cases, which were reviewed by the Federal Court in Kapildeo vs The King(4).
It is sufficient for our purpose to say that though we are not bound to follow them too (1) [1893] L.R. 20 I.A. 90.
(2) [1932] L.R. 59 I.A. 233, 235.
(3) , 458.
(4) A.I R. 1301 rigidly since the reasons constitutional and administrative, which sometimes weighed with the Privy Council, need not Weigh with us, yet some of those principles are useful as furnishing in many cases a sound basis for invoking the discretion of this Court in granting special.
Generally speaking, this Court will not grant special leave, unless it is shown that exceptional and special circumstances exist, that substantial and grave injustice has been done and that the case in question presents features of sufficient gravity to warrant a review of the decision appealed against".
The preceding article referred to in the opening passage is clearly article 134.
Article 134(1) confers a right of appeal to this Court in certain cases, in terms unqualified, on questions both of fact and of law, and if the scope of an appeal under article 136 is to be extended likewise to questions of fact, then article 134(1) would become superfluous.
It is obvious, that the intention of the Constitution in providing for an appeal on facts under articles 134(1) (a) and (b) was to exclude it under article 136, and it strongly supports the conclusion reached in Pritam Singh vs The State(1) that like the Privy Council this, Court would not function as a further court of appeal on facts in criminal cases.
Having regard to the principles enunciated in this decision.
, the question is whether there are sufficient grounds for interfering with the judgment of the High Court in the present appeal.
The point which the learned Judges had to decide in the appeal was whether it was the appellant who had murdered Jetha.
That is a pure question of fact turning on appreciation of evidence.
The High Court has gone into the matter fully, examined the entire evidence ex haustively, and in a judgment which is as closely reasoned as it is elaborate, has come to the conclusion that the guilt of the appellant has been established beyond all reasonable doubt.
Does that decision call for our interference in special appeal?.No, unless this Court is to 'function as a court of appeal on facts.
1302 But then, it is argued that the appeal before the High Court was one against acquittal, that such an appeal was subject to the limitation that there should be compelling reasons for reversing an order of acquittal, and that it would be open to this Court in special appeal to consider whether that limitation bad been duly observed.
Nevertheless, the view was taken at one time in some of the decisions that appeals against acquittals were in a less favoured position than appeals against convictions, and that an order of acquittal should not be interfered with in appeal except "where through the incompetence, stupidity or perversity of certain tribunal such unreasonable or distorted conclusions have been drawn from the evidence so as to produce a positive miscarriage of justice", or were "the lower court has so obstinately blundered or gone wrong as to produce a result mischievous at once to the admi nistration of justice and the interests of the public".
In Sheo Swarup vs King Emperor(5), the question was raised for determination by the Privy Council whether there was any legal basis for the limitation which the above decisions had placed on the right of the State to appeal under section 417.
Answering it in t e negative, Lord Russell observed that there was "no indication in the Code of any limitation or restriction on the High Court in the exercise of its powers as an appellate tribunal", that no distinction was drawn (1) All. 148.(2) All. 212.(3) (4) Rang.312, (5)[1934] L.R. 61 I.A. 398, 403, 404. 1303 "between an appeal from an order of 'acquittal and an appeal from a conviction", and that "no limitation should be placed upon that power unless it be found expressly stated in the Code".
He went on to remark at page 404 that, "the High Court should and will always give proper weight and consideration to such matters as (1) the views of the trial Judge as to the credibility of the witness, (2) the presumption of innocence in favour of the accused, a presumption certainly not weakened by the fact that he has been acquitted at his trial, (3) the right of the accused to the benefit of any doubt, and (4) the slowness of an appellate Court in disturbing a finding of fact arrived at by a Judge who bad the advantage of seeing the witnesses".
These observations, however, do not mean that the scope of appeals against acquittals is different from that of other appeals.
They merely embody the principles applicable to all appeals, civil and criminal, to appeals alike against conviction and acquittal.
If the trial Judge does not accept the evidence adduced by him and dismisses his suit and he appeals, he has the burden still on him to prove on the evidence adduced that the promissory note is genuine, and in discharging that burden he has to show that the judgment appealed against is clearly wrong.
If all he can show is nicely balanced calculations which lead to the equal possibility of the judgment on either the one side or the other being right, he has not succeeded".
1304 has to establish on the evidence that the accused is guilty, and to establish it, it has to satisfy the court that the judgment of the trial court is erroneous.
The oft repeated observation that on acquittal the presumption of innocence becomes reinforced is merely this principle stated in terms of criminal law.
Likewise, the weight to be attached by an appellate court to a finding of the trial court based upon appreciation of oral evidence is the same whether it is given in a civil litigation or a criminal trial.
But generally speaking, it is undesirable to interfere with the findings of fact of the Trial Judge who sees and hears the witnesses and has an opportunity of noting their demeanour, especially in cases where the issue is simple and depends on the credit which attached to one or other of conflicting witnesses. .
In making these observations their Lordships have no desire to restrict the discretion of the Appellate Courts in India in the consideration of evidence".
It is clearly these principles that Lord Russell had in mind when he made the observations at page 404 in Sheo Swarup vs King Emperor2 ') quoted above, and that will be clear from the observation next following: "To state this, however, is only to say that the High Court in its conduct of the appeal should and will act in accordance with rules and principles well known and recognized in the administration of justice".
The scope of the decision in Sheo Swarup vs King Emperor(2) with special reference to the observations discussed above was thus explained by the Privy .Council in Nur Mohammad vs Emperor(3): "Their Lordships were referred, rightly enough to the decision of this Board in the case in Sheo
(1) [1915] L.R. 42 I.A. 110; 118.
(2) [1934] L.R. 61 I.A. 398.
Their Lordships do not think it necessary to read it all again, but would like to observe that there really is only one principle, in the strict use of the word, laid down there; that is that the High Court has full power to review at large all the evidence upon which the order of acquittal was founded, and to reach the conclusion that upon that evidence the order of acquittal should be reversed".
These authorities establish beyond all controversy that an appeal against acquittal under section 417 stands, as regards the powers of an appellate court, on the same footing as appeals against conviction.
If that is the true scope of an appeal under section 417, where then does the doctrine of "compelling reasons" come in? And how do we fit it among the powers of a court under that section? The words compelling reasons" are not a legislative expression.
They are not found in section 417.
As far as I have been able to discover, it was first used in Surajpal Singh and others vs The State(2), wherein it was observed: "It is well established that in an appeal under section 417 of the Criminal Procedure Code, the High Court has full power to review the evidence upon which the order of acquittal was founded, but it is equally well settled that the presumption of innocence of the accused is further reinforced by his acquittal by the trial court, and the findings of the trial court which had the advantage of seeing the witnesses and hearing their evidence can be reversed only for very substantial and compelling reasons".
Do the words "compelling reasons" in the above passage import a limitation on the powers of a court hearing an appeal under section 417 not applicable to a court hearing appeals against conviction?
If they do, then it is merely the old doctrine that appeals against acquittal are in a less favoured position, dressed in a new garb, and the reasons for rejecting it as unsound are as powerful as those which found favour with the Privy Council in Sheo Swarup vs King Em (1) [1934] L.R. 61 I.A. 398.(2) ; , 201.1306 peror(1) and Nur Mohammad vs Emperor(2).
But it is probable that these words were intended to express, as were the similar words of Lord Russell in Sheo Swarup vs King Emperor(1), that the court hearing an appeal under section 417 should observe the rules which all appellate courts should, before coming to a conclusion different from that of the trial court.
If so understood, the expression "compelling reason s" would be open to no comment.
But the expression has been quoted in later judgments, especially of the courts below, as if it laid down that in appeals against acquittal, the standard of proof required of the appellant was far higher than what the law casts on appellants in other appeals, and as the words "compelling reasons" are vague and indefinite to a degree, the result has not seldom been that even when Judges hearing appeals under section 417 were convinced of the guilt of the accused, they refrained from setting aside the order of acquittal owing to the dark and unknown prohibition contained in the expression.
That is the impression which I have formed in the appeals which have come before me.
in this Court.
There is always a danger in taking a phrase, attractive and telling in its context, out of it, and erecting it into a judicial formula as if it laid down a principle universal in its application.
And this danger is all the greater when the phrase is of undefined import, and relates to appreciation of evidence.
It is in the interests of the public that crimes should be punished, and it is with this object that section 417 confers on the State a right to appeal against acquittal.
To fetter this right through such expressions as "compelling reasons" would not merely be to legislate but to defeat the plain intention of the legislature that an accused in an appeal against acquittal should.
have only those rights which the State in an appeal against conviction or a respondent in a civil appeal has, and that he is to enjoy no special protection.
(1) [1934] L.R. 61 I.A. 398.
(2) A.I.R. 1945 P.C. 151.
1307 The fundamental objection to regarding the expression "compelling reasons" as a rigid formula governing the decision of an appeal under section 417 is that it puts a judgment of acquittal, however rendered, in a position of vantage which the law did not accord to it, and throws around the accused who gets an order of acquittal in the trial court a protection which the law did not intend to give him.
In my judgment, this is a situation in which great mischief must result, and the interests of the public must suffer ' If the expression "compelling reasons" does not impose a restriction on the powers of a court hearing an appeal under section 417, and if its true scope is to guide it in arriving at a decision, the question whether this Court can interfere with that decision on the ground that it is erroneous presents no difficulty.
The decision would then be one on a question of fact depending upon the appreciation of evidence, and this court cannot, on the principles enunciated in Pritam Singh vs The State(1) interfere with it.
This position is, in fact, concluded by the decisions in Sheo Swarup vs King Emperor(2) and Nur Mohammad vs Emperor(3).
In Sheo Swarup vs King Emperor(2), the Sessions Judge bad characterised the prosecution witnesses as liars, and disbelieving their evidence had acquitted the accused.
On appeal, the High Court reviewed the evidence, and differing from the trial court as to the weight to be attached to it, convicted the accused.
Declining to interfere with this judgment, the Privy Council observed that even though there was no express mention in the judgment of the High Court that it had considered all the particulars which an appellate court should consider in deciding an appeal, there was "no reason to think that the High Court had failed to take all proper matters into consideration in arriving at their conclusions of fact".
In Nur Mohammad vs Emperor(3), the judgment of the High Court did not disclose that it had considered the matters mentioned by Lord Russell at page 404 (1) ; (2) [1934] L R. 61 I.A. 398, (3) A.I.R 1945 P.C. 151.165 1308 in Sheo Swarup vs King Emperor(1).
Nevertheless, the Privy Council dismissed the appeal observing: "In the present case the High Court judgment shows that they have been at pains to deal in detail with the reasons given by the Sessions Judge for disbelieving the group of witnesses, the Patwari and the other three alleged eye witnesses.
They have dealt in detail with them, showing on the face of their judgment that there is no necessity to presume in this case that they have not done their duty. "
These decisions are authorities for the position that when in an appeal under section 417 the court considers the evidence and comes to its own conclusion the findings recorded by it are not, even when they result in a reversal of the order of acquittal, open to interference in special appeal.
Different considerations would have arisen if the law bad provided a further appeal on facts against those orders of reversal, in which case the appreciation of the evidence by the appellate court would be a matter open to review in the superior court.
That, as already stated, would be the position in an appeal under articles 132 (1) and 134(1) (a) and (b), but where, as in the present, no appeal on facts is provided, the decision of the High Court is not open to review by this Court under article 136 on the ground that there were no compelling reasons for the learned Judges to reverse an order of acquittal.
This is sufficient to entail the dismissal of this appeal.
But, having gone through the evidence, I am of opinion that even on the merits the decision of the High Court is correct.
The evidence against the appellant is wholly circumstantial, and consists mainly of (1) the existence of a strong motive, (2) the conduct of the appellant on the day when the murder was committed, (3) the recovery of a blood stained axe and a false beard at the instance of the appellant, and (4) a confession made by him 'before the Magistrate, P.W. 21, on 3 6 1952.
1309 macy with Sunder, and as she was to be taken on the 19th May 1952 to Kalawad to join her husband, he wanted to do away with him.
The appellant admitted that he had illicit connection with Sunder for some years, and the Sessions Judge also found, basing himself on the prosecution evidence, that the appellant was very much agitated on the night of the 18th.
A number of witnesses deposed that they saw him on 18 5 1952 at Shiva sharpening his axe, and that when questioned, he stated that be was going to offer a green coconut to Mahadevji, "can expression " say the learned Judges "which in common parlance means sacrifice of a head".
The appellant denied that he went to Shiva on the 18th, but his statement was, disbelieved by the Sessions Judge who was impressed by the quality and number of the prosecution witnesses, and both the courts have concurred in accepting their evidence on this point.
As for the recovery of the axe, the appellant admitted it, but he stated in his examination under section 342 that there was no blood on it when he showed it to the police.
The Sessions Judge, was not prepared to accept this statement and observed: "Accused admits that this is his axe.
In light of chemical analysis, there is no doubt that there were stains of human blood on the axe.
It is also mentioned in the Pancbnama, exhibit 21 itself that the Panch had suspected that there were marks of human blood on this axe".
But all the same, he discounted the value of this evi dence, because according to him, in view of certain circumstances "the presence of human blood on the axe is by no means conclusive", and that "at best it raises a suspicion against the accused".
Those circumstances are three: Firstly, the panch who witnessed the recovery at Katkora belonged to Kalawad, and the criticism is that a local panch ought to have been got to witness the same.
The learned Judges of the High Court did not think much of this criticism, as the recovery at Katkora had to be made in pursuance of the statement given by the appellant at Kalawad, 1310 and the police might have reasonably thought that the same panch should be present at both the places.
As the Sessions Judge has accepted the evidence of the panch that there were blood stains at the time of the recovery of the axe, his criticism on this point lacks substance.
Secondly, though the recovery was made on 21 5 1952, it was sent to the medical officer for report only on 27 5 1952, and the delay is suspicious.
It is difficult to follow this criticism.
When once the conclusion is reached that there was blood on the axe when it was recovered, this criticism has no meaning unless it is intended to suggest that the police required some time to wash the blood which was on the axe at the, time of its recovery and to substitute human blood therefore.
There is nothing in the evidence to support a suggestion so grotesque, and as observed by the learned Judges, if the police wanted to substitute blood, they would not have taken so much time over it.
Thirdly, in despatching the blood to the Chemical Analyst, the medical officer sent the parcel containing the blood scrapings to the railway station, not through his own peon or the compounder in the hospital but through the local police, and that, according to the Sessions Judge, is a suspicious circumstance.
As the parcel was received intact by the Chemical Analyst at Bombay, it is difficult to see what the point of the criticism is.
The Sessions Judge himself observes: "I do not believe that the police have intercepted this parcel and they deliberately sent an axe with human blood.
However, there is no doubt that the procedure adopted by the doctor is wrong, and is capable of mischief".
It has not been explained and it is not possible to divine what that mischief could have been in this case.
And who could have been the mischief maker unless it be the police? The Sessions Judge stated that be did not believe the suggestion made against the police, but that nevertheless is the assumption underlying his comment.
"Anxious to wound, afraid to strike" would appropriately describe the situation.
The learned Judges disagreed with the reasoning of 1311 the Sessions Judge, and held that as the appellant had admitted the recovery of the axe and as there was human blood on it at that time, it was clear and cogent evidence pointing to his guilt.
I am unable to find any answer to this reasoning.
Pausing here, it will be seen that in discussing the question of the recovery of the blood stained axe, as indeed throughout the judgment, the learned Sessions Judge has taken up an, attitude of distrust towards the police for which it is difficult to find any justification in the evidence an attitude which, I regret to say, is becoming a growing feature of judgments of subordinate Magistrates.
When at the trial, it appears to the court that a police officer has, in the discharge of his duty, abused his position and acted oppressively, it is no doubt its clear duty to express its stern disapproval of his conduct.
But it is equally its duty not to assume such conduct on the part of the officer gratuitously and as a matter of course, when there is, as in this case, no reasonable basis for it in the evidence or in the circumstances.
The presumption that a person acts honestly applies as much in favour of a police officer as of other persons, and it is not a judicial approach to distrust and suspect him without good grounds therefore.
Such an attitude could do neither credit to the magistracy nor good to the public.
It can only run down the prestige of the police administration.
It is the case of the prosecution that the appellant unearthed a false beard, which he had buried underneath a shami tree in Shiva, and that he had worn it at the time of the murder.
The appellant did not deny the recovery, but stated that it was not he that had uncovered it but the jamadar.
Both the courts below have accepted the version of the prosecution as true, but while the Sessions Judge held that it was not sufficient to implicate the appellant, the learned Judges held otherwise.
P.W. 16 deposed that he saw the appellant at midnight on the 18th May on the outskirts of Kalawad wearing a false beard, and the comment of the Sessions Judge on this evidence is: " I do not see bow this evidence will prove the 1312 prosecution case beyond reasonable doubt.
At best, it will suffice to raise suspicion against the accused".
But if the beard was discovered by the appellant, then surely it is a valuable link in the chain of evidence against him.
Then we come to the confession made by the appellant to P.W. 21.
The Magistrate has deposed that he had satisfied himself that it was voluntary, before he recorded it.
Now, the facts relating to this matter are these, The appellant was, as already stated, arrested on the 20th May and discoveries of the axe and the false beard were made through him, and on the 21st he was sent to the Magistrate with a letter that he desired to make a confession.
The Magistrate has given evidence that he did not record the confession at once, as he wanted the appellant "to cool down", and accordingly gave him ten days to reflect, and committed him to judicial lock up.
There is nothing improper in this, and indeed ' it is a commendable precaution for ensuring that the confession was made voluntary.
From 21 5 1952 to 3 6 1952 the appellant continued in judicial lock up, and this is a circumstance which normally should negative the possibility of there having been a threat or inducement.
But the Sessions Judge declined to attach any weight to it, because both the police lock up and the judicial lock up were situated in the same compound, separated by a distance of 20 feet, and were guarded by the same police officers, and though the judicial lockup had its own warder and clerk jailor, they kept watch only during daytime, and therefore even though the police could have had no access inside the lock up, they had "every opportunity to threaten and bully the accused".
The Sessions Judge accordingly held that the confession was not voluntary.
On appeal, the learned Judges came to a different conclusion.
They considered that the possibility of threats having been uttered through the bars was too remote and unsubstantial to form the 'basis for any 1313 conclusion, and that all the circumstances indicated that the confession was voluntary.
These are the salient points that emerge out of the evidence.
The position may be thus summed up: (1) No special weight attaches to the findings of the Sessions Judge on the around that they are based on the evidence of witnesses whom he had the advantage of seeing in the box, and believed.
The oral evidence was all on the side of the prosecution, and that was substantially accepted by the Sessions Judge.
His judgment is based on the probabilities of the case, and of them, the learned Judges were at least as competent to judge, as he.
(2) The finding of the Sessions Judge in so far as it related to the recovery of bloodstained axe was clearly erroneous, as it did not follow on his reasoning.
(3) As regards the confession, the conclusion of the Sessions Judge rests on nothing tangible, and is largely coloured by a general distrust of the police, not based on evidence or justified by the circumstances.
(4) The learned Judges were of the opinion that even excluding the confession, the other evidence in the case was sufficient to establish the guilt of the appellant.
(5) All the four assessors were of the opinion that the appellant was guilty.
Now, returning to the two questions which have formed the basis of the preceding discussion, (1) what is it that the High Court has to do in exercise of its powers under section 417, having regard to the findings reached by it and set out above, and how does the doctrine of "compelling reasons" bear upon it? (2) What are the grounds on which we can interfere with its decision? A court hearing an appeal under section 417 might be confronted with three possibilities: (i) It might come to the same conclusion as the trial court on the questions in issue, in which case, of course, it should dismiss the appeal; (ii) It might consider that the evidence was not clear and conclusive one way or the other, in which case its duty 1314 as an appellate court would be not to interfere with the judgment appealed against; and (iii) it might come to a conclusion on an appreciation of the evidence opposite to that reached by the court of first instance, in which case it would clearly be its duty in exercise of its powers under section 417 to set aside the order of acquittal.
Wherein does the theory of "compelling reasons" come in the scheme? There is no need for it in the second category, because even apart from it, the same result must, as already stated, follow on the principles applicable to all courts of appeal.
Then, there remains the third category of cases.
If the High Court comes to the conclusion on an appreciation of the evidence that the appellant is guilty, has it, nevertheless, to confirm the order of acquittal on the basis of this theory? Surely not, as that would render the right conferred by section 417 illusory.
It has no independent value as bearing on its powers under section 417.
If that is the true position, it follows on the principles laid down in Sheo Swarup vs King Emperor(1) and Nur Mohammad vs Emperor(2) and in Pritam Singh vs The State(3) that this Court cannot interfere with the orders passed under section 417 merely on the ground that the findings of fact were not justified, having regard to the doctrine of "compelling reasons".
In my opinion, this appeal ought to be dismissed.
ORDER.
BY THE COURT.
In accordance with the Judgment of the majority this Appeal is allowed.
The conviction and sentence are set aside and the Appellant is acquitted.
(1) [1934] L.R. 61 I.A.398.
(2) A.I.R. 1945 P.C. 151.
| Per BOSE, and CHANDRASEKHARA AIYAR JJ.
(VENKATKRAMA AYYAR J. dissenting).
It is well settled that the High Court should not set aside an order of acquittal under section 417 of the Code of Criminal Procedure simply because it differs from the trial Court as to the appreciation of the evidence; there must be substantial and compelling reasons for doing so.
Where the trial Court takes a reason.
able view of the facts of the case, interference is not justifiable unless there are really strong reasons for holding otherwise.
Amar Singh vs State of Punjab ([1953] S.C.R. 418) and Surajpal Singh vs State ([1952] S.C.R. 193), referred to.
The accused in a criminal case must be given the benefit of every reasonable doubt and, therefore, when he offers a reasonable explanation of his conduct, although he cannot prove it, that explanation should ordinarily be accepted unless the circumstances indicate that it is false.
Consequently, in a case where an accused person, charged under SS. 302 and 447 of the Indian Penal Code, repudiated his confession at the earliest opportunity as having been made under Police threats administered to him at night while in jail custody and there was evidence to show that the Police had access to him there, and there was nothing to displace his statement that he was threatened by them, the finding of the Sessions Judge that the confession was not voluntary in character was fair and reasonable and in the absence of any compelling reason the High Court should not have set aside the order of acquittal.
1286 As the evidence otherwise was insufficient to warrant a conviction the accused was acquitted.
Per VENKATARAMA AYYAR J.
This is not a case in which the Supreme Court should interfere under article 136 of the Constitution.
The Constitution by specifically providing for an appeal on facts under article 134(1) intended to exclude it under article 136 and like the Privy Council this Court will not function as a further Court of appeal on facts in criminal cases.
The fact that the appeal in the High Court was one against an order of acquittal makes no difference as the powers of an appellate Court are the same in all appeals, whether against acquittal or against conviction.
Pritam Singh vs The State ([1950] S.C.R. 453), Sheo Swarup vs King Emperor ([1934] L.R. 61 I.A. 398) and Nur Mohammad vs Emperor (A.I.R. , relied on.
The expression "compelling reasons" used in Surajpal Singh 's case should be read only in the context of that case and should not be treated as a rigid formula so as to restrict the powers of the Court, or the right of appeal conferred on the State by section 417 of the Code or to place a judgment of acquittal in a position of vantage and give the accused a protection which the law does not afford to them.
Such a formula can be of use only as guiding principle for the appellate Courts in deter mining questions of fact.
Surajpal Singh vs The State ([1952] S.C.R. 193), considered.
Consequently, the findings arrived at by the High Court were not open to review by this Court under article 136 of the Constitution and as there was evidence apart from the retracted confession to support the view, it had taken on merits, the appeal must be dismissed.
|
Appeal from a judgment and decree of the Patna High Court dated 25th March, 1949, in A.S. 2280 of 1948 reversing an appellate _decree of the Subordinate Judge in Suit No. 62 of 1948.
Baldev Sahay (T. K. Prasad, with him) for the appel lant.
N.C. Chatterjee (H.J. Umrigar, withhim) for the respond ent. 1951.
February 2.
The judgment of the Court was deliv ered by FAZL ALL J.
This is an appeal from a judgment and decree of the High Court of Judicature at Patna reversing the appellate decree of a Subordinate Judge in a suit insti tuted by the respondents.
The facts of the case are briefly these.
The respondents have been in occupation as a monthly tenant of several blocks of premises belonging to the appellants at a monthly rental of Rs. 112.
The rent for the months of March, April and May, 1942, having fallen into arrears, they remitted it along with the rent for June, on 28th June, 1947, by means of two cheques.
As the appellants did not accept the cheques, on 4th August, 1947, the re spondents remitted the amount subsequently by postal money order.
On 12th August, 1947, the appellants, maintaining that there was non payment of rent and hence the respond ents were liable to be evicted, under section 1 1 (1) (a) of the Bihar Buildings (Lease, Rent and Eviction) Control Act, 1947 (Bihar Act III of 1947), applied to the House Control ler for the eviction of the respondents from the premises.
Section 11 (1) (a) of the Act runs as follows : "Notwithstanding anything contained in any agreement or law to the contrary and subject to the provisions of section 12, where a tenant is in possession of any building, he shall not be liable to be evicted therefrom, whether in execution of a decree or otherwise, except 147 (a) in the case of a month to month tenant, for non payment of rent or breach of the conditions of the tenancy, or for subletting the building or any portion thereof with out the consent of the landlord, or if he is an employee of the landlord occupying the building as an employee, on his ceasing to be in such employment ;" On 30th August, 1947, the respondents, whose money order had in the meantime been returned by the appellants, deposited the rent up to the month of June in the Office of the House Controller.
Notwithstanding this deposit, the House Controller passed an order on the both November, directing the eviction of the respondents by 10th May, 1948, and holding that they had made themselves liable to eviction by reason ' of non payment of rent.
The order of the House Controller was upheld by the Commissioner on appeal on the 27th April, 1948, and thereupon the respondents filed the present suit in the Patna Munsif 's Court for a declaration that the order of the ContrOller dated the 10th November, 1947, was illegal, ultra vires and without jurisdiction.
The suit was dismissed by the Munsif and his decree was upheld on appeal, but the 'High Court decreed the suit holding that the order of the Rent Controller was without jurisdiction.
The appellants were thereafter granted leave to appeal by the High Court, and they have accordingly preferred this appeal.
The High Court has delivered a somewhat elaborate judg ment in the case, but it seems to us that the point ' aris ing in this appeal is a simple one.
The main ground on which the respondents have attacked the order of eviction passed by the House Controller is that in fact there was no non payment of rent, and, since no eviction can be ordered under the Bihar Act unless non payment is established, the House 'Controller had no jurisdiction to order eviction.
On the other hand, one of the contentions put forward on behalf of the appellants is that there was non payment of rent within the meaning of that expression as used in the Act, since the rent was not paid as and when it 148 fell due.
It was pointed out that the rent for the month of March became due in April and the rent for April became due in May, but no step was taken by the respondents to pay the arrears until the 28th June, 1947.
It appears that at the inception of the tenancy, the respondents had paid one month 's rent in advance, and it had been agreed between them and the appellants that the advance rent would be adjusted whenever there was default in payment of rent for full one month.
It was however pointed out that the advance payment could be adjusted only for one month 's rent, but, in the present case, the rent for three months had become due, and, since in a monthly tenancy the rent is payable for month to month, the rent for each month becoming due in the subse quent month, non payment of that rent at the proper time was sufficient to attract the provisions of section 11(1) (a) of the Act.
The appellants also raised a second contention, namely, that having regard to the scheme of the Act, the House Controller was fully competent to decide whether the condition precedent to eviction had been satisfied, anal once that decision had been arrived at, it could not be questioned in a civil court.
This contention was accepted by the first two courts, and the first appellate court dealing with it observed as follows : "But the Buildings Control Act has authorised the Con troller to decide whether or not there is nonpayment of rent and it is only when he is satisfied that there has been nonpayment of rent that he assumes jurisdiction.
If the question of jurisdiction depends upon the decision of some fact or point of law, and if the court is called upon to decide such question, then such decision cannot be collater ally impeached (vide 12 Patna 117).
In my opinion when the Controller assumed the jurisdiction on being satisfied that there was non payment of rent and proceeded to pass an order of eviction.
I think the Civil Court can have no jurisdic tion to challenge the validity of such order.
" The High Court did not however accept this view, and after referring to section 111 of the Transfer of 149 Property Act, proceeded to propound its own view in these words: "Regard being had to the circumstances in which the Act under consideration was enacted and its object, as stated in the preamble as being 'to prevent unreasonable eviction of tenants ' from buildings, it would seem that the expres sion 'non payment of rent ' in section 11 in the context in which it is used must be given an interpretation which would have the effect of enlarging the protection against determi nation of a tenancy enjoyed by a tenant under the ordinary law.
The Legislature, therefore, by enacting that a tenant shall not be liable to be evicted 'except for nonpayment of rent ' should be held to have intended to protect a tenant from being evicted from a building in his possession for being a defaulter in payment of rent, if he brings into Court all the rent due from him before the order of his eviction comes to be passed .
If, as contended for on behalf of the respondents, section 11 of the Act were to be construed as entitling a landlord to apply for eviction of a tenant on the ground of irregular payment of rent amounting to ' non payment ' of rent and as empowering the Controller to determine as to whether irregular payment of rent amounts to non payment of rent within the meaning of sub section (1)of section 11, and subsection (3) of section 18 were to be construed as making the decision of the Controller on this question of law a final one, it will appear that not only this Act will have conferred a right upon the landlord very much in excess of the right that he enjoys under the ordinary law in the matter of determination of tenancies, but that it will have conferred very much larger power on the Controller than that possessed by the Civil Courts under the ordinary law in the matter of passing decrees for eviction of tenants.
The principle of law and equity on which relief against forfei ture for ',non payment of rent ' is based, will have been completely abrogated, and the protection of a tenant in possession of a building instead of being enlarged will 150 have been very much curtailed.
A construction of these provisions, which is calculated to bring about these conse quences, cannot and is not in accordance with the circum stances to which this Act was intended to apply and indeed cannot be accepted.
The contention of Mr. Lalnarain Sinha on behalf of the respondent that the circumstances disclosed in the petition raised the question for determination by the Controller whether a case of non payment of rent in law was established, and his decision of that question, even if wrong in law, is not liable to be questioned in the Civil Court must be over ruled.
" It seems to us that the view taken by the High Court is not correct.
Section 11 begins with the words "Notwithstand ing anything contained in any agreement or law to the con trary," and hence any attempt to import the provisions relating to the law of transfer of property for the inter pretation of the section would seem to be out of place.
Section 11 is a self contained section, and it is wholly unnecessary to go outside the Act for determining whether a tenant is liable to be evicted or not, and under what condi tions he can be evicted.
It clearly provides that a tenant is not liable to be evicted except on certain conditions, and one of the conditions laid down for the eviction of a month to month tenant is non payment of rent.
Sub section (8) (b) of section 11 provides that the "Controller shall, if he is satisfied that the claim of the landlord is bona fide, make an order directing the tenant to put the landlord in possession of the building" and if he is not so satisfied he shall make an order rejecting the application.
Section 16 empowers the Controller to make enquiries and inspections and to summon and enforce the attendance of witnesses and compel the production of documents in the same manner as is provided in the Code of Civil Procedure.
Section 18 pro vides that any person aggrieved by an order passed by the Controller may within 15 days of the receipt of such order by him, prefer an appeal to the Commissioner of the Divi sion, and it also prescribes the procedure for the hearing of the appeal.
Sub section (3) 151 of this section states that "the decision of the Commission er and subject only to such decision, an order of the Con troller shall be final, and shall not be liable to be ques tioned in any Court of law whether in a suit or other pro ceeding by way of appeal or revision.
" The Act thus sets up a complete machinery for the investigation of those matters upon which the jurisdiction of the Controller to order eviction of a tenant depends, and it expressly makes his order final and subject only to the decision of the Commis sioner.
The Act empowers the Controller alone to decide whether or not there is non payment of rent, and his deci sion on that question is essential before an order can be passed by him under section 11.
Such being the provisions of the Act we have to see whether it is at all possible to question the decision of the Controller on a matter which the Act clearly empowers him to decide.
The law on this subject has been very lucidly stated by Lord Esher M.R. in The Queen vs Commissioners for Special Purposes of the Income Tax(1), in these words : "When an inferior court or tribunal or body, which has to exercise the power of deciding facts, is first estab lished by Act of Parliament, the legislature has to consider what powers it will give that tribunal or body.
It may in effect say that, if a certain state of facts exists and is shown to such tribunal or body before it proceeds to do certain things, it shall have jurisdiction to do such things, but not otherwise.
There it is not for them conclu sively to decide whether that state of facts exists, and, if they exercise the jurisdiction without its existence, what they do may be questioned, and it will be held that they have acted without jurisdiction.
But there is another state of things which may exist.
The legislature may intrust the tribunal or body with a jurisdiction, which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction, on finding that it does exist, to proceed further or do (1) , at .319.
20 152 something more.
When the legislature are establishing such a tribunal or body with limited jurisdiction, they also have to consider, whatever jurisdiction they give them, whether there shall be any appeal from their decision, for otherwise there will be none.
In the second of the two cases I have mentioned it is an erroneous application of the formula to say that the tribunal cannot give themselves jurisdiction by wrongly deciding certain facts to exist, because the legis lature gave them jurisdiction to determine all the facts, including the existence of the preliminary facts on which the further exercise of their jurisdiction depends; and if they were given jurisdiction so to decide without any appeal being given, there is no appeal from such exercise of their jurisdiction.
" On the same lines are the following observations of Sir James Colville in The Colonial Bank of Australasia vs Wil lan(1), which is a case dealing with the principles on which a writ of certiorari may be issued : "Accordingly, the authorities. establish that an adju dication by a Judge having jurisdiction over the subject matter is, if no defect appears on the face of it, to be taken as conclusive of the facts stated therein; and that the Court of Queen 's Bench will not on certiorari quash such an adjudication on the ground that any such fact, however essential, has been erroneously found.
" There can be no doubt that the present case falls within the second category mentioned by Lord Esher, because here the Act has entrusted the Controller with a jurisdiction, which includes the jurisdiction to determine whether there is non payment of rent or not, as well as the jurisdiction, on finding that there is nonpayment of rent, to order evic tion of a tenant.
Therefore, even if the Controller may be assumed to have wrongly decided the question of non payment of rent, which by no means is clear, his order cannot be questioned in a civil court.
It seems to us that on this short ground this appeal must succeed, and we (1) , at p. 443.
153 accordingly allow the appeal, set aside the judgment and decree of the High Court and restore the decree of the courts below.
The appellants will be entitled to costs throughout.
Appeal allowed.
| Section 11 of the Bihar Buildings (Lease, Rent and Eviction) Control Act, 1947, has entrusted the Controller with a jurisdiction, which includes the jurisdiction to determine whether there is non payment of rent or not, as well as the jurisdiction, on finding that there is non payment of rent, to order eviction of a tenant.
Therefore, even if a Controller has wrongly decided the question wheth er there has been non payment of rent, his order for evic tion on the ground that there has been non payment of rent cannot be questioned in a civil court.
Queen vs Commissioners for Special Purposes of Income Tax (21 O.B.D. 313) and Colonial Bank of Australasia vs Willan (L.R. P.C. 417) relied on. 146
|
Appeal No. 255 of 1954.
Appeal by Special Leave from the judgment and decree dated April 29, 1953, of the former Pepsu High Court in R. section A. Nos. 57 and 130 of 1952, arising out of the judgment and decree dated March 8, 1952, of the Court of Addl.
Judge, Faridkot, in Civil Appeal No. 10 of 1952, against the judgment and decree dated December 4, 1951, of the Court of `ubJudge 11 Class, Faridkot, in File No. 13 of 1951.
Jagan Nath Kaushal and K. L. Mehta, for the appellant.
Kapur Chand Puri and Tarachand Brijmohan Lal, for respondents Nos. 1 to 3. 1958.
May 20.
The Judgment of the Court was delivered by SUBBA RAO J.
This appeal by Special Leave against the judgment and decree of the High Court of Patiala and East Punjab States Union raises an interesting question pertaining to the Law of Preemption.
881 The material facts are not in dispute and may be briefly stated: The dispute relates to a land measuring 179 kanals and 2 marlas, situate in village Wanderjatana.
On August 26, 1949, defendants 3 to 7 sold the said land to defendants I and 2 for a consideration of Rs. 37,611.
On August 26, 1950, defendants 8 to 11 instituted a suit, Suit No. 231 of 1950 (Exhibit P. 26/1) in the Court of the Subordinate Judge, 11 Class, Faridkot, to pre empt the said sale on the ground, among others, that they bad a right of preemption.
On January 6, 1951, the vendees, i. e., defendants I and 2, and the plaintiffs therein, i. e., defendants 8 to 11 (appellants in the present appeal), entered into a compromise.
Under the terms of the compromise, the vendees admitted that they had received Rs. 1,700 from defendants 8 to II and that defendants 8 to 1 1 agreed to pay the balance of the consideration, amounting to Rs. 35,911 on the 27th April, 1951,.
It was further agreed that on the payment of the said amount, they should get possession through Court.
As the amount agreed to be paid was in excess of the pecuniary jurisdiction of the Court of the Subordinate Judge, they filed the compromise deed in the Court of the District Judge and on the basis of the said compromise, the District Judge made a decree dated January 23, 1951.
It was provided in the decree that in case defendants 8 to I I failed to pay the balance to the vendees on April 27, 1951, the suit should stand dismissed and that if the said balance was paid on that date, the vendees should deliver possession of the land in dispute to them.
Defendants 8 to 11 deposited the balance of Rs. 35,911 on April 23, 1.951, and got possession of the land on May 17, 1951.
Before the said defendants (8 to 11) deposited the amount in Court under the terms of the compromise decree, the resondents herein, claiming to be owners of land in the same patti, filed Suit No. 13 of 1951 in the Court of the Subordinate Judge, 11 Class, Faridkot, to enforce their right of pre emption.
To that suit the original vendors were impleaded as defendants 3 to 7, the vendees as defendants I and 2 and the plaintiffs in Suit No. 231 of 1950 as defendants 8 to 11.
882 Defendants 8 to 11 contested the suit, inter alia, on the grounds that the plaintiffs had no right of preemption superior to that of theirs, that the suit was barred by limitation and that the whole of the sale consideration had been fixed in good faith and paid.
The learned Subordinate Judge found all the issues in favour of defendants 8 to 11 and dismissed the suit.
On the main issue he found that the said defendants, by obtaining a decree for pre emption before the rival claimants had filed their suit, had become vendees through Court and so the plaintiffs could not succeed unless they had a superior right.
The plaintiffs preferred an appeal to.
the Additionl District Judge, Faridkot, against the said decree.
The District Judge held that the plaintiffs and defendants 8 to 11 had equal rights of pre emption and were entitled to share the sale in the proportion of 3/7 and 4/7 respectively on payment of the proportionate amount of the consideration.
On the main question, he took the view that defendants 8 to 11 did not exercise their right of pre emption when the present suit was instituted for the reason that by the date of the filing of the suit they had not deposited the purchase money in Court.
Both the parties filed Second Appeals against the decision of the District Judge in the High Court of Patiala questioning that part of the decree which went against them.
The High Court upheld that part of the decree of the learned District Judge holding that the plaintiffs were entitled to a share in the suit property but remanded the suit to the District Judge to give his findings on the following two questions: (1) What was the amount paid by defendants 8 to 11 to the original vendees and whether they paid it in good faith; (2) Whether the case would come under section 17C, cl.
(e) of the Punjab Pre emption Act (hereinafter to be referred to as the Act).
As the High Court refused to certify that the case was a fit one for appeal to the Supreme Court, defendants 8 to 11 preferred the above appeal by obtaining special leave of this Court.
The learned Counsel for the appellants raises the following two contentions before us: (1) Section 28 of 883 the Pre emption Act indicates that a property can be divided between equal pre emptors in terms of section 17 of the Pre emption Act only when both the suits are pending before the Court at the time of the passing of the decree ; (2) the appellants exercised their right of pre emption by obtaining a decree or at any rate when they deposited the money payable under the decree and thereby got themselves substituted in place of the original vendees and thereafter, the plaintiff 's can succeed only by proving their superior right to them.
The learned Counsel for the respondents countered the aforesaid argument by stating that the plaintiffs, being pre emptors of equal degree, have got a statutory right under section 17 of the Pre emption Act to share the land with the appellants, and the appellants, having been substituted in place of the original vendees pendente lite, are hit by the doctrine of lis _pendens and therefore, they cannot claim higher rights than those possessed by the original vendees at the time of the filing of the suit.
Before attempting to give a satisfactory answered to the question raised, it would be convenient at the outset to notice and define the material incidents of the right of pre emption.
A concise but lucid statement of the law is given by Plowden J. in Dhani Nath vs Budhu (1) thus: A preferential right to acquire land, belonging to another person upon the occasion of a transfer by the latter, does not appear to me to be either a right to or a right in that land.
It is,jus ad rem aliens acquirendum and not a jus ? 'In re aliena. .
A right to the offer of a thing about to be sold is not identical with a right to the thing itself, and that is the primary right of the pre emptor.
The secondary right is to follow the thing sold, when sold without the proper offer to the pre emptor, and to acquire it, if he thinks fit, in spite of the sale, made in disregard of his preferential right." The aforesaid passage indicates that a pre emptor has two rights: (1) inherent or primary right, i.e., a right (1)136 P. R. 1894 at p. 5ii.
884 to the offer of a thing about to be sold and (2) secondary or remedial right to follow the thing sold.
Mahmood J. in his classic judgment in Gobind Dayal vs Inayatullah (1) explained the scope of the secondary right in the following terms: " It (right of pre emption) is simply a right of sub stitution, entitling the pre emptor, by means of a legal incident to which sale itself was subject, to stand in the shoes of the vendee in respect of all the rights and obligations arising from the sale, under which lie, derived his title.
It is, in effect, as if in a sale deed the vendee 's name were rubbed out and pre emptor 's name inserted in its place".
The doctrine adumbrated by the learned Judge, namely, the secondary right of pre emption is simply a right of substitution in place of the original vendee, has been accepted and followed by subsequent decisions.
The general law of pre emption does not recognize any right to claim a share in the property sold when there are rival claimants.
It is well established that the right of pre emption is a right to acquire the whole of the property sold in preference to other persons (See Mool Chand vs Ganga Jal (2)).
The plaintiff is bound to show not only that his right is as good as that of the vendee but that it is superior to that of the vendee.
Decided cases have recognized that this superior right must subsist at the time the pre emptor exercises his right and that that right is lost if by that time another person with equal or superior right has been substituted in place of the original vendee.
Courts have not looked upon this right with great favour, presumably, for the reason that it operates as a clog on the right of the owner to alienate his property.
The vendor and the vendeeire, therefore, permitted to avoid accrual of the right of pre emption by all lawful means.
The vendee may defeat the right by selling the property to a rival pre emptor with preferential or equal right.
To summarize: (1) The right of pre emption is not a right to the thing sold but a right to the offer of a thing about to be sold.
(i) All. 775, 809.
(2) Lah.
258, 273.
885 This right is called the primary or inherent right.
(2) The pre emptor has a secondary right or a remedial right to follow the thing sold.
(3) It is a right of substitution but not of re purchase, i. e., the pre emptor takes the entire bargain and steps into the shoes of the original vendee.
(4) It is a right to acquire the whole of the property sold and not a share of the property sold.
(5) Preference being the essence of the right, the plaintiff must have a superior right to that of the vendee or the person substituted in his place.
(6) The right being a very weak right, it can be defeated by all legitimate methods, such as the vendee allowing the claimant of a superior or equal right being substituted in his place.
The next question is whether this right is modified or otherwise enlarged by the ' provisions of the Act.
Relevant provisions of the Act, material to the present purpose, read thus: Section 4: " The right of pre emption shall mean the right of a person to acquire agricultural land or village immovable property or urban immovable property in preference to other persons, and it arises in respect of such land only in the case of sales and in respect of such property only in the case of sales or of foreclosures of the right to redeem such property".
Section 13: " Whenever according to the provisions of this Act, a right of pre emption vests in any class or group of persons the right may be exercised by all the members of such class or group joint, and, if not exercised by them all jointly, by any two or more of them jointly, and, if not exercised by any two or more of them jointly, by them severally".
Section 17: " Where several pre emptors are found by the Court to be equally entitled to the right of preemption, the said right shall be exercised, (a)if they claim as co shares, in proportion among themselves to the shares they already hold in the land or property ; (b)if they claim as heirs, whether co sharers or not, in proportion among themselves to the shares in which but for such sale, they would inherit the land or property in the event of the vendor 's decease without other heirs; 886 (c)if they claim as owners of the estate or recognised subdivision thereof, in proportion among themselves to the shares which they would take if the land or property were common land in the estate or the subdivision, as the case may be; (d)if they claim as occupancy tenants, in proportion among themselves to the areas respectively held by them in occupancy right; (e)in any other case, by such pre emptors in equal shares.
" Section 19: " When any person proposes to sell any agricultural land or village immovable property or urban immovable property or to foreclose the right to redeem any village immovable property or urban immovable property, in respect of which any persons have a right of preemption, lie may give notice to all such persons of the price at which he is willing to sell such land or property or of the amount due in respect of the mortgage, as the case may be.
Such notice shall be given through any Court within the local limits of whose jurisdiction such land or property or any part thereof is situate, and shall be deemed sufficiently given if it be stuck up on the chaupal or other public place of the village, town or place in which the land or property is situate.
" Section 20: " The right of pre emption of any person shall be extinguished unless such person shall, within the period of three months from the date on which the notice tinder section 19 is duly given or within such further period not exceeding one year from such date as the court may allow, present to the Court a notice for service on the vendor or mortgagee of his intention to enforce his right of pre emption.
Such notice shall state whether the preemptor accepts the price or amount due on the footing of the mortgage as correct or not, and if not, what sum he is willing to pay." " When the Court is satisfied that tile said notice has been duly served on the vendor or mortgagee the proceedings shall be filed.
" Section 28: " When more suits than one arising out of the same sale or foreclosure are pending the plaintiff 887 in each suit shall be joined as defendant in each of the other suits, and in deciding the suits the court shall in each decree state the order in which each claimant is entitled to exercise his right".
The Act defines the right and provides a procedure for enforcing that right.
It does not enlarge the content of that right or introduce any change in the incidents of that right.
Section 4 embodies the preexisting law by defining the right as a right of a person to acquire land in preference to other persons in respect of ,ales of agricultural lands.
Section 13 cannot be read, as we are asked to do, as a statutory recognition of a right of preemptors of equal degree to exercise their rights piece meal confined to their shares in the land.
Section 13 confers on a group of persons, in whom the right of preemption vests, to exercise that right either jointly or severally, that is to say, either the group of persons or one of them may enforce the right in respect of the entire sale.
Section 17 regulates the distribution of preempted land when the Court finds that several pre emptors are equally entitled to the right of pre emption.
But this Section applies only where (1) the right is yet to be exercised and (2) the pre emptors are found by the Court to be equally entitled to exercise the right.
The section does not confer the right on or against a person, who has already exercised the right and ceased to be a preemptor by his being legitimately substituted in place of the original vendee.
(See Mool Chand vs ganga Jal (1) at p. 274 and Lokha Singh vs Sermukh Singh (2)).
Sections 19 and 20 prescribe the procedure for the exercise of the primary right, while section 28 confers a power on the Court to join together two or more suits arising out of the same sale, so that suitable directions may be given in the decree in regard to the order in which each claimant is entitled to exercise the right.
This section is enacted presumably to avoid conflict of decisions and finally determine the rights of the various claimants.
The aforesaid provisions do not materially affect the characteristics of the right of pre (1) Lah.
113 (2) A.I.R. 1952 Punj.
206, 207.
888 emption as existed before the Act.
They provide a convenient and effective procedure for disposing of together different suits, arising out of the same transaction, to avoid conflict of decisions, to fix the order of priority for the exercise of their rights and also to regulate the distribution of the preempted land between rival pre emptors.
The provisions do not in any way enable the preemptor to exercise his right without establishing his superior right over the vendee or the person substituted in his place or to prevent the vendor or the vendee, by legitimate means, to defeat his right by getting substituted in place of the vendee a pre emptor with a superior right to or an equal right with that of the plaintiff.
Nor can we accept the argument of the learned counsel for the appellants that section 28 precludes the Court from giving a decree for pre emption in a case where the two suits were not joined together but one of the suits was decreed separately.
Section 28 enacts a convenient procedure, but it cannot affect the substantative rights of the parties.
We do not see that, if the plaintiffs were entitled to a right of pre emption, they would have lost it by the appellants obtaining a decree before the plaintiffs instituted the suit, unless it be held that the decree itself had the effect of substituting them in place of the original vendees.
We cannot, therefore, hold that the plaintiffs ' suit is in any way barred under the provisions of the Act.
This leads us to the main question in this case, namely, whether the appellants having obtained a consent decree oil January 23, 1951, in their suit against the vendees and having paid the amount due under the decree and having taken delivery of the property and thus having got themselves substituted in place of the original vendees, can legitimately defeat the rights of the plaintiffs, who, by reason of the aforesaid substitution, were only in the position of pre emptors of equal degree vis a vis the appellants and therefore ceased to have any superior rights.
The learned Counsel for the respondents contends that the appellants are hit by the doctrine of lis pendens and 889 therefore the act of substitution, which was effected on April 23, 1951, could not be in derogation of their right of pre emption, which they have exercised by filing their suit on February 15, 1951.
It is now settled law in the Punjab that the rule of lis pendens is as much applicable to a suit to enforce the right of pre emption as to any other suit.
The principle on which the doctrine rests is explained in the leading case of Bellami vs Sabine (1), where the Lord Chancellor said that pendente lite neither party to the litigation can alienate. . the property so as to affect his opponent.
In other words, the law does not allow litigant parties, pending the litigation, to transfer their rights to the property in dispute so as to prejudice the other party.
As a corollary to this rule it is laid down that this principle will not affect the right existing before the suit.
The rule, with its limitations, was considered by a Full Bench of the Lahore High Court in Mool Chand vs Ganga Jal (2).
In that case, during the pendency of a pre emption suit, the vendee sold the property which was the subject matter of the litigation to a person possessing a right of pre emption equal to that of the pre emptor in recognition of that person 's right of pre emption.
This re sale took place before the expiry of the period of limitation for instituting a pre emption suit with respect to the original sale.
The Full Bench held that the doctrine of lis pendens applied to preemption suits; but in that case, the resale in question did not conflict with the doctrine of lis pendens.
Bhide J. gave the reason for the said conclusion at page 272 thus: " All that the vendee does in such a case is to take the bargain in the assertion of his pre existing pre emptive right, and hence the sale does not offend against the doctrine of lis pendens ".
Another Full Bench of the Lahore High Court accepted and followed the aforesaid doctrine in Mt. Sant Kaur vs Teja Singh (3).
In that case, pending the suit for pre emption, the vendee sold the land purchased (i) ; ; (2) Lah. 258, 273.
(3) I.L.R. [1946] Lah.
467, 890 by him to a person in recognition of a superior right of pre emption.
Thereafter, the second purchaser was brought onrecord and was added as a defendant to the suit.
At the time of the purchase by the person having a superior right of pre emption, his right to enforce it was barred by limitation.
The ]High Court held that that circumstance made a difference in the application of the rule of lis pendens.
The distinction between the two categories of cases was brought out in bold relief at page 145 thus: " Where the subsequent vendee has still the means of coercing, by means of legal action, the original vendee into surrendering the bargain in his favour, a surrender as a result of a private treaty, and out of Court, in recognition of the right to compel such surrender by means of a suit cannot properly be regarded as a voluntary transfer so as to attract the application of the rule of lis pendens.
The correct way to look at the matter, in a case of this kind, is to regard the subsequent transferee as having simply been substituted for the vendee in the original bargain of sale.
He can defend the suit on all the pleas which he could have taken had the sale been initially in his own favour. " " However, where the subsequent transferee has lost the means of making use of the coercive machinery of the law to compel the vendee to surrender the original bargain to him, a re transfer of the property in the former 's favour cannot be looked upon as anything more than a voluntary transfer in the former 's favour of such title as he had himself acquired under the original sale.
Such transfer has not the effect of substituting the subsequent transferee in place of the vendee in the original bargain.
Such a transferee takes the property only subject to the result of the suit.
Even if lie is impleaded as a defendant in such suit, he cannot be regarded as anything more than a representative in interest of the original vendee, having no right to defend the suit except on the pleas that were open to such vendee himself ".
This case, therefore, expressly introduces a new element in the applicability of the doctrine of lis pendens 891 to a suit to enforce the pre emptive right.
If the right of the pre emptor of a superior or equal degree was subsisting and enforceable by coercive process or otherwise, his purchase would be considered to be in exercise of that pre existing right and therefore not hit by the doctrine of lis pendens.
On the other hand, if he purchased the land from the original vendee after his superior or equal right to enforce the right of preemption was barred by Limitation, he would only be in the position of a representative in interest of the vendee, or to put it in other words, if his right is barred by limitation, it would be treated as a non existing right.
Much to the same effect was the decision of another Full Bench of the Lahore High Court in Mohammad Sadiq vs Ghasi Ram (1).
There, before the institution of the suit for pre emption, an agreement to sell the property had been executed by the vendee in favour of another prospective pre emptor with an equal degree of right of pre emption; subsequent to the institution of the suit, in pursuance of the agreement, a sale deed had been executed and registered in the latter 's favour, after the expiry of the limitation for a suit to enforce his own pre emptive right.
The Full Bench held that the doctrine of lis pendens applied to the case.
The principle underlying this decision is the same as that in Mt. Sant Kaur vs Te a Singh (2), where the barred right was treated as a non existent right.
The same view was restated by another Full Bench of the East Punjab High Court in Wazir Ali Khan vs Zahir Ahmad Khan (3).
At p. 195, the learned Judges observed: " It is settled law that unless a transfer pendente lite can be held to be a transfer in recognition of a subsisting pre emptive right, the rule of lis pendens applies and the transferee takes the property subject to the result of the suit during the pendency where of it took place".
The Allahabad High Court has applied the doctrine of lis pendens to a suit for pre emption ignoring the limitation implicit in the doctrine that it cannot affect (i) A.I.R. 1946 Lah.
(2) I.L.R. , (3) A.I.R. [1949 East Punj.
[93. 892 a pre existing right.
(See Kundan Lal vs Amar Singh (1)).
We accept the view expressed by the Lahore High Court and East Punjab High Court in preference to that of the Allahabad High Court.
In view of the aforesaid four Full Bench decisions three of the Lahore High Court and the fourth of the East Punjab High Court a further consideration of the case is unnecessary.
The settled law in the Punjab may be summarized thus: The doctrine of lis pendens applies only to a transfer pendente lite, but it cannot affect a pre existing right.
If the sale is a transfer in recognition of a pre existing and subsisting right, it would not be affected by the doctrine, as the said transfer did not create now right pendente lite ; but if the pre existing right became unenforceable by reason of the fact of limitation or otherwise, the transfer, though ostensibly made in recognition of such a right, in fact created only a new right pendente lite.
Even so, it is contended that the right of the appellants to enforce their right of pre emption was barred by limitation at the time of the transfer in their favour and therefore the transfer would be hit by the doctrine of lis pendens.
This argument ignores the admitted facts of the case.
The material facts may be recapitulated: Defendants 3 to 7 sold the land in dispute to defendants 1 and 2 on August 26, 1949, and the sale deed was registered on February 15, 1950.
The appellants instituted their suit to pre empt the said sale on August 26, 1950, and obtained a compromise decree on January 23, 195 1.
They deposited the balance of the amount payable on April 23, 1951, and took possession of the land on May 17, 1951.
It would be seen from the aforesaid facts that the appellants ' right of pre emption was clearly subsisting at the time when the appellants deposited the amount and took possession of the land, for they not only filed the suit but obtained a decree therein and complied with the terms of the decree within the time prescribed thereunder.
The coercive process was still in operation.
if so, it follows that the appellants are not hit by the (i)A.I.R. 1927 All.
VI 893 doctrine of lis pendens and they acquired an indefeasible right to the suit land, at any rate, when they took possession of the land pursuant to the terms of the decree, after depositing in Court the balance of the amount due to the vendors.
We shall briefly touch upon another argument of the learned Counsel for the appellants, namely, that the compromise decree obtained by them, whereunder their right of pre emption was recognized, clothed them with the title to the property so as to deprive the plaintiffs of the equal right of pre emption.
The right of pre emption can be effectively exercised or enforced only when the pre emptor has been sub stituted by the vendee in the original bargain of sale.
A conditional decree, such as that with which we are concerned, whereunder a pre emptor gets possession only if he pays a specified amount within a prescribed time and which also provides for the dismissal of the suit in case the condition is not complied with, cannot obviously bring about the substitution of the decreeholder in place of the vendee before the condition is complied with.
Such a substitution takes effect only when the decree holder complies with the condition and takes possession of the land.
The decision of the Judicial Committee in Deonandan Prashad Singh vs Ramdhari Chowdhri (1) throws considerable light on the question whether in similar circumstances the pre emptor can be deemed to have been substituted in the place of the original vendee.
There the Subordinate Judge made a pre emption decree under which the pre emptors were in possession from 1900 to 1904, when the decree was reversed by the High Court and the original purchaser regained possession and in 1908, the Privy Council, upon further appeal, declared the pre emptors ' right to purchase, but at a higher price than decreed by the Subordinate Judge.
In 1909 the pre eimptors paid the additional price and thereupon again obtained possession.
The question arose whether the pre emptors were not entitled to mesne profits for the period between 1904 to 1909, i.e., during the period the judg (i)(1916) L. R. 44 1.
A. 80.
894 ment of the first appellate Court was in force.
The Privy Council held that during that period the preemptors were not entitled to mesne profits.
The reason for that conclusion was stated at page 84 thus: " It therefore follows that where a suit is brought it is on payment of the purchase money on the specified date that the plaintiff obtains possession of the property, and until that time the original purchaser retains possession and is entitled to the rents and profits.
This was so held in the case of Deokinandan vs Sri Ram (1) and there Mahmud J. whose authority is well recognized by all, stated that it was only when the terms of the decree were fulfilled and enforced that the persons having the right of pre emption become owners of the property, that such ownership did not vest from the date of sale, notwithstanding success in the suit, and that the actual substitution of the owner of the pre empted property dates with possession under the decree ".
This judgment is, therefore, a, clear authority for the position that the pre emptor is not substituted in the place of the original vendee till conditions laid down in the decree are fulfilled.
We cannot, therefore, agree with the learned Counsel that the compromise decree itself perfected his clients ' right in derogation to that of the plaintiffs.
But as we have held that the appellants complied with the conditions laid down in the compromise decree, they were substituted in the place of the vendee before the present suit was disposed of.
In the aforesaid view, the other questions raised by the appellants do not arise for consideration.
In the result, the appeal is allowed and the suit is dismissed with cost, , throughout.
Appeal allowed.
(1) All.
| Upon the sale of certain village land the appellants filed a suit for pre emption, and a compromise decree was passed allowing pre emption provided the appellants deposited the purchase amountbvacertaindate.
The appellants Posited the amount and got Possession of the land.
Before the appellants deposited 879 the amount, the respondents who were pre emptors of an equal degree, filed a suit to enforce their right of pre emption.
The appellants contended that the land could be divided between two equal pre emptors only when both the suits were pending before the court at the time of the passing of the decree, and that the appellants having obtained the decree and paid the amount got substituted in place of the vendees and the respondents could succeed only by establishing a superior right of pre emption.
The respondents countered that they had a statutory right under section 17 Of the Punjab Pre emption Act to share the land with the appellants and that the appellants, having been substituted in place of the vendees Pendente lite, were hit by the doctrine of lis pendens and could not claim a higher right than the vendees: Held, that the respondents ' suit could not succeed as they (lid not have a superior right of pre emption over the appellants who had become substituted in place of the vendees upon payment of the purchase money under their decree.
A pre emptor has two rights: (i) inherent or primary right to the offer of a thing about to be sold and (2) a secondary or remedial right to follow the thing sold.
The secondary right is simply a right of substitution in place of the original vendee.
Dhani Nath vs Budhu, 136 P. R. 1894 at P. 511 and Gobind Dayal vs Inayatullah, All. 775, followed.
In a suit for pre emption the plaintiff must show that his right is superior to that of the vendee and that it subsists at the time he exercises his right.
This right is lost if before he exercises it another person with an equal or superior right has been substituted in place of the original vendee.
The Punjab Preemption Act defines the right of pre emption and provides a procedure for enforcing it.
It does not enlarge the content of this right nor does it introduce any change in the incidents of the right.
Section 28 Of the Act does not preclude the Court from giving a decree for pre emption in a case where the suits are not joined together and one of the suits has been decreed separately.
The doctrine of lis pendens applies only to a transfer Pendente lite, but it cannot affect a pre existing right.
If the sale is a transfer in recognition of a preexisting and subsisting right, it would not be affected by the doctrine, as the transfer does not create a new right Pendente lite but if the preexisting right became unenforceable by reason of limitation or otherwise, the transfer, though ostensibly made in recognition of such a right, in fact creates only a new right pendente lite.
The appellants ' right of pre emption was subsisting and was not barred by limitation at the time of the transfer in their favour as they had filed a suit and had obtained a decree and the coercive 112 880 process was still in operation.
Consequently the appellants were not hit by the doctrine of lis pentlens and they acquired an indefeasible right to the land when they took possession of it after depositing the purchase money in court.
Mool Chand vs Ganga jal, Lah.
258, Mt. Sant Kaor vs Teja Singh, I.L.R. , Mohammad Sadhiq vs Ghasi Ram, A.I.R. 1946 Lah.
322 and Wazir Ali Khan vs Zahir Ahmad Khan, A.I.R. 1949 East Punj.
193, approved.
Kundan Lal vs Amar Singh, A.I.R. 1927 All.
664, disapproved.
The right of pre emption is effectively exercised or enforced only when the pre emptor has been substituted for the vendee.
A conditional decree whereunder the pre emptor gets possession only if he pays a specified amount within a prescribed time and which also provides for the dismissal of the suit in case the condition is not fulfilled, cannot bring about the substitution of the decree holder for the vendee before the condition is fulfilled.
Such substitution takes effect only when the decree holder fulfils the condition and takes possession of the land.
Deonandan prashad Singh vs Ramdhari Choudhyi, (1916) L. R. 44 I. A. 80, followed.
|
Civil Appeal No. 5 of 1969.
126 From the Judgment and Order dated 20th June, 1968 of the Bombay High Court in Appeal No. 48/66.
K. Jayaram, Amicus Curiae for the Appellant.
Y. section Chitaley, M. V. Goswami and Ambrish Kumar for the Respondent.
The Judgment of the Court was delivered by UNTWALIA, J.
The plaintiff appellant filed a suit in the Trial Court in the year 1963 alleging certain unjustifiable and illegal actions on the part of his employer, the respondent in this appeal.
The reliefs claimed in the suit were the following: "(a) That it may be declared that the defendant has removed the plaintiff from service illegally and without any reason.
(b) That it may be declared that the defendant failed and neglected to re employ the plaintiff although the defendant restarted the factory.
(c) That the defendant be ordered to reinstate the plaintiff to his former job with due benefits and advantages.
(d) In the alternative the defendant may be ordered to pay to the plaintiff such compensation as to the Hon 'ble Court may deem fit.
(e) For costs of the suit.
(f) For such further and other reliefs as this Hon 'ble Court may deem fit.
" On contest by the respondent, the Trial Court held that the dispute raised by the appellant was in the nature of an industrial dispute and hence the Civil Court had to jurisdiction to try it.
The appellant took the matter in appeal before the First Appellate Court.
It allowed the appeal and held that the dispute raised was of a civil nature and the case was cognizable by a Civil Court.
The respondent filed the second appeal in the High Court and the High Court has agreed with the view of the Trial Court.
It has said that the appellant had not claimed damages by pleading wrongful dismissal and breach of the contract of his service.
The facts pleaded by him all converged to show that the dispute was an industrial dispute cognizable only by an industrial court and not by a Civil Court.
The appellant has presented his appeal in this Court by a certificate granted by the High Court.
127 The Court is obliged to Mr. K. Jayaram for assisting it as Amicus Curiae in this case.
After having appreciated the entire facts and the circumstances of the case, we are of the opinion that it is not quite correct to say that the suit filed by the appellant is not maintainable at all in a Civil Court.
The correct position of law is that the main reliefs asked for by him which when granted will amount to specific performance of the contract of service and therefore they cannot be granted.
There are a number of decisions of this Court to that effect; to wit Dr. section B. Dutt vs University of Delhi(1), section R. Tiwari vs District Board Agra & Anr.(2) and Indian Airlines Corporation vs Sukhdeo Rai.(3) Reference was also be made in this connection to the decision of this Court in Premier Automobiles Ltd. vs Kamlekar Shantaram Wadke of Bombay and Ors.(4) But then in the alternative, the appellant had also prayed for awarding compensation to him.
And reading the plaint as a whole, it can legitimately be culled out that he had made out a case, whether it was right on fact or not, that is a different question, that he was wrongfully dismissed from service.
This relief could be granted by the Civil Court if it found that the plaintiff 's case was true.
The High Court, in our opinion, is not right in saying that no such case had at all been made out in the plaint.
In our opinion, as we have earlier said, reading the plaint as a whole, such case can be spelt out.
That being so to this limited extent, the matter could be examined by the Civil Court.
We accordingly allow the appeal set aside the judgments of the courts below and send back the case to the Trial Court for disposing it of in accordance with law in the light of this judgment.
There will be no order as to costs.
Since the suit has become very old, the Trial Court is directed to dispose it of as expeditiously as possible.
N.V.K. Appeal allowed.
| The appellant who was appointed as a Train Lighting Inspector, Nagpur on July 11, 1974 by the Chief Electrical Engineer was removed from service by respondent No. 1; the Divisional Assistant Engineer, Central Railway Nagpur by his order August 31, 1976.
The Writ Petition filed by the appellant in the Bombay High Court challenging the order of removal was dismissed summarily by a Division Bench of that Court.
Allowing the appeal by special leave, the Court ^ HELD: 1.
The order of removal is in patent violation of the provisions of Article 311(1) of the Constitution.
[53C] 2. article 311(1) of the Constitution provides that no person who is a member of a civil service of the Union or an all India service or a civil service of a State or holds a civil post under the Union or a State shall be dismissed or removed by an authority subordinate to that by which he was appointed.
[52A] 3.
Whether or not an authority is subordinate in rank to another has to be determined with reference to the state of affairs existing on the date of appointment.
It is at that point of time that the constitutional guarantee under article 311(1) becomes available to the person holding, for example, a civil post under the Union Government that he shall not be removed or dismissed by an authority subordinate to that which appointed him.
[52 F G] 4.
Delegation of the power to make a particular appointment does not enhance or improve the hierarchical status of the delegate.
An officer subordinate to another will not become his equal in rank by reason of his coming to possess some of the powers of that another.
[53 A B] The Divisional Assistant Electrical Engineer in the instant case does not cease to be subordinate in rank to the Chief Electrical Engineer merely because the latter 's power to make appointments to certain posts has been delegated to him the subsequent authorisation made in favour of respondent, in regard to making appointments to the post held by the appellant cannot confer upon respondent 1 the power to remove him.
On the date of the 51 appellant 's appointment as a Train Lighting Inspector, respondent 1 had no power to make that appointment.
He cannot have, therefore, the power to remove him.
[52H, 53 A B]
|
iminal Appeal No.51 of 1968.
Appeal by special leave from the judgment and order dated February 2, 1968 of the Bombay High Court in Criminal Application No. 393 of 1967.
Appellant appeared in person.
M.C. Bhandare, section B. Wad and, B. D. Sharma, for the respondent.
The Judgement of the Court was delivered by Grover, J.
This is an appeal by special leave from a judg ment of the Bombay High Court finding the appellant who is an Advocate, guilty of contempt of court and sentencing him to simple imprisonment for a term of four weeks and a fine of 538 Rs. 1,000/ .
It was directed that in default of payment of the fine he would have to undergo simple imprisonment for a further period of four weeks.
He was also ordered to pay the costs of the Assistant Government Pleader in the High Court and the Government Pleader before the Sessions Judge.
The material facts may be stated: In March 1966 a suit was filed against the appellant by D. N. Santani who is also an Advocate for recovery of Rs. 640/ in the court of the Civil Judge, Junior Division, kalyan.
The plaintiff in that suit had engaged H. I. Jagiasi as his Advocate.
In the written statement filed by the appellant he made certain allegations against Jagiasi and alleged inter alia that the latter was responsible for the suit.
Jagiasi filed a criminal complaint for defamation in August 1966 against the appellant in the court of Shri P. D. Sayyid, Judicial Magistrate at Kalyan.
The appellant has set out a number of incidents and matters in his petition for special leave to appeal which it is not necessary for our purpose to mention.
It would suffice to say that on October 15, 1966 the appellant filed an application before the Judicial Magistrate saying that he intended to apply for transfer of the case to some other court.
On October 28, 1966 he presented a transfer application in the court of the Sessions Judge.
Thana.
The transfer application was ultimately dismissed by the Assistant, Judge and Additional Sessions Judge on March 8, 1967 before whom it came up for disposal.
Meanwhile it appears that the appellant applied for transfer of the civil suit which had been filed by D. R. Santani to the court of the District Judge.
The suit was stayed and we have been informed that ultimately it was transferred sometime in the year 1967 from the court of Shri M. B. `Baadkar from whose court transfer was sought.
It has further been stated at the Bar and that statement has not been challenged that the civil suit was ultimately dismissed in August 1969.
While dismissing the transfer application of the appellant in the criminal complaint filed by Jagiasi in the, court of Shri P. D. Sayyid the Additional Sessions Judge recorded an order that a report be submitted to the High Court for "considering the conduct of the appellant and the course adopted by him in making the transfer application and in making amputations or aspersions against the Judicial Officers and to take action for contempt of court under section 3 (2) of the , hereinafter called the 'Act '.
This was done after reproducing three paragraphs from the transfer application and expressing an opinion that the appellant had attempted to attack the integrity and honesty of the courts of the Judicial Magistrate and the Civil Judge and to scandalize and to malign the same.
The High Court made an 539 order on December 1, 1967.
The following part of that order may be reproduced "He made an application to the Sessions Judge for transfer of the proceedings to another Court and the ground objected to by the learned Sessions Judge is as follows : "The Magistrate below is on friendly relations with the complainant the respondent No. 1 in the present petition and he even enjoys the hospitality of the respondent No. 1 some times alone and some times in company of the, Civil Judge J. D. Kalyan (Shri M. B. Baadkar) whois also on friendly relations with the respondent No.1 and who also enjoys the hospitality of the respondent No. 1 The learned Sessions Judge had called for report from the Magistrate Mr. P. D. Sawed and was apparently satisfied after consideration of all the affidavits produced before him that the allegations was baseless.
He, there , fore,, referred the matter to this court for suitable action being taken against the respondent Advocate for his making such allegations and interfering with the course of justice and scandalizing or maligning the Courts below '.
It was further stated in that order that the appellant had asked for an opportunity to establish the truth of the allegation made above which had been made, both "because of his personal knowledge and also because of information obtained from others".
A list of witnesses was furnished by the appellant whom he proposed to examine.
The High Court directed the District Judge to regard the evidence and to submit his report along with the evidence and the reports of the two judges.
It was expressly stated that the inquiry was to be confined to the allegations which had been quoted above.
The show cause notice which was issued to the appellant by the High Court (omitting unnecessary portions) was as follows : "Whereas" upon reading letter No. 2434, dated 5th April, 1967 forwarded by the 2nd Addl.
Sessions Judge, Thana along with the Record and proceedings of Cri.
Transfer Application No. 108/66 on his file and the Record and Proceedings in Cri.
Case No. 2949 of 1966 of the Court of the Judicial Magistrate, F. C. Kalyan, requesting to take action under the against the Advocate Mr. G. L. Bhatia, who has made serious allegations against the Judicial 540 Officers Shri Baadkar and Shri Sayyad in Transfer Cri.
Application No. ' 108/66 in para one in the Court of the 2nd Addl.
Sessions Judge, Thana, etc., And whereas this Court has on 15th June 1967, passed the following order : "Notice to Mr. Bhatia Advocate to show cause why action for contempt of Court should not be taken against him.
Notice to G. P. also.
A copy of D. J. 's letter to, be sent to Mr. Bhatia along with the notice.
" The District Judge in accordance with the orders of the High Court submitted a report giving his own findings on the evidence recorded by him and.
also after taking into consideration the reports of Sarvshri Baadkar and Sayvid which had been called for from them apparently after the witnesses produced by the appellant had given their evidence and copies of their depositions had been sent to the two Judges.
The appellant raised two preliminary objections before the High Court.
The first was that the District Judge could only submit a record of evidence and could not give his findings and, secondly, he could not take into consideration the reports of the two judges which had not been shown to the appellant.
Another objection raised was that the reports of the Judicial Officers could not have been relied upon because the appellant had no opportunity to cross examine them.
The High Court repelled all these objections.
From the statement of preliminary facts it is clear that the High Court relied only on the allegations contained in para 1 of the application of transfer which have already been set out before and contents of which were that Shri Sayyid was on friendly relations with Jagiasi and that he had even enjoyed his hospitality sometimes alone and sometimes in the company of Shri Baadkar.
We have laid a certain amount of stress on the aforesaid allegation made in para 1 of the transfer application because that application consisted in substance of three paragraphs.
It will be desirable, owing to the nature of this case, to set out all the allegations made in the transfer application 1."The Magistrate below is on friendly relations with the complainant the Respondent No. 1 in the present petition and he even enjoys the hospitality of the Respondent No. 1 some times alone and some times in company of the Civil Judge J. D. Kalyan (Shri M. B. Baadkar) who is also on friendly relations with the Respondent No. 1 and who also enjoys the hospitality of the Respondent No. 1.
541 2.
The Magistrate below is prejudiced against the present application.
3.The Magistrate below has not taken and does not appear to take impartial disinterested view of the case in question.
(a) Evidently the complainant was not actuated by mere or bonafide professional interest.
He was the author of false litigation for a false and fabricated claim.
That matter Suit No. 213 of 1966 was still pending hearing and adjudication.
The com plaint in question could not as such be filed in all fairness and it ought not to have been entertained at least without the preliminary enquiries or at any rate it ought to have been stayed.
(b) That was not done and the process was ordained to be urgently issued and served and the socalled summons was served on the applicant a day or two 'before the date of hearing to harass and handicap him in his professional commitments.
(c) Even the said summons was not accompanied by copy of the complaint as mandatorily required by section 204(b) of the Code of Criminal Procedure, and the applicant was left guessing as to what the said summons related to.
(d) On 15th October 1966 when the case in question was Sr.
No. 10 12 on the Board and it was preceded by even part heard cases the trial Magistrate did not permit this application even leave for a while to enable him to go to Civil Court at a distance of furlong or so to obtain leave of the Court from his professional engagements and the trial Magistrate observed that he would "take up the case there and then and just now" and in the next moment the complainant was in the Box ready for "finishing" the case as though by previous understanding.
4.The applicant respectfully refrains from entering into further details in this regard and he would do the same if called upon.
For the present suffice to say that in view of what is stated above there is well founded apprehension in the mind of the applicant he would not get justice unless the case is transferred to some other Court of the competent jurisdiction".
542 The question which immediately arises is whether an allegation of the nature made in para (1) in the circumstances of the present case in a 'transfer application would amount to contempt of the two judges Sarvshri Sayyid and Baadkar.
The High Court made a detailed examination of the evidence adduced before the District Judge and also relied on the reports of Sarvshri Sayyid and Baadkar.
It came to the conclusion that the allegations made by the appellant had not been proved.
It was observed that these allegations "in the above quoted paragraph" which means paragraph 1 were quite serious.
The High Court was also influenced by the fact that the appellant had "pitched the case higher and tried to prove that the two judges concerned were continuously receiving from Mr. Jagiasi presents of large value in the shape of sarees and other articles and thus receiving bribes so as to indiscreetly favour Mr. Jagiasi and the litigants whom he represented in their Court".
The appellant was not even willing to tender an apology and his position as an Advocate was naturally regarded as making the contempt all the more serious.
The appellant, who has argued the case himself, has raised the following main contentions : 1.The Act is unconstitutional and invalid.
It violates Articles 20 and 21 of the Constitution.
2.No procedure has been provided in the Act and therefore if is bad.
3.Even the normal procedure which should be followed in such cases has not been followed.
4.The High Court was not entitled to call for a report from the District Judge or to delegate its functions ,including the examination of witnesses to the District Judge.
5.The show cause notice issued by the High Court containing the charge of contempt was confined only to paragraph 1 of the transfer application.
The statements made in that paragraph could not by themselves constitute contempt.
In our opinion it is wholly unnecessary to decide points 1 to 4 because the appellant must succeed on the 5th point.
This court has, after a review of all the relevant decisions, laid down in Perspective Publications (P) Ltd. & Anr.
vs State of Maha rashtra(1), inter alia, the following principles : 1.It will not be right to say that the committals for contempt for scandalizing the, court have become obsolete.
(1) ; 543 2.The summary jurisdiction by way of contempt must be exercised with great care caution and only when its exercise is necessary for the proper administration of law and justice.
3.It is open to any one to express fair, reasonable and legitimate criticism of any act or conduct of a judge in his judicial capacity or even to make a proper and fair comment on any decision given by him.
4.A distinction must be made between a mere libel or defamation of a judge and what amounts to a contempt of the court.
The test in each case would be whether the impugned publication is a mere defamatory attack on the judge or whether it is calculat ed to interfere with the due course of justice or the proper administration of law by his, court.
It is only in the latter case that it will be punishable as contempt.
5."Alternatively the test will be whether the wrong is, done to the judge personally or it is done to the public.
To borrow from the language of Mukherjea J., (as he then was,) Brahma Prakash Sharma 's case the publication of a disparaging statement 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".
In that case it was held that the imputation in an article of impropriety, lack of integrity and oblique motives to a judge of the High Court in the matter of deciding a suit constituted contempt of court.
The question whether an action can be taken under section 3 of the Act if in a transfer application allegations are made against a judge which are of such nature as to constitute contempt of his court does not appear to be res Integra.
In State of Madhya Pradesh vs Revashankar(1) aspersions of a serious nature had been made against a Magistrate in a transfer petition.
, One of such aspersions was that the Magistrate in whose court the proceedings were pending was a party to a conspiracy with certain others the object of which was to implicate, the complainant in a false case of theft and that a lawyer appearing for the accused persons in whose favour the Magistrate, was inclined, had declared (1) 544 that he had paid a sum of Rs. 500/ to the Magistrate.
It was also asserted that the applicant was sure that he would not get impartial and legal justice from the Magistrate.
It was held that the aspersions taken at their face value amounted to what is called ' scandalizing the court ' itself and the attack on the Magistrate tended to create distrust in the popular mind and impair the confidence of the people in the courts.
This decisions is quite apposite for the purposes of the present case.
It decides that allegations made even in a transfer application casting aspersions on a judicial officer can constitute contempt of his court within section 3 of the Act.
It is difficult to comprehend that the mere statement that a Magistrate is friendly with a party who happens to be an advocate and enjoys his hospitality or has friendly relations with him will constitute contempt unless there is an imputation of some improper motives as would amount to scandalizing the court itself and as would have a tendency to create distrust in the popular mind and impair the confidence of the people in the courts.
The allegations contained in para 1 of the transfer application may or may not amount to defamation of the two judges, namely, Sarvashri Sayyid and Baadkar but to constitute contempt the other tests which have been discussed above must be fulfilled.
As noticed before the High Court confined the action, which was to be taken, only to the matter stated in paragraph 1 and did not choose or decide to include or consider paragraphs 2 or 3 either in the show cause notice or in the judgment the following part of which may be reproduced: .
"We have considered the whole of the evidence on record that can be relied upon on behalf of the condemner on the one side and by the State in support of the case for action against the condemner.
We have with some anxiety considered the arguments advanced by the contemner in support of his case that the evidence is sufficient to prove the allegations made by the contemner in the above quoted paragraph.
We find it impossible to hold in his favour that he has proved that Mr. Sayyid had friendly relations with Mr. Jagiasi and was enjoying the hospitality of Mr. Jagiasi either alone or in company with Mr. Baadkar.
He has failed to prove that Mr. Baadkar had friendly relations with Mr. Jagiasi and enjoyed the hospitality of Mr. Jagiasi".
It is true that a party cannot make such allegations even in a transfer application which may fall within the rule laid down in Revashankar 's(1) case or in the Perspective Publication 's case(2) and which may amount to scandalizing the court in the sense pointed out in these decisions.
In the State vs The Editors & (1) (2) [1969] 2 S.C.R.779.
545 Publishers of Eastern Times and Prajatantra(1), Jagannadhadas C.J. (as he then was) delivering the judgement of the Division Bench, after an exhaustive examination of the decided cases where the jurisdiction of the court for this, class of contempt had in fact been exercised, observed "A review of the cases in which a contempt committed by way of scandalising the court has been taken notice of, for punishment, shows clearly that the exercise of the punitive jurisdiction is confined to cases of very grave and scurrilous attack on the court or on the Judges in their judicial capacity, the ignoring of which would only result in encouraging a repetition of the same with a sense of impunity and which would thereby result in lowering the prestige and authority of the court".
There are not many decisions in which punishment has been inflicted for committing contempt of court by making scurrilous allegations in an application for transfer of a case from one court to another.
Mention may, however, be made of one of such cases: Swarnamayi Panigrahi vs B. Nayak & Ors.
(2) There, during the pendency of certain rent suits filed before the Rent Suit Collector by the landlord, who was the wife of the Chief Justice of the Orissa High Court, the tenant filed certain transfer applications before the Additional District Collector making statements like these : "1.
The lower court openly identified himself with 'the plaintiff Shrimati Swammayi Panigrahi and is so partial to her that no justice or impartial decision can be expected from him; 2.He has gone out of the course prescribed by law and has taken over the function of witness and court in himself in such a way that there is no parallel to it in the history of litigation in India; and 3.That opposite party wields extraordinary in fluence in the State as she is the wife of Shri Lingarai Panigrahi Chief Justice of Orissa High Court.
It is being openly talked about that the conclusions are foregone".
It was observed that though some latitude has to 'be given in a transfer application but the question was whether or not the applicant in that case had exceeded the limits permissible under the law.
As a rule applications for transfer were not made merely (1) (2) A.I.R 1959 Orissa 89.
546 because the trying judge was alleged to be incompetent but there may be circumstances beyond the judge 's control such as the acquaintance with one of the parties or personal interest in the subject matter of the proceedings which in law would be considered as preventing him from giving an unbiased decision.
It was held that the, applicant had exceeded the limits and had gone out of his way not only to malign the personal integrity and judicial honesty of the lower court but had also directly attacked the whole administration of justice headed by the Chief Justice of the State.
It is noteworthy that on an allegation made in a transfer application the judge against whom the allegation is made is often afforded an opportunity of giving explanation by the higher court and he can dispel any cloud that might have been cast on his fairness and integrity.
The higher court takes action for transfer after full consideration of all the circumstances of the case including the report of the judge against whom the allegations are made.
In this way it can well be said that cases in which applications for transfer are made stand on a slightly different footing from those where a party makes an allegation, either inside or outside the court of a scandalizing nature imputing improper motives to the judge trying the case.
The Allahabad High Court in Emperor vs Murli Dhar & Another(1) was of the view that where an accused person in an application for transfer of a case made an assertion that the persons who had caused the Proceedings to be instituted were on terms of intimacy with the officer trying the case and, therefore, he did not expect a fair and impartial trial was not guilty of offence under section 228, Indian penal Code, there being no intention on the part of the applicant to insult the court, his object being merely to procure a transfer of his case.
It is true that.
in the garb of a transfer application a person cannot be allowed to commit contempt of court by making allegations of a serious and scurrilous nature scandalizing the court and imputing improper motives to the judge trying the case.
But then the nature of the allegations will have to be closely examined and so long as they do not satisfy the requirements of what May be regarded as contempt of court no punishment can possibly be inflicted.
The appellant, in the present case, is an advocate and it is most unfortunate that though at the stage of the transfer application be made certain allegations in para 1 about the social intimacy between Jagiasi and Sarvashri Sayyid and Baadkar, the two judicial officers, with the apparent object of securing a transfer of the case he proceeded to take the highly ill advised step of attempting to substantiate, the allegation so made.
We are, however, not concerned with any charge relating to the matters subsequent to the notice which was issued by the High Court with regard.to the allegations for which punishment has been (1) I.L.R. 8 All, 284.
547 imposed on the appellant.
That notice on the face of it discloses no such allegation which could be regarded as falling within the rule laid down by this Court and by a series of decisions of the Privy Council in which this head of contempt i.e. scandalizing court has come up for examination.
Most of those decisions have been referred to in the case of Perspective Publications (P) Ltd.(1).
In addition we may mention Debi Prasad Sharma & Others vs Emperor(2) in which in a newspaper report the Chief Justice of a High Court was untruly alleged to have committed an ill advised act in writing to his.
subordinate judges asking them to collect subscriptions for the War Fund.
According to their lordships there was no criticism of any judicial act of the Chief Justice nor any imputation was made for anything done or omitted to be done by him in the administration of justice nor was there any criticism of him in his administrative capacity.
In the opinion of their lordships the proceedings in contempt were misconceived.
In our judgment the allegations contained in para 1 of the transfer application were not such as would amount to contempt of court.
We cannot help observing that the appellant did not show the sense of responsibility in making the allegations in question which is expected from an advocate and in further attempting to substantiate them which he failed to do.
The appeal is allowed and the order passed by the High Court is hereby set aside.
Parties will bear their own costs in this Court.
S.C. Appeal allowed.
(1) ; (2) A.I.R. (1943) P.C. 202.
| An advocate, in a transfer application in respect of a criminal complaint, filed before the Sessions Judge made certain allegations against two judicial officers before whom the criminal complaint and a civil suit, were pending.
While dismissing the transfer application, the Additional Sessions Judge, who heard ' the application, recorded an order that a report be submitted to the High Court for considering the conduct of the applicant as to the course adopted by him in making imputations or aspersions in the transfer petition against the judicial officers and to take action for contempt of court under section 3(3) of the .
Paragraph 1 of the transfer application stated that "the Magistrate below is on friendly relations with the complainants the respondent No. 1 in the present petition and he even enjoys the hospitality of the Respondent No. 1 sometimes alone and sometimes in company of the Civil Judge J. D. Kalyan (Shri M. B. Boadkar) who is also on friendly relations with the respondent No. 1 and who also enjoys the hospitality of the respondent No. 1".
There were other allegations in the transfer petition.
The show cause notice issued by the High Court containing the charge of contempt was confined only to paragraph 1 of the transfer appli cation.
The High Court held that the appellant was guilty of contempt of court and he was sentenced accordingly.
Allowing the appeal.
HELD : (1) The show cause notice on the face of it disclosed no such allegation which could be regarded as falling within the rule laid down by this Court in which the head of contempt, i.e. scandalizing the Court, had come up for examination.
In Perspective Publications (P) Ltd. vs State of Maharashtra, ; this Court has laid down certain principles as to the law of contempt.
They are : (i) It will not be right to say that Committals for contempt for scandalizing the Court have become obsolete.
(ii)The summary jurisdiction by way of contempt should be exercised with great care and caution and only when its exercise is necessary for the proper administration of law and justice.
(iii)Any one may express fair, reasonable and legitimate criticism of any act or conduct of a judge in his judicial capacity or make a proper or fair comment on any decision given by him.
(iv)A distinction must be made between a mere libel or defamation of a judge and what amounts to contempt of court.
The test in each 537 case would be whether the impugned publication is a mere defamatory attack on the judge or whether it is calculated to interfere with due course of justice or the proper administration of law by the court it is only in the latter case that it will be punishable as contempt.
[542 H] (v)Alternatively, the test will be whether the wrong is done to the judge personally or it is done to the public.
The publication of a disparaging statement will be an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability of fairness of the judges or to deter actual and prospective litigants from lacing complete reliance upon the courts 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".
[543 E] (2)Allegations made even in a transfer application casting aspersions on a judicial officer can constitute contempt of his court within section 3 of the Act.
However, cases in which applications for transfer are made/ stand on a slightly different footing from those where a party makes an allegation, either inside or outside the court of a scandalizing nature imputing improper motives of the judge trying the case; but even in the case of a transfer application, a person cannot be allowed to commit contempt of court by making allegations of a serious nature scandalizing the court and imputing improper motives to the judge trying the case.
[544 B, 546 D] In the present case, the mere statement that a Magistrate is friendly with a party who happens to be an advocate and enjoys his hospitality or has friendly relations with him will not constitute contempt unless there is an imputation of some improper motives as would amount to scandalizing the court itself and as would have a tendency to create distrust in the popular mind and impair the confidence of the people in the courts.
[544 C] State of Madhay Pradesh vs Revashankar, , State vs
The Editors and Publishers of Eastern Times and Prajatantra, and Swaranamavi Panigrahi vs B. Nayak & Ors., A.I.R. 1959 Orissa 89, referred to and discussed.
|
Civil Appeal No. 2059 of 1974.
Appeal by special leave from the Judgment and order dated the 10th June, 1974 of the Andhra Pradesh High Court in Writ Petition No. 895 Of 1974 621 P.A. Chowdhary and K. Rajendra Chaudhury, for the appellant.
P. Ram Reddy and P. P. Rao, for respondent No. 1.
A. V. Rangam and A. Subhashini, for respondent No. 2.
G. Narasimhulu, for respondents Nos. 3, 5 and 6.
G. N. Rao, for respondent No. 4.
A. V. K. Rao, the intervener, appeared in person.
The Judgment of the Court was delivered by UNTWALIA, J.
In this appeal by special leave we are once again called upon to lay down the meaning and scope of Article 233 of the Constitution of India relating to the appointment of District Judges.
This Article alongwith other Articles in Chapter VI of Part VI of the Constitution came up for consideration and was interpreted by this Court on several occasions in the past, yet, a Bench of the High Court of Andhra Pradesh in its judgment under appeal felt persuaded to take a wholly erroneous view as to the meaning of the Article and committed a serious error in the application of the principles of law settled by this Court to the facts of the instant case.
We shall state the facts in a narrow compass shorn of unnecessary details.
On 3 1 1972 the Government of Andhra Pradesh, respondent No. 1 was requested by the High Court, respondent No. 2, to take necessary steps "for filling up six vacancies by notifying six posts of District and Sessions Judges, Grade II for direct recruitment.
" By a D.O. letter dated 14 9 1972 the first respondent informed the second respondent that the six vacancies were being notified for direct recruitment.
They were actually notified in the Gazette of that date.
With the approval of the High Court, an advertisement was published on 1 8 1972 in the Deccan Chronicle.
The total number of applications received in response to the advertisement was 381.
Twenty six applications were found to be not in order and rejected.
The remaining 355 candidates were called by the High Court for interview.
92 did not turn up and the remaining 263 were interviewed by the Selection Committee of the High Court on various dates.
Shri A. Panduranga Rao, the sole appellant in this appeal was one of the candidates interviewed on 14 6 1973.
The High Court eventually made its recommendations in its D.O. letter dated 13 7 1973 recommending in order of merit six persons "as most suitable candidates from among the applicants, for being appointed as District and Sessions Judges, Grade II.
" This letter was written by the Registrar of the High Court as directed "by the Hon 'ble the Chief Justice, and the Hon 'ble Judges of the Andhra Pradesh High Court.
" The appellant 's name was the fifth amongst the six names recommended.
Although it is not very relevant to say so, just to complete the link in the chain of relevant events, it may be stated here that the recommendations made by the High Court seems to have leaked out.
Whoever might have been responsible for this leakage it was all the same a very unfortunate thing.
This led the Bar Association City Civil Court, Hyderabad and the High Court Bar Association to pass certain 622 resolutions and to send certain memoranda to the Government even to the extent of making some adverse comments against some of the persons recommended by the High Court for appointment.
On receipt of the same, Government wrote a D.O. letter to the High Court on 24 7 1973 expressing surprise at the leakage of secret information but at the same time inviting the High Court to send its comments.
The High Court sent a detailed reply and comments in its D.o.
letter dated 26 7 1973 pointing out that the leakage of the secret information could not be possible at the High Court end.
It is not necessary for us to advert to the comments or resolutions of the Bar Associations or the views of the High, Court expressed in its letter dated 26 7 1974.
We now come to the relevant letters in question.
A D.o.
letter dated 26 7 1973 was written by the Government to the High Court with reference to the latter 's letter of recommendation dated 13 7 1973.
We may point out here that this letter dated 26 7 1973 was written by the Government without any reference to, and in all probability, before the receipt of the High Court 's letter dated 26 7 1973 in reply to the Government 's of 24 7 1973.
In the Government 's letter dated 26 7 1973 attention of the High Court was invited to Instruction 12(5) of the Secretariat instructions and a request was made "to send the list of persons whom the High Court considered to have reasonable claims to the appointment or suitable therefore the posts of District and Sessions Judges, Grade II alongwith remarks regarding the qualifications and claims of the several persons in the list.
" It may be stated here that as usual the correspondence was going on between the Chief Secretary on behalf of the Government and the Registrar on behalf of the High Court.
The latter in reply to the former 's letter dated 26 7 1973 sent the following reply on 1 8 1973: "Your letter reached me on 28 7 1973.
With reference to your above letter dated 26 7 1973, I have been directed to forward the entire list of the candidates interviewed by the High Court, with the marks obtained by them.
the High Court has no further remarks to offer.
All the applications of the candidates sent by you are returned separately.
" Thereupon the Government wrote D.o. letter dated 30 11 1973 to the Chief Justice of the High Court intimating that Government had decided to select the six candidates mentioned in that letter for filling up the six vacancies.
Out of the persons so selected two were those who had been recommended by the High Court alongwith four others in its letter dated 13 7 1973.
They were serials 1 and 4.
Four out of the six were not appointed and in their place, as it appears, treating the entire list of 263 as a list recommended by the High Court in order of merit persons at serials 9, 12, 13 and 16 were selected by the Government for appointment.
And finally orders appointing the six persons so selected were issued on 7 12 1973.
Several writ applications were filed in the High Court to challenge the appointments made by the Government.
We are in this appeal concerned with the judgment of the High Court dismissing the Writ Petition No. 895/1974 filed by the appellant to challenge the appointment of only four viz.,, respondents 3 to 6 and the non appointment of the appellant.
His case was that respondents 3 to 623 6 were appointed in violation of the constitutional provision contained in Article 233 and that he was not appointed on grounds which are unsustainable in law.
The High Court has taken the view that the appointments have been made by the Government consistent with the requirement of Article 233(2) out of the entire list of 263 recommended by the High Court.
The appellant 's claim on merits for appointment to the post has not found favour with the High Court.
In the view which we take as to the violation of Article 233 in this case, we would not like, nor is it necessary to do so, to examine the claim of the appellant for appointment in one of the six vacancies.
It would be convenient to read once again Article 233 of the Constitution.
" (1) Appointments of persons to be, and the posting and promotion of, district judges in any State shall be made by the Governor of the State in consultation with the High Court exercising jurisdiction in relation to such State.
(2) A person not already in the service of the Union or of the State shall only be eligible to be appointed a district judge if he has been for not less than seven years an advocate or a pleader and is recommended by the High Court for appointment.
" As pointed out at page 89 by this Court in Chandra Mohan vs State of Uttar Pradesh & Ors (1) "There are two sources of recruitment, namely, (1) service of the Union or of the State, and (ii) members of the Bar.
The said judges from the first source are appointed in consultation with the High Court and those from the second source are appointed on the recommendation of the High Court.
" A candidate for direct recruitment from the Bar does not become eligible for appointment without the recommendation of the High Court.
He becomes eligible only on such recommendation under clause (2) of article 233.
The High Court in the judgment under appeal felt some difficulty in appreciating the meaning of the word "recommend".
But the literal meaning given in the Concise oxford Dictionary is quite simple and apposite.
It means "suggest as fit for employment." In case of appointment from the Bar it is not open to the Government to choose a candidate for appointment until and unless his name is recommended by the High Court.
The recommendation of the High Court for filling up the six vacancies was contained in its letter dated 13 7 1973.
Government was not bound to accept all the recommendations but could tell the High Court its reasons for not accepting the High Court 's recommendations in regard to certain persons.
If the High Court agreed with the reasons in case of a particular person the recommendation in his case stood with drawn and there was no question of appointing him.
Even if the High (1) 624 Court did not agree the final authority was the Government in the matter of appointment and for good reasons it could reject the High Court 's recommendations.
In either event it could ask the High Court to make more recommendations in place of those who have been rejected.
But surely it was wrong and incompetent for the Government to write a letter like the one dated 26 7 1973 inviting the High Court 's attention to Instruction 12(5) of the Secretariat instructions and on the basis of that to ask it to send the list of persons whom the High Court considered to have reasonable claims to the appointment.
On the basis of the furore created by two Bar Associations of Hyderabad and the High Court 's letter dated 26 7 1973 written in reply to the Government 's letter dated 24 7 1973 no person 's candidature recommended by the High Court had been rejected when the letter dated 26 7 1973 was written by the Government.
Even after rejection the Government could not ask the High Court to send the list of all persons whom the High Court considered to have reasonable claim to the appointment We feel distressed to find that instead of pointing out the correct position of law to the Government and itself acting according to it, a letter hike the one dated 1 8 1973 was sent by the High Court in reply to the Government 's letter dated 26 7 1973.
It is not clear from this letter whether it was written under the direction of the Chief Justice alone or under the directions of Chief Justice and the other Judges of the High Court as in the case of the letter dated 13 7 1973.
But surely it was very much wrong on the part of the High Court to forward the entire list of the candidates interviewed with the marks obtained by them and adding at the same time that the High Court had no further remarks to offer.
We could not understand the reason for writing such a letter by the High Court.
But if we may hazard a surmise it seems to have been written in utter disgust at the Government 's unreasonable attitude displayed in its letter dated 26 7 1973.
By no means could it be, nor was it, a recommendation by the High Court of all there 263 candidates interviewed, that all of them had a reasonable claim, or in other words, were fit to be appointed District Judges.
We must express our displeasure at and disapproval of all that happened between the Government and the High Court in the former writing the letter dated 26 7 1973 and the letter sending the reply dated 1 8 1973.
Then comes the letter dated 30 11 1973.
After tracing the history of the recommendation made by the High Court in its letter dated l 3 7 1973 and "in the light of the further information about these candidates as required from High Court", Government decided to select the six candidates mentioned therein including respondents 3 to 6 as if they were from "the list recommended by the High Court .
It was further stated in this letter "Reasons for not selecting candidates placed by the High Court higher than those now selected are given in the annexure enclosed to this D.o. letter.
" The High Court, to be more accurate, the Chief Justice to whom the letter dated 30 11 1973 was addressed seems to have not resented or protested against the selection so made by the Government in clear violation of Article 233 of the Constitution.
We find it intriguing that the letter written by the Registrar of the High Court on 1 8 1973 was treated as a recommendation of all the 263 candidates as having been found fit for appointment as District Judges.
By no means could it be so.
It was not so.
And yet the High Court or the 625 Chief Justice did not object to the appointment of respondents 3 to 6 as District Judges.
They were not eligible to be so appointed as their names had never been recommended.
In the result we allow this appeal and set aside the judgment of the High Court.
The writ application filed by the appellant succeeds only to this extent that the appointments of respondents 3 to 6 are quashed.
The four posts manned by them are declared vacant.
There will be no order as to costs.
P.B.R. Appeal allowed.
| To fill up a casual vacancy in the office of the President of the Municipal Board, Soron in the district of Etah in Uttar Pradesh, the District Magistrate issued notices to the members of the Board informing them that nomination paper should be filed in his office by 20th of September, 1974 and if necessary the election will take place on 1st October, 1974.
The 1st respondent thereupon filed a petition under Article 226 of the Constitution challenging the validity of the procedure adopted by the District Magistrate for holding the election and prayed for an order to the District Magistrate not to hold the election on 1st October, 1974.
The objection to the procedure for election was based on the allegation that it did not conform to the provisions of Rule of the U.P. Municipalities (Conduct of Election of Presidents and Election Petitions) order, 1964.
The High Court admitted the Writ Petition and directed that the election would be subject to ultimate decision in the Writ Petition.
Consequently the election took place on the 1st of October and the 1st appellant was declared elected.
Thereafter the 1st respondent filed an application for impleading the 1st appellant and the Municipal Board as parties and also claimed a further relief for quashing the election proceedings that took place on the 1st of October, 1974.
The High Court allowed the petition and set aside the entire election proceedings relating to the election of the 1st appellant as the President of the Municipal Board.
Allowing the appeal by special Leave, ^ HELD: The right to vote or stand for election to the office of the President of the Municipal Board is a creature of the statute, that is the U.P. Municipalities Act and it must be subject to the limitations imposed by it.
Therefore the election to the office of the President could be challenged only according to the procedure prescribed by that Act and that is by means of an election petition presented in accordance with the provisions of the Act and in no other way.
The Act provides only for one remedy, that remedy being an election petition to be presented after the election is over and there is no remedy provided at any intermediate stage.
[813 E, 814A B, 814C D] N. P, Ponnuswami v, Returning officer, Namakkal Constituency & Ors. ; relied on.
Desi Chettiar vs Chinnasami Chettiar A.I.R. 1928 Mad. 1271 and Wolverhamption New Water Works Co. vs Hawkesford ; referred to.
(ii) These conclusions in Punnuswami case were arrived at without taking the provisions of Article 329 of the Constitution into account.
Tho provisions of Article 329 are relevant only to the extent that even the remedy under Article 226 is barred as a result of the provisions.
But on e the legal effect of the provisions of law contained in Article 329 and in section 43 B of the U.P. Municpalities Act is taken into account there is no room for the High Courts to interfere in exercise of their powers under Article 226 of the Constitution.
810 Quaere: Can there be any extraordinary circumstances in which the High courts could exercise their power under Article 226 of the Constitution in relation to elections ? [814 E]
|
Appeal No. 135 of 1951.
Appeal by Special Leave granted by the Supreme Court of India by its Order dated the 21st of May, 1951, from the Judgment and Order dated the 19th February, 1951, of the Labour Appellate Tribunal of India, Allahabad in Appeal No. 136 of 1950.
C.K. Daphtary, Solicitor General of India (J. B. Dadachanji, Rajinder Narain and Devinder Swarup, with him) for the appellant.
S.C. Isaacs (0. P. Lal, with him) for the res.
pondent.
M.C. Setalvad, Attorney General for India, (Rajin der Narain and Devinder Swarup, with him) for the Intervener (All India Organisation of Industrial Employers).
S.C. Isaacs (Mohan Lal Saxena and C. P. Lal, with him) for the Intervener (State of U.P.).
November 19.
The Judgment of the Court as delivered by BHAGWATI J.
This appeal with special leave is directed against the judgment and order of the Labour Appellate Tribunal of India in a dispute regarding the workers ' claim for bonus.
During the year 1948 the appellant made a profit of Rs. 11,97,648 11 9.
It paid 24 3 per cent.
dividend on ordinary shares, being the maximum that could be paid under the Public Companies (Limitation of Dividend) Ordinance of 1948 and also paid to the workers their full share of bonus at annas 4 in a rupee of their basic earnings.
During the year 1949 the selling rates for cloth and yarn were controlled by the Government and were approximately 4 per cent.
below those obtained in 1948.
The basic wages were increased from the 1st December, 1948, by order of the Government of Uttar Pradesh and the total wages paid were therefore higher than those in the previous year.
There 994 was moreover indiscipline amongst the workers and production suffered.
There was a strike in the month of October and the mills were closed for nearly a month.
Further the management were unable to secure cotton which resulted in the curtailment of the working hours.
As a result of all these circumstances the appellant suffered a trading loss of Rs. 5,02,563 1 10.
A sum of Rs. 2,50,000 being the excess reserve for taxation was written back and a sum of Rs. 10,01,871 13 5 being the amount of reserve transferred from the investment account was also brought in.
An aggregate sum of Rs. 12,51,871 13 5 was thus brought into the balance sheet by these two transfers.
The trading loss was deducted from this amount leaving a credit balance of Rs. 7,49,308 11 7 and that amount was shown as the profit for the year 1949 in the balance sheet for that year.
The balance which had been brought forward from the previous year was added thereto and a dividend of 243/4 per cent.
was paid to the ordinary shareholders.
The appellant also paid ex gratia to the workmen bonus at the rate of annas 2 per rupee of their basic earnings making it clear by their notification dated the 7th April, 1950, that the directors had sanctioned the payment at that rate in spite of the appellant having suffered a trading loss for the year, that it was being paid entirely at the discretion of the appellant and was not related to or connected with any contract of employment of any worker.
On the 4th May, 1950, the Secretary of the respondent Union petitioned to the Provincial Conciliation Officer (Textile) that there was more production in 1949 than in 1948, that there was no reason to hold that the profit in 1949 was less than in the previous year and that the rate of bonus was wrongly reduced and asked that bonus for 1949 should also be paid at the rate of annas 4 per rupee.
The industrial dispute which thus arose was referred for enquiry and recording of an award to the Regional Conciliation Board (Textile), Kanpur.
The Conciliation Board by a majority decision repelled the contention of the appellant and awarded the payment of bonus at annas 4 per rupee.
On an appeal taken by the appellant to the 995 Industrial Court (Textiles and Hosiery), Kanpur, the Industrial Court accepted the contention of the appellant, allowed the appeal and set aside the award.
The respondent thereupon appealed to the Labour Appellate Tribunal which substantially agreed with the Industrial Court on questions of fact as well as the general position in law but imported considerations of social justice and treating this as a special case " where social justice would demand that labour should have bonus for the year where for that very year capital had not only a reasonable return but much in excess of that ", allowed the appeal and directed the appellant to pay to the workmen bonus at the rate of annas 4 per rupee within six weeks of their decision.
The appellant filed this appeal against that decision after obtaining special leave from this Court.
Both the Industrial Court as well as the Labour Appellate Tribunal found as a fact that there was a trading loss of Rs. 5,02,563 1 10 during the year 1949 and also that the dividend of 243/4 per cent.
to the ordinary shareholders was distributed after transferring the aggregate sum of Rs. 12,51,871 13 5 from the reserves.
The question which therefore arises for our consideration is mainly whether the workers are entitled to the payment of a bonus in spite of the employer having worked at a loss during the year and incidentally whether the workers have any right, title or interest in the reserves and the undistributed profits of the previous years.
The primary meaning of the word " bonus " according to the definition given in the New English Dictionary is: " A boon or gift over and above what is nominally due as remuneration to the receiver and which is therefore something wholly to the good ".
This definition was adopted by Stirling J. in In re Eddystone Marine Insurance Co. (1).
Webster 's International Dictionary defines bonus as "something given in addition to what is ordinarily received by or strictly due to the recipient ".
The Oxford Concise Dictionary defines it as " something to the good, into the bargain (and as an example) gratuity to workmen beyond their wages".
(1) L. R. (I894) W. N. 30.
996 Corpus Juris Secundum, Volume XI, at page 515 ascribes the following meanings to the word bonus: " An allowance in addition to what is usual current or stipulated ; a sum given or paid beyond what is legally required to be paid to the recipient; something given in addition to what is ordinarily received by or strictly due to the recipient" and adds: It has been said to carry the idea of something uncertain and indefinite, something which may or may not be paid depending on varying circumstances and under particular conditions has been said to imply a benefit accruing to him who offers it and an inducement to the offeree.
" This imports the conception of a boon, a gift or a gratuity otherwise described as an ex gratia payment.
The word 'bonus ' has however acquired a secondary meaning in the sphere of industrial relations.
It is classified amongst the methods of wage payment.
It has been used especially in the United States of America to designate an award in addition to the contractual wage.
It is usually intended as a stimulus to extra effort but sometimes represents the desire of the employer to share with his workers the fruits of their common enterprise.
(Vide Encyclopaedia Britannica, Volume III, page 856).
The Pocket Part of the Corpus Juris Secundum, Volume XI, under the heading "As Compensation for Services" quotes the following passage from Attorney General vs City of Woburn(1) : "The word 'bonus ' is commonly used to denote an increase in salary or wages in contracts of employment.
The offer of a bonus is the means frequently adopted to secure continuous service from an employee to enhance his efficiency and to augment his loyalty to his employer and the employee 's acceptance of the offer by performing the things called for by the offer binds employer to pay the bonus so called.
" It also gives another meaning of the word bonus ', viz., "increased compensation for services already (1) 997 rendered gratuitously or for a prescribed compensation where there is neither express or implied understanding that additional compensation may be granted.
" This imports the conception that even though the payment be not strictly due to the recipient nor legally enforceable by him, a claim to the same may be laid by the employee under certain conditions and if such claim is entertained either by an agreement with the employer or by adjudication before a properly constituted Tribunal as on an industrial dispute arising, the same would ripen into a legally enforceable claim.
This position was recognised in Sutton vs Attorney General (1), where the Earl of Birkenhead observed "The term 'bonus ' may of course be properly used to describe payments made of grace and not as of right.
But it nevertheless may also include, as here, payments made because legally due but which the parties contemplate will not continue indefinitely", and in National Association of Local Government Officers vs Bolton Corporation(2) "This payment, if made, cannot properly in my opinion be regarded as a mere gratuity.
Though there is an element of bounty in it the bounty, if granted, is given for good reasons of national policy. .
I do not see why this does not fall within the definition of trade dispute just as much as a dispute as to the rate of wages or salary.
" To a similar effect are the observations in Kenicott vs Supervisors of Wayne County (1): "But second, the meaning of the word 'bonus ' is not given to it by the objection.
It is thus defined by Webster. 'A premium given for a loan or a charter or other privilege granted to a company; as, the bank paid a bonus for its charter; a sum paid in addition to a stated compensation '.
It is not a gift or gratuity, but a sum paid for services, or upon a consideration in addition to or in excess of that which would ordinarily be given", (1) , 297, (3) ; (2) , I87.
127 998 and also in Great Western Garment Co. Ltd. vs Minister of National Revenue (1): "A bonus may be a mere gift or gratuity as a gesture of goodwill and not enforceable, or it may be something which an employee is entitled to on the happening of a condition precedent and is enforceable when the condition is fulfilled.
But in both cases it is something in addition to or in excess of that which is ordinarily received.
" The Textile Labour Inquiry Committee defined 'bonus ' as follows : "The term bonus is applied to a cash payment made in addition to wages.
It generally represents the cash incentive given conditionally on certain standards of attendance and efficiency being attained.
" There are however two conditions which have to be satisfied before a demand for bonus can be justified and they are, (1) when wages fall short of the living standard and (2) the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production.
The demand for bonus becomes an industrial claim when either or both these conditions are satisfied.
The principles for the grant of bonus were discussed and a formula was evolved by the Full Bench of the Labour Appellate Tribunal in Millowners ' Association, Bombay vs Rashtreeya Mill Mazdoor Sangh, Bombay (2) "As both labour and capital contribute to the earnings of the industrial concern, it is fair that labour should derive some benefit, if there is a surplus after meeting prior or necessary charges" and the following were prescribed as the first charges on gross profits, viz., (1) Provision for depreciation, (2) Reserves for rehabilitation, (3) A return at 6 per cent.
on the paid up capital.
(4) A return on the working capital at a lesser rate than the return on paid up capital.
The surplus that remained after meeting the aforesaid deductions would be available for distribution as bonus.
(1) , 233.
(2) 999 It is therefore clear that the claim for bonus can be made by the employees only if as a result of the joint contribution of capital and labour the industrial concern has earned profits.
If in any particular year the working of the industrial concern has resulted in loss there is no basis nor justification for a demand for bonus.
Bonus is not a deferred wage.
Because if it were so it would necessarily rank for precedence before dividends ' The dividends can only be paid out of profits and unless and until profits are made no occasion or question can also arise for distribution of any sum as bonus amongst the employees.
If the industrial concern has resulted in a trading loss, there would be no profits of the particular year available for distribution of dividends, much less could the employees claim the distribution of bonus during that year.
This has been clearly recognised even in the various decisions of the Labour Appellate Tribunal, e.g., Nizam Sugar Factory Ltd., Hyderabad vs Their Workmen(1), Textile Mills, Madhya Pradesh vs Their Workmen (2) and Famous Cine Laboratory vs Their Workmen (3).
This was also the basis of the demand of the respondent in the case before us, its case being that the appellant had reaped substantial profits during the year 1949.
This case was negatived by the Industrial Court as well as the Labour Appellate Tribunal, both of whom held that the working of the appellant during the year 1949 had resulted in a loss.
Whereas the Industrial Court declined to grant the respondent any relief because the working of the appellant during the year had resulted in a loss, the Labour Appellate Tribunal made a special case for the respondent in spite of its concurrence with that finding of the Industrial Court.
It is significant to observe that this principle was accepted by the Labour Appellate Tribunal itself.
"As at present advised a claim for bonus which had been rested on profits earned should ordinarily be determined on the basis of the profits earned in the year under claim and that the scale of bonus should be determined on the quantum of profits earned in the (1) (1952) I L.L.J. 386.
(2) (3) (1953) I L.L.J. 466.
1000 year.
So, it would follow that if there is trading loss in the year under claim, bonus should not ordinarily be awarded.
It however observed: " But, in our opinion, that should not be the universal rule.
Considerations of social justice cannot be disregarded altogether, in relations between capital and labour.
There may be special cases, and we consider the case before us to be one, where social justice would demand that labour should have bonus for the year where for that very year capital had not only a. reasonable return but much in excess of that.
" The Labour Appellate Tribunal did not accept the contention of the respondent that bonus should be linked to dividends nor did it rest its decision on the respondent having a right, title and interest in the reserves and the undistributed profits of the appellant.
Linking of bonus to dividend would obviously create difficulties.
Because if that theory was accepted a company would not declare any dividends but accumulate the profits, build up reserves and distribute those profits in the shape of bonus shares or reduce the capital in which event the workers would not be entitled to claim anything as and by way of bonus.
The workers not being members of the company would also not have any right, title and interest in the reserves or the undistributed profits which would form part of the assets of the company.
Even on a winding up of a company the property of the company would be applied in satisfaction of its liabilities pari passu and, unless the articles of association of the company otherwise provided, in distribution amongst the members according to their rights and interest in the company.
The employees would in no event be entitled to any share or interest in the assets and the capital of the company.
A transfer of moneys from these reserves or the undistributed profits would therefore not enure for the benefit of the workers.
The shareholders only would be entitled to such benefit and the mere fact that dividends were declared and paid to the shareholders out of such reserves and undistributed profits would 1001 not entitle the workers to demand bonus when in fact the working of the industrial concern during the particular year had showed a loss.
It has also got to be remembered that the labour force employed in an industrial concern is a fluctuating body and it cannot be predicated of the labour force in a particular year that it represents the past and the present workers, so that it can claim to demand bonus out of the reserves or undistributed profits of the Previous years.
On the accounts of each year being made up and the profits of the industrial concern being ascertained the workers during the particular year have their demand for bonus fully satisfied out of the surplus profits and the balance of profits is allocated and carried over in the accounts.
No further claimed payment of bonus out of those reserves or undistributed profits can therefore survive.
To admit the claim for bonus out of the reserves transferred to the profit and loss account would tantamount to allowing a second bonus on the same profits in respect of which the workers had already received their full bonus in the previous year.
The labour force which earns the profits of a particular year by collaborating with the employers is distinct from the one which contributed to the profits of the previous years and there is no continuity between the labour forces which are employed in the industrial concern during the several years.
The ratio which applies in the case of the shareholders who acquire the right, title and interest of their predecessorsin interest does not apply to the labour force and the fact that the shareholders get a dividend by transfer of funds from the reserves and undistributed profits of the previous years would not entitle the workers to demand bonus out of those funds if the working of the industrial concern during the particular year has resulted in a trading loss.
The considerations of social justice imported by the Labour Appellate Tribunal in arriving at the decision in favour of the respondent were not only irrelevant but untenable.
Social justice is a very vague and indeterminate expression and no clear cut definition can be laid down which will cover all the situations.
1002 Mr. Isaacs, the learned counsel for the respondent,.
attempted to give a definition in the following terms : "social justice connotes the balance of adjustments of the various interests concerned in the social and economic structure of the State, in order to promote harmony upon an ethical and economic basis" and he stated that there were three parties concerned here, viz., the employers, the labour and the State itself, and the conception of social justice had to be worked out in this context.
Without embarking upon a discussion as to the exact connotation of the expression "social justice" we may only observe that the concept of social justice does not emanate from the fanciful notions of any particular adjudicator but must be founded on a more solid foundation.
Indeed the Full Bench of the Labour Appellate Tribunal evolved the abovequoted formula with a view to dispensing social justice between the various parties concerned.
It adopted the following method of approach at page 1258 of that judgment : " Our approach to this problem is motivated by the requirement that we should ensure and achieve industrial peace which is essential for the development and expansion of industry.
This can be achieved by having a contented labour force on the one hand, and on the other hand an investing public who would be attracted to the industry by a steady and progressive return on capital which the, industry may be able to offer.
" This formula was reiterated in Textile Mills, M. P. Their Workmen(1), and Famous Cine Laboratory vs ,Their Workmen( 2 ), and in the latter case it deprecated the idea of adjudicators importing considerations of social justice which were not comprised in that formula : " And what is social justice ? Social 'justice is not the fancy of any individual adjudicator; if it were so then ideas of social justice might vary from adjudicator to adjudicator over all parts of India.
In our Full Bench decision (See 1950,2 L.L.J., p. 1247), we care.
fully considered the question of social justice in relation (1) (2) 1003 to bonus, and there we equated the rights and liabilities of employers and workmen with a view to achieving a just formula for the computation of bonus.
That Full Bench decision stands, and this tribunal and all other tribunals are bound by it.
" Without committing ourselves to the acceptance of the above formula in its entirety we may point out that the Labour Appellate Tribunal did not apply its own formula to the facts of the present case.
It is also significant to note that even while importing considerations of social justice the Labour Appellate Tribunal was oblivious of the fact that it was by their own acts of indiscipline and strike that the workers of the appellant company themselves contributed, to the trading losses incurred by the appellant and it hardly lay in their mouth then to contend that they were none the less entitled to a payment of bonus commensurate with the dividend paid to the shareholders out of the undistributed profits of the previous years.
The Labour Appellate Tribunal also overlooked the fact that but for the Public Companies (Limitation of Dividend) Ordinance of 1948 the whole of the profits of 1948 could have been distributed after paying the workers bonus in that year of four annas in the rupee.
We may before concluding refer to an argument which was addressed to us by Mr. Isaacs, the learned counsel for the respondent, that this Court under article 136 should not interfere with the decisions of the tribunals set up by the .
This contention can be shortly answered by referring to our decision in Bharat Bank Ltd., Delhi vs Employees of the Bharat Bank Ltd., Delhi(1), where we held that the Industrial Tribunals were tribunals within the meaning of article 136 and further that article 136 has vested in this, Court exceptional and overriding power to interfere where it reaches the conclusion that a person has been dealt with arbitrarily or that a Court or tribunal within the territory of India has not given a fair deal to a litigant.
(Vide (1) (1950] S.C.R. 459.
1004 Dhakeswari Cotton Mills Ltd. vs Commissioner of Income tax, West Bengal(1).
The result therefore is that the decision of the Labour Appellate Tribunal appealed against must be reversed and that of the Industrial Court (Textiles and Hosiery), Kanpur, restored.
The appeal will accordingly be allowed with costs.
Appeal allowed.
| Under the Chanda Patent and the terms recorded in the Wajibul Arz the Dhanora Zamindari was impartible and on the death of the holder it devolved upon his eldest son and in the absence of a legitimate or an adopted son it devolved upon the nearest male relative.
The succession to the Zamindari was subject to the power of the Governor to dispossess a person found unfit to observe the conditions of loyalty, good police administration and improvement of the estate.
The respondent instituted an action for possession of certain immovable properties including the zamandari and for recovery of compensation, in respect of malguzari lands, paid to the appellants in consequence of the enactment of the Madhya Pradesh Abolition of Proprietary Rights (Estate, Mahals, Alienated Lands) Act, 1951.
They claimed the Zamindari relying upon the rule of primogeniture and other estates as devisees under a Will.
The trial court decreed the suit and the High Court affirmed the decree with slight modifications.
in the appeal to this Court the appellants urged that (1) the Zamindari devolved on the death of the holder on the male relative who is senior most in age and not the eldest member in the senior line; (2) by the order of the Governor the Zamindari was conferred upon the first appellant as he was found suitable to hold the zamindari and since the Government had the power to determine inheritance and the right to remove a person, the holder of the zamindari had merely a life interest; and (3) the compensation officer had decided by his order under section 14 of the Act that compensation in respect of malqutari land was payable to the first appellant and since no suit was filed by the plaintiffs for setting aside that decision within the period specified, the order of the compensation officer became final and conclusive.
HELD : (1) By the use of the expression "the nearest male relative" the test of propinquity alone may be applied and when there are two or more claimants equally removed from the common ancestor the eldest male member in the senior most line will be preferred.
The contest between the parties had to be adjudged in the light of the rules of lineal primogeniture governing an impartible estate.
In determining a single their according to the rules of primogeniture the class of heirs who would 325 be entitled to succeed the property if it were partible must be ascertained first, and then the single heir applying the special rule must be selected.
By the expression "nearest male relative" it was not intended to confer be estate upon the eldest male relative of the Zamindar.
The High Court was, therefore, right in holding that the Zamindari devolved upon the first respondent to ' the exclusion of the first appellant.
[333 C F] (2) The power vested in the Governor to take extraordinary steps to protect the interest of the zamindari by the removal of the holder did not restrict the title of the zamindar to a mere life interest.
The power had to be exercised in accordance with the custom of the family and an order by the Governor purporting to exercise powers under the Chanda Patent contemplated a quasi judicial inquiry.
The order does not show that any inquiry was made for determining the rights of the contesting claimants.
[334 G] (3) Section 14 of Act 1 of 1951 does not invest the compensation officer with jurisdiction to determine competing claims of persons claiming proprietary rights to the property vested in the Government by the operation of section 3 of the Act.
Section 14 is intended to determine only the proprietary rights in the land qua the State.
[339 D E]
|
vil Appeal No. 2448 of 1989 etc.
From the Judgment and Order dated 25.5.1988 of the Punjab and Haryana High Court in C.W.P. No. 736 of 1987.
G. Ramaswamy, Additional Solicitor General, Harbhawan Walia, Kapil Sibal, M.S. Gujral, Anil Dev Singh, M.R. Shar ma, D.V. Sehgal, Naresh Bakshi, R. Bana, Jitendra Sharma, S.M. Satin, S.K. Mehta, D. Mehta, Atul Nanda, P.N. Pun, B.B. Sawhney, M.C. Dhingra, A.K. Gupta, T.C. Sharma, Mrs. Sushma Suri, Ms. Indu Goswami, R.S. Yadav, Manoj Prasad, Manoj Swarup M.L. Verma, section Bagga, D.S. Gupta, B.R. Kapur, Anis Ahmad Khan, section Sehgal and 637 N.K. Aggarwal for the appearing parties.
The Judgment of the Court was delivered by RANGANATHAN, J.
This is a batch of appeals and writ petitions challenging the validity of a notification issued on.15.12.1986 by the Central Government under section 87 of the (Act of Parliament No. 31 of 1966), hereinafter referred to as 'the Reorganisation Act '.
By this notification, the Central Government purported to extend to the Union Territory of Chandigarh hereinafter referred to also as 'Chandigarh ' the provisions of the East ' Punjab Urban Rent Restriction (Amendment) Act, 1985 (Punjab Act 2 of 1985) (hereinafter referred to as 'the 1985 Act '), as it was in force in the State of Punjab at the date of the notification and subject to the modifications men tioned in the said notification.
The Punjab and Haryana High Court by its judgment in Ramesh Birch vs Union, AIR 1988 P & H 281 upheld the validity of the above notification and hence the special leave petitions.
The writ petitions have been directly filed in this Court challenging the validity of the notification.
In view of the importance of the ques tion involved, we have heard the parties on the merits of the cases.
We, therefore, grant special leave in the special leave petitions and rule nisi in the writ petitions and proceed to dispose of the appeals and the writ petitions by this common judgment.
Section 87 of the Reorganisation Act is in the following terms: "87.
Power to extend enactment to Chandigarh The Central Government may, by notification in the Official Gazette, extend with such restrictions or modifications as it thinks fit, to the Union Territory of Chandi garh any enactment which is in force in a State at the date of the notification.
" There are other provisions of this Act which will be referred to later.
But it is necessary to refer to section 87 here for a specific purpose and that is to point out that the provisions of section 87 are pari materia with the provisions of Section 7 of the Delhi Laws Act, 19 12 and Section 2 of the Ajmer Marwara (Extension of Laws) Act, 1947, which, for convenience, we shall refer to as Act I and Act II respectively.
These provisions read as follows: "Section 7 of Act 1: The Provincial Government may, by 638 notification in the Official Gazette, extend with such restrictions and modifications as it thinks fit, to the Province of Delhi or any part thereof, any enactment which is in force in any part of British India at the date of such notification." "Section 2 of Act H: The Central Government may, by notification in the official Gazette, extend to the province of Ajmer Marwara with such restrictions and modifications as it thinks fit any enactment which is in force in any other province at the date of such notifi cation.
" It is also necessary here to contrast the above two provisions with section 2 of the Part C States (Laws) Act, 1950 (hereinafter referred to, for purposes of convenience, as Act III).
That provision reads as follows: "Section 2 of Act 111: The Central Government may, by notification in the official Gazette, extend to any Part C State (other than Coorg and the Amendment and Nicobat Islands) or any part of such State, with such restrictions and modifications as it thinks fit, any enactment which is in force in a Part A State at the date of the notification and provision may be made in any enactment so extended for the repeal or amendment of any corresponding law (other than a Central Act) which is for the time being applicable to that Part C State.
" The reference to these provisions is being made at this stage because the validity of section 7 of the and section 2 of Ajmer Marwara (Extension of Laws) Act 1947 were upheld by this court in the decision reported as In re ; , The decision also upheld the validity of the first part of section 2 of Act III but struck down the second part of that provision (underlined above) as vitiated by the vice of excessive delegation.
A good deal of the arguments addressed before us naturally turned on the ratio and effect of the decision of this Court in the case (supra), but, before turning to the arguments, it is necessary to give a brief history of section 87, the interpretation of which is presently in question.
When the Constitution of India came into force on 26th January, 1950, the component units of the Indian Union were grouped into four 639 types of territories.
There Were nine States in Part A (one of which was Punjab, earlier known as East Punjab), nine States in Part B (which included Pepsu), ten States in Part C (which included Himachal Pradesh) and only one State, namely, Andaman and Nicobar Islands, in Part D.
At this stage, although several of the former Indian States had acceded to the Indian Union, the process of their integra tion as component units of the Indian Union was not com plete.
Some units were accepted as units of the Union in the form in which they existed at the time of independence while some were formed by grouping together one or more of the former princely States.
After the recommendations of the States Reorganisation Commission in 1955, the Constitution was amended to classify the units of the Indian Union into States and Union Territories.
At the time of the 1956 reorganisation one State of Punjab was created by merging the erstwhile States of Pepsu and Punjab.
In 1966 a new State of Haryana was created by carrying out certain territories from the State of Punjab.
Certain hill areas of the Punjab were merged with the ad joining Union Territory of Himachal Pradesh.
A new Union Territory of Chandigarh was carved out which became the joint capital of Punjab and Haryana.
The Punjab Reorganisa tion Act, 1966 gave effect to these proposals.
Sections 3 and 4 dealt with the delimitation of the territories of the States of Punjab and Haryana and the Union Territories of Himachal Pradesh and Chandigarh.
One of the important as pects of the reorganisation, in respect of which specific statutory provision was needed, was regarding the applica bility of laws to the various territories which underwent reoganisation.
This was effected by Part X of the Reorgani sation Act comprising of sections 86 to 97.
It is however sufficient for our present purposes to refer to the provi sions contained in sections 87 to 90.
These provisions were in the following terms: Section 87: Power to extend enactments to Chandigarh set out earlier.
Section 88: Territorial extent of laws The Provisions of Part II shall not be deemed to have effected any change in the territories to which any law in force immedi ately before the appointed day extends or applies, and territorial references in any such law to the State of Punjab shall, until otherwise provided by a competent Legislature or other competent authority, be construed as meaning the territories within the State immediately before 1 the appointed day.
640 Section 89: Power to adapt laws For the purpose of facilitating the application in relation to the State of Punjab or Haryana or to the Union territory of Himachal Pradesh or Chandigarh of any law made before the appoint ed day, the appropriate Government may, before the expiration of two years from that day, by order, make such adaptations and modifications of the law, whether by way of repeal or amend ment, as may be necessary or expedient, and thereupon every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent Legislature or other competent authority.
Section 90: Power to construe laws (1) Not withstanding that no provision or insufficient provision has been made under section 89 for the adaptation of a law made before the ap pointed day, any court, tribunal or authority, required or empowered to enforce such law may, for the purpose of facilitating its applica tion in relation to the State of Punjab or Haryana, or to the Union of territory of Himachal Pradesh or Chandigarh construe the law in such manner, without affecting the substance, as may be necessary or proper in regard to the matter before the court, tribu nal or authority.
(2) Any reference to the High Court of Punjab in any law shall, unless the context otherwise requires, be construed, on and from the ap pointed day, as a reference to the High Court of Punjab and Haryana.
The dispute in this batch of cases is regarding the applicability of certain rent laws to the Union Territory of Chandigarh.
The territories originally comprised in the former Province of East Punjab later designated as the State of Punjab were governed by the East Punjab Urban Rent Restriction Act, 1949 (hereinafter referred to as the 'pri ncipal Act ' or the '1949 Act ').
This Act applied to all urban areas in the State of Punjab.
Section 2(j) of that Act defined 'urban area ' as any area administered by a municipal committee, a cantonment board, a town committee or a noti fied area committee or any area declared by the State Gov ernment by notification to be an urban area for the purposes of the Act.
The Central Government had earlier issued, under section 89, the Punjab Reorganisation (Chandigarh) (Adapta tion of Laws on State and Concurrent Subjects) Order, 1968 w.e.f. 641 1.11.66.
Paragraph 4 of the Order directed that in all the existing laws, in its application to the Union Territory of Chandigarh, any reference to the State of Punjab should be read as a reference to the Union Territory of Chandigarh and para 2(1)(b) of the Order defined the expression 'existing law '.
The Central Government, in exercise of the power conferred by section 2(j) of the principal Act, issued on 13.10.72 a notification declaring the area comprising Chand igarh to be an 'urban area ' for the purposes of the princi pal Act.
The notification was published in the Gazette of India on 4.11.72.
This notification was however quashed by the Punjab & Haryana High Court by its decision in the case of Harkishan Singh vs Union, AIR 1975 P & H 160.
That was on the short ground that, as no notification had been issued prior to 1.11.66 under section 2(j) declaring Chandigarh to be an urban area, the Act could not be said to have been in force within the said area prior to 1.11.66.
Neither section 88 not the notification of 13.10.72 could, it was held, be effective to make the principal Act operative in Chandigarh unless it had first been applied to the Union Territory of Chandigarh or any part thereof by a notification under section 87 with the necessary adaptation.
This decision, of a Full Bench of the High Court, was rendered on 9.10.1974.
Two courses were open to the Government to set right the lacunae pointed out by the High Court.
The first, as pointed out by the Full Bench, was to extend the principal Act to Chandigarh by a notification under section 87.
The second was to invoke the legislative powers of Parliament available in respect of Chandigarh under article 246(4) of the Constitu tion to enact a legislation for this purpose.
But it was important that any corrective measure had to be made retro spective in its operation if the large number of suits for eviction that had been filed in the meanwhile on the strength of the notification and were pending disposal in various courts were to be saved from being rendered non maintainable consequent on the decision of the High Court.
Presumably for this reason, the second of the above courses was adopted and Parliament enacted the East Punjab Urban Rent Restriction (Extension to Chandigarh) Act (Central Act 54 of 1974) hereinafter referred to as 'the 1974 Act '.
Section 3 of this Act provided for the enforcement of the principal Act in Chandigarh.
It reads: "Section 3: Extension of East Punjab Act 111 of 1949 to Chandigarh Notwithstanding anything contained in any judgment, decree or order of any court, the Act shall, subject to the 642 modifications specified in the Schedule, be in force in, and be deemed to have been in force with effect from 4th day of November, 1972 in the UniOn Territory of Chandigarh, as if the provisions of the Act so modified had been included in and formed part of this section and as if this section had been in force at all material times." Three features of the above legislation may be empha sised at this stage.
The first was that, though this pur ported to extend the principal Act to Chandigarh, it was in truth and substance a Parliamentary enactment applicable to Chandigarh incorporating within itself by reference, for purposes of convenience and to avoid repetition, all the provisions of the principal Act.
The second was that the Act was given retrospective effect from 4.11.72, the date on which the previous notification under section 89 had been gazetted with a view to regularise all proceedings for eviction which might have been initiated during the inter regnum.
Thirdly, the principal Act was re enacted subject to the modifications specified in the Schedule.
These included a modification of the definition of 'urban area ' as includ ing the area comprising Chandigarh as defined in section 2 of the Capital of Punjab (Development Regulation) Act, 1952 and such other areas comprised in the Union Territory of Chandigarh as the Central Government may by notification declare to be urban for the purposes of the Act.
Before turning to the issues before us, it is necessary to refer to three subsequent developments: (i) In 1976, when Parliament was not in session, the President of India promulgated Ordinance 14 of 1976 on 17.12.76.
By this Ordinance, the 1949 Act, as in force in Chand igarh, was amended in the following respects: (a) In section 13, an exlanation and sub section (4A) were introduced; (b) New sections 13A. 18A and 18B were insert ed; (c) A new sub section (2A) in section 19 was inserted; (d) A Schedule II prescribing the form of summons to be issued in proceedings under the newly inserted section 13A was added.
This ordi nance was allowed to lapse and was not enacted into law thereafter.
643 (ii) In 1982, Parliament passed the East Punjab Rent Restriction (Chandigarh Amendment) Act (No. 42) of 1983 (hereinafter referred to as 'the 1982 Act ').
By this Act, two amend ments were effected to the principal Act in its application to Chandigarh.
One was a formal one replacing reference to "East Pun jab" by a reference to "Punjab".
The second was the substitution of a new definition of "non residential building" in section 2(d) of the Act.
This amendment Act did not, however, incorporate the amendments earlier effected in the principal Act (as in force in Chandigarh) by the Ordinance of 1976 which had lapsed, though this opportunity could have been availed of by Parliament had it been so mind ed, to introduce those amendments as well.
(iii) In 1985, the provisions of the principal Act were amended in their applica tion to the State of Punjab.
The legislature of the State of punjab enacted Punjab Act 2 of 1985 (hereinafter referred to as 'the 1985 Act ') by which the principal Act was amended to insert therein new sections 13A, 18A and 18B and a new Second Schedule and to make certain amendments in sections 13 and 19 of the Act.
These amendments were substantially the same as those that had been effected by the Ordinance of 1976 except that a new defi nition of "specified landlord" was added in section 2 and the other provisions verbally altered in consequence.
This amendment came into force w.e.f. 16.11.
When the last of the above developments took place, the Central Government considered it necessary to extend the 1985 Act to the territory of Chandigarh.
In order to effec tuate this object, it issued a notification dated 15.12.86 purportedly in exercise of its powers under section 87 of the Reorganisation Act.
By this notification the Central Government extended to the Union Territory of Chandigarh the provisions of the 1985 Act as in force in the State of Punjab at the date of the notification (i.e. to say as on 15.12.1986) and subject to the modifications mentioned therein.
The resultant position is that while the provisions of the principal Act had been brought into force in the Union Territory of Chandigarh w.e.f. 4.11.72 by an Act of Parliament, the provisions of the 1985 Act have been extend ed to the territory of Chandigarh by means of a notification of the Central Government issued under section 87.
The short question posed before us is whether the latter "extension" is permissible and valid in law.
644 Ex facie, the impugned notification appears to be intra vires section 87.
The 1985 Act is an enactment in force in a State on the date of the notification and section 87 clearly permits the Central Government to extend it to Chandigarh.
If the petitioners/appellants seek to challenge its validi ty, they have either to contend that section 87 itself is ultra vires the Constitution or that, though section 87 is a valid provision, on a proper construction thereof, the notifica tion travels beyond the area of extension permitted Under it and is hence invalid.
Both these contentions have been urged before us.
Sri Gujral had so much confidence in the latter argument that he had made it his principal argument, taking up the former as a plea in the alternative.
But young Sri Swarup boldly concentrated on attacking the validity of section 87 while also lending support to Sri Gujral 's principal argument as an argument in the alternative.
We shall proceed to examine these two contentions.
The argument contesting the validity of section 87 proceeds on the following lines.
The main premise of the argument is that, under Article 246(4) of the Constitution, Parliament has exclusive power to make laws on matters enumerated in the State List and Concurrent List (i.e. List II and List III of the Seventh Schedule to the Constitution) in respect of a Union Territory except where (as in the case, say, of Pondicherry) the territory has a legislative assembly, in which event the power will vest in such assembly under section 18 of the Government of Union Territories Act (18 of 1963).
There being no legislative assembly set up for Chandigarh, Parliament and Parliament alone has any legislative power with regard to that territory.
This power, however, plenary and extensive, cannot be self effacing.
In purported exer cise of such power, Parliament cannot delegate its legisla tive function in favour of an executive authority to such an extent as to amount to an "abdication" of such legislative function.
The argument is that this is exactly what has been done under section 87.
By enacting section 87, Parliament, instead of legislating for the Union Territory, has left it to the Central Government to decide for all time to come what should be the laws in force in that territory.
This, it is said, is clear from the extraordinary ambit of the powers conferred by section 87 on the Central Government in three impor tant directions: (i) section 87 is not transitional in nature but confers an all time power on the executive.
This will be clear if one contrasts it with section 89.
Section 89 gives a limited power to the Central Government to adapt existing laws within a period of two years.
Though, as will be noticed later, section 89 is wider in certain respects, it is clearly a transitory provision intended to enable the Central Government to tide over the 645 difficulties caused by the sudden creation of a new territo ry and the immediate need for having laws applicable therto.
The transitoriness is indeed emphasised by the concluding words of section 89, (which are really superfluous) that the adaptation will hold the field only until they are altered, repealed or amended by a competent legislature or authority.
But section 87 empowers the Central Government to extend any legislation to Chandigarh at any time: even today, twenty three years after the passing of Reorganisation Act.
(ii) The second feature of section 87 is this.
Under it, the Central Government could extend to the Union Territory any law in force in any part of India.
For instance, it could be the Rent Control Act in force in Punjab or the Rent Control Act in operation in a distant State like the State of Tamil Nadu.
It could perhaps extend to the Union Territory some provisions of the rent control legislation in one State side by side with certain other provisions of legislations in force in any other State or States and thus enforce a law which would be an "amalgam" of various statutory provisions in force in various parts of the country.
Though a conces sion against this possibility was made in case ; at p. 1005), it would seem to be possible if such provisions are contained in independent enactments.
Here, for e.g. the 1949 Act and the 1985 Act, both of Pun jab, have been made applicable to Chandigarh.
But suppose, after the provisions of the 1949 Act had been made applica ble to Chandigarh by the 1974 Act, an amendment Act of the nature presently in question had been introduced not in the Punjab but, say, in Kerala, there is nothing in the language of section 87 to prohibit the Central Government from extending the Kerala Amendment Act to Chandigarh to stand side by side with the 1974 Act.
In other words, the section confers on the executive government a wide power of choice, for appli cation to Chandigarh, of not only one legislative enactment on any subject from among various enactments on that subject in operation in various parts of the country but also of groups of provisions from one or more of them.
There is no legislative guidance as to the manner in which these choices should be exercised by the executive government.
(iii) The laws that can be extended to the Union Terri tory under section 87 would include not only the laws in force in any State in India on the date of the Reorganisation Act (i.e. 1.11.66) but any Act that may come into force in those States upto the date of the notification.
If it had been restricted to laws in force as on the day the Reorganisation Act came into force, one could at least say that Parliament could be attributed with a knowledge of the various provi sions in existence in 646 the various states, and to have decided, as a matter of policy that anyone of them could be good enough for Chandi garh and hence left it to the executive government to choose and extend any one of them for application to the territory.
But section 87 goes further and enables extension, by Gov ernment notification, even of any legislation which might come into force in any part of India at any time between 1966 and the date of the notification.
Parliament, while enacting the Reorganisation Act, could certainly have had no knowledge or even inkling of possible laws that might be enacted in future in any part of the country on any subject.
The effect, therefore, of section 87 would be that the entire legislation for the Union Territory, in respect of any particular subject, would entirely depend upon the fancy of the Central Government without any sort of legislative or parliamentary application of mind, except the fact that some legislature in some part of the country has considered the law good enough for the conditions prevailing in that terri tory.
Learned counsel contends that these facets of section 87 clearly render it an instance of excessive delegation by Parliament to executive amounting, in effect, to the total abdication by Parliament of its legislative powers in regard to Chandigarh.
The problem posed before us is, what Chinnappa Reddy, J. in Registrar of Cooperative Societies vs Kunhambu, ; described as, the "perennial, nagging problem of delegated legislation and the so called Henry VIII clause".
This is an issue on which there is an abundance of authori ty, of even larger Benches of this Court.
The judgments in R.v.
Burah, [1878] 51.A. 178; Jatindra Nath Gupta, ; the case; , ; Hari Shankar Bagla, ; Rajnarain Singh; , ; Sardar Inder Singh; , ; Banarsi Das; , ; Edward Mills, ; Western India Theatres, [1959] Supp 2 SCR 71; Hamdard Dawakhana; , ; Vasantlal Maghanbhai; , ; Jyoti Prashad; , ; Shama Rao, ; Mohammad Hussain Gulam Mohammad; , ; Liberty Cinema; , ; Devi Dass; , ; Birla Cotton; , ; Sitaram Bishambar Dayal; , ; Hiralal Ratanlal; , ; Gwalior Rayon; , ; Papiah; , and Kunhambu; , and Brij Sunder Kapoor; , can be referred to for a detailed discus sion and application of the relevant principles in the context of various kinds of legislative provisions.
It is unnecessary, for our present purposes, to undertake a de tailed examination of the several opinions expressed in these cases.
Suffice it to say that these decisions have been interpreted as holding that the power of 647 Parliament to entrust legislative powers to some other body or authority is not unbridled and absolute.
It must lay down essential legislative policy and indicate the guidelines to be kept in view by that authority in exercising the delegat ed powers.
In delegating such powers, Parliament cannot "abdicate" its legislative functions in favour of such authority.
Doubts have been expressed in some quarters as to the correctness of the principle indicated above.
It has been suggested that, had the question been res integra or even if one carefully analysed the observations made in these var ious cases, there is much to be said for a different view advocated by the Privy Council in R. vs Burah, [1878] 51.A. 178 and adhered to by it ever since.
This view is that, given the present system of Parliamentary democracy, the extensive range of governmental functions today and the kind and quantity of legislation which modern public opinion requires, the legislatures under the Constitution should be held to be supreme and unrestricted in the matter of legis lation and should not be prohibited from delegating some of their powers of legislation to such other agencies, bodies or authorities as they may choose, so long as they do not altogether divest themselves of their legislative power and confer them on another and so long as they retain the power, whenever it pleases them, to remove the agency they have created and set up another or take the matter directly into their own hands.
The reasons put forward in support of this line of thought are these: (1) The whole doctrine of excessive delegation is based either on the doctrine of separation of powers or on the doctrine of the law of agency: "delegata potestas non potest delegari", neither of which can validly apply to the constitutional context we are concerned with.
(2) The Privy Council, ever since its leading decision in R. vs Burah, [1878] 51.A. 178, has taken this view consistently.
This is also the view to which American and Australian courts have veered round in recent years.
(3) The doctrine enunciated in the above cases is so difficult of practical application and has resulted in such a large number of separate judgments that litigants are encour aged to raise the plea in respect of every conceivable piece of delegation banking on an off chance of being ultimately successful.
648 (4) The magnitude of the controversies raised on this issue is so great that legisla tions, if invalidated on this ground, have to be invariably validated with retrospective effect.
The result is that, on the one hand, the implementation of important legislations is held up due to interim orders for the long period of pendency of the litigation and even the final determination, on the other, achieves no practical result.
In short, the consideration of such issues is practically a waste of judicial time.
The doctrine is based on the theory that it is the legislature and not the execu tive that has to apply its mind to the basis of all legislation.
Judicial dicta are not wanting which emphasise that this is a theory wholly unrelated to the practical realities of the modern functioning of a cabinet system of Government.
An examination of the cases decided on this principle show that it is very diffi cult to define the scope of "essential legis lative function" which cannot be delegated.
In the ultimate analysis, only lip service is paid to the doctrine of legislative policy and guidance and courts are inclined to grab at the weakest of straws as a policy or guideline with which to bale out an impugned piece of legislation rather than invalidate it.
(7) There have been cases where the delegation of the taxing powers has been upheld by drawing on non existent distinctions such as, for example, one between the delega tion of a power to fix the rates of the taxes to be charged on different classes of goods and the power to fix rates of taxes simplicit er.
(8) There is clear inconsistency be tween Shama Rao, and the decision in the , case upholding the delegation to the executive of the power to extend not only present but also future laws to a particular territory.
Shama Rao does not answer the question posed before it that the validity of such legislation follows on the answer given by Delhi Laws to categories (3) and (4) of Bose J. 's summary of its deci sion in Rajnarain.
(9) The Indian Statute book contains any number of legislations, on tax matters as well as others, conferring a wide range of delegation of powers and a search for guide lines or policy underlying them may well prove an unending quest.
649 (10) Judicial dicta abound where it has been pointed out that, so long as the legisla ture has preserved its capacity in tact and retained control over its delegate, so as to be able, at any time, to repeal the legisla tion and withdraw the authority and discretion it had vested in the delegate, it cannot be said to have abdicated its legislative func tions.
Chinnappa Reddy, J. in Kunhambu; , , did not wish to be drawn into the pros and cons of the above line of reasoning.
His Lordship observed that the clear trend of a large number of the decisions of this Court was in favour of the "policy" and "guidelines" theory and he was content to adopt the same for the purposes of the case before the Court.
This theory, which is capable of being formulated in broad terms, though difficult of practical application to individual cases as and when they arise, can be set out best in the words of Reddy, J. in the above case: "It is trite to say that the function of the State has long since ceased to be confined to the preservation of the public peace, the exaction of taxes and the defence of its frontiers.
It is now the function of the State to secure to its citizens 'social, economic and political justice ', to preserve 'liberty of thought, expression, belief, faith and worship ', and to ensure 'equality of status and of opportunity ' and 'the dignity of the individual ' and the 'unity of the nation '.
That is what the Preamble to our Constitution says and that is what is elaborated in the two vital chapters of the Constitution on Funda mental Rights and Directive Principles of State Policy.
The desire to attain these objectives has necessarily resulted in intense legislative activity touching every aspect of the life of the citizen and the nation.
Execu tive activity in the field of delegated or subordinate legislation has increased in direct, geometric progression.
It has to be and it is as it should be.
The Parliament and the State Legislatures are not bodies of experts or specialists.
They are skilled in the art of discovering the aspirations, the expectations and the needs, the limits to the patience and the acquiescence and the articu lation of the views of the people whom they represent.
They function best when they con cern themselves with general principles, broad objectives and fundamental issues instead of technical and situational intricacies which are better left to better equipped full time expert executive bodies and specialist public 650 servants.
Parliament and the State Legisla tures have neither the time nor the expertise to be involved in detail and circumstance.
Nor can Parliament and the State Legislatures visualise and provide for new strange, unfore seen and unpredictable situations arising from the complexity of modern life and the ingenui ty of modern man.
That is the raison d 'etre for delegated legislation.
That is what makes delegated legislation inevitable and indis pensable.
The Indian Parliament and the State Legislatures are endowed with plenary power to legislate upon any of the subjects entrusted to them by the Constitution, subject to the limitations imposed by the Constitution it self.
The power to legislate carries with it the power to delegate.
But excessive delega tion may amount to abdication.
Delegation unlimited may invite despotism uninhibited.
So the theory has been evolved that the legisla ture cannot delegate its essential legislative function.
Legislate it must by laying down policy and principle and delegate it may to fill in detail and carry out policy.
The legislature may guide the delegate by speaking through the express provision empow ering delegation or the other provisions of the statute, the preamble, the scheme or even the very subject matter of the statute.
If guidance there is, wherever it may be found, the delegation is valid.
A good deal of lati tude has been held to be permissible in the case of taxing statutes and on the same prin ciple a generous degree of latitude must be permissible in the case of welfare legisla tion, particularly those statutes which are designed to further the Directive Principles of State Policy.
" The same view was taken by Khanna J. in Gwalior Rayon, [1974] 2 'SCR 879 when,, after reviewing the entire literature on the subject, he observed: "It would appear from the above that the view taken by this Court in a long chain of author ities is that the legislature in conferring power upon another authority to make subordi nate or ancillary legislation must lay down policy, principle, or standard for the guid ance of the authority concerned.
The said view has been affirmed by Benches of this Court consisting of seven Judges.
Nothing cogent, in our opinion, has been brought to our notice as may justify departure from the said view.
The binding effect of that 651 view cannot be watered down by the opinion of a writer, however eminent he maybe, nor by observations in foreign judgments made in the context of the statutes with which they were dealing.
" If this be the consistent view of this court on this thorny issue, Sri Manoj Swarup says, section 87 clearly offends the principle so enunciated, particularly, when one considers the extremely broad sweep of its language.
In empowering the executive to extend laws to Chandigarh to the contents of which Parliament has not applied its mind and further in allowing the executive to exercise a choice among several such existing and future laws, Parliament has in fact abdicated its essential legislative functions in rela tion to the Union Territory in favour of the Central Govern ment and given the go by to the elaborate procedures and safeguards enacted in the Constitution in regard to the process of legislation by Parliament or a State Legislature.
There would have been considerable force in this contention had it not been for the decision in the case 195 1 SCR 747.
As has been pointed out earlier, that deci sion clearly upheld the validity of section 7 of Act I, section 2 of Act II and the first part of section 2 of Act III which did, in relation to Delhi, Ajmer Marwara and Part C States, exactly that which has been done by section 87 in relation to Chandigarh despite the fact that some of the judges struck a different line from R.v.
Burah, [1878] 51.A 178, refused to accept the theory of absolute freedom for Parliament to delegate its powers and enunciated the "policy guideline" theory which has been taken up in subsequent decisions of this Court.
It is said that there are some difficulties in straightaway treating ; , as conclusive of the issue before us.
In the first place, that was a decision which reflected the advisory opinion of this Court in a reference made by the President under article 143(1) of the Constitution which, technically speaking, is not a binding precedent.
Secondly, although five of the seven learned Judges upheld the validity of the provisions re ferred to above, it is difficult to clearly formulate the principle which emerges therefrom, for, as Patanjali Sastri C.J. observed in Kewal Raning Rawat vs State, ; "While undoubtedly certain definite conclu sions were reached by the majority of the judges who took part in the decision in regard to the constitutionality of certain specified enactments, the reasoning in each case was different and it is difficult to say that any particular principle has been laid down by the majority which can be of assistance in the determination of other cases".
652 Thirdly, Shama Rao, is said to be a binding decision of a Constitution Bench of this Court to the con trary and that has to be followed by us.
Since the case; , was con cerned with provisions identical in language to the one before us, it is only proper and appropriate for us to refer to the reasoning of the judges in the case in regard to the provisions the validity of which was upheld: A. Kania CJ.
held that all the provisions under consid eration were ultra vires to the extent they permitted the extension of Acts other than those of the Central Legisla ture to the areas in question.
His view was that the essen tials of a legislative function are the determination of the legislative policy and its formulation as a rule of conduct and these essentials are the characteristics of a legisla ture itself.
These essentials are preserved when the legis lature specifies the basic conclusions of fact upon the ascertainment of which from relevant data by a designated administrative agency it ordains that its statutory command is to be effective.
The legislature having thus made its laws, every detail for working it out and for carrying the enactment into operation and effect may be done by the legislature or may be left to another subordinate agency or to some executive officer.
His Lordship was further of the opinion that, if full powers to do everything that the legislature can do are conferred on a subordinate authority, although the legislature retains the power to control the action of the subordinate authority by recalling such power or repealing the Acts passed by the subordinate authority, there is an abdication or effacement of the legislature conferring such power.
Even such partial "abdication or effacement" is not permissible.
The provisions impugned were, therefore, invalid.
The salient point in the opinion of Fazal Ali J. are these: 1.
Even American Courts, which are fiercely opposed to uncanalised delegation of legislative power to the execu tive, have been compelled, by practical considerations, to engraft numerous exceptions to the rule and, in laying down such exceptions, have offered various explanations, one of which is this: "The true distinction . . is this.
The legislature cannot delegate the power to make a law; but it can make a law to delegate a power to determine some fact or state of things 653 upon which the law makes, or intends to make, its own action depend.
To deny this would be to stop the wheels of Government." (P. 814) 2.
The true import of the rule against delega tion is this: "This rule in a broad sense involves the principle underlying the maxim, delegatus non potest delegate, but it is apt to be misunder stood and has been misunderstood.
In my judg ment, all that it means is that the legisla ture cannot abdicate its legislative functions and it cannot efface itself and set up a parallel legislature to discharge the primary duty with which it has been entrusted.
This rule has been recognised both in America and in England . " XXX XXX XXX XXX "What constitutes abdication and what class of cases will be covered by that expression will always be a question of fact, and it is by no means easy to lay down any comprehensive formula to define it, but it should be recog nised that the rule against abdication does not prohibit the Legislature from employing any subordinate agency of its own choice for doing such subsidiary acts as may be necessary to make its legislation effective, useful and complete".
(P . 819) 3.
The conclusions are set but thus: "(1) The legislature must normally discharge its primary legislative function itself and not through others.
(2) Once it is established that it has sover eign powers within a certain sphere, it must follow as a corollary that it is free to legislate within that sphere in any way which appears to it to be the best way to give effect to its intention and policy in making a particular law, and that it may utilize any outside agency to any extent it finds neces sary for doing things which it is unable to do itself or finds it inconvenient to do.
In other words, it can do everything which is ancillary to and necessary for the full and effective exercise of its power of legisla tion.
654 (3) It cannot abdicate its legislative func tions, and therefore while entrusting power to an outside agency, it must see that such agency acts as a subordinate authority and does not become a parallel legislature.
(4) The doctrine of separation of powers and the judicial interpretation it has received in America ever since the American Constitution was framed, enables the American courts to check undue and excessive delegation but the courts of this country are not committed to that doctrine and cannot apply it in the same way as it has been applied in America.
There fore, there are only two main checks in this country on the power of the legislature to delegate, these being its good sense and the principle that it should not cross the line beyond which delegation amounts to "abdication and self effacement".
(P. 830 1) 4.
The learned Judge recognised that the impugned provisions, at first sight, did appear to be very wide they were of the same sweeping nature as section 87 here and observed.
"Let us overlook for the time being the power to introduce modifications with which I shall deal later, and carefully consider the main provision in the three Acts.
The situation with which the respective legislatures were faced when these Acts were passed, was that there were certain State or States, with no local legislature and a whole bundle of laws had to be enacted for them.
It is clear that the legislatures concerned before passing the Acts, applied their mind and decided firstly, that the situation would be met by the adop tion of laws applicable to the other provinces inasmuch as they covered a wide range of subjects approached from a variety of points of view and hence the requirements of the State or States for which the laws had to be framed could not go beyond those for which laws had already been framed by the various legislatures, and secondly, that the matter should be entrusted to an authority which was expected to be familiar and could easily make itself familiar with the needs and conditions of the State or States for which the laws were to be made.
Thus, everyone of the Acts so enacted was a complete law, because it em bodied a policy, defined a standard, and 655 directed the authority chosen to act within certain prescribed limits and not to go beyond them.
Each Act was a complete expres sion of the will of the legislature to act in a particular way and of its command as to how its will should be carried out.
The legisla ture decided that in the circumstances of the case that was the best way to legislate on the subject and it so legislated.
It will be a misnomer to describe such legislation as amounting to abdication of powers because from the very nature of the legislation it is manifest that the legislature had the power at any moment of withdrawing or altering any power with which the authority chosen was entrusted, and could change or repeal the laws which the authority was required to make applicable to the State or States con cerned.
What is even more important is that in each case the agency selected was not empowered to enact laws, ' but it could only adapt and extend laws enacted by re sponsible and competent legislature.
Thus, the power given to the Governments in those Acts was more in the nature of ministerial than in the nature of legislative power.
The power given was ministerial, be cause all that the Government had to do was to study the laws and make selections out of them." (pp. 838 9) He proceeded to point out that.
such legislation was neither unwarranted nor unprecedented.
5, Following the line of reasoning in Sprigg vs Sigoau, the learned Judge held that what the Central Government had been empowered to do under the impugned legislations was not to enact "new laws" but only "to trans plant" to the territory concerned laws operating in other parts in the country.
As to the absence of a clause such as the one in the enactment considered in Sprigg and the latter part of section 89 that any extensions made shall be subject to repeal, alteration or variation by Parliament, the learned Judge observed, "This provision however does not affect the principle.
It was made only as a matter of caution and to ensure the superintendence of Parliament, for the laws were good laws until they were repealed, altered or varied by Parliament.
If the Privy Council have correct ly stated the principle that the legislature in enacting subordinate or conditional legis lation does not part with its perfect control and 656 has the power at any moment of withdrawing or altering the power entrusted to another au thority, its power of superintendence must be taken to be implicit in all such legislation.
Reference may also be made here to somewhat unusual case of Dorr vs United States, ; , where delegation by Congress of the power to legislate for the Phillipine Islands was held valid." (p. 843) 6.
Indian legislation, past and present, contains numerous instances of enactments whereunder power was conferred on a local Government to extend to the local territory laws in force in other parts of the country as on the date of such extension.
The learned Judge observed: "It is hard to say that any firm legislative practice had been established before the and other Acts we are concerned with were enacted, but one may presume that the legislature had made several experiments before the passing of these Acts and found that they had worked well and achieved the object for which they were intended.7" (p. 846) 7.
The learned Judge concluded with a few general observations on the subject of "dele gated legislation" in its popular sense.
He observed: "The legislature has now to make so many laws that it has no time to devote to all the legislative details, and sometimes the subject on which it has to legislate is of such a technical nature and all it can do is to state the broad principles and leave the details to be worked out by those who are more familiar with the subject.
Again, when complex schemes of reform are to be the subject of legisla tion, it is difficult to bring out a self contained and complete Act straightaway, since it is not possible to foresee all the contin gencies and envisage all the local require ments for which provision is to be made.
Thus, some degree of flexibility becomes necessary, so as to permit constant adaptation to unknown future conditions without the necessity of having to amend the law again and again.
The .advantage of such a course is that it enables the delegate authority to consult interests likely to be affected by a particu lar law, make 657 actual experiments when necessary, and utilize the results of its investigations and experi ments in the best way possible.
There may also arise emergencies and urgent situations re quiring prompt action and the entrustment of large powers to authorities who have to deal with the various situations as they arise.
xxx xxx xxx xxx It is obvious that to achieve the objects which were intended to be achieved by these Acts, they could not have been flamed in any other way than that in which they were flamed".
(p. 851 2) C. Patanjali Sastri, J. upheld the validity of all the impugned provisions.
His Lordship held that it is as compe tent for the Indian Legislature to make a law delegating legislative power, both quantitatively and qualitatively, as it is for Parliament to do so provided, of course, it acts within the circumscribed limits.
The learned judge, however drew a distinction between delegation of legislative author ity and the creation of a new legislative power.
He ob served: In the former the delegating body does not efface itself but retains its legislative power intact and merely elects to exercise such power through an agency.
or instrumental ity of its choice.
In the latter there is no delegation of power to subordinate units but a grant of power to an independent and co ordi nate body to make laws operating of their own force.
In the first case, according to English constitutional law, no express provision authorising delegation is required.
In the absence of a constitutional inhibition, dele gation of legislative power, however exten sive, could be made so long as the delegating body retains its own legislative power intact.
In the second case, a positive enabling provi sion in the constitutional document Is re quired.
D. Mahajan J. shared the view of Kania CJ that all the impugned provisions were ultra vires.
His Lordship consid ered it a settled maxim of constitutional law that a legis lative body cannot delegate its power.
The legislature cannot substitute the judgment, wisdom and patriotism of any other body for those to which alone the people have seen fit to confide this sovereign trust.
Unless the power to dele gate is expressly given by the Constitution and it has not been a legislature cannot 658 abdicate its functions and delegate essential legislative functions to any other body.
There is such abdication when in respect of a subject in the legislative list that body says in effect that it will not legislate but would leave it to another to legislate on it.
To turn next to the views of Mukharjea J. the learned Judge considered the following aspects: 1.
The learned Judge did not accept the principle that an unlimited right of delega tion is inherent in the legislative power itself.
He observed: "This is not warranted by the provisions of the Constitution and the legitimacy of delega tion depends entirely upon its being used as an ancillary measure which the legislature considers to be necessary for the purpose of exercising its legislative powers effectively and completely.
The legislature must retain in its own hands the essential legislative func tions which consist in declaring the legisla tive policy and laying down the standard which is to be enacted into a rule of law, and what can be delegated is the task of subordinate legislation which by its very nature is ancil lary to the statute which delegates the power to make it.
Provided the legislative policy is enunciated with sufficient Clearness or a standard laid down the courts cannot and should not interfere with the discretion that undoubtedly rests with the legislature itself in determining the extent of delegation neces sary in a particular case.
These, in my opin ion, are the limits within which delegated legislation is constitutional provided of course, the legislature is competent to deal with and legislate on the particular subject matter".
(P. 997) 2.
Dealing with the question whether the statutory provisions under consideration envisaged an unwarrantable delegation of legislative powers to the executive govern ment, the learned Judges said: "If the competent legislature has framed a statute and left it to an outside authority to extend the operation of the whole or any part of it, by notification, to any particular area, it would certainly be an instance of conditional legislation as discussed above and no question of delegation would really arise.
The position would not be materially 659 different, if instead of framing a statute, the legislature had specified one or more existing statutes or annexed them by way of a schedule to the Act and had given authority to a subordinate or administrative agency to enforce the operation of any one of them at any time it liked to a particular area.
It could still be said, in my opinion, that in such circumstances the proper legislature had exercised its judgment already and the subor dinate agency was merely to determine the condition upon which the provisions already made could become operative in any particular locality".
(P. 999 1000) 3.
Adverting to the wide power in the impugned provision to extend future laws as well and that too with the modifications and restrictions, he observed: "The question is whether these facts indicate a surrender of the essential powers of legis lation by the legislature.
The point does not seem to be altogether free from difficulty, but on careful consideration I am inclined to answer this question in the negative.
As I have already said, the essential legislative power consists in formulating the legislative policy and enacting it into a binding rule of law.
With the merits of the legislative poli cy, the court of law has no concern.
It is enough if it is defined with sufficient preci sion and definiteness so as to furnish suffi cient guidance to the executive officer who has got to work it out.
If there is no vague ness or indefiniteness in the formulation of the policy, I do not think that a court of law has got any say in the matter.
The policy behind the seems to be that in a small area like Delhi which was constituted a separate province only recently and which had neither any local legislature of its own nor was considered to be of sufficient size or importance to have one in the near future, it seemed to the legislature to be quite fit and proper that the laws validly passed and in force in other parts of India should be ap plied to such area, subject to such restric tions and modification as might be necessary to make the law suitable to the local condi tions.
The legislative body thought fit that the power of making selection from the exist ing statutes as to the suitability of any one of them for being applied to the province of Delhi, should rest with the Governor General in Council which was considered to be 660 the most competent authority to judge the necessities and requirements of the Province.
That this was the policy is apparent from several other legislative enactments which were passed prior to 19 12 and which would show that with regard to areas which were backward or newly acquired or extremely small in size and in which it was not considered proper to introduce the regular legislative machinery all at once, this was the practice adopted by the legislature at that time." (P. 1000 1) 4.
one more passage from the opinion of the learned Judge may be set out in regard to two aspects of the impugned provision that were touched upon before us.
The learned Judge said: "Of course the delegate cannot be allowed to change the policy declared by the legislature and it cannot be given the power to repeal or abrogate any statute.
This leads us to the question as to what is implied in the language of section 7 of the which empowers the Central Government to extend any statute in force in any other part of British India to the Province of Delhi with such 'modifications and restrictions ' as it thinks fit.
The word "restriction" does not present much difficulty.
It connotes limitation im posed upon a particular provision so as to restrain its application or limit its scope.
It does not by any means involve any change in the principle.
It seems to me that in the context, and used along with the word "re striction", the word "modification" has been employed also in a cognate sense and it does not involve any material or substantial alter ation.
The dictionary meaning of the expres sion "to modify" is to "tone down" or "to soften the rigidity of the thing" or "to make partial changes without any radical alteration.
" It would be quite reasonable to hold that the word "modification" in section 7 of the means and signifies changes of such character as are necessary to make the statute which is sought to be extend ed suitable to the local conditions of the province.
I do not think that the executive government is entitled to change the whole nature or policy underlying any particular Act or take different portions from different statutes and prepare what has been described before us as "amalgam" of several laws.
The Attorney General has very fairly 661 admitted before us that these things would be beyond the scope of the section itself and if such changes are made, they would be invalid as contravening the provision of section 7 of the , though that is no reason for holding section 7 itself to be invalid on that ground." (P. 1004 5) 5.
Mukharjee J. however joined with Kania CJ., Mahajan J. and Bose J. in upsetting the validity of the second part of section 2 of Act III.
Since this part of the judgment has been relied on by the learned counsel for the petitioners, it may also be referred to here.
On this aspect, the learned Judge observed: "It will be noticed that the powers conferred by this section upon the Central Government are far in excess of those conferred by the other two legislative provisions, at least in accordance with the interpretation which I have attempted to put upon them.
As has been stated already, it is quite an intelligible policy that so long as a proper legislative machinery is not set up in a particular area.
the Parliament might empower an executive authority to introduce laws validly passed by a competent legislature and actually in force in other parts of the country to such area, with such modifications and restrictions as the authority thinks proper, the modifications being limited to local adjustments or changes of a minor character.
But this presupposes that there is no existing law on that particu lar subject actually in force in that territo ry.
If any such law exists and power is given to repeal or abrogate such laws either in whole in part and substitute in place of the same other laws which are in force in other areas, it would certainly amount to an unwar rantable delegation of legislative powers.
To repeal or abrogate an existing law is the exercise of an essential legislative power, and the policy behind such acts must be the policy of the legislature itself.
If the legislature invests the executive with the power to determine as to which of the laws in force in a particular territory are useful or proper and if it is given to that authority to replace any of them by laws brought from other provinces with such modification as it thinks proper, that would be to invest the executive with the determination of the entire legisla tive policy and not merely of carrying out a policy which the legislature has already laid down.
Thus the 662 power of extension, which is contemplated by section 2 of Part C States (Laws) Act, in cludes the power of introducing laws which may be in actual conflict with the laws validly established and already in operation in that territory.
This shows how the practice, which was adopted during the early British period as an expedient and possibly harmless measure with the object of providing laws for a newly acquired territory or backward area till it grew up into a full fledged administrative and political unit, is being resorted to in later times for no other purpose than that of vest ing almost unrestricted legislative powers with regard to certain areas in the executive government.
The executive government is given the authority to alter, repeal or amend any laws in existence at that area under the guise of bringing in laws there which are valid in other parts of India.
This, in my opinion, is an unwarrantable delegation of legislative duties and cannot be permitted.
The last portion of section 2 of Part C States (Laws) Act is, therefore, ultra vires the power of the Parliament as being a delegation of essen tial legislative powers in favour of a body not competent to exercise it and to that extent the legislation must be held to be void.
This portion is however severable; and so the entire section need not be declared invalid." (P. 1008 1010) F. Das J., who upheld the validity of section 7 of Act 1, section 2 of Act II and both parts of section 2 of Act III, rested his conclusions on the following reasoning: (i) After expressing the opinion that the principle of non delegability of legislative powers rounded either on the doctrine of separation of powers or on the theory of agency had no application to the British Parliament or the legisla tures constituted by an Act of the British Parliament and that, in the ever present complexity of conditions with which Governments have to deal, a power of delegation is necessary and ancillary to the exercise of legislative power and is a component part of it, the learned Judge observed: "The only rational limitation upon the exer cise of this absolute power of delegation by the Indian Legislature as by any Dominion Legislature is what has been laid down in the several Privy Council and other cases from which relevant passages have been quoted above.
It is that the legisla 663 ture must not efface itself or abdicate all its powers and give up its control over the subordinate authority to whom it delegates its law making powers.
It must not, without pre serving its own capacity intact, create and arm with its own capacity a new legislative power not created or authorised by the instru ment by which the legislature itself was constituted.
In short, it must not destroy its own legislative power.
There is an antithesis between the abdication of legislative power and the exercise of the power of legislation.
The former excludes or destroys the latter.
There is no such antithesis between the dele gation of legislative power and the exercise of the legislative power, for however wide the delegation may be, there is nothing to prevent the legislature, if it is so minded, from, at any time, withdrawing the matter into its own hands and exercising its law making powers.
The delegation of legislative power involves an exercise of the legislative power.
It does not exclude or destroy the legislative power itself, for the legislative power is not diminished by the exercise of it.
A power to make law with respect to a subject must, as we have seen, include within its content, the power to make a law delegating that power.
Having regard to entry No. 97 in the Union List and article 248 of our Constitution, the residuary power of our Parliament is wide enough to include delegation of legislative power of a subject matter with respect to which Parliament may make a law.
Apart from that considertion, if a statute laying down a policy and delegating power to a subordinate authority to make rules and regulations to carry out that policy is permissible then 1 do not see why an Act merely delegating legisla tive power to another person or body should be unconstitutional if the legislature does not efface itself or abandon its control over the subordinate authority.
If the legislature can make a law laying down a bare principle or policy and commanding people to obey the rules and regulations, made by a subordinate author ity, why cannot the legislature, without effacing itself but keeping its own capacity intact, leave the entire matter to a subordi nate authority and command people to obey the commands of that subordinate authority? The substance of the thing is the command which is binding and the efficacy of the rules of conduct made by the subordinate authority is due to no other authority than the command of the legislature itself.
Therefore, short of self 664 effacement, the legislative power may be as freely and widely delegated as the Dominion Legislature, like the British Parliament, may think fit and choose.
XXX XXX XXX In my opinion, the true tests of the validity of a law enacted by the Indian Legislature conferring legislative power on a subordinate authority are: (i) Is the law within the legislative competency fixed by the instrument creating the legislature? and (ii) Has the legislature effaced itself or abdicated or destroyed its own legislative power? If the answer.to the first is in the affirmative and that to the second in the negative, it is not for any Court of justice to enquire further or to question the wisdom or the policy of the law.
Dealing with the necessity for limiting or restricting the powers of delegation the learned Judge observed: "It is said that it will be dangerous if the legislature is permitted to delegate all its legislative functions without formally abdi cating its control or effacing itself, for then the legislature will shirk its responsi bility and go to sleep and peoples ' life, liberty or property may be made to depend on the whims of the meanest policy officer in whom, by successive delegation, the legisla tive power may come to be vested.
I do not feel perturbed.
I do not share the feeling of oppression which some people may possibly entertain as to the danger that may ensue if the legislature goes to sleep after delegating its legislative functions, for I feel sure that the legislators so falling into slumber will have a rude awakening when they will find themselves thrown out of the legislative chamber at the next general election.
I have no doubt in my mind that the legislature after delegating its powers will always keep a watchful eye on the activities of the persons to whom it delegates its powers of legislation and that as soon as it finds that the powers are being misused to the detriment of the public, the legislature will either nullify the acts done under such delegation or appoint some more competent authority or withdraw the matter into its own hands.
There is and will always remain some risk of abuse whenever wide legislative 665 powers are committed in general terms to a subordinate body, but the remedy lies in the corrective power of the legislature itself and, on ultimate analysis, in the vigilance of public opinion and not in arbitrary judicial fiat against the free exercise of law making power by the legislature within the ambit fixed by the instrument of its constitution.
It is not for the court to substitute its own notions of expediency of the will of the legislature.
This, 1 apprehend, is the correct position in law.
In my judgment, if our law is not to be completely divorced from logic and is not to give way and surrender itself to sterile dogma, the widest power of delegation of legislative power must perforce be conceded to our Parliament.
A denial of this necessary power will "stop the wheels of government" and we shall be acting "as a clog upon the legis lative and executive departments.
The learned Judge also referred to the Indian legislative practice and relied on several instances of enactments such as the ones in question before the Court and ob served: "During the time of the expansion of the British possessions in India, small bits of territories in outlying parts of Indian were being constantly annexed by the British but on account of the smallness of such territories or the undesirability of their immediate merger with the established Provinces it was not found to be practically possible to pro vide legislative Councils for these enclaves.
Nor was it possible for the Governor General in Council to enact laws for the day to day administration of these bits of territories or for all their needs.
The practice, therefore, grew up for the Governor General in Council, by a simple legislation, to confer power on the Lieutenant Governor to extend to such territories such of the laws as were or might be in force in other parts of the territories under the Lieutenant Governor which were considered suitable for these territories.
Such practice was certainly convenient, and ever since Burah 's case does not appear to have been seriously questioned.
I do not say that the argument has no merit, but in the view I have taken and expressed above, I do not find it necessary, on the present occasion to base my opinion on this argument.
666 G. Bose J. observed that he was not enamoured of this kind of legislation and did not like "this shirking of responsibility, for after all, the main function of the legislature is to legislate and.not to leave that to others.
" He, however, leaned in favour of upholding the statutes in question before the court for the following reasons.
Two of the Acts under consideration before the court were Acts of British Parliament and had to be looked at through British eyes.
In the face of Queen vs Burah, [1878] 5 I.A. 173, there was no doubt that this legislation would have been upheld and it was not necessary to enquire further because no single decision of the Judicial Committee had thrown any doubt on the soundness of Burah 's case.
Act III however, stood on a different footing as it was an Act of the Indian Parliament of 1950.
One had to try to discover from the Constitution itself what concept of legislative power Parliament had in mind while framing the Constitution.
The learned Judge observed: "Now in endeavoring to discover from the Constitution what the Constituent Assembly thought of this grave problem.
I consider it proper to take the following matters into con sideration.
First, it has been acknowledged in all free countries that it is impossible to carry on the government of a modern State with its infinite complexities and ramifications without a large devolution of power and dele gation of authority.
It is needless to cite authority.
The proposition is self evident.
Next, the practical application of that prin ciple has been evident through the years both in India and in other parts of the British Empire and in England itself.
In the third place, even in America, Judges have had to veer away from the rigidity of their earlier doctrine and devise ways and means for soften ing its rigour and have not always been able, under a barrage of words, to disguise the fact that they are in truth and in fact effecting a departure because compelled to do by the force of circumstances.
After pointing out the similarities between the Constitution and the Government of India Act of 1935, the learned Judge conclud ed: "I prefer therefore to hold that that which The Queen vs Burah, authorised, whatever you may choose to call it, was not abrogated except in special cases.
667 I SO hold for another reason as well namely, that to decide otherwise would make the Gov ernment of India an exceedingly difficult matter and would put back the hands of the clock.
I prefer therefore to hold and that has the logic of history behind it that the concept of legislative power which had hither to been accepted in India continued to hold good but that this limitation was placed upon it by the Constitution, namely that wherever the Constitution empowers Parliament to do a particular thing as opposed to legislating generally on a particular topic, there can be no delegation.
Parliament must itself act.
Referring to the authorities and text books cited before the Court, the learned Judge observed: "An anxious scrutiny of all the many authori ties and books which were referred to in the arguments, and of the decisions which I have analysed here, leads me to the conclusion that it is difficult to deduce any logical princi ple from them.
In almost every case the deci sion has been ad hoc and in order to meet the exigencies of the case then before them, judges have placed their own meaning on words and phrases which might otherwise have em bodied a principle of general application.
I have therefore endeavoured, as far as I possi bly could, to avoid the use of these disputa ble terms and have preferred to accept the legacy of the past and deal with this question in a practical way.
My conclusion is that the Indian Parliament can legislate along the lines of The Queen vs Burah, that is to say, it can leave to another person or body the introduction or application of laws which are or may be in existence at that time in any part of India which is subject to the legisla tive control of Parliament, whether those laws were enacted by Parliament or by a State Legislature set up by the Constitution.
That has been the practice in the past.
It has weighty reasons of a practical nature to support it and it does not seem to have been abrogated by the Constitution.
The learned Judge, however, held that second part of section 2 of Act 3 could not be held to be valid for the following reasons: "But I also consider that delegation of this kind cannot proceed beyond that and that it cannot extend to the repe 668 aling or altering in essential particulars of laws which are already in force in the area in question.
That is a matter which Parliament alone can handle.
I See no reason for extending the scope of legislative delegation beyond the confines which have been hallowed for so long.
Had it not been for the fact that this sort of prac tice was blessed by the Privy Council as far back as 1878 and has been endorsed in a series of decisions ever since, and had it not been for the practical necessities of the case, I would have held all three Acts ultra vires.
But, so far as the latter portion of the third Act is concerned, no case was cited in which the right to appeal the existing laws of the land and substitute others for them has been upheld.
That was tried in a South African case, Sir John Gorden Sprigg vs Sigcau, , but the Privy Council held it could not be done, not indeed on any ground which is material here but that is the only case I know where the attempt was made and the right litigated.
It is one thing to fill a void or partial vacuum.
Quite another to throw out existing laws enacted by a competent authori ty.
It is bad enough to my mind to hold that the first is not a delegation of legislative power.
But as that has been held by an author ity which it is impossible now to question so far as the past is concerned, I bow to its wisdom.
But as to the future, I feel that a body which has been entrusted with the powers of legislation should legislate and not leave the decision of important matters of principle to other minds.
I am therefore of opinion that the power upheld by the Queen vs Burah, does not extend as far as the latter portion of section 2 of the Part C States (Laws) Act of 1950 endeavours to carry it.
" A perusal of the above judgments shows that the validity of the provisions in question were upheld on different lines of reasoning.
Nevertheless all the learned Judges seem to have agreed and, indeed, as pointed out in later decisions, it is inevitable in modern conditions that, while Parlia ment should have ample and extensive powers of legislation, these should include a power to entrust some of those func tions and powers to another body or authority.
They also seem to have agreed that there should be a limitation placed on the extent of such entrustment.
It is only on the ques tion as to what this limitation should be that there was lack of consensus among the 669 judges.
All of them agreed that it could not be so extensive as to amount to "abdication" or "effacement".
Some thought that there is no abdication or effacement unless it is total i.e. unless Parliament surrenders its powers in favour of a "parallel" legislature or loses control over the local authority to such an extent as to be unable to revoke the powers given to, or to exercise effective supervision over, the body entrusted therewith.
But others were of opinion that such "abdication" or "effacement" could not even be partial and it would be bad if full powers to do everything that the legislature can do are conferred on a subordinate authority, although the legislature may retain the power to control the action of such authority by recalling such power or repealing the Acts passed by the subordinate authority.
A different way in which the second of the above views has been enunciated and it is this view which has dominated since is by saying that the legislatures cannot wash their hands off their essential legislative function.
Essential legislative function consists in laying down the legislative policy with sufficient clearness and in enunciating the standards which are to be enacted into a rule of law.
This cannot be delegated.
What can be delegated is only the task of subordinate legislation which is by its very nature ancillary to the statute which delegates the power to make it and which must be within the policy and framework of the guidance provided by the legislature.
It is suggested for the petitioners that, since the reasonings of the learned Judges are so different, we cannot derive any assistance from the case and should therefore ignore it.
We are unable to accept this suggestion.
We think, with respect, that Bose J. was right when he pointed out in Rajnarain Singh 's case and his summary in the case, of the conclusions arrived at in the case has consistently been referred to with approval in later decisions of this Court as an authoritative exposition that: "Because of the elaborate care with which every aspect of the problem was examined in that case, the decision has tended to become diffuse, but if one concentrates on the mat ters actually decided and forgets for a moment the reasons given, a plain pattern emerges leaving only a narrow margin of doubt for future dispute.
" If we apply this formula, whatever reasoning one adopts, the answer to the question posed before us has to be in favour of upholding the constitutional validity of section 87.
One may doubt the wisdom of attempting to trace a common ratio decidendi from such divergent views but it 670 seems equally illogical to altogether ignore a clear conclu sion arrived at by the majority of judges only because they arrived at that conclusion by different processes of reason ing.
One would rather have thought that a conclusion stands more fortified when it can be supported not on one but on several lines of reasoning.
At least for an identical prob lem, the final answer, we think, should be the same.
This should particularly be so when we remind ourselves that the case arose because, soon after India became a Republic, the Government, envisaging the necessity of having recourse to legislation of this type in the context of the changing topography of India, took the precaution of seeking the advice of the Supreme Court for its future guidance and that they have acted upon the answers propounded by the Supreme Court in enacting a provision of this type.
In this situation we find ourselves unable to accept the contention that, after a lapse of thirty eight years, we should declare that the case decided nothing or, as counsel euphimistically put it, that it should be confined to its own facts.
It is contended that the above line of approach is one of expediency rather than logic and that, unless one can extract a principle of general application from the case, it will not be helpful as a precedent.
Even if this is taken to be the proper approach, an answer to the contention is furnished by Shama Rao , on which considerable reliance was also placed on behalf of the petitioners.
The facts in that case were that the legisla tive assembly for the Union Territory of Pondicherry passed a Sales Tax Act (10 of 1965) in June, 1965.
Under s 1(2) of the Act, it was to come into force on such date as the Pondicherry Government may by notification, appoint.
section 2(1) of the Act provided that the Madras General Sales Tax Act, 1959 as in force in the State of Madras immediately before the commencement of the Pondicherry Act, shall be extended to Pondicherry subject to certain modifications.
The Pondi cherry Government issued a notification on March 1, 1966 appointed April 1, 1966 as the date of the commencement of the Pondicherry Act.
Prior to the issue of the notification, however, the Madras Legislature had amended the Madras Act and consequently it was the Madras Act as amended upto April 1, 1966, which was brought into force in Pondicherry.
When the Act thus came into force, the petitioner was served with a notice to register himself as a dealer and thereupon he filed a writ petition challenging the validity of the Act.
It was contended for the petitioner that the Act was void and was a still born legislation by reason of the Pondicher ry Legislature having abdicated its legislative functions in favour of the Madras State Legislature.
It was argued that such abdica 671 tion resulted from the wholesale adoption of the Madras Act as in force in the State of Madras immediately before the commencement of the Pondicherry Act, as section 2(1) read with section 1(2) meant that the legislature adopted not only the Madras Act as it was when it enacted the Pondicherry Act but also such amendment or amendments in the Madras Act which might be passed by the Madras State Legislature upto the time of commencement of the Act i.e. upto April 1, 1966.
On the other hand, counsel for the respondent relied on the deci sion of a majority of judges (5:2) in the case "that authorisation to select and apply future Provin cial Laws was not invalid" as had been clearly brought out in the summary of the Case attempted by Bose J. in Rajnarain Singh 's case; , After a brief reference to the history of the doctrine of abdication contended for by the petitioner and a discussion of the Case, Shelat J., with whom Subba Rao, CJ.
and Mitter J. agreed, accepted the contention of the petitioner.
He observed: "The question then is whether in extending the Madras Act in the manner and to the extent it did under sec.
2(1) of the Principal Act the Pondicherry legislature abdicated its legisla tive power in favour of the Madras legisla ture.
It is manifest that the Assembly refused to perform its legislative function entrusted under the Act constituting it.
It may be that a mere refusal may not amount to abdication if the legislature instead of going through the full formality of legislation applies its mind to an existing statute enacted by another legislature for another jurisdiction, adopts such an Act and enacts to extend it to the territory under its jurisdiction.
In doing so, it may perhaps be said that it has laid down a policy to extend such an Act and di rects the executive to apply and implement such an Act.
But when it not only adopts such an Act but also provides that the Act applica ble to its territory shall be the Act amended in future by the other legislature, there is nothing for it to predicate what the amended Act would be.
Such a case would be clearly one of non application of mind and one of refusal to discharge the function entrusted to it by the instrument constituting it.
It is diffi cult to see how such a case is not one of abdication or effacement in favour of another legislature at least in regard to that partic ular matter.
But Mr. Setalvad contended that the validity of such legislation has been accepted in Delhi Laws Act 's case and 672 particularly in the matter of heading No. 4 as summarised by Bose J. in Raj Narain Singh 's case.
In respect of that heading, the majority conclusion no doubt was that authorisation in favour of the executive to adopt laws passed by another legislature or legislatures includ ing future laws would not be invalid.
So far as that conclusion goes Mr. Setalvad is right.
But as already stated, in arriving at that conclusion each learned Judge adopted a dif ferent reasoning.
Whereas Patanjali Sastri and Das JJ. accepted the contention that the plenary legislative power includes power of delegation and held that since such a power means that the legislature can make laws in the manner it liked if it delegates that power short of an abdication there can be no objec tion.
On the other hand, Fazal Ali J. upheld the laws on the ground that they contained a complete and precise policy and the legisla tion being thus conditional the question of excessive delegation did not arise.
Mukherjea J. held that abdication need not be total but can be partial and even in respect of a par ticular matter and if so the impugned legisla tion would be bad.
Bose J. expressed in frank language his displeasure at such legislation but accepted its validity on the ground of practice recognised over since Burah 's case and thought that that practice was accepted by the Constitution makers and incorporated in the concept of legislative function.
There was thus no unanimity as regards the principles upon which those laws were upheld.
All of them however appear to agree on one principle, viz., that where there is abdica tion of effacement the legislature concerned in truth and in fact acts contrary to the Instrument which constituted it and the stat ute in question would be void and still born." (Underlining ours) Bhargava, J. (with whom Shah J. agreed) did not consider it necessary to enter into this controversy as, according to them and on this they dissented from the majority even if it be held that the Pondicherry Act was bad for excessive delegation of powers when it was enacted and published, a subsequent amending Act of the Pondicherry Legislature had remedied the situation.
Sri Sibal contended that the Pondicherry Assembly, on a true 673 construction of section 18 of the was not a full fledged legislature but only a delegate of Parliament and, therefore, a delegation by it to the State Government amounted, in effect, to a sub delega tion which cannot be justified at all and that, therefore, Shama Rao is distinguishable.
We do not think this conten tion is tenable in view of the observations made in Burha 's case, [1878] 51.A 178 and in the case (supra) while repelling a similar contention about the status of a Dominion Legislature vis a vis the Parliament of the United Kingdom, and in the case.
Also that was not the basis on which Shama Rao was either argued before, or decided by, this Court.
We may, therefore, turn to Sharma Rao 's interpretation of the case and apply it here.
We think we may accept the passage in Shelat J 's judgment which we have underlined earlier as a correct enunciation by this Court of the Principle emerging from the case; if we do so the only question that will remain to be considered will be whether section 87 is a case of "abdication or effacement" and the answer to that question has been furnished, in the negative, by the case itself in respect of identically worded provisions.
Thus, Shama Rao, in effect, helps the respondents to sustain the validity of section 87, though it is true that, on a differ ent, if somewhat analogous, provision in the Pondicherry Act, their Lordships reached the contrary conclusion and held there was an "abdication or effacement.
" But, these niceties apart, we think that section 87 is quite valid even on the "policy and guideline" theory if one has proper regard to the context of the Act and the object and purpose sought to be achieved by section 87 of the Act.
The judicial decisions referred to above make it clear that it is not necessary that the legislature should "dot all the t 's" and cross all the t 's" of its policy.
It is sufficient if it gives the broadest indication of a general policy of the legislature.
If we bear this in mind and have regard to the history of this type of legislation, there will be no difficulty at all.
Section 87, like the provisions of Acts I, II and III, is a provision necessitated by changes re sulting in territories coming under the legislative juris diction of the Centre.
These are territories situated in the midst of contiguous territories which have a proper legisla ture.
They are small territories falling under the legisla ture jurisdiction of Parliament which has hardly sufficient time to look after the details of all their legislative needs and requirements.
To require or expect Parliament to legislate for them will entail a disproportionate pressure on its legislative schedule.
It will also mean the unneces sary utilisation of the time of a large number of members of Parliament for, except the few (less than ten) members returned to Parliament from 674 the Union Territory, none else is likely to be interested in such legislation.
In such a situation, the most convenient course of legislating for them is the adaptation, by exten sion, of laws in force in other areas of the country.
As Fazal Ali J. pointed out in the case, it is not a power to make laws that is delegated but only a power to "transplant" laws already in force after having undergone scrutiny by Parliament or one of the State Legislatures, and that too, without any material change.
There is no dispute before us and it has been unanimously held in all the decisions that the power to make modifications and restric tions in a clause of this type is a very limited power, which permits only changes that the different context re quires and that changes in substance.
There is certainly no power of modification by way of repeal or amendment as is available under section 89.
Sri Swarup contends that the vice in the provision lies (a) in the choice it has left to the Central Government of one among several laws that may be in force in various areas and (b) in the power it has given to extend future laws as well.
A power to exercise such wide power, he says, cannot be described as a ministerial power ; it is essential legis lative power, according to him.
It is true that if one were to read the section in the abstract and in its broadest connotation, it conjures up the possibilities of the execu tive picking up at its fancy at any time any law that may exist in any part of India for extension to Chandigarh without any particular rhyme or reason.
The force of Sri Swarup 's objection on this aspect has been picturesquely brought out by Mahajan J. in a passage in the case: "The choice to select any enactment in force in any province at the date of such notifica tion clearly shows that the legislature de clared no principles or policies as regards the law to be made on any subject.
It may be pointed out that under the Act of 1935 differ ent provinces had the exclusive power of laying down their policies in respect of subjects within their own legislative field.
What policy was to be adopted for Delhi, whether that adopted in the province of Punjab or of Bombay, was left to the Central Govern ment.
Illustratively, the mischief of such law making may be pointed out with reference to what happened in pursuance of this section in Ajmer Marwara.
The Bombay Agricultural Debtors ' Relief Act, 1947, has been extended under cover of this section to Ajmer Marwara and under the power of modification, by amend ing the definition of the word 'debtor ' the whole policy of the Bombay Act has been 675 altered.
Under the Bombay Act a person is a debtor who is indebted and whose annual income from sources other than agricultural and manly labour does not exceed 33 per cent of his total annual income or does not exceed Rs.500, whichever is greater.
In the modified statute "debtor" means an agriculturist who owes a debt, and "agriculturist" means a person who earns his livelihood by agriculture and whose income from such source exceeds 66 per cent of his total income.
The outside limit of Rs.500 is removed.
The exercise of this power amounts to making a new law by a body which was not in the contemplation of the Constitution and was not authorized to enact any laws.
Shortly stated, the question is, could the Indian legislature under the Act of 1935 enact that the executive could extend to Delhi laws that may be made hereinafter by a legislature in Timbuctoo or Soviet Russia with modifications.
The answer would be in the negative because the policy of those laws could never be deter mined by the law making body entrusted with making laws for Delhi.
The Provincial legisla tures in India under the Constitution Act of 1935 qua Delhi constitutionally stood on no better footing than the legislatures of Tim buctoo and Soviet Russia though geographically and politically they were in a different situation.
" But, with respect, we think, we should not look at the provision in the present context from that angle.
We should here have regard to the object of the provision and the purpose it was intended to achieve and, in the historical perspective we have set out, there is no vice in the power conferred.
So far as the first aspect referred by Sri Swarup is concerned, the provision only confers a power on the execu tive to determine, having regard to the local conditions prevalent in the Union Territory, which one of several laws, all approved by one or the other of the legislatures in the country, will be the most suited to Chandigarh.
Thus viewed, it would fail under one of the permissible categories of delegation referred to at p. 814 in the case and extracted by us earlier and, if so, it is not really an unguided or arbitrary power.
There could have been no objec tion to the legislation if it had provided that the laws of one of the contiguous States (say Punjab) should be extended to Chandigarh.
But such a provision would have been totally inadequate to meet the situation for two reasons.
There may be more than 676 one law in force on a subject in the contiguous States say one in Punjab, one in Pepsu and one in Himachal Pradesh etc. and Parliament was anxious that Chandigarh should have the benefit of that one of them which would most adequately meet the needs of the situation in that territory.
Or, again, there may be no existing law on a particular subject in any of the contiguous areas which is why the power had to include the power of extending the laws of any State in India.
While, in a very strict sense, this may involve a choice, it is in fact and in the general run of cases, only a decision on suitability for adaptation rather than choice of a policy.
It is a delegation, not of policy, but of matters of detail for a meticulous appraisal of which Par liament has no time.
Even if we assume that this involves a choice of policy, the restriction of such policy to one that is approved by Parliament or a State Legislature constitutes a sufficient declaration of guideline within the meaning, of the "policy guideline" theory.
The second aspect referred to by Sri Swarup, again, is, in the context, not a sign ' of "abdication" but is only a necessary enabling power.
Once it is held that the delega tion of a power to extend a present existing law is justi fied, a power to extend future laws is a necessary corol lary.
Here again, its validity may be tested by considering what the position would have been if the section had provid ed only for the extension of the laws in a contiguous terri tory, say Punjab.
As mentioned earlier, a power to extend existing statutes in Punjab could clearly have been delegat ed.
If Parliament formulated such a policy as it had no time to apply its mind to the existing law initially to be adapt ed, it could hardly find time to consider the amendments from time to time engrafted on it in the state of its ori gin.
Hence once a policy of extension of Punjab laws is clear and permissible it would seem only natural as a neces sary corollary that the executive should be permitted to extend future amendments to those laws as well.
The power to extend any future law has to be considered in the above context and not only could be, but also has to be, conferred for the same reasons as justify the conferment of a power to extend a present contiguous law.
Mukherjea J. in the case has touched upon this issue.
As pointed out by him, the question of validity of the delegation of a power to extend any future law, is not free from difficulty.
If the provision is considered in the abstract and contrued on the basis of its fullest possible ambit, it may be difficult to sustain it.
But if it is construed and judged in the historical context of the legislation, the needs of the situation and a reasonably practical appraisal of the extent of its intended application, there can be no doubt that it contains a sufficient indication of broad policy to sustain the validity of the 677 extent of delegation involved in section 87.
We may, in this context, repeat again that courts, in the decided cases, do not envisage a meticulous enunciation of a policy in all its details.
They are satisfied even if they can discern even faint glimmerings of one from the object and scheme of the legislation.
For the reasons discussed above, we reject the conten tions of the petitioners challenging the constitutional validity of section 87.
We now turn to the second contention of the petitioners based on the assumption of section 87 being valid.
The point made is that section 87, on its proper construction, permits the extension of the laws of another State to Chandigarh only so long as there is a 'vacuum" of laws, on any particular subject, within the Union Territory but that, once Parlia ment itself steps in and makes laws for the territory, it has assumed legislative responsibilities in respect of that subject and a "transplantation" of laws from elsewhere by extension is neither necessary nor valid, Sri Gujral submits that the raison d 'etre of section 87 is that, as Parliament may not have enough time to attend to the legislative needs of the new territory brought into its fold, it is necessary to provide a machinery by which some laws could enforced in the territory.
But here, as early as 1974, Parliament applied its mind and legislated, in respect of landlord tenant matters, for the Union Territory and having done this, it is for Parliament and Parliament alone to legislate on the subject thereafter.
Indeed President issued an ordinance in 1976 and Parliament also amended the law in 1982 in some other respects indicating that Parliament was in full ses sion of the matter.
This is one facet of the objection.
The other facet is that, by purporting to extend, by an execu tive notification, the provisions of the 1985 Act to Chandi garh, what the Central Government has really done is to modify or amend an existing Parliamentary law (the 1974 Act) operating in the State already.
Conceding, for purposes of argument, that, had the 1949 Act been extended to Chandigarh in 1974 by a notification under section 87, it might have been open to the Government, by another notification under section 87, to extend the 1985 Act also to the Union Territory, counsel contends that it was impermissible to allow the Central Government to issue a notification under section 87 which will have the effect of amending or modifying a law of Parliament already in force in the territory.
A notification could amend a notification but not a statute, he says.
In support of this part of the argument, counsel strongly relies on the decision, of a majority of Judges in the case, that the second part of section 2 of Act 111 considered by them was ultra vires.
He submits that, if even a specific provision in a law could 678 not validly permit a notification of extension to amend or repeal existing laws of the territory in question, a notifi cation under section 87 which advisedly omits any reference to such an enabling power (enacted in Act III and declared ultra vires by this court) could hardly be on a stronger footing.
On this construction of section 87, counsel contends, the notification dated 15.12.86 has exceeded the purview of section 87 and is, therefore ultra vires.
Turning, therefore, to the judgments in the case on which counsel strongly relies in support of his contentions, we may observe at the outset that the judgments of Kania CJ.
and Patanjali Sastri J. are not helpful, as according to Kania C J, the power of delegation was alto gether bad except in so far as it permitted an extension of laws made by the Central Legislature and, according to Sastri J. extensive delegation of powers was valid.
Fazal Ali J., in upholding its validity, observed thus in regard to the second part of section 2 of Act III: "I will now deal with section 2 of Part C States (Laws) Act, 1950, in so far as it gives power to the Central Government to make a provision in the enactment extended under the Act for the repeal or amendment of any corre sponding law which is for the time being applicable to the Part C State concerned.
No doubt this power is a far reaching and unusual one, but, on a careful analysis, it will be found to be only a concomitant of the power of transplantation and modification.
If a new law is to be made applicable, it may have to replace some existing law which may have become out of date or ceased to serve any useful purpose, and the agency which is apply the new law must be in a position to say that the old law would cease to apply.
The nearest parallel that I can find to this provision, is to be found in the Church of England Assembly (Powers) Act, 19 19.
By that Act, the Church Assembly is empowered to propose legislation touching matters concerning the Church of England, and the legislation proposed may extend to the repeal or amendment of Acts of Parliament including the Church Assembly Act itself.
It should however be noticed that it is not until Parliament itself gives it legis lative force on an affirmative address of each House that the measure is converted into legislation.
There is thus no real analogy between that Act and the Act before us.
Howev er, the provision has to be upheld, because, though it goes to the farthest limits, it is difficult to hold that it was beyond the 679 powers of a legislature which is supreme in its own field, and all we can say is what Lord Hewart said in Kind vs Minister of Health, , namely, that the particular Act may be regarded as "indicating the high water mark of legislative provisions of this character," and that, unless the legislature acts with restraint, a stage may be reached when legislation may amount to abdication of legislative powers.
" Mahajan J. had this to say: "For reasons given for answering questions 1 and 2 that the enactments mentioned therein are ultra vires the Constitution in the par ticulars stated, this question is also an swered similarly.
It might, however, be ob served that in this case express power to repeal or amend laws already applicable in Part C States has been conferred on the Cen tral Government.
Power to repeal or amend laws is a power which can only be exercised by an authority that has the power to enact laws.
It is a power co ordinate and co extensive with the power of the legislature itself.
In be stowing on the Central Government and clothing it with the same capacity as is possessed by the legislature itself the Parliament has acted unconstitutionally.
" The observations of Mukherjea J. are very relevant from the point of counsel for the petitioners.
His Lordship said: "It will be noticed that the powers conferred by this section upon the Central Government are far in excess of those conferred by the other two legislative provisions, at least in accordance with the interpretation which I have attempted to put upon them.
As has been stated already, it is quite an intelligible policy that so long as a proper legislative machinery is not set up in a particular area, the Parliament might empower an executive authority to introduce laws validly passed by a competent legislature and actually in force in other parts of the country to such area, with such modifications and restrictions as the authority thinks proper, the modifications being limited to local adjustments or changes of a minor character.
But this presupposes that there is no existing law on that particu lar subject actually in force in that territo ry.
If any such law 680 exists and power is given to repeal or abro gate such laws either in whole or in part and substitute in place of the same other laws which are in force in other areas, it would certainly amount to an unwarrantable delega tion of legislative powers.
To repeal or abrogate an existing laws is the exercise of an essential legislative power, and the policy behind such acts must be the policy of the legislature itself.
If the legislature invests the executive with the power to determine as to which of the laws in force in a particular territory are useful or proper and if it is given to that authority to replace any of them by laws brought from other provinces with such modification as it thinks proper that would be to invest the executive with the determination of the entire legislative policy and not merely of carrying out a policy which the legislature has already laid down.
Thus the power of extension which is contemplated by section 2 of Part C States (Laws) Act, in cludes the power of introducing laws which may be in actual conflict with the laws validly established and already in operation in that territory.
This shows how the practice, which was adopted during the early British period as an expedient and possibly harmless measure with the object of providing laws for a newly acquired territory or backward area till it grew up into a full fledged administrative and political unit, is being resorted to in later times for no other purpose that that of vest ing almost unrestricted legislative powers with regard to certain areas in the executive government.
The executive government is given the authority to alter, repeal or amend any laws in existence in that areas under the guise of bringing in laws there which are valid in other parts of India.
This, in my opinion, is an unwarrantable delegation of legislative duties and cannot be permitted.
The last portion of section 2 of Part C States (Laws) Act, is therefore, ultra vires the powers of the Parliament as being a delegation of essential legislative powers in favour of a body not competent to exercise it and to that extent the legislation must be held to be void.
This portion is however severable; and so the entire section need not be declared invalid." (Emphasis added) Bose J., again, made certain observations which are strongly relied upon by counsel.
His Lordship observed: "I see no reason for extending the scope of legislative delegation 681 beyond the confines which have been hallowed for so long.
Had it not been for the fact that this sort of practice was blessed by the Privy Council as far back as 1878 and has been endorsed in a series of decisions ever since, and had it not been for the practical necessi ties of the case, I would have held all three Acts ultra vires.
But, so far as the latter portion of the third Act is concerned, no case was cited in which the right to repeal the existing laws of the land and substitute others for them has been upheld.
That was tried in a South African case, Sir John Gorden Sprigg.
vs Sigcau, , but the Privy, Council held it could not be done, not indeed on any ground which is material here but that is the only case I know where the attempt was made and the right litigated.
It is one think to fill a void or partial vacuum.
Quite another to throw out existing laws enacted by a competent authority.
It is bad enough to my mind to hold that the first is not a delegation of legislative power.
But as that has been held by an authority which it is impossible now to question so far as the past is concerned, I bow to its wisdom.
But as to the future, I feel that a body which has been entrusted with the powers of legislation should legislate and not leave the decision of important matters of principle to other minds.
I am therefore of opinion that the power upheld by the The Queen vs Burah does not extend as far as the latter portion of section 2 of the Part C States (Laws) Act of 1950 endeavours to carry it.
" (Emphasis added) In support of his "vacuum" theory, counsel also refers to an instance of legislative practice referred to in Ka poor 's case ; Counsel points out there was a central rent law applicable t9 all cantonments in India, being Act 10 of 1952.
In 1957, Parliament decided that the rent law in force in the rest of a State should be allowed to be extended to the cantonment areas in State as well by issue of Government notification, and enacted Act 46 of 1957 for the purpose.
However, no such extension under section 3 of the Act 46 of 1957 was notified for the State of U.P. until Parliament, by passing Act 68 of 1971, statutorily clarified that: "On and from the date on which the United Provinces (Temporary) Control of Rent & Evic tion Act, 1947, is extended by notification under section 3 of the Cantonments (Extention of Rent Control Laws) Act, 1957 to the Canton ments in Uttar Pradesh, the Uttar Pradesh Cantonments (Control of Rent & Eviction) Act 1952 (Act 10 of 1952) shall stand repealed.
" In other words, though extension of local laws to canton ments by notification was allowed, Parliament provided for the simultaneous creation of a "vacuum" in the cantonment area by repeal of the 1952 Act which could be occupied by the extended law.
Counsel emphasises this aspect to show that an extension by notification can be allowed to fill a void but cannot be allowed to knock against a superior Parliamentary enactment already in existence.
682 There is certainly a good deal of force in these argu ments but we think that they proceed on an incorrect view of the effect of the notification impugned in the present case.
We might have been inclined to accept the submissions of the learned counsel had the effect of the notification been to extend a law which is in "actual conflict" with any parlia mentary enactment or which has the effect of "throwing out" any existing law in the Union Territory.
To borrow an ex pression used in an analogous context, we would have consid ered the validity of the extension doubtful had the extended provisions been repugnant to an Act of Parliament in force in the Union Territory.
So long as that is not the effect or result, we think, there is no reason to construe the scope of section 87 in the restricted manner suggested by counsel.
It is no doubt true that section 87 permits an extension because there is no law in the Union Territory in relation to a particular subject and Parliament has not the requisite time to attend to the matter because of its preoccupations.
But this purpose does not require for its validity that there should be no existing law of Parliament at all on a subject.
Again the concept of "subject" for the purposes of this argument is also an elastic one the precise scope of which cannot be defined.
The concept of vacuum is as much relevant to a case where there is absence of a particular provision in an existing law as to a case where there is no existing law at all in the Union Territory on a subject.
For in stance, if Parliament had not enacted the 1974 Act but had only enacted an extension of the Transfer of Property Act to Chandigarh, could it have been said that a subsequent noti fication cannot extend the provisions of the 1949 Act to Chandigarh because the subject of leases is governed by the Transfer of Property Act which has been already extended and there is, therefore, no "vacuum" left which could be filled in by 'such extension? Again, suppose, initially, a Rent Act is extended by Parliament which does not contain a provision regarding one of the grounds on which a landlord can seek eviction say, one enabling the owner to get back his house for reoccupation and then the Government thinks that anoth er enactment containing such a provision may also be extend ed, can it not be plausibly said that the latter is a matter on which there is no legislation enacted in the territory and that the extension of the latter enactment only fills up a void or vacancy? Again, suppose the provisions of a gener al code like, say, the Code of Civil Procedure are extended to the Union Territory, should be construe section 87 so as to preclude the extension of a later amendment to one of the rules to one of the Orders of the C.P.C. merely on the ground that it will have the effect of varying or amending an existing law? We think it would not be correct to thus unduly restrict the scope of a provision like section 87.
The better way to put the principle, we think, is to 683 say that the extension of an enactment which makes additions to the existing law would also be permissible under section 87 so long as it does not, expressly or impliedly, repeal or conflict with, or is not repugnant to, an already existing law.
In this context, reference can usefully be made to the observations in.
Hari Shanker Bagla at 39 1, which seem to countenance the "by passing" of an existing law by a piece of delegated legislation and to draw the line only at its attempt to repeal the existing law, expressly or by necessary implication.
In a sense, no doubt, any addi tion, however small, does amend or vary the existing law but so long as it does not really detract from or conflict with it, there is no reason why it should not stand alongside the existing law.
In our view section 87 should be interpreted con structively so as to permit its object being achieved rather than in a manner that will detract from its efficacy or purpose.
We may also note, incidentally, that in legislative practice also, such successive changes have been allowed to stand together.
Lachmi Narain vs Union of India, ; narrates how the Bengal Finance (Sales Tax) Act, 1941 extended to Delhi under Act III was subsequently amend ed by Parliament Acts of 1956 and 1959 but was also sought to be modified by various notifications from time to time.
These notifications were challenged on the ground that the power to extend by notification could be exercised only once and that the impugned notification did not merely extend but also effected modifications of a substantial nature in the Act sought to be extended.
No contention was, however, raised that after the intervention of Parliament in 1956 and 1959 there could have been no extension of the Bengal Act as it would have the effect of adding to or varying the Parlia mentary legislation apparently because they could stand side by side with each other.
We, therefore, think that since the extension of the 1985 Act only adds provisions in respect of aspects not covered by the 1974 Act and in a manner not inconsistent therewith, the impugned, notification is quite valid and not liable to be struck down.
We may now briefly dispose of certain minor aspects of the above contentions which were debated before us: 1.
It was urged that the provisions of the 1985 Act extended to Chandigarh cannot stand independently and make sense only if read along with and as supplementing the provisions of the 1949 Act already reenacted by the 1974 Act and, therefore, amend or modify the 1974 Act.
This is true but it does not affect our line of reasoning indicated above.
684 2 There was considerable argument before us as to wheth er the modifications introduced by the 1985 Act in the 1949 Act, as reenacted by the 1974 Act, are minor "modifications or restrictions" or incorporate substantial changes in the scheme of the pre existing law.
Counsel for the petitioners contended that the changes introduced by the 1985 Act were substantial and far reaching.
On the other hand counsel for the respondent contended to the contrary.
Sri Sehgal, ap pearing for one of the landlords submitted that the Act already contained provisions enabling any owner to get back his premises when he needed it for his occupation section 13(3)(a)(i) and (iv) and a special provision enabling an Army Officer to expeditiously recover possession of his premises when he needed it for his family section 13(3)(a)(i a) and (c) and that the provision sought to be introduced by the 1985 Act was only a natural and logical extension.
thereof.
Counsel for the landlord in SLP 92 17 of 1988 sub mitted that it was only a procedural change that the 1985 Act introduced, relying on certain observations made by this Court in Kewal Singh vs Lajwanti, ; All this discussion is wholly irrelevant on our line of reasoning.
As we have pointed out, in construing the scope of a law ex tended under section 87 qua an existing law, the question is not whether there are changes or not, the question is only, are they inconsistent with, in conflict with or repugnant to, the scheme of the existing law and we have answered this question in the negative.
The question of "modifications or restrictions" will loom large only in construing the scope of the notification qua the law extended by it.
In Lachmi Narain ; (at p. 801 2) and other cases it has been held that such a notification, while extending a law, can make only such "modifications and restrictions" in the law extended as are of an incidental, ancillary or subservi ent nature and as do not involve substantial deviations therefrom.
Here, it is common ground that the 1985 Act has been extended as it is, with only very minor modifications and, hence, it is unnecessary to consider the question debated.
The reference to the legislative precedent referred to in Kapoor 's case does not help us to determine the issue in the present case.
Sri Gujral pointed out that, in that case, Parliament considered it necessary to repeal an Act of Parliament (10 of 1952) and thus create a vacuum before providing for extension of a State law to the cantonment.
Central Act 10 of 1952 in that case, was a detailed enact ment and the State law extended under section 3 of the Act 46 of 1957 could not have stood alone with it.
It was, therefore, decided by Parliament that the Central Act should stand repealed.
Here, on the other hand, we have attempted to show that both sets of provisions can stand together 685 and effectively supplement 'each other.
Sri Swarup pointed out that, in Kapoor 's case, the words "on the date of the notification" were omitted with retro spective effect.
This also does not help the petitioners.
For one thing, the omission of those words enlarges the power of notification and made possible the issue of a notification to extend the State law along with its future amendments.
But that apart, the words "on the date of the notification" are present in section 87 and authorise the exten sion of the law in force in Punjab, as on 15.12.1986, to Chandigarh.
There was some discussion before us on the basis of the observations in Lachmi Narain & Ors.
vs Union of India & Ors.
, ; , as to whether there could be succes sive notifications under section 87.
But this question, which was answered in the affirmative in Kapoor 's case (supra), does not arise here, as there is only one notification under section 87. 5.
Learned counsel submitted that the observations of the High Court in para 17 and 26 of the judgment under appeal are not helpful as they refer to extension of laws made under the provisions of Acts I, II and III which had been held valid in the case.
This is correct but, as we have pointed out earlier.
section 87 only continued the pattern of Acts I, II and III after being assured by the Supreme Court that there was nothing wrong with it.
This is a relevant aspect which has to be kept in mind in consider ing the issues before us.
Learned counsel criticised the observations made by the High Court in para 27 of the judgment.
The passage referred to seems to echo the observations made in certain decisions of this Court (vide, for e.g. Mukherjea CJ) in Rai Sahab Ram Jawaya Kapur vs State, at p. 237 and Hedge J. in Sitaram Bishamber Dayal; , at p. 143 cited, with apparent approval, in Roy vs Union, ; at p. 3 17.
They should not be understood as equating the exercise of legislative power by Parliament and the Executive.
Both sides sought to take advantage of the history of the legislation in this case.
As stated earlier, the main contention of counsel for the petitioners was that, by enacting the 1974 Act and the 1982 Act, Parliament had filled in the "vacuum" which could no longer be penetrated by extension of laws from other parts of the country on the subject.
In addition they point out that the 1976 Ordinance making the amendments which are now being sought to be 686 extended was allowed to lapse and that an incorporation of these amendments was not considered necessary when the 1982 Act was passed.
These two circumstances show, according to them, that an extension of the provisions of the 1985 Act was contrary to the clear intention of Parliament.
On the contrary, counsel for the State submitted that the passing of the 1974 Act and the promulgation of the ordinance show that it was the policy of the Parliament to extend the provisions of the 1949 Act and, in particular, the provi sions now extended, to Chandigarh as well.
He further sub mitted that the ordinance could not be made into an Act because of the intervention of the emergency and that the omission to convert the ordinance into an Act and to insert the provisions of the ordinance into the 1982 Act really demonstrate how Parliament is unable to keep track of legis lation necessary for a Union Territory.
We do not wish to enter into this controversy for our present purposes as we do not think that any clear inference can be drawn one way or the other from these circumstances.
It is also not neces sary to consider these developments in the view we have taken that there can be no objection to extension of provi sions which do not conflict with the existing law in the Union Territory.
Sri Swarup raised a point that if section 87 is read as empowering the extension of any law at any time, section 89 which prescribes a maximum time limit of two years within which to adapt existing laws for their application to Chandigarh would become redundant.
This argument overlooks a very crucial difference between sections 87 and 89.
This is that, within the period of two years mentioned in section 89, the Central Government can, while adapting pre existing laws make any changes therein, including changes by way of repeal or amendment.
But section 87 though capable of enforcement indef initely, confers a more limited power.
It can be invoked only to extend laws already in existence to the Union Terri tory and cannot make any substantial changes therein.
The power under section 89 is limited in time but extensive in scope while under section 87 the power is indefinite in point of dura tion but very much more restricted in its scope.
The above discussions dispose of all the contentions urged before us.
For the reasons set out, we are of opinion that the conclusion arrived at by the Punjab and Haryana High Court was the correct one.
All these petitions and appeals fail and are dismissed and the rules nisi discharged but, in the circumstances, we direct each party to bear his/its own costs.
P.S.S. Appeals & petitions dismissed.
| Section 87 of the empow ered the Central Government to extend, with such restric tions and modifications as it thought fit, to the Union Territory of Chandigarh any enactment which was in force in a State at the date of the notification.
Section 89 provided for adaptation and modification by the appropriate Govern ment of any law made before the appointed day, whether by way of repeal or amendment, for application in relation to the State of Punjab or Haryana or to the Union Territory of Himachal Pradesh or Chandigarh before the expiration of two years.
The State of Punjab, of which the Union Territory of Chandigarh originally formed part, was then governed by the East Punjab Urban Rent Restriction Act, 1949.
Section 2(j) of that Act defined 'urban area ' as any area administered by a municipal committee, a cantonment board, a town committee, or a notified area committee or any area declared by the State Government by notification to be an urban area for the purposes of the Act.
630 The Central Government had issued under section 89 of the Reorganisation Act, the Punjab Reorganisation (Chandigarh) (Adaptation of Laws on State and Concurrent Subjects) Order, 1968 with effect from 1st November, 1966 Paragraph 4 of which directed that in all the existing laws, in its appli cation to the Union Territory of Chandigarh, any reference to the State of Punjab should be read as a reference to the Union Territory of Chandigarh.
In exercise of the power conferred by section 2(j) of the Rent Act, the Central Government had also issued on 13th October, 1972 a notification declar ing the area comprising Chandigarh to be an "urban area" for the purpose of that Act.
This notification was, however, quashed by the High Court in Harkishan Singh vs Union, AIR 1975 P & H 160, on the ground that no notification had been issued prior to 1st November, 1966 under section 2(j) declaring Chandigarh to be an urban area, and there was no notification under section 87 making the 1949 Act operative in Chandigarh with the necessary adaptation.
Thereupon, Parliament enacted the East Punjab Urban Rent Restriction (Extension to Chandigarh) Act, 1974.
Section 3 of that Act extended to Chandigarh the 1949 Act subject to modifications specified in the schedule with retrospective effect from 4th November, 1972 with a view to regularies all proceedings for eviction which might have been initiated during the interregnum.
These included a modification of the definition of 'urban areas ' as including the area comprising Chandigarh, as defined in section 2 of the Capital of Punjab (Development Regulation) Act, 1952, and such other areas comprised in the Union Territory of Chandi garh as the Central Government may by notification declare to be urban for the purposes of the Act.
In 1982 Parliament passed the East Punjab Urban Rent Restriction (Chandigarh Amendment) Act, 1982 effecting certain amendments in the 1949 Act in its application to Chandigarh.
In 1985 the Legislature of the State of Punjab enacted East Punjab Urban Rent Restriction (Amendment) Act, 1985 to make the 1949 Act more effective.
This amendment came into force with effect from 16th November, 1985.
By a notification dated 15th December, 1986 purportedly in exercise of its power under section 87 of the Reorganisation Act the Central Government extended to the Union Territory of Chandigarh the provisions of the 1985 Act as in force in the State of Punjab at the date of the notification and subject to the modifications mentioned therein, with 631 the result that while the provisions of the 1949 Act had been brought into force with effect from 4th November, 1972 by the Act of Parliament, the provisions of the 1985 Act had been extended to the said territory by means of a Notifica tion of the Central Government issued under section 87.
The High Court upheld the validity of the said notification.
In these appeals by special leave and the writ petitions it was contended for the appellants/petitioners that in the purported exercise of its power under Article 246(4) of the Constitution, the Parliament could not delegate its legisla tive function in favour of an executive authority to such an extent as to amount to an abdication of its legislative function; that by enacting section 87, Parliament instead of legislating for the Union Territory had left it to the Central Government to decide for all time to come what should be the law in force in that Territory; whereas section 89 gives a limited transitory power to the Central Government to adapt existing laws within a period of two years; that such adaptation could hold the field only until they were altered, repealed or amended by a competent legislature or authority; that section 87 confers on the executive government a wide power of choice, for application to Chandigarh, of not only one legislative enactment on any subject in operation in various parts of the country but also groups of provi sions from one or more of them and thus enforce a law which would be an amalgam of various statutory provisions; that there was no legislative guidance as to the manner in which these choices should be exercised by the executive; that section 87 enables extension by Government notification even of any legislation which might have come into force in any part of India at any time between 1966 and the date of the notifica tion; that the effect, therefore, of section 87 could be that the entire legislation for the Union Territory in respect of any particular subject would entirely depend upon the fancy of the Central Government without any sort of legislative or parliamentary application of mind; that a power to exercise such wide power could not be described as a ministerial power, it is essential legislative power; that these facets of section 87 clearly render it an instance of excessive delega tion by Parliament to executive amounting in effect, to the total abdication of its legislative powers in regard to Chandigarh.
It was further contended that section 87, on its proper construction, permits the extension of the laws of another State to Chandigarh only so long as there is a vacuum of.
laws on any particular subject; that once Parliament itself steps in and assumes legislative responsibilities in respect of that subject, a transplantation of laws from elsewhere by extension is neither necessary nor valid; that as early as 1974 Parliament having applied its mind and legislated in respect of landlord 632 tenant matters for the Union Territory, it was for Parlia ment and Parliament alone to legislate on the subject there after; that by purporting to extend by an executive notifi cation under section 87 the provisions of the 1985 Act to Chandi garh what the Central Government had really done was to modify or amend an existing parliamentary law operating already in the State, which was impermissible, and that the notification dated 15th December, 1986 having thus exceeded the purview of section 87 it was, therefore, ultra vires.
Dismissing the appeals and the writ petitions, HELD: 1.1 Section 87 of the should be interpreted constructively so as to permit its object being achieved rather than in a manner that will detract from its efficacy or purpose.
So construed, its validity has to be upheld.
[683C] 1.2 It is impossible to carry on the government of a modern State with its infinite complexities and ramifica tions without a large devolution of power and delegation of authority.
While Parliament should, therefore, have ample and extensive powers of legislation, these should include a power to entrust some of those functions and powers to another body or authority.
Such entrustment, however, could not be so extensive as to amount to abdication or efface ment.
The legislatures cannot wash their hands off their essential legislative function of laying down the legisla tive policy with sufficient clearness and enunciating the standards which are to be enacted into a rule of law.
This function cannot be delegated.
What can be delegated is only the task of subordinate legislation which is by its very nature ancillary to the statute which delegates the power to make it and which must be within the policy and framework of the guidance provided by the legislature.
[668G H; 669C D] 1.3 Section 87 of the Reorganisation Act did not cross the line beyond which delegation amounts to abdication and self effacement.
It was not the power to make laws that was delegated.
The provision only conferred a power on the executive to determine, having regard to the local condi tions prevalent in the Union Territory, which one of several laws, all approved by one or the other of the legislatures in the country, would be the most suited to Chandigarh.
The power given as such was more in the nature of ministerial than in the nature of legislative power because all that the Government had to do was to study the laws and make selec tion out of them.
Thus viewed, it was not really an unguided and arbitrary power.
[675F G] 633 In re Delhi Laws Act; , applied.
Registrar of Cooperative Societies vs Kunhambu ; ; R. vs Burah, [1878] 51.A. 178; Jatindra Nath Gupta vs The Province of Bihar & Ors., ; Harishankar Bagla & Anr.
vs The State of Madhya Pradesh, ; Rajnarain Singh vs The Chairman, Patna Administration Committee, Patna & Anr., ; ; Sardar Inder Singh vs The State of Rajasthan, ; ; Pandit Banarsi Das vs The State of Madhya Pradesh & Ors., ; ; The Edward Mills Co. Ltd. Beawar vs The State of Ajmer; , ; The Western India Theatres Ltd. vs Municipal Corporation of the City of Poona, [1959] 2 Supp.
SCR 71; Hamdard Dawakhana (Wakf) Lal Kuan vs Union of India; , ; Vasantlal Maganbhai San janwala vs The State of Bombay & Ors., ; ; Jyoti Pershad vs Administrator for the Union Territory of Delhi, ; ; Shama Rao vs The Union Territory of Pondichery, ; ; Mohammad Hussain Gulam Moham mad & Anr.
vs The State Of Bombay & Anr.
; ; Corporation of Calcutta & Anr.
vs Liberty Cinema, ; , Devi Das Gopal Krishan & Ors.
vs State of Punjab & Ors.
, ; ; Municipal Corporation of Delhi vs Birla Cotton, Spinning & Weaving Mills, Delhi & Anr., ; ; Sita Ram Bishambhar Dayal vs State of U.P. & Ors., ; ; Hira Lal Rattan Lal etc.
vs State of U.P. & Anr.
; , ; Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. vs The Ass,.
Commissioner of Sales Far & Ors., ; ; M.K. Papiah & Sons.
vs The Excise Commissioner & Anr., ; ; Brii Sundar Kapoor vs First Additional District Judges, [1980] I SCC 651 and Sprigg.
vs Sigcau, , referred to.
2.1 Section 87 was quite valid even on the policy and guidelines theory.
It is not necessary that the legislature should "dot all the t 's" and cross all the t 's" of its poli cy.
It is sufficient if it gives the broadest indication of a general policy of the legislature.
[673E F] 2.2 The policy behind section 87 seems to be that it was necessitated by changes resulting In territories coming under the legislative jurisdiction of the Centre.
These were territories situated In the midst of contiguous territories which had a proper legislature.
They were small territories falling under the legislative jurisdiction of Parliament, which had hardly sufficient time to look after the details of all their legislative needs and requirements.
To require or expect Parliament to legislate 634 for them would have entailed a disproportionate pressure on its legislative schedule.
It would also have meant the unnecessary utilisation of the time of a large number of members of Parliament for, except the few members returned to Parliament from the Union Territory none else was likely to be interested in such legislation.
In such a situation the most convenient course of legislating for them was the adaptation by extension of laws in force in other areas of the country.
[673F; 674A B] 2.3 There could have been no objection to the legisla tion if it had provided that the laws of one of the contigu ous States should be extended to Chandigarh.
But such a provision would have been totally inadequate to meet the situation for two reasons.
There might have been more than one law in force on a subject in the contiguous States say one in Punjab, one in PEPSU and one in Himachal Pradesh etc. and Parliament was anxious that Chandigarh should have the benefit of that one of them which would most adequately have met the needs of the situation in that territory.
Or, again, there might have been no existing law on a particular subject in any of the continuous 3teas which was why the power had to include the power of extending the laws of any State of India.
While in a very strict sense this might have involved a choice, it was in fact, and in general run of cases.
only a decision on suitability for adaptation rather than choice of a policy.
It was a delegation not of policy, but of matters of detail for a meticulous appraisal of which Parliament had no time.
Even if it be assumed that this involved a choice of policy, the restriction of such policy to one that was approved by Parliament or a State Legisla ture constituted a sufficient declaration of guideline within the meaning of the "policy guideline theory." [675G H; 676A C] In re Delhi Laws Act; , referred to.
Once it is held that the delegation of a power to extend a present existing law is justified, a power to extend future laws is a necessary corollary.
If Parliament had no time to apply its mind to the existing law initially to be adapted, it could have hardly found time to consider the amendments from time to time engrafted on it in the State of its origin.
It would then seem only natural as a necessary corollary that the executive should be permitted to extend future amendments to those laws as well.
[676D E] In re Delhi Laws Act; , referred to.
4.1 The concept of vacuum is as much relevant to a case where there is absence of a particular provision in an existing law as to a case 635 where there is no existing law at all in the Union Territory on a subject.
For instance, if Parliament had not enacted the 1974 Act but had only enacted an extension of the Trans fer of Property Act to Chandigarh, it could not have been said that a subsequent notification cannot extend the provi sions of the 1949 Act to Chandigarh simply because the subject of leases was governed by the Transfer of Property Act, which had been already extended and there, was, there fore, no "vacuum" left which could be filled in by such extension.
Again, suppose, initially, a Rent Act was extend ed by Parliament which did not contain a provision regarding one of the grounds on which a landlord could seek eviction say, one enabling the owner to get back his house for reoc cupation and then the Government thought that another enact ment containing such a provision also be extended, it could not perhaps be said that the latter was a matter on which there was no legislation enacted in the Territory and that the extension of the latter enactment only filled up a void or vacancy.
Again, suppose the provisions of a general code like.
say, the Code of Civil Procedure were extended to the Union Territory.
In that case s.87 could not be construed so as to preclude the extension of a later amendment to one of the rules to one of the orders of the C.P.C. merely on the ground that it will have the effect of varying or amending an existing law.
There is no warrant to thus unduly restrict the scope of a provision like section 87.
[682D H] 4.2 The extension of an enactment which makes additions to the existing law would thus also be permissible under section 87 of the Reorganisation Act, so long as it does not, ex pressly or impliedly repeal or conflict with, or is not repugnant to, an already existing law.
[683A B] In the instant case, the extension of the East Punjab Urban Rent Restriction (Amendment) Act, 1985 to the Union Territory of Chandigarh only added provisions in respect of aspects not covered by the East Punjab Urban Rent Restric tion (Extension to Chandigarh) Act, 1974 and in a manner not inconsistant therewith.
[683F] Lachmi Narain vs Union of India, and Hari Shankar Bagla vs State of Madhya Pradesh, referred to.
A notification while extending a law can make only such modifications and restrictions in the law extended as are of an incidental, ancillary or subservient nature and as do not involve substantial deviations therefrom.
In the instant case, the 1985 Act has been extended as 636 it is, with only very minor modifications.
The notification dated 15th December.
1986 was, therefore, quite valid and not liable to be struck down.
[684E F] Lachmi Narain vs Union of India, ; ; referred to and Kewal Singh vs Lajwanti, ; ; distinguished. 6.
Any addition, however, small does amend or vary the existing law but so long as it does not really detract from or conflict with it, there is no reason why it should not stand alongside the existing law.
In the instant case the modifications introduced by the 1985 Act in the 1949 Act, as were reenacted by the 1974 Act were minor modifications and restrictions.
They do not incorporate substantial changes in the scheme of the pre existing law.
Both sets of provisions can stand together and effectively supplement each other.
[684F, H] Hari Shankar Bagla vs State of Madhya Pradesh, and Lachmi Narain vs Union of India, referred to. 7.
There is a very crucial difference between section 87 and 89 in as much as within the period of two years mentioned in section 89, the Central Government could while adapting pre existing laws make any changes by way of repeal or amend ment.
But section 87, though capable of enforcement indefinitely, confers a more limited power.
It can be invoked only to extend laws, already in existence, to the Union Territory and cannot make any substantial changes therein.
The power under section 89 is limited in time but extensive in scope, while under section 87 the power is indefinite in point of duration but very much more restricted in its scope.
Therefore, resort to section 87 did not render section 89 redundant.
[686E F]
|
Appeal No. 434 of 1963.
Appeal from the judgment and decree dated July 22, 1960, of the Andhra Pradesh High Court in Appeal Suit No. 709 of 1954.
A. Ranganadham Chetty, A. Vedavalli and A.V. Rangam, for the appellants.
M.S.K. Sastri and M.S. Narasimhan, for the respondents.
The Judgment of the Court was delivered by Bachawat, J.
The first respondent, Seetharamamma, is a Brahmin woman.
She was married to one Ramakrishnayya.
During the life time of her husband she became the concubine of one Lingayya, a Sudra by caste.
From 1938 until the death of Lingayya in February, 1948, she was the permanently kept concubine of Lingayya, and lived with him.
During this period and thereafter, she preserved sexual fidelity to Lingayya.
The second, third and fourth respondents are the sons of the first respondent by Lingayya.
The husband of the first respondent is still alive.
The appellants are the brothers and brothers ' sons of Lingayya.
Lingayya was separate in estate from his brothers and brothers ' sons.
The parties are residents of Choragudi, Bapatla, now in Andhra Pradesh and governed by the Mitakshara school of Hindu law.
In the plaint, as originally filed, the respondents claimed that they were exclusively entitled to the estate left by Lingayya.
The Subordinate Judge and the High Court found that as the first respondent was and continued to be a married woman while she lived with Lingayya and bore him children, she was not the lawfully wedded wife of Lingayya and the children born of the union were not his legitimate sons, nor were they Dasiputras and as such entitled to his properties.
The suit was originally dismissed by the Subordinate Judge, but on appeal, the High Court gave the respondents leave to amend the plaint by making suitable averments for the award of maintenance, and remanded the suit for trial on the question of maintenance.
At the subsequent trial on the amended plaint, the Subordinate Judge decreed the respondents ' claim for maintenance and consequential 124 reliefs and awarded to them maintenance during their lifetime out of the estate of Lingayya.
The Subordinate Judge passed his decree on September 20, 1954.
During the pendency of the appeal preferred by the appellants before the High Court, the Hindu Adoptions and Maintenance Act of 1956 (hereinafter referred to as the Act) came into force.
The main controversies in the appeal before the High Court were (1) whether the provisions of the Act are retrospective; and (2) whether a married woman who left her husband and lived with another as his permanently kept mistress could be regarded as an A varuddha Stree.
In view of the importance of these questions, the appeal was referred to a Full Bench of the High Court.
On the first question the High Court held that the relevant provisions of the Act applied only to the estates of Hindus dying after the commencement of the Act, and that the right of the respondents to maintenance during their lifetime under the Hindu law in force at the time of the death of Lingayya was not affected by the Act.
On the second question, the High Court held that the first respondent was an Avaruddha Stree of Lingayya, and was entitled to maintenance from his estate, though her husband was alive and the connection with Lingayya was adulterous.
The High Court agreed with the Subordinate Judge with regard to the quantum of maintenance.
On behalf of the appellants, it is contended that the respondents are not entitled to claim any maintenance from the estate of Lingayya under the Hindu law as it stood prior to the commencement of the Act, because (a) the first respondent is not a Dasi and the second, third and fourth respondents are not Dasiputras of Lingayya, and this point is concluded by the previous judgment of the High Court, which has now become final between the parties; (b) the husband of the first husband still alive, and the connection of the first respondent with Lingayya.
was adulterous during the period of her intimacy with Lingayya and while she bore him children; (c) the first respondent being a Brahmin adulteress and Lingayya being a Sudra, the connection was Pratiloma and illegal.
Now, under the Hindu law as it stood before the commencement of the Act, the claim of a Dasiputra or the son of a Dasi, that is, a Hindu concubine in the continuous and exclusive keeping of the father rested on the express texts of the Mitakshara, Ch.
I, s.12 V. 1, 2 and 3.
In the case of Sudras, the Dasiputra was entitled to a share of the inheritance, and this share was given to him not merely in lieu of maintenance but in recognition of his status as a son, see Gur Narain Das and another vs Gur Tahal Das and others(1).
But the illegitimate son of a Sudra by his concubine was not entitled to a share of the inheritance if he were the offspring of an incestuous connection, see Datti Parisi Nayudu vs Datti Bangaru Nayudu(2), or if at the time of his conception, the connection was (1)[1952] S.C.R. 869, 875.
(2) [1869] 4 Madras High Court Reports.
204, 125 adulterous, see Rahi and others vs Govind Valad Teja(1), Narayan Bharthi vs Laving Bharthi and others(2), Tukaram vs Dinnkar(3).
Such an illegimate son could not claim the status of a member of his father 's family and could not get a share of the inheritance as a Dasiputra under the express text of the Mitakshara.
For the reason, the previous judgment of the High Court rightly held that the second, third and fourth respondents were not Dasiputras of Lingayya, and could not claim the inheritance.
But the point whether they are entitled to maintenance out of the estate of Lingayya is not concluded by the previous judgment.
It is well recognised that independently of the express texts of the Mitakshara, Ch.
I section 12, V. 3, the illegitimate son of a Sudra was entitled to maintenance out of his father 's estate, though his mother was not a Dasi in the strict sense and though he was the result of a casual or adulterous intercourse.
It was not essential to his title to maintenance that he should have been born in the house of his father or of a concubine possessing the peculiar status therein.
See: Muttusawmy Jagavera Yettappa Naicker vs Vencataswara Yettayya(4).
The illegitimate son of a Sudra was entitled to maintenance out of his father 's estate, though at the time of his conception his mother was a married woman, her husband was alive and her connection with the putative father was adulterous, see Rahi vs Govind(2), Viraramuthi Udayan vs Singaravelu(5), Subramania Mudaly vs Valu(6).
According to the Mitakshara school of law, the illegitimate son a Sudra was entitled to maintenance from his father 's estate during his lifetime.
Under the Hindu law, as it stood prior to the commencement of the Act, the first, second and third respondents were, therefore, entitled to maintenance during their lifetime, out of the estate of Lingayya.
The claim of an Avaruddha Stree or woman kept in concubinage for maintenance for her lifetime against the estate of her paramour rested on the express text of Bai Nagubai vs Bai Monghibai(1), where the man and the woman were Hindus and the paramour was governed by the law of the Mayuka, Lord Darling said: "providing the concubinage be permanent, until the death of the paramour, and sexual fidelity to him be preserved, the right to maintenance is established; although the concubine be not kept in the family house of the deceased.
" The law of the Mitakshara is in agreement with the law of the Mayuka on this point.
In the instant case, the first respondent (1)[1875] I.L.R.1 Bom.97 (2)[1878] I.L.R.2Bom.140.
(3)[1931] 33 B.L.R. 280.
(4)[1868] ,220.
(5)[1877] I.L.R. 1 Mad.306 (6)[1911] I.L.R. 34 Mad.68.
(7)[1926] I.L.R. 50 Bom.604,614,(P.C.).
126 being continuously and exclusively in the keeping of Lingayya until his death for about 10 years, the concubinage has been found to be permanent.
She observed sexual fidelity to Lingayya during his lifetime, and after his death has continued to preserve her qualified chastity.
In Akku Pralhad vs Ganesh Pralhad(1), a Full Bench of the Bombay High Court held that a married woman who left her husband and lived with her paramour as his permanently kept mistress could claim the status of an Avaruddha Stree by remaining faithful to her paramour, though the connection was adulterous, and was entitled to maintenance from the estate of the paramour so long as she preserved her sexual fidelity to him.
This Full Bench decision overruled the decision in Anandilal Bhagchand vs Chandrabai(2)and followed the earlier decisions in Khemkore vs Umiashankar(3), and Bingareddi vs Lakshmawa(1).
The decision in Akku Pralhad vs Ganesh Pralhad(1) has been the subject of strong criticism in Mayne 's Hindu law and Usage, 11th Edn., article 683, p. 816 edited by Sri N. Chandrasekhara Aiyar and in a learned article in (1946) 1 M.L.J., Notes of Indian cases, p. 1, but the Full Bench of the Andhra Pradesh High Court in the instant case found themselves in complete agreement with the Bombay decision.
We are of the opinion that the Bombay decision lays down the correct law.
Avaruddha Stree, as understood by Vijnaneswara, includes a Swairini or adulteress kept in concubinage.
While dealing with the assets of a deceased Hindu not liable to partition, Mitakshara, Ch.
I, section 4, V. 22, he says, "Swairini and others who are Avaruddha by the father, though even in number, should not be divided among the sons".
Colebrooke 's translation of the passage is as follows: "But women (adulteresses and others) kept in concubinage by the father must not be shared by the sons, though equal in number".
In his commentary on Yajnavalkya 's Verse 290 in Vyavahara Adhyaya, Ch. 24 on Stree Sangrahana, Vijnaneswara, citing Manu, explains Swairini as a woman who abandons her own husband and goes to another man of her own Varna out of love for him.
Thus, a Swairini and other adulteress kept in concubinage could claim the status of an Avaruddha Stree.
The connection was no doubt immoral, but concubinage itself is immoral; yet it was recognised by law for the purpose of rounding a claim for maintenance by her and her illegitimate sons.
The paramour may be punishable for the offence of adultery, but the concubine is not punishable as abettor of the offence.
A concubine was not disqualified from claiming maintenance by reason of the fact that she was a Brahmin.
The claim of a concubine who was a respectable woman of the Brahmin caste and (1) I.L.R. (2)I.L.R (3) [1873] 10 Biombay High Court Reports.
(4)[1901] I.L. R. 127 her illegitimate sons for maintenance was allowed in Hargovind Kuari vs Dharam Singh(1).
No doubt, a Pratiloma connection is denounced by the Smriti writers and the Commentators, and before the Hindu Marriages Validity Act, 1949 (Act XXI of 1949) Pratiloma marriages between a Sudra male and a Brahmin female were declared invalid in Bai Kashi vs Jamnadas(2) and in Ramchandra Doddappa vs Hanamnaik Dodnaik(3), but even those cases recognise that a Brahmin concubine in the exclusive and continuous keeping of a Sudra until his death was entitled to claim maintenance.
We express no opinion on the question whether a Pratiloma marriage was valid under the old Hindu law, but we are satisfied that the claim of the respondents for maintenance cannot be defeated on the ground that the first respondent was a Brahmin and her paramour was a Sudra.
We are satisfied that the respondents were entitled to maintenance during their lives out of the estate of Lingayya under the Hindu law as it stored in 1948, when Lingayya died, in December 1949, when the suit was instituted and also in 1954, when the suit was decreed by the Subordinate Judge.
The question is whether this right is taken away by the Hindu Adoptions and Maintenance Act, 19 5 6, which came into force during the pendency of the appeal to the High Court.
The Act is intended to amend and codify the law relating to adoptions and maintenance among Hindus.
Section 4 of the Act is as follows: "4.
Save as otherwise expressly provided in this Act, (a) any text, rule or interpretation of Hindu law or any custom or usage as part of that law in force immediately before the commencement of this Act shall cease to have effect with respect to any matter for which provision is made in this Act; (b) any other law in force immediately before the commencement of this Act shall cease to apply to Hindus in so far as it is inconsistent with any of the provisions contained in this Act.
" Section 21 defines "dependants" as meaning certain relatives of the deceased, and under sub cl (viii), includes "his or her minor illegitimate son, so long as he remains a minor".
A concubine is not one of the persons within the definition of "dependants" given in section 21, and an illegitimate son is not a dependant when he ceases to be a minor.
Section 22 reads thus: "22.
(1) Subject to the provisions of sub section (2), the heirs of a deceased Hindu are bound to maintain the dependants of the deceased out of the estate inherited by them from the deceased.
128 (2) Where a dependant has not obtained, by testamentary or intestate succession, any share in the estate of a Hindu dying after the commencement of this Act, the dependant shall be entitled, subject to the provision of this Act, to maintenance from those who take the estate.
(3) The liability of each of the persons who takes the estate shall be in proportion to the value of the share or part of the estate taken by him or her.
(4) Notwithstanding anything contained in sub section (2) or sub section (3), no person who is himself or herself a dependant shall be liable to contribute to the mainten(2) or sub section (3), no person who is himself or herself the value of which is, or would, if the liability to contribute were enforced, become less than what would be awarded to him or her by way of maintenance under this Act.
" Sub section (1) of section 22 imposes upon the heirs of a deceased Hindu the liability to maintain the dependants of the deceased defined in section 21 out of the estate inherited by them from the deceased.
but this liability is subject to the provisions of sub section
(2), under which only a dependant who has not obtained by testamentary or intestate succession, any share in the estate of a Hindu dying after the commencement of the Act is entitled, subject to the provisions of the Act, to maintenance.
Specific provision is thus made in section 22 with regard to maintenance of the dependants defined in section 21 out of the estate of the deceased Hindu, and in view of section 4, the Hindu law in force immediately before the commencement of the Act ceases to have effect after the commencement of the Act with respect to matters for which provision is so made.
In terms, sections 21 and 22 are prospective.
Where the Act is intended to be retrospective, it expressly says so.
Thus, section 18 provides for maintenance of a Hindu wife, whether married before or after the commencement of the Act, by her husband, section 19 provides for the maintenance of a Hindu wife, whether married before or after the commencement of the Act, by her father in law, after the death of her husband, and section 25 provides for alteration of the amount of maintenance whether fixed by a decree of Court or by agreement either before or after the commencement of the Act.
Now, before the Act came into force, rights of maintenance out of the estate of a Hindu dying before the commencement of the Act were acquired, and the corresponding liability to pay the maintenance was incurred under the Hindu law in force at the time of his death.
It is a well recognised rule that a statute should be interpreted, if possible, so as to respect vested rights.
See Craies on Statute Law, 6th Edn.
(1963), p. 397.
We think that sections 21 and 22 read with section 4 do not destroy or affect any right of maintenance out of the estate 129 of a deceased Hindu vested on his death before the commencement of the Act under the Hindu law in force at the time of his death.
On the death of Lingayya, the first respondent as his concubine and the second, third and fourth respondents as her illegitimate sons had a vested right of maintenance during their lives out of the estate of Lingayya.
This right and the corresponding liability of the appellants to pay maintenance are not affected by sections 21 and 22 of the Act.
The continuing claim of the respondents during their lifetime springs (out of the original right vested in them on the death of Lingayya and is not rounded on any right arising after the commencement of the Act.
In section Kameswarammna vs SubramanYam(1), the plaintiff 's husband had died in the year 1916, and the plaintiff had entered into a compromise in 1924 fixing her maintenance at Rs. 240 per year and providing that the rate of maintenance shall not be increased or reduced.
The question arose whether, in spite of this agreement, the plaintiff could claim increased maintenance in view of section 25 of the .
It was held that, in spite of the aforesaid term of the compromise, she was entitled to claim increased maintenance under section 25.
This conclusion follows from the plain words of section 25, under which the amount of maintenance, whether fixed by decree or agreement either before or after the commencement of the Act, may be altered subsequently.
The decision was therefore, plainly right.
No doubt, there are broad observations in that case to the effect that the right to maintenance is a recurring right and the liability to maintenance after the Act came into force is imposed by section 22, and there is no reason to exclude widows of persons who died before the Act from the operation of section 22.
Those observations were not necessary for the purpose of that case, because the widow in that case was clearly entitled to.
maintenance from the estate of her deceased husband dying in 1916 under the Hindu law, as it stood then,independently of sections 21 and 22 of the Act, and in spite of the compromise timing the maintenance before the commencement of the Act, the widow could in view of section 25 claim alteration of the amount of the maintenance.
The decision cannot be regarded as an authority for the proposition that sections 21 and 22 of the Act affect rights already vested before the commencement of the Act.
We therefore, hold that the claim of the respondents to main tenance for their lives is not affected by the Act.
We see no reason to interfere with the concurrent finding of Courts below with regard to the quantum of maintenance.
In the result, the appeal is dismissed with costs.
Appeal dismissed.
| The first respondent S, a Brahmin woman married to R, during the lifetime of her husband became the permanently kept concubine of L, a sudra by caste.
The other three respondents were the sons of S & L.
After L 's death, in a suit filed by the respondent against L 's brother and their sons (the appellants here), the sub judge, by a decree dated September 20, 1954, awarded maintenance to the respondents during their life time out of the estate of L and this award was upheld on appeal by the High Court.
During the pendency of the appeal before the High Court, the Hindu Adoptions and Maintenance Act of 1956 came into force and upon a contention being raised before it, the High Court held that the relevant provisions of the new Act did not have retrospective effect so as to adversely affect the rights of maintenance available to the respondents under the Hindu Law before the Act came into force.
In appeal before the Supreme Court, it was contended on behalf the appellants (1), that the respondents were not entitled to claim any maintenance from the estate of L under the Hindu Law in force before the 1956 Act because (a) the first respondent was not a Dasi and the other three respondents were not Dasiputras of L; (b) the husband of the first respondent having been alive, her connection with L was adulterous and she could not therefore be entitled to maintenance as an Avaruddha Stree and (c) the first responden being a Brahmin adulteress and L being a Sudra.
the connection was Pratiloma and illegal.
(2) That in any event, by virtue of section 4 of the 1956 Act, the Hindu Law prior to that Act ceased.
to have effect with respect to matters for which provision was made in the Act and that provision for maintenance, etc.
had in fact been made in sections 21 and 22 of the Act.
HELD ': (1) The respondents were entitled to maintenance during their lives out of the estate of L under the Hindu Law as it stood before the 1956 Act came into force.
[127 D] (a) It was well recognised that independently of the express texts of the Mitakshara, whereby, in the case of Sudras the Dasiputra was entitled to a share of the inheritance, the illegitimate son of a Sudra was entitled to maintenance out of his father 's estate though his mother was not a Dasi in the strict sense and though he was the result of a casual or adulterous relationship.
[125 C] Mitakshara Ch.
I, section 12 V. 1, 2 and 3 referred to; Case law reviewed.
(b) Under Mitakshara law.
a married woman who left her husband and lived with her paramour as his permanently kept mistress could claim the status of an Avaruddha Stree by remaining faithful 123 to her paramour, even though the connection was adulterous, and she was entitled to maintenance from the estate of the paramour so long as she preserved sexual fidelity to him.
[125 H, 126 B] Akku Prahlad vs Ganesh Prahlad I.L.R. affirmed Case law reviewed.
(c) A Brahmin concubine in the exclusive and continuous keeping of a Sudra until his death was entitled to claim maintenance.[127 B] Case law referred to.
Sections 21 and 22 are in terms prospective and these sections read with section 4 did not destroy or affect the right of maintenance of the respondents which vested in them on the death of L and before the commencement of the 1956 Act.
A] section Kameshwaramma vs Subramanyam A.I.R. 1959 Andhra Pradesh 269; distinguished.
|
iminal Appeal No. 1 of 1955.
Appeal from the judgment and order dated October 13, 1954, of the former Judicial Commissioner 's Court, Ajmer, in Criminal Reference No. 31 of 1954.
H. J. Umrigar and T. M. Sen, for the appellant.
The respondents did not appear.
December 16.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This appeal was preferred by the State of Ajmer, but after reorganisation the b of States, the State of Rajasthan stands substituted for the former State.
It was filed against the decision of the Judicial Commissioner of Ajmer, who certified the case as fit for appeal to this Court under article 132 of the Constitution.
The Ajmer Legislative Assembly enacted the Ajmer (Sound Amplifiers Control) Act, 1952 (Ajmer 3 of 1953), (hereinafter called the Act) which received the assent of the President on March 9, 1953.
This Act was successfully impugned by the respondents before the learned Judicial Commissioner, who held that it was in excess of the powers conferred on the State Legislature under section 21 of the (49 of 1951) and, therefore, ultra vires the State Legislature.
The respondents (who were absent at the hearing) were prosecuted under section 3 of the Act for breach of the first two conditions of the permit granted to the first respondent, to use sound amplifiers on May 15 and 16, 1954.
These amplifiers, it was alleged against them, were so tuned as to be audible beyond 30 yards (condition No. 1) and were placed at a height of more than 6 feet from the ground (condition No. 2).
The second respondent was at the time of the breach, operating the sound amplifiers for the Sammelan, for which permission was obtained.
On a reference under section 432 of the Code of Criminal Procedure, the Judicial Commissioner of Ajmer held that the pith and substance of the Act fell within 114 906 Entry No. 31 of the Union List and not within Entry No. 6 of the State List, as was claimed by the State.
Under article 246(4) of the Constitution, Parliament had power to make laws for any Part of the territory of India not included in Part A or B of the First Schedule, notwithstanding that such matter was a matter enumerated in the State List.
Section 21 of the , enacted: " (1) Subject to the provisions of this Act, the Legislative Assembly of a State, may undertake laws for the whole or any part of the State with respect to any of the matters enumerated in the State List or in the Concurrent List, (2) Nothing in subsection ( 1) shall derogate from the power conferred on Parliament by the Constitution to make laws with respect to any matter for a State or any part thereof." Under these provisions, the legislative competence of the State Legislature was confined to the two Lists other than the Union List.
If, therefore, the subjectmatter of the Act falls substantially within an Entry in the Union List, the Act must be declared to be unconstitutional, but it is otherwise, if it falls substantially within the other two lists, since prima facie there is no question of repugnancy to a central statute or of an " occupied field".
The rival Entries considered by the Judicial Commissioner read as follows: Entry No. 31 of Post and Telegraphs; Telephones, wire the Union List.
less,broadcasting and other like forms of communication.
Entry No. 6 of Public health and sanitation; hospita the State List.
ls and dispensaries.
The attention of the learned Judicial Commissioner was apparently not drawn to Entry No. 1 of the State List, which is to the following effect: Entry No. 1 of Public order(but not including the use the State List.
of naval,military or air forces of the Union in aid of civil power.) 907 Shri H. J. Umrigar relied upon the last Entry either alone, or in combination with Entry No. 6 of the State, List, and we are of opinion that he was entitled to do so.
After the dictum of Lord Selborne in Queen vs Burah (1), oft quoted and applied, it must be held as settled that the legislatures in our Country possess plenary powers of legislation.
This is so even after the division of legislative powers, subject to this that the supremacy of the legislatures is confined to the topics mentioned as Entries in the Lists conferring respectively powers on them.
These Entries, it has been ruled on many an occasion, though meant to be mutually exclusive are sometimes not really so.
They occasionally overlap, and are to be regarded as enume ratio simplex of broad categories.
Where in an organic instrument such enumerated powers of legislation exist and there is a conflict between rival Lists, it is necessary to examine the impugned legislation in its pith and substance, and only if that pith and substance falls substantially within an Entry or Entries conferring legislative power, is the legislation valid, a slight transgression upon a rival List, notwithstanding.
This was laid down by Gwyer, C. J., in Subramanyam Chettiar vs Muthuswamy Goundan (2), in the following words: " It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere.
Hence the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its 'pith and substance ', or its 'true nature and character ', for the purpose of determining whether it is legislation with respect to matters in this list or in that.
" This dictum was expressly approved and applied by the Judicial Committee in Prafulla Kumar Mukherjee (1) (2) , 201.
908 vs
Bank of Commerce, Ltd., Khulna (1), and the same view has been expressed by this Court on more than one occasion.
It is equally well settled that the power to legislate on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given.
It becomes, therefore, necessary to examine closely how the Act is constructed and what it provides.
The Act in its preamble expresses the intent as the control of the use ' of sound amplifiers.
The first section deals with the title, the extent, the commencement and the interpretation of the Act.
It does not unfold its pith and substance.
The last two sections provide for penalty for unauthorised use of sound amplifiers and the power of police officers to arrest without ",arrant.
They stand or fall with the constitutionality or otherwise of the second section, which contains the essence of the legislation.
That section prohibits the use in any place, whether public or otherwise, of any sound amplifier except at times and places and subject to such conditions as may be allowed, by order in writing either generally or in any case or class of cases by a police officer not below the rank of an inspector, but it excludes the use in a place other than a public place, of a sound amplifier which is a component part of a wireless apparatus duly licensed under any law for the time being in force.
In the explanation which is added, 'public place ' is defined as a place (including a road, street or way, whether a thoroughfare or not or a landing place) to which the public are granted access or have a right to resort or over which they have a right to pass.
The gist of the prohibition is the use ' of an external sound amplifier not a component part of a wireless apparatus, whether in a public place or otherwise, without the sanction in writing of the designated authority and in disregard of the conditions imposed on the use thereof.
It does not prohibit the use in a place other than a public place of a sound amplifier which is a component part of a wireless apparatus.
(1) (1947) L.R. 74 I.A. 23.
909 There can be little doubt that the growing nuisance of blaring loud speakers powered by amplifiers of great output needed control, and the short question is whether this salutary measure can be said to fall within one or more of the Entries in the State List.
It must be admitted that amplifiers are instruments of broadcasting and even of communication, and in that view of the matter, they fall within Entry 31 of the Union List.
The manufacture, or the licensing of amplifiers or the control of their ownership or possession, including the regulating of the trade in such apparatus is one matter, but the control of the 'use ' of such apparatus though legitimately owned and possessed, to the detriment of tranquillity, health and comfort of others is quite another.
It cannot be said that public health does not demand control of the use of such apparatus by day or by night, or in the vicinity of hospitals or schools, or offices or habited localities.
The power to legislate in relation to public health includes the power to regulate the use of amplifiers as producers of loud noises when the right of such user, by the disregard of the comfort of and obligation to others, emerges as a manifest nuisance to them.
Nor is it any valid argument to say that the pith and substance of the Act falls within Entry 31 of the Union List, because other loud noises, the result of some other instruments, etc., are not equally controlled and prohibited.
The pith and substance of the impugned Act is the control of the use of amplifiers in the interests of health and also tranquillity, and thus falls substantially (if not wholly) within the powers conferred to preserve, regulate and promote them and does not so fall within the Entry in the Union List, even though the amplifier, the use of which is regulated and controlled is an apparatus for broadcasting or communication.
As Latham, C. J., pointed out in Bank of New South Wales vs The Commonwealth (1): " A power to make laws 'with respect to ' a subjectmatter is a power to make laws which in reality and substance are laws upon the subject matter.
It is not (1) ; , 186.
910 enough that a law should refer to the subject matter or apply to the subject matter: for example, incometax laws apply to clergymen and to hotel keepers as members of the public; but no one would describe an income tax law as being, for that reason, a law with respect to clergymen or hotel keepers.
Building regulations apply to buildings erected for or by banks; but such regulations could not properly be described as laws with respect to banks or banking.
" On a view of the Act as a whole, we think that the substance of the legislation is within the powers conferred by Entry No. 6 and conceivably Entry No. 1 of the State List" and it does not purport to encroach upon the field of Entry No. 31, though it incidentally touches upon a matter provided there.
The end and purpose of the legislation furnishes the key to connect it with the State List.
Our attention was not drawn to any enactment under Entry No. 31 of the Union List by which the ownership and possession of amplifiers was burdened with any such regulation or control, and there being thus no question of repugnancy or of an occupied field, we have no hesitation in holding that the Act is fully covered by the first cited Entry and conceivably the other in the State List.
The Judicial Commissioner 's order, with respect, cannot be upheld, and it must be set aside.
We allow the appeal and reverse the decision, and we declare the Act in all its parts to be intra vires the State Legislature.
As the matter is four years old we do not order a retrial and we record that the State does not, as a result of the reversal of the decision under appeal, propose to prosecute the respondents, and that a statement to this effect was made before us at the hearing.
Appeal allowed.
| The appellant, a Government servant, was charged with having, contrary to the rules governing the conditions of his service, accepted private employment without sanction of Government while he was still in Government service.
The Officer who held an enquiry against him found the charge to be true and submitted a report.
On April 14, 1954, a notice was issued to the appellant asking him to show cause in accordance with the provisions of article 3II(2) of the Constitution in the following terms:. . .
On a careful consideration of the report, and in particular of the conclusions reached by the Enquiring Officer in respect of the charges framed against you, the President is provisionally of opinion that a major penalty, viz., dismissal, removal or reduction should be enforced on you.
Before he takes that action, he desires to give you an opportunity of showing cause against the action proposed to be taken. .
The appellant then showed cause and on October 1, 1954, the President passed an order removing the appellant from service with effect from that date.
It was contended for the appellant, inter alia, that the show cause notice dated April 14, 1954, stated all the three punishments mentioned in article 311(2) and that inasmuch as it did not particularise the actual or exact punishment proposed to be imposed on the appellant, the notice did not comply with the essential requirements of article 311(2) and, therefore, the final order of removal passed on October, 1`954, was not a valid order.
Held, that the show cause notice dated April 14, 1954, did not contravene the provisions of article 311(2) of the Constitution.
There is nothing wrong in principle in the punishing authority tentatively forming the opinion that the charges proved merit any one of the three major penalties and on that footing asking the Government servant concerned to show cause against the punishment proposed to be taken in the alternative in regard to him, because it gives the Government servant better opportunity to show cause against each of those punishments being inflicted on him, which he would not have had if only the severest punishment had been mentioned and a lesser punishment not mentioned in the notice had been inflicted on him.
893 High Commissioner for India and High Commissioner for Pakistan vs I. M. Lall, (1948) L.R. 75 I.A. 225 and Khem Chand vs Union of India, ; , explained.
Jatindra Nath Biswas vs R. Gupta, ; Dayanidhi Rath vs B. section Mohanty, A.I.R. 1955 Orissa 33 and Lakshmi Narain Gupta vs A. N. Puri, A.I.R. 1954 Cal.
335, distinguished.
|
etition (Criminal) No. 8061 of 1981.
(Under article 32 of the Constitution of India.) Dr. N.M. Ghatate for the Petitioner.
O.P. Rana and R.N. Poddar for the Respondent.
The Judgment of the Court was delivered by SEN, J.
By this petition under article 32 of the Constitution, one Ashok Kumar seeks issuance of a writ of habeas corpus challenging the validity of the order of detention dated August 11, 1981, passed by the Commissioner of Police, Delhi under sub section
(2) of section 3 of the (for short 'the Act ') on being satisfied that his detention was necessary with a view to preventing him from "acting in any manner prejudicial to the maintenance of 710 public order".
The main issue is as to whether the activities of the petitioner fall within the realm of 'public order ' or 'law and order '.
It appears that on August 12, 1981 while the detenu was held at the Central Jail, Tihar in connection with some of the offences committed by him, he was served with the aforesaid order of detention passed a day earlier i.e. on August 14, 1981.
Two days later i.e. on August 14, 1981 he was furnished with the grounds of detention as well as with copies of documents and statements relied upon in the grounds of detention.
It seems that the Commissioner of Police forthwith made a report to the Administrator about the passing of the detention order together with the grounds of detention and all other particulars bearing on the same.
The said report and the other particulars were considered by the Administrator and he, by his order dated August 20, 1981, approved of the detention order under sub section
(4) and sent a report to the Central Government as required under sub section
(5) of section 3 of the Act.
The Administrator by his order dated August 20, 1981 informed the petitioner that his order of detention had been approved by him and that he had a right to make a representation.
The case of the petitioner was placed before the Advisory Board who was of the opinion that there was sufficient cause for the detention of the petitioner and accordingly the Administrator by his order dated September 15, 1981 confirmed the aforesaid detention order under sub section
(1) of section 12 and further directed under section 13 of the Act that the petitioner be detained for a period of 12 months from the date of his detention i.e. w.e.f. August 12, 1981.
In support of the petition, four points are canvassed.
First of these is that there was a denial of the constitutional imperatives of article 22(5) read with section 8 of the Act which cast a duty on the detaining authority to afford the detenu "the earliest opportunity of making a representation against the order of detention" inasmuch as there was unexplained delay of two days in furnishing the grounds of detention; secondly, there was a failure on the part of the Commission of Police as well as the Administrator to apply their mind and specify the period of detention while making the order of detention under sub section
(2) of section 3 of the Act and therefore the impugned order of detention is invalid; thirdly, the grounds of detention served on the detenu are not connected with "maintenance of public order", but they relate to "maintenance of law and order" and fourthly, the facts as set out in the grounds of detention did not 711 furnish sufficient nexus for forming the subjective satisfaction of the detaining authority and further they were vague, irrelevant and lacking in particulars.
We are afraid, none of these contentions can prevail.
There is no substance in the contention that there was denial of the constitutional imperatives of article 22(5) read with section 8 of the Act, because there was unexplained delay of two days in furnishing the grounds of detention and it was imperative that the detenu should be furnished with the grounds of detention along with the order of detention.
It is said that delay even for a day, if it remains unexplained ' means deprivation of liberty guaranteed under article 21, and this is impermissible except according to procedure established by law.
The contention that the constitutional safeguards in article 22(5) were not complied with merely because the detenu was not 'simultaneously ' furnished with the grounds of detention along with the order of detention and was thereby deprived of the right of being afforded 'the earliest opportunity of making a representation against the order of detention ' as enjoined by article 22(5) read with with section 8 of the Act, cannot be accepted.
The language of article 22(5) itself provides that where a person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, "as soon as may be", communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order.
Sub section
(1) of section 8 of the Act which is in conformity with article 22(5) provides that when a person is detained in pursuance of a detention order made under sub section
(1) or sub section
(2) of section 3 of the Act, the authority making the order shall, as soon as may be, but ordinarily not later than five days and in exceptional circumstances and for reasons to be recorded in writing, not later than ten days from the date of detention, communicate to him the grounds on which the order has been made.
Parliament has thus by law defined the words "as soon as may be" occurring in article 22(5) as meaning normally a period of five days.
The matter is no longer res integra.
Chandrachud, C.J. in A.K. Roy vs Union of India observed : "This argument overlooks that the primary requirement of section 8(1) is that the authority making the order of 712 detention shall communicate the grounds of detention to the detenu "as soon as may be".
The normal rule therefore is that the grounds of detention must be communicated to the detenu without avoidable delay.
It is only in order to meet the practical exigencies of administrative affairs that the detaining authority is permitted to communicate the grounds of detention not later than five days ordinarily and not later than 10 days if there are exceptional circumstances.
If there are any such circumstances, the detaining authority is required by section 8(1) to record its reason in writing.
We do not think that this provision is open to any objection.
" Under our constitutional system, therefore, it is not the law that no person shall be detained in pursuance of an order made under a law providing for preventive detention without being informed of the grounds for such detention.
The law is that the detaining authority must, as soon as may be, i.e. as soon as practicable, communicate to the detenu the grounds on which the order of detention has been made.
That period has been specified by section 8 of the Act to mean a period ranging from five to ten days depending upon the facts and circumstances of each case.
Admittedly, the detenu here was served with the grounds of detention within a period of two days i.e. within the period allowed by section 8 of the Act and that was "as soon as practicable".
This is not a case where the detenu alleges that his detention was for non existent grounds.
Nor does he attribute any mala fides on the part of the detaining authority in making the order.
The order of detention is therefore not rendered invalid merely because the grounds of detention were furnished two days later.
We find it difficult to conceive of any discernible principle for the second submission.
It is submitted by learned counsel appearing for the detenu that the right to make a representation under article 22(5) of the Constitution read with section 8 of the Act means what it implies, "the right to make an effective representation".
It is urged that unless the period of detention is specified, there can be no meaningful representation inasmuch as the detenu had not only the right of making a representation against the order for his detention but also the period of detention.
On this hypothesis, the contention is that the impugned order of detention is rendered invalid.
The 713 entire submission rests on the following observations of Chandrachud, C.J. in A.K. Roys case, supra : "We should have thought that it would have been wrong to fix a minimum period of detention, regardless of the nature and seriousness of the grounds of detention.
The fact that a person can be detained for the maximum period of 12 months does not place upon the detaining authority the obligation to direct that he shall be detained for the maximum period.
The detaining authority can always exercise its discretion regarding the length of the period of detention.
" The majority decision in A.K. Roys case, supra, as pronounced by Chandrachud, C.J. is not an authority for the proposition that there is a duty cast on the detaining authority while making an order of detention under sub section
(1) or (2) to specify the period of detention.
The learned Chief Justice made the aforesaid observations while repelling the contention advanced by learned counsel for the petitioner that section 13 of the Act was violative of the fundamental right guaranteed under article 21 read with article 14 as it results in arbitrariness in governmental action in the matter of life and liberty of a citizen.
The challenge to the validity of section 13 of the Act was that it provides for a uniform period of detention of 12 months in all cases, regardless of the nature and seriousness of the grounds on the basis of which the order of detention is passed.
In repelling the contention, the learned Chief Justice observed that there was no substance in that grievance because, any law of preventive detention has to provide for the maximum period of detention, just as any punitive law like the Penal Code has to provide for the maximum sentence which can be imposed for any offence.
In upholding the validity of section 13 the learned Chief Justice observed : "We should have thought that it would have been wrong to fix a minimum period of detention, regardless of the grounds of detention".
And then went on to say : "It must also be mentioned that under the proviso to section 13, the appropriate government has the power to revoke or modify the order of detention at any earlier point of time.
" 714 It would thus be clear that the Court was there concerned with the validity of section 13 of the Act and it is not proper to build up an argument or by reading out of context just a sentence or two.
There is no doubt in our mind that the Court has not laid down that the detaining authority making an order of detention under sub section
(1) or sub section
(2) of section 3 of the Act or the authority approving of the same, must specify the period of detention in the order.
It is plain from a reading of section 3 of the Act that there is an obvious fallacy underlying the submission that the detaining authority had the duty to specify the period of detention.
It will be noticed that sub section
(1) of section 3 stops with the words "make an order directing that such person be detained", and does not go further and prescribe that the detaining authority shall also specify the period of detention.
Otherwise, there should have been the following words added at the end of this sub section "and shall specify the period of such detention".
What is true of sub section
(1) of section 3 is also true of sub section
(2) thereof.
It is not permissible for the courts, by a process of judicial construction, to alter or vary the terms of a section.
Under the scheme of the Act, the period of detention must necessarily vary according to the exigencies of each case i.e. the nature of the prejudicial activity complained of.
It is not that the period of detention must in all circumstances extend to the maximum period of 12 months as laid down in section 13 of the Act.
The most crucial question on which the decision must turn is whether the activities of the detenu fall within the domain of 'public order ' or 'law and order '.
The contention is that the grounds of detention served on the detenu are not connected with 'maintenance of 'public order ' but they relate to 'maintenance of law and order ' and therefore the impugned order of detention purported to have been passed by the detaining authority in exercise of his powers under sub section (2) of section 3 of the Act is liable to be struck down.
It is urged that the facts alleged in the grounds of detention tend to show that he is engaged in criminal activities and it is an apparent nullification of the judicial process if, in every case where there is a failure of the prosecution to proceed with a trial or where the case ends with an order of discharge or acquittal, the Executive could fall back on its power of detention because the verdict of the Court goes against it.
Put differently, the contention is that resort cannot be had to the Act to direct preventive detention of a person under sub section
(2) of section 3 of the Act for the Act is not a law for the 715 preventive detention of gangsters and notorious bad characters.
The detention here, it is said, is not so much for the "maintenance of public order" but as a measure for the past criminal activities of the detenu.
It is further urged that the grounds of detention have no rational connection with the object mentioned in the Act for which a person may be detained.
Further, that there is no sufficient nexus between the preventive action and the past activities of the detenu which are not proximate in point of time but are too remote.
There is no substance in any of these contentions advanced.
The true distinction between the areas of 'public order ' and 'law and order ' lies not in the nature or 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.
That test is clearly fulfilled in the facts and circumstances of the present case.
Those who are responsible for the national security or for the maintenance of public order must be the sole judges of what the national security or public order requires.
Preventive detention is devised to afford protection to society.
The object is not to punish a man for having done something but to intercept before he does it and to prevent him from doing.
Justification for such detention is suspicion or reasonable probability and not criminal conviction which can only be warranted by legal evidence.
It follows that any preventive measures, even if they involve some restraint or hardship upon individuals, do not partake in any way of the nature of punishment, but are taken by way of precaution to prevent mischief to the State.
It is a matter of grave concern that in urbanised areas like cities and towns and particularly in the metropolitan city of Delhi the law and order situation is worsening everyday and the use of knives and firearms has given rise to a new violence.
There is a constant struggle to control the criminal activities of the persons engaged in such organised crimes for the maintenance of public 716 order.
It is difficult to appreciate the argument that the detention here is with a view to punish the detenu for a series of crimes that he is alleged to have committed, but which the law enforcement agency is not able to substantiate.
There is no reason why the Executive cannot take recourse to its power of preventive detention in those cases where the Court is genuinely satisfied that no prosecution could possibly succeed against the detenu because he is a dangerous person who has overawed witnesses or against whom no one is prepared to depose.
The prejudicial activities of the detenu leading to public disorder, as revealed in the grounds of detention, consist of a consistent course of criminal record.
Although the criminal activities of the detenu in the past pertained mostly to breaches of law and order, they have now taken a turn for the worse.
From the facts alleged it appears that the detenu has taken to a life of crime and become a notorious character.
His main activities are theft, robbery and snatching of ornaments by the use of knives and firearms.
The area of operation is limited to South Delhi, such as Greater Kailash, Kalkaji and Lajpat Nagar.
A perusal of the F.I.Rs. shows that the petitioner is a person of desperate and dangerous character.
This is not a case of a single activity directed against a single individuals.
There have been a series of criminal activities on the part of the detenu and his associates during a span of four years which have made him a menace to the society.
It is true that they are facing trial or the matters are still under investigation.
That only shows that they are such dangerous characters that people are afraid of giving evidence against them.
To bring out the gravity of the crimes committed by the detenu, we would just mention four instances.
On November 19, 1979 Smt.
Anupam Chander of B 5/10, Safdarjang Enclave reported that she was robbed of her gold chain near East of Kailash and on investigation the petitioner along with his associates was arrested for this high handed robbery and there is a case registered against them which is pending trial.
Just a month after i.e. on December 11, 1979, one Munna of Lajpat Nagar reported that he was robbed of his wrist watch and cash by three persons who were travelling in a three wheeler.
On investigation, the petitioner and his associate Rajendra Kumar were arrested and the police recovered the stolen property.
They are facing trial in these cases.
On July 18, 1981 717 Kumari G. Radha reported that she had been robbed of her gold chain and a pair of tops in Lajpat Nagar at the point of knife by persons in the age group of 21/22 years.
On investigation, the petitioner and his associate Rajendra Kumar were arrested and the entire booty was recovered.
The case is still under investigation.
It appears that the detenu was enlarged on bail and two days after i.e. on July 20, 1981, he was again arrested on the report of Smt.
Ozha that she was robbed of her gold chain near Shanti Bazar, Khokha Market, Lajpat Nagar by two persons in the age group of 21 25 years at the point of knife.
On investigation, the petitioner and his companion Rajendra Kumar were arrested and she identified them to be the culprits and the booty was recovered from them.
The case is under investigation.
There have been similar incidents of a like nature.
What essentially is a problem relating to law and order may due to sudden sporadic and intermittent acts of physical violence on innocent victims in the metropolitan city of Delhi result in serious public disorder.
It is the length, magnitude and intensity of the terror wave unleashed by a particular act of violence creating disorder that distinguishes it as an act affecting public order from that concerning law and order.
Some offences primarily injure specific individuals and only secondarily the public interest, while others directly injure the public interest and affect individuals only remotely.
The question is of the survival of the society and the problem is the method of control.
Whenever there is an armed hold up by gangsters in an exclusive residential area like Greater Kailash, Kalkaji or Lajpat Nagar and persons are deprived of their belongings like a car, wrist watch or cash, or ladies relieved of their gold chains or ornaments at the point of a knife or revolver, they become victims of organised crime.
There is very little that the police can do about it except to keep a constant vigil over the movements of such persons.
The particular acts enumerated in the grounds of detention clearly show that the activities of the detenu cover a wide field and fall within the contours of the concept of public order.
The contention that the facts alleged in the grounds of detention did not furnish sufficient nexus for forming the subjective satisfaction of the detaining authority and further that they were vague, irrelevant or lacking in particulars, cannot be accepted.
A bare perusal of the grounds of detention along with the particulars 718 of the 36 cases furnished in the accompanying chart, shows that the grounds furnished were not vague or irrelevant or lacking in particulars or were not adequate or sufficient for the subjective satisfaction of the detaining authority.
In the result, the petition must fail and is dismissed.
N.V.K. Petition dismissed.
| The respondents were the heirs and legal representatives of one of the directors of a Company in liquidation.
When the company was ordered to be wound up, the Official Liquidator took out summons under section 543 (1) of the Companies Act against its directors for a declaration that the said directors were guilty of misfeasance and breach of trust and also for an order directing them to repay or restore the money or property of the company in liquidation which they were alleged to have retained wrongfully.
During the pendency of the proceedings one of the directors died intestate leaving behind the respondents as his heirs and legal representatives.
At the instance of the Official Liquidator the Company Judge passed an order substituting the respondents in place of the deceased director.
Allowing the respondents ' appeal, a Division Bench of the High Court held that no further action in the misfeasance proceedings could be taken against the legal representatives of the deceased director.
In coming to this conclusion the High Court purported to follow the decision of this Court in Official Liquidator vs P.A. Tendolkar (dead) by L. Rs.; , Allowing the Appeal, ^ HELD: The liability arising under the misfeasance proceedings is founded on the principle that a person who has caused loss to the company by an act amounting to breach of trust should make good the loss.
Section 543 of the Act provides for a summary remedy for determining the amount payable by such person on proof of the necessary ingredients.
The section authorises the Court to direct such persons chargeable under it to pay a sum of money to the Company by way of compensation.
This is not a provision intended to punish a man who has been found guilty of misfeasance but is only intended for compensating the company in respect of the loss occasioned by his misfeasance.
Whenever there is a relationship based on contract, quasi contract, some fiduciary relation or a failure to perform a duty, there is no 212 abatement of the liability on the death of the wrong doer.
When once the liability is declared, it is open to the Official Liquidator to realise the amount due by resorting to section 634 of the Act and section 50 of the Code of Civil Procedure.
In Tendolkar 's case this Court did not consider the effect of section 634 of the Act which made the relevant provisions of the Code of Civil Procedure relating to execution of decrees applicable to orders passed by the Court under the Act.
[223 C F] At the conclusion of the proceedings under section 543 a declaration of the liability is made.
Such declaration partakes of the character of a decree in a suit.
When once such declaration is made it can be enforced under section 634 of the Act and where the order made by one court has to be executed by another court the procedure prescribed by section 635 of the Act has to be followed.
In the course of such execution proceedings the provisions of section 50 of the Code of Civil Procedure have to be applied when the person who is made liable dies before the order is satisfied and the liability of the legal representatives should be determined accordingly.
[223 G H] Official Liquidator, Supreme Bank Ltd. vs P.A. Tendolkar (dead) by L.Rs, & Ors.
; , , applied.
Aleykutty Varkey Tharakan & Anr.
vs Official Liquidator Shiwalik Transport Co. Ltd. (in liquidation) vs Thakur Ajit Singh & Ors., [1978] 48 Comp.
465, approved.
|
Civil Appeal Nos.
1394/74, 543/75 and 242/79.
Appeals from the Judgment and Order dated 22 5 1973 of the Allahabad High Court in Special Appeals Nos. 26/73, 682/72 and 502/72.
AND SPECIAL LEAVE PETITION (CIVIL) No. 2152 of 1974.
From the Judgment and Order dated 22 5 1973 of the Allahabad High Court in Spl.
Appeal No. 469/72.
J. P. Goyal and section K. Jain for the Appellants in CA 1394/74.
G. section Chaterjee for the Petitioners in SLP 2152/74.
A. P. section Chauhan and V. C. Prashar for the RR 3 & 4 in CA 1394/ 74.
section N. Andley, Uma Datta and Tara Chand Sharma for the Appellants in CA 543/75.
R. N. Dixit for the Appellant in CA 242/79.
E. C. Agarwala for the Respondent in CA 543/75.
1208 The Judgment of the Court was delivered by CHANDRACHUD, C.J.
In view of the Judgment of this Court in State of Bombay vs Narothamdas, Jethabhai & Anr.(1) Union of India vs Mohindra Supply Company(2) and Ram Adhar Singh vs Ramroop Singh & Ors.(3) and in view of the fact that the Special Leave Petition filed against the judgment rendered by the High Court of Allahabad, upholding the validity of the 1962 Act was dismissed by the Constitution Bench of this Court after an elaborate argument, there is no substance in the contention that either the U.P. High Court (Abolition of Letters Patent Appeals) Act, 1962 or the U.P. High Court (Abolition of Letters Patent Appeals) (Amendment) Act, Act 33 of 1972 is unconstitutional.
The challenge to these Acts on the ground of their unconstitutionality is, therefore, rejected.
Learned counsel appearing on behalf of the appellants have very fairly conceded that position.
Accordingly, the Civil Appeals and the Special Leave Petition are dismissed.
There will be no order as to costs.
However, the appellants may, if so advised, ask for special leave to appeal from the judgment of the learned single judge.
We are sure that the delay caused in filing the S.L.Ps in this Court will be condoned since the appellants were pursuing their remedy by filing these appeals in this Court.
Learned counsel for the appellant in Civil Appeal No. 543/75 says that the appellant has already filed special leave petition (Civil) No. 361 of 1976 in this Court challenging the decision of the learned single judge of the Allahabad High Court on the merits of the matter.
He has also filed an application seeking leave of this Court for urging additional grounds and an application for condonation of delay in filing the Special Leave Petition.
The petition for permission to urge additional grounds, except on Constitutional points, shall be treated as having been filed in the S.L.P.
These three petitions will be listed before the Division Bench on 4 10 1979.
| The petitioners registered firm has its head office in Calcutta where its books of account are kept and maintained and where it has its banking account, the members of the firm being citizens of India.
Since its inception the firm has all along been assessed to income tax by the Income Tax Officer, District III, Calcutta.
The assessments for the years 1948 49 and 1949 50 were made by the Income Tax Officer, District III, Calcutta.
Notices under section 22(2) of the Income Tax Act were issued to the petitioner by the Income Tax Officer, District III, Calcutta to submit returns for the years 1950 51, 1951 52, 1952 53, 1953 54 and 1954 55.
The Income Tax Officer, District III, Calcutta made assessment for the year 1950 51 on 18 12 1954 being satisfied that the principal place of business of the petitioner was in Calcutta.
On the 25th January 1955 the petitioner received a letter from the Income Tax Officer, District III, Calcutta that in pursuance to orders dated 13th December 1954 under section 5(7 A) of the Income Tax Act its assessment records were transferred from that office to the Income Tax Officer, Special Circle, Ranchi with whom the petitioner was to correspond in future regarding its assessment proceedings.
The order stated that the Central Board of Revenue "hereby transfers the case of" the petitioner.
The petitioner had no previous notice of the intention of the Income Tax authorities to transfer the assessment proceedings from Calcutta to Ranchi nor bad it an opportunity to make any representation against such decision. 'When called upon to submit its return for the assessment year 1955 56 the petitioner by an application under article 32 of the Constitution contended that sub section (7 A) of section 5 of the Indian Income Tax Act, 1922 and the order of transfer made thereunder were unconstitutional in that they infringed the fundamental rights guaranteed to the petitioner under articles 14, 19(1)(g) and 31 of the Constitution.
section 64 of the Indian Income Tax Act makes provisions for determining the place of assessment.
Sub section (1) of that section provides 268 that where an assessee carried on a business, profession or vocation at any place he shall be assessed by the Income Tax Officer of that area in which that place is situate or where the business, profession, or vocation is carried on at more than one place by the Income Tax Officer of the area in which the principal place of business, profession or vocation is situate.
In all other cases, according to sub section (2), an assessee shall be assessed by the Income Tax Officer of the area in which he resides.
If any question arises as to the place of assessment such question shall be decided, after giving the assessee an opportunity to represent his views by the Commissioner or Commissioners concerned or in case of disagreement between them by the Board of Revenue.
The section is imperative in terms and gives a valuable right to the assessee.
By amending the Indian Income Tax Act 1922 by the Indian Income Tax (Amendment) Act, 1940 (Act XL of 1940) by adding to clause (b) of sub section (5) of section 64 the words "in consequence of any transfer made under sub section (7 A) of section 5" and by adding subsection (7 A) to section 5 the benefit conferred by the provisions of subsection (1) and sub section (2) of section 64 is taken away and is to be deemed not to have existed at any time as regards the assessee with regard to whom a transfer is made under sub section (7 A) of section 5.
Held that as under section 22(2) of the Act, the notice and the return are to be confined to a particular assessment years sub section (7 A) of section 5 contemplates the transfer of such a "case" i.e. the assessment case for a particular year.
The provision that such a transfer may be made "at any stage of the proceedings" obviously postulates proceedings actually pending and "stage ' I refers to a point in between the commencement and ending of those proceedings.
Further the transfer contemplated by the sub section is the transfer of a particular case actually pending before an Income Tax Officer of one place to the Income Tax Officer of another place.
Accordingly such an omnibus wholesale order of transfer dated 13th December 1954 as was made in the present case is not contemplated by the sub section and therefore the impugned order of transfer which was expressed in general terms without any reference to any particular case and without any limitation as to time was beyond the competence of the Central Board of Revenue and the petitioner was still entitled to the benefit of the provisions of subsections (1) and (2) of section 64.
The impugned order is discriminatory against the petitioner and violates the fundamental right guaranteed to it by article 14 of the Constitution in as much as the income tax authorities by an executive order unsupported by law picked out the present petitioner and transferred all his cases by an omnibus order unlimited in point of time,which order is calculated to inflict considerable inconvenience and harassment on the petitioner.
BOSE J. Section 5(7 A) of the Indian Income Tax Act is ultra vires article 14 of the Constitution and so is section 64(5)(b) in so far as it 269 makes an order under section 5(7 A) as it now exists, inviolate.
The power of transfer can only be conferred if it is hedged round with reasonable restrictions, the absence or existence of which can in the last instance be determined by the courts; and the exercise of the power must be in conformity with the rules of natural justice, that is to say, the parties affected must be heard when that is reasonably possible, and the reasons for the order must be reduced however briefly, to writing so that men may know that the powers conferred on these quasi judicial bodies are being justly and properly exercised.
Chiranjit Lal Chowdhury vs The Union of India ([1950] S.C.R. 860), Budhan Chowdhry and others vs The State of Bihar, ([1955] 1 S.C.R. 1045), Dayaldas Kushiram vs Commissioner of Income Tax Central (I.L.R. ; [1940] 8 I.T.R. 139), Eshugbai Eleko 's case ; , The State of West Bengal vs Anwar Ali Sarkar ([1952] S.C.R. 284), Ram Prasad Narayan Sahi and Another vs The State of Bihar and Others ' ([1953] S.C.R. 1129), Bowman 's case ([1917] A.C. 406), Coal Control case ([1954] S.C.R. 803), State of Madras vs V. G. Bow ([1952] S.C.R. 597), and Liversidge vs Sir John Anderson ([1942] A.C. 206), referred to.
|
N: Criminal Appeal No. 701 of 1980.
Appeal by special leave from the Judgment and order dated the 5th March, 1980 of the Delhi High Court in Criminal Revision No. 335 of 1974.
B.P. Maheshwari for the Appellants.
M.C. Bhandari, Mrs. Madhhu Mull Chandani and R.B. Datar for the Respondents.
F.S. Nariman, Parveen Kumar Jain, Kapil Sibbal and Anil Kumar Sharma for Respondents.
This appeal by special leave is directed against a judgment dated March 5, 1980 of the Delhi High Court quashing the proceedings taken against respondents Nos. 1 to S and arises in the following circumstances.
On March 25, 1974, one Shri M.M. Gupta, Food Inspector, Municipal Corporation of Delhi visited premises No. 5171, Basant Road, Delhi where Shri Madan Lal had kept for sale 'Morton Toffees '.
The said Inspector after purchasing the sample of the article sent it to the Public Analyst who opined that the said sample did not conform to the standards prescribed for toffees.
The toffees were manufactured by M/s. Upper Ganges Sugar Mills.
Respondent No. 1 (Rain Kishan Rohtagi) was the Manager of the company and Respondent Nos.
2 to 5 were the Directors of the Company, including the company also.
A complaint was filed before the Metropolitan Magistrate who summoned all the respondents for being tried for violating the provisions of the Prevention of Food Adulteration Act (hereinafter referred to as the 'Acts).
The said complaint was filed by the Assistant Municipal Prosecutor in the court of Metropolitan Magistrate, Delhi against the accused for having committed offences under sections 7/16 of the Act.
The only point canvassed before us was that on the allegations made in the complaint, a clear case was made out against all the 887 respondents and the High Court ought not to have quashed the proceedings on the ground that the complaint did not disclose any offence.
Before going through the relevant part of the complaint, it mag be necessary to say a few words about the law on the subject.
After the coming into force of the Code of Criminal Procedure, B 1973 (hereinafter referred to as the 'present Code '), there was a serious divergence of judicial opinion on the question as to whether where a power is exercised under section 397 of the present Code, the High Court could exercise those very powers under section 482 of the present Code.
It is true that section 397 (2) clearly bars the jurisdiction of the Court in respect of interlocutory orders passed in appeal, enquiry or other proceedings.
The matter is, however, no longer res integra as the entire controversy has been set at rest by a decision of this Court in Madhu Limaye vs State of Maharashtra(1) where this Court pointed out that section 482 of the present Code had a different parameter and was a provision independent of section 397(2).
This Court further held that while section 397(2) applied to the exercise y of revisional powers of the High Court, section 482 regulated the .
inherent powers of the court to pass orders necessary in order to prevent the abuse of the process of the court.
In this connection, Untwalia, J. speaking for the Court observed as follows: "On a plain reading of section 482, however, it would follow that nothing in the Code, which would include sub section (2) of section 397 also, "shall be deemed to limit or affect the inherent powers of the High Court".
But, if we were to say that the said bar is not to operate in the exercise of the inherent power at all, it will be setting at naught one of the limitations imposed upon the exercise of the revisional powers .
But in case the impugned order clearly brings about a situation which is an abuse of the process of the court or for the purpose of securing the ends of justice interference by the High Court is absolutely necessary, then nothing contained in section 397(2) can limit or affect the exercise of the inherent power by the High Court.
But such cases would be few and far between.
The High Court must exercise the inherent power very sparingly.
" 888 It may be noticed that section 482 of the present Code is the ad verbatim copy of section 561A of the old Code.
This provision confers a separate and independent power on the High Court alone to pass orders ex debito justitiae in cases where grave and substantial injustice has been done or where the process of the Court has been seriously abused.
It is not merely a revisional power meant to be exercised against the orders passed by subordinate courts.
It was under this section that in the old Code, the High Courts used to quash the proceedings or expunge uncalled for remarks against witnesses or other persons or subordinate courts.
Thus, the scope, ambit and range of section 561A (which is now section 482) is quite different from the powers conferred by the present Code under the provisions of section 397.
It may be that in some cases there may be overlapping but such cases would be few and far between.
It is well settled that the inherent powers under section 482 of the present Code can be exercised only when no other remedy is available to the litigant and not where a specific remedy is provided by the statute.
Further, the power being an extraordinary one, it has to be exercised sparingly.
If these considerations are kept in mind, there will be no inconsistency between sections 482 and 397(2) of the present Code.
The limits of the power under section 482 were clearly defined by this Court in Raj Kapoor and Ors.
vs State and Ors.(l) where Krishna Iyer J. Observed as follows: "Even so, a general principle pervades this branch of law when a specific provision is made: easy resort to inherent power is not right except under compelling circumstances.
Not that there is absence of jurisdiction but that inherent power should not invade areas set apart for specific power under the same Code." Another important consideration which is to be kept in mind is as to when the High Court acting under the provisions of section 482 should exercise the inherent power in so far as quashing of criminal q proceedings are concerned.
This matter was gone into in greater detail in Smt.
Nagawwa vs Veeranna Shivalingappa Konjalji and Ors.(2) where the scope of sections 202 and 204 of the present Code was consider ed and while laying down the guidelines and the grounds on which proceedings could be quashed this Court observed as follows: 889 "Thus, it may be safely held that in the following cases an order of the Magistrate issuing process against the accused can be quashed or set aside: (1) Where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused; (2) Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused; (3) Where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) Where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like.
The cases mentioned by us are purely illustrative and provide sufficient guidelines to indicate contingencies where the High Court can quash Proceedings.
" Same view was taken in a later decision of this Court in Sharda Prasad Sinha vs State of Bihar(l) where Bhagwati, J. speaking for the Court observed as follows: "It is, now settled law that where the allegations set out in the complaint or the charge sheet do not constitute any offence, it is competent to the High Court exercising its inherent jurisdiction under section 482 of the Code of Criminal Procedure to quash the order passed by the Magistrate taking cognizance of the offence." 890 It is, therefore, manifestly clear that proceedings against an accused in the initial stages can be quashed only if on the face of the complaint or the papers accompanying the same, no offence is constituted.
In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting any thing, if no offence is made out then the High Court will be justified in quashing the proceedings in exercise of its powers under section 482 of the present Code.
In the instant cases the argument of the appellant before us is that taking the complaint as a whole, it cannot be said that no offence is made out or that the facts mentioned in the complaint do not constitute any offence against the respondents or some of them.
On the other hand, the counsel for the respondents submitted that even taking the allegations of the complaint ex facie no case for trial has been made out at all.
Before going to the complaint, we might state that it is common ground that the complaint clearly contains the allegations regarding the visit of the Inspector to the shop of respondent No. 6 (Madan Lal) and that the sample taken by him, which was sent to the Public Analyst, was manufactured by Upper Ganges Sugar Mills, Daryagang, Delhi having its registered office at Calcutta and that the Public Analyst found the samples to be adulterated.
There is no dispute regarding these facts.
The only point on which the contro versy centres is as to whether or not on the allegations, the Manager as also the other respondents I to 5 committed any offence.
The main clause of the complaint which is the subject matter of the dispute is clause No. S which may be extracted thus: "5.
That the accused No. 3 is the Manager, of accused No. 2 and accused No. 4 to 7 are the Directors of accused No. 2 and as such they were incharge of and responsible for the conduct of business of accused No. 2 at the time of a sampling.
" According to this clause, accused No. 3 (Ram Kishan) who is respondent No. I in this appeal and accused Nos. 4 7 who are respondent Nos. 2 to 4, were the Directors of the company, respondent No. 5.
So far as the Manager, respondent No. 1, is concerned it was not and could not be reasonably argued that no case is made out against him because from the very nature of his 891 duties, it is manifest that he must be in the knowledge about the affairs of the sale and manufacture of the disputed sample.
It was, however, contended that there is no allegation whatsoever against the Directors, respondent Nos. 2 to 4.
Reliance has been placed on the words 'as such ' in order to argue that because the complaint does not attribute any criminal responsibility to accused Nos. 4 to 7 except that they were incharge of and responsible for the conduct of the business of the company.
It is true that there is no clear averment of the fact that the Directors were really incharge of the manufacture and responsible for the conduct of business but the words 'as such ' indicate that the complainant has merely presumed that the Directors of the company must be guilty because they are holding a particular office.
This argument found favour with the High Court which quashed the proceedings against the Directors as also against the Manager, respondent No. 1.
So far as the Manager is concerned, we are satisfied that from the very nature of his duties it can be safely inferred that he would undoubtedly be vicariously liable for the offence; vicarious liability being an incident of an offence under the Act.
So far as the Directors are concerned, there is not even a whisper nor a shred of evidence nor anything to show, apart from the presumption drawn by the complainant, that there is any act committed by the Directors from which a reasonable inference can be drawn that they could also be vicariously liable.
In these circumstances, therefore, we find ourselves in complete agreement with the argument of the High Court that no case against the Directors (accused Nos 4 to 7) has been made out ex facie on the allegations made in the complaint and the proceedings against them were rightly quashed.
We, however, do not agree that even accused No. 3, respondent No. 1, who is Manager of the Company and therefore directly incharge of its affairs, could fall in the same category as the Directors.
Hence, we would set aside that part of the judgment of the High Court which quashes the proceedings against the Manager, respondent No. I (Ram Kishan Rohtagi).
Although we uphold the order of the High Court we would like to state that there are ample provisions in the Code of Criminal 892 Procedure, 1973 in which the Court can take cognizance against persons who have not been made accused and try them in the same manner along with the other accused.
In the old Code, section 351 contained a lacuna in the mode of taking cognizance if a new person was to be added as an accused.
1 he Law Commission in its 41st Report (para 24.81) adverted to this aspect of the law and section 319 of the present Code gave full effect to the recommendation of the Law Commission by removing the lacuna which was found to exist in section 351 of the old Code.
Section 319 as incorporated in the present Code may be extracted thus: "319.
Power to proceed against other persons appearing to be guilty of offence.
(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 could 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 enquiry into, or trial of, the offence which he appears to have committed.
(4) Where the Court proceeds against any person under sub section (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 clause (a), the case may proceed as if such person had been an accused person when the Court took cognizance 893 of the offence upon which the inquiry or trial was commenced.
" This provision gives ample powers to any court to take cognizance and add any person not being an accused before it and try him alongwith the other accused.
This provision was also the subject matter of a decision by this Court in Joginder Singh and Anr.
vs State of Punjab and Anr.(1) where Tulzapurkar, J., speaking for the Court observed thus: "A plain reading of section 319 (1), which occurs in chapter XXIV dealing with general provisions as to inquiries and trials, clearly shows that it applies to all the Courts including a Sessions Court and as such a Sessions Court will have the power to add any person, not being the accused before it, but against whom there appears during trial sufficient evidence indicating his involvement in the offence, as an accused and direct him to be tried along with the other accused.
" In these circumstances, therefore, if the prosecution can at any stage produce evidence which satisfies the court that the other accused or those who have not been arrayed as accused against whom proceedings have been quashed have also committed the offence the Court can take cognizance against them and try them along with the other accused.
But, we would hasten to add that this is really an extraordinary power which is conferred on the Court and should be used very sparingly and only if compelling reasons exist for taking cognizance against the other person against whom action has not been taken.
More than this we would not like to say anything further at this stage.
We leave the entire matter to the discretion of the court concerned so that it may act according to law.
We would, however, make it plain that the mere fact that the proceedings have been quashed against respondent Nos. 2 to S will not prevent the court from exercising its discretion if it is fully satisfied that a case for taking cognizance against them has been made out on the additional evidence led before it.
894 For these reasons, therefore, we allow this appeal only to the extent that the order of the High Court quashing the proceedings against the Manager (Rohtagi), respondent No. 1, is hereby set aside and that of the Metropolitan Magistrate is restored.
As regards the other respondents (Directors) the order of the High Court stands and the appeal in respect of these respondents only will stand dismissed.
An attested copy of this judgment be placed on the file of criminal appeal No. 749 of 1980.
H.L.C. Appeal partly allowed.
| The respondent State in the public Works Department has engaged a large number of workers for the construction of Madanganj Harmara Road, close to Tilonia village with a view to providing relief to persons affected by drought and scarcity conditions.
The workers employed in this construction work are divided into gangs of 20 persons or multiple thereof and for each gang one muster roll is maintained.
The work done by each gang is measured every fortnight and payment is made by the Public Works Department to the Mate who is the leader of the gang according to the work turned out by such gang during each fortnight.
The Public Works Department has fixed a certain norm of work to be turned out by each gang before the workmen belonging to such gang can claim the minimum wage of Rs. 7 per day with the result that if any particular gang turns out work according to the norm fixed by the Public Works Department, the Mate would be paid such amount as would be on distribution give a wage of Rs. 7 per day to the workmen constituting such gang, but if less work is turned out by such gang, payment to be made to the mate of such gang would be proportionately reduced and in that event, the wage earned by each member of such gang would fall short of the minimum wage of Rs. 7 per day.
Further, this system of proportionate distribution of the wages adopted without any visible principle or norm enabled a workman who has put in less work to get more payment than the person who has really put in more work.
Hence the public interest writ petition filed by the Director of the Social Work and Research Centre, complaining violation of the provisions of the , Articles 14 and 23 of the Constitution, and the vires of section 3 of the Rajasthan Famine Relief Works Employees (Exemption from Labour Laws) Act, 1964.
Allowing the Petition, the Court ^ HELD: 1.
Where a person provides labour or service to another for remuneration which is less than the minimum wage, the labour or service provided by him clearly falls within the meaning of the words 'forced labour ' and attracts the condemnation of Article 23.
Every person who provides labour or service to another is entitled at the least to the minimum wage and if anything less than the minimum wage is paid to him, he can complain of violation of his 272 fundamental right under Article 23 and ask the court to direct payment of the minimum wage to him so that the breach of Article 23 may be abated.
[280 D F] 2: 1.
The constitutional validity of the Exemption Act in so far as it excludes the applicability of the providing that minimum wage may not be paid to a workman employed in any famine relief work, cannot be sustained in the face of Article 23.
Article 23 mandates that no person shall be required or permitted to provide labour or service to another on payment of anything less than the minimum wage.
Whenever any labour or service is taken by the State from any person, whether he be affected by drought and scarcity conditions or not, the State must pay, at the least, minimum wage to such person on pain of violation of Article 23.
[280 F G, 282 B C] 2: 2.
When the State undertakes famine relief work, it is no doubt true, that it does so in order to provide relief to persons affected by drought and scarcity conditions but, none the less it is work which enures for the benefit of the State representing the society and if labour or service is provided by the affected persons for carrying out such work, the State cannot pay anything less than the minimum wages to the affected persons.
It is not as if dole or bounty is given by the State to the affected persons in order to provide relief to them against drought and scarcity conditions nor is the work to be carried out by the affected persons worthless or useless to the society so that under the guise of providing work what the State in effect and substance seeks to do is to give dole or bounty to the affected persons.
The State cannot be permitted to take advantage of the helpless condition of the affected persons and extract labour or service from them on payment of less than the minimum wage.
No work of utility and value can be allowed to be constructed on the blood and sweat of persons who are reduced to a state of helplessness on account of drought and scarcity conditions.
[281 B E, H, 282 A] 2: 3.
In the instant case, the Notification issued under the makes it clear that the minimum wage of Rs. 7 is fixed per day and not with reference to any particular quantity of work turned out by the workmen during the day.
The Notification does not empower the employer to fix any particular norm of work to be carried out by the workman with reference to which the minimum wage shall be paid by the employer.
The minimum wage is not fixed on piece rate basis, so that a particular minimum wage would be payable only if a certain amount of work is turned out by the workman and if he turns out less work, then the minimum wage payable would be proportionately reduced.
Here the minimum wage is fixed at Rs. 7 per day and that is the minimum wage which must be paid by the employer to the workman so long as the workman works throughout the working hours of the day for which he can lawfully be required to work.
The employer may fix any norm he thinks fit specifying the quantity of work which must be turned out by the workman during the day, but if the workman does not turn out work in conformity with such norm, the employer cannot pay him anything less than the minimum wage.
If the norm fixed by the employer is reasonable and the workman does not turn out work according to such norm, disciplinary action may be taken against the workman and in a given case he must even be liable to be thrown out of employment, but he cannot be paid less than the minimum 273 wage, unless, of course, the minimum wage fixed by the Notification under the is correlated with the quantity of work to be turned out by the workman.
Otherwise, it would be the easiest thing for the employer to fix an unreasonably high norm which a workman working diligently and efficiently during the day cannot possibly reach and thereby deprive the workman of the minimum wage payable to him.
[283 B G] Peoples Union for Democratic Rights & Other vs Union of India &.
Others [1983]1 S.C.R. 456 followed.
PER PATHAK, J. 1.
The workers employed in the construction of the Madanganj Harmara Road as a measure of relief is a famine stricken area are entitled to a minimum wage of Rs. 7 per day, and that wage cannot be reduced by reference to the Rajasthan Famine Relief Works Employees (Exemption and Labour Laws) Act 1964, because in so far as the provisions of section 3 of that Act countenance a lesser wage they operate against Article 14 of the Constitution and are, therefore, void.[286 D E] 2:1.
By prescribing the criterion which it has, the Public Works Department has effected an invidious discrimination bearing no reasonable nexus to the object behind the employment.
[286 C D] 2:2 The circumstance that employment has been given to persons affected by drought and scarcity conditions provides only the reason for extending such employment.
In other words, the granting of relief to persons in distress by giving them employment constitutes merely the motive for giving them work.
It cannot affect their right to what is due to every worker in the course of such employment.
The rights of all the workers will be the same, whether they are drawn from area affected by drought and scarcity conditions or come from elsehwere.
The mere circumstance that a worker belongs to an area affected by drought and scarcity conditions can in no way influence the scope and sum of those rights.
In comparison with a worker belonging to some other more fortunate area and doing the same kind of work, he is not less entitled than the other to the totality of those rights nor liable to be distinguished from the other by the badge of his misfortune.
[285 E G] 2: 3.
When the State employs workers for doing work needed on its development projects, it must find funds for such projects.
And the fund must be sufficient to ensure the prescribed minimum wage to each worker and this is particularly so having regard to the concept of a "minimum wage".
Therefore, the argument that the wages are drawn from a fund too limited to provide for payment of a minimum wage to all is not justified.
[286 B C]
|
ivil Appeal No. 778 of 1988.
From the Judgment and Order dated 5.8.
1987 of the Assam High Court in Civil Rule No. 372 of 1982.
Anil Dev Singh and P. Parmeshwaran for the Appellants.
A.K. Ganguli, I.A. Ansari and Ms. Mridula Ray for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This appeal is by special leave and is directed against the judgment of the Division Bench of the High Court of Guwahati setting aside the order of conviction and the punishment of imprisonment as also the order of dismissal from service inflicted on the three respondents following a finding of guilt by the General Court Martial.
Naik Subedar Baleshwar Ram was a Junior Commissioned Officer of Amaribari Supply Point in the far eastern sector and was in overall charge of the said supply point.
Around 5.30 p.m. on June 19, 1980, he directed Driver Rattan Singh to park an army vehicle near the ration store for loading dry ration.
Respondent Ramji with the help of one labour from civilian side loaded the dry ration in the vehicle, whereafter Baleshwar Ram directed the truck to be taken towards Balipura.
Respondent No. 1 sat in the front seat in civil dress while respondents 2 and 3 sat behind the body of the truck.
By the time the vehicle reached Balipura, it had become dark and respondent No. 1 ordered the driver to take the vehicle towards Tezpur.
When the vehicle reached the outskirts of village Eatavari, respondent No. 1 directed the driver to slow down and turn the vehicle towards the right and take it off on a narrow kutcha track not leading to Tezpur.
The driver of the vehicle was not prepared to take the vehicle on the kutcha road but upon respondent No. 1 's insistence the vehicle was so taken and on the kutcha track the vehicle bogged down mid way and could not be taken further.
In the meantime, some civilian persons gathered there.
The respondents 2 and 3 got down and started unload ing some ration until they were prevented by the civilians present there.
Respondent No. 2 21 slipped away from the place.
The civilians being suspicious informed the civil police, who in turn handed over the matter to military police for investigation and necessary action.
After due inquiry a disciplinary action was initiat ed and inquiry under Rule 22 of the Army Rules was undertak en.
A General Court Martial followed where definite charges were given and ultimately on the basis of summary evidence available all the three persons were found guilty, convicted and sentenced.
Order of dismissal from service followed.
The decision of the Court Martial and the order of dismissal were challenged before the Guwahati High Court in a writ petition.
The High Court found that as against re spondents 2 and 3 there was no inquiry under Rule 22.
The High Court relied upon the decision of this Court in Lt. Col. Prithi Pal Singh Bedi vs Union of India & Ors., [1982] 3 SCC 140 and held that the proceeding before the General Court Martial was in violation of the mandatory provisions of the Army Rules.
On that finding the High Court set aside the order of conviction and punishment of imprisonment as also the order of dismissal from service.
It is a fact that as against respondents 2 and 3 there was no inquiry under Rule 22.
It is not disputed that the Commanding Officer of the Unit had stated before the General Court Martial that he did not find any case against respond ents 2 and 3.
The summary of evidence recorded in the Gener al Court Martial has been made available to us and we have read the same.
The conclusion reached by the Commanding Officer seems to us to be a reasonable one.
We do not think there is any justification to set aside the order of the High Court so far as respondents 2 and 3 are concerned.
So far as the case against respondent No. 1 goes there was an inquiry under Rule 22.
The point raised on behalf of respondent No. 1 in the High Court was different from the case made out by respondents 2 and 3.
It had been pleaded that the inquiry under Rule 22 as against respondent No. 1 related to an offence which came under section 63 of the , namely, conduct prejudicial to good order and military discipline; while the charge he was called upon to face in the General Court Martial was one of theft punisha ble under section 52(a) of the .
We have seen the evidence recorded in the inquiry under Rule 22.
It is a fact that the allegation at the stage of inquiry under Rule 22 was described as prejudicial to good order and military discipline but the basic facts said to constitute that allegation were nothing else than removal of the foodstuff which constituted that charge of 22 theft.
It is, therefore, clear that no prejudice has been caused to respondent 1 and the inquiry under rule 22 and the trial before General Court Martial were over the self same facts.
In these circumstances, we are inclined to sustain the judgment of the High Court in regard to respondents 2 and 3 but we would reverse the judgment in regard to respondent 1 and restore the order of the General Court Martial.
Respond ent No. 1 has already been dismissed from service.
He has undergone more than 9 months of the punishment out of one year of imprisonment.
There has been a gap of several years since he has been released from jail initially on bail and Later on the basis of the judgment of the High Court.
In these circumstances he need not be taken into custody for suffering the balance period of the sentence.
The appeal is partly allowed.
There shall be no order for costs.
T.N.A. Appeal allowed.
| The appellant is engaged in the business of manufacture of various pharmaceutical products including sulphamethoxa zole which is also known as 'SMX '.
One of the important ingredients or raw materials for the manufacture of SMX is a chemical known as 'isoxamine '.
On April 23, 1974 the Ministry of Industrial Development of the Government of India issued to the appellant an indus trial licence enabling it to manufacture 18 tonnes of SMX per year.
Under one of the conditions of the industrial licence, the appellant was permitted to import the material, isoxamine, for a period of two years only from the date of licence, and thereafter the product SMX was to be manufac tured from indigenous materials.
The appellant 's request for permission to import isoxamine till the middle of 1979 was not acceded to by the Government and the appellant was asked to manufacture SMX from indigenous materials.
In the mean time, the appellant had placed orders for the import of isoxamine under an import licence issued on October 13, 1976, and between March and June 1979 got the goods cleared after giving a declaration that the appellant was an Actual User, and that its registration had not been cancelled or withdrawn or otherwise made inoperative.
496 The Collector of Customs, Bombay, issued show cause notice on the appellant for confiscation of goods and impo sition of penalty, inter alia, on the ground that it had made a false statement that its registration had not been cancelled, withdrawn or otherwise made inoperative for the manufacture of SMX by using imported material, that is, isoxamine, inasmuch as the industrial licence had ceased to be valid for the manufacture of SMX with imported material after April 22, 1976.
The Collector of Customs, after bearing the appellant, held that the appellant was not an Actual User (Industrial) in respect of the said imported raw material, isoxamine, after April 22, 1976, and that since the industrial licence was invalid for manufacture of SMX with imported material the importation of the raw material, namely, isoxamine, was impermissible.
The Collector also held that the appellant had furnished a false declaration on the basis of which it got the goods cleared by the Custom Officer.
The Collector, therefore, set aside the decision of the Custom Officer allowing clearance of the goods.
The Collector of Customs further directed confiscation of the goods imported by the appellant and also imposed a penalty.
The appellant 's writ petition was dismissed by the learned Single Judge of the High Court, and appeal against his judgment was dismissed by the Division Bench.
Before this Court it was contended on behalf of the appellant that the goods, namely, isoxamine, having been imported under a valid Open General Licence (OGL), the customs authorities had no jurisdiction to confiscate the same; that the appellant having secured the OGL for the import of isoxamine for its own use and not for business or trade in it, the appellant should be held to be an Actual User; that the Collector of Customs could not, in exercise of his revisional jurisdiction under section 130(2) of the , as it stood then, for the first time confiscate the goods and impose penalty on the appellant; and that as the goods have been confiscated and the penalty has been imposed by the Collector of Customs in exercise of his revisional jurisdiction, the appellant has been deprived of his right to prefer an appeal before the Central Board of Excise and Customs under Section 128(a) of the .
While dismissing the appeal, this Court, HELD: (1) There can be no doubt that the definition of "Actual User (Industrial)", as contained in clause (3) of paragraph 5 of chapter 2 of Import Policy 1978 79 should be read with the definition of "Actual 497 User" in clause (1) of paragraph 5.
So read, it is clear that an "Actual User (Industrial)" means an industrial undertaking which is entitled to utilise the imported goods "in the manufacturing process or operations conducted within its authorised premises.
In other words, the importer must not be debarred from utilising the imported goods under the terms of the industrial licence.
[504C D] (2) The declaration of the appellant that it is an Actual User, and that its registration has not been other wise made inoperative is a false declaration, as rightly held by the Collector of Customs.
When the industrial li cence granted to the appellant does not permit the use of the imported goods for the manufacture of SMX, the importa tion of the goods under the OGL is illegal and could not be allowed to be cleared by the appellant.
[505A B] (3) In view of the provisions of section 122 read with section 124 of the , the Collector of Customs has the jurisdiction to confiscate goods or impose penalty after issuing show cause notice.
He has, therefore, both the original jurisdiction as also revisional jurisdiction.
In exercise of his revisional jurisdiction under section 130(2) of the Act, he set aside the order of the Customs Officer allowing the goods to be cleared by the appellant and, thereafter, in exercise of his original jurisdiction under section 122 read with section 124 of the Act, he issued a show cause notice on the appellant and, after hearing the appellant, confiscated the goods and imposed penalty on the appellant.
[506E F] (4) It appears, however, that the confiscation was made and the penalties imposed by the Collector of Customs in exercise of his revisional power under section 130(2) of the act.
This is a mere irregularity not affecting the order.
When an authority has the power to do a certain act and in exercise of such power he does the same, but refers to a wrong provision of the law, that would be a mere irregulari ty and would not vitiate such act.
[506G H; 507A] Addl.
Commissioner of Income Tax vs J.K. D 'Costa, , distinguished.
(5) In the order of the Collector it has been specifi cally stated at the very outset that an appeal against the order lies to the Central Board of Excise and Customs.
It cannot, therefore, be said that the appellant was misled, as the order was purported to have been passed by the Collector of Customs in exercise of his revisional jurisdiction. 498
|
Appeal No. 145 of 1953.
Appeal by Special Leave from the Judgment and Order dated the 8th day of September, 1950, of the High Court of Judicature for the State of Punjab at Simla in Civil Reference No. 3 of 1949.
Achhru Ram (R. section Narula and Naunit Lal, with him) for the appellants.
M. C. Setalvad, Attorney General for India, (G. N. Joshi and P. G. Gokhale, with him) for the respondent.
October 25.
The Judgment of the Court was delivered by DAS J.
This appeal by special leave arises out of a consolidated reference made on the 19th April, 1949, under section 66(1) of the Indian Income tax Act read with section 21 of the Excess Profits Tax Act by the Income tax Appellate Tribunal, Madras Bench.
The reference arose out of four several proceedings for assessment to excess profits tax of the appellant, the chargeable accounting periods being periods ending with 31st March of each of the years 1942, 1943, 1944 and 1945.
The relevant facts appearing from the consolidated statement of the case are as follows: Narain Swadeshi Weaving Mills, the appellant before us (hereinafter referred to as the assessee firm), is a firm constituted in 1935 upon terms and conditions set forth in a deed of partnership dated the 6th November, 1935.
The partners were Narain Singh and two of his sons, Ram Singh and Gurdayal Singh, their respective shares in the partnership being 6 annas, 5 annas and 5 annas.
The business of the firm which was carried on 954 at Chheharta, Amritsar, in the Punjab, was the manufacture of ribbons and laces and for this purpose it owned buildings, plant, machinery , etc.
On the 7th April, 1940, a public limited liability company was incorporated under the name of Hindus,tan Embroidery Mills Ltd. The objects for which the company was established were to purchase, acquire and take over from the assessee firm the buildings and leasehold rights, plant, machinery, etc., on terms and conditions mentioned in a draft agreement and the other objects set forth in the Memorandum of Association of the said company.
Out of the total subscribed capital represented by 41,000 shares 23,000 shares were allotted to the assessee firm.
Of these 23,000 shares so allotted 20,000 shares were not paid for in cash but the remaining 3,000 shares were paid for in cash.
The directors of the company were Narain Singh and his three sons Ram Singh, Gurdayal Singh and Dr. Surmukh Singh and one N. D. Nanda, a brother in law of Gurdayal Singh.
Dr. Surmukh Singh was at all material times residing in South Africa.
These 4 directors between themselves hold 33,340 shares including the said 23,000 shares.
The company was, accordingly, a director controlled company.
The funds available to the company were not sufficient to enable it to take over all the assets of the assessee firm.
The company, therefore, purchased only the buildings and the leasehold rights therein but took over the plant, machinery, etc.
on lease at an annual rent of Rs. 40,000.
On the 28th July, 1940, the company executed a managing agency agreement in favour of Uppal & Co., a firm constituted on the same day with Ram Singh and Gurdayal Singh, two of the sons of Narain Singh, as partners with equal shares.
Under the managing agency agreement dated the 28th July, 1940, Uppal & Co., was to be paid 10% of the net profits of the company besides salary and other allowances mentioned therein.
On the 25th January, 1941, the company appointed as its selling agent Ram Singh & Co., a firm which 955 came into existence on the same day with Ram Singh, Gurdayal Singh and Dr. Surmukh Singh, the three sons of Narain Singh, as partners, each having an one third share.
The terms of this partnership were recorded in writing on the 17th March, 1941.
Ram Singh & Co., was to get a commission of 3% on the net sales and 6% on the gross income of the company.
In the two new firms so constituted Narain Singh had no share and eventually with a view to make up for his loss the shares of the partners in the assessee firm were modified by an agreement made by them on the 21st April, 1941.
Under this agreement Narain Singh was to get a 12 annas share and the two sons Ram Singh and Gurdayal Singh 2 annas share each.
All the three firms mentioned above, namely, the assessee firm, Uppal & Co., and Ram Singh & Co., were registered as firms under section 26A of the Indian Income tax Act.
On the facts summarised above, the Excess Profits Tax Officer came to the conclusion that the main purpose of the formation of the company and the two firms of Uppal & Co., and Ram Singh & Co., was the avoidance of liability to excess profits tax.
Accordingly, on the 16th November, 1944, the Excess Profits Tax Officer issued notices under section 10A of the Excess Profits Tax Act to the company and the three firms.
Eventually, however, the proceedings against the company were dropped and the Excess Profits Tax Officer considered the case of the three firms only.
He held that the three firms were really one and he, therefore, amalgamated the income of all three and proceeded to assess the assessee firm to excess profits tax on that basis for the four several chargeable accounting periods mentioned above.
Under sub section (3) of section 10 A the assessee company preferred four several appeals to the Appellate Tribunal.
In their order the, Appellate Tribunal considered the four following issues: (1)Whether the income of the firms styled as "Uppal & Co.," and "Ram Singh & Co.," could be amalgamated with the income of the assessee firm 956 under the provisions of section 10 A of the Excess Profits Tax Act ? (2) Whether the share of income of Dr. Surmukh Singh, a partner in the selling agency of Ram Singh & ,Co., could be included under section 10 A in the excess profits tax assessment of the assessee firm ? (3) Whether the lease money obtained by the assessee firm could be legally treated as business profits liable to excess profits tax ? (4) Whether proper opportunity under section 10 A had been given to the assessee firm?" Before the Appellate Tribunal, as before the Excess Profits Tax Officer, the assessee firm objected to the application of the provisions of section 10 A of the Excess Profits Tax Act.
The contention was.
that as the assessee firm did not, during the relevant chargeable accounting periods, carry on any business within the meaning of section 2(5) of the Excess Profits Tax Act, section 10 A had no application and, therefore, the profits of Uppal & Co., and Ram Singh & Co., could not be amalgamated with its own income.
In other words, the argument was that there must be an existing business of an assesses during the relevant period before section 10 A could be applied in respect of transactions concerning that business.
The Appellate Tribunal took the view that instead of using the plant, machinery, etc., for its own manufacture the assessee firm turned that revenue yielding asset into another use by lettinh it out on an annual rent of Rs. 40,000 and that this was certainly an adventure in the nature of trade as contemplated by section 2(5) of the Excess Profits Tax Act read with rule 4 of Schedule I thereto.
Accordingly, it decided issue No. 3 against the assessee firm holding that the assessee firm carried on business in the letting out of the plant, machinery, etc., on hire and the lease money obtained thereby could be legally treated as business profits liable to excess profits tax.
On issue No. I the Appellate Tribunal agreed with the Excess Profits Tax Officer that it was evident beyond doubt that a definite scheme was adopted creating separate charges in order to avoid excess profits tax 957 by the three firms, namely, the assessee firm, Uppal & Co., and Ram Singh & Co., taken together.
Thefirst step in the scheme was the formation of the company.
The second step was the appointment of Uppal & Co., as managing agents instead of appointing the assessee Tfirm itself.
The third step was the creation of the firm Ram Singh & Co., for taking up the selling agency of the company and the final step was to adjust the shares of the partners of the assessee firm so as to equalise, as far as possible, the share of Narain Singh with the shares which his sons got in the several firms.
The Appellate Tribunal held that all the various steps noted above need not necessarily have been fictitious or artificial but they were certainly transactions so as to attract the operation of section 10 A.
The Appellate Tribunal decided issues Nos. 2 and 4 against the assessee.
All the four appeals were accordingly dis missed by the Appellate Tribunal.
The assessee firm thereupon preferred four several applications under section 66(1) of the Income tax Act read with section 21 of the Excess Profits Tax Act praying that the following questions arising out of the order of the Appellate Tribunal be referred to the High Court : (1) Whether, under the facts and circumstances of the case, the application of section 10 A with a view to amalgamating the income of the firms "Uppal & Co." and "Ram Singh & Co.", with the income of the appellant firms was correct and valid in law ? (2) Whether, in view of the facts admitted on record, the share of income of Dr. Surmukh Singh, a partner in the selling agency and not a partner in the appellant firm, could be legally included along with the share of income of section Ram Singh and section Gurdial Singh and is this inclusion at all within the purview of section 10 A ? (3) Whether, in view of the facts, circumstances and observations on record, the lease money obtained by the appellant firm could be legally treated as business profits or profits from an adventure in trade liable to excess profits tax ? 122 958 (4) Whether the type of a notice served on the appellant, under the facts and the circumstances of the case, legally amounts to a proper opportunity under section 10 A of the Excess Profits Tax Act, and if not ,what is the legal effect of such opportunity being not afforded ? (5) Whether the proceedings under section 1O A were not null and void ab initio, for want of necessary previous sanction from the Inspecting Assistant Commissioner of Excess Profits Tax, the fact of such previous sanction having been obtained being neither mentioned in the order nor proved before the Appellate Tribunal at the time of hearing although expressly required by the Court.
The Appellate Tribunal declined to refer questions (4) and (5) sought to be raised by the assessee firm and no grievance has been made before us on that score.
The Appellate Tribunal referred the earlier three questions after reframing the same so as to read as follows : (1) Whether there is any evidence before the Tribunal to support the conclusion that the main purpose of the transactions was the avoidance of excess profits tax ? (2) Whether on the facts admitted or proved the share of income of Dr. Surmukh Singh in the firm of Ram Singh & Co., can be legally included along with the share of income of Ram Singh and Gurdayal Singh ? (3) Whether on the facts and circumstances of the case the leasing of machinery, etc., by the assessee firm to the company was a business within the meaning of section 2(5) of the Excess Profits Tax Act ? The learned counsel appearing for the assessee firm submitted before the High Court that the third of the referred questions should be discussed and decided first, but the High Court took the view that the decision of the first question was a necessary preliminary to the consideration of the third question.
Taking up, then, the first question first the High Court referred to the ,several facts found by the Appellate Tribunal and 959 described as steps and regarding them as circumstantial evidence came to the conclusion that it could not be said that there was no evidence upon which the Tribunal was justified in coming to the conclusion that the formation of the firms, Uppal & Co., and Ram Singh & Co., was mainly for the purpose of avoidance or reduction of liability to excess profits tax.
In the result, the High Court held that the three firms, the assessee firm, Uppal & Co., and Ram Singh & Co., were in fact one and the same and on that basis proceeded next to take up the third question.
After referring to section 2(5) and certain judicial decisions, the High Court concluded as follows: " The argument of Mr. Pathak when applied to the present case would have force were it a fact that the sole concern of the assessee firm was the receipt of hire of machinery from a company or firm, in which the assessee firm had Do interest.
But this is not the state of affairs.
On the finding under the first question referred, the assessee firm, the firm of managing agents and the firm of selling agents are really one and the same firm.
This firm and its partners held the majority of shares in the company.
The agreement for payment of Rs. 40,000 as rent of machinery is an agreement between the assessee firm and the company which the assessee firm controls.
The business of the assessee firm was, and in effect still is, the manufacture of ribbons and laces, and the receipt of Rs. 40,000 is a profit from that business diverted into the pockets of the assessee firm.
" The High Court accordingly answered the third question in the affirmative and against the assessee firm.
The necessary certificate of fitness for appeal to this Court having been refused by the High Court, the assessee firm obtained special leave of this Court to prefer the present appeal.
The learned counsel appearing for the assessee firm has submitted before us and we think rightly that the approach of the High Court was erroneous in that they took up the discussion of question No. I first.
That question, as framed, proceeded on the assumption 960 that section 1O A applied to the case and only raised the question as to whether there was any evidence to support the finding of the Appellate Tribunal arrived at as a result of the enquiry under that section, namely, that the main purpose of the transaction was the avoidance of excess profits tax.
The long title and the preamble of the Excess Profits Tax Act refer to the imposition of tax on excess profits arising out of certain businesses.
Section 4, which is the charging section and section 5 which lays down the application of the Act to certain business, clearly postulate the existence of a business carried on by the assessee on the profits of which the excess profits tax can be imposed.
Therefore, if there is such a business during the relevant period, then and then alone can arise the question of the applicability of section 10 A.
If there is no such business as is contemplated by the Act, then the Act does not apply and section 10 A cannot come into operation at all.
Before the Excess Profits Tax Officer can embark upon an enquiry as to whether a transaction was effected for the avoidance or reduction of liability to excess profits tax and to make such adjustments as he considers appropriate_ there must be proof that the assessee was, during the chargeable accounting period, carrying on any business of the kind referred to in section 5 of the Act.
Logically, therefore, the Appellate Tribunal as well as the High Court should have taken up question No. 3 first, for on a decision of that question would depend the applicability of section 1O A and if that question were answered in favour of the assessee firm the further question of law as raised in question No. I would not, in such event, arise.
The approach of the High Court was, therefore, logically misconceived on the facts of this case.
What then are the facts found by the Appellate Tribunal apart from its findings under section 10 A ? The findings are that after the formation of the company the assessee firm was left with no business at all.
The company purchased the leasehold rights in the lands and buildings where the plant, machinery, etc., were installed.
The firm as such ceased to manufacture any ribbons and laces.
It was left with the plant, 961 machinery, etc., which it did not require and which ceased to be a commercial asset in its hands, for it had no longer any manufacturing business at all.
Further, the assessee firm had put it out of its power to use the plant, machinery, etc.
, for it had no right in the lands and buildings where the plant, machinery, etc., had been installed.
In these circumstances, the assessee firm let out the plant, machinery, etc., to the company.
It was thenceforth the company which was carrying on the business of manufacturing ribbons and laces and for that purpose hired the plant, machinery, etc., from the assesee firm.
Prima facie it was the company which appointed the managing agents and the selling agents.
Ex facie and apart from the alleged result of any enquiry under section 10 or section 1O A of the Excess Profits Tax Act those were not transactions of the assessee firm.
The assessee firm was, therefore, left only with some property which at one time was a commercial asset but had ceased to be so.
The assessee firm thereupon let out that property on rent.
The question is whether such letting out in such circumstances amounted to carrying on of a business.
"Business" as defined in section 2(5) of the Excess Profits Tax Act includes amongst others, any trade, commerce or manufacture or any adventure in the nature of trade, commerce or manufacture.
The first part of this definition of "a business" in the Excess Profits Tax Act is the same as the definition of a business in section 2(4) of the Indian Income tax Act.
Whether a particular activity amount to any trade, commerce or manufacture or any adventure in the nature of trade, commerce or manufacture is always a difficult question to answer.
On the one hand it has been pointed out by the Judicial Committee in Commissioner of Income tax vs Shaw Wallace & Co.(1), that the words used in that definition are no doubt wide but underlying each of them is the fundamental idea of the continuous exercise of an activity.
The word "business" connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose.
On the other hand, a single and (1) Cal.
962 isolated transaction has been held to be conceivably capable of falling within the definition of business as 'being an adventure in the nature of trade provided the transaction bears clear indicia of trade.
The question therefore, whether a particular source of income is business or not must be decided according to our am ordinary notions as to what a business is.
The case of Commissioner of Excess Profits Tax, Bombay City vs
Shri Lakshmi Silk Mills Ltd.(1), decided by this Court is clearly distinguishable.
There, the respondent company which was formed for the purpose of manufacturing silk cloth installed a plant for dying silk yarn as a part of its business.
During the relevant chargeable accounting period, owing to difficulty in obtaining silk yarn on account of the war, it could not make any use of this plant and it remained idle for some time.
In August, 1943, the plant was let out to another company on a monthly rent.
The question arose whether the income received by, the respondent company in the chargeable accounting period by way of rent was income from business and assessable to excess profits tax.
It should be noted that in that case the respondent company was continuing its business of manufacturing silk cloth.
Only a part of its business, namely, that of dying silk yarn had to be temporarily stopped owing to the difficulty in obtaining silk yarn on account of the war.
In such a situation, this Court held that part of the assets did not cease to be commercial assets of that business since it was temporarily put to different use or let out to another and accordingly the income from the assets would be profits of the business irrespective of the manner in which that asset was exploited by the company.
This Court clearly indicated that no general principle could be laid down which would be applicable to all cases and that each case must be decided on its own circumstances according to ordinary common sense principles.
In the case before us the assessee firm 's business had entirely closed.
It no longer 'manufactured any ribbons and laces.
It had accordingly no further trading or commercial activity.
It could not in fact use the plant, machinery, etc., (1) ; 963 after the land and the buildings where they were installed had been sold to the company.
In these circumstances the assessee firm let out the plant, machinery, etc., on an annual rent of Rs. 40,000.
These facts are very similar to those found in Inland.
Revenue , Commissioners vs Broadway Car Co., Ltd.(1).
There the war conditions bad reduced the company 's business to very small proportions.
In that situation it was observed that in that case the company dealt with part of its property which bad become redundant and was sublet purely to produce incomes transaction quite apart from the ordinary business activities of the company.
The ratio decides in that case which was noticed in the judgment of this Court appears to us to apply to the facts found in the present case apart from the findings Under section 10 A. Applying also the common sense principle to the fact so found it is impossible to hold that the letting out of the plant, machinery, etc., was at all a business operation when its normal business activity had come to a close.
It is interesting to note that sub sections (3) and (4) of section 12 of the Indian Income tax Act recognise that letting out of plant, machinery, etc., may be a source of income falling under the head "other sources" within that section and not necessarily under the head "business" dealt with in section 10 of that Act.
In the facts and circumstances of this case, therefore, the letting out of the plant, machinery, etc.
,cannot be held to fall within the body of the definition of "business" under section 2(5) of the Excess Profits Tax Act.
In this view of the matter it is not necessary for us to express an opinion as to the meaning or implication of the proviso to that definition or rule 4(4) of Schedule I to the Act.
In our opinion, in the facts and circumstances of this case, question No. 3 should have been answered in the negative.
The question of law raised in the third question being answered in favour of the assessee firm, the question of the applicability of section 1O A of the Excess Profits Tax Act could not arise, for the assessee firm having, during the relevant period, no business to which that (1) 964 Act applied section 1O A could not be invoked by the revenue and, therefore, the question whether there was "evidence to support the finding of the Tribunal under that section could not arise.
On the contrary, the further question of law which would really arise out of the order of the Appellate Tribunal consequent upon the aforesaid answer to question No. 3 would be whether under the facts and circumstances of the case the application of section 1O A with a view to amalgamating the income of the firms Uppal & Co., and Ram Singh & Co., with the income of the assessee firm was correct and valid in law and that was precisely the first question which the assessee firm sought to raise by its application.
In our view the High Court should not only have answered question No. 3 in the negative but should also have raised, as a corollary to that answer to question No. 3, the further question of law on the lines indicated in question No. I of the assessee 's petition.
In other words, the High Court should have, after answering question No. 3 in the negative reframed the referred question No. I by restoring question No. 1 as suggested by the assessee firm in its petition and should have answered the question so restored in the negative and in favour of the assessee.
For the reasons stated above, we allow this appeal, reframe question No. I by restoring the first question suggested by the assessee firm, namely " Whether under the facts and circumstances of the case the application of section 1O A with a view to amalgamating the income of the firms Uppal & Co., and Ram Singh & Co., with the income of the appellant firm was correct and valid in law?" and we answer the question so reframed in the negative.
Question No. 2 must be answered in the negative and in favour of the assessee by way of necessary corollary.
We also answer question No. 3 in the negative.
The appellant will be entitled to the costs of this appeal and we order accordingly.
| In September, 1953, the first respondent applied for a mining lease for over 900 acres in the then Hyderabad State.
He was granted a lease of about 57 acres in January, 1954 by an order of the State Government which was silent as regards the other areas included in his application.
While the respondent kept pressing ' for a lease of the remaining areas, the State Government began to grant, some of these areas to other persons including the appellant.
Meanwhile,, on December 8, 1955, the respondent moved the Central Government under Rule 57 of the Mineral Concession Rules, 1949, seeking a direction to the State to grant to him the lease of the areas sought by him and to stop granting further areas to other applicants.
This review petition was dismissed on the basis that the order of the State Government granting only 57 acres by implication amounted to a rejection of the respondent 's claim for the balance area.
On September 15, 1956, the Mineral Concession Rules were amended and a new sub rule 28(1) (A) was introduced which provided that every application under Rule 27 shall be disposed of within 9 months from the date of its receipt.
The amended Rule 57 provided that the failure of the State Government to dispose of an application within the prescribed period would be deemed to be a refusal to grant a lease and that the aggrieved person may, within two months, apply to the Central Government for a review.
A further amendment of Rule 57(2) provided that any application pending with the State Government an 14th September, 1956 and remaining undisposed of on the 24th August, 1957, shall be disposed of by the State Government within 6 months from the latter date.
Prior to this amendment the respondent had filed another review petition before the Central Government and on September 26, 1957, that petition was dismissed by the Government as being premature; this was on the basis that the respondent 's original application was pending on 31st August, 1957, and the period of 6 months from that date, as prescribed by the amended Rule 57(2) had not yet expired.
The respondent then moved the High Court by a petition under Article 226.
making the State Government alone party and seeking a writ of mandamus to the Government to dispose of his application of September, 1953, expeditiously.
The High Court allowed this petition and did not accept the contention, on behalf of the State Government that in view of section 57(2) the respondent 's application must be L11Sup CI/11 154 deemed to have been rejected.
it held that section 57(2) was intended to be for the benefit of the applicant and did not relieve the State Government from performing the statutory function imposed on it under rule 17 of granting or refusing the licence.
During the pendency of the first petition, the respondent had also filed a second petition seeking the same relief and this was disposed of in August, 1959 on the basis of a statement by the Government Advocate that the State Government was prepared to dispose of the first respondent 's application on the merits without relying on rule 57(2).
By an order on May 27, 1961, the State Government granted on.
mining lease to the, respondent all the areas for which he had applied in September, 1953 excluding those areas which had been earlier leased to others.
, However.
the Central Government allowed a review petition under Rule 57 filed by the appellant and set aside the order on the ground that the application made by the appellant, the first respondent, as well as others which were pending before the State Government 'should be deemed to have been rejected on 1st March, 1958 in view of rule 57(2).
The 1st respondent then challenged this order by a writ petition in the High Court which was allowed and the order was quashed.
The court held that rule 57(2) was enacted only for the benefit of the applicants and did not take away the power of the State Government to dispose of applications even after expiry of the prescribed period; that in view of the Government Advocate 's concession the State Government Was stopped from contending that the respondent 's application of September, 1953 must be deemed to have 'been refused; and furthermore that in view of the writ of mandamus issued in the first writ petition, the State Government was bound to consider the application of the 1st respondent and the decision of the State Government taken in obedience to the order of the High Court could not have been set aside by the Central Government.
HELD : (Per Hedge and Grover, JJ); The appeal must be allowed (By the Court) (1) Reading rule 28 (1 A) and rule 57 (2) together, there is no doubt that after the period prescribed, the State Government is incompetent to deal with the applications ' pending before it.
The High Court was, therefore, wrong in holding that even if an application stands rejected for failure to pass an order within the time prescribed, the State Government has power to issue a licence.
[164 C] Dey Gupta & Company vs State of Bihar A.I.R. 1961 Pat. 487; referred to.
(2) There can be no estoppel against a statute.
Rule 28(1 A) and rule 57(2) are statutory rules.
They bind the Government as much as they bind others.
The requirement of those rules cannot be waived by the State Governments.
Therefore the fact that the Government Advocate represented to the Court that the 1st respondent 's application was still pending could not change the legal position nor could it confer on the State Government any power to act in contravention of those rules.
[165 A B] (3)Per Hegde and Grover JJ.); As far as the State Government was concerned the writ issued was binding whether the decision rendered by the Court was correct in law or not; but that decision could not bind the appellant or the Central Government who were not parties to that writ petition.
It was not a judgment in rem.
In obedience to the writ issued by the court, the State Government did consider the 155 application of the 1st respondent and granted him the lease asked for by him.
The Central Government had been constituted as the revisional authority under rule 57.
That authority is a quasi judicial body created by statutory rules.
It is bound by law to discharge the duties imposed on it by rule 57.
Therefore it had to obey the mandate of rule 57.
In so doing it cannot be said that it had infringed the mandamus issued by the High Court.
[165 D F] (Per Shah J, dissenting) : The appeal must be dismissed, Granting that the High Court erroneously issued a writ of mandamus directing the State Government to perform its functions it was, not open to the Central Government in effect to exercise appellate authority over the judgment of the High Court.
To accede to the contention that the executive has the power, when exercising quasi judicial functions, to sit in appeal over the decision of the High Court is to destroy the scheme of division of powers under our Constitution.
There was no distinction between the effect of an order made by the High Court and carried out by the State, and an order made by the High Court and confirmed in appeal by this Court and carried out by the State.
Article 141 of the Constitution has no bearing on that question.
If this Court decided a question of law or of fact or a mixed question of law and fact arising in an appeal against an order passed by the High Court in a writ petition against the action of the State Government granting or refusing to grant a licence, it would not be open to the Central Government, hearing a review petition against the order of the State Government in compliance with the order of this Court, to set aside the order so as to upset the order of this Court.
[156 H] It is well settled that a person who has not been made a party to a proceeding may still appeal with leave of the Appellate Court provided he might have properly been made 'a party to the proceeding.
The appellant could undoubtedly have been made a party to the petition before the High Court.
He could, therefore, challenge the correctness of the order and no objection could be raised against the granting of leave to him to appeal on the ground that he was not a party to the writ petition.
C] Re.
"B" an Infant C.A., The Province of Bombay vs Western India Automobile Association I.L.R. ; Ponnalagu vs State of Madras I.L.R. [1953] Mad. 808; Pullayya vs Nagbhushanain I.L.R. F.B.; referred to.
|
Appeal No. 855 of 1968.
Appeal by Special Leave from the Award dated October 26, 1967 of the National Industrial Tribunal, Calcutta in Reference No. NIT 3 of 1967.
D. N. Mukherjee, for the appellant.
P. section Khera and section K. Nandy, for respondents Nos. 1 and 3.
The Judgment of the Court was delivered by Vaidialingam, J.
This appeal, by special leave, is directed against the Award dated October 26, 1967 of the National In dustrial Tribunal, Calcutta in Reference No. NIT 3 of 1967, holding that for the accounting year 1965 66, the quantum of bonus payable by the appellant to its workmen is 20% of the effective salaries or wages with a further direction to set on a sum of Rs. 1,46,252.
The appellant, Indian Cable Company Ltd. (hereinafter to be referred as the Company) occupies a very prominent position in the Cable Industry of India having its Head Office at Calcutta and its factory at Jamshedpur.
It has, branches in Bombay, Madras, New Delhi, Kanpur, Ahmedabad, and Bangalore.
(In addition to insulated cables, the Company manufactures Aluminium Rods, Radio Aerials, Fuse Wires and other products.).
Its paid up capital is Rs. 2,48,65,450.
It employed workmen numberingover 5000.
The gross effective salaries and wages of its employees for the relevant accounting year amounts to Rs. 1,05,32,880.
Its accounting year is from 1st April to 31st March of the succeeding year.
For the accounting year 1964 65, the Company declared and paid bonus at 20% to all employes in accordance with the provisions of the (hereinafter to be referred as the Act).
For the year in question 1965 66, it calculated a sum of Rs. 23,68,785 as available surplus.
This amount was arrived at by the Company after calculating direct tax without deducting the provision for payment of bonus payable to its workmen.
A sum of Rs. 14,21,271 being 60% of the said available surplus was declared as bonus for the year 1965 66.
This amount represented 13 51% of the wage bill.
The workmen were dissatisfied with this offer of bonus at 13.51% and demanded payment of bonus at the maximum rate of 20% as provided in the Act.
In consequence they raised a dispute with the Company.
In view of the agreement dated November 24, 1966 between the parties to refer the claim for additional bonus for adjudication to a Tribunal, the workmen received the bonus at 108 the rate of 13.51% offered by the Company.
The Central Government by order dated June 23 1967 referred for adjudication to the National Industrial Tribunal, Calcutta, the following dispute "What should be the quantum of bonus payable to the Workmen of the Indian Cable Company Limited Calcutta for the accounting year 1965 66" The Unions contended before the Tribunal that the computa tion of allocable surplus by the Company has not been properly made in accordance with the Act and that several items shown in the profit and loss account as expenditure have to be added back to arrive at the actual gross profits.
The Unions further alleged that the Company has spent large amounts for payment of liability for future years with a view to reduce the available and allocable surplus, which in consequence has resulted in, the reduction of percentage of bonus.
The Company on the other hand maintained that it has kept proper accounts which have been audited by a reputed firm of auditors Messrs Lovelock & Lewes and that the computation of allocable surplus has been properly arrived at having due regard to the provisions of the Act.
The Com pany denied the allegations of the Unions that enormous expenditure has been shown with a view to reduce the quantum of bonus.
On the other hand, the Company pleaded that all items of expenditure were justified and those items are deductable in considering, the claim for bonus.
At this stage it may be mentioned that the Unions served interrogatories requiring information on various matters and there is no controversy that the Company furnished all the informations that were 'Called for.
Before the Tribunal the Company required various deductions to be made from the net profits shown in its profit and loss account.
On the other hand, the Unions required various items to be added back.
The Tribunal accepted the contentions of both the parties with regard to certain items.
We will in due course refer to the items which are in dispute before us at the instance of both the Company and the Unions.
The Tribunal computed the, available surplus at Rs. 37,54,713, 60% of this amount being Rs. 22,52,828 was fixed as allocable surplus.
The Tribunal held that a sum of Rs. 21,06,576 being bonus at 20% of the gross effective salaries and wages was payable for the year in question and it directed the surplus amount of Rs. 1,46,252 to be set on.
As the bonus at the rate of 13.51% had already been declared and paid by the Company, the Tribunal directed the payment of the balance 6.49% within the period mentioned 109 in the Award.
One aspect which has to be acted is that (in calculating the available surplus, the Tribunal before calculating the notional direct tax, deducted the bonus payable for the accounting year in question.
The grievance of the Company, as placed before us by its learned counsel Mr. D. N. Mukherjee, relates to three items (1) the method of computation of notional direct tax; (2) disallowance of the deduction from gross profits of the sum of Rs. 2.65 lakhs made as ex gratia payment for the accounting year 1964 65 to employees drawing emoluments exceeding Rs. 750 per mensem; and (3) disallowance of the claim for re 'turn on provision for doubtful debts.
The first contention relates to the principle to be adopted for calculating direct tax when computing the available and allocable surplus for payment of bonus under the Act.
According to the Tribunal, under sections 6 and 7 of the Act, the bonus payable for ,the relevant accounting year has to be deducted from the grossprofits for calculation of direct tax or alternatively rebate for bonus found payable has to be calculated and 60% of the rebate has to be added back as allocable surplus.
The Tribunal took notice of the fact that the Income tax Authorities did not object to deduction of the provision made by the Company for payment of bonus for the accounting year 1965 66.
On this reasoning the Tribunal added back to the gross profits as per the profit and loss account the provision made for payment of bonus.
For coming to this view the Tribunal followed its previous decision in Indian Oxygen Ltd. vs Their Workmen (N.I.T. 1 of 1966).
The Tribunal has also noted that its Award in the Indian Oxygen Ltd. was pending appeal in this Court.
According to Mr. D. N. Mukherjee, this method of calculation of direct tax under the Act, adopted by the Tribunal is contrary to the decisions of this Court.
We are in entire agreement with this contention of Mr. Mukherjee.
In view of the decisions of this Court, to which we will immediately refer, Mr. P. section Khera, learned counsel for the Unions was unable to support the reasoning of the Tribunal on this aspect.
The question of calculation of direct tax under the Act was considered for the first time by this Court in Metal Box Co. of India Ltd. vs Their Workmen.(1) It was held therein that the nationalc tax liability is to be worked out by first working out the gross profits and deducting therefrom the prior charges under section 6, but not the bonus payable to the employees.
Therefore, it is clear from this decision that an employer is entitled to deduct (1) ; 110 his tax liability without deducting first the amount of bonus he would be liable to pay from and out of the amount computed under sections 4 and 6 of the Act.
The same principle, has been reiterated in The Workmen of William Jacks and Company Ltd. Madras vs Management of William Jacks and Co., Madras,(1) Delhi Cloth and General Mills Co. Ltd. vs Workmen(2) and Indian Oxygen Ltd. etc.
vs Their Workmen.
(3) In fact the last decision overruled the decision of the National Industrial Tribunal in Reference No. NIT 1 of 1966, which has been followed by the present Tribunal.
We may also state that after the first decision of this Court, referred to above, the Act was amended in 1969.
The last three decisions of this Court considered the question whether the amendments effected to the Act had made ' any change in the principle laid down by this Court in the first decision.
It was uniformly held in all the three decisions that the amendment has not effected any change in the principle laid down in the earliest decision that the tax liability under the Act is to be worked out first by working out the gross profits and deducting therefrom bonus payable to the employees.
Therefore, it follows that the Tribunal committed an error in law in corrupting, direct tax after deducting bonus.
Therefore, this point will have to be held in favour of the appellant.
The second item relates to the disallowance of Rs. 2.65 lakhs which represented the ex gratia payment made by the Company to certain employees drawing, emoluments exceeding Rs. 750 per mensem for the year 1964 65.
The Company claimed that this amount should be deducted from the gross profits whereas the Unions contended that the same has to be added back to the gross profits shown in the profit and loss account.
The factual position relating to this claim is as follows: From the letter dated February 4, 1966, Ext. 1, written by the Company to one of its officers Mr. section N. Banerjee, it is seen that the Company in appreciation of the officer 's services during the year 1964 65 made an ex gratia payment of Rs. 90.
Mr. Banerjee has given evidence on behalf of the Unions.
He has deposed to the fact that he was drawing about Rs. 1,000 per mensem and that he received the letter Ext.
I as well as the sum of Rs. 90 mentioned therein.
He has further stated that over and above this sum of Rs. 90 he has also, received the bonus payable to him under the Act for the year 1964 65.
He has also deposed to the effect that the ex gratia payment of Rs.( 90 was paid to him in lieu of bonus calculated on the difference in emoluments drawn by him and the ceiling of Rs. 750 per mensem fixed by the Act.
It was (1) ; (2) ; (3) ; 111 the practice of the Company to pay bonus to all the members of its staff without application of any ceiling.
In view of the fact that a ceiling had been fixed under the Act, to make up for the lesser amount that the employees like Mr. Banerjee will get under the Act, this amount of Rs. 2.65 lakhs was paid to all such officers.
The Tribunal accepted the evidence of Mr. Banerjee that the ex gratia amount was paid to keep up the old practice of the Company of paying all the members of the staff without the application of any ceiling.
The Tribunal held that such a payment was not an item which could be deducted from the gross profits under the Act as claimed by the management.
Accordingly, it added back the sum of Rs. 2.65 lakhs to the gross profits shown in the profit and loss account.
Mr. Mukherjee urged that the Company was justified in claiming the above amount by way of deduction.
He referred us to the definition of "employee" in section 2(13) of the Act as also to the employees declared eligible for bonus under section 8.
He also relied on sections 10 and 11 which make it obligatory on an employer to pay the minimum bonus and also the maximum bonus upto 20% respectively.
We are not inclined to agree with the contention of Mr. Mukherjee that the Tribunal committed an error when it added back the sum of Rs. 2.65 lakhs.
From the evidence of Mr. Banerjee, which has been accepted by the Tribunal, read along with the letter Ext.
1, it is clear that Mr. Banerjee received not only bonus due to him under the Act, but also the extra amount of Rs. 90.
Mr. Banerjee was admittedly drawing a salary of Rs. 1000 per mensem.
For a person to be an "employee" under section 2(13), among other things, he is a person drawing a salary or wage not exceeding Rs. 1600 per mensem.
Under section 8, it is provided that every employee is entitled to be paid in an accounting year bonus as per the Act provided he has worked in the establishment for not less than thirty working days in that year.
Section 10, provides for payment of minimum bonus to every employee.
Similarly section 11 provides for payment of bonus to every employee subject to a maximum of 20% of his salary or wage.
According to Mr. Mukherjee there is no prohibition in the Act from paying bonus to officers like Mr. Banerjee, upto a maximum of 20%.
Therefore, when the payment as in Ext.
1, has been made to officers like Mr. Banerjee and others, such amounts have to be computed as an item of expenditure, under the Second Schedule of the Act.
It is no doubt true that an officer drawing a salary not exceeding, Rs. 1600 per mensem is an employee under section 2(13) and he will also be eligible for payment of bonus under section 8 read with sections 10 and 11 of the Act.
But ,the point that is missed by the learned counsel is the limitation 112 contained in section 12.
Though officers drawing salary upto Rs. 1600 per mensem are employees under section 2 (13) and eligible for bonus, still for purposes of calculation of bonus payable under sections 10 and 11, such officers, whose salary exceeds Rs. 750 per mensem, for calculating bonus, the, salary or wages per month will be taken at the maximum of Rs. 750 per mensem.
That is, if an officer is getting, Rs. 1500, per mensem.
he will be eligible for onus; nevertheless for calculating bonus payable to him he will be treated as drawing a salary of only Rs. 750 per mensem.
Therefore, Mr. Banerjee, in the case before.
, us, has admittedly to be paid bonus, which is due to him under the Act for the year 1964 65 on the, basis that his salary is only Rs. 750 per mensem.
What the Company has done was to pay him not only the bonus as calculated under the Act, but also an additional amount.
Such additional amount paid to all such officers totalling Rs. 2.65 lakhs cannot be considered to be an expenditure debited directly to Reserves.
The Tribunal was justified in adding back this amount to the gross profits.
The third item relates to return on provision for doubtful debts.
The Company had calculated return of Share capital and Reserves.
It further claimed a return at 6% on Rs. 2.5 lakhs, which according to it was a revision for doubtful debts.
The amount claimed as return under this head was Rs. 15,000 and the Company claimed to deduct this amount from the gross profits as an item of expenditure.
The Tribunal has rejected this claim of the Company.
It is not necessary for us to dwell on this point at any great length in view of the decision of this Court in Indian Oxygen Ltd. etc.
vs Their Workmen(1), where the decision of the Tribunal directing such an amount to be added back in computing the gross profits has been approved.
The legal position has been dealt with in the said _judgment.
Accordingly, we hold that the Tribunal was justified in adding back the said amount to gross profits.
Mr. P. section Khera, learned counsel for the Unions has contended that the Tribunal was not justified in allowing deduction of certain items from the gross profits for purposes of computing the available and allocable surplus.
The Unions no doubt have not filed any appeal.
In fact in the particular circumstances of this case the could not have filed an appeal because they have been awarded the maximum 20% allowable under the Act.
But, according to Mr. Khera, if the items on which he has relied on had been added back, the Award of the Tribunal can be maintained even on the basis that the principle adopted by the Tribunal in respect of direct tax is found to be erroneous by this Court.
(1) ; 113 The right of parties like the respondents before us even in labour adjudication to support the decision of the Tribunal on grounds which were not accepted by the Tribunal or on other grounds which may not have been taken note of by the Tribunal, has been recognised by this Court in Management of Northern Railway Co operative Society Ltd. vs Industrial Tribunal, Rajasthan etc.
(" ') In fact this decision had to deal with an appeal filed a Co operative Society against the Award of the Tribunal setting aside the order passed by the Society removing from its service an employee.
This Court permitted the Union concerned, which was respondent in the appeal, to support the Award of the Tribunal, directing reinstatement of the employee on grounds which had not been accepted by the Tribunal and also on ground which had not been taken notice of by the Tribunal.
Similarly, in J. K. Synthetics Limited vs J. K. Synthetics Mazdoor Union(1), this Court permitted the Union, which was the respondent in the appeal, to support the decision of the Industrial Tribunal on a method of computation regarding bonus which was not adopted by the Tribunal.
Though 'the management appellant therein challenged the right of the Union to support the award on other grounds without filing an appeal, that contention was rejected by this Court as follows : "On behalf of the management the right of the union to challenge the multiplier and divisor, in the absence of an appeal by it, is strenuously contested but in our view there is little force in this objection.
The appeal by the employer is against the grant of bonus to, the employees which implies that the method of computation of the gross profits, as well as of the available surplus and the rate at which the bonus is granted can subjected to scrutiny.
It is needless to recount the several priorities that have to be deducted and the items in respect of which amounts have to be added, before arriving at the available surplus.
In an appeal, the sevetat steps which have to be taken for computation of the available surplus, either in respect of the actual amounts or the method adopted, can be challenged.
If so, the union, even where it has not appealed against ,the award, can support it on a method of computation, which may not have been adopted by the Tribunal but nonetheless is recognised by the Full Bench formula of this Court so longing in the final result the amount awarded is not exceeded.
We are supported in this view by a decision of this Court in Management of Northern Railway Cooperative Society Ltd. vs Industrial Tribunal, Rajasthan, (1) ; (2) 114 Jaipur and another(1), where it was held that the respondents were entitled to support the decision of the Tribunal even on grounds which were not accepted by the Tribunal or on other grounds which may not have been taken notice of by the Tribunal while they were patent on the face of the record.
" In the said decision this Court also found support for the above view in the decision of Ramanbhai Ashabhai Patel vs Dabhi Ajitkumar Fulsinji and others(1), though the latter decision related to an election appeal.
We will now deal with the items, which, according to ( 'the Unions should not have been allowed to be deducted from the gross profits.
The first item relates to a sum of Rs. 18,24,047 paid by the Company to retired workmen at Jamshedpur Workshop under a Voluntary Retirement Scheme.
This Scheme is exhibit G. and it was framed on August 9, 1965.
The Scheme states that the Company has been suffering, from an acute shortage of imported raw materials in view of the difficulty in getting foreign exchange and as such production could not be maintained for some, considerable time.
In view of these difficulties it is stated that the Company has found it necessary substantially to reduce the number of workers in the Workshop.
The Scheme offered substantial benefits to workmen who choose to retire voluntarily, namely, ex gratia payment equal to retrenchment compensation under section 25 of the Industrial Disputes Act, and gratuity admissible to the workmen.
There is evidence on the side of the Company that about 450 workmen availed themselves of the Voluntary Retirement Scheme and a sum of Rs. 18,24,047 was paid.
This item has been included in the profit and loss account under the heading "Salary, Wages, Bonus and Retirement gratuities.
" The Company gave a break ,up of these items in answer to the interrogatories furnished to it by the workmen.
The contention on behalf of the Unions is that under the Re tirement Gratuity Scheme, which is in force, a workman retires at the age of 60 and normally during the year 1965 66, the payment of gratuity to persons so retired would have come to Rs. 1.21 lakhs.
Therefore, it was argued that the payment of Rs. 18.24 lakhs and odd paid as lumpsum under the Voluntary Retirement Scheme during the year 1965 66 was not proper as that amount would have in the ordinary course been spread over eight or ten years.
The Tribunal has rejected this claim of the Unions, and in ,,our opinion, quite rightly.
If there had been a retrenchment and compensation had been paid to all these workmen, ;the Unions cannot raise any objection in law to the payment of such amount.
(1) ; (2) [1965]1 S.C.R. 712.
115 If retrenchment had been restored, the junior most men under the principle "last come first go" would have been sent out of service.
On the other hand, the Voluntary Retirement Scheme enabled the younger workmen to continue in service while it offered a temptation for the older employees to retire from service.
The Voluntary Retirement Scheme has not been challenged, as mala fides by the Unions.
We are in agreement with the view of the Tribunal that the payment of compensation to induce the workmen to retire prematurely was an item of expenditure incurred by the Company on the ground of commercial expense in order to facilitate carrying on of the business and it was an expenditure allowable under section 37(1) of the Income tax Act.
It was not an expenditure of a capital nature.
The Tribunal was justified in declining to add back this item of expenditure to the gross profits.
The second item, which according to the Unions should have been added back is the sum of Rs. 65,764 which was claimed as extra shift allowance of plants and machinery added during the year.
The consideration of this claim was postponed by the Income tax Officer on the ground that the Company had not furnished the requisite particulars.
The Company claimed a sum of Rs. 36,10,594 as depreciation allowable under section 32(1) of the Income tax Act.
According to the Unions, as the sum of Rs. 65,764 has not been accepted by the Income tax Officer, the Company can claim depreciation only in the sum of Rs. 35,44,830.
The Tribunal did not accept this contention of the Unions on the ground that the amount of Rs. 65,764 has not been disallowed by the Income tax Officer.
It is now stated in an affidavit filed in this Court on March 23, 1972 by the Chief Financial Accountant of the Company that the Company has filed an appeal against the order of the Income tax Officer refusing to allow Rs. 65,764 as extra shift allowance for the year 1965 66.
In our opinion, the rejection of the Unions ' contention in this regard by the Tribunal is justified.
It is seen that the Company has produced figures for depreciation and that has not been subjected to any serious challenge by the Unions.
Hence the objection regarding extra shift allowance has also to be rejected in view of the decision of this Court, in Jabalpur Bijlighar Karamchari Panchayat vs The Jabalpur Electric Supply Co. Ltd. and another.
(1) The third item objected to by the Unions related to the ex penditure shown by the Company for repairs and renewals.
According to the Unions the expenses shown are very heavy and large and that the Company was not justified in incurring 'the same.
In our opinion, this contention also has been properly rejected by the Tribunal.
Apart from the fact that the Unions (1) A.I.R. 1972 S.C.70 116 are not technically entitled to raise this objection, as they have not pleaded the same in their statement of case filed before this Court, this contention can be rejected even on merits.
The Unions had furnished interrogatories requiring the Company to furnish certain particulars.
Mr. R. N. Gupta, the Chief Financial Accountant of the Company filed an affidavit before the Tribunal giving answers to the interrogatories.
He had categorically given details as to how the amount of Rs. 12.94 lakhs has been incurred as expenses for repairs and renewal.
Mr. Gupta had also given evidence about this matter.
In cross examination he had stated that all the vouchers for repairs and renewal were scrutinised by the auditors and this evidence has been accepted by the Tribunal.
Therefore, the Tribunal was justified in rejecting this claim of the Unions.
The last item relates to the claim made by the Unions that after distribution of bonus at 20% for the year 1964 65, there must have been a surplus and it.
should have been set on for the next year, namely, 1965 66.
This amount so set on should be taken into account for computing bonus for the year 1965 66.
This assertion made on behalf of the Unions was controverted by the Company on the ground that there was no surplus left after paying, the maximum 20% bonus for the accounting year 1964 65.
In fact the evidence of Mr. Gupta shows that apart from there not having been any surplus, the Company Raid 20% bonus merely because they had already announced that they will pay the same.
It is clear from his evidence that bon us at 20% could not have been declared for the year 1964 65 and in order to honour the declaration made by the Company, bonus was paid at that percentage.
This evidence of Mr. Gupta has been, in our opinion, rightly accepted by the Tribunal.
No evidence contra has been adduced by the Unions.
Once the evidence of Mr. Gupta is accepted, it is: clear that there was no surplus after paying bonus for 1964 65.
Therefore, the question of set on does not arise.
This plea of the Unions also has to be rejected.
From what is stated above, it is seen that the only aspect in respect of which the Award of the Tribunal requires modification is in respect of the principle to, be adopted for calculating direct tax.
As we have accepted the contention of the Company in that regard, it follows that recomputation of the available and allocable surplus will have to be made after making a calculation of direct tax without deducting bonus payable for the year 1965 66.
In the original calculation filed by the Company, it calculated tax only in the sum of Rs. 98,10,893.
It has later on corrected this figure by adding a sum of Rs. 1,34, 921 being surtax.
Therefore, the total direct tax will be Rs. 99,45,814.
Here again Mr. 117 Gupta in his affidavit dated March 23, 1972 has given the correct figures.
Therefore the recomputation of the available surplus, allocable surplus and the percentage of bonus for The accounting year 1965 66 on the basis of our judgment will be as follows Rs. Rs. Gross Profit as pier Award 216,16,195 of National Tribunal Less (1) Depreciation admissible under section 32 (1) of I.T. Act. 36,10,594 (2) Development Rebate admissible 6,76,22442,86,818 1,73,29,377 Less: Direct Tax as Per cl. 6 (c) including Di vidend Tax 99,45,814 73,83,563 Less Statutory Deductions Share Capital Rs. 248,65,45021,13,56349,22,387 @ 8 .5%.
Reserves Rs. 46,81,37,73928,08,824 @ 6% (without tak ing into account 6 % of Rs. 250,000/ be ing provision for Doubtful debts) Available Surplus. 24,61,176 Allocable Surplus60% of above 14,76,706 Effective Gross salary 105,32,880 Bonus paid @ 13.51% 14,22,992 Balance .51% 53,714 14.02% 14,76,706 From the above, it will be seen that the workmen will be entitled to bonus at 14.02% of their total salary or wages and the amount will be Rs. 14,76,706 and not Rs. 20% as awarded by the Tribunal.
From this it follows that the further direction in the Award of the Tribunal regarding set on cannot be accepted.
Admittedly, the Company has already declared and paid Rs. 14,22,922 representing 13.51% of the total wages or salary.
Therefore, the balance additional amount that the Company will have to pay by way of bonus to make up the 14.02%, as stated above, is Rs. 53,714.
This amount will be paid by the Company within a period not exceeding two months from today.
The Award of the Industrial Tribunal is accordingly modified and the appeal allowed in part.
Parties will bear their own costs.
G.C Appeal allowed in part.
| The appellant company declared bonus for the year 1955 56 at 13.51% The workmen demanded bonus at the rate of 20%, the maximum provided in the Payment.of Bonus Act, 1965.
The dispute about the rate of bonus and calculation of the available surplus was referred to the Industrial Tribunal.
The Tribunal held that a sum of Rs. 21,06,576 being bonus at 20% of the gross effective salaries and wages was payable for the year in question and it directed the surplus amount of Rs. 1,46,252/ to be set on As the bonus at the rate of 13.51 % had already been declared and paid by the Company, the Tribunal directed the payment of the balance 6.49% within a prescribed period.
In appeal to this Court against the Tribunal 's award the appellant company contended : (i) that the Tribunal erred in holding that under sections 6 and 7 of the the bonus payable for the relevant accounting year has to be deducted from the gross profits for the calculation of direct tax, (ii) that the Tribunal erred in refusing to deduct from the gross profits the ex gratia payment made to employees in respect of salary above the ceiling of Rs. 750 fixed by the Act.
(iii) that the Tribunal wrongly refused to deduct the reserve for doubtful debts from the gross profits.
On behalf of the respondent workmen it was urged that the Tribunal was not justified in allowing deduction of certain items from the gross profits for purposes of computing the available and allocable surplus.
HELD : (i) In the case of Metal Box Co., it was held by this Court that the notional tax liability is to be worked out by first working out the gross profits and deducting therefrom the prior charges under section 6, but not the bonus payable to the employees.
It is clear from the above decision that an employer is entitled to deduct his tax liability without deducting first the amount of bonus he would be liable to pay from and out of the amount computed under sections 4 & 6 of the Act.
This principle has been upheld by the Court in later cases.
This Court has also held that the amendment of the Act in 1969 has not effected any change in the earlier decision that the tax liability under the Act is to be workedout firstby working out the gross profits and deducting therefrom bonuspayableto the employees.
It followed that the Tribunal committed anerror inlaw in computing direct tax after deducting bonus.
[109H 110D] Metal Box Co. of India Ltd. vs Their Workmen, [1969]1 S.C.R. 750, The Workmen of William Jacks, and Company Ltd. Madras vs Management of William Jacks and Co. Ltd., Madras, A.I.R. 1971 S.C. 08SupCI/72 106 1821, Delhi Cloth and General Mills Co. Ltd. vs Workmen ; and Indian Oxygen Ltd. etc.
vs Their Workmen; , applied.
(ii) Though officers drawing salary upto Rs. 1600 per mensem are employees under section 2(13) of the Act and eligible for bonus, the salary or wages per month will be taken at the maximum of Rs. 750/ permensem.
What the company had done was to pay such men not only the bonus as calculated under the Act, but also in additional amount representing bonus on the emoluments above the ceiling of Rs. 750/ .
Such additional amount paid to all such officers totalling Rs. 2.5 lakhs could not be considered to be an expenditure debited directly to Reserves.
The Tribunal was justified in adding back this amount to the gross profits.
[12A C] (iii) In view of the decision of this Court in Indian Oxygen Ltd. the Tribunal 's decision adding back the deduction claimed by the appellant on account of return on the provision for doubtful debts must be upheld.
[112E F] (iv) The respondents were entitled to support the decision of the Tribunal even on grounds which were not accepted by the Tribunal or on other grounds which may not have taken notice of by the Tribunal while they were patent on the face of the record.
[113A, 114A B] Management, of Northern Railway Co operative Society Ltd. vs Industrial Tribunal, Rajasthan et. ; ; J. K. Synthetics Limited vs J.K. Synthetics Mazdoor Union, and Ramanbhai Ashabhai Patel vs Dabhi Ajitkumar Fulsinji and others; , , followed.
(v) The Voluntary Retirement Scheme had not been challenged as mala fide by the Unions.
The payment of Compensation.
to induce the workmen to retire prematurely was an item of expenditure incurred by the company on the ground of commercial expense in order to facilitate carying on of the business and it was an expenditure allowable under section 37(i) of the Income tax Act.
It was not an expenditure of a capital nature.
The Tribunal was justified in declining to add back this item of expenditure to the gross profits.
[115B C] (vi) The Company had filed an appeal against the order of the Income tax officer postponing consideration of the company 's claim for extra shift allowance.
The Company had produced figures of depreciation and that had not been subjected to any serious challenge by the Unions.
In the circumstances the Tribunal rightly refused to add back the amount claimed by the Company as extra shift allowance.
[1 15F G] Jabalpur Bijlighar Karamchari Panchayat vs
The Jabalpur Electric Supply Co. Ltd. and another, A.I.R. 1972 S.C.70 applied.
(vii) The amount claimed by the Companyin respect of repairs and renewals was supported by evidence and had been accepted by the auditors.
The contention of the Unions that the Company was not justified in incurring the said expenditure had been rightly rejected by the Tribunal.
[1 15A] (viii) Since from the evidence produced on behalf of the company it was clear that there was no surplus after paying bonus for 1964 65 the question of set on for the next year did not arise.
The plea of the Unions in this regard had to be rejected.
[116F] [After working out the available and allocable surplus on the basis of the above findings the Court fixed the bonus payable at 14.02%].
|
ON: S.L.P. (Criminal) No. 2485 of 1989.
From the Judgment and Order dated 12.12.1989 of the Delhi High Court in C.W.P. 589 of 1989.
Harjinder Singh and R.N. Joshi for the Petitioner.
Soli J. Sorabjee, P.K. Goswamy, Udai Lalit, C.V.S. Rao, P. Parmeshwaran and Sushma Suri for the Respondents.
The Judgment of the Court was delivered by REDDY, J.
This is a petition under Article 136 of the Constitution of India against the judgment and order of the High Court of Delhi dismissing the writ petition filed on behalf of the detenu challenging the detention.
Notice was given and after hearing counsel for both the parties at length the matter is being disposed of at the admission stage.
The detenu was detained under Section 3(1) of the Con servation of Foreign Exchange and Prevention of Smuggling Activities Act (hereinafter referred to as 'the Act ') by an order dated 13.7.89.
On 7.6.89 Officers of Directorate of Revenue Intelligence, New Delhi intercepted a Maruti Car in which one Mahesh Kumar Chauhan and three others were present but no recovery was effected on the spot.
But later on the Car was thoroughly rummaged in presence of two independent witnesses and the occupants of the car and 206 foreign marked gold biscuits of ten tolas each were recovered from the cavities of the car meant for fitting speakers in the rear portion of the car.
The occupants did not give any explanation for the possession of gold biscuits.
On personal search of Mahesh, a slip was recovered which contained a telephone number and Mahesh Kumar in his statement admitted that he was to hand over the smuggled goods to one Vijay Kumar.
The premises of these two peoples were searched and a receipt of token tax in respect of the car was recovered.
Mahesh Kumar admitted that he was visiting Dubai frequently to bring con 320 sumer goods and gold ornaments for being sold in the local market.
One Avtar Singh who was engaged in smuggling of foreign gold biscuits, agreed to sell the gold biscuits to Mahesh Kumar on commission.
He also gave some more details about Avtar Singh.
Similarly Vijay Kumar also made a state ment.
From these statements it is also revealed that peti tioner herein Sanjeev Kumar Aggarwal had made arrangements for selling the gold biscuits.
The residential premises of the petitioner was searched and he was taken into custody.
The officers of the Directorate of Revenue Intelligence questioned the petitioner and he gave a statement.
On the basis of this material the detaining authority passed an order of detention on 13.7.89 and the same was served on 24.7.89.
The grounds were also served in time.
The learned counsel submitted that there is a total non application of mind by the detaining authority inasmuch as he was failed to note that the detenu was in jail and that there is no possibility of his being released and the failure on the part of the detaining authority to consider the same renders the detention invalid.
It is true that the petitioner was in judicial custody in connection with crimi nal proceedings.
An application was filed in the court of A.C.M.M. Delhi for extending the remand and the remand was granted upto 6.7.89.
However, two detenus who figured as co accused in that criminal proceedings were also in the judicial custody and on their behalf an application for bail was filed.
As mentioned in the grounds of detention the detaining authority has noted these circumstances.
In para graph No. 16 it is mentioned that: 'I am aware that all of you are under judicial custody and possibility of your release on bail in near future cannot be ruled out.
Also nothing prevents Mahesh Kumar Chauhan, Vijay Kumar Dharne and you from moving bail application and get ting release on bail." Then in paragraph No. 24 it is mentioned thus: "From the foregoing facts and circumstances and statements recorded in this connection as disclosed herein above, it is evident that you have engaged yourself in abetting the smuggling of goods unless prevented you will continue to do so in similar manner or otherwise in future when released on bail.
" The further submission of the learned counsel is that the petitioner 321 alongwith two others were in judicial custody and they were further remanded upto 20.7.1989 and no bail application was filed or pending as on the date of passing orders of deten tion.
Therefore it must necessarily be inferred that there is no awareness on the detaining authority of this aspect.
Reliance is placed on some of the decisions of Supreme Court of India in this context.
In Abdul Razak Abdul Wahab Sheikh vs
S.N. Sinha, Commis sioner of Police, Ahmadabad and Anr., ; it is held that there must be awareness in the mind of the detain ing authority that the detenu is in custody at the time of service of order of detention and that cogent and relevant material and fresh facts have been disclosed necessitating making of an order of detention.
In the course of the judg ment it is noted that the detaining authority also was not aware that application for bail filed on behalf of the detenu was rejected by the designated court and therefore, there was no application of mind.
In Binod Singh vs District Magistrate, Dhanbad, 16 it is laid down "If a man is in custody and there is no imminent possibility of his being released, the power of preventive detention should not be exercised.
In the instant case when the actual order of detention was served upon the detenu, the detenu was in jail.
There is no indica tion that this factor or the question that the said detenu might be released or that there was such a possibility of his release, was taken into consideration by the detaining authority properly and seriously before the service of the order." In Vijay Kumar vs State of Jammu and Kashmir, ; the detention order was quashed because it did not give the slightest indication that the detaining authority was aware that the detenu was already in jail.
But in the case before us the detaining authority has noted in the grounds that the petitioner alongwith other two coaccused have been remanded to judicial custody and the bail applica tion was filed on behalf of the other two detenues and there is every likelihood of the petitioner also being released on bail and as such the possibility cannot be ruled out.
The other material relied upon by the detaining authority in apprehending that the detenus are likely to be released on bail is that their remand to the judicial custody was upto 20.7.89 and that the other two co accused have also filed bail applications and they were pending and that this mate rial is sufficient to indicate that petitioner also may file bail application and is likely to be released on bail.
322 We have carefully examined the material relied upon by the detaining authority in this regard and we are of the opinion that it cannot be said that there was no awareness in the mind of the detaining authority about the detenu being in custody and that if he is released on bail he is likely to indulge in the prejudicial activities.
At this juncture we may also notice another decision of the Supreme Court.
In Ramakrishna Rawat vs District Magistrate, Jabal pur, , the detention order was upheld since the custody was obviously of a short duration and on the basis of the antecedent activities of the detenu in the proximate past, the detaining authority could reasonably reach its subjective satisfaction in respect of the detenu that he was in custody.
The learned counsel, however, submitted that in case the bail application is filed, the same can be opposed or even if enlarged the same can be questioned in a higher court and that a mere bald statement that the person would repeat his criminal activities after release would not be enough.
In Smt.
Shashi Aggarwal vs State of U.P. and Ors.
, ; it is observed: "The possibility of the court granting bail may not be sufficient.
Nor a bald statement that the person would repeat his criminal activities would be enough.
There must also be credible information or cogent reasons apparent on the record that the detenu, if enlarged on bail, would act prejudicially to the interest of public order.
" This is a case of detention on the ground of likelihood of disruption of public order by the detenu.
The detention order shows that the order had been made only on the sole ground that the detenu was trying to come out on bail.
Learned counsel also relied upon the decision in Ramesh Yadav vs District Magistrate, Etah & Ors., wherein it is observed: "Merely on the ground that an accused in detention as an under trial prisoner was likely to get bail, an order of detention under the National Security Act should not ordi narily be passed.
If the apprehension of the detaining authority was true, the bail application had to be opposed and in case bail was granted, challenge against that order in the higher forum had to be raised.
" 323 But as already held in the instant case the detaining au thority was not only aware that the detenu was in jail but also noted the circumstances on the basis of which he was satisfied that the detenu was likely to come out on bail and continue to engage himself in the smuggling of goods.
There fore the detention was not ordered on the mere ground that he is likely to be released on bail but on the ground that the detaining authority was satisfied that the detenu was likely to indulge in the same activities if released on bail.
At this stage it is useful to refer to another impor tant decision rendered by the Constitution Bench in Ramesh war Shaw vs District Magistrate, Burdwan, ; , wherein the detention order was served while the detenu was in custody.
The detenu was in jail by virtue of a remand order.
The Constitution Bench considered the effect of the detenU 's subsisting ' detention and it was indicated that the detenu 's subsisting detention did not by itself invalidate the detention order but facts and circumstances justifying the order of preventive deten tion notwithstanding his custody were necessary to sustain such an order.
It is observed in the said case that: "Whether the detention of the said person would be necessary after he is released from jail, and if the authority is bona fide satisfied that such detention is necessary, he can make a valid order of detention a few days before the person is likely to be released.
The antecedent history and the past conduct on which the order of detention would be based would, in such a case, be proximate in point of time and would have a rational connection with the conclusion drawn by the authority that the detention of the person atter his release is necessary . " It was further observed that: "Therefore.
we are satisfied that the question as to whether an order of detention can be passed against a person who is in detention or m jail, will always have to be determined in the circumstances of each case.
" The principles laid down by the Constitution Bench are followed in a number of subsequent decisions.
In Alijan Mian vs District Magistrate, Dhanbad, [1983] 4 SCC 301 the detention order was upheld even though the detenu was in jail custody on the date of passing of the detention order because the 324 detention order showed that the detaining authority was alive to the fact yet it was satisfied that if the detenu was enlarged on bail, which was quite likely, he could create problems of public order.
In N. Meera Rani vs Government of Tamil Nadu & Anr., [ 18 all these earlier cases have been referred to extensively and the conclusions are deduced as follows: "Subsisting custody of the detenu by itself does not invali date an order of his preventive detention and the decision must depend on the facts of the particular case, preventive detention being necessary to prevent the detenu from acting in any manner prejudicial to the security of the State or to the maintenance of the public order etc.
ordinarily it is not needed when the detenu is already in custody; the de taining authority must show its awareness to the fact of subsisting custody of the detenu and take that factor into account while making the order; but, even so, if the detain ing authority is reasonably satisfied on cogent material that there is likelihood of his release and in view of his antecedent activities which are proximate in pint of time he must be detained in order to prevent him from indulging in such prejudicial activities, the detention order can be validly made even in anticipation to operate on his release.
This appears to us, to be the correct legal position.
" In one of the latest judgments of this Court in Shri Dhar mendra Suganchand Chelawat etc.
vs Union of India and Ors.
JT , once again all the authoritative pro nouncements including that of the Constitution Bench in Rameshwar Shaw 's case are referred to and the Bench which consisted of three Judges observed thus: "The decisions referred to above led to the conclusion that an order for detention can be validly passed against a person in custody and for that purpose it is necessary that the grounds of detention must show that (i) the detaining authority was aware of the fact that the detenu is already in detention; and (ii) there were compelling reasons justi fying such detention despite the fact that the detenu is already in detention.
The expression "compelling reasons" in the context of making an order for detention of a person already in custody implies that there must be cogent materi al before the detaining authority on the basis of which it may be 325 satisfied that (a) the detenu is likely to be released from custody in the near future and (b) taking into account the nature of the antecedent activities of the detenu, it is likely that after his release from custody he would indulge in prejudicial activities and it is necessary to detain him in order to prevent him from engaging in such activities.
" It could thus be seen that no decision of this Court has gone to the extent of holding that no order of detention can validly be passed against a person in custody under any circumstances.
Therefore the facts and circumstances of each case have to be taken into consideration in the context of considering the order of detention passed in the case of a detenu who is already in jail.
We have already, in the instant case, referred to the grounds and the various cir cumstances noted by the detaining authority and we are satisfied that the detention order cannot be quashed on this ground.
Learned counsel, however, strongly relied on Smt.
Shashi Aggarwal 's case and Ramesh Yadav 's case and contended that in the instant case also the bail application could be opposed if moved or if enlarged the same can be questioned in a higher court and on that ground the detention order should be held to be invalid.
In N. Meera Rani 's case a Bench of three Judges noted the above observations in Smt.
Shashi Aggarwal 's case and Ramesh Yadav 's case and it is said that they were made on the facts of those particular cases and the Bench also observed thus:.
"A review of the above decisions reaffirms the position which was settled by the decision of a Constitution Bench in Rameshwar Shaw case.
The conclusion about validity of the detention order in each case was reached on the facts of the particular case and the observations made in each of them have to be read in the context in which they are made.
None of the observations made in any subsequent case can be construed at variance with the principle indicated in Ra meshwar Shaw case for the obvious reason that all subsequent decisions were by benches comprised of lesser number of judges.
We have dealt with this matter at some length be cause an attempt has been made for some time to construe some of the recent decisions as modifying the principle enunciated by the Constitution Bench in Rameshwar Shaw 's case.
" 326 AS a matter of fact, in Shri Dharmendra Suganchand Chela wat 's, case there is a reference to Smt.
Shashi Aggarwal 's, case and Ramesh Yadav 's, case and a Bench of three Judges following the decision of the Constitution Bench in Ramesh war Shaw 's Case, laid down the above principles which we have already referred to.
Therefore we see no force in the submission.
The next submission of the learned counsel is that the detaining authority has not applied his mind properly in rejecting the representation made by the detenu.
It is submitted that in Annexure X 3, an application sent by Vijay Kumar, the co detenu, it is clearly mentioned that his statement was recorded under torture and duress.
Likewise in Annexure X 4, a petition filed in the Court of A.C.M.M.
New Delhi, it is complained that the statement was recorded under torture and duress.
According to the learned counsel, this petition as well as the medical reports of the Doctors who examined Vijay Kumar have not been referred to and considered by the authority while rejecting the representa tion.
Reliance is also placed on a judgment of the Delhi High Court in Sat Pal Manchanda vs
M.L. Wadhawan and Ors., (Criminal Writ No. 333 of 1986) decided on 30.10.86.
In that case it is held that all the relevant material should be taken into consideration by the detaining authority while disposing of the representation.
But in the instant case the circumstances are different.
As a matter of fact, it is referred in paragraph 15 of the grounds that a telegram dated 8.6.89 was received in the Ministry of Finance alleg ing that the detenu was picked up by the DRI officers and that the allegations made therein were found false and baseless.
In paragraph 17, it is also mentioned that the detenu alongwith his accomplices retracted from their state ment dated 8.6.89.
It can therefore be seen that the detain ing authority has considered the allegations that the detenu was manhandled etc.
At any rate, the detaining authority has clearly noted that the detenu has retracted from the alleged statement, therefore it can not be said that there is non application of mind in this regard, namely, in considering the representation.
The same principle applies to the Advi sory Board also.
According to the submissions of the learned counsel, these documents were not placed before the Advisory Board in its meeting on 18.9.89.
Whatever statement was made by the petitioners on 22.6.89 prior to the detention and the grounds clearly disclose that there was retraction.
It must also be noted in this context that in the grounds in para graph 10 also it is mentioned that a telegram was received on 9.6.89) alleging about the wrongful arrest and extraction of the statements and the detaining authority has also taken note of the allegations made against the DRI officers which were round to 327 be false and baseless.
The same material was there before the Advisory Board.
Therefore there is no force in this submission.
It is lastly submitted that there was 11 days delay in serving the detention order.
It is true that the order of detention was passed on 13.7.89, but the same was served on 24.7.89.
According to the learned counsel, there is a viola tion of Section 3(3) of the Act.
The said provision lays down that for the purpose of Article 22(5) of the Constitu tion, the order should be served as soon as possible but ordinarily not later than five days and in exceptional circumstances and for reasons to be recorded in writing, not later than fifteen days from the date of detention.
Learned counsel for the State submitted that firstly the point of delay was not taken up in the special leave petition, there fore he had no opportunity to counter the same.
However, from the record he submitted that it took quite sometime for translating the documents to Hindi and Gurumukhi.
We have seen the documents filed before us and we are satisfied that there are valid and sufficient reasons for delay in serving the detention order.
Thus, we find no merit in anyone of the submissions.
The petition is, therefore, dismissed.
N.V.K. Petition dismissed.
| The firsf petition is on behalf of one thousand Dairy Mates and the other on behalf of 280 workers as Junior Plant Operatives and semiskilled Operatives.
The grievance of Dairy Mates is that although they perform the duties of semi skilled workers they have been wrongly classified as unskilled workers and paid salaries as such.
Similarly the grievance of the Junior Plant Operatives and semi skilled Operatives is that they are actually doing the work of skilled workers but are classified as unskilled workers and paid salary as such.
In view of the disputed questions relating to the nature and functions of the workmen involved, the Court referred the matter to the Central Govt.
Industrial Tribunal cum Labour Court to report to the Court as to what would be appropriate pay scales admissible to the concerned workers.
On the basis of additional material and evidence produced by the workers, the Tribunal made its report and recommended that taking into consideration all the facts and circum stances, the Mates and JPOs may be given the pay scale of Rs.800 1150, the semi skilled operatives may be given the scale of Rs.825 1200 and the skilled operatives may be given the scale of Rs.950 1400.
The Union of India criticised the pay scale recommended to the Mates contending that their work was of unskilled nature.
Accepting the report of the Tribunal while allowing the Petitions in terms of the re port, this Court, HELD: There is no roster of duties and functions of the Mates in any Unit and all Mates have to do the work of the Units to which they are assigned on any particular day.
The Mates have thus to be versatile with the work in all the Units, both unskilled and semi skilled.
This is certainly not the case with the Sweepers, Chowkidars and Malls who are categorised as unskilled workers.
This being the case, there is no merit in the contention of the Union of India that the Mates should be 324 treated on par with the unskilled workers.
[328C D]
|
ivil Appeal No. 5 (N) of 1982.
(From the Judgment and order dated the 14th September, 1981 of the High Court of Delhi at New Delhi in F.A. No. 29 of 1981) Soli J. Sorabjee, A. Minocha, Mrs. Veerna Minocha and Dr. Roxna Swamy, for the Appellant.
Rameshwar Nath for the Respondent.
The Judgment of the Court was delivered by 376 PATHAK, J.
I agree that the appeal must succeed.
The real question is whether the Explanation(l) to r. 13 of O. 9 of the Code of Civil Procedure bars the appeal filed by the respondent against the ex parte decree.
The Explanation was enacted by the Code of Civil Procedure (Amendment) Act, 1976 with effect from February 1, 1977.
Prior to its enactment, a defendant burdened by an ex parte decree could apply to the trial court under r. 13 of O. 9 for setting aside the decree.
He could also appeal under section 96 against the decree.
The mere filing of the appeal did not take away the jurisdiction of the trial court to entertain and dispose of the application for setting aside the ex parte decree.
It was where the appeal was disposed of, and the appellate decree, superseded the trial court decree by reversing, confirming or varying it that the trial court could not proceed to set aside its ex parte decree.
For the trial court decree was said to have merged with the appellate decree.
There are of course cases where the trial court decree does not merge with the appellate decree.
Such instances arise when the appeal is dismissed in default, or where it is dismissed as having abated by reason of the omission of the appellant to implead the legal representatives of a deceased respondent or where it is dismissed as barred by limitation.
So there a limited area where the trial court decree merges in the appellate decree and when that takes place an application before the trial court for setting aside the decree loses all meaning.
It was a limited area defined by the operation of the doctrine of merger.
From February 1, 1977 the area was extended enormously.
With the Explanation in operation, no application for setting aside an ex parte decree can lie where the defendant has filed an appeal and the appeal has been disposed of on any ground other than the ground that the appeal has been withdrawn by the appellant.
No doubt the provision described as an "Explanation", but as is well known it is not the rubric which decisively defines the true nature of a statutory provision.
Its true nature must be determined from the content of the provision, its import gathered from the language employed, and the language construed in the context in which the 377 provision has been enacted.
In the present .
case, the rule in Heydon 's case,(l) approval of and applied by this Court in Swantraj & Ors.
vs State of Maharashtra (2) and many other cases, is attracted.
What was the law before the amendment, what was the mischief and defect for which the law did not provide, what remedy has Parliament resolved and appointed to cure the mischief, and the true reason of the remedy.
It has been observed earlier that a defendant intending to avoid an ex parte decree could apply to the trial court for setting it aside and could 'also appeal to a superior court against it.
The courts were open to a duplication of proceedings, and although the immediate relief claimed in the two proceedings was not identical both ultimately aimed at a redecision on the merits.
Moreover, on the two proceedings initiated by the defendant, the application under r. 13 of O. 9 would subsequently become infructuous if the appeal resulted in a decree superseding the trial court decree.
It was also possible to envisage the appeal becoming infructuous if the trial court decree was set aside on the application under r. 13 of O. 9 before the appeal was disposed of.
The plaintiff was in the unfortunate position of being dragged through two courts in simultaneous proceedings.
Public time and private convenience and money was sought to be saved by enacting the Explanation.
The Code of Civil Procedure (Amendment) Act, 1976 was enacted with the avowed purpose of abridging and simplifying the procedural law.
By enacting the Explanation, Parliament left it open to the defendant to apply under r. 13 of O. 9 for setting aside an ex parte decree only if the defendant had opted Dot to appeal against the ex parte decree or, in the case where he had preferred an appeal, the appeal had been withdrawn by him.
The withdrawal of the appeal was tantamount to effacing it.
It obliged the defendant to decide whether he would prefer an adjudication by the appellate court on the merits of the decree or have the decree set aside by the trial court under r. 13 of O. 9.
The legislative attempt incorporated in the Explanation was to discourage a two pronged attack on the decree and to confine the defendant to a single course of action.
If he did not withdraw the appeal filed by him, but allowed the appeal to be disposed of on any other ground, he was denied the right to 378 apply under r. 13 of O.9.
The disposal of the appeal on any ground whatever, apart from its withdrawal, constituted sufficient reason for bringing the ban into operation.
In the present case, the appeal was dismissed as barred by limitation.
That it was an appeal even though barred by time is clear from M/s. Mela Ram & Sons vs Commissioner of Income tax,(1) where Venkataram Ayyar, J., speaking for the court, after referring to Nagendranath Dey vs Suresh Chandra Dey,(2) Raja Kulkarni and Ors.
vs The State of Bombay(3) and Promotho Nath Roy vs W.A. Lee(4) held that "an appeal presented out of time is an appeal, and an order dismissing it as time barred is one passed in appeal.
" There can be no dispute then that in law what the respondent did was to file an appeal and that the order dismissing it as time barred was one disposing of the appeal.
Accordingly, the appeal is allowed, the judgment and order passed by the High Court are set aside and the ex parte decree passed in favour of the appellant is restored.
There is no order as to costs.
AMARENDRA NATH SEN, J.
Whether the dismissal of an appeal against an ex parte decree on the ground that the appeal is barred by limitation attracts the provisions contained in the Explanation in O. 9. R.13 of the Code of Civil Procedure and creates a bar to the maintainability of an application under O. 9.
rule 13 of the Code of Civil Procedure for setting aside the ex parte decree, is the question which falls for determination in this appeal by special leave granted by this Court.
The question arises in the following circumstances: The appellant filed a petition against the respondent under section 13 of the Hindu Marriage Act for the dissolution of her marriage with respondent and for a decree of divorce.
The said petition was filed by the appellant on 1.9.79 and the appellant obtained an ex 379 parte decree on 6 12 1979.
It appears that on 10 11 79 the respondent husband had addressed a letter to the Court requesting the Court for an adjournment of the case fixed on 6 12 1979 on the ground that because of special assignment it would not be possible for him to be present in Court on that day.
The Court refused to grant an adjournment and on that date an ex parte decree for divorce was passed in favour of the appellant.
The respondent husband preferred an appeal against the ex parte decree in the High Court.
As the appeal had been filed in the High Court beyond time, the respondent husband also made an application under section 5 of the Limitation Act for condonation of delay in filing the appeal.
By its judgment and order dated 17 3 1981, the High Court dismissed the application tor condonation of delay, holding that no sufficient cause for condonation had been made out.
The High Court by the same order and Judgment also dismissed the appeal holding "the appeal being barred by time is dismissed".
The respondent moved an application before the Trial Court under O. 3, rule 13 of the Code of Civil Procedure for setting aside the ex parte decree.
The respondent had also moved an application under section 5 of the Limitation Act for condonation of delay in making the application under O.9, rule 13 of the C.P. Code.
The learned Trial Judge held that no sufficient cause had been made out for condonation of delay and in that view of the matter the learned Trial Judge dismissed both the applications.
Against the order of the Trial Judge, the respondent filed an appeal in the High Court.
The main contention of the husband, the appellant in the High Court, was that the Trial Court was in error in coming to the conclusion that no sufficient cause for condonation of delay had been made out and the Trial Court had also erred in not setting aside the ex parte decree as there was sufficient cause for non appearance of the husband on the date fixed for the hearing of the petition for divorce.
On behalf of the wife, the respondent in the appeal before the High Court, it was urged that the Trial Court was clearly right on merits in coming to the conclusion that no sufficient cause had been made out for condonation of delay and for setting aside the decree and it was further urged that in view of the provisions contained in the Explanation in order 9, rule 13 of the Code of Civil Procedure, the application for setting aside the ex parte decree was not maintainable, as the appeal preferred by the husband against the ex parte decree had already been dismissed by the High Court.
The High Court for reasons recorded in its Judgment dated 14.9.1981 380 came to the conclusion that sufficient cause bad been made out by the husband for condonation cf delay in presenting the application under O. 9, rule 13 beyond the prescribed time, that sufficient cause had been made out by the husband for his non appearance at the hearing of the petition on 6 12 1979 when the ex parte decree for divorce was passed and that the Explanation in order IX, rule 13 did not create any bar to the maintainability of the application under order 9, rule 13, as the appeal against the ex parte decree had been dismissed not on merits but on the ground of Limitation.
The High Court held: "Thus I am of the view that the disposal of an appeal against the ex parte decree means disposal on merits for debarring the defendant applicant from filing or continuing an application for setting aside the ex parte decree under order 9 rule 13 of the code.
If an application for condonation of delay in filing appeal has not been accepted it means no appeal was preferred in law and dismissal of appeal as barred by time would not be disposal of the appeal as contemplated under Explanation to order 9 rule 13 of the Code.
I, therefore, hold that the appellant 's application under order 9, rule 13 of the Code of Civil Procedure is maintainable".
Against the Judgment and order of the High Court this appeal has been preferred by the wife with special leave granted by this Court The main contention raised on behalf of the appellant is that on a true interpretation of the Explanation in order 9, rule 13 of the Code of Civil Procedure the application for setting aside the ex parte decree must be held to be incompetent and not maintainable.
It has been urged that the High Court erred in holding that the Explanation did not impose any bar to the maintainability of an application in a case where the appeal is not dismissed on merits.
The argument it that the said interpretation by the High Court is wrong and is clearly unwarranted by the plain language used in the said Section.
It is urged that it is not right to hold that when an appeal is filed beyond time and is dismissed on the ground of limitation, there is no appeal in the eye of law and therefore, no disposal, of an appeal as contemplated in the Explanation.
The learned counsel has submitted that the decisions of the Privy Council in the case of Chandri Abdul Majid vs Jawahar Lal (1) and of the Calcutta High (I) AIR 1914 P. C. 66.
381 Court in the case of Kalumuddin Ahmed vs Esabakuddin & ors (l) are of no assistance in interpreting the provisions contained in the Explanation in order 9, rule 13 of the Code of Civil Procedure.
The learned Counsel has further submitted that the High Court went wrong in interfering with the findings of the Trial Court that no sufficient cause had been made out for condonation of delay in filing an application under order 9, rule 13 of the Code and in any event there is no justifiable reason for non appearance of the respondent on the due date for the hearing of the matter.
On behalf of the respondent husband, it has been urged that on a true interpretation of the Explanation, the High Court has correctly held that the Explanation will not apply to a case where the appeal preferred against an ex parte decree is dismissed not on merits but on the ground of limitation.
It is the argument of the learned counsel that the Explanation will only apply when the appeal is dismissed on merits, as in such a case the decree of the Trial Court gets merged with the decree of the appellate Court and naturally the trial Court loses its competence to set aside the ex parte decree which was originally passed by the trial court, but has subsequently merged in the decree passed by the appellate court.
The learned counsel argues that the Explanation seeks to embody the principle that when a decree of the Trial Court gets merged in the decree of the appellate court, the Trial Court loses seisin over the matter and becomes incompetent to deal with a decree of the appellate court.
It is his argument that as in the instant case the appeal was dismissed on the ground of limitation and not on merits, there is no question of any merger of the decree P of the trial court with any decree of the appellate court.
He argues that an appeal preferred beyond time, unless delay in filing the appeal is condoned, becomes incompetent and is indeed no appeal in the eye of law.
He has placed reliance on the two decisions of the Privy Council in Chandri Abdul Majid (supra) and Kalimuddin Ahmed (supra), considered by the High Court in its judgment.
The learned counsel further argues that in the facts and circumstances of this case, the High Court was perfectly justified in holding that sufficient cause was made out for not making the appli 382 cation under order 9, rule 13 within the time prescribed and for condoning the delay in making the application, and the High Court was also clearly justified in coming to the conclusion that the respondent husband was prevented by sufficient cause for not being able to appear on the date fixed for hearing.
He submits that in any event this Court in this appeal should not interfere with these findings of the High Court in the larger interfere of the administration of justice and this Court should not deprive the husband of the opportunity of contesting the claim of the wife.
The principal question as to whether the application made by the husband for setting aside the ex parte decree is competent or not in view of the provisions contained in the Explanation in O. 9, rule 13 of the Code of Civil Procedure turns on a proper interpretation of the Explanation.
Order 9, rule 13 of the Code of Civil Procedure reads as follows: "In any case in which a decree is passed ex parte against a defendant, he may apply to the Court by which the decree was passed for an order to set aside, and if he satisfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for Proceeding with the suit; Provided that where the decree is of such a nature that it cannot be set aside as against such defendant only it may be set aside as against all or any of the other defendants also: Provided further that no court shall set aside a decree passed ex parte merely on the ground that there has been an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and answer the plaintiff 's claim.
383 Explanation: Where there has been an appeal against a decree passed ex parte under this rule, and the appeal has been disposed of on any ground other than the ground that the appellant has withdrawn the appeal, no application shall lie under this rule for setting aside that ex parte decree.
" Order 9, rule 13 makes provision for the setting aside of an ex parte decree against the defendant.
It lays down the conditions and also the procedure for the setting aside of an ex parte decree.
The Explanation was introduced into this provision by the Code of Civil Procedure (Amendment) Act, 1976 (Act 104 of 1976) and it has come into force from 1.2 1977.
The proceeding by the wife was initiated on 1.9.1979 and the ex parte decree of divorce in her favour was passed on 6.12.1979.
The application by the husband has been made for setting aside this ex parte decree.
The Explanation, therefore, operates; the real question being whether in the facts and circumstances of this case, the bar created by the Explanation to the setting aside of an ex parte decree is attracted to the present application.
A plain reading of the Explanation clearly indicates that if any appeal against an ex parte decree has been disposed of on any ground other than the ground that the appellant has withdrawn the appeal, no application for setting aside the ex parte decree under order 9, rule 13 of the Code will be entertained.
The words used in the Explanation are clear and unambiguous.
The language used in the explanation clearly suggests that where there has been an appeal against a decree passed ex parte and the appeal has been disposed of on any ground other than the ground that the appellant has withdrawn the appeal, no application shall lie under order 9, rule 13 of the Code for setting aside the ex parte decree.
An appeal may be disposed of on various grounds.
It may be disposed of after proper hearing on merits and this is usually the normal way of disposal of an appeal.
An appeal may be disposed of also for non prosecution thereof.
Though the dismissal of an appeal on the ground of non prosecution of the same is not disposal of the appeal on merits, yet the dismissal of the appeal for non prosecution results in the disposal thereof.
An appeal may also be dismissed on the ground of limitation, if condonation of delay in filing the appeal is not allowed by the Court.
An appeal may also be liable to be dismissed for non compliance with any condition relating to 384 the filing of the appeal and also for other reasons.
An appellant is also entitled to withdraw the appeal and the withdrawal of the appeal also results in the disposal of the appeal, though in such a case no merits of the appeal are adjudicated upon.
The language used in the Explanation makes it clear that the withdrawal of an appeal is considered to be disposal of the appeal, as contemplated in the Explanation.
It is significant to note that though an appeal may be disposed of on very many grounds the Legislature has thought it fit to provide in the Explanation that only when an appeal against an ex parte decree is disposed of on the ground that the appellant has withdrawn the appeal, the bar created to the maintainability of an application under order 9, rule 13 of the Code for setting aside the ex parte decree will not apply.
The Legislature must be presumed to know that there are various ways of disposal of an appeal.
The Legislature has, however, thought it fit to provide that when an appeal has been preferred against an ex parte decree, the disposal of the appeal on any ground excepting the solitary ground of disposal of the appeal by withdrawal of the same by the appellant, will create a bar to the maintainability of an application under Order 9, rule 13 of the Code of Civil Procedure.
By specifically providing in the Explanation that the disposal of any appeal from the ex parte decree on any ground other than the solitary ground of withdrawal of the appeal by the appellant, the legislative intent is made manifestly clear that in all other cases of the disposal of the appeal on any other ground than the ground of withdrawal of the appeal, there will be a bar to the maintainability of the application under order 9, rule 13 and no application will lie under order 9, rule 13 for the setting aside of an ex parte decree.
Withdrawal of an appeal by an appellant does not result in any adjudication on merits.
Even then, the withdrawal of an appeal is still considered to be a disposal of the appeal; and the disposal of an appeal only on this ground of withdrawal of the appeal by the appellant, it is made clear in the Explanation, will not create any bar to the maintainability of the application under order 9, rule 13 of the Code of Civil Procedure.
On a proper interpretation of the explanation we are of the opinion that where there has been an appeal against an ex parte decree and the appeal has not been withdrawn by the appellant and has been disposed of on any ground, the application under order 9, rule 13 of the Code of Civil Procedure will not lie and cannot be entertained.
385 In the instant case, an appeal had admittedly been filed against the ex parte decree.
The appeal was beyond time.
The appellant had not withdrawn the appeal.
The appellant had filed an application for condonation of delay in preferring the appeal.
The application for condonation of delay had been rejected by the Court and the appeal had been dismissed an the ground of limitation.
The dismissal of the appeal on the ground of limitation resulted in disposal of the appeal though not on merits.
The appeal filed against the ex parte decree was, therefore, disposed of on grounds other than the ground that the appellant had withdrawn the appeal.
The application under order 9, rule 13 after the disposal of the appeal, therefore, became incompetent in view of the provisions contained in the Explanation and could not therefore be entertained by the Court.
The view expressed by the High Court must, therefore.
be held to be erroneous.
In support of the view taken by the High Court, the High Court referred to and relied on the decision of the Privy Council in the case of Chandri Abdul Majid (supra).
The decision of the Privy Council, in our opinion, has no material bearing on the question involved in the present appeal.
In the case before the Privy.
Council, the Judicial Committee was concerned with the question as to the commencement of the period of limitation in respect of a decree passed by the Trial Court, affirmed by the High Court on appeal and a further appeal therefrom to the Privy Council was dismissed by the Privy Council for non prosecution of the appeal.
The appellant before the Privy Council was in the position of a mortgagor and the Respondents of mortgagees under a mortgage dated 3rd September, 1868.
In 1889 a suit was commenced before the Subordinate Judge of Allahabad to enforce that mortgage and on the 12th May, 1890, a decree was passed by him for the sale of the property unless payment was made on or before the 12th August, 1890.
An appeal was brought from that decree to the High Court and on the 8th April, 1893 that appeal was dismissed and the decree of the Subordinate Judge was confirmed.
The mortgagor obtained leave to appeal to the Judicial Committee but did not prosecute his appeal; and on the 13th May, 1901, the appeal was dismissed for want of prosecution.
The Mortgagor decree holder made an application to the Subordinate Judge on the 11th June, 1909 for an order absolute to sell the mortgaged properties; it appears that an 386 order had been 'made on the said application for execution in favour of the decree holder and ultimately the validity of the execution proceedings went to the Privy Council for consideration.
The main argument before the Privy Council was that the decree which was sought to be enforced had been constructively turned into a decree of the Privy Council by virtue of the dismissal of the appeal by the Privy Council on 13.5.1901 for non prosecution of the appeal and the period of limitation, therefore, was 12 years from 13.5.1901.
The Judicial Committee rejected this contention holding that the order dismissing the appeal for want of prosecution did not deal judicially with the matter of the suit and could in no sense be regarded as an order adopting or confirming the decision appealed from.
The Judicial Committee held that as there was no decree by the Judicial Committee adopting or confirming the decision appealed from, and as there was never any stay of the decree passed by the High Court affirming the decree of the Subordinate Judge, the period of limitation will run from the date of the passing of the decree by the High Court and the period will be three years from the date of the decree! passed by the High Court.
The Privy Council allowed the appeal holding that the application dated 11.6.1909 for sale of the mortgaged properties was barred by limitation.
While considering the question whether the period of limitation should be effective from the date of the dismissal of the appeal by the Judicial Committee for non prosecution thereof, the Judicial Committee had made the following observations: "The order dismissing the appeal for want of prosecution did not deal judicially with the matter of the suit and could in no sense be regarded as an order adopting or confirming the decision appealed from.
It merely recognised authoritatively that the appellant had not complied with the conditions under which the appeal was open to him, and that therefore he was in the same position as if he had not appealed at all.
" This position was made abundantly clear by the Judicial Committee by the observations immediately following: "To put it shortly, the only decree for sale that exists is the decree, dated 8th April, 1893, and that is a decree of the High Court of Allahabad." 387 In the case of Kalimuddin Ahamed vs Esabakuddin and ors the material facts were: A partition suit was instituted on 20.12.1918 against several defendants, among whom the appellant before the High Court was No. 4.
Two of the defendants contested the suit and on 22.9.1919 a preliminary decree from partition was made on contest against two of the defendants and ex parte against the others.
The appellant did not appear at all in the first Court and he was one of the defendants against whom the decree was made ex parte.
On 17.12.1919 the first defendant alone preferred an appeal against the decree to the High Court and on 20.12.1919 the appellant presented an application to the Trial Court under order 9, rule 13 of the Code of Civil Procedure.
This application was kept pending until after the disposal of the appeal preferred by the first defendant.
One of the respondents in the appeal filed by the first defendant died and as the appellant did not take proper steps to bring the heirs on the record, the appeal was dismissed as against them and then against the others it was held that in the absence of the heirs of the deceased respondent the appeal could not proceed and the appeal was accordingly dismissed on 5th January 1922.
Thereafter the application of the appellant under 9, rule 13 of Code of Civil Procedure came up for hearing and on 8th April 1922 a petition of compromise between the plaintiff and the appellant was presented and in accordance therewith the Court ordered that the suit should be restored to its original number as against the applicant who was defendant No. 4 in the suit in regard to three only of the plots mentioned in the plaint.
In making this order, the Court proceeded on the compromise alone without any enquiry as to the causes which prevented defendant No. 4 from appearing at the trial.
In July.
1922, a different Judge was presiding over the Court and on 5th July, 1922, he expressed doubt as to the legality of the order passed by his predecessor on 8th April, 1922 and after hearing the arguments he delivered his judgment on 7th July, 1922 holding that the order passed by his predecessor on 8th April, 1922 was made without jurisdiction because there was no longer any ex parte decree over which the Court had control and the said order was a nullity and utterly void so that no proceeding to set it aside were necessary and the fact of the order being made on consent as against the plaintiff could not convert it into a valid order.
Against this judgement, an appeal was filed in the High Court.
A division Bench of 388 the Calcutta High Court treated the appeal as a revision petition under section 115 and set aside the order, holding that when an ex parte decree was appealed against and also an application to set aside was made but the appeal was dismissed for not bringing the representatives of the deceased respondent on record, the ex parte decree did not merge in the appellate decree and an order passed on consent on the application to set aside the decree was not without jurisdiction.
The decision of the Judicial Committee in Abdul Majid 's case was also considered in this case.
Walmsley, J. held at p1832 as follows : "The order of this Court may be a decree, without being such a decree as to supersede the decree of the lower Court.
All that this Court decided was that having regard to the nature of the appeal, a certain defendant was a necessary party, and that in the absence of that defendant, . or on her death her representatives, the appeal could not proceed.
On the merits of the appeal in other respects there was no adjudication, but on the contrary an express refusal to adjudicate.
Consequently it is of no importance whether the order did or did not amount to a decree.
What .
is of importance is that it was not a decree in which that of the lower Court was merged:" Mukherjee, J., the other learned Judge on the Bench observed at p. 834 : "Now the consideration of the question as to whether the learned Subordinate Judge had jurisdiction to pass the order of the 8th April, 1922 involves a consideration of the following questions (a) whether the order of this Court passed on the 5th January 1922, amounted to a decree or not, (b) if it was a decree, whether the ex parte decree can be held to have a merged into it, (c) whether the learned Subordinate Judge had jurisdiction to set aside the ex parte decree and restore the suit, and (d) whether his successor could declare or was right in declaring the aforesaid order a nullity.
As to (a): The definition of the word 'decree ' in the Code of Civil Procedure, in so far as it purports to be a 389 definition at all, lays down the following essential and distinguishing elements viz., that the decision must have been expressed in a suit, that the decision must have been passed on the rights of the parties with regard lo all or any of the matters in controversy in the suit, that the decision must be one which conclusively determines those rights.
Then certain orders which may or may not satisfy the above requirements are either expressly included in or excluded from the definition.
The whole object of defining a 'decree ' in the said Code appears to be to classify orders in order to determine whether an appeal or in certain cases a second appeal lies therefrom.
Apart from that object .
this definition is of no value.
I am not prepared to accept the contention of the respondent that because an order rejecting a plaint is a decree, an order dismissed an appeal on the ground that it was improperly constituted is by mere analogy to be treated as a decree.
I am unable to reconcile either in principle or in theory why an order rejecting a plaint should stand on a different footing from orders of dismissal for default, and yet one is a decree and the other is not.
It is true that an order of rejection of a plaint has been expressly included in the definition of a 'decree ' but the legislature has included it and no analogy can be drawn therefrom.
The question whether an adjudication is an order or decree is to be tested not by general principles, but by the expressions of the Code, and those words are to be construed in their plain and obvious sense." The learned Judge further held at p. 835: "Here the position was that the plaintiff had got a decree as against the defendants in respect of a certain share; one of the defendants viz., the defendant No. 1, had preferred the appeal; excepting the question as to whether the appeal was maintainable in the absence of the minors, the heirs of the defendants No. 6, no other question was gone into, and in fact none could be litigated, and that is more important is what the rights of the defendant 390 No. 4 were as against the plaintiff or whether the ex parte decree passed against him was a good or valid one, or whether it should stand at all, could scarcely be determined in that appeal.
There is no authority for the proposition that under circumstances such as these, the ex parte decree can possibly be said to have merged in the decree by passed the appellate Court.
" It may be noticed that in neither of these two decisions there was or could be any occasion for interpreting the Explanation which came to be incorporated years later and these two decisions have mainly proceeded on the basis of merger of the decree passed by the Trial Court with the decree of the Appellate Court.
The words used in Explanation make it abundantly clear that disposal of the appeal as contemplated in the Explanation is not intended to mean or imply disposal on merits resulting in the merger of the decree of the Trial Court with the decree, if any, of the Appellate Court on the disposal of the appeal.
The Explanation speaks of "the appeal has been disposed of on any ground other then the ground that the appellant has withdrawn the appeal" and these words make it abundantly clear that disposal of the appeal may be on any ground and the withdrawal of on appeal by the appellant is also considered to be the disposal of the appeal on the ground of withdrawal, and, the disposal of the appeal from the ex parte decree on the ground of withdrawal of the appeal by the appellant has only been exempted from the operation of the Explanation.
If the intention was that the Explanation would not be attracted and there would be no disposal of an appeal within the meaning of the Explanation unless the appeal was disposed of on merits resulting in the merger of the decree of the Trial Court with the decree of the Appellate Court, it would not have been necessary to provide specifically that the disposal of an appeal on the ground of withdrawal would be exempt, because the disposal of an appeal on the ground of withdrawal would not be disposal of the appeal within the meaning of the Explanation, as on the withdrawal of an appeal there is no decision on merits and there is no merger of the decree with any decree of the Appellate Court.
The legisla 391 ture could also have simply provided in the Explanation for the disposal of an appeal on merits and it would not have been necessary to use the other words, "on the disposal of an appeal on any ground other than the ground that the appellant has withdrawn the appeal.
The words used, "disposal of the appeal on any ground other than the ground that the appellant has withdrawn the appeal" will undoubtedly attract within its ambit the disposal of an appeal on the ground of the same being dismissed for non prosecution, Though in the case of such disposal of the appeal there will be no effective adjudication of the appeal on merits and the disposal of the appeal may not have the effect of the decree of the Trial Court appealed against being merged with any decree of the Appellate Court on the disposal of the appeal.
The disposal of an appeal on the ground of limitation may or may not be adjudication on the merits of the appeal, depending on the particular facts and circumstances of the case and may or may not result in the merger of the decree of the Trial Court with the decree, if any, of the appellate Court; but there cannot be any manner of doubt that when an ' appeal from the ex parte decree is dismissed on the ground of limitation, the appeal is disposed of on any ground other than the ground that the appellant has withdrawn the appeal.
As the dismissal of the appeal on the ground of limitation results in the disposal of the appeal on any ground other than the ground of the withdrawal of the appeal by the appellant, the explanation is attracted, and the application for setting aside the ex parte decree becomes in competent after the disposal of the appeal and cannot be entertained.
As in our view, the application for setting aside the ex parte decree does not lie and cannot be entertained, in view of the provisions contained in the Explanation, it does not become necessary for us to go into the merits of the application to consider whether sufficient cause had been shown by the respondent for his nonappearance at the hearing at the date fixed and also for not preferring the application with n the time prescribed.
The appeal, therefore, succeeds.
The judgment and order passed by the High Court are set aside and the ex parte decree 392 passed in favour of the appellant OD 6.12.1979 is restored.
In the facts and circumstances of this case, we do not propose to make any order for costs.
S.R. Appeal allowed.
| The appellant wife filed on 1.9.1979, a petition under section 13 of the Hindu Marriage Act, against the respondent for dissolution of her marriage with him and for a decree for divorce.
The next date of hearing was fixed for 6.12.1979.
On 10.11.1979, the respondent husband had addressed a letter to the court requesting the court for an adjournment of the case fixed for 6.12.1979 on the ground that because of special assignment it would not be possible for hi to be present in Court on that day.
On that date, the court refused to grant the adjournment and passed an ex parte decree in favour of the appellant.
The respondent husband, thereafter preferred an appeal under section 96 of the Civil Procedure Code before the High Court with an application under section 5 of the Limitation Act to condone the delay in filing.
The High Court dismissed the condonation application as well as the appeal.
Thereafter the respondent husband moved the Trial Court with an application under Rule 13 of order IX with an application under section 5 of the Limitation Act.
Both the applications were dismissed.
The respondent husband moved the High Court against the said orders of dismissal which was accepted rejecting the contention of the appellant wife that the newly added Explanation to Rule 13 of order IX C.P.C. is a bar to the maintainability of the application itself filed by the respondent husband under that Rule.
Hence the appeal by the appellant wife, after obtaining special leave of the Court.
Allowing the appeal the Court, ^ HELD: Per Pathak, J. (Concurring with A.N. Sen, J.) 1.
No doubt the provision is described as an 'Explanation ', but it is not the rubric which decisively defines the true nature of a statutory provision.
Its true 373 nature must be determined from the content of the provision, its import gathered from the language employed, and the language construed in the context in which the provision has been enacted.
What was the law before the amendment; what was the mischief and defect for which the law did not provide, what remedy has Parliament resolved and appointed to cure the mischief, and the true reason of the remedy.
[376 E G, 377 A B] Rule in Heydon 's case, 76 English Reports 637; Swantraj & Ors.
vs State of Maharashtra ; , followed.
The Code of Civil Procedure (Amendment) Act, 1976 was enacted with the avowed purpose of abridging and simplifying the procedural law.
Prior to it a defendant burdened by an ex parte decree could apply to the trial court under Rule 13 of order IX C.P.C. for setting aside the decree.
He could also appeal under section 96 against the decree.
The mere filing of the appeal did not take away the jurisdiction of the trial court to entertain and dispose of application for setting aside the ex parte decree.
It was where the appeal was disposed of, and the appellate decree superseded the trial court decree by reversing, confirming or varying it that the trial court could not proceed to set aside its ex parte decree.
For the trial court decree was said to have merged with the appellate decree.
Prior to the Amendment Act, the courts were open to a duplication of proceedings, and although the immediate relief claimed in the two proceedings was not identical both ultimately aimed at a redecision on the merits.
The earlier disposal of either resulted in the other becoming infructuous.
The plaintiff, therefore, was in the unfortunate position of being dragged through two courts in simultaneous proceedings.
[376 A C, 377 C D] 2:2.
Public time and private convenience and money was sought to be saved by enacting the Explanation.
By enacting the Explanation, Parliament left it open to the defendant to apply under Rule 13 of order IX for setting aside an ex parte decree only if the defendant had opted not to appeal against the ex parte decree or, in the case where he had preferred an appeal, the appeal had been withdrawn by him.
The withdrawal of the appeal was tantamount to effacing it.
It obliged the defendent to decide whether he would prefer an adjudication by the appellate court on the merits of the decree or have the decree set aside by the trial court under Rule 13 of order IX.
The legislative attempt incorporated in the Explanation was to discourage a two pronged attack on the decree and to confine the defendant to a single course of action.
If he did not withdraw the appeal filed by him, but allowed the appeal to be disposed of on any other ground, he was denied the right to apply under r. 13 of order IX.
The disposal of the appeal on any ground whatever, apart from the withdrawal, constituted sufficient reason for bringing the ban into operation.
[377 D G, 378 A] 2:3.
In the present case, the appeal was dismissed as barred by limitation and the order was one disposing of the appeal on any other ground.
[378 A] M/s. Mela Ram & Dons vs Commissioner of lncome tax; , , followed.
374 Per Amarendra Nath Sen, J. 1:1.
A proper interpretation of the Explanation, makes it clear that where there has been an appeal against an ex parte decree and the appeal has not been withdrawn by the appellant and has been disposed of any ground, the application under Rule 13 of order IX of the Code of Civil Procedure will not lie and cannot be entertained.
[384 G H] 2:2.
The words used in the Explanation are clear and unambiguous.
The language used in the Explanation makes it clear that the withdrawal of the appeal is considered to be disposal of the appeal, as contemplated by the Explanation.
Though an appeal may be disposed of on very many grounds, the Legislature has thought it fit to provide in the Explanation that only when an appeal against an ex parte decree is disposed of on the ground that the appellant has withdrawn the appeal, the bar created to the maintainability of an application under order IX, Rule 13 of the Code for setting aside the ex parte decree will not apply.
The Legislature must be presumed to know that there are various ways of disposal of an appeal and that in all other cases of the disposal of the appeal on any other ground than the ground of withdrawal of the appeal, there will be a bar to the maintainability of the application under order IX, Rule 13 and no application will lie for setting aside the ex parte decree.
Withdrawal of appeal by an appellant does not result in any adjudication on merits.
Even, then, the withdrawal of an appeal is still considered to be a disposal of the appeal, but not creating a bar for the maintainability of the application under order IX Rule 13 [383 E, 384 B G] 1:3.
In the instant case, the appellant had not withdrawn the appeal.
His application for condonation of delay was rejected by the High Court and therefore, the appeal was dismissed on the ground of limitation.
The appeal filed against the ex parte decree was, therefore, disposed of on grounds other than the ground of withdrawal of the appeal.
The application under order IX, Rule 13, after the disposal of the appeal, therefore, became incompetent.
[385A B] 2:1.
The words used in the Explanation make it abundantly clear that disposal of the appeal as contemplated in the Explanation is not intended to mean or imply disposal in merits resulting in the merger of the decree of the Trial Court with the decree, if any, of the Appellate Court on the disposal of the appeal.
The Explanation speaks of "the appeal has been disposed of an any ground other than the ground that the appellant has withdrawn the appeal" and these words make it abundantly clear that disposal of the appeal by the appellant is also considered to be the disposal of the appeal on the ground of withdrawal; and, the disposal of the appeal from the ex parte decree on the ground of withdrawal of the appeal by the appellant has only been exempted from the operation of the Explanation.
If the intention was that the Explanation would not be attracted and there would be no disposal of an appeal within the meaning of the Explanation unless the appeal was disposed of on merits resulting in the merger of the decrees of the Trial Court with the decree of the 375 the Appellate Court, it would not have been necessary to provide specifically that the disposal of an appeal on the ground of withdrawal would be exempt, because the disposal of an appeal on the ground of withdrawal would not be disposal of the appeal within the meaning of the Explanation, as on the withdrawal of an appeal there is no decision on merits and there is no merger of the decree with any decree of the Appellate Court.
The legislature could also have simply provided in the Explanation for the disposal of an appeal on merits and it would not have been necessary to use the other words, "on the disposal of an appeal on any ground other than the ground that the appellant has withdrawn the appeal.
The words used, "disposal of the appeal on any ground other than the ground that the appellant has withdrawn the appeal" will undoubtedly attract within its ambit the disposal of an appeal on the ground of the same being dismissed for non prosecution, though in the case of such disposal of the appeal there will be no effective adjudication of the appeal on merits and the disposal of the appeal may not have the effect of the decree of the trial court appealed against being merged with any decree of the Appellate Court on the disposal of the appeal.
[390D H, 391 A C] 2:2.
The disposal of an appeal on the ground of limitation may or may not be adjudication on the merits of the appeal, depending on the particular facts and circumstances of the case and may or may not result in the merger of the decree of the Trial Court with the decree, if any, of the appellate Court; but there cannot be any manner of doubt that when an appeal from the ex parte decree is dismissed on the ground of limitation, the appeal is disposed of on any ground other than the ground that the appellant has withdrawn the appeal.
As the dismissal of the appeal on the ground of limitation results in the disposal of the appeal on any ground other than the ground of the withdrawal of the appeal by the appellant, the Explanation is attracted, and the application for setting aside the ex parte decree becomes incompetent after the disposal of the appeal and cannot be entertained.
[391 C F] Ckandri Abdul Majid vs Jawahar Lal, A.l.
R. 1914 P.C. 66: Kalumuddin Ahmad vs Esabakuddin & Ors.
, A.I.R. 1924 Cal. 830; discussed and held inapplicable.
|
Civil Appeal No. 96 of 1972.
From the Judgment and Order dated 23rd December, 1971 of the High Court of Judicature at Allahabad in Second Appeal No. 3082 of 1971.
Yogeshwar Prasad, Mrs. Rani Chhabra and section K. Bagga for the Appellants.
B. R. Agarwala, R. H. Pancholi and Ms. Vijayalakshmi Menon for the Respondent.
The Judgment of the Court was delivered by VENKATRAMIAH, J.
The short question which arises for consideration in this appeal by special leave is whether a nominee of a life insurance policy under section 39 of the (Act No. IV of 1938) (hereinafter referred to as 'the Act ') on the assured dying intestate would become entitled to the beneficial interest in the amount received under the policy to the exclusion of the heirs of the assured.
994 The facts leading to this appeal are these: One Jag Mohan Swarup who was governed by the died intestate on June 15, 1967 leaving behind his son, Alok Kumar (plaintiff No. 2), his widow Usha Devi (defendant) and his mother Sarbati Devi (plaintiff No. 1) as his heirs.
He had during his lifetime taken out two insurance policies for Rs. 10,000 each and had nominated under section 39 of the Act his wife Usha Devi as the person to whom the amount was payable after his death.
On the basis of the said nomination, she claimed absolute right to the amounts payable under the two policies to the exclusion of her son and her mother in law.
Thereupon Sarabati Devi and Alok Kumar (minor) represented by his next friend Atma Ram who was the father of Jag Mohan Swarup filed a suit in Civil Suit No. 122 of 1970 on the file of the Ist Additional Civil Judge.
Dehradun for a declaration to the effect that they were together entitled to 2/3rd share of the amount due and payable under the insurance policies referred to above.
Usha Devi, the defendant resisted the suit.
Her contention was that on the death of the assured, she as his nominee became absolutely entitled to the amounts due under the insurance policies by virtue of section 39 of the Act The trial court dismissed the suit.
The first appeal filed by the plaintiffs against the decree of the trial court was dismissed by the District Judge, Dehradun.
The second appeal filed by them against the judgment of the District Judge before the High Court of Allahabad was dismissed in limine under Rule 11, Order 41 of the Civil Procedure Code.
The plaintiffs have filed this appeal after obtaining special leave under Article 136 of the Constitution.
The only question which requires to be decided in this case is whether a nominee under section 39 of the Act gets an absolute right to the amount due under a life insurance policy on the death of the assured.
Section 39 of the Act reads: "39.
Domination by policy holder. (1) The holder of a policy of life insurance on his own life may, when effecting the policy or at any time before the policy matures for payment, nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death: Provided that where any nominee is a minor, it shall be lawful for the policy holder to appoint in the prescri 995 bed manner any person to receive the money secured by the policy in the event of his death during the minority of the nominee.
(2) Any such nomination in order to be effectual shall unless it is incorporated in the text of the policy itself, be made by an endorsement on the policy communicated to the insurer and registered by him in the records relating to the policy and any such nomination may at any time before the policy matures for payment be cancelled or changed by an endorsement, or a further endorsement or a will, as the case may be, but unless notice in writing of any such cancellation or change has been delivered to the insurer, the insurer shall not be liable for any payment under the policy made bona fide by him to a nominee mentioned in the text of the policy or registered in records of the insurer.
(3) The insurer shall furnish to the policy holder a written acknowledgement of having registered a nomination or a cancellation or change thereof, and may charge a fee not exceeding one rupee for registering such cancellation or change.
(4) A transfer or assignment of a policy made in accordance with section 38 shall automatically cancel a nomination: Provided that the assignment of a policy to the insurer who bears the risk on the policy at the time of the assignment, in consideration of a loan granted by that insurer on the security of the policy within its surrender value, or its reassignment on repayment of the loan shall not cancel a nomination, but shall affect the rights of the nominee only to the extent of the insurer 's interest in the policy.
(5) Where the policy matures for payment during the lifetime of the person whose life is insured or where the nominee or, if there are more nominees than one, all the nominees die before the policy matures for payment, the amount secured by the policy shall be 996 payable to the policy holder or his heirs or legal representatives or the holder of a succession certificate, as the case may be.
(6) Where the nominee or if there are more nominees than one, a nominee or nominees survive the person whose life is insured, the amount secured by the policy shall be payable to such survivor or survivors.
(7) The provisions of this section shall not apply to any policy of life insurance to which section 6 of the Married Women 's Property Act, 1874 applies or has at any time applied : Provided that where a nomination made whether before or after the commencement of the Insurance (Amendment) Act, 1946, in favour of the wife of the person who has insured his life or of his wife and children or any of them is expressed, whether or not on the face of the policy, as being made under this section the said section 6 shall be deemed not to apply or not to have applied to the policy.
" At the out set it should be mentioned that except the decision of the Allahabad High Court in Kesari Devi vs Dharma Devi on which reliance was placed by the High Court in dismissing the appeal before it and the two decisions of the Delhi High Court in section Fauza Singh vs Kuldip Singh & Ors.
and Mrs. Uma Sehgal & Anr.
vs Dwarka Dass Sehgal & Ors in all other decisions cited before us the view taken is that the nominee under section 39 of the Act is nothing more than an agent to receive the money due under a life insurance policy in the circumstances similar to those in the present case and that the money remains the property of the assured during his lifetime and on his death forms part of his estate subject to the law of succession applicable to him.
The cases which have taken the above view are Ramballav DhanJhania vs Gangadhar Nathmall.
Life Insurance Corporation of India vs United Bank of India Ltd. & 997 Anr., D. Mohanaeelu Muldaliar & Anr.
vs Indian Insurance and Banking Corporation Ltd. Salem & Anr., Sarojini Amma vs Neelakanta Pillai Atmaram Mohanlal Panchal vs Gunavantiben & Ors., Malli Dei and Lakshmi Amma Anr.
vs Sagnna Bhagath & Ors.
, Since there is a conflict of judicial opinion on the question involved in this case it is necessary to examine the above cases at some length.
The law in force in England on the above question is summarised in Halsbury 's Laws of England (Fourth Edition), Vol. 25, Para 579 thus : "579.
Position of third party, The policy money payable on the death of the assured may be expressed to be payable to a third party and the third party is then prima facie merely the agent for the time being of the legal owner and has his authority to receive the policy money and to give a good discharge; but he generally has no right to sue the insurers in his own name.
The question has been raised whether the third party 's authority to receive the policy money is terminated by the death of the assured; it seems, however, that unless and until they are otherwise directed by the assured 's personal representatives the insurers may pay the money to the third party and get a good discharge from him.
" We shall now proceed to analyse the provisions of section 39 of the Act.
The said section provides that a holder of a policy of life insurance on his own life may when effecting the policy or at any time before the policy matures for payment nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death.
If the nominee is a minor, the policy holder may appoint any person to receive the money in the event of his death during the minority of the nominee.
That means that if the policy holder is alive when the policy matures for payment he alone will receive payment of the money due under the policy and 998 not the nominee.
Any such nomination may at any time before the policy matures for payment be cancelled or changed, but before such cancellation or change is notified to the insurer if he makes the payment bon fide to the nominee already registered with him, the insurer gets a valid discharge.
Such power of cancellation of or effecting a change in the nomination implies that the nominee has no right to the amount during the lifetime of the assured.
If the policy is transferred or assigned under section 38 of the Act, the nomination automatically lapses.
If the nominee or where there are nominees more than one all the nominees die before the policy matures for payment the money due under the policy is payable to the heirs or legal representatives or the holder of a succession certificate.
It is not necessary to refer to sub section (7) of section 39 of the Act here.
But the summary of the relevant provisions of section 39 given above establishes clearly that the policy holder continues to hold interest in the policy during his lifetime and the nominee acquires no sort of interest in the policy during the lifetime of the policy holder.
If that is so, on the death of the policy holder the amount payable under the policy becomes part of his estate which is governed by the law of succession applicable to him.
Such succession may be testamentary or intestate.
There is no warrant for the position that section 39 of the Act operates as a third kind of succession which is styled as a 'statutory testament ' in paragraph 16 of the decision of the Delhi High Court in Mrs. Uma Sehgal 's case (supra).
If section 39 of the Act is contrasted with section 38 of the Act which provides for transfer or assignment of the rights under a policy, the tenous character of the right of a nominee would become more pronounced.
It is difficult to hold that section 39 of the Act was intended to act as a third mode of succession provided by the statute.
The provision in sub section (6) of section 39 which says that the amount shall be payable to the nominee or nominees does not mean that the amount shall belong to the nominee or nominees.
We have to bear in mind here the special care which law and judicial precedents take in the matter of execution and proof of wills which have the effect of diverting the estate from the ordinary course of intestate succession and that the rigour of the rules governing the testamentary succession is not relaxed even where wills are registered.
As observed in the Full Bench decision of the Allahabad High Court in Raja Ram vs Mata Prasad & Anr.
which has interpreted 999 section 39 of the Act correctly, the judgment of that High Court in Kesari Devi 's case (supra) related to a different set of facts.
In Kesari Devi 's case (supra) the dispute arose regarding the person who was entitled to the succession certificate in respect of the amount payable under a life insurance policy which had been taken out by the assured between the widow of the assured and the widow of the nominee under section 39 of the Act.
On going through the judgment in Kesari Devi 's case (supra) we feel that the Court in that case paid little heed to the earlier judicial precedents of its own Court.
The decision of the Full Bench in Raja Ram 's case (supra) set at rest all doubts which might have been created by Kesari Devi 's case (supra) about the true import of section 39 of the Act in so far as the High Court of Allahabad was concerned.
In Fauja Singh 's case (supra) there is reference only two three cases Life Insurance Corporation of India vs United Bank of India Ltd. (supra), Matin vs Mahomed Matin and Kesari Devi 's case (supra).
The Court expressed its dissent from the Calcutta decision on the ground that decision had not considered sub section (6) of section 39 of the Act.
The Lahore case was one decided before the Act came into force.
The distinguishing features of Kesari Devi 's case (supra) are already mentioned.
Otherwise there is not much discussion in this case about the effect of section 39 of the Act.
We have carefully gone through the judgment of the Delhi High Court in Mrs. Uma Sehgal 's (case) supra.
In this case of the High Court of Delhi clearly came to the conclusion that the nominee had no right in the lifetime of the assured to the amount payable under the policy and that his rights would spring up only on the death of the assured.
The Delhi High Court having reached that conclusion did not proceed to examine the possibility of an existence of a conflict between the law of succession and the right of the nominee under section 39 of the Act arising on the death of the assured and in that event which would prevail.
We are of the view that the language of section 39 of the Act is not capable of altering the course of succession under law.
The second error committed by the Delhi High Court in this case is the reliance placed by it on the effect of the amendment of section 60(1) (kb) of the Code of Civil Procedure, 1908 providing that all moneys payable under a 1000 policy of insurance on the life of the judgment debtor shall be exempt from attachment by his creditors.
The High Court equated a nominee to the heirs and legatees of the assured and proceeded to hold that the nominee succeeded to the estate with all plus and minus points '.
We find it difficult to treat a nominee as being equivalent to an heir or legatee having regard to the clear provisions of section 39 of the Act.
The exemption of the moneys payable under a life insurance policy under the amended section 60 of the Code of Civil Procedure instead of 'devaluing ' the earlier decisions which upheld the right of a creditor of the estate of the assured to attach the amount payable under the life insurance policy recognises such a right in such creditor which he could have exercised but for the amendment.
It is because it was attachable the Code of Civil Procedure exempted it from attachment in furtherance of the policy of Parliament in making the amendment.
The Delhi High Court has committed another error in appreciating the two decisions of the Madras High Court in Karuppa Gounder & Ors.
vs Palaniammal & Ors.
and in B.M. Mundkur vs Life Insurance Corporation of India & Ors.
The relevant part of the decision of the Delhi High Court in Mrs. Uma Sehgal 's case (supra) reads thus: 10. "In Karuppa Gounder vs Palaniammal, AIR 1963 Mad. 245 (para 13), K had nominated his wife in the insurance policy.
K died.
It was held that in virtue of the nomination, the mother of K was not entitled to any portion of the insurance amount.
I am in respectful agreement with these views, because they accord with the law and reason.
They are supported by section 44 (2) of the Act.
It provides that the commission payable to an insurance agent shall after his death, continue to be payable to his heirs, but if the agent has nominated any person the commission shall be paid to the person so nominated.
It cannot be contended that the nominee u/s 44 will receive the money not as owner but as an agent on behalf of someone else vide B.M. Mundkur vs Life Insurance Corporation, AIR 1977 Mad. 72.
Thus, the nominee excludes the legal heirs.
" 1001 Two mistakes committed by the Delhi High Court in the above passage are these.
In Karuppa Gounder 's case (supra), the question was whether the amount payable under the insurance policy in question was joint family property or separate property of the assured.
In that connection, the High Court of Madras observed thus: "But where a coparcener has effected insurance upon his own life, though he might have received the premia from out of the funds which he might have received from the joint family, it does not follow that the joint family insured the life of the member or paid the premia in relation thereto.
It is undeniable that a member of a coparcenary may with the moneys which he might receive from the coparcenary effect an insurance upon his own life for the benefit of the members of his immediate family.
His intention to do so and to keep the property as his separate property would be manifested if he makes a nomination in favour of his wife or children as the case may be.
It would therefore appear that no general proposition can be advanced in the matter of the insurance policy of a member of a coparcenary and that each case must be dealt with in accordance with the circumstances surrounding it.
" It is obvious from the above passage that the above case has no bearing on the meaning of section 39 of the Act.
The fact of nomination was treated in that case as a piece of evidence in support of the finding that the policy was not a joint family asset but the separate property of the coparcener concerned.
No right based on the ground that one party was entitled to succeed to the estate of the deceased in preference to the other or along with the other under the provisions of the was asserted in that case.
The next error committed by the Delhi High Court is in drawing an analogy between section 39 and section 44(2) of the Act thinking that the Madras High Court had done so in B. M. Mundkur 's case (supra).
In B.M. Mundkur 's case (supra), the High Court of Madras instead of drawing an analogy between section 39 and section 44(2) of the Act actually contrasts them as can be seen from the following passage: 1002 "There are vital differences between the nomination contemplated under Section 39 of the Act and the nomination contemplated under the proviso to Section 44(2) of the Act.
In the first place, the sum assured, with which alone Sec.
39 was concerned, was to be paid in the event of the death of the assured under the terms of the contract entered into between the insurer and the assured and consequently it was the contractual right which remained vested in the insured with reference to which the nomination happened to be made.
It should be pointed out that the nomination as well as the liability on the part of the insurer to pay the sum assured become effective simultaneously, namely, at the moment of the death of the assured.
So long as he was alive, the money was not payable to him, in the case of a whole life policy, and equally, having regard to the language of Section 39(1) of the Act, the nominee 's right to receive the money arose only on the death of the assured, Section 39 itself did not deal with the title to the money assured, which was to be paid by the insurer to the nominee who was bound to give discharge to the insurer.
It was in this context that the Court took the view that the title remained with the estate of the deceased, and therefore, with the heirs of the deceased, that the nomination did not in any way affect the title and that it merely clothed the nominee with the right to receive the amount from the insurer.
On the other hand, the provisions and purport of Section 44 of the Act are different.
In the first place under Section 44(1) it was a statutory right conferred on the agent to receive the commission on the renewal premium notwithstanding the termination of the agreement between the agent and the insurer, which provided for the payment of such commission on the renewal premium.
The statute also prescribed the qualification which rendered the agent eligible to receive commission on such renewal premium.
Section 44(1) provides for the payment of the commission to the agent during his lifetime only and does not contemplate the contingency of his death and the commission being paid to anybody even after his death.
It is section 44(2) which deals with the 1003 payment of commission to the heirs of deceased for so long as such insurance agent been alive.
Thus it was not the general law of inheritance which conferred title on the heirs of the deceased insurance agent to receive the commission on the renewal premium, but it was only the particular statutory provision, namely, Section 44(2) which conferred the right on the heirs of the deceased agent to receive the commission on the renewal premium.
In other words, the right of the heirs to receive the commission on renewal premium does not arise under any law of succession and it is a right directly conferred on the heirs by Section 44(2) of the Act, even though who the heirs of the deceased insurance agent are will have to be ascertained under the law of succession applicable to him.
Thus the statute which conferred such a right on the heirs is certainly competent to provide for an exception in certain cases and take away such a right from the heirs; and the proviso which has been introduced by the Government of India notification 1962 has done exactly this in taking away the right of the heirs conferred under the main part of Section 44(2), in the event of the agent, during his lifetime, making a nomination in favour of a particular person and not cancelling or altering that nomination subsequently.
If the statute itself was competent to donfer such a right for the first time on the heirs of the deceased agent it is indisputable that the statute could take away that right under stated circumstances.
" The reasons given by the Delhi High Court in this case in support of its view are not tenable.
Moreover there is one other strong circumstance in this case which dissuades us from taking a view contrary to the decisions of all other High Courts and accepting the view expressed by the Delhi High Court in the two recent judgments delivered in the year 1978 and in the year 1982.
The Act has been in force from the year 1938 and all along almost all the High Courts in India have taken the view that a mere nomination effected under section 39 does not deprive the heirs of their rights in the amount payable under a life insurance policy.
Yet Parliament has not chosen to make any 1004 amendment to the Act.
In such a situation unless there are strong and compelling reasons to hold that all these decisions are wholly erroneous, the Court should be slow to take a different view.
The reasons given by the Delhi High Court are unconvincing.
We, therefore, hold that the judgments of the Delhi High Court in Fauja Singh 's case (supra) and in Mrs. Uma Sehgal 's case (supra) do not lay down the law correctly.
They are, therefore, overruled.
We approve the views expressed by the other High Courts on the meaning of section 39 of the Act and hold that a mere nomination made under section 39 of the Act does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the assured.
The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy, The amount; however, can be claimed by the heirs of the assured in accordance with the law of succession governing them.
In view of the above conclusion, the judgments and decrees of the High Court, the first appellate court and the trial court are liable to be set aside.
They are accordingly set aside.
Since it is not disputed that the plaintiffs are under the law of succession governing them each entitled to 1/3 share in the estate of the deceased, it is hereby declared that each of the plaintiffs is entitled to 1/3rd share in the amount received under the insurance policies in question and the interest which may have been earned by its investment.
The suit stands decreed accordingly.
Parties shall, however, bear their own costs throughout.
S.R. Appeal allowed.
| The assessee (Appellant No. 2) who was Karta of a Hindu Undivided Family was a partner of the family firm (Appellant No. 1) and was being assessed to wealth tax as a HUF.
For the purpose of evaluating the interest of the family 's interest in the firm, the assessee adopted the book value of buildings owned by the firm.
On the view that the market value of the buildings was much more than their book value, the Wealth Tax Officer (Respondent No. 1) referred, under section 16A on the Wealth Tax Act, 1957, to the Valuation Officers (Respondent Nos. 2 Valuation Officers issued notices under section 38A(1) (b) for inspection of buildings and records relating to them, and the assessees objections to such procedure were overruled.
The High Court dismissed the assessee 's writ petition holding: (1) having regard to section 29 of the Partnership Act which enables a partner to transfer his interest in the partnership firm and Section 2(e) and Section 4(1) (b) of the Act the interest of a partner in the partnership firm will have to be regarded as a part of his net wealth under the Act.
(2) Section 3 the charging provision expressly levied wealth tax on the net wealth of every Hindu undivided family, and consequently the interest of a H.U.F. in a partnership firm, which is property, could be regarded as a part of its assets liable to be charged under this Section.
(3) Rule 2, section 7 and section 16A (1) (i) (ii) had 36 to be read harmoniously and Rule 2 did not exclude the application of sections 7 and 16A for valuing an asset of a partner in a partnership firm.
(4) Section 7(2) was an enabling provision giving a discretion to the Wealth tax Officer either to value the assets of a business as a whole or valuing each asset thereof separately and in that behalf he had the power to refer such valuation to the Valuation Officer under Section 16A. (5) Appellant No. 2 as a partner could be regarded as an agent of appellant No. 1 firm and the Valuation Officers could issue notices requiring affording of facilities for inspection of buildings and production of books, documents and records.
In the Appeal to this Court it was contended that: (1) there was no provision for inclusion of a 'Karta 's interest in a partnership firm in the H.U.F. 's net wealth for wealth tax purposes under the Act, and (2) even assuming that appellant No.2 's interest (as a Karta of his H.U.F.) in the appellant No.1 's firm is eligible to tax under the Act, the valuation of such interest would be governed by section 7(2) (a) of the Act read with rule 2A of the Wealth Tax Rules 1957 and it was not open to the Wealth Tax Officer to refer the valuation to the valuation Officer under section 16A. Dismissing the Appeal, ^ HELD: 1(i) Section 3 of the Act read with the definitions of "net wealth" as given in Section 2(m) and "assets" given in section 2(e) clearly brings out the exigibility of a partner 's interest in a firm either in his individual capacity or his capacity as Karta of a H.U.F. to wealth tax under the Act.
[44 B C] (ii) There is no lacuna in the Act as regards the making of a Karta 's interest (representing his H.U.F.) in the partnership firm exigible to wealth tax.
[45 C] (iii) Section 4 (1) deals with the computation of the net wealth of an individual.
It enacts a deeming provision.
Certain assets which do not in fact or in reality belong to the individual (the assessee) but some one else are to be treated as belonging to that individual and are to be included in his net wealth.
Analysis of Clauses (a) and (b) of section 4(1) make it clear that there is a great difference between the cases covered by clause (b).
Clause (a) refers to five situations in all of which the asset is held by some one other than the individual concerned (the assessee).
It is provided that such asset held by that some one else shall be treated as belonging to the assessee.
Clause (b) provides that where the individual assessee is a partner in a firm it is the value of his interest in the firm determined in the prescribed manner that is to be treated as belonging to him and is includible in his net wealth.
[43 C F] (iv) It cannot be said that the interest of the partner in a firm does not belong to him.
The proper way to interpret clause (b) would be that the deeming part of it relates to the quantum of his interest in the firm determined in the prescribed manner which is to be treated as belonging to him and includible in his net wealth.
[43 F G] (v) A partner 's interest in a firm, either in his individual capacity or in his capacity as a Karta of a HUF, is property and is otherwise exigible to wealth tax under the other provisions of the Act.
[43 H] 37 2(i) Even where the Wealth tax Officer has resorted to section 7(2) for determining the value of assets of a business as a whole the written down values or book values of specific assets as appearing in the balance sheet are not sacrosanct and when the market value exceeds the written down value or book value by more than 20 per cent, the Wealth tax Officer has to adopt the market value of such assets for the purposes of the Act.
[49 C D] (ii) In order to determine the valuation of a partner 's interest in the firm, first the net wealth of the firm has to be determined under section 7 of the Act and Rule 2 provides that the net wealth of the firm so determined shall be allocated among the partners of the firm, which allocated amount will be the value of the interest of each partner in the firm.
[46 F G] (iii) The primary method of determining the value of the assets for the purposes of the Act is the on indicated in section 7(1), which provides that value of any assets, other than cash, shall be estimated to be its market price on the valuation date.
Sub section (2) provides that in the case of a business for which accounts are maintained by the assessee regularly the Wealth tax Officer may instead of determining separately the valuation of each asset held by the assessee in such business, determine the net value of the business as a whole having regard to the balance sheet of such business as on the valuation date and making such adjustment to therein as may be prescribed.
[48 D F] (iv) It is optional for the Wealth tax Officer to resort to either of the methods even in the case where the net value of a business carried on by the assessee is to be determined.
Even when he proceeds under sub section (2) he has to determine the net value of the business as a whole having regard to the balance sheet of such business as on the valuation date.
[48 G H] (v) The phrase "having regard to the balance sheet of such business" as judicially interpreted means that the Wealth tax Officer has to take into consideration or account the balance sheet of such business for such valuation and not that such balance sheet is conclusive or binding or decisive of the values of assets appearing therein.
[48 H;
|
Appeal No. 1370 of 1966.
Appeal from the Judgment and decree dated February 16, 1966 of the Rajasthan High Court in D. B. Civil Regular First Appeal No. 86 of 1958.
R. K. Garg, section C. Agarwal, D. P. Singh, V. J. Francis and section Chakravarty, for the appellants D. V. Patel, Janendra Lal, and B. R. Agarwala, for the respondents.
The judgment of the Court was delivered by Bhargava, J.
This appeal arises out of a suit for Partition of properties in the family of one Lalaji Ramchandra who Was the ,common ancestor of the parties to the suit.
He had two sons, Govindraoji 'and Motilal alias Krishnaraoji.
The plaintiffs/ appellants and the non contesting proforma respondents are the descendants of Motilal, while the contesting respondents are the descendants of Govindraoji, the principal one being Chandrakant Rao who was defendant No. 1 in the suit.
The appellants sought Partition of all the family properties, including eight villages known ,as "the sarola Jagir" which were situated in the erstwhile State of 'Kota.
The trial Court dismissed the suit in its entirety, holding 83 9 that none of the properties in suit was ancestral property.
On appeal by the present appellants, the High Court of Rajasthan upheld the dismissal of the suit insofar as the appellants had claimed a share in the eight villages forming the Sarola Jagir, while the suit in respect of the other properties was decreed and a preliminary decree passed in respect of those properties.
The appellants have come up to this Court in this appeal, by certificate granted ,by the High Court, against the order of the High Court refusing to grant partition of the eight villages of the Sarola Jagir.
In order to appreciate the point raised in this appeal the history of this Jagir in this family may be recited briefly.
Lalaji Ramchandra and his eldest son Govindraoji were awarded this Jagir by means of a Parwana dated 8th April, 1838 issued by His Highness Maharao Ramsingh, Ruler of Kotah.
It appears that the Maharao had contracted debts with the family of Lalaji Ramchandra even in the time of his ancestors and, at the relevant time, the amount of debt exceeded Rs. 9 lakhs.
This debt was guaranteed by the British Government.
In lieu of this debt, this Jagir, which was already being enjoyed by Lalaji Ramchandra with certain limitations, was given jointly to him and his son Govindraoji, stating that it was being conferred in perpetuity and was always to remain from sons to grandsons and was to be free from all taxes which were being exacted up to that time, such as Barar and Sewai.
At the same time, Govind Rao executed a deed of release by which he accepted the adjustment of the amount due from the Maharao against this grant of jagir.
These documents thus show that this Jagir was originally granted by Maharao Ramsingh, Ruler of Kotah, jointly in the names of Lalaji Ram Chandra and his son, Govindraoji in lieu of the debt which the Maharao owed to them.
Subsequently, this property was treated as property of the joint family of Lalaji Ramchandra Motilal the second son of Lalaji Ramchandra, was born after this grant and his name was also mutated against the Jagir villages.
On the death of Govindraoji, the name of his adopted son, Ganpat, Raoji, was brought in, while Motilal, the uncle, managed the property on behalf of the family.
Motilal executed a will in respect of his properties, including these villages, specifically stating that half of this property belonged to Ganpatraoji, while half would belong to his adopted son, Purshottam Raoji.
After the death of Motilal, Ganpatraoji became the manager of the property and Purshottam Raoji 's name was also entered against this property.
On the death of Ganpat Raoji, the name of his eldest son Chandrakant Rao was mutated while Purshottam Raoji in the capacity of the eldest member of the family, started managing the property.
The property thus remained in the family, being treated as joint family property and, even during the years between 1852 and 1868 when efforts were made by the Maharao of Kotah to dispossess this 8 40 family, the British Government had intervened to ensure that the property remained with this family, insisting that the Maharao could only resume the Jagir on repayment of the loan in respect of which discharge had been obtained when this Jagir was conferred.
The property was thus continued to be treated as joint family property until the death of Purshottam Raoji when a question arose as to the mutation of names of his descendants in his place.
Chandrakant Rao desired that his name alone should be shown as the holder of this Jagir and, on 22nd October, 1937, gave a statement before the Revenue Commissioner claiming that the eldest son in the eldest branch had the right over the jagir according to the custom and usage in Rajputana and, consequently, mutation in the records should be in his name alone.
A report was sent by the Revenue Commissioner and the matter was dealt with by the Maharao of Kotah himself in Mehakma Khas.
The order of the Maharao on that report was passed on 22nd January, 1938.
By this Order, a direction was made that this Jagir, like all other Jagirs, should be given the status of an impartible estate and it should be given proper shape by being liable to render 'Chakri, and 'Subhchintki to the Ruler.
It was further ordered that the Jagir will be governed by the rule of primogeniture, so that Chandrakant Rao alone would be held to be the Jagirdar.
As a result, all these eight villages of the Sarola Jagir came to be shown as the property of Chandrakant Rao alone.
The claim of the plaintiff in this suit was that the Jagir having been joint Hindu family property, the rights of the plaintiffs, who are the successors in interest of Purshottam Raoji, cannot be defeated by the order of the Maharao dated 22nd January, 1938 ,and, consequently, the appellants together with the proforma respondents who are also descendants of Purshottam Raoji are entitled to 1/2 share, whereas the other 1/2 share only can be claimed by the contesting defendants, including Chandrakant Rao, who are descendants of Ganpatraoji.
Both the trial Court and the High Court have held that, after the order of the Maharao of Kota dated 22nd January, 1938, this Jagir came to be, governed by the rule of primogeniture, with the result that Chandrakant Rao alone was the owner of this property, while all other members of the family could only claim maintenance out of this property.
Consequently, the claim of the appellants for a share in these villages on partition was negatived.
It is the correctness of this decision that has been challenged, before us.
Since, in this case, no effort was made on behalf of the respondents to contest the correctness of the finding given by the High Court that all these villages were joint family property and were treated as such right up to the year 1937 when Purshottam Raoji died, we need not enter into the details of the evidence on the basis 841 of which this finding has been recorded.
The question that falls for decision is whether the Maharao of Kota by his order dated 22nd January, 1938, could validly change the nature of the property.
make it impartible and governed by the rule of primogeniture when the property was already joint family property.
In deciding this question, the crucial point is that the Maharao of Kota was an independent and sovereign Ruler whose orders in his State were law.
He had absolute power to make any orders, and the Order dated 22nd January, 1938 has, therefore to be given the force of law which, when it was passed, could not be challenged as invalid.
Counsel for the appellants, however, urged that all orders passed by an independent and sovereign Ruler do not have the force of law.
It is only those orders which purport to lay down a law for the State which cannot be challenged and which would remain in force even after the merger of the Kota State in India and after, the enforcement of the Constitution under article 372 of the Constitution.
His submission was that, when passing the Order dated 22nd January, 1938, the Ruler was only exercising executive powers of directing mutation of names and was not exercising any legislative powers.
The nature of the Order passed by him, however, shows that this submission cannot be accepted.
No doubt, that Order was made on a report which was put up before the Maharaoji for deciding who should be held to be the owner of the Jagir when Purshottam Raoji died.
The Order shows that the Maharao took notice of the fact that the Sanad had been granted in the name of Lalaji Ramchandra and his eldest son Govind Rao on executing a deed of release in respect of the debt, but it added that, when the unpaid debt was changed in the form of a Jagir and no special condition was laid down regarding it and the name of only the eldest son was written in the 'Sanad ' though another brother was present there, it has to be held that the Jagir was intended to be given on the same rules on which the other Jagirs were granted The Order then proceeds to take notice of the fact that, though the mutation should have been in the name of Chandrakant after the death of Ganpat Rao, a practice had developed of entering more than one person as the holders of this Jagir.
It appears that, in order to give effect to the original intention that this Jagir should be governed by the same rules as all other Jagirs, the Maharao proceeded to lay down that this ' Jagir should also be impartible and should be held by the eldest member of the family in the eldest branch.
The Ruler considered it desirable to make this Order, because it was envisaged that, it the entire Jagir, was distributed amongst all the members of the family, then even the name of Thikana ' would disappear.
It was considered desirable that this Jagir should be governed according to the custom of the States in Rajputana including Kota State under which the eldest son of the senior branch alone was entitled to hold the property.
Thereafter, the Maharao proceeded to lay down that this Jagir should be L 10 Sup C I (NP)70 9 84 2 equated with other Jagirs by making a direction that the holders of this Jagir should also render 'Chakri ' and should continue to do 'Subhchintki '.
Having made this direction, the Ruler then held that.
since this 'Thikana ' was being given proper shape, its custom and status must be similar to that of all other Jagirdars in the State.
These directions given by the Ruler clearly show that, though the proceedings came to him on the basis of a report for directions as to the mutation entry to be made on the death of Purshottam Rao, he proceeded to lay down the principles Which were to govern this Jagir thereafter.
The Ruler decided that this Jagir should be placed on equality with all other Jagirs in the State and should be governed by the same laws.
The Order thus made was clearly an exercise of legislative power by which the Ruler was competent to lay down that, though this Jagir had in the past been joint family property, it was to be thereafter impartible property governed by the rule of primogeniture and Chandra Kant Rao as the eldest member of the senior branch was to be the sole Jagirdar.
This was, therefore, a case where the Maharao exercised his powers of laying down the law with respect to this one single Jagir.
It cannot be said that the Order passed by him was a mere executive order and did not result in exercise of his powers of making the law.
In this connection, counsel for the appellants relied on the principle laid down by this Court in Rajkumar Narsingh Pratap Singh Deo vs State of Orissa and Another(1) to canvass his submission that the Maharao, in this case, was not exercising legislative powers when he passed the Order dated 22nd January, 1938.
In that case, the effect of a Sanad granted by the Ruler of Dhenkanal State had to be considered and 'the question arose whether the Sanad could be treated as existing law within the meaning of article 372 of the Constitution.
The Court, after taking notice of previous decisions, drew a distinction between orders made by a Ruler having the force of law and orders which may be of executive nature, and held "The true legal position is that whenever a dispute arises as to whether an order passed by an absolute monarch represents 'a legislative act and continues to remain operative by virtue of cl.
4(b) of the Order, 'all relevant factors must be considered before the question is answered; the nature of the order, the scope and effect of its provisions, its general setting and context, the method adopted by the Ruler in promulgating legislative as distinguished from executive orders, these and other allied matters will have to be examined before the character of the order is judicially determined." (1) ; 843 On an application of these principles in that case, it was held that the Sanad in question could not be held to be a legislative act.
In our opinion, even if these principles are applied to the case,before us, it has to be held that the Order of the Maharao dated 22nd January, 1938 amounted to exercise of legislative power.
As we have already indicated earlier, the very mature of the Order, which changes the law applicable to the Jagir, indicates that it was a legislative act and not a mere executive order.
The Maharao did not purport to lay down that the Jagir was already governed by the rule of primogeniture; what he did was to apply the rule of primogeniture to this Jagir for future.
Such an order could only be made in exercise of his prerogative of laying down the law for the State.
The mere fact that it was laid down for one single Jagir and was not a general law applicable to others in the State is immaterial, because it does not appear that there were any other similar Jagirs which also required alteration of the law applicable to them.
There is also nothing to show that during the period of his rule, the Maharao had adopted any special procedure for promulgating the laws in his State.
The manner in which the Order was passed indicates that, in this State, the Maharao considered himself competent to lay down the law at any time he liked.
Reliance was also placed on the decision of this Court in State of Gujarat vs Vora Fiddali Badruddin Mithibarwala(1), but that case, in our opinion, has no application at all.
In that case,, the question arose whether an agreement entered into by a Ruler had the force of law.
In the case before us, there is no such question of any agreement.
In dealing with that question, the Court relied on the following extract from a decision of the Court in an earlier case of The Bengal Nagpur Cotton Mills Ltd. vs The Board of Revenue, Madhya Pradesh and Others(2) : "It is plain that an 'agreement of the Ruler expressed in the shape of a contract cannot be regarded as a law.
A law must follow the customary forms of law making and must be expressed as a binding rule of conduct.
There is generally an established method for the enactment of laws, and the laws, when enacted, have also a distinct form.
It is not every indication, of the will of the Ruler, however expressed, which amounts to a law.
: An indication of the will meant to bind as a rule of,,., conduct and enacted with some formality either traditional or specially devised for the occasion, results.
in a law but not an agreement to which there are two parties, one of which is the Ruler.
" Emphasis was laid by counsel on the views expressed in this passage that a law, must follow the customary forms of law making.and ' (1) ; (2) A.T.R. 1964 S.C. 8.88 844 must be expressed as a binding rule of conduct.
In the present case, there is nothing to show that, in the State of Kota, there was any other customary form of law making.
The Order of 22nd January, 1938 clearly expresses the direction of the Ruler that the Jagir must be governed by the same customary law as other Jagirs as a binding direction which was to govern the future conduct of the holders of this Jagir.
The principle relied on, therefore, does not show that this Order of 22nd January, 1938 did not amount to a legislative act on the part of the Maharao.
Reference was also made to the decision of this Court in Major Ranjit Singh Rao Phalke vs Smt.
Raja Bai Sahiba (dead) by her legal representatives & Vice Versa(1) where the Court said : "It is now settled law that every order of the Maharaja cannot be regarded as law, particularly those which were in violation of his own laws." and again repeated: "The position today is that every order of the Ruler cannot be regarded as law but only such orders as contain some general rule of conduct and which follow a recognised procedure of law making." In that case, the particular order of the Ruler which was questioned had been made in contravention of one of the existing laws of the State and it was held that such an order could not be treated as law.
In the case before us, the position is quite different.
There was no law of the Kota State which could be held to be contrary to the Order dated 22nd January, 1938.
In fact, the general law govern ing all Jagirs in the State was the customary law under which the Jagirs were owned by the eldest member of.
the senior branch, and all that this Order did was to apply the same law to this Jagir also.
It is true that no special procedure of law making was adopted by the Maharao when making this Order; but that circumstance cannot change the nature of the Order specially when there is nothing to indicate that there was any recognised procedure of law making in the Kota State at that time.
In these circumstances, we hold that the High Court was quite correct in arriving at the decision that these eight villages ', at the time when the suit for partition was instituted, were impartible property governed by the law of primogeniture and Chandrakant Rao respondent alone had to be treated as the owner of these villages.
It, however, appears that, during the pendency of the suit, Jagirs were resumed in Rajasthan including this Jagir which stood in the name of Chandrakant Rao and cash compensation was paid in respect of it.
It was urged by counsel for the appellants that, (1) Civil Appeals Nos. 982 and 983 of 1964 decided on 18th July, 1967.
845 even if the Jagir was impartible and governed by the rule of primogeniture, the right, which earlier Vested in the members of the family when it was joint family property, would be exercisable when the Jagir was converted into cash and lost its status of impartible estate.
It was, therefore, claimed that, after the Jagirs had been converted into cash under the Rajasthan Land Reforms and Resumption of Jagirs Act No. VI of 1952, the appellants should have been granted a share in the compensation received by Chandrakant Rao on the basis that this property was earlier joint Hindu family property.
In the altemative, it was also urged that, even if this claim of the plaintiffs/appellants is not accepted, they would at least be entitled to claim a part of the compensation in lieu of their right of maintenance.
These two aspects do not seem to have been considered by the trial Court and even the High Court in one sentence disposed of this matter by saying that, since the appellants were only entitled to maintenance, they could not claim any share in the compensation money paid under the Rajasthan Act VI of 1952.
In dealing with this aspect, we are handicapped by the circumstance that the suit was instituted before this Act VI of 1952 was.
passed, so that there was no specific pleading in this behalf by the plaintiffs appellants.
The trial Court, therefore, ignored this aspect altogether, and even the High Court did not take into account the effect of Act VI of 1952 in the, two aspects which have been mentioned by us above.
Since, however, this is an appeal against a preliminary decree in the suits and the suit is still to continue in the trial Court, we think it appropriate to direct that these questions should be properly raised in the trial Court by amendment of the pleadings in the plaint, if necessary, and should be considered and decided by that Court.
It will be for that court to give a fresh decision whether, the appellants are entitled to claim a share in the compensation money received in lieu of these eight villages under Rajasthan Act VI of 1952.
The result is that this appeal is dismissed, subject to the modification that the case will go back to the trial Court for deciding the question whether the plaintiffs/appellants can claim a share in the compensation money or not, as indicated above.
Costs of this appeal shall abide the decision on this claim of the plaintiffs appellants to a share in the compensation money.
R.K.P.s.
Appeal dismissed.
| L had two sons G and M. L. and his elder son G were granted a Jagir by the then Ruler of Kotah jointly in their names, in lieu of a debt which the Ruler owed to them.
This property was treated as property of the joint family of L.
The name of M, the second son born after the grant, was also mutated against the Jagir villages.
The names of the descendants of G and M were from time to time similarly mutated against the Jagir and this Jagir as well as other property of the joint family was managed for some time by the eldest member belonging to either branch of the family.
The respondent C was a descendant of G and claimed in 1937 before the Revenue Commissioner that as the eldest son in the eldest branch he alone had the right over the Jagir according to the custom and usage in Rajputana and, consequently, mutation in the records should be in his name alone.
On a report by the Revenue Commissioner, the Ruler passed an order on 22nd January, 1938, directing that the Jagir, like all other Jagirs in the State should be given the status of an impartible estate and should be liable to render 'Chakri ' and 'Subchintki ' to the Ruler.
It was further ordered that the Jagir would be governed by the rule of primogeniture, so that C alone would be held to be jagirdar.
The appellants, who were the descendants of M, sought partition of all the family properties including the villages in the Jagir.
Although the Trial Court dismissed the suit, on appeal, the High Court granted a decree in respect of other properties but upheld the dismissal of the suit in so far as the appellants had claimed a share in the Jagir.
The appellants claimed that the jagir having been joint Hindu property, their rights as successors in interest of M could not be defeated by the order of Ruler dated 22nd January, 1938, and consequently, the appellants were entitled to their proper share in the Jagir.
It was contended that all orders passed by an independent and sovereign Ruler do not have the force of law.
It is only those orders which purport to lay down a law for the State which cannot be challenged and which would remain in force even after the merger of the Kotah State in India and, after the enforcement of the Constitution, under article 372 of the Constitution.
It was submitted that, when passing the Order dated 22nd January, 1938, the Ruler was only exercising executive powers of directing mutation of names and was not exercising any legislative powers.
HELD: Dismissing the appeal.
(i) The High Court was right in holding that the villages in the Jagir, at the time when the suit for partition was ' instituted, were impartible 838 property governed by the law of primogeniture and C alone could be treated as the owner of these villages.
(ii)The very nature of the Order, which changed the law applicable to the Jagir, indicated that it was a legislative act and not a mere executive order.
The Ruler did not purport to lay down that the Jagir was already governed by the 'rule of primogeniture; what he did was to apply the rule of primogeniture to this Jagir for future.
Such an order could only be made in exercise of his prerogative of laying down the law for the State.
The mere fact that it was laid down for one single Jagir and was not a general law applicable to others in the State was immaterial, because it does not appear that there were any other similar Jagirs which also required alteration of the law applicable to them.
L843 B D] (iii)Although no special procedure of law making was adopted by the Ruler when making this Order, that circumstance could not change the nature of the Order specially when there was nothing to indicate that there was any recognised procedure of law making in the Kotah State at that ,time.
[844 F G] Rajkumar Narsingh Pratap Singh Deo vs State of Orissa and Another ; ; referred to.
State of Gujarat, vs Vora Fiddali Badruddin Mithibarwala ; and Major Ranjit Singh Rao Phalke vs Smt.
Raja Bai Sahiba (dead) by her legal representatives and Vice Versa Civil Appeal Nos.
982 :and 983 of 1964 decided on 18th July, 1967 ; distinguished.
|
Civil Appeal No. 144 of 1956.
Appeal by special leave from the judgment and order dated the 9th July, 1955, of the former Madhya Bharat High Court in Civil Misc.
Case No. 27 of 1954.
M. A. Khan and Ratanaparkhi, for the appellant.
section N. Bindra and R. H. Dhebar, for the respondent.
October 30.
The following Judgment of the Court was delivered by IMAM J.
This is an appeal by special leave against the order of the Madhya Bharat High Court dated July 9, 1955, rejecting an application filed by the appellant under article 226 of the Constitution.
According to the appellant, his father Habibullah died more than twenty years ago leaving behind the appellant and his brother Bashirullah as his sole heirs.
Habibullah, on his death, left immovable properties in the city of Indore.
Bashirullah, who was unmarried, went mad in 1942 and died in 1950 without any issue.
On his death, the appellant became the sole owner of all the properties left by his father Habibullah.
On September 21, 1954, the respondent purported to serve on the appellant a notice tinder section 7 of the (XXXI of 1950), hereinafter referred to as the Act.
This notice was not served on him and was never pasted on the property concerned.
Service of the notice was, according to the appellant, not proper and therefore illegal.
The appellant desiring to know on what material the notice under section 7 of the Act was issued against him applied on October 1, 1954, for copies of the record and the evidence in the possession of the respondent on the basis of which he formed the opinion that Bashirullah, at his death, had left behind a son Iqbal and a wife Kamrunnissa who had migrated to Pakistan in consequence of which the estate inherited by them from Bashirullah became evacuee property.
The application was rejected by the respondent.
818 The appellant filed a petition under article 226 of the Constitution in the Madhya Bharat High Court, which was dismissed by that Court.
The High Court was of the opinion that two questions fell to be decided in the proceedings before it (I) was the notice dated September 21, 1954, issued by the respondent under section 7 of the Act, illegal and (2) was the refusal of the respondent to supply to the appellant copies of the record and the evidence in possession of the respondent prior to the issue of notice under section 7 of the Act unlawful? Both these questions were decided against the appellant.
The notice dated September 21, 1954, was issued under section 7 of the Act in accordance with the Rules framed under section 56 of the Act.
Under section 7 of the Act the notice has to be given to persons interested in the prescribed manner.
Rule 6 of the Rules framed under the Act requires the notice to be in Form I to be served on persons interested in the property proposed to be declared evacuee property.
We have compared the notice issued in the present case with Form I of the Rules and can find no difference between them in essential particulars.
It was said that the notice in the present case does not state the grounds upon which the property concerned was proposed to be declared evacuee property and Iqbal and Kamrunnissa evacuees.
This contention is without foundation because the notice in question definitely states under the heading "Grounds" that Iqbal and Kamrunnissa migrated to Pakistan after March 1, 1947, on account of the creation of the Dominions.
The notice specifies with sufficient clarity the particulars of the property proposed to be declared evacuee property.
There was no reliable material to prove the assertion of the appellant that the notice was not properly served.
We are, accordingly, of the opinion that the notice in question has not been proved to be illegal on account of contravention of any of the provisions of the Act or the Rules made thereunder.
It was next contended that there was no material before the respondent to justify his issuing the notice and, therefore, the notice was issued without 819 jurisdiction.
Section 7 of the Act provides that where the Custodian is of the opinion that any property is an evacuee property within the meaning of the Act he may, after causing notice thereof to be given in the prescribed manner to the persons interested and after holding such enquiry in the matter, as the circumstances of the case permitted, pass an order declaring any such property to be evacuee property.
It is for the Custodian to form his opinion on such material, as was before him, and on such information which he possessed.
The notice which he issued was in Form I of the Rules framed under the Act and it stated clearly that there was credible information in possession of the respondent that lqbal and Kamrunnissa were evacuees and that the property specified in the notice was evacuee property.
It was for the respondent to decide .
whether, on the information in his possession, he should issue a notice under section 7 of the Act.
It is not for this Court or any other Court to determine whether the information in possession of the respondent was adequate to justify the issuing of the notice.
The contention on behalf of the appellant in this respect cannot be supported on any valid ground.
It was next contended on behalf of the appellant that when bona fides of the respondent bad been challenged in the High Court, that Court should have sent for the record and seen for itself as to whether there was any justification for the issue of the notice under section 7 of the Act.
In our opinion, this contention cannot prevail as there is no material on the record to justify the accusation that the respondent acted with malafides in issuing the notice.
The respondent was free to believe or not to believe the information in his possession.
The mere issue of a notice would not make the persons named therein evacuees or the property mentioned therein evacuee property.
That stage could only be reached after the notice had been issued and after the holding of such enquiry, as the circumstances of the case permitted, when an order declaring the property to be evacuee property could be made in respect of a person who was an evacuee, as defined in 104 820 the Act.
In our opinion, it was unnecessary for, the High Court to have called for the record and to have examined it for itself in order to ascertain whether the respondent was justified in issuing the notice.
We have now to consider whether the application for copies filed by the appellant was improperly rejected.
On his behalf, it was contended that the application for copies should have been allowed as section 7 of the Act contemplates only one proceeding, from the commencement to the end, including the stage prior to the issue of notice, regarding the declaration of any property as evacuee property and that that proceeding is a judicial proceeding.
Since the appel lant was a party to the proceedings under section 7 of the Act, he was entitled to have copies of the record including the evidence which constituted the proceedings.
Reliance was placed on section 49 of the Act, which states that all records prepared or registers maintained under the Act shall be deemed to be public documents within the meaning of the Indian Evidence Act and shall be presumed to be genuine until the contrary is proved.
Reference was also made to section 45 of the Act which states that for the purpose of holding an enquiry under the Act, the Custodian shall have the same powers as are vested in a civil court under the Code of Civil Procedure when trying a suit, in respect of the following matters: (a) enforcing the attendance of any person and examining him on oath; (b) compelling the discovery and production of documents; (c) any prescribed matter; and the enquiry by the Custodian shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code and the Custodian shall be deemed to be a court within the meaning of sections 480 and 482 of the Code of Criminal Procedure.
There can be little doubt that the Custodian, while holding an enquiry under section 7 of the Act is acting in a judicial capacity and that, by virtue of Rule 35 of the Rules, any party to the enquiry would be entitled to copies of any application, 821 objection, petition, affidavit, or statement made by a party or a witness and any other document.
He would also be entitled to copies of the final original order passed by the Custodian or an order passed in appeal, revision or review.
The position, however, is quite different with respect to the material in possession of the Custodian on which he formed his opinion and on which he issued notice under section 7, because at that stage he was not holding an enquiry and was, therefore, not acting in a judicial capacity.
It is a misconception of the entire scheme of the Act to suppose that an enquiry under section 7 of the Act and the issuing of a notice previous to the holding of that enquiry is a single proceeding.
When issuing a, notice under section 7 the Custodian merely has some credible information which, in his opinion, justifies him in issuing it and thereafter to enquire into the matter before making a declaration that the property is evacuee property.
That information may, after the enquiry has been concluded, turn out to be entirely insufficient for making the required declaration.
In our opinion, there are two stages in the process whereby any property can be declared to be evacuee property under the Act.
One is the issuing of the notice to persons interested and the other an enquiry under section 7 of the Act.
The proceedings commence after the issue of a notice and not previous to it.
At the second stage, a party to the proceedings would be entitled to copies of the record and the evidence from the stage of the issuing of the notice until the conclusion of the enquiry but not previous to the issue of the notice.
In our opinion, the appellant would have been well advised to have responded to the notice issued to him and assisted the respondent in holding the enquiry.
The respondent would have had to consider all the material before him at the enquiry before he declared the property in question evacuee property.
If the material in the enquiry was insufficient to justify such a declaration, the appellant had the right of appeal against the order of the respondent.
In our opinion, the application of the respondent for copies was rightly rejected by the respondent as he was not, 822 entitled to copies of the material before the respondent previous to the issuing of the notice under section 7 of the Act.
The appeal, accordingly, fails and is dismissed with costs.
Appeal dismissed.
| The appellant and his brother owned certain properties inherited from their father.
The brother died and the appellant claimed to have become the sole heir.
The respondent issued a notice under section 7 of the , in respect of the share of the brother on the ground that the brother had left a widow and a son who had migrated to Pakistan.
The appellant, desiring to know on what materials the notice was issued, applied for copies of the materials on the basis of which he respondent had formed his opinion.
The application was rejected by the respondent.
The appellant filed a petition under article 226 of the Constitution in the High Court which was also dismissed.
The appellant obtained special leave and contended that the notice was issued without jurisdiction as there was no material before the respondent to justify his issuing of the notice and that the application for the copies had been improperly ejected by the respondent.
Held, that it was for the Custodian to form his opinion on such material as was before him and on such information which he possessed.
It is not for any Court to determine whether the information in the possession of the Custodian was adequate to justify the issue of a notice under section 7 of the Act: Held further, that the application for copies had been rightly rejected.
There are two stages in the process whereby any property can be declared to be evacuee property under the Act.
One is the issuing of the notice to persons interested and the other is the inquiry under section 7.
The proceedings commence after issue of the notice and not prior to it.
A party to the proceedings will be entitled to copies of the record and evidence from the stage of 817 the issuing of the notice until the conclusion of the enquiry but not previous to the issue of the notice.
|
Appeals Nos.
519 to 521 of 1958.
Appeal by special leave from the decision dated January 4,1955, of the Labour Appellate Tribunal of India, Calcutta, in Appeals Nos.
69152 and Cal.
70/52.
AND Civil Appeal No. 521 of 1958.
Appeal by special leave from the decision dated January 4, 1955, of the Labour Appellate Tribunal of India, Calcutta in Appeal No. Cal 70/52.
Ram Lal Anand and Naunit Lal, for the appellant in C.A. No. 519 of 58.
H. N. Sanyal, Additional Solicitor General of India, Ram Lal Anand and Naunit Lal, for the appellants in C.A. No. 520/58 and respondents in C.A. NO. 521 of 58.
M. C. Setalvad, Attorney General for India, C. K. Daphtary, Solicitor General, M. K. Ramamurthi, Syed Mahummud, B. K. Garg, Miss. A. B. Varma and Janardan Sharma, for respondent No. 1 in C.A. Nos. 519 and 520 of 58 and appellant in C.A. No. 521 of 58.
Hardyal Hardy and M. B. Krishna Pillai, for respondent No. 2 in C.As, Nos.
519 & 520 of 58.
September 24.
The judgment of Sinha and Gajendragadkar, JJ., was delivered by Gajendragadkar, J. Subba Rao, J., delivered a separate judgment.
J.GAJENDRAGADKAR J. These three appeals arise out of an industrial dispute between the Punjab National Bank, Ltd. (hereinafter called the Bank) and two sets of its employees represented by the.
All India Punjab National Bank Employees ' Federation (hereinafter called the Federation) and the U.P. Bank Employees ' Union hereinafter called the Union) respectively.
811 On July 2, 1951, this dispute was referred by the Central Government for adjudication to the industrial tribunal of which Mr. A. N. Sen, a retired Judge of,, the Calcutta High Court, was the sole member.
It raised two issues.
The first was whether the 150 workmen mentioned in Sch.
11 attached to the reference had been wrongfully dismissed by the Bank, and the second had reference to the claim for reinstatement and payment of wages and allowances from the date of dismissal to the date of reinstatement.
The reference thus made has gone through a long and protracted career and the final decision of the dispute would be reached after we dispose of the present appeals.
In order to appreciate the points raised for our decision in these appeals it is necessary to indicate briefly at the outset the salient points of controversy between the parties, the findings made by the original tribunal, the conclusions reached by the Labour Appellate Tribunal in its interlocutory and final judgments and the decision of this Court in the appeal which had been brought before it by the Bank against the interlocutory judgment of the Labour Appellate Tribunal.
The 150 employees, whose dismissal has given rise to the present dispute are spread over several branches of the Bank.
52 of them work at its head office in Delhi, 15 in Bombay, 73 in East Punjab and 10 in U.P. 140 workmen in the first three areas are represented by the Federation while the last 10 in U.P. are represented by the Union.
All of these employees took part in strike which, according to the Bank, were illegal.
The strikes in which the two respective groups of workmen took part were, however, for different reasons.
The strike in which the Federation took part was the result of the suspension by the Bank of its typist Sabharwal employed in the Delhi Branch of the Bank on April 17, 1951.
It appears that Sabharwal, who was the Secretary of the Punjab National Bank Employees ' Union, Delhi, had applied for leave for seven days on April 3, 1951, but his application was rejected; even so he absented himself from duty and went to Bombay.
As soon as he resumed his duties on 812 April 14, 1951, he was supplied with a written chargesheet for absence without leave which he refused to accept.
It was then sent to him by registered post, and on April 17 he was suspended.
This suspension was followed by an immediate pen down strike at the head office of the Delhi Branch subsequent to which the Bank suspended 60 other employees.
This led to a general strike in Delhi and many other branches and it commenced at different dates from April 18 to 20, 1951.
On April 21 22, 1951, the Bank issued notices calling upon all striking members of the staff to report for duty by 10 a. m. on April 24, 1951, and it warned them that if they did not comply with the notice it would be taken that they had voluntarily ceased to be its employees and their services would be deemed to have terminated from that date.
This was followed by another notice on April 24 which announced that the strikers who had failed to report for duty as aforesaid had ceased to be the employees of the Bank from April 24, 1951.
An option was, however, given to the strikers who were still willing to rejoin duty to apply in that behalf and explain their action in staying away.
It is common ground that the 140 employees represented by the Federation who had taken part in the strike were dismissed by the Bank for absence due to the strike.
That is the genesis of the dispute between the Bank and the Federation in relation to the 140 employees of the Bank.
The strike in which the remaining 10 employees of the Bank from the U.P. branches are concerned commenced on April 23, 1951.
This strike was in pursuance of the strike notice served by the Union on the Bank on April 22, 1951.
This pen down strike was a part of the general strike which affected not only the Bank but also the Allahabad Bank and other banks in the U.P. region.
The Regional Labour Commissioner of the U.P. Government who intervened suggested that the general strike should be called off and recommended that some of the demands made by the strikers should be referred to the industrial tribunal for adjudication; in accordance with this request, on April 30, 1951, the strike committee decided to call off the strike and 813 Advised workmen to join duty from May Is 1951.
This advice, however, did not reach all the branches in time with the result that some of the employees of the Bank offered to resume work on May 3,1951.
The other banks in the U.P. region took back their employees who rejoined on May 3, but the Bank refused to take back its employees on the ground that they ' had not offered to rejoin on or before the date fixed; and so it proceeded to dismiss them.
The dismissal of the said 10 employees is also the subject matter of the present reference.
That is bow the reference is concerned with the dismissal of 150 employees of the Bank in all.
The strikes in question which affected the head office and the large number of branches of the Bank operating in more than one State and a very large number of its employees caused public concern, and so the Prime Minister and the Labour Department of the Central Government thought it necessary to intervene; and a conference was arranged at New Delhi between the officers of the Government and the Bank.
To this conference the representatives of the Federation or the Union were, however, not invited.
This conference led to an agreement as a result of which the Bank undertook to reinstate all its employees who had taken part in the strikes except those to whose reinstatement it had " positive objections".
This, however, was subject to the reservation that the number of such employees was not to exceed 150 and that their case, , would be referred by the Central Government for adjudication by a tribunal.
This agreement was the result of several meetings between the representatives of the Bank and the Labour Department of the Central Government and it was reached on or about May 9, 1951.
Thereafter the head office of the Bank sent a circular letter to all its branches calling for names of the employees who according to the branch managers could not be considered for reinstatement.
The list of such employees received by the head office from the respective managers of its branches was examined by the head office and the Bank then compiled the 103 814 list of 150 workmen whom it was not prepared to reinstate.
This list was in due course communicated by the Bank to the Central Government; and in pursuance of the agreement aforesaid the Central Government referred the dispute in respect of the said 150 workmen for adjudication before the tribunal by its notification issued on July 2, 1951.
Before the tribunal the case for the Federation and the Union was that the refusal of the Bank to take back the 150 workmen in question was a part of the concerted and deliberate plan adopted by the management of the Bank for victimising the President, the Vice President, the General Secretary and Secretaries and Treasurer of the Federation and of the working committees of the different trade unions of workers and the members of the strike committees, and it showed that the sole object of the Bank in refusing to take back those employees was to teach a lesson to the Federation and the Union and to penalise all active trade union workers who supported the cause of the employees.
On the other hand, the Bank contended that the strikes in which the 150 employees had participated were illegal and had been resorted to not with a view to obtain relief for the employees but with a view to paralyse the business of the Bank and to scare away its customers.
The Bank further alleged that the said 150 employees were guilty of " unpardonable acts of violence, intimidation, coercion and victimisation.
" The tribunal gave two interim awards by which it directed the Bank to make some payments to the 150 employees by way of allowance pending the final disposal of the dispute.
On February 2, 1952, the tribunal pronounced its final award.
It held that the strikes were illegal and that the ' Bank was entitled to dismiss the employees solely on the ground that the said employees had participated in an illegal strike.
On this view the tribunal did not think it necessary to allow evidence to be given on the question as to whether some of the strikers were guilty of specific subversive or violent acts.
It also did not allow 815 evidence to be led by workmen in support of their plea that their dismissal was the result of victimisation.
It decided the dispute on the sole ground, that the strikes were illegal and participation in illegal strikes justified the dismissal of the employees.
Even so the tribunal made an order directing the Bank to pay certain amounts to the said employees on compassionate grounds.
The direction issued by the tribunal for the payment of the said amount was challenged by the Bank by its appeal (No. 25 of 1952) before the Labour Appellate Tribunal (hereinafter called the appellate tribunal), whereas the decision of the tribunal that the 150 employees were not entitled to reinstatement was challenged by the two sets of employees by two different appeals (Nos. 69 and 70 of 1952).
The appellate tribunal recorded its interlocutary decision on September 22, 1952.
As a result of this decision the dispute was set down for further hearing on the points indicated by it.
It was urged by the Bank before the appellate tribunal as a preliminary objection that the appeals preferred by the employees were incompetent.
This objection was overruled.
The appellate tribunal then proceeded to consider two questions of law, (1) whether an employer has the right to dismiss a workman for his absence from duty by reason of his mere participation in an illegal strike, and (2) if he has, can the tribunal scrutinise the exercise of that right and grant relief to such a workman when it comes to the conclusion that the right has been exercised capriciously or by unfair labour practice.
The appellate tribunal held that the strike started by the Federation was illegal under section 23 (b) read with section 24 (1) of the (14 of 1947) (herein after called the Act).
It appears that on February 21, 1950, an industrial dispute between the Bank and the Federation had been referred to the arbitration of Mr. Campbell Puri, and whilst the proceedings in the said reference were pending before the tribunal the strike was commenced on or about April 17, 1951.
That is why the strike was illegal.
The appellate tribunal, however, held that, even if mere participation 816 in an illegal strike by workmen is assumed to give the employer certain rights against the striking workmen, the employer can waive these rights, that is to say, rafrain from exercising those rights against the workmen.
According to the appellate tribunal such waiver or relinquishment can be inferred from conduct, and it thought that the conduct of the Bank evidenced by the agreement which it reached with the Central Government on or about May 9, 1951, unambi guously proved that it had waived or relinquished its rights to take any penal action against its employees merely for their participation in the illegal strike.
In other words, the effect of the findings of the appellate tribunal was that, though the strike was illegal, by its conduct the Bank had precluded itself from exercising its alleged right to dismiss its employees for their participation in such an illegal strike.
The appellate tribunal also considered the general question of law as to whether participation in an illegal strike can be said to deserve dismissal of the striking workmen.
It took the view that an illegal strike absolves the liability of the employer to pay to its employees wages during the period of absence of the striking workmen, but that it cannot be stated as a general proposition that participation in an illegal strike would by itself necessarily involve the penalty of dismissal.
The Bank attempted to justify the dismissal in the present case by urging that the 150 employees were guilty of violent or subversive acts but the appellate tribunal held that it was not open to the Bank at that stage to plead in justification of their dismissal any such acts of violence or subversive acts.
" There is abundant authority ", observed the appellate, tribunal, " for the proposition that an employer can justify before the tribunal a dismissal only on the ground on which he purported to dismiss him and not a ground different from it ".
That is why in the end the appellate tribunal held that the dismissals were wrongful.
The appellate tribunal had no doubt that mere participation by a workman in an illegal strike or his absence due to such participation does not entitle an employer to dismiss him and that it is 817 open to a tribunal to order reinstatement in a proper case.
Having reached this conclusion the appellate tribunal observed that "though in the case of wrongful dismissals the normal rule is that the employees wrongfully dismissed should be reinstated, it would nevertheless be necessary to consider the question of reinstatement in the case of each individual employee in the light of requirements of social justice and fair play for which the employee claims and industrial peace and discipline which the employer emphasizes.
" In order to decide the cases of the several employees from this twofold point of view the appellate tribunal thought it was necessary to allow the parties to lead additional evidence on relevant points.
The employees wanted to lead evidence in support of their case of victimisation and they were allowed to do so by the appellate tribunal.
The Bank wanted to lead evidence on five points.
The appellate tribunal held that evidence on items (3) and (5) would be irrelevant and it thought that item (4) was too vague.
That is why 'the Bank was allowed to lead evidence only in respect of item (2) and some heads mentioned in item (1).
In the result opportunity was given to the parties to lead evidence on the following points: (1) victimisation, (2) past service records of the 150 employees, (3) conduct of those 150 employees or any of them during the strike confined to acts of violence, intimidating loyal workers and acts subversive of the credit of the Bank, (4) employment which any of those 150 persons got after this dismissal, the period during which they were in employment and the wages or emoluments they received.
The appellate tribunal then directed the Bank to file a statement within a month giving particulars of the acts confined to the matters on which the Bank was allowed to lead evidence in respect of each one of the 150 employees after supplying a copy of the same, one to the Federation and one to the Union.
In the meanwhile the appellate tribunal directed the Bank to make interim payments to the employees as indicated in its order.
This interlocutary judgment was challenged by the Bank before this Court by its appeal under article 136 818 of the Constitution.
On behalf of the Bank it was urged that the conclusion of the appellate tribunal that the Bank had condoned the illegal strike by its workmen was unjustified and that it was open to the Bank to rely upon the illegal strike as justifying the dismissal of the said workmen.
The case of the Bank thus was that the order passed by the appellate tribunal setting down the dispute for further enquiry was illegal and should be set aside.
The judgment of this Court delivered by Patanjali Sastri, C. J., shows that this Court thought it unnecessary to express any opinion on the question of condonation or waiver of the illegal strike because, in its opinion, even if there was no such condonation or waiver and even if it was open to the Bank to rely upon the illegal strike as a valid ground for dismissing its employees, there was no doubt that the order of dismissal was illegal having regard to the provisions of section 33 of the Act.
The said section furnished a short answer to the Bank 's contention that the appellate tribunal had no jurisdiction to order reinstatement of the 150 workmen.
In other words, just as the strike of the employees was illegal so was the order of dismissal passed by the Bank illegal and for a similar reason.
section 23(b) of the Act made the strike illegal while section 33 of the Act made the dismissal also illegal.
In the result the appeal preferred by the Bank was dismissed; and it was held that there was no substance in the plea of the Bank that the appellate tribunal had no jurisdiction to direct reinstatement of the employees.
This judgment was pronounced on April 10, 1953.
The proceedings before the appellate tribunal were subsequently resumed and they terminated on January 4, 1955, when the appellate tribunal directed the reinstatement of the 136 employees and passed incidental orders about the payment of their wages.
It refused to reinstate the remaining 14 employees but passed orders in regard to payment of compensation even in their cases.
Before the appellate tribunal four general points were sought to be raised at this subsequent hearing.
The first was in regard to the invalidity of the reference itself.
The second was in regard to 819 the ultra vires character of the relevant provisions of the Act.
Both these contentions were not allowed to be raised by the appellate tribunal and they have not been urged before us either.
The third contention ' raised was that both the strikes were not bona fide and so the striking workmen were not entitled to reinstatement; and the last contention was that the pen down strike was illegal and participation in it should be considered as a circumstance disqualifying the strikers from reinstatement.
The appellate tribunal has held that the strikes in question were bona fide and that mere participation in the pen down strike cannot be treated as a valid ground for refusing reinstatement to the strikers.
It considered the evidence led by the parties in regard to the character of the strike, and it held that the definite instruction issued to the employees was to continue occupation of their seats till the police intervened and threatened to arrest and so it was not prepared to accept the employees ' case that the pen down strikers "vacated their seats on the mere asking by the management" According to the finding, the persons who took part in the pen down strike not only ceased to work but continued to occupy their seats.
The appellate tribunal also found that the pen down strikers were quiet and peaceful, that no slogans were shouted, no attempt at violence or coercion was made and that they simply occupied their seats without doing any work.
It was conceded before the appellate tribunal that pen down strike falls within the definition of strike prescribed by section 2(q) of the Act; but it was urged that the act of not vacating their seats when asked by the management to do so introduced an element of illegality and made the strikers liable in a civil court for trespass.
The appellate tribunal was not impressed with this argument but it held that even if the striking workmen are assumed to have made themselves liable for civil trespass that itself would not be sufficient ground for refusing reinstatement.
It appears that the Bank relied upon several documents to show that the employees were guilty of subversive actions during the course of the strike.
The 820 appellate tribunal was not satisfied that these documents were genuine and could be effectively pressed into service by the Bank in support of its case.
It was also urged by the Bank that during the course of the strike posters and circulars were issued which were clearly subversive of the credit of the Bank and it was contended that employees who were guilty of issuing such posters and circulars did not deserve reinstatement.
The appellate tribunal examined these documents and held that three of them amounted to sub versive acts.
They are Exs.
255(a), 255(c) and 302.
In regard to exhibit 302 the findings recorded by the appellate tribunal in two places of its decision are somewhat inconsistent; but the operative portion of the decision shows that the appellate tribunal was inclined to hold that exhibit 302 was also objectionable and that it amounted to a subversive act.
The rest of the documents no doubt used strong and intemperate language but the appellate tribunal was not prepared to treat them as constituting subversive activity.
On this finding a question which arose before the appellate tribunal was : Who should be held responsible for the offending documents ? The appellate tribunal was not prepared to hold all the 150 employees responsible for them.
In this connection it considered the statement made by H. N. Puri in this evidence and it field that since Puri had admitted that he consulted 11 specified persons in preparing Exs.
255(a) and 255(c) as well as other documents they must share the responsibility for the said documents along with Puri.
Similarly the appellate tribunal held that the persons who were shown to have been responsible for exhibit 302 must be treated on the same basis.
It was as a result of this finding that the appellate tribunal refused to direct reinstatement of 14 employees.
In regard to the remaining 136 employees the appellate tribunal held that it would not be right to impute the responsibility for the publication of the three subversive documents to them merely because they were members of the working committee or were otherwise active leaders of the Union.
The appellate tribunal the considered the voluminous evidence led by the parties in respect 821 of each one of the 150 employees, and it held that in regard to the 136 employees no case had been made out by the Bank for refusing them reinstatement.
It is clear from the decision of the appellate tribunal that it was not at all satisfied with a substantial part ,of the documentary evidence adduced by, the Bank.
It held that the affidavits filed by the Bank were sometimes prepared en masse and the deponents simply put their signatures on them.
In most of the affidavits there were blank spaces for the name, parentage and age of the deponents and they have been subsequently filled up in ink.
Some of them, though sworn at different places, used identical language; while in some others material additions and alterations have been made which do not bear the initials either of the deponents or of the oath commissioner.
It appeared to the appellate tribunal that some of the statements made by the witnesses of the Bank showed that their affidavits had been prepared by the Bank 's lawyers and they simply put their signatures thereon and affirmed them before the oath commissioner.
Indeed the appellate tribunal apparently thought that there was some force in the contention raised by the employees that some of the documents produced by the Bank had been manufactured or tampered with long after the strike was over, It has noticed the argument urged by the Bank that even if it was so the Bank cannot be condemned for the act or acts of its branch managers in that behalf.
This argument did not appeal to, the appellate tribunal.
Thus the decision of the appellate tribunal substantially upheld the case made by the employees in that it directed the rein statement of the 136 out of the 150 ' employees and ordered payment of compensation to the remaining 14 whose reinstatement was not granted.
This decision has given rise to the three present appeals before us.
Civil Appeal No. 519 of 1958 has been filed by the Bank against the order of reinstatement in respect of 126 employees represented by the Federation.
Similarly Civil Appeal No. 520 of 1958 has been filed by the Bank against the order directing 104 822 the reinstatement of 10 employees represented by the Union; and Civil Appeal No. 521 of 1958 has been filed by the Federation on behalf of the 14 employees the claim for whose reinstatement has been rejected.
In regard to the first two appeals preferred by the Bank special leave was granted to the Bank on February 21, 1958, limited to grounds (b), (c), (d), (f) and (g) set out in paragraph 162 of its petitions.
These grounds are: (b) Whether employees, who have been propagating against the stability and solvency of the Bank by propaganda oral as well as written through open letters, posters, leaflets and hand bills amongst the customers and constituents of the Bank and the public at large before, during and after an illegal strike are entitled to an order of reinstatement ? (c) Whether after the declaration of an illegal strike, forcible occupation of the seats and refusal to vacate them, when ordered to do so by the Management, does not constitute as act of criminal trespass, it having been held by the appellate tribunal that the employees formed a large riotous assembly in and outside the premises of the Bank and delivered fiery and provocative speeches to accompaniment of scurrilous slogans directed against the institution and its high officers with a view to render impossible the business of the institution, are entitled to an order of reinstatement ? (d) Whether a 'pen down ' strike of such a character does not contravene the provisions of the law of the land and is exempted under the Trade Unions Act or the ? (f ) Whether employees, who, notwithstanding the fact that they resorted to an illegal strike and were guilty of rioting, had been invited by the Management to come back and resume work and who spurned at this offer and in so many words treated it with contempt and whose places had, therefore, to be replaced by fresh recruits are entitled to an order that those fresh recruits be dismissed and replaced by the strikers ? 23 (g) Whether it is open to the employees of a concern to raise with their Employers a question as to whether the Employers should employ in their service employees of a concern other than their own and whether such a question constitutes an 'industrial dispute ' within the meaning of the ? It may be mentioned that the Bank 's petitions had raised several other grounds in paragraph 162 but leave has not been granted to the Bank to raise any of them.
Almost a month and a half after limited leave was thus granted to the Bank the Federation filed its petition for special leave on April 4, 1955, and it applied for condonation of delay made in presenting the petition.
On April 9, 1956, this Court granted the employees ' application for condonation of delay and gave special leave to them to prefer their appeal.
This leave has not been limited to any particular grounds.
Broadly stated these are the relevant facts which give rise to the three present appeals.
Before dealing with the merits of these appeals we must consider two preliminary objections raised by the learned Attorney General on behalf of the employees.
He has claimed that if these objections are upheld the Bank 's appeals would have to be dismissed and the employees ' appeal allowed without considering the merits of the orders under appeal.
In pressing these objections he urged that the questions raised were of considerable importance, and, though he conceded that some aspects of the matter were covered by the previous decisions of this Court, he requested us to examine the whole question afresh once more.
We would accordingly deal with these contentions at some length.
The first contention is that as a result of the decision of this Court in the appeal preferred by the Bank against the interlocutary judgment of the appellate tribunal, the whole of the enquiry held by the said tribunal pursuant to the said interlocutary judgment is invalid and infructuous.
This Court has held that the dismissal of the 150 employees is illegal having 824 regard to the provisions of section 33 of the Act; if the dismissal is illegal it is void and inoperative and as such it cannot be said to have terminated the relationship of master and servant between the Bank and its employees.
Despite the said order of dismissal the employees continued to be in the employment of the, Bank and are entitled to reinstatement without any further enquiry.
That, it is said, is the effect of the Bank 's failure to comply with the provisions of section 33.
It is next contended that the Bank does not dispute the fact that it had held no enquiry into the alleged misconduct of its employees before it passed the impugned: orders of dismissal against them.
It is well established that even where an employer is justified in terminating the services of his employees he is bound to give them a charge sheet and hold a proper enquiry at which they would have, a chance to meet the said charge sheet.
This requirement is universally treated as,consistent with natural justice and fairplay and since the Bank has not complied with it the impugned orders of dismissal are wholly invalid for this additional reason; and the result again would be that the said orders are inoperative and void and the employees are entitled to reinstatement as a matter of course.
In support of this argument reliance has been placed on the decision of the Privy Council in the case of The High Commissioner for India and High Commissioner for Pakistan and I.M. Lall (1).
This decision holds that the order of dismissal passed against a person who is a member of the Civil Service of the Crown in India without complying with the mandatory relevant provisions of section 240 of the Government of India Act, 1935, is void and inoperative, and that the Civil Servant against whom such an order is passed is entitled to a declaration that he remained a member of the Indian Civil Service at the date of the institution of the suit in which he challenged the validity of the impugned order.
Similarly in Khem Chand vs The Union of India(2), this Court has held that an order of dismissal passed against a public servant specified in article 311(a)with out complying with the mandatory (1) 75 1.
A. 225.
(2) ; 825 provisions of article 311 (2) is void and that the public servant sought to be dismissed by such an invalid order continued to be a member of the service at the date of the institution of the suit.
It is in the light of these decisions that the learned Attorney General asks us to hold that the relationship between the Bank and its employees remains wholly unaffected by the ' orders of dismissal passed by the Bank against them; and so, as soon as the orders are held to be void nothing more remains to be done but to make a declaration about the the continuance of the relationship of master and servant between the parties and to direct reinstatement.
Thus presented the argument no doubt appears prima facie to be attractive; but in our opinion, a careful examination of the relevant sections of the Act shows that it is not valid.
The three sections of the Act which are relevant are sections 33, 33A and 10.
Let us first consider section 33.
This section has undergone several changes but we are concerned with it as it stood in 1951.
It provides inter alia that during the pendency of any proceedings before a tribunal in respect of any industrial dispute no employer shall discharge or punish, whether by dismissal or otherwise, any workman concerned in such dispute save with the express permission in writing of the tribunal.
It is clear that in cases to which this section applies a ban has been imposed on the power of the employer to dismiss his employees save with the express permission in writing of the ,tribunal.
The object of the Legislature in enacting this section is obvious.
By imposing the ban section 33 attempts to provide for the continuance and termination of the pending proceedings in a peaceful atmosphere undisturbed by any causes of friction between the employer and his employees.
In substance it.
insists upon the maintenance of the status quo pending the disposal of the industrial dispute between the parties; nevertheless it recognises that occasions may arise when the employer may be justified in discharging or punishing by dismissal his employees; and so it allows the employer to take such action subject to the condition that before doing so he must obtain the 826 express permission in writing of the tribunal.
It is true that the ban is imposed in terms which are mandatory and section 31(1) makes the contravention of the provisions of section 33 an offence punishable as prescribed therein.
But the question which calls for our decision is: What is the effect of such contravention on the decision of the industrial dispute arising from it ? Where an application is made by the employer for the requisite permission under section 33 the jurisdiction of the tribunal in dealing with such an application is limited.
It has to consider whether a prima facie case has been made out by the employer for the dismissal of the employee in question.
If the employer has held a proper enquiry into the alleged misconduct of the employee, and if it does not appear that the proposed dismissal of the employee amounts to victimisation or an unfair labour practice, the tribunal has to limit its enquiry only to the question as to whether a prima facie case has been made out or not.
In these proceedings it is not open to the tribunal to consider whether the order proposed to be passed by the employer is proper or adequate or whether it errs on the side of excessive severity; nor can the tribunal grant permission, subject to certain conditions, which it may deem to be fair.
It has merely to consider the prima facie aspect of the matter and either grant the permission or refuse it according as it holds that a prima facie case is or is not made out by the employer.
But it is significant that even if the requisite permission is granted to the employer under section 33 that would not be the end of the matter.
It is not as if the permission granted under section 33 validates the order of dismissal.
It merely removes the ban; and so the validity of the order of dismissal still can be, and often is, challenged by the union by raising an industrial dispute in that behalf.
The effect of compliance with the provisions of section 33 is thus substantially different from the effect of compliance with section 240 of the Government of India Act, 1935, or article 311(2) of the Constitution.
In the latter classes of cases, an order of dismissal passed after duly complying with the 827 relevant statutory provisions is final and its validity or propriety is no longer open to dispute; but in the case of section 33 the removal of the ban merely enables the employer to make an order of dismissal and thus avoid incurring the penalty imposed by section 31(1).
But if an industrial dispute is raised on such a dismissal, the, order of dismissal passed even with the requiste permission obtained under section 33 has to face the scrutiny of the tribunal.
The decisions of this Court show that this position is well established.
In Atherton West & Co. Ltd. vs Suti Mills Mazdoor Union (1) this Court was dealing with the provisions of cl. 23 of the relevant U. P. Government notification which is similar to the provisions of section 33 of the Act.
" The enquiry to be conducted by the Regional Conciliation Officer under the said clause ", observed Bhagwati, J., " was not an enquiry into an industrial dispute as to the non employment of workmen who was sought to be discharged or dismissed which industrial dispute would only arise after an employer, his agent or manager discharged or dismissed the workman in accordance with the written permission obtained from the officer concerned.
The only effect of obtaining permission from the officer concerned was to remove the ban imposed on the employer.
But the order of dismissal passed after obtaining the requisite permission can still become the subject matter of an industrial dispute under section 2(k) of the Act and the workman who has been dismissed would be entitled to have the industrial dispute referred to the appropriate authority.
" In The Automobile Products of India, Ltd. vs Rukmaji Bala & Ors.
(2), this Court was dealing with a similar problem posed by the provisions of section 22 of Act 48 of 1950, and section 33 of the Act.
Dealing with the effect of these sections this Court held that the object of section 33 was to protect the workmen against the victimisation by the employer and to ensure the termination of the proceedings in connection with the industrial disputes in a peaceful atmosphere.
That being so, all that the tribunal, exercising its jurisdiction under section 33, is (1) ; , (2) ; 828 required to do is to grant or withhold the permission, that is to say, either to lift or to maintain the ban.
This section does not confer any power on the tribunal 'to adjudicate upon any other dispute or to impose conditions as a prerequisite for granting the permission asked for by the employer.
The same view has been ,expressed in Lakshmi Devi Sugar Mills Ltd. vs Pt.
Ram Sarup (1).
In cases where an industrial dispute is raised on the ground of dismissal and it is referred to the tribunal for adjudication, the tribunal naturally wants to know whether the impugned dismissal was preceded by a proper enquiry or not.
Where such a proper enquiry has been held in accordance with the provisions of the relevant standing orders and it does not appear that the employer was guilty of victimisation or any unfair labour practice, that tribunal is generally reluctant to interfere with the impugned order.
The limits of the tribunal 's jurisdiction in dealing with such industrial disputes have been recently considered by this Court in the Indian Iron & Steel Co. Ltd. vs Their Workmen (2 ) and it has been held that the powers of the tribunal to interfere with cases of dismissal are not unlimited because the tribunal does not act as a court of appeal and substitute its own judgment for that of the management.
In this judgment this Court has indicated the classes of cases in which the tribunal would be justified in interfering with the impugned order of dismissal.
It would and should interfere when there is want of good faith, when there is victimisation or unfair labour practice, when the management has been guilty of a basic error or violation of the principle of natural justice, or when, on the materials, the finding of the management is completely baseless or perverse.
The same view has been again expressed by this Court in O. McKenzie & Co., Ltd., and Its Workmen (3).
There is another principle which has to be borne in mind when the tribunal deals with an industrial dispute arising from the dismissal of an employee.
We have already pointed out that before an employer can (1) ; (2) ; (3) 829 dismiss his employee he has to hold a proper enquiry into the alleged misconduct of the employee and that such an enquiry must always begin with the supply of a specific charge sheet to the employee.
In Lakshmi Devi Sugar Mills, Ltd. (1), it has been held by this Court that in dealing with the merits of the dismissal of an employee the employer would be confined to the ' charge sheet given by him to his employee when an enquiry was held into his conduct.
It would not be open to the employer to add any further charges against the employee and the case would have to be considered on the original charge sheet as it was framed.
It is significant that in the case of Lakshmi Devi Sugar Mills, Ltd. (1), this Court was apparently inclined to take the view that the additional acts of insubordination on which the appellant mills wanted to rely would have justified the employee 's dismissal; but even so it was not allowed to raise that plea because the said plea had not been included in the original charge sheet.
It, therefore, follows that where a proper enquiry has been held by the employer and findings are recorded against the employee that the principles laid down by this Court in the case of Indian Iron & Steel Co. Ltd. (2)would be applicable; and in applying the said principles the employer would be confined to the grounds set out by him in his charge sheet against the employee.
This position is not disputed before us.
Indeed the learned Attorney General contends that the principles applicable to the decision of an industrial dispute arising from the dismissal of an employee to which we have just referred serve to emphasise the obligatory character of the limitation imposed on the employer by section 33 of the Act and by the requirements of natural justice that every dismissal must be preceded by a proper enquiry.
Where the ban imposed by section 33 of the Act has been defied and/or where a proper enquiry has not been held at all the action of the employer in dismissing his employee must be treated as void and inoperative.
Such a case (1) ; (2) ; , 105 830 stands outside the principles which we have discussed, so far.
That in brief is the main contention raised by the employees.
This contention is, however, untenable in view of the decisions of this Court where the provisions of section 33A have been construed and considered, and so we must now turn to section 33A.
This section was inserted in the Act in 1950.
Before it was enacted the only remedy available to the employees against the breach of section 33 was to raise an industrial dispute in that behalf and to move the appropriate Government for its reference to the adjudication of a tribunal under section 10 of the Act.
The trade union movement in the country complained that the remedy of asking for a reference under section 10 involved delay and left the redress of the grievance of the employees entirely in the discretion of the appropriate Government; because even in cases of contravention of section 33 the appropriate Government was not bound to refer the dispute under section 10.
That is why section 33A was enacted for making a special provision for adjudication as to whether section 33 has been contravened.
This section enables an employee aggrieved by such contravention to make a complaint in writing 'in the prescribed manner to the tribunal and it adds that on, receipt of such complaint the tribunal shall adjudicate upon it as if it is a dispute referred to it in accordance with the provisions of the Act.
It also requires the tribunal to submit its award to the appropriate Government and the provisions of the Act shall then apply to the said award.
It would thus be noticed that by this section an employee aggrieved by a wrongful order of dismissal passed against him in contravention of section 33 is given a right to move the tribunal in redress of his grievance without having to take recourse to section 10 of the Act.
After this section was thus enacted the scope of the enquiry contemplated by it became the subject matter of controversy between the employers and the employees.
This Court bad occasion to deal with this controversy in the case of the Automobile Products of India Ltd. (1).
Das, J., as he then was, who delivered (1) ; 831 the judgment of the Court construed section 33A of the Act and the corresponding section 23 of Act 48 of 1950, which applied to the Labour Appellate Tribunal then in existence, and observed that " the scheme of the section clearly indicates that the authority to whom the complaint is made is to decide both the issues, viz., (1) the effect of contravention, and (2) the merits of the act or order of the employer ".
" The provision in the section that the complaint shall be dealt with by the tribunal as if it were a dispute referred to or pending before it quite clearly indicates ", said the learned Judge, "that the jurisdiction of the authority is not only to decide whether there has been a failure on the part of the employer to obtain the permission of the authority before taking action but also to go into the merits of the complaint and grant appropriate reliefs (p. 1253) ".
It was urged before this Court that in holding an enquiry under section 33A the tribunal 's duty was only to find out whether there had been a contravention of section 33, and if it found that there was Such a contravention to make a declaration to that effect.
The argument was that no further question can or should be considered in such as enquiry.
This contention was, however, rejected.
The same question was raised before this Court in Equitable Coal Co. Ltd. vs Algu Singh (1) and following the previous decision of this Court in the case of the Automobile Products of India Ltd. (2) it was held that in an enquiry under section 23 two questions fall to be considered: Is the fact of contravention of the provisions of section 22 proved ? If yes, is the order passed by the employer against the employee justified on the merits ? Thus there can be no doubt that in an enquiry under section 33A the employee would not succeed in obtaining an order of reinstatement merely by proving contravention of section 33 by the employer.
After such contra vention is proved it would still be open to the employer to justify the impugned dismissal on the merits.
That is a part of the dispute which the tribunal has to consider because the complaint made by the employee is treated as an industrial dispute and all the relevant (1) A.I.R. 1958 S.C. 761.
(2) ; 832 aspects of the said dispute fall to be considered under 3.
Therefore, we cannot accede to the argument that the enquiry under section 33A is confined only to the determination of the question as to whether the alleged contravention by the employer of the provisions of section 33 has been proved or not.
In the present case the impugned orders of dismissal have given rise to an industrial dispute which has been referred to the tribunal by the appropriate Government under section 10.
There can be no doubt that if under a complaint filed under section 33A a tribunal has to deal not only with the question of contravention but also with the merits of the order of dismissal, the position cannot be any different when a reference is made to the tribunal like the present under section 10.
What is true about the scope of enquiry under section 33A is a fortiori true in the case of an enquiry under section 10.
What is referred to the tribunal under section 10 is the industrial dispute between the Bank and its employees.
The alleged contravention by the Bank of section 33 is no doubt one of the points which the tribunal has to decide; but the decision on this question does not conclude the enquiry.
The tribunal would have also to consider whether the impugned orders of dismissal are otherwise justified; and whether, in the light o the relevant circumstances of the case, an order of reinstatement should or should not be passed.
It is only after all these aspects have been considered by the tribunal that it can adequately deal with the industrial dispute referred to it and make an appropriate award.
In this connection it would be relevant to remember that in dealing with industrial disputes arising out of dismissal of employees the tribunal undoubtedly has jurisdiction to direct reinstatement in proper cases.
The question about the jurisdiction of an industrial tribunal to direct reinstatement was raised as early as 1949, before the Federal Coort in Western India Automobile Association vs Industrial Tribunal, Bombay (1).
In this case the Federal Court considered the larger question about the powers of industrial tribunals in (1) 833 all its aspects and rejected the argument of the employer that to invest the tribunal with jurisdiction to order re employment amounts to giving it authority to make a contract between two persons when one of them is unwilling to enter into a contract of employment at all. " This argument ", observed Mahajan, J., as he then was, "overlooks the fact that when dispute arises about the employment of a person at the instance of a trade union or a trade union objects to the employment of a certain person, the definition of industrial dispute would cover both those cases.
In each of those cases, although the employer may be unwilling to do so, there will be jurisdiction in the tribunal to direct the employment or non employment of the person by the employer ".
The learned Judge also added that " the disputes of this character being covered by the definition of the expression 'industrial disputes, ' there appears no logical ground to exclude an award of reinstatement from the jurisdiction of the industrial tribunal." Since this judgment was pronounced the authority of the industrial tribunals to direct reinstatement in appropriate cases has never been questioned.
In exercising its jurisdiction to direct reinstatement of dismissed employees industrial tribunals have indicated certain general considerations for their own guidance.
In the case of a wrongful dismissal the normal rule adopted in industrial adjudication is that reinstatement should be ordered.
"But", observed the Full Bench of the Labour Appellate Tribunal in Buckingham & Carnatic Mills Ltd., And Their Workmen (1), " in so ordering the tribunal is expected to be inspired by a sense of fair play towards the employee on the one hand and considerations of discipline in the concern on the other.
The past record of the employee, the nature of his alleged present lapse and the ground on which the order of the management is set aside are also relevant factors for consideration.
" It is obvious that no hard and fast rule can be laid down in dealing with this problem.
Each case must be considered on its own merits, and, in reaching the (1) [1951] 11 L.L.J.314.
834 final decision an attempt must be made to reconcile the conflicting claims made by the employee and the employer.
The employee is entitled to security of service and should be protected against wrongful dismissals, and so the normal rule would be reinstatement in such cases.
Nevertheless in unusual or exceptional cases the tribunal may have to consider whether, in the interest of the industry itself, it would be desirable or expedient not to direct reinstatement.
As in many other matters arising before the industrial courts for their decision this question also has to be decided after balancing the relevant factors and without adopting any legalistic or doctrinaire approach.
No such considerations can be relevant in cases where in civil courts the validity of dismissals is challenged on the ground of non compliance with section 240 of the Government of India Act, 1935 or article 311(2) of the Constitution.
There is one more point which still remains to be considered and that is the effect of the Bank 's default it not holding an enquiry in the present case.
If the Bank has not held any enquiry it cannot obviously contend before the tribunal that it has bona fide exercised the managerial functions and authority in passing the orders of dismissal and that the tribunal should be slow to interfere with the said orders.
It is true as we have already pointed out that if the employer holds a proper enquiry, makes a finding in respect of the alleged misconduct of the employee and then passes an order of dismissal the tribunal would be glow to interfere with such an order and would exercise its jurisdiction within the limits prescribed by this Court in The case of Indian Iron & Steel Co. Ltd. (1).
But it follows that if no enquiry has in fact been held by the employer; the issue about the merits of the impugned order of dismissal is at large before the tribunal and, on the evidence adduced before it, the tribunal has to decide for itself whether the misconduct alleged is 'roved, and if yes, what would be proper order to make.
In such a case the point about the exercise of managerial functions does not arise at (3) ; , 835 all.
This answers the argument which Mr. Sanyal has raised before us in his appeal.
Mr. Sanyal, however, seeks to derive support to his argument from the decision of the Labour Appellate Tribunal in The Madras Electric Tramways (1904) Ltd. Madras And Their Workers (1).
In that case the order of reinstatement passed by the tribunal was reversed in appeal by the appellate tribunal which observed that in dealing with cases of dismissal where the management had acted bona fide and with knowledge and experience of the problems which confronted in the daily work of the concern it should be considered to be well qualified to judge what sentence would be appropriate, and the sentence imposed by the management should normally stand subject to the qualification that it must not be unduly severe.
It is obvious that in that case the management had held a proper enquiry and the question which arose for decision was what are the limits of the jurisdiction of the tribunal in dealing with an industrial dispute arising from an order of dismissal passed by an employer after holding a proper enquiry.
The principles applicable to such a case have been already considered by us; but they can have no application to the present case where the employer has held no enquiry at all.
Therefore, this decision on which Mr. Sanyal relies is irrelevant.
The position then is that the effect of the double default committed by the employer is not to limit the enquiry to the decision of the sole question as to the commission of the said default, and so, despite the said default the subsequent enquiry held by the appellate tribunal pursuant to its interlocutory judgment was proper and legal.
The two preliminary objections raised by the learned Attorney_General must, therefore, fail.
Let us now deal with the two appeals filed by the Bank (Civil Appeals Nos.
519 and 520 of 1958).
We have already indicated that in dealing with these appeals we have to bear in mind the limitations imposed by the nature of the limited leave granted to (1) 836 the Bank; it is only the grounds specifically covered by the leave which fall to be considered, and even these grounds will necessarily have to be dealt with in the light of the findings already recorded by the appellate tribunal which are no longer open to challenge.
The subsequent enquiry held by the appellate tribunal was limited to the question as to whether the Bank was able to prove any specific circumstances which disentitled the employees from claiming reinstatement.
In other words, the object of the said enquiry was to ascertain the nature of the "positive objections" which the Bank had against each one of them.
The rest of the matters in dispute between the parties are concluded by the other findings which have become final.
Considered in the light of these limitations the grounds on which leave has been granted to the Bank must first be examined.
A bare perusal of the said grounds would show that some of them are vague and they are urged on assumptions of fact which run counter to the findings recorded by the appellate tribunal.
That is why when those appeals were urged before us, Mr. Anand and Mr. Sanyal have recast their contentions within the frame, work of the grounds in respect of which leave has been granted and have urged the following points before us: (1) that participation in a pen down strike is itself an activity of such a subversive character that it disqualifies the employees who took part in it from claiming the relief of reinstatement, (2) that the publication and circulation of subversive documents was the result of a concerted plan and represent a collective activity of all the strikers and as such all the employees before us should be held responsible for it and on this ground reinstatement should be refused to them, (3) that the finding recorded by the appellate tribunal that only 14 persons were directly and actively concerned with the preparation and publication of the subversive documents is opposed to the weight of evidence and is perverse, (4) that the appellate tribunal erred in law in not taking into account the fact that after the 150 employees were dismissed the Bank has engaged fresh hands and the order of reinstatement would, therefore, be unjust and 837 unfair, and (5) that the appellate tribunal was also in error in not taking into account the fact that some of the employees have in the meanwhile taken employment elsewhere.
It is these five grounds which we are asked to consider by the Bank in its present appeals.
Before dealing with these contentions we would like to make one general observation.
Though not in the, same form, in substance these contentions were raised before the appellate tribunal in support of the plea that the dismissed employees should not be reinstated.
As we have already emphasized whether or not reinstatement should be ordered in cases of wrongful or illegal dismissals is normally a question of fact and in deciding it several relevant factors have to be borne in mind.
If the appellate tribunal applied its mind to those relevant factors and came to the conclusion that 14 employees did not deserve to be reinstated while the remaining 136 did, we would be reluctant to interfere with the said order under article 136 unless it is shown that the order suffers from an error which raises a general or substantial question of law.
The first contention raised by the Bank is in regard to the conduct of the employees in entering upon a pen down strike and its effect on their claim for reinstatement.
The finding of the tribunal on this point is that the persons who took part in the pen down strike not only ceased to work but continued to occupy their seats.
A tumultuous crowd had gathered outside the premises of the Bank and some persons in the crowd were shouting slogans in support of the strike.
The strikers had been definitely instructed to stick to their seats until the police intervened and threatened arrest or until orders of discharge or suspension were served on them.
There has been some argument before us as to the number of persons who actually took part in this kind of pen down strike.
For the Bank Mr. Anand has urged that the finding, of the appellate tribunal suggests that most of the strikers took part in this strike; and in any event, according to him, at least 52 persons took part in it.
He has filed in this Court a list of these 52 employees.
On the other hand, 106 838 the learned Attorney General has contended that on the findings recorded by the appellate tribunal not more than 10 persons can be said to have taken part in it.
In dealing with the present contention of the Bank we are prepared to assume that most of the strikers participated in the pen down or sit down strike as generally found by the tribunal.
Is this pen down strike a strike within section 2(q) of the Act or not? section 2(q) defines a strike as meaning a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons who are or have been so employed to continue to work or to accept employment.
It was conceded before the appellate tribunal that a pen down strike falls within this definition, and this position is not seriously disputed before us either.
On a plain and grammatical construction of this definition it would be difficult to exclude a strike where workmen enter the premises of their employment and refuse to take their tools in hand and start their usual work.
Refusal under common understanding to continue to work is a strike and if in pursuance of such common understanding the employees entered the premises of the Bank and refused to take their pens in their hands that would no doubt be a strike under section 2(q).
The main grievance of the Bank is that these employees not only sat in their places and refus ed to work but they would not vacate their seats when they were asked to do so by their superior officers.
Such conduct may introduce an element of insubordination but that is a different matter.
In our opinion, therefore, the pen down strike in which the employees participated in the present case cannot be said to be outside section 2(q) of the Act.
It was, however, urged that the entry of the strikers in the premises of the Bank amounted to civil trespass.
The argument is that by virtue of their employment the employees had a licence to enter the premises of the Bank but this licence is subject to the condition that the employees are willing to carry out their obligation of the contract and do their allotted work during the, 839 office hours.
If the employees had decided not to work they were not entitled to the licence in question and so their entry into the Bank itself constituted a civil trespass.
On their hand, the employees contend that during the continuance of their employment they are entitled to enter the premises of the Bank and having thus entered they were also entitled to exercise their right of going on strike.
They entered the premises as employees of the Bank and having taken their seats they exercised their right of striking work.
If the Bank had suspended the employees it would have been another matter; but so long as the relationship of master and servant continued the employees could not be said to have committed civil trespass when they entered the premises at the time.
In support of its case the Bank has relied on the proposition that " even if a person has a right of entry on the land of another for a specific purpose he commits a trespass if he enters for any other purpose or under any other claim or title apart from that under which he might lawfully enter.
As an illustration of this proposition it is stated that if a person having a licence for entry on land enters the land not by virtue of the said licence but in order to contest the licensor 's title, he commits a trespass " (1).
" But this proposition is subject to the exception that if a person enters for a lawful purpose he is not a trespasser unless the case is one to which the doctrine of trespass ab initio applies " (2).
So the decision of this technical point would depend on whether or not the employees are given a limited or conditional licence to enter the premises and that if they have decided to go on strike the said conditional or limited licence is no longer available to them.
We do not think it necessary to consider this academic question in the present proceedings because, in our opinion, the appellate tribunal was obviously right in holding that even if civil trespass was involved in the conduct of the employees that by itself cannot justify the rejection of their claim for reinstatement.
Incidentally we may add that even (1) Salmond on Torts, 12th Ed., p. 158.
(2) Salmond on Torts, 12th Ed., p. 159. 840 in America " the simple act of trespassing upon the employer 's property is no bar to reinstatement nor is the act which at most a civil tort " (1).
Does the conduct of the strikers as found by the appellate tribunal constitute criminal trespass unders.
441 of the Indian Penal Code?That is the next point which calls for decision.
It is argued that the conduct of the employees amountsto criminal trespass which is an offence and as suchthose who committed criminal trespass would not be entitled to reinstatement.
According to the Bank the employees committed the criminal trespass inasmuch as they either entered unlawfully or having lawfully entered continued to remain there unlawfully with intent thereby to insult or annoy their superior officers.
It would be noticed that there are two essential ingredients which must be established before criminal trespass can be proved against the employees.
Even if we assume that the employ ees ' entry in the premises was unlawful or that their continuance in the premises became unlawful, it is difficult to appreciate the argument that the said entry was made with intent to insult or annoy the superior officers.
The sole intention of the strikers obviously was to put pressure on the Bank to concede their demands.
Even if the strikers might have known that the strike may annoy or insult the Bank 's officers it is difficult to, hold that such knowledge would necessarily lead to the inference of the requisite intention.
In every case where the impugned entry causes annoyance or insult it cannot be said to be actuated by the intention to cause the said result.
The distinction between knowledge and intention is quite clear, and that distinction must be borne in mind in deciding whether or not in the present case the strikers were actuated by the requisite intention.
The said intention has always to be gathered from the circumstances of the case and it may be that the necessary or inevitable consequence of the impugned act may be one relevant circumstance.
But it is impossible to accede to the argument that the likely consequence of the act and its possible knowledge (1) Ludwig Teller 's "Labor Disputes and Collective Bargaining" Vol. 11, p.855 841 must necessarily import a corresponding intention.
We think it is unnecessary to elaborate this point; we would only like to add that the decision of the Patna High Court, in T. H. Bird vs King Emperor (1) on which reliance was placed by the Bank is wholly inconsistent with the contention raised by it.
Thus our conclusion is that the Bank has failed to prove that the conduct of the strikers as found by the appellate tribunal amounted to criminal trespass under s.441 of the Code.
In resisting the employees ' claim for reinstatement on the ground that participation in a pendown strike creates a bar against such a claim the Bank has strongly relied on the decision of the Supreme Court of America in National Labor Relations Board vs Fansteel Metallurgical Corporation(2).
Both Mr. Anand and Mr. Sanyal have contended that this decision is an authority for the proposition that participation in pen down strikes necessarily disqualifies the strikers from claiming reinstatement.
It is, therefore, necessary to examine this case carefully.
In this case, the National Labor Relations Board bad directed the reinstatement of participants in a sit down strike whom, upon their refusal to leave the employer 's plant, the employer declared to be discharged.
The Board had held that despite the illegal strike and the consequent order of discharge the status of the employees continued by virtue of the definition of the term " employee " in section 2, sub section
(3) of the National Labor Relations Act.
It had also taken the view that it had jurisdiction to direct reinstatement of the said employees under section 10(c) of the said act with a view to effectuate the policies of the Act.
Both these conclusions were reversed by the Supreme Court by a majority judgment.
According to the majority view, when the Congress enacted the National Labor Relations Act it " did not intend to compel employers to retain persons in their employ regardless of their unlawful conduct, to invest those who go on strike with an immunity from discharge for acts of trespass or violence against the employer 's property, which they (1) (1934) I.L.R. XIII Pat.
(2) ; 306 U.S. 238; 842 would not have enjoyed had they remained at work.
" It was also held that " the Congress was intent upon ,.protection of employees ' right to self organisation and to the selection of representatives of their own choosing for collective bargaining without restraint or coercion.
" On the facts the conclusion of the majority was that the strike was illegal in its inception and prosecution.
This was really not the exercise of the right to strike to which the Act referred.
It was an illegal seizure of the building in order to prevent their use by the employer in a lawful manner, and thus by acts of force and violence compel the employer to submit.
The conclusion, therfore, was that to provide for the reinstatement or re employment of employees guilty of the acts which even according to the Board had been committed would not only not effectuate any policy of the Act but would directly tend to make abortive its plan for peaceable procedure.
Mr. Justice Reed, who delivered a dissenting judgment thought that both labour and management had erred grievously in their respective conduct and so it would not be unreasonable to restore both to their former status.
That is why he was not prepared to reverse the order of reinstatement passed by the Board.
The Bank naturally relies upon the majority decision in support of its contention that its employees who participated in the pen down strike are not entitled to reinstatement.
In considering the question as to whether the principle underlying the majority decision should be, applied to a pen down strike in India it is necessary to remember that the pen down strike properly so called is recognised as a strike under section 2(q) of the Act and so it would not be safe to extend the principles of American decisions bearing on this question without a careful scrutiny of the relevant provisions of the American statute and the facts on which the said decisions are based.
Let us then consider the facts on which the majority decision was based.
It appears that an acrimonious dispute had been going on between the Corporation and its employees for some time before February 17,1937 when the pen down strike commenced.
The Corporation was not prepared to recognise the 843 outside union and had employed a labor spy to engage in espionage within the union and continued the employment of the said spy.
It also appears that the, super intendant of the Corporation when requested to meet the deputation of the union required that the deputation should consist only of employees of five years ' standing.
Subsequently the superintendent ' refused to confer with the committee in which the outside Organisation had been included; and as a punitive measure he required the president of the union to work in a room adjoining his office with the purpose of keeping him away from the other workers.
It was in this background of bitter relationship that the strike commenced.
In the afternoon of February 17 the union committee decided upon a sit down strike by taking over and holding two of the respondent 's key buildings.
These were then occupied by about 95 employees, as a result of which work in the plant stopped.
In the evening the superintendent accompanied by police officials went to each of the building and demanded that the men leave.
They, however, refused whereupon the respondent 's counsel who had accompanied the superintendent announced in loud tone that all the men in the plant were discharged for the seizure and detention of the buildings.
Even so the men continued to occupy the buildings until February 26.
Their fellow members brought them food, blankets, stoves, cigarettes and other supplies.
Meanwhile on February 18, the respondent obtained from the state court an injunction requiring the men to surrender the premises.
The men refused to obey the order and a writ of attachment for contempt was served on them on February 19.
When the men refused to submit a pitched battle ensued and the men successfully resisted the attempt by the sheriff to evict and arrest them.
Efforts at mediation failed.
Ultimately on February 26, the sheriff with An increased force of deputies made a further attempt and this time, after another battle, the men were ousted and placed under arrest.
They were subsequently prosecuted and most of them were fined and given jail sentence for violating 844 the injunctions.
A bare statement of these facts would clearly bring out the true character of the strike with which the Supreme Court was dealing.
It was not merely an illegal but violent strike, ; it was a strike which began with the wrongful seizure of the employer 's property and his exclusion from it; a strike accompanied by violence which led to pitched battles between the strikers and the sheriff 's men; a strike continued by the strikers even after they were formally discharged from the employment and against an order of injunction by a competent court.
It is difficult to accede to the argument that the majority decision in that case can be extended to the facts before us.
As Teller has observed " the strike in question can be more accurately defined as a strike in the traditional sense to which is added the element of trespass of the strikers upon the property of the employer ".
(1) Therefore, in our opinion, this decision does not assist the Bank in support of its case that mere participation in the illegal strike in the present case can by itself defeat the claim of the employees for reinstatement.
In this connection we may point out that, according to Teller the Fansteel decision marks " what is hoped to be an end of an unfortunate chapter in the history of American labor activity"; he has added that " there is danger, however, in viewing the sitdown strike solely as the reflection of lawless labour leadership.
The causes of its emergence are deeper.
Indeed labour has contended that capital and labor share equal responsibility for its rise and development.
No analysis of a sit down strike can claim a broad view of the subject, says labor, without a full measure of consideration of the infamous Mohawk Valley methods used by Remington Rand to break strikes, nor to the facts elicited in the recent Rand Bergoff trial under the Byrnes Act. .
The anarchy of law which resulted from unlawful employer utilisation of instruments of violence and chicanery in disregard of law needed the sit down (1) Ludwig Teller 's "Labour Disputes and Collective Bargaining", Vol 1, p. 311, section 106.
845 strike as an effective counterpoise " ; and so the author significantly concludes that " it is no coincidence that statistics show a precipitate drop in the prevalence of sit down strikes immediately upon validation by the United States Supreme Court of the National Labor Relations Act.
" It is in the light of this background that the Supreme Court had been( called upon to decide the question of reinstating employees in the Fansteel case (1).
The history of the trade union legislation in England shows that the trade union movement had to wage a long and bitter struggle to secure recognition for the workmen 's right to organise themselves into unions and to exercise their right of collective bargaining if necessary by the use of the weapon of strikes.
In America a similar struggle took place, and, as we have just pointed out, it was marked by violence on the part of both capital and labour, because the employer 's theory of " hire and fire " offered relentless resistence to the workmen 's claim to form unions and to resort to strikes for trade union purposes.
In Williams Truax vs Michael Corrigan(2) Mr. Justice Brandeis, in his dissenting judgment, has given a, very illuminating account of the history and progress of the trade union movement in the United States, in England and the Colonies. " Practically every change in the law ", observed Mr. Justice Brandeis, " governing the relation of the employer and the employees must abridge in some respect the liberty or property of one of the parties, if liberty and property is measured by the standard of the law theretofore prevailing.
If such changes are made by acts of the Legislature we call the modification an exercise of the police power, and although the change may involve an interference with existing liberty or property of individuals, the statue will not be declared a violation of the due process clause unless the court finds that interference is arbitrary or unreasonable, or that, considered as a means, the measure has no real or substantial relation of cause to a permissible end".
(1) ; 306 U.S. 238; (2) 66 Law.
Edn. 311 ; 107 846 In that case the validity of the prohibition of Ariz. Civil Code 1913, cl. 1464 against the interference ,.by injunction between employers and employees in cases growing out of a dispute concerning terms or conditions of employment was challenged; and the challenge was upheld by a majority of the learned judges who took the view that the said provision was contrary to the 14th Amendment of the Constitution.
Holmes, Pitney, Clarke and Brandeis, JJ., however, dissented.
The main decision in that case is not of direct assistance in the present appeals.
No doubt Mr. Anand has attempted to contend that the acts of which the strikers were held guilty in that case are similar to the acts alleged against the employees in the present appeals; but this argument would be relevant only if it is shown by the Bank that the specific subversive acts alleged have been committed by the specific individual employees.
To that point we will refer later on.
Incidentally the present decision is of some importance because the dissenting opinion delivered by Mr. Justice Brandeis has been subsequently treated as an authoritative exposition of the problem of trade unionism and the history of its growth and development.
Fortunately, as the Indian , (16 of 1926), the (20 of 1946), and the (14 of 1947) show, our Legislature has very wisely benefitted by the experiences of other countries in the matter of the development of trade union movement, and has made progressive, just and fair provisions governing the important problem of industrial relationships, the formation of trade unions, and the settlement of industrial disputes, It can be justly claimed that though we have witnessed capital labour conflicts in our country, on the whole neither party has departed from the pursuit of peaceful methods, and both parties submit their disputes to be resolved in accordance with the provisions of the Act.
In dealing with industrial disputes like the present, we must, therefore, primarily consider the relevant statutory provisions and the material Indian decisions, 847 Thus considered the conclusion is inevitable that the pen down strike is a strike within section 2(q) and so per se it cannot be treated as illegal; it has been found to be illegal in this case because it was commenced in contravention of section 23(b) of the Act; but, as has been held by this Court in M/s. Burn & Co. Ltd. vs Their Workmen (1) mere participation in such an illegal strike cannot necessarily involve the rejection of the striker 's claim for reinstatement.
As we have already indicated, on the findings of the appellate tribunal nothing more than such participation has been proved against the employees whose reinstatement has been ordered; and so, unless the said finding is reversed, the first contention raised by the Bank must fail.
It has been strenuously urged before us that in the case of a Bank which is a credit institution a pen down strike, if continued for a long period, is likely to affect prejudicially the credit of the Bank.
It is also pointed out that, even in regard to industrial concerns, if strikers entered the premises of the factory and sit around the plant in large numbers, in the heat of the moment unfortunate and ugly incidents are likely to happen, and so such pen down or sit down strikes should be positively discouraged.
We are prepared to concede that in the surcharged atmosphere which generally accompanies strikes and when passions are aroused, a large scale and continuous pen down strike may lead to untoward consequences.
But, on the other hand, even in the case of such a strike, the employer is not without a remedy.
He may bar the entry of the strikers within the premises by adopting effective and legitimate methods in that behalf as in fact the Bank did in the present case from April 23.
He may call upon the employees to vacate, and, on their refusal to do so, take due steps to suspend them from employment, proceed to hold proper enquires according to the standing orders, and pass proper orders against them subject to the relevant provisions of the Act.
If the Bank had been properly advised to adopt such a course, many of the difficulties which it had to face in the present proceedings would not (1) A.I.R. 1959 S.C. 529.
848 probably have arisen.
Therefore, we do not think that the general hypothetical consideration that pendown strikes may in some cases lead to rowdy demonstrations or result in disturbances or violence or shake the credit of the Bank would justify the conclusion that even if the strikers are peaceful and non violent and have done nothing more than occupying their seats during office hours, their participation in the strike would by itself disqualify them from claiming reinstatement.
Let us then consider the second contention raised by the Bank.
It is urged on behalf of the Bank that it is really unnecessary to examine which particular employee was directly associated with the preparation and circulation of the subversive circular or posters.
The offensive posters and circulars had been drafted, printed and circulated in pursuance of the common object of the strikers, and each one of them must, therefore, share the responsibility for the said act.
It is really an argument based on the theory of conspiracy which makes all conspirators liable for the act of any one of them.
This argument is countered by the employees with the contention that the activities of the Union do not fall to be considered in the present enquiry.
It is the acts of individual strikers who have been dismissed that have given rise to the dispute and the enquiry must be confined to that dispute alone.
The learned Attorney General seriously asked us to bear in mind that the application of the doctrine of conspiracy to the decision of the present dispute may have far reaching consequences on the future of the trade union movement itself, and he suggested that since the Union and its activities were not the subject matter of the present enquiry we need not consider the argument of conspiracy at all.
Besides, according to him, if the theory of conspiracy was upheld it would mean that if any office bearers of the Union were guilty of any subversive acts the whole membership of the Union would be constructively responsible and that is plainly unreasonable.
In this connection he also referred us to sections 17, 18 and 19 of the Indian 849 (16 of 1926).
We have indicated this argument at this place by anticipation.
In fact this argument has been raised by the employees in their appeal but we thought it would be convenient to deal with both these aspects of the matter in one place.
Now the answer to both these technical and academic contentions is the same.
In industrial adjudication tribunals should be slow to adopt any doctrinaire or legalistic approach.
They should as far as is reasonably possible avoid the temptation of formulating general principles and laying down general rules which purport to cover all cases.
Let us recall the nature of the enquiry which the appellate tribunal had directed as a result of its interlocutary judgment.
This enquiry is confined to the question as to whether in ' regard to the case of each one of the dismissed employees, the Bank has shown any positive circumstances as a result of which reinstatement, which is the normal rule, should not be directed.
Thus considered we do not think it necessary to deal with the academic points raised by both the parties before us.
The third argument urged by the bank is in regard to the finding of the tribunal that only 14 employees named by it are responsible for the subversive posters and hand bills.
It is urged that this finding is perverse.
We are not impressed by this argument.
There is no doubt that the three posters Exs. 255 (a), 255 (c) and 302, to which strong exception has been taken by the Bank are subversive of the credit of the Bank.
They make imputations about the honesty of the management of the Bank and in terms suggest improper use of the funds of the Bank for personal purposes.
It is also true that a large number of other documents issued by the Union before and during the strike have used exaggerated, and unduly militant intemperate, language, and in our opinion the appellate tribunal was justified in expressing its disapproval of the use of such language; but the appellate tribunal thought that none of these documents could really be taken to be subversive of the credit of the Bank and with that conclusion we are in full agreement.
Therefore the only question which we have to consider is whether 850 the view taken by the appellate tribunal that 14 persons were actively concerned with these offensive documents can be successfully challenged by the Bank before us.
In making its finding on this point the appellate tribunal has substantially relied on the statement made by H. L. Puri.
He was asked whether the drafts of the letters issued by him had been approved at the meeting of the working committee or on his individual responsibility and he replied that they were never written on individual responsibility but were based on consultation with the members of the working committee.
Then he was asked whether he could name the persons whom he consulted in drafting the poster dated July 5, 1949 (exhibit 222).
In reply to this he enumerated the names of 9 persons and added the word " so on.
" It appears that the appellate tribunal asked him several questions on the same topic and the effect of his admissions clearly was to show that most of the documents were issued by the secretary or the president after he had consulted the persons named by Puri.
In this connection Puri gave the names of the office bearers of the Federation at Delhi.
It was in the light of these admissions that the appellate tribunal came to the conclusion that 14 persons named by him can be safely taken to have been actively associated with the drafting and the publication of the subversive documents.
Mr. Anand contends that the list of office bearers separately supplied by Puri includes a much larger number of active workers of the Union and on the evidence of Puri all these active workers should have been held responsible for the said documents.
In this connection he has relied on the affidavit filed by Amar Singh on behalf of the Bank.
We do not think that this argument is wellfounded.
It is significant that though the appellate tribunal had directed the Bank by its interlocutary judgment to file a statement giving particulars of the acts alleged against each one of the employees no such statement was filed.
Besides it is fairly conceded before us by Mr. Anand that most 851 of the employees who made affidavits in the subsequent enquiry were not asked any general question about their alleged subversive activities and no particular question was put to them in regard to the relevant subversive documents.
The judgment of the appellate tribunal shows that it first considered the general points and the evidence relied upon by the parties in that behalf; and then it exhaustively dealt with the whole of the evidence bearing on the case of each individual employees.
We are satisfied that the Bank is not justified in contending that in excluding 136 employees from the responsibility of direct participation in the drafting and publication of the subversive circulars and hand bills the appellate tribunal has ignored any important evidence.
The argument that the said finding is opposed to the weight of evidence and as such perverse must therefore be rejected.
Then Mr. Anand has invited us to consider some individual cases.
According to him the case against Joshi had not been properly considered by the appellate tribunal.
It does appear that Joshi admitted that he had taken part in the drafting of documents P. 272, 274, 279, 280 and 286; but none of these documents has been found to be subversive and so it is idle to contend that Joshi 's connection with any of the three subversive documents is established.
So there is no substance in the argument that Joshi 's case should be reconsidered.
Then our attention has been drawn to the cases of five other employees Narain Das, Chuni Lal, Som Datt, Trilok Chand and Charan Singh. ' In regard to these persons the appellate tribunal has found that the Bank had failed to prove any subversive acts against them, and that undoubtedly is a question of fact and the finding of the appellate tribunal cannot be reopened.
But Mr. Anand has attempted to challenge the correctness of this finding on the ground that it is entirely inconsistent with one material document on the record.
This document is the report made by Dina Nath on April 24 in which the incidents that took place on April 23 and 24 have been set out and the names of persons who took prominent part in the said incidents 852 have been enumerated.
This list includes the names of the five persons in question.
Dina Nath had, however, died at the date of the enquiry and so he could not give evidence.
Jagan Nath, who was then the Superintendent of Police, proved this report.
Mr. Anand 's grievance 'is that though the evidence of Jagan Nath had been accepted by the appellate tribunal in a part of its judgment it has failed to consider his testimony in dealing with the cases of these five persons.
In our opinion this argument is entirely misconceived.
It is not correct to say that the appellate tribunal has accepted the whole of Jagan Nath 's evidence in any part of its judgment; while dealing with the question about the conduct of the crowd the appellate tribunal considered the evidence of Rajinder Nath, Mehta, Ram Pratap and Amar Singh and held that part of their evidence which was corroborated by Jagan Nath and also partially by Puri must be believed; that is all.
Besides, the evidence of Jagan Nath itself does not carry the Bank 's case any further against the five persons.
No doubt, while proving the report of Dina Nath, Jagan Nath first stated that the facts narrated therein were correct; but in crossexamination when he was asked about some details mentioned in the report he added that the report was written by Dina Nath and he could not say anything about it.
Further he also admitted that during the course of his visit and stay at the Bank when the strike was going on he only knew three persons who took part in the activity which was described by Dina Nath in his reports Thus the evidence of Jagan Nath does not show that he clearly knew any of the five employees and the same comment obviously falls to be made about Dina Nath himself who made the report.
Therefore it is not accurate to say that the conclusion of the appellate tribunal in regard to these, five cases suffers from any infirmity on which it can be successfully challenged before us; besides the Bank apparently relied upon other evidence against these five persons, and not the report of Dina Nath, and that evidence has been disbelieved, 853 Mr. Anand has then urged that in directing reinstatement of 136 employees the appellate tribunal failed to consider the fact that in the meanwhile the Bank has employed additional hands and it would be unfair to the Bank to direct that these dismissed employees should be taken back.
The reinstatement order would lead to complications and the Bank may have to face the claims of those who have been employed in the meanwhile.
Mr. Anand wanted to prove that the Bank had employed a large number of hands in the meanwhile by referring to the statement made by the Union in the bulletin and posters issued during the strike.
These statements seem to indicate that the Union complained that pending the strike the Bank was employing new hands.
But if the Bank wanted to urge this plea seriously it should have proved the relevant facts, e.g., how many employees have been appointed and on what terms.
These are matters within the special knowledge of the Bank and they could have been proved very easily.
The Bank did not choose to prove these facts.
Indeed it does not appear that this plea was urged as a separate plea against the order of reinstatement before the appellate tribunal.
In any case, in the absence of satisfactory materials it would be difficult to deal with this plea on the merits.
Besides, if the Bank has failed to establish its specific case against any of the 136 employees, there is no reason why the normal rule should not prevail and the employees should not get the relief of reinstatement.
The mere fact that the Bank may have employed some other persons in the meanwhile would not necessarily defeat such a claim for reinstatement.
As has been held by this Court in the National Transport and General Co. Ltd. vs The Workmen (1), however much the court may sympathise with the employer 's difficulty caused by the fact that after the wrongful dismissals in question he had engaged fresh hands, the court cannot " overlook the claims of the employees who, on the findings of the tribunals below, had been wrongly dismissed.
" In the case of such wrongful (1)Civil Appeal No. 312 of 1956 Decided by this Court on January 22, 1957.
108 854 dismissal the normal rule would be that the employees thus wrongfully dismissed must be reinstated.
" The hardship in question ", observed this Court, " has been brought about by the precipitate action of the appellants themselves who dismissed their workmen without holding the usual enquiries after framing a proper charge against them.
If they had proceeded in the usual way and given a full and fair opportunity to the workmen to place their case before the enquiring authority, the result may not have been so bard.
" These observations are equally applicable to the conduct of the Bank in the present appeals.
The last argument urged by Mr. Anand is that a large number of employees who are clamouring for reinstatement have secured employment on a fairly permanent basis and so it is unnecessary that they should be forced on the Bank.
This argument cannot be entertained because it has not been urged before the appellate tribunal, and though it was sought to be raised before us, Mr. Anand fairly conceded that in the absence of any material it would not be possible for him to press this point.
Indeed it is the first two general points which were seriously pressed before us by Mr. Anand and Mr. Sanyal on behalf of the Bank.
Mr. Anand no doubt raised three additional subsidiary points in Civil Appeal No. 519 of 1958, in which he appeared, but as we have pointed out there is no substance in any one of them.
In Civil Appeal No. 520 of 1958, in which Mr. Sanyal appeared for the Bank he did not challenge the findings recorded by the appellate tribunal in respect of the 10 employees concerned in the said appeal.
In the result both the appeals preferred by the Bank fail and are dismissed with costs.
| The appellant company was an all India concern and carried on the major part of its business in Calcutta.
Its clerical and non clerical staff in Bombay raised disputes relating to gratuity and age of retirement and contended that the scale of gratuity for both the clerical and non clerical staff provided by the existing scheme of the company was low and should be raised and that the age of retirement for the clerical staff should be raised from 55 to 60.
The company resisted the claim on the ground that the existing scheme having been enforced on the basis of an agreement between the company and the large majority of its staff, both clerical and non clerical, working in Calcutta, the same could not be changed at the instance of a small minority.
The tribunal rejected this contention and raised the age of retirement to 60.
It also raised the scale of gratuity and made it uniform for the clerical and non clerical staff.
The appellant reiterated its contention in this Court.
Held, that although it was advisable for an all India concern to have uniform conditions of service 'throughout the country, that were not to be lightly changed, industrial adjudication in 52 India being based on an industry cum region basis, cases might arise where it would be necessary to change the uniform scheme so that it might accord with the prevailing conditions in the region where the Industrial Tribunal functioned, in order to ensure fair conditions of service.
Consequently, in the instant case, where the Industrial Tribunal found that the existing scheme was neither adequate nor in accord with the prevailing conditions in the region, it was not bound to refrain from altering either the age of retirement or the gratuity scheme on the ground the appellant 's concern was an all India one.
Nor could the decision of the Tribunal to raise the age of retirement of the clerical staff to 60 be said to be an improper one.
Guest, Keen, Williams (Private) Limited, Calcutta vs P. J. Sterling and Others, ; referred to.
|
249 of 1956.
Under Article 32 of the Constitution of India for the enforcement of Fundamental Rights.
R. Ramamurthi Aiyar and B. K. B. Naidu, for the petitioners.
Purshottam Tricumdas, P. Ramaswamy, Advocate, 2 Bombay High Court, with special permission and 1.
N. Shroff, for the respondent No. 1.
Y. Kumar, for the interveners.
C. K. Daphtary, Solicitor General of India and B. Sen, for the Attorney General of India (To assist the Court).
March 19.
The following Judgment of the Court was delivered by GAJENDRAGADKAR J.
This is an application under article 32 of the Constitution.
The petitioner is a private limited company having its registered office at No. 201, Mount Road, Madras.
The company is the, proprietor of a daily newspaper called " The Hindu " which is published at Madras and has a large circulation in India and abroad.
The shareholders of the company are all citizens of India.
The first respon dent, Shri N. Salivateeswaran, is a journalist of Bombay and he has been supplying news to various newspapers and journals one of which was the Hindu.
The supply of news by the first respondent to the Hindu was under an agreement under which he was being paid a fixed monthly honorarium.
Contrary to the advice and instructions of the petitioner, the first respondent left India for Zurich on May 1, 1956.
The petitioner thereupon relieved him of his duties and terminated with effect from March 1, 1956, the arrangement under which he was supplying news to the Hindu.
He returned to India in July 1956, and requested the petitioner to reconsider its decision; but the petitioner did not think that any case for reconsideration had been made out.
Thereupon the first respondent made an application to the Labour Minister of the State of Bombay under section 17 of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 (Act 45 of 1955), hereinafter referred to as the act.
On receiving this application the State of Bombay nominated Shri M. R. Meher, 1.
C. section (Retired), second respondent, as the authority under section 17 of the act for the purpose of enquiry into the first respondent 's application and requested him to examine the claim made by the first 3 respondent and, in case he was satisfied that any money was due, to issue a certificate for that amount to the Collector of Bombay for further action as provided under section 17.
A copy of the application was served on the petitioner by order of the second respondent; and a covering letter addressed to the petitioner called upon him to file his written statement in reply to the first respondent 's claim.
By his application the first respondent had claimed a sum of Rs. 1,57,172 8 0 from the petitioner.
In his written statement, the petitioner disputed the whole of the claim made by the first respondent and traversed all the material allegations made by him in support of his claim.
The petitioner also contended that the second respondent had no jurisdiction to go into the matters arising from the first respondent 's application.
It was also urged by the petitioner alternatively that, even if the second respondent had jurisdiction to deal with the matter, he had the discretion to decline to consider the matter and leave it to be tried in the ordinary courts.
The petitioner requested the second respondent to exercise his discretion and direct the first respondent to establish his claim in the appro priate civil court.
The petitioner 's written statement was filed on October 18, 1956.
The second respondent decided to deal with the question of jurisdiction as a preliminary issue.
He heard both the parties on this preliminary issue and, by his order dated November 12, 1956, he recorded his conclusion that he had jurisdiction to deal with the matter and that it was unnecessary to direct the first respondent to establish his claim in the ordinary civil court.
Accordingly the matter was adjourned to December 1, 1956, for hearing on the merits.
It is this order which is challenged by the petitioner before us by his present petition under article 32 of the Constitution.
The petitioner 's case is that section 17 of the act provides only for a mode of recovery of any money due to a working journalist.
It does not empower the State Government or the authority specified by the State Government to act as a forum for adjudicating 4 upon the merits of the disputed claim.
That being so, the second respondent has no jurisdiction to deal with the merits of the first respondent 's claim against the petitioner.
In the alternative, the petitioner contends that,if section 17 confers jurisdiction on the State Government or the authority specified by the State Government to adjudicate upon disputed claims mentioned in the said.
section, the said section would be ultra vires and void.
On these alternative pleas, two alternative reliefs are claimed by the petitioner.
The first relief claimed is that a writ in the nature of the writ of prohibition or other suitable writ or direction be issued restraining the second respondent from exercising any powers under section 17 of the act and proceeding with the enquiry into the application filed by the first respondent and forwarded to him by the State Government and issue him a certificate.
The other relief claimed is that this court should be pleased to order and direct that section 17 of the act is ultra vires and void on the grounds set out in the petition.
It would be necessary and convenient to construe section 17 of the act first and determine its true scope and effect.
The larger question about the vires of this act and the validity of the decision of the Wage Board set up by the Central Government under section 8 of the act have been considered by us in the several petitions filed by several employers in that behalf before this Court.
We have held in those petitions that, with the exception of section 5 (1) (a) (iii) which deals with the payment of gratuity to employees who voluntarily resign from service, the rest of the act is valid.
That is why the question about the vires of section 17 need not be considered in the present petition over again.
The main point which remains to be considered, however, is: Does section 17 constitute the State Government or the authority specified by the State Government into a forum for adjudicating upon the merits of the claim made by newspaper employee against hip, employer under any of the provisions of this act ? Section 17 provides: " Where any money is due to a newspaper employee from an employer under any of the provisions 5 of this Act, whether by way of compensation, gratuity or wages, the newspaper employee may, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the money due to him, and if the State.
Government or such authority as the State Government may specify in this behalf is satisfied that any money is so due, it shall issue a certificate for that ' amount to the collector and the collector shall proceed to recover that amount in the same manner as an arrear of land revenue.
" It is clear that the employee 's claim against his employer which can form the subject matter of an enquiry under section 17 must relate to compensation awardable under section 4 of the act, gratuity awardable under section 5 of the act, or wages claimable under the decision of the Wage Board.
If the employee wishes to make any other claim against his employer, that would not be covered by section 17.
As the marginal note shows, the section deals with the recovery of money due from an employer.
The employee contends that the process of recovery begins with the making of an application setting out the claim and ends with the actual recovery of the amount found due.
On this construction, the dispute between the employee and his employer in regard to any claim which the employee may make against his employer would fall to be determined on the merits right up from the start to the issue of the certificate under this section.
In other words, if a claim is made by the employee and denied by the employer, the merits of the claim together with the other issues that may arise between the parties have to be considered under this section.
On this argument section 17 provides a self contained procedure for the enforcement of the claims covered by it.
On the other hand, the case for the petitioner is that the section provides for a procedure to recover the amount due from an employer, not for the determination of the question as to what amount is due.
The condition precedent for the application of section 17 is a prior determination by a competent authority or the 6 court of the amount due to the employee from his employer.
It is only if and after the amount due to the employee has been duly determined that the stage is reached to recover that amount and it is at this stage that the employee is given the additional advantage provided by section 17 without prejudice to any other mode of recovery available to him.
According to this view, the State Government or the authority specified by the State Government has to hold a summary enquiry on a very narrow and limited point: Is the amount which is found due to the employee still due when the employee makes an application under section 17, or, has any amount been paid, and, if yes, how much still remains to be paid? It is only a limited enquiry of this type which is contemplated by section 17.
Within the scope of the enquiry permitted by this section are not included the examination and decision of the merits of the claim made by the employee.
When the section refers to the application made by the employee for the recovery of the money due to him, it really contemplates the stage of execution which follows the passing of the decree or the making of an award or order by an appropriate court or authority.
In our opinion, the construction suggested by the petitioner should be accepted because we feel that this construction is more reasonable and more consistent with the scheme of the act.
It is significant that the State Government or the specific authority mentioned in section 17 has not been clothed with the normal powers of a court or a tribunal to hold a formal enquiry.
It is true that section 3, sub section
(1) of the Act provides for the application of the , to or in relation to working journalists subject to sub section
(2); but this provision is in substance intended to make working journalists workmen within the meaning of the main .
This section cannot be read as conferring on the State Government or the specified authority mentioned under section 17 power to enforce attendance of witnesses, examine them on oath, issue commission or pass orders in respect of discovery and inspection such as can be passed by the boards, courts 7 or tribunals under the .
It is obvious that the relevant provisions of section 11 of the , which confer the said powers on the conciliation officers, boards, courts and tribunals cannot be made applicable to the State Government or the specified authority mentioned, under section 17 merely by virtue of section 3(1) of the act.
In this connection, it would be relevant to remember that section 11 of the act expressly confers the material powers on the Wage Board established tinder section 8 of the Act.
Whatever may be the true nature or character of the Wage Board whether it is a legislative or an administrative body the legislature has taken the precaution to enact the enabling provisions of section 11 in the matter of the said material powers.
It is wellknown that, whenever the legislature wants to confer upon any specified authority powers of a civil court in the matter of holding enquiries, specific provision is made in that behalf.
if the legislature had intended that the enquiry authorised under section 17 should include within its compass the examination of the merits of the employee 's claim against his employer and a decision on it, the legislature would undoubtedly have made an appropriate provision conferring on the State Government or the specified authority the relevant powers essential for the purpose of effectively holding such an enquiry.
The fact that the legislature has enacted section 11 in regard to the Wage Board but has not made any corresponding provision in regard to the State Government or the specified authority under section 17 lends strong corroboration to the view that the enquiry contemplated by section 17 is a summary enquiry of a very limited nature and its scope is confined to the investigation of the narrow point as to what amount is actually due to be paid to the employee under the decree, award, or other valid order obtained by the employee after establishing his claim in that behalf.
We are reluctant to accept the view that the legislature intended that the specified authority or the State Government should hold a larger enquiry into the merits of the employee 's claim without conferring on the State Government or the 8 specified authority the necessary powers in that behalf.
In this connection, it would be relevant to Point out that in many cases some complicated questions of fact may arise when working journalists make claims for wages against their employers.
It is not unlikely that the status of the working journalist, the nature of the office he holds and the class to which he belongs may themselves be matters of dispute between the parties and the decision of such disputed questions of fact may need thorough examination and a formal enquiry.
If that be so it is not likely that the legislature could have intended that such complicated questions of fact should be dealt with in a summary enquiry indicated by section 17.
Section 17 seems to correspond in substance to the provisions of section 20, sub section
(1) of the Industrial Disputes (Appellate Tribunal) Act, 1950, which has now been repealed.
Under this section, any money due from an employer under any award or decision of an industrial tribunal may be recovered as arrears of land revenue or as a public demand by the appropriate Government on an application made to it by the person entitled to the money under that award or decision.
It is clear that the proceedings under section 20, sub section
(1) could commence only if and after the workman had obtained an award or decision in his favour.
We are inclined to think that the position under section 17 is substantially similar.
In this connection we may also refer to the provisions of section 33C of the (14 of 1947).
sub section
(1) of section 33C has been added by Act 36 of 1956 and is modelled on the provisions of section 17 of the present Act.
Section 33C, sub section
(2), however, is more relevant for our purpose.
Under section 33C, sub section
(2), where any workman is entitled to receive from his employer any benefit which is capable of being computed in terms of money, the amount at which such benefit may be computed may, subject to any rules made under this act, be determined by such Labour Court as may be specified in this behalf by the appropriate Government, and the amount so determined should be recovered as provided for in 9 sub section
Then follows sub section
(3) which provides for an enquiry by the Labour Court into the question of computing the money value of the benefit in question.
The Labour Court is empowered under this sub section to appoint a commissioner who shall, after taking such evidence as may be necessary, submit a report to the Labour Court, and the Labour Court shall determine the amount after considering the report of the commissioner and other circumstances of the case.
These provisions indicate that, where an employee makes a claim for some money by virtue of the benefit to which he is entitled, an enquiry into the claim is contemplated by the Labour Court, and it is only after the Labour Court has decided the matter that the decision becomes enforceable under section 33C(1) by a summary procedure.
It is true that, in the present case, the Government of Bombay has specified the authorities under the Payment of Wages Act and the as specified authorities under section 17 to deal with applications of newspaper employees whose wages are less than Rs. 200 per month or more respectively; but there can be no doubt that, when the second respondent entertained the first respondent 's application, he was acting as the specified authority under section 17 and not as an industrial tribunal.
It is clear that, under section 17, the State Government would be entitled to specify any person it likes for the purpose of holding an enquiry under the said section.
The powers of the authority specified under section 17 must be found in the provisions of the act itself and they cannot be inferred from the accidental circumstance that the specified authority otherwise is a member of the industrial tribunal; since there is no provision in the act which confers on the specified authority the relevant and adequate powers to hold a. formal enquiry, it would be difficult to accept the position that various questions which may arise between the working journalists and their employers were intended to be dealt with in a summary and an informal manner without conferring adequate powers on the 2 10 specified authority in that behalf.
The second respondent himself was impressed by this argument but he was inclined to hold that the necessary power could be assumed by him by implication because he thought that, in the absence of such implied power, his jurisdiction under section 17 could not be effectively exercised.
In our opinion, this approach really begs the question.
If the legislature did not confer ad.
equate powers on the specified authority under section 17, a more reasonable inference would be that the nature and scope of the powers under section 17 is very limited and the legislature knew that, for holding such a limited and narrow enquiry, it was unnecessary to confer powers invariably associated with formal and complicated enquiries of a judicial or quasi judicial character.
We must accordingly hold that the second respondent had no jurisdiction to entertain the first respondent 's application at this stage.
It appears from the order made by the second respondent that he took the view that, though he had jurisdiction to deal with the application, it would have been open to him to refuse to exercise that jurisdiction and to direct the first respondent to establish his claim in the ordinary civil court.
He, however, thought that he need not exercise that power in the present case.
We are satisfied that the second respondent was in error in both these conclusions.
If he had jurisdiction to deal with this matter under section 17, it is difficult to appreciate how, in the absence of any provision in that behalf, he could have directed the first respondent to establish his claim in the ordinary civil court.
Such an order would clearly have amounted to the second respondent 's failure to exercise jurisdiction vested in him.
Besides, if section 17 had really given him discretion in this matter as assumed by the second respondent, on the merits of this case it would obviously have been a case which should have been referred to the ordinary civil court.
This, however, is now a matter of purely academic interest.
The question which still remains to be considered is: What would be the proper order to make on the present petition in view of our conclusion that the 11 second respondent had no jurisdiction to entertain the first respondent 's application.
The present petition purports to invoke our jurisdiction under article 32 of the Constitution and it was a valid and competent petition in so far as it challenged the vires of section 17 itself; but, once section 17 is held to be valid and in order, the competence of the petition under article 32 is naturally open to serious jeopardy.
No question about the fundamental rights of the petitioner is involved and his grievance against the order passed by the second respondent cannot be ventilated by a petition under article 32.
This position is fairly conceded by the learned counsel for the petitioner.
He, however, argued that, if we construe section 17 in his favour and hold that the second respondent had no jurisdiction to entertain the first respondent 's application, his purpose would be effectively served even though technically his petition may ultimately be dismissed on the ground that it is not competent under article 32 of the Constitution.
In our opinion, there is considerable force in this contention.
We would accordingly hold that the second respondent has no jurisdiction to entertain the first respondent 's application; but, since the petition itself is not competent under article 32, we would direct that the petition fails on this technical ground and must be dismissed.
There would be no order as to costs.
Petition dismissed.
| The appellant not being satisfied with the compensation offered by the Land Acquisition officer in respect of his land placed under acquisition under the Land Acquisition Act, applied for a reference to a civil court, for determining the market value of the land for awarding compensation to the appellant.
The Trial Court determined the market value of the land in question at Rs.8692 per acre.
The High Court reduced the amount of compensation payable to Rs.4845.87 from Rs.8692 per acre.
The appellant moved this Court for relief, complaining that the High Court had erroneously revised downwards the valuation correctly arrived at by the Trial Court.
Allowing the appeal partly, the Court ^ HELD: The trial Court had virtually treated the award rendered by the Land Acquisition officer as a judgment under appeal.
The Court laid down general guidelines to be followed in respect of methodology for valuation, in order to capsulize the true position.
[534E] F The valuation made by the High Court had been faulted on three grounds: (1) The High Court should not have made a deduction of 25% in place of deduction made by the Trial Court at 20% to account for the factor pertaining to largeness of the block of land under acquisition.
[539B] (2) The High Court had grossly under valued the land in determining the market value of the appellant 's land at Rs.7000 per acre as a block.
[539B C] 532 (3) There was no warrant for pushing down or depressing the market value of land as determined by the Trial Court in order to deduce the 'present value ' by reference to Miram 's Tables to account for the factor as regards the estimated time lag for development reaching the block of land in question which was situated in the interior.
Besides, the time lag of 12 years as estimated by the High Court was excessive and unrealistic.
[539C D] The first two grounds were devoid of merit.
It was not possible to find fault with the reasoning or conclusion of the High Court.
The High Court was regularly engaged in valuation of the lands in different parts of the State and was fully aware of the landscape.
It had made the estimate as regards the time lag for development to reach the appellant 's land to the best of its judgment, and having taken into account all the relevant factors, it had arrived at its determination.
The High Court had not committed any error or violated any principle of valuation.
It was purely a question of fact and it was not possible to detect any error even in the factual findings recorded by the High Court.
There was no material on the basis on which the plea of the appellant could be upheld that the valuation of Rs.7000 per acre did not reflect the true market value or that the land in question was undervalued.
[541B F] The Appellant 's grievance with regard to the third ground was justified.
The appellant 's parcel of land in question, situated very much in the interior, was valued by the Trial Court at Ks.
l0,866 per acre (less 20% for roads, etc.).
The High Court valued this parcel of land at Rs.7,000 per acre.
It had valued the land with the best situation on the Ganeshkhand Road at Rs.20,000 per acre.
As against this, the appellant 's land was valued at Rs.7,000 per acre.
This pushing down was made to account for its situation in the interior on the premise that development would take about 12 years to reach the appellant 's land under acquisition.
But after 12 years, it would become land adjoining the developed area and not land which could be treated as in the interior.
If the present value was to be ascertained, it should be ascertained on the basis of present value of land which would fetch Rs.20,000 per acre after 12 years and not present value of land which would fetch Rs.7,000 per acre after 12 years.
In fact the present value of Rs.20,000 payable at the end of 12 years at 8% would work out to Rs.6942 according to Miram 's Table 7, p.657 of A.K. Mitra 's Theory and Practice of Valuation 2nd Edition.
The High Court was right in valuing the land in interior at Rs.7,000 per acre but wrong in directing that present value of Rs.7,000 payable after 12 years should be ascertained.
The appellant must be awarded compensation at Rs.7,000 533 per acre subject to deduction or allowance of 25% to account for land required to be set apart for roads, open spaces, etc.
The appellant would be entitled to be paid compensation for his land in question at Rs.5250 per acre (Rs.7,000 less 25%) in place of lesser amount awarded by the High Court.
[541F H; 542A F] The appellant would be entitled to the benefit of the Central Amending Act 68 of 1984 in view of section 30(2) of the Act because these appeals were pending before this Court on 30th April, 1982, if the view is taken that the said Act had retrospective operation in the sense that the amended section 23(2) and section 28 apply also in relation to an order under appeal against an award made by the Collector or Court between April 30, 1982 and the commencement of the Amending Act.
This must depend upon the decision of the Constitution Bench of this Court, expected soon; the appellant would be entitled to the benefit as above said if the Constitution Bench upholds the view expressed in Bhag Singh case, (1985) 3 SCC p. 737 and overrules the view expressed in Kamalajamanniavaru case, [542G H; 543A B]
|
Civil Appeal No. 631 of 1973.
Appeal by Special Leave from the Judgment and Order dated 14/16th November, 1970 of the Gujarat High Court in Sales Tax Reference No. 9/69.
R. P. Bhatt and section P. Nayar for the Appellant.
Appeal Set down ex Parte against respondent.
The following Judgments were delivered.
BHAGWATI, J. I have had the advantage of reading the judgment prepared by my learned brother Sen and I entirely agree with the conclusion reached by him, but I would like to state briefly my 873 own reasons for arriving at that conclusion.
The facts giving rise to this appeal have been stated with admirable succinctness by my learned brother Sen and I need not repeat them.
The facts in deed are not material, because only one single question of law arises for determination in this appeal and it does not depend on any particular facts.
The question is a very simple one, namely, whether the expression 'Registered dealer ' in sec.8(ii) of the Bombay Sales Tax Act, 1959 as applicable to the State of Gujarat (hereinafter referred to as the Bombay Act) means only a dealer registered under section 22 of that Act or it also comprises a dealer registered under the (hereinafter referred to as the Central Act).
Since the decision of this question turns on the true interpretation of the expression 'Registered dealer '.
in sec.8(ii) of the Bombay Act, we may reproduce that section as follows: "Sec.8: There shall be levied a sales tax on the turn over of sales of goods specified in Schedule C at the rate set out against each of them in column 3 thereof, but after deducting from such turnover (i) * * * * (ii) resales of goods purchased by him on or after the appointed day from a Registered dealer if the goods at the time of their purchase were goods specified in Schedule C".
This section has obviously been enacted to prevent multiple point taxation on goods specified in Schedule C.
Where goods specified in Schedule 'C ' are sold by a dealer and obviously he must be a dealer registered under section 22 of the Bombay Act, if he is liable to pay tax under that Act the turnover of these sales is liable to be taxed at the rate specified against each category of goods in that Schedule, but if the sales in question are re sales of goods purchased by the dealer on or after the appointed day from a 'Registered dealer ', they would be liable to be excluded from the turnover, because the 'Registered dealer ' from whom they are purchased would have paid tax under the main part of section 8 and the goods having already borne tax in the hands of the selling 'Registered dealer ', the legislative intent is that they should not suffer tax again.
Now the expression 'Registered dealer ' is defined in section 2(15) of the Bombay Act to mean "a dealer registered under section 22" and therefore, ordinarily, the expression 'Registered dealer ' as used in section 8(ii) must carry the same meaning, namely, a dealer registered under section 22 of the Bombay Act.
But, as the opening part of section 2 shows, the definitional meaning is subject to anything repugnant in the subject or 874 context.
The context in which the defined word occurs may clearly indicate that it is used in a sense different from that given in the definition clause.
We must therefore see whether there is anything in section 8(ii) or in the context in which it occurs which should compel us to place on the expression 'Registered dealer ' as used in that section a meaning different from that given to it in section 2(15).
We are afraid we do not find anything in the subject or context of sec.8(ii) which would persuade us to depart from the definitional meaning of the expression 'Registered dealer '.
The subject and context in fact re enforce the view that the expression 'Registered dealer ' in sec.8(ii) is used to mean a dealer registered under sec.22 of the Bombay Act, and does not include a dealer registered only under the Central Act.
If a dealer is registered only under the Central Act and not under the Bombay Act, it would mean that he is not liable to pay tax under the Bombay Act and in that event, even if he has sold goods specified in Schedule 'C ', to a registered dealer under an intra State sale, no tax would be payable by him on such sale and if the purchasing dealer is also to be exempt from tax in respect of re sale effected by him, the result would be that the goods would escape tax altogether and not suffer even single point tax.
That surely could not have been the intendment of the legislature in enacting section 8(ii).
It would indeed frustrate the object of section 8(ii) which is to provide for imposition of single point tax on the goods specified in Schedule 'C '.
The situation would be the same even where the sale effected by the dealer registered under the Central Act is an inter State sale.
That sale would undoubtedly be taxable under the Central Act, but it is difficult to see why the Gujarat State should give exemption to re sale of goods in respect of which, at the time of the first sale, tax has been levied under the Central Act of which the benefit has gone to another State.
Moreover, in such a case, the first sale being an inter State sale, would be taxable at a fixed concessional rate under section 8(1)(a) or at the rate of 7% or at a rate equal to or twice the rate applicable to the sale of such goods in the State of the selling dealer, under clause (a) or (b) of sub section (2) of sec.
8 of the Central Act and if that be so, it is impossible to understand why the Legislature should have insisted, for attracting the applicability of section 8(ii), that the goods resold by the dealer should at the time of their first sale be goods specified in Schedule 'C '.
The requirement that the goods at the time of their first sale by the 'Registered dealer ' should be of one of the categories specified in Schedule 'C ', is a clear pointer that the 'Registered dealer ' contemplated in this provision is a dealer registered under section 22 of the Bombay Act, because it is only with reference to such a dealer liable to pay tax under the Bombay Act that this 875 requirement of the goods sold by him being goods specified in Schedule 'C ' can have any meaning and significance.
We are, therefore, clearly of the view that the expression 'Registered dealer ' is used in section 8(ii) in its definitional sense to mean a dealer registered under section 22 of the Bombay Act and it does not include a dealer registered under the Central Act.
The Revenue, however, relied on section 4 of the Bombay Act and tried to project it in the interpretation of the expression 'Registered dealer ' in section 8(ii).
We fail to see how section 4 can at all help in throwing light on the true interpretation of the expression 'Registered dealer '.
That section provides: "Sec. 4(1): Notwithstanding anything in section 3, a dealer who is registered under the , but who is not liable to pay tax under the said section 3, shall nevertheless be liable to pay tax (a) on Sales of goods is respect of the purchase of which he has furnished a declaration under sub sec.
(4) of section 8 of the , and (b) on sales of goods in the manufacture of which the goods so purchased have been used; and accordingly, the provisions of sections 7 to 12 (both inclusive) shall apply to such sales, as they apply to the sales made by a dealer liable to pay tax under section 3.
(2) Every dealer who is liable to pay tax under sub section (1) shall, for the purposes of sections 32, 33, 35, 36, 37, 38, 46, 47 and 48 be deemed to be a Registered dealer.
" It is obvious that if a dealer is not registered under the Bombay Act, it could only be on the basis that he is not liable to pay tax under the Bombay Act, but even so, section 4, sub section (1) provides that if he is registered under the Central Act, he would be liable to pay tax under the Bombay Act in respect of the transactions of sale set out in that section.
This liability arises despite the fact that the dealer, not being liable to pay tax under section 3 of the Bombay Act, is not registered under that Act.
The question then would be: if the dealer is not registered under the Bombay Act, how to recover the tax from him? The dealer not being registered under the Bombay Act, the machinery of the Bombay Act would not of itself apply for recovery of tax from him.
Section 4, sub section (2) therefore enacts that every dealer who is liable to pay tax under sub section (1) shall, for the purposes of sections 32 to 38 and 46 876 to 48 be deemed to be a Registered dealer.
Sections 32 to 38 and 46 to 48 are machinery sections and it is for the purpose of making the machinery of these sections applicable for recovery of the tax imposed on the dealer under sub section (1) of section 4 that an artificial fiction is created deeming the dealer to be a Registered dealer, that is, a dealer registered under section 22 of the Bombay Act.
This legal fiction is created for a specific purpose and it is limited by the terms of sub section 2 of section 4 and it cannot be projected in section 8(ii).
Section 4 has, in fact, nothing to do with section 8(ii).
They are distinct and independent provisions operating on totally different areas, and it is difficult to see how section 4 can be availed of for the purpose of interpreting the expression "Registered dealer" in section 8(ii).
I would therefore set aside the judgment of the High Court under appeal and answer the question referred by the Tribunal in favour of the Revenue and against the assessee.
There will be no order as to costs of the appeal.
SEN, J.
This appeal, by special leave, is from a judgment of the Gujarat High Court, upon a question of law referred to it under sub s.(1) of s.61 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as 'the Act ').
By that judgment the High Court answered the question referred in the affirmative and in favour of the assessee.
The point involved is of considerable importance.
The facts giving rise to the reference were these: Messrs Union Medical Agency, Ahmedabad was, at all material times, carrying on business in spirit and alcohol, and was a dealer registered under s.22 of the Act (hereinafter referred to as 'the assessee ').
In the assessment year 1964 65, the corresponding accounting year of which was the year ending March 31, 1965, the assessee claimed deduction from its turnover in respect of resales of certain goods purchased from one Motibhai Gopalbhai Patel of Baroda who, at the relevant time, was a dealer registered under s.7 of the (hereinafter referred to as 'the Central Act '), but was not a dealer registered under section 22 of the Act.
The Sales Tax Officer rejected the claim of the assessee for such deduction on the ground that the said Motibhai Gopalbhai Patel from whom the goods were purchased was not a registered dealer within the meaning of cl.(ii) of s.8 of the Act inasmuch as he was not registered as a dealer under s.22 of the Act.
The assessee appealed to the Assistant Commissioner of Sales Tax, the only material ground being that the expression 'registered dealer ' in cl.
(ii) of section 8 of the Act was wide enough to 877 include a registered dealer under the but the Assistant Commissioner affirmed the disallowance of the deduction.
On further appeal, the Gujarat Sales Tax Tribunal agreeing with the Sales Tax Authorities, held that in order to claim deduction from the turnover of sales of goods under cl.
(ii) of section 8 of the Act, what was required to be shown was that the goods were purchased by the dealer on or after the appointed day from a 'registered dealer ' under the Act, and that in view of the definition of the expression 'registered dealer ' in sub s.(25) of s.2 of the Act, such dealer had to be a dealer registered under s.22 of the Act.
The Tribunal accordingly held that since Motibhai Gopalbhai Patel, the Baroda dealer, from whom the assessee had purchased the goods, was not a registered dealer under the Act, therefore the requirements of cl.(ii) of s.8 of the Act were not fulfilled, and the claim for deduction made by the assessee had been rightly disallowed.
On the application of the assessee, the Tribunal referred the following question of law to the High Court under sub section
(1) of section 61 of the Act, for its opinion, namely: "Whether for the purpose of allowing deduction from the turnover of sales under clause (ii) of section 8 of the Bombay Sales Tax Act, 1959, purchases of goods made by a dealer registered under the Bombay Sales Tax Act, 1959 from a dealer registered under the but not registered under the Bombay Sales Tax Act.
1959 can be said to be purchases of goods made from a registered dealer within the meaning of clause (ii) of section 8 of the Bombay Sales Tax Act, 1959.
" It appears that the High Court was not satisfied at this formulation as it felt that the statement of the case as made by the Tribunal did not bring out the real question of law arising out of its order.
At the instance of the assessee, it re framed the question in the following terms: "Whether for the purpose of allowing deduction from the turnover of sales under clause (ii) of section 8 of the Bombay Sales Tax Act, 1959, purchases of goods made by a dealer registered under the Bombay Sales Tax Act, 1959 from a dealer who is registered under the and who is liable to pay tax under section 4 of the Bombay Sales Tax Act, 1959 though not registered under the Bombay Sales Tax Act, 1959 can be said to be purchases of goods made from a registered dealer within the meaning of clause (ii) of section 8 of the Bombay Sales Tax Act, 1959.
" 878 We feel that the High Court was not justified in re framing the question as referred.
It is nobody 's case that Motibhai Gopalbhai Patel, the Baroda dealer from whom the assessee had purchased the goods, had ever paid any tax on the sales effected by him under s.4 of the Act.
Nor is there any material on record to suggest that any proceedings were started against the Baroda dealer for subjecting the transactions to tax.
In answering the reference in the affirmative, in favour of the assessee and against the Commissioner of Sales Tax, the High Court observes: "The result of the foregoing discussion is that having regard to the context, collocation and the object of the expression 'registered dealer ' in clause (ii) of section 8 of the Bombay Act, and having regard to the policy of the Act, the said expression would also include a dealer registered under the Central Act on whom special liability to pay sales tax has been imposed under section 4 of the Act.
A dealer who purchases goods from a dealer registered under the Central Act, who is liable to pay sales tax on the sale of the said goods by virtue of the provisions of section 4 of the Bombay Act, would, therefore, be entitled to deduct from his turnover of sales of goods, resales of goods so purchased by him on or after the appointed day if the goods, at the time of their purchase, were goods specified in Schedule C." This conclusion of the High Court can hardly be supported.
The short question that falls for determination in the appeal is whether the expression 'registered dealer ' in cl.(ii) of s.8 of the Act must bear the meaning that is assigned to it in section 2(25) which is the definition section, or the said expression is capable of bearing an enlarged meaning, in view of the subject and context in which it is used in cl.(ii) of s.8 of the Act.
The decision of the appeal must turn on the construction of cl.(ii) of s.8 of the Act, which provides: "8.
There shall be levied a sales tax on the turnover of sales of goods specified in Schedule C at the rate set out against each of them in column 3 thereof, but after deducting from such turnover: (i) * * * * * * * (ii) resales of goods purchased by him on or after the appointed day from a Registered dealer if the goods at the time of their purchase were goods specified in Schedule C." 879 In the Act, the expression 'registered dealer ' is defined in section 2(25) in these terms: "2.
In this Act, unless the context otherwise requires, (25) "Registered dealer" means a dealer registered under section 22.
" The error in the decision of the High Court lies in its misunderstanding of the scope and effect of section 4 of the Act, which it has tried to project into cl.
(ii) of section 8 and it reads as follows: "4.
(1) Notwithstanding anything in section 3, a dealer who is registered under the , but who is not liable to pay tax under the said section 3, shall nevertheless be liable to pay tax (a) on sales of goods in respect of the purchase of which he has furnished a declaration under sub section (4) of section 8 of the , and (b) on sales of goods in the manufacture of which the goods so purchased have been used, and accordingly, the provisions of sections 7 to 12 (both inclusive) shall apply to such sales, as they apply to the sales made by a dealer liable to pay tax under section 3.
(2) Every dealer who is liable to pay tax under sub section (1) shall, for the purposes of sections 32, 33, 34, 35, 36, 37, 38, 46, 47 and 48 be deemed to be a Registered dealer.
" Sub section (3) of section 7 reads: "7.(3) In order to ensure that after the date of the coming into force of section 15 of the , tax shall not be levied on the sales or purchases of Declared goods at more than one stage, it is hereby provided that if under this Act or any earlier law, any tax has been levied or is leviable on the sale or purchase of such goods then no further tax shall be levied under this Act on any subsequent sale or purchase thereof; and accordingly, for the purpose of arriving at the taxable turn over of sales or purchases of a dealer, there shall be deducted from his total turnover of sales, or as the case may be, of purchases, the sales or purchases of such declared goods as have borne tax at any earlier stage.
" There is no obscurity in the language of cl.
(ii) of section 8 of the Act.
It is clear from the terms of cl.
(ii) of section 8 that no deduction is claimable in respect of resales of goods purchased from a dealer registered under the Central Act, who is not a registered dealer within the meaning of section 2(25) of the Act.
It follows that the 880 expression 'registered dealer ' in cl.
(ii) of section 8 of the Act must bear the meaning of that expression as given in section 2(25) of the Act.
If the meaning of the section is plain, it is to be applied whatever the result.
It is a well settled principle that when a word or phrase has been defined in the interpretation clause, prima facie that definition governs whenever that word or phrase is used in the body of the statute.
But where the context makes the definition clause inapplicable, a defined word when used in the body of the statute may have to be given a meaning different from that contained in the interpretation clause; all definitions given in an interpretation clause are, therefore, normally enacted subject to the usual qualification 'unless there is anything repugnant in the subject or context ', or 'unless the context otherwise requires '.
Even in the absence of an express qualification to that effect such a qualification is always implied.
The expression 'registered dealer ' having been defined in s.2(25) of the Act as having a particular meaning, i.e., a dealer registered under section 22 of the Act, it is that meaning alone which must be given to it in interpreting cl.
(ii) of s.8 of the Act, unless there is anything repugnant to the context.
It was not permissible for the High Court to ignore a statutory definition and give to the expression a wider meaning independent of it.
There is nothing to suggest that the expression 'registered dealer ' is used in cl.
(ii) of s.8 of the Act in any different sense from that in ' which it is defined.
It is significant to notice that whenever the legislature wanted that the expression 'registered dealer ' should have a different meaning, it has expressly said so.
Thus in sub s.(1) of s.4 it mentions of 'a dealer who is registered under the '.
The distinction between the two classes of dealers is, therefore, clearly maintained.
The High Court was obviously wrong in not interpreting the expression 'registered dealer ' in the context of cl.
(ii) of s.8 but with reference to the other provisions of the Act, particularly in the light of section 4 of the Act, to give effect to the so called legislative intent for the levy of a single point tax.
It was in error in making an exposition ex visceribus actus and in relying upon the leading cases of Bywater vs Brandling, Rein vs Lane, Jobbins vs Middlesex Country Council Craies on Statute Law, 6th ed., 99, and Maxwell on Interpretation of Statutes, 8th ed., 30.
The High Court expresses the view that the legislative intent in enacting cl.
(ii) of s.8 of the Act is two fold (1) to restrict the levy 881 of sales tax to a single point and to avoid multiple levy of sales tax on goods, and (2) that sales tax should be levied at the stage of the first sale and should be recovered from the registered dealer who effects the first sale and that all subsequent sales of such goods should not be subjected to sales tax over again.
In the light of this so called legislative intention and the policy of the Act, the High Court observes that 'having regard to the context, collocation and the object of the expression 'registered dealer ' in cl.(ii) of s.8 of the Act ', and 'having regard to the legislative intent, namely, to levy a single point tax under sub s.(3) of s.7 of the Act ', the expression 'registered dealer ' in cl.
(ii) of s.8 would also include a dealer registered under the , on whom a special liability to pay sales tax has been imposed under s.4.
Upon that view, it held that a dealer who purchased goods from a dealer registered under the Central Act, who was liable to pay sales tax on the sale of such goods by virtue of the provisions of s.4 of the Act, would be entitled to deduct from his turnover of sales of goods, resales of goods so purchased by him on or after the appointed day if the goods at the time of their purchase, were goods specified in Schedule C of the Act.
It accordingly held that the meaning of the expression 'registered dealer ' in cl.(ii) of s.8 was not limited only to a dealer registered under the Act but it was wide enough to also include a dealer registered under the Central Act.
There is no dispute with the proposition that the meaning of a word or expression defined may have to be departed from on account of the subject or context in which the word had been used and that will be giving effect to the opening sentence in definition section, namely 'unless the context otherwise requires '.
In view of this qualification, the Court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words in a particular section, there is no scope for the application of the rule ex visceribus actus.
This rule is never allowed to alter the meaning of what is of itself clear and explicit.
The authorities relied upon by the High Court are, therefore, not applicable.
While accepting that sub s.(3) of s.7 of the Act was to give effect to cl.(a) of s.15 of the Central Act, and therefore cannot control the interpretation of cl.(ii) of s.8, the High Court commits the mistake of interpreting the expression 'registered dealer ' appearing therein, in the context of s.4 of the Act.
The provisions of s.4, sub s.(3) of s.7 and cl.(ii) of s.8 of the Act operate in three different fields.
882 While s.4 of the Act provides that a registered dealer under the Central Act who may not be liable to pay tax under s.3 of the Act may nevertheless in certain contingencies be liable to pay tax, sub section
(3) of s.7 provides for the levy of single point tax on sales in the course of inter state trade and commerce of declared goods, to bring the Act in conformity with cl.(a) of s.15 of the Central Act.
The object and purpose of enacting the provisions of s.8 are entirely different, namely, to lay down the mode of computation of the turnover of sales or purchases of a registered dealer for the imposition of a tax.
Clause (ii) of s.8 allows for deduction of resales from the turnover of such registered dealer when the goods are purchased from a registered dealer, i.e., a dealer registered under s.22 of the Act.
In effect, s.8 deals with transactions of sale or purchase taking place within the State.
There is a fallacy in the reasoning of the High Court.
It seems that the High Court was obsessed with two factors, namely (1) the concept of a single point tax under sub s.(3) of s.7 of the Act, and (2) the fact that a registered dealer under the Central Act who may not be liable to pay tax under s.3 of the Act may nevertheless in certain contingencies be liable to pay tax.
It failed to appreciate that cl.(ii) of s.8 which allows for deduction of sales by one registered dealer to another, deals purely with inside sales.
The expression 'registered dealer ' in cl.(ii) of s.8 is sought to be given an enlarged meaning by stretching, in effect, the legal fiction contained in sub s.(2) of s.4.
After observing that the legal fiction in sub s.(2) of s.4 is created for a limited purpose, it goes on to observe: "It would, therefore, have been inappropriate or at any rate wholly inartistic for the legislature to provide in sub section (2) of section 4 that every dealer who is liable to pay tax under sub section (1) shall be deemed to be a registered dealer for the purpose of clause (ii) of section 8 since the latter section provides for the levy of sales tax on sales of goods of an altogether different dealer after making certain deduction from the turnover of sales of goods of such dealer.
The legislature could have made a specific provision, if any, in this behalf only in clause (ii) of section 8 and not in sub section (2) of section 4." The High Court proceeds on the hypothesis that the transactions in question must have been brought to tax in the hands of the Baroda dealer and, therefore, it became necessary to avoid multiple levy of sales tax.
On that assumption, it felt that it was necessary to give to the assessee the benefit of s.8(ii) of the Act although the Baroda dealer was not a registered dealer within the meaning of 883 section 2(25) i.e., registered as a dealer under section 22 of the Act.
We regret to say that in reaching that conclusion, the High Court has proceeded on mere conjectures and surmises.
For aught we know, the Baroda dealer at the relevant time, might not be engaged in the business of selling goods in the State of Gujarat and was, therefore, not a dealer liable to pay tax at all.
Perhaps he was primarily engaged in effecting sales in the course of inter State trade and commerce, or it may be that the inside sales effected by him did not exceed the taxable limits.
Both the parties proceeded upon the basis that the purchases effected by the assessee were not subjected to tax.
It was, therefore, not right for the High Court to hold that the disallowance of deduction claimed by the assessee under cl.(ii) of s.8 of the Act would result in double taxation of the same goods.
It is evident that the High Court has completely misdirected itself.
The transactions of sales effected by the Baroda dealer to the assessee who was a dealer at Ahmedabad, were clearly inside sales.
While it is true that the Baroda dealer being a dealer registered under s.7 of the was, in certain contingencies, liable to pay tax under s.4 of the Act, but that circumstance by itself would not make him a 'registered dealer ' within the meaning of section 2(25) of the Act.
If the legislature really intended that the expression 'registered dealer ' in cl.(ii) of s.8 should take within its ambit a dealer registered under the , upon whom liability to pay sales tax is imposed by s.4 of the Bombay Act, it would have said so in clear words.
It would have made necessary provision in that behalf in sub s.(2) of s.4 which provides that every dealer liable to pay tax under sub s.(1) shall be deemed to be a registered dealer for purposes of certain sections of the Bombay Act viz., sections 32, 33, 34, 35, 36, 37, 38, 46, 47 and 48.
It is thus apparent that the legal fiction in sub s.(2) of s.4 is created for a limited purpose, namely, to make section 4 a self contained code which not only imposes a charge of tax and lays down the rate structure, but also provides the machinery for assessment and recovery of tax and penalty.
The legal fiction contained in sub s.(2) of s.4 of the Act cannot be stretched any further.
For these reasons, the judgment of the High Court answering the reference in favour of the assessee is set aside.
The question referred by the Tribunal is answered in the negative and in favour of the Revenue.
There shall be no order as to costs.
S.R. Appeal allowed.
| Allowing the appeal by special leave and answering against the assessee, the Court.
^ HELD: Per Bhagwati,J. (Concurring with Sen and Venkataramiah, JJ.) (1) The expression "Registered dealer" is used in section 8 (ii) in its definitional sense to mean a dealer registered under section 22 of the Bombay Sales Tax Act and it does not include a dealer under the Central Sales Tax Act.
[875A] (2) The object of section 8 is to prevent a multiple point taxation on goods specified in Schedule C and for imposition of single point tax on them under the Act.
If a dealer is registered only under the Central Act and not under the Bombay Act, it would mean that he is not liable to pay tax under the Bombay Act and in that event, even if he has sold goods specified in Schedule 'C ', to a registered dealer under an intra State sale, no tax would be payable by him on such sale and if the purchasing dealer is also to be exempt from tax in respect of re sale effected by him, the result would be that the goods would escape tax altogether and not suffer even single point tax.
That is not the intendment of the legislature in enacting section 8(ii); on the contrary it would frustrate the very object of that section.
The situation would be the same even where the sale effected by the dealer registered under the Central Act is an inter State sale.
That sale would undoubtedly be taxable under the Central Act but there is no reason why the Gujarat State would give exemption to re sale of goods in respect of which, at the time of the first sale tax has been levied under the Central Act of which the benefit has gone to another State.
Moreover, in such a case, the first sale being an inter State sale, would be taxable at a fixed concessional rate under section 8(1)(a) or at the rate of 7% or at a rate equal to or twice the rate applicable to the sale of such goods in the State of the selling dealer, under clause (a) or (b) of sub section (2) of section 8 of the Central Act and if that be so, it is difficult to understand why the Legislature should have insisted, for attracting the applicability of section 8(ii), that the goods re sold by the dealer should at the time of their first sale be goods specified in Schedule 'C '.
[873F G, 874C G] 871 (3) Sections 4 and 8(ii) of the Bombay Act are distinct and independent provisions operating on totally different areas.
The legal fiction in sub section (1) of section (4) is created for a specific purpose and it is limited by the terms of sub section (2) of section 4 and it cannot be projected in section 8(ii).
If a dealer is not registered under the Bombay Act, it could only be on the basis that he is not liable to pay tax under the Bombay Act, but even so, section 4 sub section (1) provides that if he is registered under the Central Act, he would be liable to pay tax under the Bombay Act in respect of the transactions of sale set out in that section.
This liability arises despite the fact that the dealer, not being liable to pay tax under section 3 of the Bombay Act, is not registered under that Act.
The dealer not being registered under the Bombay Act, the machinery of the Bombay Act would not of itself apply for the recovery of tax from him.
Section 4 sub section 2, therefore, enacts that every dealer who is liable to pay tax under sub section (1) shall, for the purpose of sections 32 to 38 and 46 to 48 be deemed to be a registered dealer.
Sections 32 to 38 and 46 to 48 are machinery sections and it is for the purpose of making the machinery of these sections applicable for recovery of the tax imposed on the dealer under sub section (1) of section 4 that an artificial fiction is created deeming the dealer to be a registered dealer, that is, a dealer registered under section 22 of the Bombay Act.
Per Sen, J. (On behalf of himself and Venkataramiah, J.).
(1) It is a well settled principle that when a word or phrase has been defined in the interpretation clause, prima facie that definition governs whenever that word or phrase is used in the body of the statute.
But where the context makes the definition clause inapplicable, a defined word when used in the body of the statute may have to be given a meaning different from that contained in the interpretation clause; all definitions given in an interpretation clause, are, therefore, normally, enacted subject to the usual qualification "unless there is anything repugnant in the subject or context", or "unless the context otherwise requires".
Even in the absence of an express qualification to that effect such a qualification is always implied.
The expression "registered dealer" having been defined in section 2(25) of the Bombay Act as having a particular meaning, that is, a dealer registered under section 22 of the Act, it is that meaning alone which must be given to it in interpreting clause (ii) of section 8 of the Bombay Act unless there is anything repugnant to the context [880B D] There being no obscurity in the language of clause (ii) of section 8 of the Bombay Act, it is clear that no deduction is claimable in respect of re sales of goods purchased from a dealer registered under the Central Act, who is not a registered dealer within the meaning of section 2(25) of the Act.
It follows that the expression "registered dealer" in clause (ii) of section 8 of the Act must bear the meaning of that expression as given in section 2(25) of the Act.
If the meaning of the section is plain it is to be applied whatever the result, [879H 880A] (2) The meaning of a word or expression defined may have to be departed from on account of the subject or context in which the word had been used and that will be giving effect to the opening sentence in definition section, namely, "unless the context otherwise requires".
In view of this qualification, the Court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words in a particular section.
But where there is no obscurity in the language of the section, 872 there is no scope for the application of the rule ex visceribus actus.
This rule is never allowed to alter the meaning of what is of itself clear and explicit.
[881E G] Bywater vs Brandling, ; Rein vs Lane, and Jobbins vs Middlesex County Council, Craies, , held inapplicable.
(3) The provisions of section 4, sub section (3) of section 7 and clause (ii) of section 8 of the Bombay Act operate in three different fields.
While section 4 of the Act provides that a registered dealer under the Central Act who may not be liable to pay tax under section 3 of the Act may nevertheless in certain contingencies be liable to pay tax, sub section (3) of section 7 provides for the levy of a single point tax on sale in the course of inter State trade and commerce of declared goods, to bring the Act in conformity with clause (a) of section 15 of the Central Act.
The object and purpose of enacting the provisions of section 8 are entirely different, namely, to lay down the mode of computation of the turnover of sales or purchases of a registered dealer for the imposition of a tax.
Clause (ii) of section 8 allows for deduction of re sale from the turnover of such registered dealer when the goods are purchased from a registered dealer, that is, a dealer registered under section 22 of the Act.
In effect, section 8 deals with transactions of sale or purchase taking place within the State.
The disallowance of deduction claimed by the assessee under clause (ii) of section 8 of the Act, therefore, would not result in double taxation of the same goods.
[881H 882C, 883C] While it is true that the Baroda dealer being a dealer registered under section 7 of the Central Sales Tax Act, in the instant case, was in certain contingencies, liable to pay tax under section 4 of the Act, but that circumstance by itself would not make him a "registered dealer" within the meaning of section 2(25) of the Act.
If the legislature really intended that the expression "registered dealer" in clause (ii) of section 8 should take within its ambit a dealer registered under the Central Sales Tax Act, upon whom liability to pay sales tax is imposed by section 4 of the Bombay Act, it would have said so in the clear words section (2) of section 4.
The legal fiction in sub section
(2) of section 4 is created for a limited purpose, namely, to make section 4 a self contained code which not only imposes a charge of tax and lays down the rate structure, but also provides the machinery for assessment and recovery of tax and penalty.
The legal fiction contained in sub section
(2) of section 4 of the Act cannot be stretched any further.
[883D E, G]
|
Appeals Nos. 2253 and 2254 of 1966.
Appeals from the judgment and decree dated July 5, 1965 of the Calcutta High Court in Appeals from Original Decrees Nos. 490 and 489 of 1960 respectively.
Sarjoo Prasad and R. Ganapathy Iyer, for the appellant (in C. A. No. 2253 of 1966).
Devaprasad Chaudhury and Sukumar Ghove, for the appellant (In C. A. No. 2254 of 1966).
A.K. Sen, section K. Gambhir and D. N. Gupta, for the respon dents (in both the appeals).
The Judgment of the Court was delivered by Bachawat, J.
The respondents are limited companies having their head offices in Calcutta.
On May 15, 1953, the two Companies jointly purchased the premises known as King 's Court ' at No. 46B Chowringhee Road, Calcutta, for the purpose of providing residential accommodation for their staff.
They instituted a suit against one B. M. Lall, since deceased, predecessor of the appellants in C. A. No. 2253/66 for recovery of possession of flat No. 8 in the aforesaid premises in his occupation as a tenant, and another suit against the appellant in C. A. No. 2254/66 for recovery of possession of flat No. 9 in his occupation as a tenant, on the ground that they reasonably required the flats for the occupation of their staff.
By Sec.
13(1) of the West Bengal Premises Tenancy Act, 1956, (West Bengal Act XII of 1956), the tenants are protected from eviction except on one or more of the grounds specified in the sub section.
The grounds mentioned in clause (f) of section 13(1) are: "Where the premises are reasonably required by the landlord either for purposes of building or re building or for making thereto substantial additions or alterations or for his own occupation if he is the owner or for the occupation of any person for whose benefit the premises are held;". .
The respondents claim that they reasonably require the flats for their own occupation.
The trial court dismissed the suits.
From these decrees, the respondents filed appeals in the High Court at Calcutta.
The High Court set aside the decrees passed by the trial court and decreed the suits.
The present appeals have been filed under certificates granted by the High Court.
25 The High Court held that (1) a limited company can be a landlord within the meaning of section 13(1)(f) and can reasonably require the premises for its own occupation, and (2) where there are several landlords, the requirement of the premises by the landlords for the occupation of one or more of them is sufficient to bring the case within Sec.
13(1)(f).
These findings are not challenged in this Court.
Before us it is also conceded by all the appearing parties that the respondents are entitled to a decree for recovery of possession of the two flats under sec.
13(1)(f), if they establish that they reasonably require the flats for the occupation of respondent No. 2, Guest Keen and Williams Ltd. only.
The two courts concurrently found that respondent No. 2 reasonably requires the flats for the occupation of its staff.
The Company is under an obligation to provide free residential accommodation for its officers in properties either rented or owned by it.
In view of the acute scarcity of accommodation in the city, it is not possible to find other convenient flats for officers who were transferred to the city from other stations.
Suitable provision for the accommodation of officers visiting Calcutta on tour is a matter of necessity.
The sole question is whether the occupation by its staff officers would be the company 's own occupation.
The point of dispute on which the two courts differed is whether the officer to whom the flat would be allotted would occupy it as a tenant or as a licensee.
It is common case before us that if he is a licensee his occu pation would be on behalf of the company and its requirement would be for its own occupation.
On the other hand, if he is a tenant his occupation would be on his own account and the company 's requirement would not be for its own occupation.
It appears that the officers provided with accommodation by the Company are required to execute agreements in a standard form.
The terms and conditions of the agreement are as follows: 1 .
The Licensee whilst in the employment of the Company at Calcutta and for the sole purpose of the Licensee being more conveniently situated in such employment is hereby permitted by the Company to occupy as a Licensee during the term of his employment at Calcutta Flat No. 25, situated in the Company 's property known as Kings Court, Calcutta, or such other flat as may be allotted to the Licensee at the company 's discretion (hereinafter referred to as "the said permises") subject to the terms and conditions hereinafter contained.
In the event of the Company deciding to levy License fees and the Company reserves the right to do so without prior notice, the Licensee shall pay to the Company each month such License fees which may be varied by the 'Company from time to time at its discretion and the Company shall be entitled to deduct such License fees from the emoluments or to become due to the Licensee from Company.
The occupation of the said premises by the Licensee is a condition of his employment at Calcutta with the company and such right of occupation shall forthwith cease upon his employment being terminated by the company or on his leaving such employment or on his transfer away from Calcutta or on his death whichever is earlier.
Notice given by the Company to the Licensee of termination of employment or of transfer away from Calcutta shall be deemed to be sufficient notice of revocation of the licence.
The Company shall be entitled to determine forthwith the licence hereby granted if the licensee shall fail to comply with any of the terms and conditions herein contained and on his part to be observed and non compliance with the terms and conditions herein contained may be deemed by the company to be misconduct.
These presents shall not or shall not be deemed to create any relationship of landlord and tenant between the company and the licensee in respect of the said premises.
The company shall pay all present and future revenue and municipal taxes payable in respect of the said premises and keep the said premises in repair during the continuance of these presents.
Conditions to be complied with by the licensee: 1.
The Licensee shall pay the cost of electricity and gas consumed within the said premises and the company may at its discretion deduct such charges from the emoluments due or to become due to the Licensee from the company.
The Licensee shall not cause or permit to be cause any disturbance or nuisance in or in the vicinity of the said premises.
No structure or alteration temporary or permanent, other than common ornaments shall be erected, fixed or carried out by the Licensee in the said premises or garden without prior written permission from the company.
The Licensee shall not do or permit to be done any act or thing which causes damage or is liable to cause damage to the said premises.
The cost of rectification of such damage will be recoverable in accordance with condition (1).
Alterations of or extensions to the installed electrical circuit are strictly prohibited.
No notice advertisement or placard other than the Licensee 's own name, which may be fixed to the main door of the said premises, shall be fixed or permitted to be fixed to any portion of the said premises.
The said premises shall be used entirely as a dwelling place and no business or trade shall be carried out on the said premises or any part thereof without prior written permission from the company.
The Licensee will not permit any persons other than his own personal servants to occupy the servants ' quarters allotted to him by the company and will not permit the garage allotted to him by the company to be used for residential purpose.
The Licensee shall not take in any paying guest without prior written permission from the company and such permission shall be deemed to have been withdrawn when the paying guest ceases to reside.
The Licensee shall not let or part with possession of the whole or any part of the said premises to any person, firm or company.
During periods when the Licensee is absent from Calcutta the Company may assign the premises to any other employee or suitable person at its sole discretion.
The question is whether the occupier under this agreement is a tenant or a licensee.
The distinction between a lease and a license is well known.
105 of the Transfer of Property Act defines a lease.
52 of the Indian Easements Act defines a license.
A lease. is the transfer of a right to enjoy the premises; whereas a license is a privilege to do something on the premises which otherwise would be unlawful.
If the agreement is in writ ing, it is a question of construction of the agreement having regard to its terms and where its language is ambiguous, having regard to its object, and the circumstances under which it was executed whether the rights of the occupier are those of a lessee or a licen see.
The transaction is a lease, if it grants an interest in the land; it is a license if it gives a personal privilege with no interest in the land.
The question is not of words but of substance and the label which the parties choose to put upon the transaction, though relevant, is not decisive.
The test of exclusive possession is not decisive, see Errington vs Errington and Woods,(1) Associated Hotels of India Ltd. vs R. N. Kapoor,(2) though it is a very important indication in favour of tenancy.
See Addiscombe Garden Estates Ltd. and Anr.
vs Crabbe and Ors.(3).
A servant in occupation of premises belonging to his master may be a tenant or a licensee, see Halsbury 's Laws of England, Third Edition, Vol.
23, article 990.
p. 411.
A service occupation is a particular kind of license whereby a servant is required to live in the premises for the better performance of his duties.
Formerly, the occupation of the servant was regarded as a tenancy unless it was a service occu (1)[1952] 1 K.B. 290, 298.
(2) [1260] 368, 381 5.
(3) ,525.
28 pation, see Nippon Menkwa Kalmshiki vs F. Portlock(1).
Now it is settled law that a servant may be a licensee though he may not be in service occupation.
In Torbett vs Faulkner(2) Denning, L. J. said: "A service occupation is, in truth, only one form of licence.
It is a particular kind of licence whereby a servant is required to live in the house in order the better to do his work.
But it is now settled that there are other kinds of licence which a servant may have.
A servant may in some circumstances be a. licensee even though he is not required to live in the house, but is only permitted to do so because of its convenience for his work see Ford vs Langford 1(1949) 65 The Times L.R. 1381, per Lord Justice Asquith, and Webb, Ltd. vs Webb (unreported, October 24, 1951) and even though he pays the rates, Gorham Contractors, Ltd. vs Field (unreported, March 26, 1952), and even though he has exclusive possession, Cobb vs Lane (1952) 1 The Times L.R. 1037)".
The Lord Justice then continued: "If a servant is given a personal privilege to stay in a house for the greater convenience of his work, and it is treated as part and parcel of his remuneration, then he is a licensee, even though the value of the house is quan tified in money; but if he is given an interest in the land, separate and distinct from his contract of service, at a sum properly to be regarded as a, rent, then he is a tenant, and none the less a tenant because he is also a servant.
The distinction depends on the truth of the relationship and not on the label which the parties choose to put upon it: see Facchini vs Bryson (1952 ) The Times L.R. 1386).
" The last observation covers the present case.
Under the standard form of agreement of respondent No. 2, the occupation of the officer ceases not only on the termination of his employment but also on his transfer from Calcutta and on his death.
The company is at liberty to allot any other flat to the officer.
During the absence of the servant from Calcutta, the company is at liberty to assign the premises to any other employee or other person.
The accommodation is free, but the Company reserves the right to levy license fees.
All the terms of the agreement are consistent with the expressed intention that the officer is permitted to occupy the flat as a licensee and nothing in the agreement shall be deemed to create the relationship of landlord and tenant.
The agreement on its true construction read in the light of the surrounding circumstances operates as a license and not as a tenancy.
It creates no interest in the land.
It gives only a personal privilege or license (1)A.I.R. 1922 Botm.
(2) [1952]2 T.L.R. 659,660, 29 of the servant to occupy the premises for the greater convenience of his work.
The High Court rightly held that the respondents reasonably require the flats for respondent No. 2 's own occupation through officers holding the flats on its behalf as licensee.
If so, it is conceded that it is not necessary for the respondents to establish the reasonable requirement by respondent No. 1 also for its own Occupation.
The High Court decided this issue also in favour of the respondents.
As the decision on this issue is not necessary for the disposal of this appeal, we express no opinion on it.
The High Court rightly decreed the suits.
In the result, the appeals are dismissed.
There will be no order is to costs.
R.K.P.S. Appeals dismissed.
| Hold, that section 8 A inserted in Rajasthan Ordinance XXVII of 1948 by section 4 of Rajasthan Ordinance X of, 1949 and as amended by section 3 of Rajasthan Ordinance XV of 1949 is void under article 14 of the Constitution.
Frank J. Bowman vs Edward A. Lewis ; ; 25 Law.
Ed. 989), Ramjilal vs Income Tax Officer, Mohindargarh ([1951] S.C.R. 127), The State of Punjab vs Ajaib Singh ([1953] S.C.R. 254) and Thakur Madan Singh vs Collector of Sikar (Rajasthan Law Weekly, 1954, p. 1), referred to.
|
Civil Appeal No. 1153 of 1975.
Appeal by Special Leave from the Judgment and order dated the 29th November 1974 of the Mysore High Court at Bangalore Writ Petition No. 117 of 1973.
section V. Gupte, K. R. Nagaraja for the Appellant.
Shyamla Pappu (Mrs.) for Respondent No. 3.
The Judgment of the Court was delivered by Gupta, J.
on the application of the appellant the Regional Transport Authority, Mandya, granted him.
a contract carriage permit on February 8, 1972, valid for the entire State of Karnataka.
The grant was cancelled by the Karnataka State Transport Appellate Tribunal by its order dated August 19, 1972 on appeal preferred by the third respondent, Karnataka State Road Transport Corporation.
The appellant filed a writ petition in the High Court of Karnataka at Ban galore challenging the order of the Appellate Tribunal.
The High Court dismissed the petition by its order dated November 29, 1 974 agreeing with the Appellate Tribunal that the Regional Transport Authority, Mandya, had no jurisdiction to grant permits valid throughout the State of Karnataka in view of the first proviso to sub section (1) of section 45 of the (hereinafter referred to as the Act).
The correctness of that decision is questioned by the appellant in this appeal by special leave.
Section 45(1) with its first proviso which is the only part of the section relevant for the present purpose is in these terms: General provision as to applications for permits.
30 "45 (1) Every application for a permit shall be made to the Regional Transport Authority of the region in which it is proposed to use the vehicle or vehicles: Provided that if it is proposed to use the vehicle or vehicles in two or more regions lying within the same State, the application shall be made to the Regional Transport Authority of the region in which the major portion of the proposed route or area lies, and in case the portion of the proposed route or area in each of the regions is approximately equal, to the Regional Transport Authority of the region in which it is proposed to keep the vehicle or vehicles :" As its marginal note indicates, section contains a general provision regulating applications for permits.
The proviso, quoted above, lays down that where the applicant for a permit proposes to use his vehicle in two or more regions in the same State, the application must be made to the Regional Transport Authority within whose jurisdiction the major portion of the proposed route or area lies.
The appellant had asked for a contract carriage permit that would be valid throughout the State of Karnataka which meant that he proposed to use his vehicle in all the different regions lying in the State.
The second proviso to section 44(1) of the Act lays down that the area specified as the region of a Regional Transport Authority shall not be less than an entire district, or the whole area of a Presidency town.
In the State of Karnataka there are 19 Regional Transport Authorities, one for each district in the State.
In terms of the first proviso to section 45 (1), an application for an inter regional permit that the appellant was asking for had to be made to the Regional Transport Authority of the region that included the major portion of the proposed area.
The question debated before the appellate tribunal and the High Court was whether the area lying within the jurisdiction of the Regional Transport Authority, Mandya, was larger than the area within the region of any other Regional Transport Authority in the State, and in that context the meaning of the term 'area ' in the first proviso to section 45 (1) arose for consideration.
According to the applicant for the permit, 'area ' in section 45 meant the extent of motorable tract in the region, and the Regional Transport Authority, Mandya, agreeing with this interpretation of the word 'area ' found that the 'Mandya Region has more motorable roads than any other district in the State".
The appellate tribunal and the High Court both refused to accept this meaning of 'area ' which they held to mean plain geographical area and as the Regional Transport Authority, Mandya, was admittedly not the largest district in that State, the High Court dismissed the writ petition and affirmed the decision of the appellate tribunal that the grant of permit was without jurisdiction.
Before proceeding to consider the merits of the rival contentions as to the meaning of the word 'area ' in the first proviso to section 45(1), it would be helpful to refer to certain other provisions of the Act which seem to be relevant in this context.
The appellant had asked for a contract carriage permit.
Section 2(3) defies a contract carriage as a motor vehicle which carries passengers for hire or reward under a contract for the use of the vehicles as a whole either on a time basis or 31 from one point to another, and in both cases without stopping to pick up or set down along the line of route passengers not included in the contract.
A motor vehicle is defined in section 2(18) as a mechanically propelled vehicle 'adapted for use upon roads '.
Section 49 lays down the particulars that an application for a contract carriage permit shall contain, and the 'area ' for which the permit is required is one of the matters that the application must state.
The word route which has been used in association with 'area ' in section 45(1) is defined by section 2(28A) as "a line of travel which specifies the highway which may be traversed by a motor vehicle between one terminus and another." Section 2(1) defines 'area ' as follows: " "area", in relation to any provision of this Act, means such area as the State Government may, having regard to the requirements of that provision, specify by notification in the official Gazette;" The terms and expressions defined in section 2 will apply only if there is nothing repugnant in the subject or context as the opening words of the section indicate.
The first proviso to section 45 (1) speaks of the route or area proposed in an application for a permit and, as such, there can be no question here of the State Government specifying the area.
Clearly, the definition of area in section 2(1) has no relevance in this context.
The question therefore remains to be answered, whether 'area` in section 45(1) has been used in the wider sense of geographical area, or it means only the area of motorable roads ? The section uses both the words, 'route ' and 'area ', whichever is applicable in a given case.
A route as defined is a line of travel between two termini on a highway, but the idea of a route as a notional line that the definition suggests has not been consistently maintained in the Act.
In Dosa Satyanarayanamurty etc.
vs The Andhra Pradesh State Road Transport Corpn.
(1) this Court observed: "There is no inherent in consistency between an "area" and a "route".
The proposed route is also an area limited to the route proposed.
" A similar observation was made in C.P.C. Motor Service, Mysore vs The State of Mysore(2) that in the scheme of the Act, by the word "route" is meant "not only the notional line but also the actual road over which the omnibuses run".
Of course, it would not be correct to say that the Act recognizes no distinction between 'route ' and 'area '.
A route may mean not only the notional line of travel between one terminus and another, but also the area of the road over which the motor vehicles ply, yet the two terms are not interchangeable; as pointed out in C.P. Sikh Regular Motor Service etc.
vs The State of Maharashtra,(3) "a route is an area plus something more".
This "something" is the notional line of travel between two termini which distinguishes a route ` from an area simpliciter.
The first proviso to section 45(1) speaks of "route or area" apparently making a distinction between them to cover applications relatable to either.
A contract carriage does not ply along a fixed route or routes but over an area, which is why an application for a contract carriage permit has to contain a statement as to the proposed area.
(1) (644).
(2) [1962 Supp.
(1) S.C.R. 717 (725).
(3) ; 32 All the decisions to which we have referred above have taken the view that by area is meant the road, the physical tract, over which the motor vehicles ply without reference to any notional line of travel.
Of course, this meaning was given to the word 'area ' in the context of the provisions of the Act considered in these cases, in none of which section 45 came up for consideration.
We do not however find any reason to think that 'area ' in section 45 ( 1 ) has a different connotation.
Except that the territorial jurisdiction of the regional transport authorities is fixed in terms of geographical area districtwise in the State of Karnataka 'area ' in that wider sense is irrelevant to the purposes of the Act.
Counsel for the respondent, Mysore State Road Transport Corporation, Bangalore, built an argument on the provisions of section 12 of the Act that the meaning of 'area ' is not restricted only to the area of motorable roads in a region.
Section 42 prohibits the use of a transport vehicle in any public place except in accordance with the conditions of a valid permit.
A transport vehicle includes a motor vehicle used for the carriage of passengers [section 2(33) and section 2(25).
Public place has been defined by section 2(24) of the Act as "road, street, way or other place, whether a thoroughfare or not, to which the public have a right of access, and includes any place or stand at which passengers are picked up or set down by a stage carriage".
lt was argued that a contract carriage which does not ply on a fixed route could be used in any public place which need not necessarily be a road; this, according to counsel, indicated that the word area occurring in section 45(1) meant geographical area and not motorable roads only.
We do not find it possible to accept this contention.
Assuming that a contract carriage could be used in places which are not really roads, the fact remains that a contract carriage being a motor vehicle is intended for use upon roads, and any casual use of it in places other than roads is not decisive on the interpretation of the word area.
The prohibition against the use of transport vehicles in public places which are not roads serves to repel a possible claim that for using a motor vehicle in places which cannot be called roads no permit was necessary.
We hold therefore that the word area in the first proviso to section 45(1) of the Act means the area of motorable roads within the territorial jurisdiction of a regional transport authority.
The Regional Transport Authority, Mandya, held that it had within its jurisdiction the largest area of motorable roads in the State of Karnataka, and this finding has not been disturbed by the appellate tribunal.
The appellate tribunal thought that the expression "motorable roads" was vague as the area comprising of motorable roads would be changing from time to time", but the jurisdiction of a regional transport authority to grant an inter regional permit depends on the existing area of motorable roads when an application for a permit is made.
In the course of arguments before us doubts were expressed on the reasonableness of a provision which requires an application for an inter regional permit to be made to the regional transport authority of the region in which the major portion of the proposed route or area lies when section 63 of the Act provides elaborate checks and lays 33 down conditions for the validation of permits for use outside the region in which it has been granted.
It was submitted that in view of the provisions of section 63 there was no point in insisting on the application being made to the Regional Transport Authority of any particular region.
We see the logic of this submission, but this is a matter of policy on which the court has no say.
However, the policy itself does not appear to have been stated very clearly.
On the provisions as they are it is difficult to say that the construction put forward on behalf of the third respondent is altogether implausible.
It is also true that there can be practical difficulties, whichever interpretation was adopted.
This being the position we should have thought that instead of leaving the law in such a slippery state, the State should clarify it by appropriate legislation so that the law may be clear and easily ascertainable by the concerned section of the public.
The appeal is allowed and the impugned order including the order of the Mysore State Transport Appellate Tribunal is set aside.
We make it clear that all we have decided in this case is that the Regional Transport Authority, Mandya, had jurisdiction to issue the permit to the appellant, whether the permit satisfies the other conditions of a valid inter regional permit did not arise for consideration in this appeal In the circumstances of the case we make no order as to costs.
S.R. Appeal allowed.
| The respondent, a director of a company was charged with offences under sections 418 and 471 read with sections 468 and 477A, I.P.C. on the ground that he defrauded the company.
At the trial, a single Judge of the High Court discharged the respondent on the view that he had no jurisdiction to proceed with the trial by reason of s.195(1)(c) of the Cr. P.C., 1898.
The full Bench of the High Court affirmed the view of the single Judge.
Allowing the appeals to this Court, ^ HELD: The High Court was entitled to proceed with the trial of the respondent in respect of offences under section 471 without any complaint in writing from the company Judge whom the proceeding was pending.
[938A] (1) Section 195(1)(c) of the Code of Criminal Procedure provides that no court shall take cognizance of an offence described in section 463 or punishable under sections 471, 475 and 476, Indian Penal Code where such offence is alleged to have been committed by a party to any proceeding in any court in respect of any document produced or given in evidence in such proceeding, except on the complaint in writing of such court or of some other court to which such court is subordinate.
The High Court had clearly and indubitably jurisdiction to proceed with the trial against the respondent in respect of offences under sections 418 and 477A. On its plain language the inhibition in section 195(1)(c) applies only where a person is being tried for an offence under section 463 or punishable under sections 471, 475 or 476.
Offences under 418 and section 477A are plainly not covered by section 195(1)(c) Cr.
P.C. [936 D G] (2) In regard to offences under section 471, I.P.C. it could not be said that the respondent could invoke the applicability of section 195(1)(c).
The offence under section 471 was committed by the respondent long before the proceeding in the Company matter commenced and he became a party to that proceeding, and it was not committed by him in his capacity as such party, i.e. after having become a party to the proceeding.
In Patel Laljibhai Somabhai vs The State of Gujarat this Court restricted the scope and ambit of section 195 (1)(c) to cases where the offence was alleged to have been committed by a party to a proceeding after he became such party and not before.
[936H, 937A D] Raghunath vs State of U.P., AIR 1973 S.C. 1100 and Mohan Lal vs The State of Rajasthan, AIR 1974 S.C. 299, referred to.
In the instant case since the offence charged against the respondent was one alleged to have been committed by him before he became a party to the proceeding in the company matter, section 195(1)(c) had no application.
Secondly, the forged bills had not been produced in evidence before the Company Judge in the proceeding before him.
The requirement of section 195(1)(c) that the document in question should be produced or given in evidence in the proceeding was, therefore, clearly not satisfied and on this ground also section 195(1)(c) was not attracted in the present case.
[937G, 938A]
|
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.
| Aggrieved by an Award of 195, the employees placed before the Company a fresh charter of demands which was mutually settled by a written agreement which provided, inter alia, that the existing rate of dearness allowance should prevail which was adjustable to any future substantial change in the cost of living index of the working class.
As the cost of living increased disputes arose, and in spite of the said Award of 1951, 137 which was not terminated according to law, the dispute arising out of the said written agreement was referred for adjudication by the Government to the Second Industrial Tribunal, Calcutta, in September, 1956.
In April 1957, the Government transferred the dispute from the Second Industrial Tribunal to the Fifth Industrial Tribunal.
The Company, inter alia, contended that the Government had no power to transfer the dispute from one Tribunal to another and that the reference was bad as the 1951 Award had not been duly terminated.
The Industrial Disputes (Amendment and Miscellaneous Provisions) Act (36 of 1956) amending the Industrial Disputes Act (14 Of 1947) came into force on August 28, 1956, giving authority to the Government to transfer a reference from one Tribunal to another, which was followed by a further amending Act, being Industrial Disputes (Amendment) Act (18 of 1957) whereunder among other things a new definition of 'Tribunal ' was given, whereby the Industrial Tribunal constituted prior to March 10, 1957, under section 7A of Act 14 Of 1947 was included.
Held, that as a result of the amendments to the , the Government had authority to transfer a case from one Tribunal to another. 'Tribunal ' as defined by section 2(r) of the , as amended by Act 36 of 1956, read with amending Act 18 of 1957, empowers the Government to transfer a reference from one Tribunal to another.
Where, in spite of a previous award, the employees after raising fresh demands entered into a new agreement with the employer which started a fresh chapter regulating the relationship of the parties, the previous award, though not terminated in accordance with the provisions of law, must be deemed to have been superseded.
Held, further, that though article 136 of the Constitution is couched in the widest terms and confers a discretionary power, (which cannot exhaustively be defined) on the Supreme Court to grant special leave to appeal from the order of a tribunal, but it is necessary for the Supreme Court to exercise its said discretionary jurisdiction only in cases (a) where there is a violation of the principle of natural justice, (b) raises an important principle of industrial law requiring elucidation and final decision by the Supreme Court, or (c) discloses such other exceptional or special circumstances which merit the final decision by the Supreme Court.
Such discretionary reserve power cannot obviously be so construed as to confer a right of appeal to any party from the decision of a Tribunal, where he has none under the law.
is intended to be a self contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration.
Awards are given on circumstances peculiar to each dispute and the Tribunals are to a 18 138 large extent free from restrictions of technical considerations imposed on courts.
A free and liberal exercise of the discretionary powers by the Supreme Court may materially affect the fundamental basis of the decision, namely, quick solution to such disputes to achieve industrial peace.
Where an Industrial Tribunal on the consideration of the entire material placed before it and having regard to the overall picture, came to a conclusion of facts, the Supreme Court will not interfere with such finding of fact nor will it be justified to allow to make a new case for the first time before it.
Pritam Singh vs State of Madras, ; ; Hem Raj vs State of Ajmer, and Sadhu Singh vs State of PEPSU, A.I.R. 1954 S.C. 272, referred to.
|
Civil Appeal No. 1733 of 1973.
From the Judgment and Order dated 26.7.1971 of the Bombay High Court in Income Tax Reference No. 112 of 1963.
G.C. Sharma, K.C. Dua and Miss A. Subhashini for the Appellant.
S.T. Desai, D.N. Misra and Mrs. A.K. Verma for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This appeal by special leave at the instance of the Revenue assails the decision of the Bombay High Court upon a reference under section 66 of the Income Tax Act, 1922 (hereinafter referred to as 'the Act ').
In respect of the assessment year 1954 55, the respondent assessee claimed deduction of a sum of Rs. 7,93,837, under section 10(1) or alternatively under 8.
10(2) (xv) of the Act in determining its business profits which the Income Tax Officer and the two appellate authorities in due course rejected.
On the application of the assessee the dispute regarding admissibility of the claim w referred to the High Court.
It agreed with the Tribunal that 'the assessee had acquired an asset of an enduring nature in lieu of the payment of the amount in dispute; yet, the High Court held that the payment represented business expenditure and the claim of deduction was tenable under 8.
10(2) (xv) of the Act.
On reaching this conclusion the Court was of the view that consideration as to whether the payment made by the assessee did not form part of its real income was unnecessary and answered the reference in favour of the assessee.
The Commissioner of Income Tax, on obtaining special leave, is in appeal before this Court.
The short facts relevant for appreciating the question for consideration are these: 520 M/s. Bharat Barrel & Drum Manufacturing Co. Ltd., ( 'Bharat Barrel ' for short) gave its sole selling agency to a firm Jalan Trading Co. by an agreement dated May 1, 1951, for two years with a right of renewal.
Assessee respondent is a private company incorporated on October 16, 1952.
& der a deed of assignment dated December 30, 1952, the benefits of the agreement dated May 1, 1951, were assigned to the assessee and from January 1, 1953, under the assignment the respondent carried on the business as selling agents of Bharat Barrel.
From May 1, 1953, on the basis of the option for renewal exercised by the assessee an agreement was entered into between Bharat Barrel and the assessee in respect of the sole selling agency and with a renewal clause.
The deed of assignment incorporated the following relevant terms: "WHEREAS after the incorporation of the said Company (assessee) lt was however agreed that the assignee company should take over not the whole of the business of the Assignors but only the benefit of the aforesaid contract dated the 1st May 1951 with the Said manufacturers on the terms and conditions mutually agreed to and as hereinafter appearing: 1.
In consideration of the premises and of the covenant on the part of the assignees hereinafter contain ed the Assignors as beneficial owners hereby assigns to the assignees: (i) The said agreement of the 1st day of May 1951 and made between the said Bharat Barrel & Drum Manufacturing Co. Ltd. Of the one part and the assignors of the other part and the full benefit thereof as and from the 1st day of January 1953 and all commission and other moneys payable or to be payable by the manufacturers; (ii) the full benefit of all pending contracts and orders entered into or given by the assignors in connection with the said agreement 2.
In consideration aforesaid the assignees hereby covenant with the assignors to pay to the assignors as and by way of Royalty an amount equivalent to 75% of their profits and commission remuneration and other 521 moneys received from the manufacturers under the said agreement or any further agreement that may be entered into by the Manufacturers with the Assignees in pursuance of the option to renew the agreement contained in cl. 5 of the said agreement dated 1st May 1951.
" Assessee claimed to have paid Rs. 7,93,887 being 75% of its net profits in the assessment year 1954 55 and claimed it as a business deduction but the same was rejected by the Assessing Officer as also the appellate authorities.
In dealing with the question raised, the Tribunal held: "The narrow question, therefore, that we have to decide in this case is whether the payment of Rs. 7,93,837 is made by the assessee for acquisition of an asset or benefit of an enduring character and, therefore, is of a capital nature.
In this the only relevant document to be considered, is the deed of assignment dated 30.12.1952.
Examining the said deed and particularly clause 2 therein which is already stated above, we think there is no doubt that the payment in question was made by the assessee to acquire the right to carry on the sole selling agency of Bharat Ltd. Or in any case to acquire a benefit of an enduring nature.
It is true that in this case no ascertained sum is mentioned for acquiring the right or the enduring benefit.
But in our opinion, this factor alone is not a decisive factor in every case.
The facts and the circumstances of every case have to be looked into and if on the whole it appears that what was acquired was an asset or an enduring benefit by expending a certain sum, the expenditure can well be held to be a capital expenditure and not a revenue expenditure.
In certain cases, it may well be that in conjunction with other facts, the fact that there is no ascertained sum mentioned in order to acquire the asset or the enduring benefit, would lead to the inference that the expenditure is not a capital expenditure.
But in this case, we have no doubt that the amount in question was spent for acquiring an asset of enduring benefit and, therefore, we have to hold that the expenditure in question was a capital expenditure. . " 522 The High Court also negatived the assessee 's stand that no enduring asset was acquired and held: We cannot accept the assessee 's submission that the asset acquired by it when lt obtained assignment of the sole selling agency agreement, is not of an enduring nature.
Counsel for the assessee says that the assessee only acquired the right to use the rights under the sole selling agency agreement and that is not an asset of a capital nature.
There is no warrant for the submission, because clause 1 of the deed of assignment provides in terms that the firm as a beneficial owner assigned to the assessee 'the said agreement of the 1st day of May 1951. . and the full benefit thereof as and from the 1st day of January 1953 and all commission and other moneys payable or to be payable. . by the manufacturers.
Secondly, the right which the assessee acquired under the deed of assignment was a right to act as the sole selling agents till the 1st day of May 1953 in the first instance, coupled with the right to have the sole selling agency agreement renewed for an indefinite period, though for two years at a stretch.
mere was some faint argument before us as to the true meaning and scope of the option of renewal, but we see no doubt that under the agreement of the 1st day of May 1951, the firm had the option to stipulate for a renewal on the same terms and conditions as were contained in that agreement, which must include the term regarding the option for a further renewal for an indefinite period.
m us, the assessee obtained an assignment of the agreement between the Company and the firm.
That agreement contained the right to have the sole selling agency agreement renewed for an indefinite period.
It must follow that the assessee acquired an asset of an enduring nature.
Ordinarily, out of this finding the conclusion would have followed that the claim of deduction was not admissible as the expenditure was for acquisition of a capital asset.
The High Court, however, referred to this Court 's decision in Travancore Sugars & Chemicals Ltd. vs Commissioner of Income Tax, Kerala, = ; and adopting the reasonings relied upon in that case to which we shall presently refer, came to hold: 523 In view of these circumstances, the Supreme Court held that the payment of the annual sum was not in the nature of capital expenditure but was in the nature of revenue expenditure.
Each one of the three features adverted to by the Supreme Court is present in the instant case.
and proceeded to conclude the matter by saying: We take the view that the case before us is in material respects similar to the Travancore Sugar case.
" The High Court did not examine the aspect relating to whether the payment made by the assessee did not form part of its real income by saying: 'It is enough for our purpose that the payment is deductible under section 10(2) of the Act.
A four Judge Bench of this Court in Assam Bengal Co. Ltd. vs Commissioner of Income Tax, West Bengal, 27 I.T.R. 34=[1955] 1 S.C.R. 972, indicated that the line of demarcation between capital expenditure and revenue expenditure is very thin.
Several English decisions were referred to and the Court approved the opinion of the Full Bench of the Lahore High Court in Benarsidas Jagannath, In re. , where Mahajan, J. (as he then was), speaking for the Court, had successfully attempted a synthesis.
This Court observed: The synthesis attempted by the Full Bench of the Lahore High Court truly enunciates the principles which emerge from the authorities.
In cases where the expenditure is made for the initial outlay or for extension of a business or a substantial replacement of the equipment, there is no doubt that it is capital expenditure.
A capital asset of the business is either acquired or extended or substantially replaced and that outlay whatever be its source whether it is drawn from the capital or the income of the concern is certainly in the nature of capital expenditure.
The question however arises for consideration where expenditure is incurred while the business is going on and is not incurred either for extension of the business or for the substantial replacement of its equipment.
Such expenditure can be looked at either from the point of view what is acquired or from the point of view of what is the 524 source from which the expenditure is incurred.
If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure.
If on the other hand it is made not for the purpose of bringing into existence any such asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure.
If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically.
The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure.
The source or the manner of the payment would then be of no consequence.
It is only in those cases where this test is of no avail that one may go to the test of fixed or circulating capital and consider whether of the business or part of its circulating capital.
If it was part of the fixed capital of the business it would be of the nature of capital expenditure and if it was part of its circulating capital it would be the nature of revenue expenditure.
These tests are thus mutually exclusive and have to be applied to the facts of each particular case in the manner above indicated.
It has been rightly observed that in the great diversity of human affairs and the complicated nature of business operations it is difficult to lay down a test which would apply to all situations.
One has therefore got to apply these criteria one after the other from the business point of view and come to the conclusion whether on a fair appreciation of the whole situation the expenditure incurred in a particular case is of the nature of capital expenditure or revenue expenditure in which latter event only it would be a deductible allowance under section 10(2) (xv) of the Income tax Act.
The question has all along been considered to be a question of fact to be determined by the Income tax authorities on an application of the broad principles laid down above and the Courts of law would not ordinarily interfere with such finding of fact if they have been arrived at on a proper application of these principles.
(emphasis ours) 525 In that case before this Court, a lease was obtained with certain stipulations including the payment of a sum of Rs. 5,000 per year.
The Court found that it was an enduring benefit for the benefit of the whole business of the company.
The fact that it was a recurring payment was immaterial because one had got to look to the nature of the payment which in its turn was determined by the nature of the asset which the company had acquired.
The asset which the Company had acquired in consideration of this recurring payment the right to carry on its business unfettered by any competition from outsiders within the area was in the nature of a capital asset and, therefore, the payment was not deductible under section 10(2) (xv) of the Act.
The broad tests laid down by this Court in Assam Bengal Cement Co. Ltd. 's case have been accepted in several subsequent decisions of this Court as also by the High Courts in India.
The facts in Travancore Sugars & Chemical 's case were peculiar.
The assessee in that case purchased Travancore Sugar Ltd., a Government distillery at Negercoil and the business assets of a Government Tincture Factory at Trivandrum under an agreement dated June 18, 1937, entered into between the Government of Travancore and the promoters of the assessee company.
Under the agreement, cash consideration of Rs. 3,25,000 was to be paid for buying the assets of Travancore Sugars Ltd. In regard to the distillery, the sale price had to be arrived at on the basis of joint valuation by the Engineers to be appointed by the parties.
As regards the Tincture Factory, the book valuation was to be adopted for fixing the consideration.
The existing distillery licence was agreed to stand recognised in the hands of the assessee for a period of five years after its termination.
Government also undertook to purchase pharmaceutical products manufactured by the assessee at the Tincture Factory.
Government reserved the right to nominate a director on the Board of Directors of the assessee company without voting powers.
The agreement further stipulated payment to Government of 20% of the net profits earned by the company every year subject to a limit of Rs. 40,000 per annum and certain other payments were also undertaken.
The 20% stipulation was reduced to 10% by a subsequent agreement.
The question that fell for consideration was whether payment of Rs. 42,480 by the assessee company to the Travancore Government in terms of the agreement referred to above as modified, was allowable expenditure under section 10 of the Act in the year under consideration.
This Court stated: It is often difficult, in any particular case, to decide and determine whether a particular expenditure 526 is in the nature of capital expenditure or in the nature of revenue expenditure.
It is not easy to distinguish whether an agreement is for the payment of price stipulated in instalments or for making annual payments in the nature of income.
The Court has to look not only into the documents but also at the surrounding circumstances so as to arrive at a decision as to what was the real nature of the transaction from the commercial point of view.
No single test of universal application can be discovered for a solution of the question.
The name which the parties may give to the transaction which is the source of the receipt and the characterization of the receipt by them are of little consequence.
The Court has to ascertain the true nature and character of the transaction from the convenants of the agreement tested on the light of surrounding circumstances.
So far as these observations formulating the tests are concerned, they are not different from those laid down by this Court in Assam Bengal Cement Co. 's case.
The Court then proceeded to apply these tests to the facts of the case and observed: Examining the transaction from this point of view, it is clear in the present case that the consideration for the sale of the three undertakings in favour of the appellant was: (1) the cash consideration mention ed in the principal agreement, viz., clauses 3, 4(a) and 5(a); and (2) the consideration that Government shall be entitled to twenty per cent of the net profits earned by the appellant in every year subject to a maximum of Rs. 40,000 per annum.
With regard to the second part of the consideration there are three important points to be noticed.
In the first place, the payment of commission of twenty per cent on the net profits by the appellant in favour of the Government is for an indefinite period and has no limitation of time attached to it.
In the second place, the payment of the commission is related to the annual profits which flow from the trading activities of the appellant company and the payment has no relation to the capital value of the assets.
In the third place, the annual payment of 20 per cent commission every year is not related to or tied up, in any way, to any fixed sum agreed between the undertakings.
There is not 527 reference to any capital sum in this part of the agreement.
On the contrary, the very nature of the payments excludes the idea that any connection with the capital sum was intended by the parties.
It is true that the purchaser may buy a running concern and fix a certain price and the price may be payable in a lump sum or may be payable by instalments.
The mere fact that the capital sum is payable by instalments spread over a certain length of time will not convert the nature of that payment from the capital expenditure into a revenue expenditure, but the payment of instalments in such a case would always have some relationship to the actual price fixed for the sale of the particular undertaking.
As we have already mentioned, there is no specific sum fixed in the present case as an additional amount of price payable in addition to the cash consideration and payable by instalments or by any particular method.
In view of these facts we are of opinion that the payment of the annual sum of Rs. 42,480 in the present is not in the nature of capital expenditure but is in the nature of revenue expenditure and the judgment of the High Court of Kerala on this point must be overruled.
As we have already observed, the facts in this case were peculiar.
There was a substantial amount of outright cash payment over and above which the indefinite annual payment had been stipulated.
It is interesting to note that this Court by its judgment in Travancore Sugars & Chemicals Ltd. had sent down the matter to the High Court for a re disposal and the very matter again came before this Court, this time at the instance of the Revenue and the judgment is reported in Commissioner of Income Tax, Kerala vs Travancore Sugars & Chemicals Ltd. = At page 10 of the Reports, this Court observed: "In considering the nature of the expenditure incurred in the discharge of an obligation under a contract or a statute or a decree or some similar binding covenant, one must avoid being caught in the maze of judicial decisions rendered on different facts anc which always present distinguishing features for a comparison with the facts and circumstances of the case in hand.
Nor would it be conducive for clarity or 528 for reaching a logical result if we were to concentrate on the facts of the decided cases with a view to match the colour of the case with that of the case which requires determination.
The surer way of arriving at a just conclusion would be to first ascertain by reference to the expenditure is created and thereafter to apply the principle emblamed in the decisions of those facts.
Judicial statements on the facts of a particular case can never assist courts in the construction of an agreement or a statute which was not considered in those Judgments or to ascertain what the intention of the legislature was.
What we must look at is the contract or the statute or the decree, in relation to its terms, the obligation imposed and the purpose for which the transaction was entered into.
We agree with these observations.
The tests indicated by this Court in Travancore Sugars & Chemicals were not intended to be of general application but were given to bring into bold relief the special aspects of the case as the learned Judges themselves stated.
The High Court committed a mistake In importing these reasonings as tests of general application to be applied to the facts of the present case though the facts were indeed quite different.
As already pointed out, there was a definite sum of cash consideration in Travancore Sugars Chemicals ' case and the special features were taken into account.
In the dispute before us the High Court was categorically found that a capital asset had been acquired under the arrangement.
Admittedly, the assessee was a new company and it had no other business.
It acquired under the contract stipulating to pay 75% of its annual net profits, the right to carry on the business on a long term basis subject to the renewal of the agreement.
The first of the broad tests laid down in Assam Bengal Cement Co. 's case that the expenditure was made for the initial outlay squarely applies and on the finding that a capital asset had been acquired (a finding which has not been disputed before us) we must hold that the expenditure related to acquisition of a capital asset and was not admissible as a deduction under section 10(2) (xv) of the Act.
With this conclusion of ours and no more, the appeal deserved to be allowed.
Mr. S.T. Desai for the assessee respondent thereupon sought to raise the contention that once the assessee had paid 75% of its profits of the year, the 529 amount claimed as a deduction was no more in its hands as income and on the principle of real income in the hands of the assessee, we should hold the same was not income within the meaning of s.10(1) of the Act.
Initially, objection was raised to this move of Mr. Desai by learned counsel for the Revenue on the ground that such a plea had not been canvassed in the earlier stages of the matter.
The question referred to the High Court did raise the issue and the High Court in the penultimate paragraph of its judgment had declined to go into this question by saying that it was sufficient for the disposal of the reference once it took the view that the payment was deductible under section 10(2) (xv) of the Act.
Mr. Desai wanted this aspect of the matter to be sent back to the High Court, but we were not inclined to do so in consideration of the fact that the assessment is for the year 1954 55 a period three decades away.
Thereupon, counsel for both sides agreed to advance their arguments in regard to this aspect to enable this Court to finally deal with this question avoiding remand.
Section 10(1) of the Act provides: The tax shall be payable by an assessee under the head 'Profits & gains of business, profession or vocation ' in respect of the profits and gains of any business, profession or vocation carried on by him.
Tax, therefore, under the provision is payable on income and if income is not earned by the assessee no tax is payable.
It follows that tax is leviable on the real income in the hands of the assessee.
Mr. Desai for the assessee has maintained that when 75% of the net profits have been paid to the partnership firm, the real income in the hands of the assessee was reduced to 25% of the net profits and that amount alone was assessable to tax.
F M/s. Jalan Trading Co., the partnership had initially been appointed as the sole selling agent.
On October, 16, 1952, the assessee company came to be incorporated and soon after incorporation by agreement the rights of the firm were assigned to the assessee company.
Neither the Income Tax Officer nor the two appellate authorities and nor even the High Court went into the question as to whether the assessee was in fact separate from, and independent, of the partnership firm.
It is true that the tenability of the claim of deductibility as a business expenditure of the amount was examined by taking it for granted that the payment had been made by the assessee to the firm.
But the exact position having not been investigated no finding has been recorded at any stage.
The fact that the partnership and the 530 assessee company bear the same name and soon after incorporation the agreement assigning the firm 's rights in favour of the company had been entered, had obviously led the Income Tax Officer to doubt the bona fides.
That is why in his order of assessment the Income Tax Officer had observed: "The payment is also not allowable as it is only an apportionment of profits as pointed out above, as it is nothing but 75% of the net profits of the assessee company and although it has been written to the profit and loss account actually it is nothing but an apportionment of profits and as such the amount is not allowable.
The Appellate Assistant Commissioner took note of the position that the assessment of Jalan Trading Co., the firm, was not before him and observed: "The amount claimed cannot also be regarded as deduction in the trading account itself because the royalty is ascertained ultimately on the profits and does not go to add to the cost of the drums that are purchased from the manufacturers.
Therefore, there can be no question of giving any deduction under section 10(1) of the Act.
The concept of 'real income ' apparently based on the decision of the Bombay High Court in the case of 31 I.T.R. 735 has also no relevance because there is no question.
Of any deviation of profits of the appellant company by any overriding title.
The Appellate Tribunal in answer to the reiteration of the point raised, said: "Shri Mistry next submitted that the amount in question is also deductible under section 10(1) as a trading item and in any event what is to be determined is the assessee 's real income and that can only be determined after deducting from the assessee 's total income the amount paid to M/s. Jalan Trading Co. It was also stated that in the hands of the recipient the said amount of Rs. 7,93,000 and odd was assessed as revenue receipts and assessing the same in the hands of the assessee would amount to double taxation.
In our opinion, this later submission of Shri Mistry can easily be disposed of because even though the real 531 income of the assessee is to be taxed, it is not that each and every outgoing is to be taken into consideration in arriving at the real income of the assessee and if the outgoing is in fact of a capital nature, the same can never be considered as an allowable deduction under the Act.
We are impressed by the argument advanced on behalf of the Revenue that if the amount had been spent for obtaining a capital asset, the assessee would not be entitled to claim it as a deduction under s.10(1) of the Act and on the principle of taxation that income tax is to be levied on the real income, the amount paid for obtaining capital asset would not be deductible.
In such circumstances, we are inclined to agree with the appellant 's submission that there is no merit in this aspect of the matter and no relief is admissible to the assessee on that score.
We allow the appeal and vacate the Judgment of the High Court and direct that the Tribunal 's decision shall be given effect to.
Parties are directed to bear their own costs both before the High Court as also this Court.
P.B.R. Appeal allowed.
| A firm (JTC) obtained the sole selling agency for the products of a manufacturer for two years with a right of renewal.
A few months later, under a deed of assignment, the firm assigned the benefits of the agreement to the assessee company under which the assessee carried on the business as sole selling agents for the products of the manufacturer.
Under the deed of assignment the assessee company should take over not the whole of the business of the firm but only the benefit of the contract with the manufacturers in consideration whereof the assessee was to pay to the firm as and by way of royalty, an amount equal to 75% of their profits and commission, remuneration and other moneys received from the manufacturers.
The assessee had the option to renew the agreement.
In its income tax return the assessee claimed under section 10 (1) (sv) of the Act deduction of a sum of Rs. 7.93 lacs, which under the deed of assignment lt was required to pay to the firm, but the authorities below rejected the claim.
On appeal the Appellate Tribunal held that although no ascertained sum was mentioned for acquiring the right or the enduring benefit, the amount was spent by the assessee for acquiring an asset of enduring benefit, and therefore, the expenditure was capital expenditure.
On reference although the High Court held that the asset acquired by the assessee was of an enduring nature, purporting to follow the decision of this Court in Travancore Sugars Chemicals Ltd. vs Commissioner of Income Tax, Kerala lt held that the annual payment by the assessee of 75% of its profits was not in the nature of capital expenditure.
It was contended on, behalf of the Revenue that if the amount had been spent for obtaining a capital asset the assessee would not be entitled to claim it as a deduction.
518 On behalf of the assessee it was contended that once the assessee had paid 75% of its profits to the firm, the amount was no more in its hands as income and since 8.
10(1) envisage the levy of tax on real income in the assessee 's hands this was / t income within the meaning of S.10(1) and was not taxable.
Allowing the appeal, ^ HELD: On the finding of the High Court that the expenditure related to acquisition of a capital asset, it was not admissible as a deduction under section 10(2) (xv) of the Indian Income Tax Act 1922.
[528 G].
It is well settled that if an expenditure is made for acquiring or bringing into existence of an asset for the enduring benefit of the business, it is properly attributable to capital and is of the nature of capital expenditure.
The aim and object of the expenditure would determine, whether it is capital expenditure or revenue expenditure.
The source or the manner of the payment would be of no consequence.
Where a company had acquired an asset in consideration of recurring payment of certain sum per year which was a right to carry on its business unfettered by any competition from outsiders within the area it was held to be in the nature of a capital asset and the payment was not deductible under section 10(2) (xv) of the Act.
[524 A,C,G] Assam Bengal Cement Co. Ltd. vs Commissioner of Income Tax = [1955] S.C.B. 1972 applied.
In Travancore Sugars and Chemicals Ltd. which the High Court purported to follow there was a substantial aud definite amount of outright cash payment over and above which an indefinite annual payment had been stipulated.
The tests laid down in this case were not intended to be of general application but were given to bring into bold relief the special aspects of the case.
The Court itself has pointed this out.
Therefore, the High Court erred in importing this reasoning as a test of general application to be applied to the facts of the prevent case.
[528 D,E] In the instant case, the High Court has categorically found that a capital asset had been acquired under the agreement.
The assessee was a new company and had no other business.
Under the contract lt acquired the right to carry on the business on a long ter basis subject to renewal of the agreement.
Therefore, 519 the first of the broad tests l it down in Assam Bengal cases that A the expenditure was made for initial outlay applied and on the finding that a capital asset had been acquired, the expenditure is not liable as a deduction.
[528 F G] 2.
There is no merit in the assessee 's submission.
If the amount had been spent for obtaining a capital asset, the assessee would not be entitled to claim it as a deduction under section 10(1) (xv).
[531 C]
|
ax Reference Case No. 15 of 1975.
Tax Reference under Section 257 of the Income Tax Act, 1961 made by the Income Tax Appellate Tribunal Delhi Bench R.A. No. 508 of 1971 72 arising out of I.T.A. No. 3410 of 70 71 for assessment year 1964 65.
section L. Aneja and K. L. Taneja for the Appellant.
section C. Manchanda, G. A. Shah and Miss A. Subhashini for the Respondent.
The Judgment of the Court was delivered by PATHAK, J.
Is an assessee, who has concealed the particulars of his income, liable to penalty under clause (iii) of sub section (1) of section 271 of the Income Tax Act, 1961 as it stood on the date of the concealment or as it stand during the assessment year relevant to the previous year in which the income was earned ? That is the question in this reference made by the Income Tax Appellate Tribunal under section 257 of the Income Tax Act.
The assessee is a partner in two firms, Messrs. Hindustan Pottery Agency and Messrs. New Crockery House.
He filed a return of his total income for the assessment year 1964 65 on April 201 24, 1968.
He disclosed an income of Rs. 460/ from his share in the profits of Messrs. Hindustan Pottery Agency.
He did not disclose the income from his share in Messrs. New Crockery House.
In the course of the assessment proceedings, the Income Tax officer found that the assessee had received income from Messrs. New Crockery House also.
Because of non compliance by the assessee with a notice issued under section 143 (2) of the Act, the Income Tax officer made a best judgment assessment under Section 144 of the Act on a total income of Rs. 12,118/ .
This included a share income of Rs. 1,462/ from Messrs. Hindustan Pottery Agency and a share income of Rs. 3,456/ from Messrs. New Crockery House.
Certain other items of income were also included.
On appeal by the assessee, the Appellate Assistant Commissioner reduced the income from Messrs. New Crockery House to Rs. 2,955/ and taking into account certain other items determined the figure of concealed income at Rs. 7,357.
The Income Tax officer instituted penalty proceedings, and applied clause (iii) of sub section (1) of section 271 of the Act, as it stand after amendment by the Finance Act, 1968.
Having regard to the minimum penalty which, in his opinion, was leviable, he referred the case to the Inspecting Assistant Commissioner.
The Inspecting Assistant Commissioner examined the matter, and on the basis that the concealed income was Rs. 7,357/ he imposed a 13 penalty in the like sum, in view of the amended clause (iii) of subsection (1) of section 271 of the Act.
The assessee appealed to the Income Tax Appellate Tribunal, and contended that the amended provision could not be invoked and what came into operation was the law as it stood in the assessment year 1964 65.
The Tribunal rejected the contention.
But it reduced the penalty to Rs. 2,955/ taking the view that the assessee was guilty of concealing the share income from Messrs. New Crockery House only.
The assessee then applied for a reference.
The Tribunal saw a conflict of opinion on the point raised by the assessee between the Kerala High Court in Hajee K. Asseinar vs Commissioner of Income Tax, Kerala and the Punjab and Haryana High Court in Income Tax Reference No. 45 of 1971 (decided on April, 26, 1972) which had followed Saeed Ahmed vs Inspecting Assistant Commissioner of Income tax, Range ll, Lucknow(2) decided by the Allahabad High Court .
In the circumstances, it made the present reference directly to this Court on the following question of law: 202 "Whether the Tribunal was, in law, right in sustaining the penalty of Rs. 2,955/ by applying the provisions of section 271(1)(c) (iii) of the Income Tax Act, 1961 as amended with effect from 1 4 1968 ?" Section 271 of the Income Tax Act provides for penalties in certain cases.
Clause (c) of sub section (1) of section 271 speaks of a case where the Income Tax officer is satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income.
The measure of the penalty is specified in clause (iii) of the sub section.
During the assessment year 1964 65, clause (iii) read "(iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than twenty per cent but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income." That clause was substituted with effect from April 1, 1968 by the Finance Act, 1968 by the following: "(iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished. ' It is evident that the quantum of tax which is levied under the substituted clause (iii) can be greater than that imposable in terms of the original clause (iii).
The case of the assessee is that an assessment proceeding for the determination of the total income and the computation of the tax liability must ordinarily be made on the basis of the law prevailing during the assessment year, and inasmuch as concealment of income is concerned with the income relevant for assessment during the assessment year any penalty imposed in respect of concealment of such income must also be governed by the law pertaining to that assessment year.
We are unable to accept the contention.
In our opinion, the assessment of the total income and the computation of tax liability is a proceeding which for that purpose, is governed by entirely different considerations from a proceeding for penalty imposed for concealment of income And this is so notwithstanding that the income concealed is the income assessed to tax.
203 In the case of the assessment of income and the determination of the consequent tax liability, the relevant law is the law which rules during the assessment year in respect of which the total income is assessed and the tax liability determined.
The rate of tax is determined by the relevant Finance Act.
In the case of a penalty, however, we must remember that a penalty is imposed on account of the commission of a wrongful act, and plainly it is the law operating on the date on which the wrongful act is committed which determines the penalty.
Where penalty is imposed for concealment of particulars of income, it is the law ruling on the date when the act of concealment takes place which is relevant.
It is wholly immaterial that the income concealed was to be assessed in relation to an assessment year in the past.
We do not think that the cases to which the Tribunal has referred can be said to differ on this.
The concealment of the particulars of his income was effected by the assessee when he filed a return of total income on April 24, 196$,.
Accordingly, it is the substituted clause (iii), brought in by the Finance Act.
1968, which governs the case.
That clause came into effect from April 1, 1968.
Another contention raised by the assessee may be noticed.
It is urged that under section 139 of the Income Tax Act, as it stood during the assessment year 1964 65 the return of income should have been filed by the end of September, 1964 and inasmuch as the return, although filed as late as April 24, 1968, was accepted by the Income Tax officer it should be deemed that the return was treated as filed within time or, in other words, that the return had been filed by September 3(), 1964.
In that event, the submission continues, the concealment of the particulars of income must be deemed to have taken place when the original clause (iii) of section (1) of section 271 of the Act was in operation.
This contention is also without force.
Under section 139 of the Act, although the statute itself prescribes the date by which a return of income must be filed, power has been conferred on the Income Tax officer to extend the date of furnishing the return.
A return filed within the extended period is a good return in the sense that the Income Tax officer is bound to take it into consideration.
But nowhere does section 13 declare that where a return is filed within the extended period it will be deemed to have been filed within the period originally prescribed by the statute.
On the contrary, the section contains a provision for payment of interest where the return is filed beyond the 204 prescribed date even though within the extended period.
That is evidence of the fact that the return filed during the extended period is not regarded by the statute as filed within the time originally prescribed.
Accordingly, we are of opinion that clause (iii) substituted in sub section (1) of section 271 of the Income Tax Act, 1961 by the Finance Act, 1968, governs the case before us and, therefore, the penalty imposed on the assessee in the instant case is covered by that provision.
We answer the question in the affirmative, in favour of the Revenue and against the assessee.
The Revenue is entitled to its costs of this Reference.
| Section 271(1)(c)(iii) provided that where the Income Tax officer had reason to believe that the assessee had concealed particulars of his income or furnished inaccurate particulars of such income he may impose a penalty of a sum in addition to any tax payable by the assessee which shall not be less than twenty per cent but which shall not exceed one and a half times the amount of the tax.
The Finance Act 1968, which came into effect from April 1, 1968, enhanced the penalty to a sum which shall not be less than 7 but which shall not exceed twice.
the amount of income in respect of which the particulars have been concealed or inaccurate particulars have been furnished.
The assessee filed a return of his total income for the assessment year 1964 65 on 24th April, 1968.
In the course of assessment proceedings, the Income Tax officer found that the assessee had concealed the income earned from one of his two firms.
Having regard to the minimum penalty which he considered was leviable, he referred the case to the Inspecting Assistant Commissioner.
The Inspecting Assistant Commissioner imposed a penalty in respect of the concealed income in accordance with section 271 (1) (c) (iii) as amended by the Finance Act 1968.
It was argued on behalf of the assessee that (i) assessment proceeding for the determination of total income and computation of tax liability must ordinarily he made on the basis of the law prevailing during the assessment year, and inasmuch an concealment of income is concerned with the income relevant for assessment during the assessment year any penalty Imposed in respect of concealment of such income must also be governed by the law pertaining to that assessment year, (ii) under section 139 of the Act as it stood during the assessment year 1964 65, the return of income should have been filed by the end of September 1964 and as the return although filed on April 24, 1968 was accepted by the Income Tax officer and therefore should be deemed to have been filed within time i.e. by September 30, 1964 the penalty would be governed by the section as it originally stood then.
^ HELD: 1.
Clause (iii) substituted in sub section (1) of section 271 of the Income Tax Act, 1961 by the Finance Act, 1968, governs the case.
Therefore, the penalty imposed on the assessee in the instant case is covered by that provision [204B] 2.
The assessment of the total income and the computation of tax liability is a proceeding which for that purpose, is governed by entirely different considerations from a proceeding for penalty imposed for concealment of income.
And this is so notwithstanding that the income concealed is the income assessed 200 to tax.
In the case of the assessment of income and the determination of the consequent tax liability, the relevant law is the law which rules during the 1 assessment year in respect of which the total income is assessed and the tax liability determined.
The rate of tax is determined by the relevant Finance Act.
In the case of a penalty, however, it is imposed on account of the commission of a wrongful act.
It is the law operating on the date on which the wrongful act is committed which determines the penalty.
Where penalty is imposed for concealment of particulars of income, it is the law ruling on the date when the act of concealment takes place which is relevant.
It is wholly immaterial that the income concealed was to be assessed in relation to an assessment Year in the past.
[202G H, 203A C] 3.
Under section 139 of the Act, although the statute itself prescribes the date by which a return of income must be filed, power has been conferred on the Income Tax Officer to extend the date of furnishing the return.
A return filed within the extended period is a good return in the sense that the Income Tax officer is bound to take it into consideration.
But nowhere does section 139 declare that where a return is filed within the extended period it will be deemed to have been filed within the period originally prescribed by the statute.
On the contrary, the section contains a provision for payment of interest where the return filed beyond the prescribed date even though within the extended period.
That is evidence of the fact that the return filed during the extended period is not regarded by the statute as filed within the time originally prescribed.
[203 F H, 204A]
|
ivil Appeal No. 479 of 1986.
578 From the Judgment and Order dated 18.3.
1985 of the Assam High Court in Civil Rule No. 139 of 1979.
A.K. Ganguli, A. Mariarputham, A.D. Sikri and Dilip Tandon for the Appellant.
Kapil Sibal, Additional Solicitor General, Rajiv Dhawan, Gopal Singh, C.V.S. Rao, Adv.
(NP) and R.B. Misra for the appearing respondents.
Hardev Singh and section Ravindra Bhat for the intervenor.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This appeal by special leave calls in question the judgment of the Guwahati High Court dated March 18, 1985, dismissing the appellant 's writ petition.
The appellant is a resident of Tripura State.
In his application in a representative capacity before the High court he main tained that he belonged to the Laskar community which had always been treated in the erstwhile State of Tripura as a Scheduled Tribe and on that basis in the State records was included in the Deshi Tripura community long before integra tion of the Ruler 's State of Tripura with the Union of India.
Members of the Laskar community freely enjoyed all the benefits available to members of the Schedule Tribes until in 1976 the State Government decided to treat members of that community as not belonging to the Scheduled Tribes and issued instructions to the State authorities to imple ment the Government decision.
That led to the filing of the petition before the High Court.
In the writ petition appel lant prayed for appropriate directions to continue to treat the appellant and members of his community as belonging to the Scheduled Tribes and for a direction to the State Gov ernment to extend all the benefits admissible to members of the Scheduled Tribes to members of the Laskar community.
Before the High Court the respondents disputed the claim and maintained that the Laskar community was never included in the Scheduled Tribes Order and as such there was no question of exclusion from the list.
A historical study of the claim would show that in the past Tripura/Tripuri/Tippera which have been included in the Presidential Notification never included the Laskar community.
Tripuras were.
a TibetoDurman race akin to the Shan tribe and Tipperas were divided into four groups, namely, (i) Puran or original Tipperas; (ii) Jamatias; (iii) Noatias or Nutan Tripuras and (iv) Riangs.
Respondents relied upon Government records and official publications in support of the aforesaid stand.
579 Before the High Court two circulars of the erstwhile State of Tripura, one being of December, 1930, and the other of February, 1941, as also the census report of the ex State of Tripura were produced in support of the claim advanced by the appellant.
Several authorities of this Court were relied upon for finding out the scope of enquiry in a claim of this type and ultimately by the impugned judgment the High Court dismissed the writ petition but on the basis of a statement made by the Advocate General appearing for the State, it recorded: "We keep on record the statement made by the learned Advo cate General, Tripura, on instruction that as a result of the impugned Memorandum No. 18887 19077/TW/6 4(L D) dated 28.4.
1979 the certificates already issued would be treated as infructuous prospectively and not retrospectively and those who have already enjoyed the benefits by virtue of such Scheduled Tribe certificates they shall not be deprived of the benefits they have already enjoyed and the Memorandum shall be effective from its date prospectively insofar as the future benefits are concerned.
" This appeal had come up for final hearing earlier and by a brief judgment reported in , a two Judge Bench recorded the following order: "The record before us shows that the people of the Laskar community have been treated as members of the Scheduled Tribes and there have been some letters from the Government of India to the State Government in support of that posi tion; it is, however, a fact that there has been no clear inclusion of the community in an appropriate Presidential Order.
The appellant has maintained that even in the absence of such a clear specification in a Presidential Order, as a sub group under one of the notified categories, the appel lant 's community has been enjoying the privileges.
We have been told by the learned counsel for the Union of India that the representation made by the appellant and members of his community for inclusion in the Presidential Order under Article 342 of the Constitution is being looked into and is being placed before the Parliamentary Committee in accord ance with the prescribed procedure for a review of the position.
He has assured us that the Government of India will take steps to finalise the matter at an 580 early date and may in compliance with the procedure as prescribed, take a final decision.
In case the community is not included in the Presidential Order, it would be open to the appellant to take such action as may be available in law.
" The appellant waited for some time and approached the Government of India for quick action but when nothing hap pened, an application for directions was made in this Court.
Several adjournments were taken but Government could not take any decision.
Ultimately, by consent of parties, the order disposing of the appeal was recalled and the appeal was directed to be set down for re hearing.
That is how the appeal is now before us.
Articles 341 and 342 of the Constitution deal with Scheduled Castes and Scheduled Tribes respectively and contain almost identical provision.
We may extract Article 342 dealing with Scheduled Tribes: "342.(1) The President may, with respect to any State or Union Territory and where it is a State after consultation with the Governor thereof, by public notification, specify the tribes or tribal communities or parts of or groups within tribes or tribal communities which shall for the purposes of this Constitution be deemed to be Scheduled Tribes in relation to that State or Union Territory, as the case may be.
(2) parliament may by law include in or exclude from the list of Scheduled Tribes specified in a notification issued under clause (1) any tribe or tribal community or part of or group within any tribe or tribal community, but save as aforesaid a notification issued under the said clause shall not be varied by any subsequent notification.
" Article 366(25) defines 'Scheduled Tribes ' to mean such tribes or tribal communities or parts or groups within such tribal communities as are deemed under article 342 to be Sched uled Tribes for the purposes of this Constitution.
The Constitution (Scheduled Tribes) (Union Territories) Order, 1950 relating to Tripura included 19 tribes within the notification.
Items 15, 16, 17 and 18 are relevant for our purpose and they were: "15.
Tripura or Tripuri, Tippera.
581 16.
Jamatia 17.
Noatia 18.
Riang" Following the Reorganisation Act (37 of 1956), the Ministry of Home Affairs on October 29, 1956, notified the list of Scheduled Castes and Scheduled Tribes.
In respect of the then Union Territory of Tripura the same communities were relisted.
Then came the NorthEastern Area (Reorganisa tion) Act (81 of 1971) which in the Fourth Schedule con tained amendment to the Constitution (Scheduled Tribes) Order, 1950.
Items 15 to 18 in the Scheduled contained the same descriptions.
The Scheduled Castes & Scheduled Tribes Orders (Amendment) Act, (108 of 1976) in relation to Tripura in the Second Scheduled carried the same in Entries 7, 14, 16 and 18.
It is, therefore, clear that in Tripura the scheduled tribes within the meaning of the definition given in article 366 of the Constitution have been the following: 'Jamatia, Noatia, Riang and Tripura/Tripuri/Tippera ' apart from 15 other tribes as specified.
It is not necessary to refer to the 15 others inasmuch as it is the case of the appellant that Laskars are a part of the tribe named as Tripura, Tripuri or Tippera covered by Entry 18.
Before adverting to the evidence upon which the appel lant relies in support of his stand, it is necessary that the scope of enquiry to be conducted in this regard by the Court may be determined.
There are precedents of this Court which have to be first referred to.
A Constitution Bench in the case of B. Basavalingappa vs D. Munichinnappa, ; examined the provisions of article 341 which contained similar provisions for the scheduled castes with reference to an election dispute.
Wanchoo, J. spoke for the Constitu tion Bench thus: "Clause (1) provides that the President may with respect to any State, after consultation with the Governor thereof, by public notification, specify the castes, races or tribes or parts of or groups within castes, races or tribes which shall for the purposes of the Constitution be deemed to be Scheduled Castes in relation to that State.
The object of this provision obviously is to avoid all disputes as to whether a particular caste is a Scheduled Caste or not and only those castes can be Scheduled Castes which are notified in the Order made by the President under article 341 after consultation with the Governor where it relates to 582 such castes in a State.
Clause (2) then provides that Par liament may by law include in or exclude from the list of scheduled castes specified in a notification issued under cl.
(1) any caste, race or tribe or part of or group within any caste, race or tribe.
The power was thus given to Par liament to modify the notification made by the President under cl.
Further cl.
(2) goes on to provide that a notification issued under cl.
(1) shall not be varied by any subsequent notification, thus making the notification by the President final for all times except for modification by law as provided by cl.
Clearly therefore article 341 provides for a notification and for its finality except when altered by Parliament by law . .
Therefore in view of this stringent provision of the Constitution with respect to a notification issued under cl.
(1) it is not open to any one to include any caste as coming within the notification on the basis of evidence Oral or documentary, if the caste in question does not find specific mention in the terms of the notification . .
It may be accepted that it is not open to make any modification in the Order by producing evidence to show (for example) that though caste A alone is mentioned in the Order, caste B is also a part of caste A and there fore must be deemed to be included in caste A.
It may also be accepted that wherever one caste has another name it has been mentioned in brackets after it in Order.
Therefore, generally speaking it would not be open to any person to lead evidence to establish that caste B is part of caste A notified in the Order.
" The factual dispute raised in the case before the Con stitution Bench was whether Voddar caste was included in Bhovi caste which was one of the notified castes.
The Con stitution Bench dealt with the evidence and ultimately said: "In the circumstances therefore we agree with the High Court that respondent No. 1 though Voddar by caste belongs to the scheduled caste of Bhovi mentioned in the Order.
We may again repeat that we have referred to the evidence in this case only because there was undoubtedly no caste known as Bhovi in the Mysore State as it was before 1956 and we had to find out therefore which caste was meant by the word 'Bhovi ' as used in the Order.
But for this fact it would not have been open to any party to 583 give evidence to the effect that caste A mentioned in the Order includes or was the same as caste B where caste A does exist in the area to which the Order applies.
" A similar dispute again came before a Constitution Bench in Bhaiyalal vs Harikishan Singh & Ors., ; with reference to a scheduled tribe in an election dispute.
Gajendragadkar, CJ speaking for the Court said: "It is obvious that in specifying castes, races or tribes, the President has been expressly authorised to limit the notification to parts of or groups within the castes, races or tribes, and that must mean that after examining the educational and social backwardness of a caste, race or tribe, the President may well come to the conclusion that not the whole caste, race or tribe but parts of or groups within them should be specified.
Similarly, the President can specify castes, races or tribes or parts thereof in relation not only to the entire State, but in relation to parts of the State where he is satisfied that the examina tion of the social and educational backwardness of the race, caste or tribe justifies such specification.
In fact, it is well known that before a notification is issued under article 341(1), an elaborate enquiry is made and it is as a result of this enquiry that social justice is sought to be done to the castes, races or tribes as may appear to be necessary, and in doing justice, it would obviously be expedient not only to specify parts or groups of castes, races or tribes, but to make the said specification by reference to different areas in the State.
" What we have extracted above clearly supports the view of the other Constitution Bench, namely, the list is intend ed to be final.
We may now refer to a two Judge Bench decision in the case of Parsram & Anr.
vs Shivchand & Ors.
, ; Here again, the Scheduled Castes Order was in issue in an election dispute and the question for consideration was whether mochi was included in the notified caste of chamar.
The Court referred to both the Constitution Bench judgments and indicated: "These judgments are binding on us and we do not therefore think that it would be of any use to look into the gazeteers and the glossaries on the Punjab castes and tribes 584 to which reference was made at the Bar to find out whether Mochi and Chamar in some parts of the State at least meant the same caste although their might be some difference in the professions followed by their members, the main differ ence being that Chamars skin dead animals which Mochis do not.
However that may be, the question not being open to agitation by evidence and being one the determination of which lies within the exclusive power of the President, it is not for us to examine it and come to a conclusion that if a person was in fact a Mochi, he could still claim to belong to the scheduled caste of Chamars and be allowed to contest an election on that basis.
" In Kishorilal Hans vs Raja Ram Singh & Ors., ; a two Judge Bench was called upon to decide whether jatav caste not mentioned in the scheduled castes of Datia district of Madhya Pradesh in the Order was included in chamar caste.
The Court indicated: "If the matter were res integra we would have felt a good deal of difficulty in reconciling with the constitutional provisions the scheme followed in the state and the Orders concerned by which some caste has been includes in some districts of the same State and excluded in the other dis tricts.
This Court, however, has in Bhaiyalal vs Harikishan Singh & Ors., supra, made observations repelling the conten tion that under article 341 of the Constitution the President was not authorised to limit the notification to parts of a State . .
In Bhaiyalal 's case the appellant 's election had been challenged on the ground that he belonged to the Dohar caste which was not recognised as a scheduled caste for the district in question and so his declaration that he belonged to the Chamar caste which was a Scheduled Caste was improperly and illegally accepted by the Returning Officer.
It was held that the plea that though the appellant was not a Chamar as such he could claim the same status by reason of the fact that he belonged to Dohar caste which is a sub caste of the Chamar caste could not be accepted.
An enquiry of that kind would not be permissible having regard to the provisions contained in article 341 of the Constitution.
" We may now refer to two separate judgments of this Court in the case Dina vs Narayan Singh, and Bhaiya Ram Munda vs 585 Anirudh Patar & Ors., ; Both were rendered by a common Bench of Shah (as he then was) and Bhargava, JJ.
In the first case the question for consideration was inter pretation of Entry 12 in the Scheduled Tribes Order.
The entry read. 'Gond including Mana '.
The Court interpreted that Mana community was a substitute of Gond and on a proper construction of the entry Manas not being Gonds were not intended to be included.
The decision in that case is not relevant for our purpose.
In Bhaiya Ram 's case, the tribe specified in the Sched uled Tribes Order was Munda.
The respondent was a Patar but he maintained that it was included in the notified tribe.
The Bench was of the view that evidence was admissible for the purpose of showing what an entry in the Presidential Order was intended to mean though evidence could not be accepted for modifying the order by including a new tribe.
Since the respondents ' case was that Patars were Mundas, evidence could be given to show that the entry 'Munda ' included 'Patar '.
These authorities clearly indicate, therefore, that the entries in the Presidential Order have to be taken as final and the scope of enquiry and admissibility of evidence is confined within the limitations indicated.
It is, however, not open to the Court to make any addition or subtraction from the Presidential Order.
The evidence in this case on which reliance has been placed in support of the claim that Laskars are included in the tribe described as 'Tripura/Tripuri/Tippera ' mainly consists of two circulars of the erstwhile State of Tripura.
Circular No. 9 is of December, 1930.
There is a narration therein to the following effect: "In this State Tripura Sampradaya means the following five communities ' 1.
Puratan Tripura 2.
Deshi Tripura (related to Laskar Class) 3.
Noatia 4.
Jamatia 5.
Riang" 586 In Circular No. 10 which is of the year 1941, it has been said: "In this State Tripura Kshatriya denotes the following classes: 1.
Puratan Tripura 2.
Deshi Tripura (related to Laskar Class) 3.
Noatia 4.
Jamatia 5.
Riang" The latter document related to census operation in the State.
From these two documents it is clear that Deshi Tripura covered the Laskar class while there was another class called 'Tripura/Tripuri/ Tippera ' which did not relate to Laskar class.
The Presidential Order has admitted the three tribes of Noatia, Jamatia and Riang in terms but while dealing with the two classes of Puratan Tripura and Deshi Tripura covering the Laskar class, it has adopted the de scription of those three terms without referring to Puratan or Deshi.
The two Constitution Bench judgments indicate that enquiry is contemplated before the Presidential Order is made but any amendment to the Presidential Order can only be by legislation.
We do not think we should assume jurisdic tion and enter into an enquiry to determine whether the three terms indicated in the Presidential Order include Deshi Tripura which covers the Laskar community; but we consider it appropriate to commend to the authorities con cerned that as and when the question is reviewed it should be examined whether the claim of the appellant representing the Laskar community to be included in the scheduled tribes is genuine and should, therefore, be entertained.
Reservation has become important in view of the increas ing competition in society and that probably had led to the anxiety of the appellant and the people in his community to claim reservation.
As pointed out by the Constitution Bench judgments which we have referred to above, the basis on which inclusion into or exclusion from the enumerated list made under article 342 is contemplated is the changing econom ic, educational and other situations of the members of any 587 particular tribe.
Keeping that in view the State Government may initiate appropriate proposals for modification in case it is satisfied and after appropriate enquiry if the author ities are satisfied that the claim is genuine and tenable, amendment may be undertaken as provided by the Constitution.
This Court has indicated in some of the judgments re ferred to above that as a result of the detailed enquiry made as to the economic status, the level of education and the necessity of protection, inclusion into or exclusion from the Order is made.
This material relating to the Laskar tribe in 1930 or 1941 may not have been considered suffi cient before the respective Orders were made for including the Laskars, said to have been covered by the description of Deshi Tripura.
Therefore, even if historically this tribe was covered by the general description of Tripura, that by itself may not justify its inclusion in the Order as a scheduled tribe.
That is an additional feature which has weighed with us in taking our decision not to interfere in the matter.
The claim of the appellant is dismissed so far as this Court is concerned but the observations which we have made may be kept in view.
There shall be no order for costs through out.
Y. Lal Appeal dismissed.
| These writ petitions have been fried by Group 'C ' (class III) employees of the Railways working in its Transportation (Traffic) Department.
The said Department has different streams e.g. 'Control Stream ' and 'Traffic Stream ' and the employees working therein have different scales of pay.
For purposes of their promotion to Group B posts, it was neces sary to fix their inter se seniority, as only those employ ees from the different streams could be considered for promotion as would fall within the zone of consideration as per seniority list.
As the zone of consideration is deter mined with reference to the number of vacancies in Group B for which selection is held, at any point of time, the position of the employee in the combined seniority list of all the streams is important.
The zone of consideration of the employees for promotion Is fixed in the order of the combined seniority of the employees from the different streams.
The Department prior to the implementation of the recommendations of the Third Pay Commission fixed the inter se seniority of the employees of Group C employees on the basis of the grade i.e. employees working In a higher grade on a regular basis were treated senior to those working in the lower grade and the said principle worked well until the enforcement of the recommendations of the Third Pay Commis sion w.e.f.
1.1.1973, when higher or lower scales of pay came to be fixed in respect of certain posts which were having the same scale of pay upto 31.12.1972.
This presented difficulty in fixing the inter se seniority of the employees and the Railway Board in order to resolve the difficulty issued circulars from time to time indicating how their seniority should be fixed but for some reason or the other, the dissatisfaction amongst the employees in the matter of seniority continued.
Being aggrieved by the experiments which according to the petitioners only resulted in chaos and confusion, employees of the Control Stream have flied the writ petition on the Issue of a combined seniority list published by the administration on the basis 451 of instructions on 15.6.85, as they found themselves exclud ed from the panel of staff to be taken into consideration for promotion to Group B. They pray that the circular dt. 6.1.84 and the follow up action taken culminating in the Selection List be set aside.
The petitioner challenge the validity of two circulars issued by the Board, one on 29.7.83 and the other on 26.1.2.1983, restructuring the cadres as discriminatory as according to them they envisage 'mass upgradation ' to their detriment.
The question for determination is whether the principle adopted on the strength of these circulars for fixing the inter se seniori ty of these employees is proper.
Dismissing the writ petitions with liberty to the Peti tioners to move the Central Administrative Tribunal, if so advised with fuller facts, this Court, HELD: The inequity is not apparent.
Having to deal with two different streams, differently placed, the Government has to find out an equitable solution and it has been grop ing towards it.
One method would perhaps have been to have fixed quotas for promotion from each of the streams but that is not necessarily the only method.
An alternative method is being attempted here and the principle that grades of Rs.700 900 and above should be considered together being conceded the Department is trying to give some weightage by granting upgradation to each stream based on its total strength in order to balance the promotional chances in both the streams.
It is possible that some individual cases may be affected but no answer to the question whether any class discrimination has resulted can be given unless fuller details are available and the practical impact of the latest position is placed before the Court.
[463A C]
|
Appeals Nos. 235 and 236 of 1960.
Appeals from the judgment and decree dated January 23, 1959 of the Assam High Court at Gauhati in Civil Rules Nos. 138 and 139 of 1958.
N. C. Chatterjee, Amjad Ali and K. R. Chaudhari, for the appellant (in C. A. No. 235 of 1960).
D. N. Mukherjee, for the appellant (In C. A. No. 236 of 1960).
section M. Lahiri, Advocate General, Assam and Naunit Lal, for the respondents.
April 4.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
These two appeals arise out of two writ petitions Nos. 138 and 139 of 1958 filed respectively by the two appellants, Sonapur Tea Co. Ltd., of 15 D Sambhunath Pandi Street, Calcutta 9, and Musst.
Mazirunnessa, wife of Abdul Gafur of Village Bhoknamari, District Kamrup, in which they challenged the validity of the Assam Fixation of Ceiling on Land Holdings Act I of 1957 (hereafter called the Act).
The said writ petitions have been dismissed by the Assam High Court substantially on ground that since the impugned Act falls within the protection of article 31A the challenge made by the two appellants to the several provisions of the Act under articles 14, 19(1)(f) and 31(2) cannot be entertained Having dismissed the writ petitions principally on this ground the High Court granted certificates to both the appellants to come to this Court in appeal, 726 and so it is with the said certificates that the two appeals have been brought to this Court.
It is not necessary to set out the material facts leading to the two writ petitions in any detail.
It would be enough to say that under section 5 of the, impugned Act notices had been served on both the appellants by the respondent Deputy Commissioner and Collector of Kamrup calling upon them to submit a return giving the particulars of all their lands in the prescribed form and stating therein the selection of plot or plots of land (not exceeding in the aggregate the limits fixed under section 4) which they desired to retain under the provisions of the Act.
The appellants contended before the High Court that the impugned Act under which this notice had been served on them was invalid and ultra vires and so they wanted the notice issued under section 5 to be quashed.
That is the only relevant fact which needs to be stated for deciding the present appeals.
The Act received the assent of the President on December 7, 1956, and was published in the official State Gazette on January 16, 1957.
Subsequently it was amended by the amending Act XVII of 1957 and assent was obtained to the amendment thus made on November 8, 1957.
By a notification issued by the State Government on February 7,1958, the amended Act came into force on February 15, 1958.
It is relevant to consider briefly the broad features of the Act.
It has been passed because the Legislature deemed it necessary to make provision for the imposition of limits on the amount of land that may be held by a person in order to bring about an equitable distribution of land.
That being the object of the Act the principal provision of the Act imposes a ceiling on existing holding by s.4.
The act extends to the seven Districts specified in section 1(2), and from its operation are excepted the lands specified in cls.
(a) to (c) of s.2.
These clauses refer to lands belonging to any religious or charitable institution of a public nature, lands held for special cultivation of tea or purposes ancillary thereto and lands exceeding 150 bighas utilised for large scale cultivation of citrus in a compact block by any person before January 1, 1955, lands 727 utilised by efficiently managed farms on which heavy investments or permanent structural improvements have been made and whose break up is likely to lead to a fall in production, and lands held by a sugar factory or a co operative farming society for cultivation of sugarcane for the purpose of such factory.
It would thus be noticed that the measure of agrarian reform introduced by the Act has made exceptions in regard to lands which it thought should be left out of the operation of the Act in the interest of the economy of the State.
Section 3 is the definition section.
It defines land as meaning land which is or may be utilised for agricultural purposes or purposes subservient thereto and includes the sites of buildings appurtenant to such land.
Under section 3(g) the word 'landholder ' has the meaning assigned to it in the Assam Land and Revenue Regulation, 1886 (Regulation I of 1886).
'Landlord ' under section 3(h) is a person immediately under whom a tenant holds but does not include the Government; and 'owner ' under section 3(i) includes proprietor, land holder or settlement holder as defined in section 3 of the Assam land and Revenue Regulation I of 1886 but it does not include Government.
Section 3(o) defines 'tenant ' as meaning a person who holds land under another person and is, but for a special contract would be, liable to pay rent for that land to the other person, and includes a person who cultivates the land of another person on condition of delivering a share of the produce.
These are the only definitions which are relevant for our purpose.
Section 4 which is the key section of the Act prescribes ceiling on existing holding.
The limit prescribed is 150 bighas in the aggregate subject to its provisos.
Section 5 empowers the appropriate authorities to call for submission of returns by persons holding lands in excess of the ceiling.
Section 8 empowers the State Government to acquire such excess lands by publishing in the official gazette a notification to the effect that such lands are required for public purpose, and such publication shall be conclusive evidence of the notice of acquisition to the person or persons holding such lands.
Acquisition of excess lands prescribed by section 8 is followed by the vesting of the said 728 lands in the State under section 9.
On publication of the notification under section 8 all such excess lands shall stand transferred to the State Government from the date of the publication of the said notification free from encumbrances by their original owner or owners.
Under section 11 the Collector is authorised to take possession of the said lands.
Section 12 prescribes the principles of compensation.
and provides the manner in which the said compensation should be apportioned between the owner and the tenant; and s.13 provides for the manner of payment of such compensation.
Under section 14 ad interim payment of compensation can be made as specified.
These are the relevant provisions in Chapter 11 which deals with ceiling on existing holding and acquisition of excess land.
Chapter III deals with the disposal of excess land.
Under section 16(l) if there is any cultivating tenant in occupation of the land acquired from an owner then he shall have the option of taking settlement of such land within a prescribed period on the following conditions, namely, (a) that the area of land so settled together with any other lands held by him or any member of his family either as tenant or as owner shall not exceed in the aggregate the limit fixed under section 4, and (b) that he shall pay to the State Government in one or more equal annual installments not exceeding five an amount fixed by it but not exceeding the compensation payable by the State Government for acquisition thereof, provided that he shall have the right to adjust any amount which he is entitled to receive as compensation under the provisions of the Act against an equal amount which he is liable to pay under el.
Section 16(2) provides that on payment of full amount under sub section (1) above the land shall be settled with a tenant with the status of a landholder.
Under section 18 it is provided that if a tenant in occupation of any land acquired under section 8 does not take settlement of such land he shall acquire no right, title and interest in the land and shall be liable to be ejected.
Chapter IV deals with excess land under annual lease and provides for its taking over.
Chapter V puts a ceiling on future 729 acquisition, and chapter VI provides for ceiling for resumption of land from tenants for personal cultivation by the landlord.
Chapter VII provides for the establishment of a Land Reform Board, and lays down its functions,while chapter VII contains miscellaneous provisions.
That briefly is the scheme of the Act.
The question which arises for our decision is whether this Act is protected under article 31A of the Constitution.
This Article has been construed by this Court on several occasions in dealing with legislative measures of agrarian reforms.
The object of such reforms generally is to abolish the intermediaries between the State and the cultivator and to help the actual cultivator by giving him the status of direct relationship between himself and the State.
Article 31A(l)(a) provides that, notwithstanding anything contained in article 13, no law providing for the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, shall be deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights conferred by article 14, article 19 or article 31, provided that, where such law is a law made by the Legislature of a State, the provisions of this Article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent.
We have already seen that the assent of the President has been obtained both for the Act as it was originally passed and for the amending Act which subsequently modified some of the provisions of the original Act, and so the requirement prescribed by the proviso to article 31A(l)(a) is satisfied.
That raises the question as to whether the rights of the appellants which are undoubtedly taken away or abridged constitute rights in relation to an "estate" as defined by article 31A(2)(b).
We have already seen the definitions of land, landholder, landlord and tenant prescribed by section 3(f),(g),(h) and (o).
It is common ground that the lands sought to be acquired fall within an "estate" as defined by article 31 A(2).
Do the rights vesting in the appellants amount 92 730 to rights in relation to an "estate"? For deciding this question it would be necessary to consider the provisions of the existing law relating to tenure in force in Assam at the relevant time.
The existing law relating to land tenure is to be found in the provisions of the a Assam Land and Revenue Regulation, 1886 (Regulation I of 1886).
Section 3(g) of the said Regulation provides that a 'landholder ' means any person deemed to have acquired the status of a landholder under section 8.
No hen we turn to section 8 we find that it provides the manner in which the status of a landholder can be acquired; and section 9 provides for the rights of such landholders.
Under section 9 a landholder shall have a, permanent, heritable and transferable right of use and occupancy in is land subject to the payment of revenue, taxes, cesses and rates from time to time legally assessed or imposed in respect of the land.
The remaining two clauses of this section need not be considered.
It would be noticed that the expression "rights in relation to an estate" is of a very wide amplitude and as such the context requires that it must receive a very liberal interpretation.
Thus considered there can be no doubt that the rights of the appellants which have been extinguished undoubtedly constitute "rights in relation to an estate" as defined by article 31A (2) (b).
Indeed this position is not seriously disputed by Mr. Chatterjee who fairly conceded that having regard to the decisions of this Court in Thakur Raghubir Singh vs The State of Ajmer (Now Rajasthan) (1), Sri Ram Ram Narain Medhi vs The State of Bombay( ') and Atma Ram vs The State of Punjab (3 ) he would not be able to contend that the view taken by the High Court is erroneous.
Faced with this difficulty Mr. Chatterjee attempted to argue that the Act is a colorable piece of legislation and should be struck down as such.
His argument is that though ostensibly it purports to be a measure of agrarian reform its principal object and indeed its pith and substance is to acquire the property covered by its provisions and make profit by disposing of the (1) [1959] Supp. 1 S.C.R. 478.
(2) [1959] Supp. 1 S.C.R. 489.
(3) [1959] Supp. 1 S.C.R. 748. 731 same in the manner provided by Chapter III.
Mr. Chatterjee seemed to suggest that the Legislature should not have made it necessary for the tenants to exercise an option for taking settlement under section 16 because the exercise of the said option involves the liability to pay the prescribed amount though in five installments, and that, according to Mr. Chatterjee indicates that the State wanted to make profit out of the bargain.
Mr. Chatterjee 's grievance is against the provisions of section 18 also under which a tenant who does not opt for settlement is liable to be evicted.
We are not impressed by this argument.
The doctrine of colorable legislation really postulates that legislation attempts to do indirectly what it cannot do directly.
In other words, though the letter of the law is within the limits of the powers of the Legislature, in substance the law has transgressed those powers and by doing so it has taken the precaution of concealing its real purpose under the cover of apparently legitimate and reasonable provisions (Vide: K. G. Gajapati Narayan Deo vs The State of Orissa) This position is not and can not be disputed.
Is Mr. Chatterjee, however, right when he contends that the pith and substance of the Act and indeed its main object is to acquire property and dispose of it at a profit? That is the question which calls for our decision.
In our opinion the answer to this question must obviously be against the appellants.
The whole object of the Act which is writ large in all its provisions is to abolish the intermediaries and leave the lands either with the tiller or the cultivator.
With that object ceiling has been prescribed by section 4, provisions have been made for the acquisition of excess.
lands, and disposal of excess lands in favour of the tenants have been provided for.
It is significant that in settling the lands upon the tenants it is expressly provided that the payment which the tenant may have to make and that too in one or more easy installments not exceeding five will never exceed the compensation payable by the State Government for acquisition (1) ; 732 thereof.
This provision clearly negatives the assumption made by Mr. Chatterjee that any profit is intended to be made in the matter of disposal of excess lands.
The State is paying compensation to the persons dispossessed under the principles prescribed by section 12; amongst the persons entitled to such compensation tenants are included, and when the State proceeds to settle lands on tenants it expects them to pay a fair amount of price for the land and puts a ceiling on this price that it shall never exceed the amount of compensation payable in respect of the Paid land.
In our opinion this provision is very fair and reasonable and it would be idle to attack it as a piece of colorable legislation.
We have already seen that the settlement of land on the tenants would make them landholders and that is the basic idea of the Act.
If a tenant does not agree to take settlement it cannot be helped and so the land would then have to be taken from him and given over to somebody else who would be prepared to take settlement.
It is thus clear that the object of putting ceiling on existing holding is to take over excess lands and settle them on actual cultivators Or tenants and that is the essential feature of agrarian reform undertaken by several States in the country.
The Act conforms to the pattern usually followed in that behalf and the attack against its validity on the around that it is a colorable piece of legislation must therefore fail.
In the result we hold that there is no substance in the two appeals.
They are accordingly dismissed with costs one set of hearing.
Appeals dismissed.
| One Viswanatha Iyer who had two minor daughters but no male issue treated his brother Seetharama Iyer 's son, the appel lant, as a foster son and before his death made a will by which he left the management of his properties to his brother and provided that as soon as his minor daughters attained majority Seetharama should give them each one Veli of nanja land and one Veli of punja land in vattam No. 149 in village Nagampadi and should give possession of the remaining property to the appellant on his attaining majority.
The daughters after attaining majority claimed possession of their land alleging that they were entitled under the will to select their respective one Veli of nanja land and one Veli of punja land out of the land in Vattam 149.
A suit filed by the daughters on that allegation was decreed by the trial court and the decree was affirmed by the High Court holding that the English rule of benevolent construction that a legatee has a right to choose in such circumstances applied to India and that on the construction of the will in this case the right to choose was in the legatees and not in Seetharama.
Held, that section 89 of the , which lays down that "a will or bequest not expressive of any definite intention is void for uncertainty", applies only to those cases where a will is so indefinite that it is not possible to give any definite intention to it at all; but there may be wills which use words which are not so uncertain that a definite intention cannot be ascribed to the testator under those words and it is to meet such cases that the English rule of selection by legatees was evolved.
This rule of benevolent construction which is based on common sense and by which wills not quite uncertain can be made certain cannot be called an artificial rule and there is no reason why it should not be extended to India in appropriate cases.
Narayanasami Gramani vs Periathambi Gramani, (1895) I.L.R. , approved.
Bharadwaja Mudaliar vs Kolandavelu Mudaliar, (1915) 29 M.L.J. 717, discussed.
Hobson vs Blackburn, ; ; , Peck vs Halsey, ; (1726) 2 P. Wms. 387; , Tapley vs Eagleton, , Duckmanton vs Duckmanton ; (1860) 5 H. & N. 220; and Knapton vs Hindle, , referred to.
975 Asten vs Asten, and Bishop vs Holt, , held inapplicable.
The gift in the present case was not void for uncertainty within the meaning of section 89 of the Succession Act for it could be made certain by the selection of the daughters.
The testator had clearly indicated what he intended his daughters to get but the difficulty arose because the area of the vattam was more than what was given to the daughters; it must be held in the circumstances of the case that the testator intended that each daughter would select the land devised out of the vattam.
There were no words in the will from which it could be inferred that Seetharama was nominated by the testator to make the selection.
|
ition Nos.
7014, 7426 28 of 1982, 7419, 7377 78, 7278, 6460, 7078, 6461, 5720, 7428, 7454 6896, 6894, 7288, 6895, 6892 97, 7421, 75 0, 7289, 7525, 7422, 6897, 6462, 7378, 5720, 5719 & 7290 91 of 1982.
(under Article 32 of the Constitution of India) With Special Leave Petition (Civil) No. 9149 of 1982.
From the Judgment and order dated the 14th September, 1982 of the Punjab and Haryana High Court in C.W.P. No. 3460 of 1982.
And Special Leave Petition (Civil) No. 9076 of 1982.
From the Judgment and Order dated the 1st September, 1982 of the Punjab and Haryana High Court in WP No. 3299 of 1982.
And Special Leave Petition (Civil) No. 9289 of 1982.
Dr. Adarsh Kapoor & Mrs. V.D. Khanna for the Petitioners.
P.P. Rao, R. Venkataraman, A. Mariapatham & M/s. Aruna Mathur for M.D. University.
R.N. Poddar for the State.
The Judgment of the Court was delivered by 275 DESAI J.
As the matter brooked no delay, at the conclusion of the arguments, the Court pronounced the following order reserving reasons to be given at a later date.
"The petitions succeed to the extent herein indicated.
Let a writ be issued quashing reservation of 25 seats in favour of candidates coming from Rural Areas and educated in common Rural School for admission to MBBS Course 1982 at Medical College, Rohtak affiliated to Maharshi Dayanand University.
Consequently the respondents are directed to admit in 1st MBBS Course of the same College commencing from July, 1983, such number of students who secured admission against the reservation for candidates coming from Rural Areas and educated in Common Rural School in 1982, according to the general merit list drawn up in respect of candidates, who sought admission and in the absence of such a list, a waiting list should be drawn up according to merits, for the year 1982.
The respondents are directed to work out the admissions as per the direction herein made before May 31, 1983 and give intimation to the students who become eligible for admission.
There will be no order as to costs.
Reasons to follow," Here are the reasons.
In this group of petitions under article 32 of the Constitution, the petitioners questioned the validity and legality of reservation of 25 seats for candidates coming from rural areas for admission to first M.B.B.S./B.D.S. Course for 1982 session in the Medical Faculty or the Third respondent Maharishi Dayanand University Rohtak ( 'University ' for short).
The University issued a prospectus on June 12, 1982 inviting applications for appearing at an Entrance Test for selecting candidates for admission to MBBS/BDS Course, 1982.
In this prospectus, reserved seats were shown as under: "(A) RESERVED SEATS: Categories No. of Seats (a) Scheduled Caste/Tribes 30 (b) Rural areas 25 276 (i) Out of these 5 are reserved for girls, if available, otherwise these will also be for boys.
(ii) For deciding the eligibility of a candidate from rural areas, the following criterion will be observed: A candidate must have received education from Class I to Class 8 and passed 8th class examination from a common Rural School situated in any village not having any Municipality or notified area or Town Area Committee.
For this purpose a certificate is required to be submitted which may be seen in Appendix 'C '.
. . . . . . . . . " In short out of a total of 148 seats available for admission, 80 seats were to be filled in according to the merit list drawn up on the performance at the entrance examination and the rest were reserved for different classes of candidates.
The petitioners challenge only the reservation of 25 seats for candidates coming from the rural areas as being violative of articles 14, 15(4) and 29 (2) of the Constitution inasmuch as the classification is arbitrary, unintelligible and unrelated to the objects sought to be achieved and not saved by article 15(4).
It was alleged that to classify candidates on the basis of their education in a school in rural area and urban area is irrational inasmuch as before seeking admission to the Medical Faculty even the student coming from rural areas and having been educated in common rural school from 1st to 8th standard would have taken further education for a period of 40 years before seeking admission to the medical college.
It was therefore said that earlier education from 1st to 8th standard either in urban schools or common rural schools both having identical syllabus and examination evaluation prescribed by a common authority is hardly of any relevance while considering the merit for admission to the medical college more so because all students coming either from urban schools or those educated in common rural schools were required to undergo further education for a period of 4 years after the 8th standard in urban schools or schools which can be compared with urban schools.
The petitioners contend that the reservation is not sustainable under article 15(4) because candidates educated in common rural school cannot as a class be said to be society and educatio 277 nally backward and therefore, the reservation would not satisfy the test prescribed by article 15(4) of the Constitution.
The petitioners aver that the syllabus for 1st to 8th standard adopted in common rural schools and urban schools is entirely identical prescribed by the same Government and the qualification of teachers for being appointed in the urban schools or the common rural school is the same and they are transferable from one area to the other area.
It was also contended that the majority of the population in the State of Haryana as in whole country is residing in rural areas and the reservation in favour of majority would be void ab initio.
Lastly it was said that the classification apart from being arbitrary and irrational does not satisfy the twin tests of it being based on intelligible differentia and having any nexus to the objects sought to be achieved.
The petitioners say that some from amongst respondents 5 to 49 have been admitted against reservation for candidates coming from rural areas and even though the petitioners had obtained higher marks at the entrance examination and were placed higher in the merit list yet they have been denied admission on account of the constitutionally invalid reservation and therefore, their admissions should be struck down and the University may be directed by a mandamus to reconsider the eligibility for admission after ignoring the reservation in favour of students from rural areas.
Mr. K.L. Guglani, Registrar of the University filed his affidavit in opposition inter alia contending that the classification and the consequent reservation is valid under article 14 of the Constitution.
It was submitted that in order to correct the regional imbalance in the matter of admissions to medical college, the Govt.
of Haryana had carried out a sample survey of the comparative facility/inequalities between the students of the schools situated in the rural and the urban areas at the primary, middle and high school stages in 1979 which revealed that the students studying in common rural schools suffer from serious handicap such as non availabilty of electric fans in summer and on the onset of rainy season, the difficulty of access to the school resulting in shortening of the academic year in such schools with consequent disadvantages in their academic achievement as compared to children in the urban schools where the academic sessions goes undisturbed by extreme summer or rainy season.
The sample survey further revealed that most of the common rural schools are ill houses, ill staffed and ill equipped.
There is no provision for regular medical check up of students at 278 any common rural school resulting in the neglect for the upkeep of their health and this becomes a factor for the low achievements of students in rural schools.
The sample survey also revealed that the teachers attached to common urban schools residing in urban areas reached the school premises just in time to take the classes and leave soon after the school time is over thus denying the establishment of personal contact with the students resulting in the denial to such students an opportunity of development.
It was further submitted that the students coming from urban areas after taking medical education declined to settle down in rural areas and this will help in extending medical facilities solely needed for rural population.
In order to correct this imbalance and the utter handicap felt by the students studying in common rural schools, students seeking admission were divided into different classes based on intelligible differentia and that if the object of medical education is to extend medical facilities where it is needed the most, reservation for candidates coming from rural areas would achieve the object and therefore, the State Govt.
was perfectly justified in making this reasonable and rational classification.
At a later date Dr. D.C. Mehrotra, Director Principal, Medical College, Rohtak filed affidavit in opposition on behalf of respondents 1 to 3 which appears to be a carbon copy of the affidavit filed by the Registrar Mr. Guglani.
The only question which needs answer is whether reservation of '25 seats for rural areas ' for admission to 1982 session in the Medical College attached to the University is constitutionally valid.
It must at once be made clear that the respondents did not at all attempt to sustain the reservation under sub article
(4) of article 15 which enabled the State to make special provision for advancement of any socially and educationally backward classes of citizens or for the scheduled caste and scheduled tribes.
The respondents contended that the reservation of 25 seats for candidates coming from rural areas is valid and can be sustained under article 14 of the Constitution.
Therefore, the question is: whether the classification between the students educated in urban school and common rural schools is based on any intelligible differentia which has a rational nexus to the objects sought to be achieved ? It is well settled that article 14 forbids class legislation but 279 permits reasonable classification in the matter of legislation.
In order to sustain the classification permissible under article 14, it has to satisfy the twin tests: (1) that the classification is founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (2) the differentia must have a rational relation to the object sought to be achieved by the impugned provision.
Does the classification on the basis of candidates coming from rural areas against urban area in the matter of admission to medical college satisfy the twin tests.
If the attempt at amplification of the classification resorted to by the respondents is ignored for the time being, the broad classification is that the students coming from rural areas are classified separately for the purpose of admission to the medical college.
The reservation is described in the prospectus as: 'Rural areas 25 seats '.
If the matter were to rest here, it would have been unnecessary to write this judgment in view of the decision of this Court in State of U.P. vs Pradeep Tandon(1) In that case the State of U.P. had made reservation for admission to medical college in favour of the candidates from rural, hill and Uttarkhand areas on the ground that the people coming from these areas belonged to socially and educationally backward classes.
The reservation was challenged as being violative of articles 14 and 15 and not protected by article 15(4).
The State sought to sustain the classification under article 15(4) urging that the object of the classification was the advancement of facility for medical education for candidates coming from reserved areas as the people coming from these areas belonged to socially and educationally backward classes.
This contention was accepted in part and negatived in past.
Striking down reservation of candidates coming from rural areas, the Court held that reservation for rural areas cannot be sustained on the ground that the rural areas represent socially and educationally backward classes of citizens and the reservation appears to be made for the majority population of the State and on the ground of place of birth.
The Court upheld reservation in favour of candidates from Hill and Uttarkhand areas on the ground that reservation in favour of the people in those areas who belonged to socially and educationally backward classes of citizens.
Distinguishing the case of reservation in favour of candidates coming from rural areas, the Court observed that the backwardness contemplated by article 15(4) is both social and educa 280 tional backwardness of the citizens, the accent being on classes of citizens socially and educationally backward and therefore, socially and educationally backward citizens cannot be equated with areas as a whole socially and educationally backward.
The Court concluded that some people in the rural areas may be educationally backward, some may be socially backward and there may be few who are both socially and educationally backward but it cannot be said that all citizens residing in rural areas are socially and educationally backward.
Accordingly, the reservation in favour of candidates coming from rural areas was held as constitutionally invalid.
This reasoning would apply mutatis mutandis to the facts in the present case because the reservation is in favour of candidates coming from rural areas.
It was however, contended by Mr. P.P. Rao on behalf of the University that the Court should not merely confine itself to the headline in the prospectus but read the entire entry specifying reservation especially the conditions of eligibility for the reserved seats.
Reading it thus it was said that the reservation was in favour of students not coming from rural areas but in favour of students who were educated in common rural schools.
Proceeding along it was said that before making the reservation the State Government had undertaken a sample survey, portions of which are extracted in certain correspondence annexed to the affidavit in opposition which when examined in proper perspective would show that the students educated in common rural schools suffered certain handicaps and are comparatively at a disadvantage in the matter of attaining high merit for competing with students coming from urban schools and therefore, the State deemed it proper to extend the protection in the matter of admission to such handicapped students.
This submission was further amplified by saying that students coming from urban areas and joining medical colleges are generally disinclined to go to rural areas for rendering medical service while if students coming from rural areas are encouraged by reservation to take the medical education, one can reasonably expect them to return to the rural areas, the habitat of their childhood, and to make such rural places their field of activity, which would simultaneously extend medical service to rural areas which is otherwise ill starved in this behalf.
It was pointed out that the common rural schools have neither laboratories nor library facilities and that it is ill equipped, ill housed and ill manned in the matter of staff, facilities and equipment.
To over come these handicaps and to provide an opportunity 281 to the students educated in such schools against fierce competition from those students coming from well equipped and manned by highly trained staff urban schools, the classification between the students coming from common rural schools and those coming from urban school in the matter of admission to the medical college satisfied the twin tests of constitutionally valid classification.
Before anyone becomes eligible to compete for admission to the medical college in the year 1982, it was incumbent upon such a student to clear the 12th standard examination.
This is true in respect of all students seeking admission to medical college irrespective of the fact whether they have been educated in the common rural schools or urban schools.
Now the reservation is in favour of candidates from rural areas which expression in amplified to mean 'a candidate must have received education from Class 1 to class 8 and passed 8th Class examination from a common Rural School situated in any village not having any Municipality or Notified Area or Town Area Committee. ' It would at once appear that every candidate seeking admission to medical college must have studied upto the 12th class which would mean that even a candidate coming from the common rural school meaning thereby one who has taken his education upto 8th standard in such a school, yet subsequently he has joined a school which imparts education upto the 12 standard.
Such a candidate has joined a school for a period of 4 years after having come out of the common rural school.
It is nowhere suggested that this education for 4 years by a student coming from common rural school is in a school which is either unequal to the urban school or comparatively ill equipped, ill housed or ill staffed.
The necessary inference that follows from this is that all students seeking admission to the medical college have atleast taken education for the last 4 years, in schools which are comparatively similar.
What then is the relevance of the education taken from Class I to Class 8 for the purpose of admission to a medical college.
It was conceded that the specialised subjects which will qualify a student for appearing at the entrance examination for admission to medical college are to be selected from the 11th standard onwards.
It was also conceded that the syllabus for students from Class I to Class 8 either for urban schools or common rural schools is entirely identical and prescribed by the same authority, and this syllabus includes subjects of general knowledge.
It does not provide any specialised knowledge.
Therefore, it passes comprehension as to what importance can be 282 attached to education from Class 1 to Class 8 for admission to medical college which is divided by a span of over 4 years that of Class IX to Class XII (both inclusive) and in respect of which students coming from all schools are similarly situated, similarly circumstanced and similarly placed and similarly treated and exposed to same educational environments without the slightest difference.
The question then is: can the previous differentiation, if there by any, provided a rational basis for classification The answer obviously is in the negative.
The knowledge acquired in the years spent from Class 1 to Class VIII is of a general nature exposing the student to reading, writing, understanding simple arithmetics, general knowledge of History, Geography and introductory mathematics.
The introductory knowledge of these subjects could hardly be said to equip a student for admission to medical college.
The education imparted in Class IX and X is little more than introductory.
In these classes, the student is being prepared for deeper study.
The selection of specialised subjects has to be made in Classes XI and XII and in respect of education in Classes IX to XII, all students being educated in all schools are similarly situated similarly circumstance and similarly placed with no differentiation.
The earlier handicap of education in Classes 1 to 8, if there be any, becomes wholly irrelevant and of no consequence and therefore, cannot provide an intelligible differentia which distinguishes persons say students seeking admission being grouped together as having been educated in common rural schools from those left out namely the rest.
It would therefore, follow as a corollary that classification based on students coming from common rural schools meaning thereby educated upto 1 to 8th standard in common rural schools vis a vis students educated in urban schools from Ist to 8th standard would not provide intelligible differentia for founding a classification thereon The classification in such a situation will be wholly arbitrary and irrational and therefore the reservation based on such classification would be constitutionally invalid.
This view which we are taking finds support from a decision of this Court in Arti Sapru v State of Jammu and Kashmir & Ors.(1) wherein this Court struck down reservation of 20% of the seats to be filled on the basis of inter se merit to ensure rectification of imbalance in the admission for various parts of the State, if any, so as to give equitable and uniform treatment to those parts.
The Court following the decision in Pradeep Tandon 's case held that the classification attempted by the State suffers from the vice 283 of arbitrariness and must be declared invalid.
It was however., contended on behalf of the respondents that the decision in Pradeep Tandon 's case would not be of any assistance and is distinguishable because in that case reservation was in favour of candidates coming from rural, hill and Uttarkhand areas on the ground that people coming from these areas belonged to socially and educationally backward classes while the reservation in the instant case is founded on the lack of facility for education in common rural schools functioning in rural areas and also that in Pradeep Tandon 's case one of the contentions which found favour with the Court was that the reservation was in favour of a majority which aspect does not arise in the present case.
In support of this submission, learned counsel for the respondents extensively read before us the decision of the full Bench of the Punjab & Haryana High Court in Amar Bir Singh & Ors vs Moha Rishi Dayanand University, Rohtak & Ors(1) The full Bench of the High Court presided over by the then learned Chief Justice upheld the impugned reservation.
The High Court distinguished the decision in Pradeep Tandon 's case observing that the State sought to sustain the reservation under article 15 (4) contending that candidates coming from rural areas belonged to socially and educationally backward classes of citizens and the submission did not find favour with the Court though the Court unreservedly accepted that candidates coming from hill and Uttrakhand areas belonged to socially and educationally backward classes of citizens and sustained reservation in favour of the latter.
It is true that the State did not attempt to sustain the reservation under article 14 but certain observations in the judgment would leave no room for doubt that the aspect of valid classification was present to the mind of the Court.
It was observed that 80% of the population reside, in rural areas and it cannot be said to be a homogeneous class.
Rural habitation cannot constitute it into class.
And it is reservation related to place of birth.
The Court thus examined whether candidates coming from rural areas constitute a distinct homogeneous class for the purpose of admission to medical college and rejected it.
The High Court in Amar Bir Singh 's case on the contrary attempted to sustain the classification of students educated in common rural schools which does not carry conviction.
Having read this judgment minutely and with care and attention that a judgment of the 284 Full Bench of High Court bearing on the same topic merits, we are of the opinion that the manner in which Pradeep Tandon 's case, was sought to be distinguished was artificial apart from being unintelligible.
Undoubtedly the State in Pradeep Tandon 's case attempted to sustain the classification under article 15 (4) but that was not the crux of the matter.
The reservation was in favour of candidates coming from a certain area to wit rural areas.
Now if the amplification of what constitutes candidates coming from rural areas will not enlarge or restrict the operative portion, indisputably the reservation was for candidates coming from rural areas which were styled Pradeep Tandon 's case as socially and educationally backward areas.
It is true that one of the reasons which weighed with the Court in striking down reservation in Pradeep Tandon 's case was that the reservation was in favour of a majority.
Such an argument though available in the present case was not advanced, because any day rural area is comparatively much larger in area and size population to urban area in the State of Haryana.
Therefore, we are not impressed by the submission that the judgment in Pradeep Tandon 's case is distinguishable.
In fact, this Court in Arti Sapru 's case followed the decision in Pradeep Tandon 's case.
Assuming that the decision in Pradeep Tandon 's case does not conclude the point as herein raised, the differentia on which the classification is founded appears to us arbitrary and irrational.
How arbitrary and irrational it is, can be demonstrably established.
In order to take advantage of the reservation students from nearby urban areas can join common rural school on the periphery of urban agglomeration.
And all rural schools without an exception cannot be condemned as ill housed, ill staffed and ill equipped.
Agriculture in Haryana has been a very profitable pursuit and standard of life of average farmer in rural area has gone up compared to middle class and industrial workers and the slum dwellers whose children will attend as a necessity urban schools.
And yet the better place will enjoy reservation.
Further the basis of classification based on education upto 8th standard is wholly irrational.
And it has no nexus to the object sought to be achieved, of providing extra facility to students coming from rural schools to enter medical college.
What was the object sought to be achieved by the classification ? It was said that students taking education in common rural 285 schools from Ist to 8th standard are at a comparative disadvantage to those taking education in urban schools in the same standards.
The comparison in our opinion is fallacious for the reason that the same Government prescribes standards of education, equipment, grants and facilities including the qualification of the staff for being employed in urban and rural schools imparting instructions from Ist to 8th Standard.
However, as pointed out earlier, the knowledge acquired by the students while taking instructions in Class I to VIII has hardly any relevance to his being equipped for taking the test for entrance to the medical college.
The real challenge would come in Standard XI and XII.
In this behalf all students those coming from common rural school and urban school are similarly.
placed and similarly situated and yet by a reference to a past event wholly unrelated to the objects sought to be achieved, they are artificially divided.
It was however said that there was another discernible purpose in making the reservation.
The urbanised students are disinclined to go to rural areas for practice or service and therefore if the students coming from rural common schools are encouraged to seek admission they may return after obtaining qualification to their childhood habitat and thus help extend efficient medical service to rural areas at present wholly neglected.
It was urged if a region is woefully deficient in medical services, there occurs serious educational and health service disparity for that human region which must be redressed by a Welfare State.
It was submitted that the reservation was a step in this direction.
This submission was sought to be supported by referring to Jagdish Saran vs Union of India.(1) This approach overlooks the fact that even students educated in common rural schools would be joining urban schools for four years before going to medical college and then spend about five years in medical college.
There is no guarantee save a wishful thinking that they would return to rural areas.
This is so flimsy a material to sustain classification.
We are therefore satisfied that the classification is not founded on intelligible differentia and at any rate it has no rational nexus to the object sought to be achieved.
The classification is irrational and arbitrate.
The reservation based on such classification is constitutionally invalid.
286 Before we conclude, a reference to Sukhvindkr Kaur vs State of Himachal Pradesh & Ors.(1) may be made.
In that case the High Court upheld reservation of 12 seats for candidates who have passed matriculation or Higher Secondary examination from schools located in the rural areas.
The aforementioned reservation was upheld by merely observing that it does not appear to be unreasonable inasmuch as the children in the rural areas who usually attend such schools are socially, economically and educationally poor and they cannot compete with the children of their age group coming from the urban area.
The judgment does not refer to the material on which the finding was based that the ' children attending the schools in rural areas cannot compete with children of the same age group coming from the urban areas.
That apart the situation in that case was that the students took education upto the Higher Secondary examination in the schools situated in the rural areas and had thereafter straightaway to compete for entrance to the medical college with students coming from urban areas.
Such is not the situation before us.
As pointed out earlier, in the instant case, the students in whose favour the reservation is made took education only upto the 8th standard in common rural school and for the last 4 years they were on par in every respect with students coming from urban areas.
Therefore, this decision is of no assistance.
These were the reasons which weighed with us in allowing the writ petitions.
S.R. Petitions allowed.
| Selection of text books and books for reading to be kept in school and college libraries is a matter of vital importance to the imparting of proper education.
Such selection must depend upon the ability and fitness for the purpose of those who are charged with that responsibility.
In the State of Orissa, there was no statutory rule or regulation prescribing the procedure for selection of books for general reading to be kept in school and college libraries, except the State Government 's periodical administrative instructions in the form of resolutions constituting committees namely, an Assessment Sub Committee, a Distribution Sub Committee and a Purchase Committee to which Government officials as well as non officials were appointed as members.
The procedure followed was that each year the Member Secretary of the Purchase Committee would call upon publishers and authors by advertisements given in local newspapers to submit books for consideration.
The Assessment Sub Committee could than consider the books so submitted and thereafter recommend a list of books which, according to it, were suitable for general reading by school and college students.
The Purchase Committee would consider the recommendations made by the Assessment Sub Committee prepares a final list and submit it for approval to the State Government which could reject any book out of the list so submitted without giving any reason.
The decision of the State 323 Government regarding the assessment, selection purchase and distribution of books was made final.
The selection of the books for the years 1980, 1981 and 1982 was made in this fashion.
Admittedly, some of the members of the Assessment Sub Committee were themselves authors of books and some of the books written by them were selected and purchased.
The Purchase Committee restricted the list for the years 1980, 1981 and 1982 to 466 books out of 1,718 books submitted for selection, but as further funds became available the Government decided to select more books and accordingly a committee constituted under the Chairmanship of Director of Public Instruction (Schools), Orissa, selected a supplementary list of 105 books out of the said 1,718 books which had been submitted for selection.
Before further steps could be taken, in the unprecedented fiords and cyclones of August/September 1982, number of schools and colleges suffered in the calamity and the libraries of many schools and colleges were washed away.
The Central Government thereupon, as part of its relief programme for the State, gave grants to the State during February and March, 1983 aggregating to Rs. 45 lakhs for the purchase of books for the libraries of non governmental schools and colleges and to be utilised before June 1983.
Due to Paucity of time and delay in the normal process of selection of books, the State Government took a decision or April 5, 1983 to utilise the grant made by the Central Government by purchasing books out of the books selected for the years 1980, 1981 and 1982 and the said supplementary list of 105 books.
In the meeting convened on April 13, 1983, to consider the selection of books to be purchased, all the 466 books selected for the years 1980, 1981 and 1982 together with the 105 supplementary list of books were approved.
Thereupon, the appellants who were publishers filed a Writ Petition under Article 226 of the Constitution against the State of Orissa and the Director of Public Instruction, Orissa to quash the list of books selected for the years 1980, 1981 and 1982 and the State Government 's said decision with respect to purchasing books out of the cyclone and flood relief grant made by the Central Government, inter alia on the ground of bias on the part of some of the members of the Assessment Sub Committee whose books were submitted for selection.
This Writ Petition was heard along with a similar Writ Petition filed by the Orissa Publishers and Book Sellers Association.
The High Court by a common judgment delivered on August 10, 1983 dismissed both these Writ Petitions.
Hence the appeals by Special Leave of the Court.
Allowing the appeal, the Court 324 ^ HELD : 1.
The law with respect to locus standi has considerably advanced both in this country and in England and in the case of public interest litigation it is not necessary that a petitioner should himself have a personal interest in the matter.
Merely by submitting books for selection, of which some might have been selected, a person cannot be said to have waived the objection which he may have to the constitution of the committee which selects the books.
Similarly, merely because a person does not submit any book for selection, it cannot, be said that he is not a person aggrieved.
[331 E; D] 2.
In the absence of any statutory rule or regulation with respect to selection of books and the selection being made each year as an administrative measure it was open to the State Government to change both the constitution of the committee and sub committees as also the procedure for selecting books to be purchased.
Since the procedure normally adopted by the State Government would have taken more time than what the time bound grant of the Central Government would have permitted, the State Government was justified in convening the meeting on April 13, 1983 and selecting the books to be purchased from the Central Government grant.
[331 G H] 3:1.
Nemo judex in causa sua, that is, no man shall be a judge in his own cause, is a principle firmly established in law.
Justice should not only be done but should manifestly be seen to be done.
It is on this principle that the proceedings in courts of law are open to the public except in those cases where for special reason the law requires or authorizes a hearing in camera.
Justice can never be seen to be done if a man acts as a judge in his own cause or is himself interested in its outcome.
The principle applies not only to judicial proceedings but also to quasi judicial and administrative proceedings.
[332 G H] A. K. Kraipak and others vs Union of India and others, , followed.
A person who has written a book which is submitted for selection either by himself or by his publishers, is interested in the matter of selection and therefore an author member should not be a member of any such committee or sub committee for several considerations namely : (a) Authors stand to benefit financially in several ways by getting either royalty from the publishers or by direct sales; (b) Though an author member may be only one of the members of the Assessment Sub Committees and that the ultimate decision of selection may rest with the State Government which may reject any book out of the list of the approved books, normally the State would be guided by the list of books approved by the Assessment Committee ; (c) The author member can certainly influence the minds of the other members against selecting books by other authors in preference 325 to his own ; (d) Books by some of the other members may also have been submitted for selection and there can be between them a quid pro quo or, in other words you see that my book is selected and in return I will do the same for you.
In either case, when a book of an author member comes up for consideration, the other members would feel themselves embrassed in frankly discussing its merits ; (e) Such author member may also be a person holding a high official position whom the other members may not want to displease ; and (f) Though it may be that the other members may not be influenced by the fact that the book which they are considering for approval was written by one of their members, whether they were so influenced or not would, however, be a matter impossible to determine.
It is not, therefore, the actual bias in favour of the author member that is material but the possibility of such bias.
[333 F H; 334A G] 4 : 1.
The doctrine of necessity is, however, an exception to the doctrine of bias, that no man shall be a judge in his own cause.
An adjudicator, who is subject to disqualification on the ground of bias or interest in the matter which he has to decide, may be required to adjudicate if there is no other person who is competent or authorized to adjudicate or if a quorum cannot be formed without him or if no other competent tribunal can be constituted.
In such cases, the principal of natural justice would have to give way to necessity for otherwise there would be no means of deciding the matter and the machinery of justice or administration would break down.
[334 H; 335 A B] The Judges vs Attorney General for Saskatchewan, 53 The Times Law Reports 464 (1937) quoted with approval.
In the instant case, the High Court wrongly applied the doctrine of necessity to the author member of the Assessment Sub Committee.
Though the members of this Sub Committee were appointed by a Government resolution and some of them were appointed by virtue of the official position they were holding, such as, the Secretary, Education Department of the Government of Orissa, and the Director, Higher Education, etc.
, there was, nothing to prevent those whose books were submitted for selection from pointing out this fact to the State Government so that it could amend its resolution by appointing a substitute or substitutes, as the case may be.
There was equally nothing to prevent such non official author members from resigning from the committee on the ground of their interest in the matter.
[335 C E] 5:1.
The High Court, however, was justified in refusing to grant any relief in respect of the books selected for the year 1980, 1981 and 326 1982 inasmuch as the books selected for those years had already been purchased.
Since a similar fait accompli stared at the Supreme Court not only in respect of the books selected and purchased for those years, but also with respect to the books selected to be purchased from the Central Government grant, in the instant fase, the Court could lay down only certain guide lines to be followed in future in selecting not only books for libraries in educational institutions but also in prescribing text books and in constituting committees for these purposes.
The Supreme Court accordingly laid down such guidelines.
[335 F H] 5:2.
However, the guide lines laid down by a court can only ensure the selection of worthwhile books.
This must necessarily depend upon the social consciousness and moral fibre of the members of the committee.
Further, no judgment of a court can eliminate the evil of behind the scene influence.
Here, one must perforce trust the sense of responsibility of the members of the committee in the discharge of the important duty with which they are entrusted.
[338 B C] 6:1.
Clause 8 of the Government resolution dated November 24, 1983, issued after the grant of Special Leave Petition to Appeal does not satisfy the principle of natural justice and fair play.
Since several books would come up for consideration before the committee, one or more of them by one of the member and the other or others by some of the other members, mere non participation in the discussion by the member concerned or even his withdrawing from the deliberations of the committee while his or her book or books are being considered is not sufficient because the evil of quid pro quo cannot be eliminated by such a resolution.
Members deliberating would bear in mind that the turn for selecting their books would also come and the concerned member who had not participated or had withdrawn would not then be favourably inclined to select their books.
[336 B; E G] 6:2.
Many a person falls a victim to the disease called cacoethes scribendi.
It would, therefore, be unfair to prohibit publishers from submitting books for selection merely because they had at one time published a book written by any one of the members of the committee or sub committee concerned with the selection of books.
The number of publishers is large but good publishers are few and such publishers will, therefore, be publishing the majority of books.
To lay down such a guide line would be to eliminate a large number of books which may be worthy of selection.
[337 A C]
|
: Criminal Appeal NO. 32 of 1965.
Appeal by special leave from the ,judgment and order dated April 5, 1963 of the Madhya Pradesh High Court, Indore Bench in Criminal Misc., Case No. 135 of 1962.
Niren De, Solicitor General, H.L. Anand, 1. M. Bhardwaj and K.B. Mehta, for the appellant.
B.C. Mishra and C.P. Lal, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought from the order of the High Court of Madhya Pradesh dated 5th April, 1963 in Criminal Miscellaneous Case No. 135 of 1962 under section 520 of the Code of Criminal Procedure directing the return of 21 currency notes of the denomination of Rs. 1,000 each to respondents Rajendra Kumar Singh and Virendra Singh.
The currency notes of the total value of Rs, 21,000 were seized by the Madhya Pradesh Police from the Beawar Branch of the State Bank of India in the course of an investigation of a case under sections 420, 406 and 120B of the Indian Penal Code registered in P.S. Thuko Ganj, Indore City as Crime No. 113 of 1961 against Kishan Gopal, the third respondent.
It appears that the third respondent had come into possession of a sum of Rs. 1,50,000 in Government currency notes by cheating the first and second respondents.
The currency notes seized from the appellant were said to be part of the property obtained by Kishan Gopal by the commission of the said offence.
The case of the appellant was that it had come into possession of the said currency notes in the usual course of its business partly through the Bank of Rajasthan Limited and partly through the Mahalaxmi L2SuP CI 69 15 218 Mills Company Limited without any knowledge that the said currency notes had been the subject matter of an offence.
In the proceedings that followed on the investigation of the said case, the accused persons including the third respondent were acquitted by the Court of the Fourth Additional Sessions Judge, Indore in Sessions Case No. 3 of 1962 by an order made on 24th April, 1962.
In the course of the trial, the appellant made an application under section 517 (1 ) of the Code of Criminal Procedure asking for delivery of the aforesaid 21 currency notes to it on the ground that the said currency notes had been seized by the police from the appellant and that the appellant was an innocent third party who had received the said notes without any knowledge or suspicion of their having been involved in the commission of an offence.
By his order dated 24th April, 1962 the 4th Additional Sessions Judge, Indore allowed the application and directed that the currency notes should be returned to the appellant.
Subsequently, an appeal was filed to the High Court by the State of Madhya Pradesh being Criminal Appeal No. 205 of 1962.
The appeal was allowed and the High Court set aside the order of acquittal of the third respondent and ' convicted him under sections 420, 406 and 120B of the Indian Penal Code and sentenced to undergo imprisonment.
The first respondent, Rajendra Kumar Singh, made an application to the High Court asking for delivery of the currency notes as they belonged to him and the second respondent and as they had been deprived of the said property by the third respondent by the commission of the aforesaid offence.
The application was allowed by the High Court by its order dated 5th April, 1963 and the currency notes were ordered to be handed over to the first and the second respondents.
The relevant portion the order of the High Court reads as follows : "Now the bulk of the recovered property consists of Government currency notes either of the denomination of rupees one thousand each or money obtained after the tender of one thousand rupee notes by Kishan Gopal.
The position of the recovered money in short is this : 1.37, one thousand rupee notes were recovered from the pillow of accused Kishan Gopal after his arrest amounting to: 37,000 2.
Money directly traceable to one thousand rupee notes recovered from Dayabhai P.W.52, with whom it was deposited by accused Kishan Gopal and Mst.
Tulsabai.
59,500 3.
Money recovered from Mst.
Tulsa bai the sister of accused 's cuncubine 10,000 219 4.
Money in Beawar Bank consisting of two drafts of ten thousand each; on in the name of accused Kishan Gopal and the other in the name of Rukmanibai, his witness for which the accused ten dered twenty one thousand rupee notes and one thousand rupee notes.
with which he opened an account with his Bank.
21,000 Total : 1,27,500 This amount (Rs. 1,27,500) is directly traceable to the conversion of one thousand rupee notes.
We, therefore, direct it be given to Virendra Singh P.W. 1, and Rajendra Kumar P.W. 73, who shall proportionately divide it between themselves.
No other order is made in respect of other property and., the parties are left to establish their claim in Civil Court".
Section 517 o.f the Code ' of Criminal Procedure states: "517.
(1) When an inquiry or a trial in any Criminal Court is concluded, the Court may make such order as it thinks fit for the disposal by destruction, confiscation, or delivery to any person claiming to be entitled to possession thereof or otherwise of any property or document produced before 'it or in its custody or regarding which any offence appears to have been committed, or which has been used for the commission of any offence.
(2) When a High Court or a Court of Session makes such order and cannot through its own officers conveniently deliver the property to the person entitled thereto, such Court may direct that the order be carried into effect by the District Magistrate. . .
Section 520 provides as follows : "Any Court of appeal,confirmation, reference or revision may direct any order under section 518, section 518 or section 519 passed by a Court subordinate thereto, to be stayed pending consideration by the former Court, and may modify, alter or annul such order and made any further orders that may be just".
220 In Support of this appeal, it was contended in the first place that the High Court had ' reversed the order of the Sessions Judge directing the return of the currency notes without giving a notice to the appellant and without giving an opportunity to it for being heard.
The argument was stressed that there was a violation of the principle of natural justice and the order of the High Court dated 5th April, 1963 was illegal.
It was, however, contended on behalf of the respondents that there was no provision in section 520 of the Code of Criminal Procedure for giving notice to the affected parties and the order of the High Court cannot be challenged on the ground that no hearing was given to the appellant.
In our opinion, there is no warrant or justification for the argument advanced on behalf of the respondents.
It is true that the statute does not expressly require a notice to be issued, or a hearing to be given to the parties adversely affected.
But though the statute is silent and does not expressly require issue of any notice there is in the eye 'of law a necessary implication that the party adversely affected should be heard before the Court makes an order for return of the seized property.
The principle is clearly stated in the leading case of Cooper vs Wandsworth Board of Works(x).
In that ease section 76 of the Metropolis Local Amendment Act, 1855 authorised the District Board to demolish the building if it had been constructed by the owner without giving notice to the Board of his intention to build.
The statute laid down no procedure for the exercise of the power of demolition, and, therefore, the Board demolished the house in exercise of the above power without issuing a notice to the owner of the house.
It was held by the Court of Common Pleas that ' the Board was liable in damages for not having given notice o,f their order before they proceeded to execute it.
Erie, C,J. held that the power was subject to a qualification repeatedly recognised that no man is to be deprived of his property without his having an opportunity of being heard and that this had been applied to "many exercises of power which in common understanding would not be at all a more judicial proceeding than would be the act of the district board in ordering a house to be pulled down".
Willes, J. said that the rule was "of universal application and rounded upon the plainest principles of justice" and Byles, J. said that "although there are no positive words in a statute requiring that the party shall be heard, yet the justice of the common law will supply the omission of the legislature." The same principle has been reaffirmed in a recent case Ridge vs Baldwin(2).
In that case, section 191 of the Municipal Corporations Act, 1881 provided that a watch committee may at any time suspend or dismiss any borough constable whom they think negligent in the discharge of his duty, or otherwise unfit for the same.
The appellant, who was the chief constable of a (1) ; (2) ; 221 borough police force, was dismissed by the watch committee on the ground that he was negligent in the discharge of his duties as thief constable.
He brought an action against the members of the watch committee by stipulating that his dismissal was illegal and ultra vires the powers.
It was held by the House of Lords that the decision of the watch committee was ultra vires because they dismissed the appellant on the ground of neglect of duty and as such they were bound to observe the principles of natural justice by informing him of the charges made against him and giVing him an opportunity of being heard.
The same principle was applied by this Court in Board of High School and Intermediate Education.
U.P. Allahabad vs Ghanshvam Day Gupta and Ors.
It was held in that case that an examination committee of the Board of Secondary Education in Uttar Pradesh was acting quasi judicially when exercising its Dower under rule 1 (1) of Chapter VI of the Regulations dealing with cases of examinees using unfair means in examination hall and the principle of natural justice which require that the examinee must be heard.
will apply to the proceedings before the Committee.
Though there was nothing express one way or the other in the Act or the Regulations casting a duty on the committee to act judicially, where no opportunity whatever was given to the examinee to give an explanation and present their case before the Committee.
the Resolution of the committee cancelling their results and depriving them from appearing at the next examination was defective.
Applying the Principle to the present case it is manifest that the High Court was bound to give notice to the appellant before reversing the order of the Sessions judge directing the disposal1 of the property under section 517 of the Code of Criminal Procedure.
As no such notice was given to the appellant.
the order of the High Court dated 5th April, 1963 is vitiated in law.
The next question which arises in this appeal is whether the High Court was justified on merits in ordering the currency notes to be returned to respondents 1 and 2.
It was argued by Mr. Mishra that the High Court hat a discretion under the statute as to whom the property was to be returned and there was no reason why this Court should interfere with such exercise of discretion by the High Court.
We are unable to accent the argument.
It iS true that sections 517 and 520 of the Code of Criminal Procedure confer a discretion on the High Court as regards the disposal of the property seized or produced before it or regarding which any offence was said to have been committed.
But as we shall presently show the High Court has not exercised its discretion according to proper legal principle and its order is hence liable to be set aside.
It was stated by Mr. Mishra that the question involved in (1) ; 222 this case is whether as to which out of two innocent parties should suffer, viz.; the person who lost the property due to the criminal, act of another or the person to whom the property (currency notes) had been delivered in the normal course of its business.
It is not, however, correct to say that respondents 1 and 2 are equally innocent because respondents 1 and 2 had admittedly handed over the currency notes to respondent No. 3 "for the criminal purpose of duplication".
It was indeed urged on behalf of the appellant that respondents 1 and2 had entered into a criminal conspiracy with respondent No. 3 for 'duplicating ' the currency notes.
In any event, we are satisfied that the High Court was in error in directing the return of the currency notes to respondents 1 and 2.
The reason is that the property in coins and currency notes passes by mere delivery and it is the clearest exception to the rule Nemo dat quod non habat.
This exception was engrafted in the interest of commercial necessity.
But the exception only applies if the transferee of the coin.
or currency notes takes in good faith for value and without notice of a defect in the title of the transferor.
The rule is stated by Wills J. in Whistler vs Forster(1) as follows : "The general rule of law is undoubted, that no one can transfer a better title than he himself possesses: Nemo dat quod non habat.
To this there ,are some exceptions; one of which arises out of the rule of the law merchant as to negotiable instruments.
These, being part of the currency, are subject to.
the same rule as money: and if such an instrument be transferred in good faith, for value, before it is overdue, it becomes available in the hands of the holder, notwithstanding fraud which would render it unavailable in the hands of a previous holder.
" In the present case the appellant asserted that it had obtained 'the currency notes in the normal course of its business and without any knowledge or suspicion of their having been involved in the commission of any offence.
The respondents have not alleged fraud or lack of good faith on the part of the appellant.
The appellant hence contended that the property in the currency notes, passed in its favour by mere delivery and the appellant "had a right to possess ' the currency notes within the meaning of section 517 of the Code of Criminal Procedure.
We do not wish to express any concluded opinion in this case on the ultimate question of liability for payment of the money as between the appellant on the one hand and respondents 1 and 2 on the other.
But we are of opinion that in the circumstances of this case the High Court should have directed the return of the said currency notes to the (1) 223 appellant which had the "right to possess" the currency notes within the language of section 517 of the Code of Criminal Procedure.
we accordingly allow this appeal, set aside the order of the High Court dated April 5, 1963 and direct that the 21 currency notes of the denomination of Rs. 1000 each seized by the Madhya Pradesh Police should be returned to the appellant.
R.K.P.S. Appeal allowed.
| The appellant applied for a Congress ticket for election to the Legislative Assembly and deposited certain sums, which according to the rules of the Congress Party was refundable if the candidate was not selected but the deposit was to be forfeited if he contested the election against the official Congress candidate.
The appellant was denied the Congress ticket.
Thereafter the notification inviting electors to elect a member to the Assembly was issued, and the last date for filing nomination papers and for withdrawing from the contest was fixed.
The appellant contested the election against the respondent who was the official Congress nominee and incurred the penalty of forfeiture.
The appellant was declared elected and he filed his return of election expenses.
The respondent challenged the 'appellant 's election on the ground that he had committed corrupt practice under section 123(6) of the Representation of People Act, 1951, for not having included the sum deposited by him in seeking the Congress ticket in his return and by adding this sum to the return of election expenses filed the prescribed amount was exceeded, thereby contravening section 77(3) of Act.
The High Court held in favour of the election petitioner.
Dismissing the appeal, this Court, HELD: Section 77 as framed now departs in language from the earlier provision on the subject which was r. 117.
The words 'conduct 'and management of election ' are; not as wide as the words 'all expenditure in connection with election incurred or authorised by him ' which now find place in section 77 with 'election ' and 'incurred or authorised. ' 'Expenditure ' means the amount expended and 'expended ' means to pay away, lay out or spend.
It really represents money out of pocket, a going out.
The amount paid away or paid out need not be all money which a man spends on himself during this time.
It is money 'in connection with ' his election.
These words mean not so much as 'consequent upon ' as 'having to do with '.
All money laid out and having to do with the election is contemplated.
But here again money which is liable to be refunded is not to be taken note of.
The word 'incurred ' shows a finality.
It has the sense of rendering one self liable for the amount.
The words are not equivalent to 'conduct or management of an election ' and the expenses need not be for promotion of the; interest of the candidate.
Therefore the section regards everything for which the candidate has rendered himself liable and of which he is out of pocket in connection with his election, that is to say having to do with his election.
[87 G 88 B] (In this case, the appellant put out the money for his election since he was trying to obtain a Congress ticket.
If he had got the ticket and the money was refunded to him, this would not have counted as 'an expenditure since the expense would not have been incurred.
When the appellant knowing that the money would be lost went on to stand as an independent candidate, he was willing to let the money go and take a 85 chance independently.
So the 'amount was an expenditure within the meaning of the section.
[88 C D] Haji Aziz and Abdul Shakoor Bros. vs Commissioner of Income tax, Bombay City, ; , distinguished.
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